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President Bush Visits New York Stock Exchange; Sheriff's Home Shootout; Fed Leaves Interest Rate Unchanged

Aired January 31, 2007 - 14:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

DON LEMON, CNN ANCHOR: Hello, everyone. I'm Don Lemon, live at the CNN world headquarters in Atlanta.
KYRA PHILLIPS, CNN ANCHOR: And I'm Kyra Phillips.

Well, Wall Street does start with a "W." Still -- or a dubya -- till, the traders were totally floored when the president dropped in.

Our Susan Lisovicz was there.

LEMON: I think it's dubya.

PHILLIPS: Dubya.

LEMON: And speaking of the economy, up, down or holding ground? If you're interested in the interest rate, don't go anywhere. We'll take you to a live announcement from the Fed in just a few minutes.

PHILLIPS: A little more adventure than they bargained for. Cruise passengers jump ship after their boat runs aground.

You're live in the CNN NEWSROOM.

Well, she was so amazing. And if you missed it, we want you to see it again.

Our own Susan Lisovicz, live from the New York Stock Exchange floor, was the only reporter there to grab the president of the United States live as he came through for an unexpected visit.

So the knees still knocking there, Susan?

SUSAN LISOVICZ, CNN FINANCIAL CORRESPONDENT: They are, Kyra. It's starting to dawn on me what happened.

Honestly, when I came to work early this morning, I thought the most exciting part of my day would be interviewing the CEO of the Tokyo Stock Exchange. Which I did.

I knew that the president was speaking across the street from Federal Hall. It seems logical that the president of the United States would come to the world's greatest stock exchange when he was talking about the U.S. economy.

We got some very good figures before the opening bell this morning that the GDP, the gross domestic product, actually exceeded the estimation. So it was a logical thing for the president to come here. He did. And I was able to squeeze past security and pop a question.

(BEGIN VIDEO CLIP)

LISOVICZ: President Bush, welcome to Wall Street. President Bush, welcome to Wall Street.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Good to be here, thanks.

LISOVICZ: What do you think of the reception here?

BUSH: I'm impressed and grateful.

LISOVICZ: You think it's warmer than on Capitol Hill right now?

(END VIDEO CLIP)

LISOVICZ: Kyra?

PHILLIPS: I'm with you, Susan. You threw out the softball. And like we said, then came the fast pitch. And he didn't want to answer about what was happening on Capitol Hill. He didn't want to talk Iraq.

LISOVICZ: No.

PHILLIPS: But he sure wanted to talk about the economy.

LISOVICZ: He did. And as I said, there are a lot of things that the president can talk about that are going in his favor.

It's surprising, honestly, that President Bush has not come to the New York Stock Exchange before. These are his people. A lot of folks like the fact that he lowered taxes. They like the fact that there are more trade policies that enable American businesses to do business overseas and vice versa.

They like the fact that the unemployment rate is low and that energy prices have finally come down. It seems if the president wants to set a grand stage for talking about his vision for the U.S. economy in the final two years of his administration, this seems like a very logical place to do it.

One last thing, Kyra. You know how crowded it was, I'd say, 30 minutes ago?

PHILLIPS: That's when you did the body blocks that you learned from your brothers.

LISOVICZ: Look at it. It looks like the closing bell rang already. The president left and it seems like half of the trading floor left with him.

PHILLIPS: Well, now things stopped, too. When the president walked through, everything went dark on the floor. Is that necessarily a good thing? LISOVICZ: Well, there's two things. One is that these are people, after all. And this is an historic moment. And they were very excited.

And I would say a good 45 minutes before the president was in the building, trading had stopped. And you could see it from the volume, which is very low.

But it would be low, to some degree, anyway because we get that decision by the Federal Reserve in less than 15 minutes. And so there's a tentative nature to trading. But it was at a standstill -- Kyra.

PHILLIPS: All right, Susan. We're going to come back to you when we find out about those rates. So you just let us know as soon as we know.

LISOVICZ: OK, you got it. And let me just quickly point to the Big Board since I'm on the trading floor.

PHILLIPS: All right.

(STOCK MARKET REPORT)

PHILLIPS: Our Susan Lisovicz. Yes, she's our financial guru, but she also had the one-on-one with the president today, the only one there on the floor.

Thanks, Susan. We'll talk to you in a little bit.

LISOVICZ: Thanks, Kyra.

LEMON: Well, we told you about this story at the start of our 1:00 p.m. Eastern hour. It's a murder mystery. A deadly shootout at the home of a Florida sheriff.

When the gunfire ended, the sheriff's wife was dead. And so was the first deputy on the scene. It looks as if the gunman targeted the home, but it's not clear why. It happened in the panhandle town of Marianna. And CNN's Susan Roesgen is there with an update for us.

Susan, it is a mystery.

SUSAN ROESGEN, CNN GULF COAST CORRESPONDENT: It really is, Don. This is a very compelling case with more questions than answers right now. But some really tantalizing details that we've been able to confirm just in the last half an hour or so about what happened here in this small town of Marianna -- it's about 20,000 people -- about what happened last night with the sheriff's wife at about 5:00.

Sheriff John McDaniel, the sheriff of Jackson County, he had reported that his wife, I've been told now by law enforcement, his wife, Mellie McDaniel, was driving home at about 5:00 last night when she called him on her cell phone to tell him that she was worried, that she thought there was some kind of suspicious vehicle following her. After that, what happens is a little bit unclear. There's going to be a press conference later this afternoon to spell it all out. But what we understand happened is this: Mellie McDaniel pulled into the driveway of her home and was confronted by two gunmen.

Now, the sheriff, once he got the call from his wife, sent a deputy out right away. The deputy got on the scene. And we're not again quite sure of the timeline, but both Mrs. McDaniel and the first deputy on the scene were shot to death.

A little bit later, apparently, more deputies and the sheriff himself got to his home. They exchanged gunfire with the two suspects, shot them both dead. Then there was a massive search, Don, because at that time they believed that there might be a third suspect on the loose in the area somewhere.

About 100 law enforcement officers combed the woods behind the sheriff's house. There was a helicopter in the sky with a spotlight looking for a potential third suspect. They have said today that there were no other suspects, that the two gunmen who were shot dead by the deputies were the only suspects involved.

But as you mentioned, Don, the big question is why? What was the motive? Was the sheriff's wife the target?

Now, I have been told again by law enforcement sources here that, yes, this was a targeted killing. Whether the wife or whether the sheriff or both were the targets, we don't know yet. But this was not some sort of random act of violence in the area. This was not, as they thought perhaps in the beginning an armed robbery. This was some sort of hit, if you will.

Again, we don't know why. We don't know who. We have not been told who these suspects are except that they are both from this area, from Jackson County.

I did ask if they have a criminal record. I was told that information has not been released yet. And also, Don, the investigators are looking at the radio logs right now. They want to get a good sense of this timeline, how long before the first deputy got there, how long before the other deputies and sheriff himself got to his home. What happened in this exchange of gunfire?

But once again, I have been told that this entire strange case should be pretty much wrapped up. We should get all the answers, the clues to this mystery at 4:00 local time, when the local state attorney holds a news conference right here in Marianna.

LEMON: 4:00 -- you're in the Central Time zone, is that correct?

ROESGEN: Yes, that's correct.

LEMON: So that would be 5:00 Eastern then.

Thank you very much for that, Susan. We'll check back with you, if necessary.

We want to head to the newsroom now. Fredricka Whitfield is working on a developing story for us -- Fred.

FREDRICKA WHITFIELD, CNN ANCHOR: Well, Don, this time a terrible traffic nightmare. And this taking place on I-35 in Kansas City, Missouri.

Well, you see the southbound traffic, closest to the camera here, is moving, but moving very slow, where on the other side, if you get through all the fuzz there, as a result of snow, you'll see that it is piled up. It is bumper to bumper because of an apparent 30-car pileup taking place on the northbound side of I-35 there in Kansas City, Missouri. It is slow going because of the accident and also because of the weather.

Rob Marciano is keeping a close eye on the weather.

You said that there would be some severe weather coming through this area. And here it is.

ROB MARCIANO, CNN METEOROLOGIST: Well, you know, Fredricka, sometimes an inch or two of snow is worse than getting six or seven inches as far as driving is concerned. It's just enough to kind of slick up that roadway. And that's kind of what we're seeing there and likely the cause of that big pileup. It just makes it more difficult to stop and control your vehicle.

(WEATHER REPORT)

WHITFIELD: We still don't know the details of the accident. Just that whatever took place has resulted in a 30-car pileup there on I-35 there in Kansas City Missouri.

We'll continue to keep tabs of the weather, as well as the traffic conditions there in that area -- Don.

LEMON: Yes, Fredricka. And it's just when you get a little bit of snow, people have this false sense of security that they can get out on the roads and everything's going to be OK, but it's often very, very dangerous.

OK. Thank you so much for that.

We're waiting an announcement -- Fred, thank you -- from the Federal Reserve to talk about interest rates, whether or not they'll be raised or lowered today. So we'll have that for you as we watch the Big Board.

We'll get a full report from Susan Lisovicz about what's going on in the market today. And as soon as the Federal Reserve makes that announcement, we'll bring it to you live right here.

You're watching the CNN NEWSROOM.

(COMMERCIAL BREAK)

LEMON: Is good news for the economy bad news for interest rates? We're waiting for the Federal Reserve to let us know whether rates will go up or down or stay the same.

Susan Lisovicz, the hardest working woman in show business, joins us, and so does Ali Velshi. They're both watching...

LISOVICZ: Don, we want to jump in. We already have a decision.

LEMON: OK. Go ahead.

LISOVICZ: Unchanged, as expected. The Federal Reserve announcing that it will leave the federal funds rate unchanged at 5.25 percent. This would mark the fifth consecutive session where the Fed policymakers have left that rate unchanged after a two-year hike campaign of raising interest rates began.

It held rates steady as of August. And that is what we expected.

And Ali, I know you're going to be watching for the statement...

ALI VELSHI, CNN CORRESPONDENT: Got it right here.

LISOVICZ: ... to see what policymakers say.

VELSHI: Yes. I've got the statement right here.

Going through it, it's talking about -- I think we're looking at when an interest rate doesn't change, is whether the Fed indicates that it's going to think about changing interest rates the next time around. And the wording here says, "In any event, the committee" -- meaning the Federal Open Market Committee -- "will respond to changes in economic prospects as needed to foster these objectives."

It says that some further policy firming may be needed. That means -- that's sort of Fed language to say, we may have to tighten our interest rates, we may have to increase interest rates at the next meeting.

This is exactly what investors always worry about. All right, so we're in the clear now but, the next time the Fed meets, will they, in fact, increase interest rates? That next meeting isn't going to be -- well, hold on a second. I am just making sure that we've got the right -- yes, it says that some inflation risks do remain -- Susan.

LISOVICZ: Yes. And, you know, it's interesting, because what the Federal Reserve has been trying to do is engineer something called a soft landing.

They don't want the economy to heat up so much that inflation got out of hand. And so that's why it was raising interest rates.

It held steady. Ben Bernanke is only marking his first year anniversary. He said he wanted to study the economy for a while. That's basically why -- why -- one of the reasons why they held rates steady. Well, interestingly enough, the U.S. economy, which -- which had been slowing down, is actually showing some surprising strength recently.

And I guess a good example of that, Ali, would be the GDP, which is the broadest measure...

VELSHI: Right.

LISOVICZ: ... of the economy, came in just this morning. The initial read on fourth quarter GDP was 3.5 percent. And that was a lot better...

LEMON: Susan, Ali, if you guys can answer this for me, what does this mean in layman's terms for just the average person when it comes to borrowing and spending, maybe buying a home, or what have you, or getting a loan? What does this mean for folks?

VELSHI: If you're in a fixed mortgage situation, it doesn't mean anything to you. But if you are in some kind of a variable loan, whether it's on your house, an adjustable rate mortgage, or you have loans that adjust with the -- with the prime rate, when the Fed has its rate at 5.25 percent, which is where it's been for a while, that means prime rate sits three percentage points higher than that. So prime is at 8.25.

Many, many loans are linked to prime. The fact that the Fed doesn't move means that prime rate doesn't move. So, for consumer loans and for some businesses, their costs of borrowing money doesn't go up.

But there are a lot of other kinds of loans that are financed in other ways that are affected by it. But for the meantime, what the Fed is saying is that by not increasing interest rates, it's allowing people to continue to borrow money and spend money, consumers and businesses.

So it keeps the economy going. If you are feeling like it's still cheap to borrow money, you'll keep spending.

LISOVICZ: And that's important to note, Don, because the one really sore point in the U.S. economy is the housing market.

LEMON: Right.

LISOVICZ: And if those interest rates go up, you see how it could deteriorate further.

LEMON: Right.

LISOVICZ: Investors apparently like what they've heard so far. We've got a nice rally going on right now with the Dow industrials up -- they're up half a percent right now. But that's one of the areas where you can see it most dramatically I would say, right, Ali, in the housing market, which has been under a lot of pressure.

LEMON: Well, Susan and Ali...

VELSHI: This is the big variable this year, how are housing prices going to do.

LEMON: Yes. We have to go, but that's -- everybody I know watches this announcement to find out where their home values are going to be and if they're going to buy a home or sell a home. LISOVICZ: It's important.

VELSHI: Don, can you ask Susan if President Bush is still there? Maybe she can ask him what he thinks about the situation.

LEMON: You know...

LISOVICZ: He's out of here.

LEMON: Oh, she's the big cheese today.

You did a great job with that. Thank you.

Ali Velshi, Susan Lisovicz, thank you so much, both of you.

VELSHI: All right.

PHILLIPS: Well, a deadly attack targets U.S. soldiers in Iraq. Now fingers are being pointed at Iran. Fact, or is Washington building a case against Tehran?

The NEWSROOM talks to a top security analyst next.

(COMMERCIAL BREAK)

LEMON: Reconstructing Iraq, a monumentally expensive proposition under the best of conditions, which these are certainly not. Apart from security issues, waste, negligence and possible corruption are set to be hindering reconstruction and bleeding the U.S. Treasury.

CNN's Brianna Keilar has the bottom line and the latest from a government audit -- Brianna.

BRIANNA KEILAR, CNN CORRESPONDENT: Hi there, Don.

Stuart Bowen Jr., special inspector-general for Iraq reconstruction, billed 2006 as a year of transition. But this quarterly report that he released today really tells a very different story.

In fact, one of the most glaring examples of waste in the report is perhaps something that deals with DynCorp. This is a company that on its Web site says that it is a private corporation that supports government and military operations.

So what this report says is that the Department of State paid DynCorp $43.8 million for a residential camp for police training personnel. Well, it turns out that this camp was never even used. And also, the office of the inspector-general says about $4 million of that was spent by Iraq's Ministry of the Interior on 20 VIP trailers, also an Olympic-size swimming pool, and that these were projects that were not authorized by the Department of State as they should have been.

Now, furthermore, this report says that about $36 million paid by the Department of State to DynCorp was spent on weapons and equipment. Equipment like armored vehicles, body armor and all of that is unaccounted for. This report says there was not a proper paper trail in that case. And a spokesman for the State Department says taxpayer money should be spent responsibly. They're going to take corrective action but wouldn't specify, Don, exactly what corrective action they are taking.

LEMON: Brianna Keilar, thanks, as always.

PHILLIPS: Let's get straight to the newsroom. Fredricka Whitfield working a story out of Boston -- Fred.

WHITFIELD: Right. Well, you know that hours ago a suspicious package was found in the Boston area in Charlestown, near a transit area. And that suspicious package was detonated. And after looking closer at it, after the detonation, police noticed that it did have an electronic circuit board and some components that were consistent with an improvised explosive device, but they don't believe it was a threatening device, just that it had some of the components.

And now hours after detonating it, now police have located four other suspicious packages dispersed in different areas around the Boston area. They continue to look closer at these items before making the next step, which would be detonating them, or perhaps even bringing in some kind of robotic apparatus. You are looking at live pictures right now of the Longfellow Bridge, which is apparently where one of the investigations is under way right now.

Earlier, you note from that suspicious package that it did back up transit traffic. And eventually things resumed to some normalcy. But now police in the Boston area have this on their hands as they look into four other suspicious packages dispersed in various locations.

When we get those specific locations we'll be able to bring that to you and any other information that we get -- Kyra.

PHILLIPS: All right, Fred. Appreciate it. We'll stay in touch.

LEMON: A deadly propane blast in West Virginia. The search for clues straight ahead in the CNN NEWSROOM.

PHILLIPS: And a deadly attack targets U.S. soldiers in Iraq. Now fingers are being pointed at Iran. Fact, or is Washington building a case against Tehran?

The NEWSROOM talks to a top security analyst next.

(COMMERCIAL BREAK)

PHILLIPS: Hello, everyone. I'm Kyra Phillips, live at the CNN world headquarters in Atlanta.

LEMON: And I'm Don Lemon.

Five U.S. soldiers ambushed and killed in Iraq. Some now wonder whether Iran was involved. We'll talk to security analyst Jim Walsh straight ahead right here in the CNN NEWSROOM. Bottom of the hour. Politics aside on Iraq and the war on terror, well, that's the goal of a so-called bipartisan working group in a city where bipartisan is often a four-letter word.

CNN's Kathleen Koch is at the White House to tell us all about it -- Kathleen.

KATHLEEN KOCH, CNN CORRESPONDENT: Well, the administration had wanted to keep the focus on the economy this week. President Bush in New York City this morning delivering a state of the economy address, afterwards making a surprise visit to the floor of the New York Stock Exchange. Only the second sitting president to do that, saying that he was impressed by the reception that he got. But as soon as he returns to Washington, the focus returns to Iraq.

President Bush meeting at 3:50 this afternoon in the Oval Office with House Speaker Nancy Pelosi and members of a congressional delegation who accompanied her to both Iraq and Afghanistan.

White House spokesman Tony Fratto says President Bush will be listening to what the delegation learned, asking questions about the meetings that they had there. While there, Nancy Pelosi sent out some press releases calling for a political solution to the problems in Iraq saying U.S. troops there should switch from a combat role to focusing on training, force protection, border control. Also asking for more U.S. troops to fight what she called a, quote, "forgotten war in Afghanistan".

Now interestingly, the same time, the speaker sent out this letter yesterday, to President Bush, thanking him for what she called his efforts to work with Congress by establishing a working group to advise him on Iraq and the war on terror. This reported last night on CNN.

But at the same time, in this letter, she does make her points very clear. The best approach being to cooperatively develop an agenda. The list of participants of discussions formulated by both rather than just one branch of government unilaterally making the important decisions. She also says the meeting should alternate between the White House and Capitol Hill.

So should be very interesting meeting this afternoon in the Oval Office. And we will be here to let you know what the lawmakers say if they choose to come out and speak to cameras afterwards.

LEMON: You are right. It will be a very interesting meeting. Thank you very much, Kathleen Koch.

KOCH: You bet.

LEMON: We want to get back to the newsroom, Fredricka Whitfield working on a developing story.

What's happening now, Fred?

WHITFIELD: Well, CNN has confirmed that these four additional suspicious devices are being investigated by police in the Boston area; all of them involving bridges and/or a medical center.

The Boston University Bridge apparently has a suspicious device, which police say they have just detonated. But it turns out there was no -- there was not an explosive, but as a precaution, they've detonated it. And then there is one apparently at the Longfellow Bridge. And then also in the basement one was found at the New England Medical Center. And the fourth location we're still trying to confirm it.

But this taking place hours after, earlier today, a suspicious device was found in the Charlestown area. It was detonated. And while police say it was not an explosive, they did say that this package did have an electric circuit board and some components which are consistent with an improvised explosive device. But they confirm that it was not an explosive and they detonated it, as a precaution.

Who may be responsible for all these suspicious devices, if it is indeed one person, or one outfit? That's still unclear. All of this still under investigation right now from the Boston authorities. But at least some good news, two out of now five suspicious devices have been detonated. Investigation is still under way. When we get more information, we'll be able to bring that to you, Kyra and Don.

LEMON: So they get them and destroy them. These all appear to be happening near roadways, or interstates in the area, right?

WHITFIELD: Right, near bridges, the subway system, roads. All of it affecting transportation.

LEMON: Let's hope it's nothing but probably going to be a very busy rush hour for the folks there in the Boston area.

WHITFIELD: And then, of course, the one medical center I mentioned, too.

LEMON: Yes, OK. We'll check back. Thank you.

PHILLIPS: Well, right now it's just speculation, a theory, but some in the White House and the U.S. military believe Iran may have played a part in the deaths of soldiers in Karbala, Iraq. What if it's true? Joining us now is Jim Walsh, he's an international security analyst at MIT.

Jim, always great to see you. You've spent a lot of time in Iran. You've met with politicians there. What is your take on this with regard to what you know? Do you think Iran is behind this attack?

JIM WALSH, INTERNATIONAL SECURITY ANALYST: Well, I think it's possible. But we're getting way ahead of the ball game here. This is based purely on speculation. The notion that because the attack was well coordinated, therefore, it must be Iran. So I think we have a lot of investigation to go before we conclude that.

What troubles me about this, let's face it. If Iran is guilty here, it should be held accountable. What troubles me is this comes in the context of basically two weeks of the drum beating, Iran this, Iran that, Iran is the problem.

And I'm afraid what we're doing is we're missing the real story here. Iran could disappear tomorrow. If I had a magic wand, and waved it, and Iran was gone, we'd still have the problems in Iraq. Iran doesn't control the Sunnis. Iran doesn't control Al Qaeda in Iraq. Iran is trying to exercise influence, probably with arms and money. That's not unusual in international politics. Most countries do that. And so they want to be able to play in Iraq.

But if Iran isn't there, we still have a problem in Iraq. And we need to get that problem fixed and talk less about Iran and more about how we're going to succeed in Iraq.

PHILLIPS: But understandable, but when you look at the reality of things now, Jim, that we've talked about Iran supplying Iraqi militias with a variety of weapons, including Katyusha rockets, guns, IEDs, et cetera.

And just recently the "USA Today", General Raymond Odierno (ph), he's the second U.S. general, in Iraq, he actually said we have weapons that we know through serial numbers that trace back to Iran. Not talking about this specific attack, but he's said we found those weapons, and those serial numbers match.

WALSH: Yeah, well, Kyra, I think that's right. Of course, if the Iranians are as sophisticated as people are saying regarding the first attack, you'd think they'd figure out they should file off the numbers on the guns. But be that as it may, do I think that there are factions in Iran that are supporting Shiites in Iraq, or supporting Kurds in Iraq, with money and guns? Absolutely. But are they out there to try to create chaos and a civil war? I doubt that very much.

Remember, Iran is on the border there. They fought this big war with Iraq. If Iraq goes into full-scale chaos, they are going to be the losers. They are going to have a big problem right on their border, which will have security implications and economic implications. So I think Iran is definitely trying to play in Iraq, without question. But I don't think -- I think we're focusing on the tail and not the dog.

PHILLIPS: All right. So focus on the dog for a minute. Help me out. What needs to be done? What would be the next step forward? This is something that is on everybody's mind. If you watch the hearings yesterday, for Admiral Bill Fallon the possible future head of CentCom. We'll know possibly at the end of the week. Also if you followed the Senate Foreign Relations Committee, this hearing, talking about the strategy in Iraq with Henry Kissinger and also Madeleine Albright, questions about Iran came back and forth. As a matter of fact, here's what Kissinger said. Let's take a listen. I'll get you to respond.

(BEGIN VIDEO CLIP)

HENRY KISSINGER, FMR. SECY OF STATE: We can accept Iran as a major player in the region with a significant role in the region. What we cannot accept is an Iran that seeks to dominate the region on the basis of a religious ideology and using the Shia base in other countries to undermine stability in a region, on which the economic well-being of such a large part of the world depends.

(END VIDEO CLIP)

PHILLIPS: Bottom line what Kissinger said there, a country that wants to dominate the region. And the president of Iran has made it very clear that he wants to dominate that region. He'll do whatever he needs to do.

WALSH: Yeah, well, Kyra, that's right. I agree with Henry Kissinger here. We want to be able to treat Iran as a normal country, have dealings with it, but we don't want them to dominate the region. I think everyone would agree with that.

What everyone forgets here is the president, Ahmadinejad, just suffered a major election defeat back in the December elections in Iran. The population is unhappy with Ahmadinejad, unhappy with his economic policies. Even the conservative parliament in Iran has a petition in which over 150 ministers have -- or parliament members have signed complaining about Ahmadinejad.

What bails him out is there are all these public threats from the U.S. or from other countries, saying, we're going to attack you. That makes it easy for the hardliners to stay in power. It changes the subject from his failed economic policies, to look, the U.S. is going to attack us. We have to rally around the flag. So I think this is a mistake. I agree with Kissinger. I agree with the Iraq Study Group, which most Americans agree with that we need to engage Iran and talk seriously. We need to be clear where we have differences but we also need to work on our common interests, and one of the common interests is not an Iraq that goes to hell.

PHILLIPS: Well, OK. Interesting -- well, let's go back at the war in Iraq and all the cases that were made to go to war in Iraq, the talk of weapons of mass destruction. The White House built its case, built its case. Now they are coming forward and saying, it looks like Iran may be behind this attack. Are we starting to see a build-up of cases to justify going to war in Iran?

WALSH: Well, you know it does sound like deja vu all over again. I've gotten a bunch of calls and a bunch of e-mails this week, saying, Jim, are we going to war in Iran? My answer is, no, I don't think so. I don't think the president is crazy enough to launch a third war when we already have problems in Afghanistan, and problems in Iraq.

But you can see why people are nervous. We've moved military assets. We're increasing troops. We're saying more aggressive things about Iran. But it may be preparation for an attack. I doubt it, but it may be. But it may be simply trying to pressure Iran and reassure the other Gulf states that we're still going to stay. Or it may be an attempt to find a scapegoat for what's going wrong in Iraq.

That is to say, Iraq is terrible, but it's Iran 's fault. Any of those three possibilities are in play. I personally don't think we're going to attack them but I tell you, more and more people think that, and my phone is ringing pretty constantly.

PHILLIPS: We'll keep tracking it. Security Analyst Jim Walsh. Always great to see you, Jim.

WALSH: Good to see you, Kyra.

LEMON: Married for decades, a California woman wasn't about to let a mountain lion, that's right, a mountain lion, come between her and her husband.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I just kept lifting it, and hitting it, and hitting it and screaming at the top of my lungs.

(END VIDEO CLIP)

LEMON: Wow. Saved from the jaws of death. Ahead in the NEWSROOM

PHILLIPS: In and in the spotlight, new video of Fidel Castro, the first we've seen in months. What does it show us about the Cuban leader's health? We'll take a closer look.

(COMMERCIAL BREAK)

LEMON: Been following this breaking story happening in the Boston area. Fredricka Whitfield has some new developments for us.

WHITFIELD: We understand, Don, that one of the latest four suspicious devices found in the Boston area in and around the transit or automobile traffic thoroughfares has been disabled. Police say it was not an explosive.

Even though hours earlier today a device that shared some of the same components of something like an improvised explosive device was disabled. It had an electronic board on it, a circuit board, which police thought to be very suspicious and unusual, and alarming.

You are looking at video taken from earlier today when it was disabled. And so now the four devices that have been located just within the past hour, at least that we're learning of in the Boston area, one of them has been disabled. That at the Boston University Bridge.

The other locations where these suspicious devices have been found include the Longfellow Bridge as well as an area at the intersection of Stewart and Columbus Streets, and in the basement of the New England Medical Center. There is no explanation of these suspicious devices as of yet, but we're continuing to work our sources and will bring more to you as we get it at the top of the hour.

LEMON: It certainly is very interesting. You wonder what's behind all of it. It certainly doesn't appear to be a coincidence that you have six devices.

WHITFIELD: Five. LEMON: Five devices.

WHITFIELD: Five, including this morning.

LEMON: Thank you very much, Fredricka.

Time to talk about the weather. Rob Marciano tracking all the winter watches.

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PHILLIPS: From a deadly explosion comes a long investigation. In southern West Virginia, a convenience store was incinerated in a propane gas explosion yesterday. Four people were killed, five others seriously hurt. The dead include a volunteer firefighter and a building inspector. Firefighters had already been called to help with evacuations after a leak was reported in a propane tank. The sheriff says one ambulance disintegrated. Seven homes and a nearby school sustained minor damage.

LEMON: Hold the festivities. We've reported on plans in Miami to hold post-Castro celebrations at the Orange Bowl, but now comes new video of the ailing Cuban dictator. The first new video in months. While he's far from a picture of health, he's undeniably alive. Morgan Neill has more from Havana.

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MORGAN NEILL, CNN INT'L. CORRESPONDENT, CNN NEWSROOM (voice over): Three months after disappearing from sight, Fidel Castro is back.

In this new video, the ailing 80-year-old Cuban leader is on his feet greeting Venezuelan President Hugo Chavez. His voice is weak, but the message is clear.

"This is far from a lost battle," he says. The video lasting some 10 minutes shows Castro and Chavez discussing everything from climate change to what the Venezuelan leader called the threats from the empire, a reference to the United States.

Chavez says the video was shot during an unannounced visit Monday afternoon. Wednesday marks six months since intestinal surgery forced Castro to transfer power to his 75-year-old brother Raul. With or without the new images, many Cubans say they have more pressing things to worry about than politics.

"I have so many things on my mind," she says. "I haven't been able to think whether there are changes or not."

Both inside and outside Cuba, the president's health is a constant source of speculation. Most recently the Spanish newspaper, "El Pais" reported he had three failed operations to deal with diverticulitis, inflammation of a pouch in the intestinal wall. This has not been confirmed. The latest video will do little to clear up uncertainty about just who is making the decisions. Acting President Raul Castro, or Fidel Castro, from his bedside? Raul is officially in charge, but analysts say at this point he is not likely to take decisions that is would directly contradict those of his brother.

While Miami erupted with celebrations when Castro transferred power in July, the streets of Havana have remained calm. Analyst Hal Klepak says there's good reason for that.

HAL KLEPAK, ROYAL MILITARY COLLEGE: Cubans are not surprised by whatever, Miami or Washington, or capitalists think. They see more stability not less in the sense of here is what was said was going to be happening. It is happening, but without the absence of this 47 years ruler.

NEILL (on camera): And so six months after President Fidel Castro was forced to hand over power, it's the sense of continuity, not of change that's most striking. And it's likely to stay that way as long as new videos like this most recent ensure that he remains in the picture. Morgan Neill, CNN, Havana.

PHILLIPS: Straight ahead, entertainment news with A.J. Hammer, of "Showbiz Tonight".

Hey, A.J.

A.J. HAMMER, CNN ANCHOR, "SHOWBIZ TONIGHT: Hey, Kyra, one star returns from rehab, another heading to court. And we'll tell you about the death of one of America's most popular writers. That's coming up next in the NEWSROOM.

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PHILLIPS: Rob Marciano giving the kids their little tour of the Weather Center. He's such a nice guy.

LEMON: Wave, kids, you're on TV.

PHILLIPS: He's such a nice guy.

Well, rehab is a lot faster than it used to be. A controversial cast member heads back to "Grey's Anatomy" barely a week after he went off to seek -- understanding. "Showbiz Tonight" A.J. Hammer has today's entertainment report.

Hey, A.J.

HAMMER: Little quotation marks, there, yeah.

PHILLIPS: Understanding.

HAMMER: Well, it was a pretty quick trip to rehab for Isaiah Washington, this "Grey's Anatomy" star got into trouble, in the first place, when he referred to his co-star T.R. Knight, with a homophobic slur. But that was last October. Washington really got into trouble when publicly denied the incident back at the Golden Globes and used the slur when doing so.

After being criticized by several members of the cast, he headed into, quote/unquote, "rehab" on January 23rd. He said he wanted understand why he did what he did, and he wanted to make sure it would never happen again.

Well, after a little more than a week, Isaiah will be returning to the set tomorrow.

Now, Kyra, I should mention that there has been plenty of speculation that this rehab is nothing more than a PR stunt to rehabilitate his image. I'll give him credit for perhaps taking the right steps, and maybe he was forced to do so. But we'll find out how everybody is feeling after he's back on set tomorrow.

PHILLIPS: Forced to do so. Thanks, A.J.

HAMMER: Yes.

PHILLIPS: All right, from a star trying to get over his troubles to another just at the beginning of hers, what can you tell us about what's going on with Brandy.

HAMMER: This is just such a sad story. As we've reported, the pop star was involved in a fatal car accident last month. While Brandy is still waiting to find out if she'll be facing criminal charges stemming from the accident, she already knows she'll be heading to court because of it.

The family the woman who was killed is suing Brandy for $50 million. The 38-year-old mother of two died after Brandy hit her car from behind forcing it into the center median where it was hit by another car.

Through a spokesman, Brandy said her heart goes out to the family but for legal reasons at this time she can't make any further comment. The California Highway Patrol has recommended that Brandy be charged with misdemeanor vehicular homicide, but the district attorney has not decided what, if anything, she'll be charged with. As I said, Kyra, just a sad story.

PHILLIPS: You also have some pretty sad news for the publishing world.

HAMMER: Yes, Sidney Sheldon, the very prolific author, has passed away. He was 89 years old. Most famous for the 18 novels he wrote. He had quite the life outside of books. He wrote musicals on Broadway, screenplays in Hollywood and he was a television writer and producer, creating "The Patty Duke Show" and "I Dream of Jeannie", among others.

Sheldon was a triple threat, too. He won a Tony, an Oscar and an Emmy over his career. It was back in 1970 when he decided to try writing novels and he discovered the readers really responded to his stories that tended to feature strong women triumphing in a world of men. He wound up selling more than 300 million copies of his novels. Clearly he did hit a nerve. Sheldon died from complications from pneumonia.

Coming up tonight on "Showbiz Tonight," much more on the Brandy tragedy. The singer facing criminal charges following the deadly car crash. Now, as I mentioned, being sued for $50 million. And why are civil rights leaders now getting involved in this tragic case? We'll get into it with the explosive developments tonight on TV's most provocative entertainment news show.

There's the music. It's "Showbiz Tonight" at 11:00 Eastern and Pacific on Headline Prime.

PHILLIPS: All right, thanks, A.J.

HAMMER: You got it.

LEMON: We'll have more coming up on this developing story out of Boston. Several suspicious packages discovered; an update on that straight ahead.

And a Florida sheriff's wife makes a call for help, but it arrives too late. Up next in the NEWSROOM, details on what police are calling a targeted attack and the sheriff's own history of loss.

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