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Watching Wall Street; Smith's Mother In Appeals Court

Aired February 28, 2007 - 10:00   ET

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


UNIDENTIFIED MALE: Look, I will make a fool out of myself and waller (ph) on the floor for anyone who's willing to do 90 meetings in 90 days to get clean and soberer.
(END VIDEO CLIP)

TONY HARRIS, CNN ANCHOR: How about that.

HEIDI COLLINS, CNN ANCHOR: We need to bring in Mary Lou Retton, though, to show him. I'm not, you know, criticizing, but I'm not even sure that's a full cartwheel. He's got to get those legs out there. Oh, this was just the second time that someone has taken Judge Lewis up on his offer. It sounds like it won't be the last either.

HARRIS: We're booking him for the NEWSROOM. You'll be doing that interview?

COLLINS: Yes, sure.

Good morning, everybody. I'm Heidi Collins.

HARRIS: And I'm Tony Harris. Spend a second hour in the NEWSROOM this morning and stay informed. Here's what's on the rundown.

Stocks sprint ahead at the start of the trading day. We're watching Wall Street a day after a 400 point plus melt down.

COLLINS: Meeting the neighbors. The Bush administration appears to reverse course, agreeing to sit down with Iran and Syria to talk about Iraq.

HARRIS: Prince Charles calling for a ban on an all-American institution, McDonald's? Big Mac attacked on Wednesday, February 28th. You are in the NEWSROOM.

And at the top this hour, for whom the bell tolls. OK. We are about 30 minutes into the new day on Wall Street. Will U.S. stock markets recover from their bought of Asian flu? So far, OK. Yesterday China's stock markets sneezed, U.S. investors shivered and Wall Street shuttered.

Here's a reminder of that plunge. The Dow Jones Industrial average dropped 416 points. The Nasdaq tumbled almost 97 points.

But those numbers don't tell the whole story. The Dow lost about 3.3 percent of its total value. Compare that to black Monday in 1987. A 500 point drop then caused the Dow more than 22 percent of its value.

COLLINS: Well, let's get the latest now on how the markets are doing. Trading has been underway for about a half an hour. And we are in the plus side at this very moment. And our Susan Lisovicz is watch those numbers very closely, joining us live now from the New York Stock Exchange.

And I thought you put it so well last hour here, Susan. Fear and agreed seem to be what it's all about, right?

SUSAN LISOVICZ, CNN CORRESPONDENT: Yes. And, you know, sometimes, you know, it's a real battle. It's a real tug of war as to which one is winning. And it's been kind of a wobble. You know, in the first few minutes, it looked like we were on, you know, tera firma and that's not exactly the case. It's, you know, the Dow has dipped into negative territory.

But whatever the case is, it's nothing like what we saw yesterday. And that's a relief. You know, the Dow right now up 15 points. We have some real nice gainers. Merck is up about 2 percent. It upgraded or I should say it raised its earnings forecast for the year. P&G, Procter & Gamble, the big consumer products giants, is up about 3 percent. So clearly some investors see opportunity here.

But breadth overall here at the New York Stock Exchange is actually negative. Narrowly negative. So, you know, we really aren't going to -- we don't really know how this is going to play out, but it's nothing like what we saw yesterday. And that is certainly an improvement.

COLLINS: Yes, we know that the relatively new Fed chairman anyway, Ben Bernanke, is going to be testifying on Capitol Hill today. He's probably not going to talk about this a whole lot though, is he?

LISOVICZ: Well, you know, that's not what he's scheduled to talk about. But as you know, there's lots of Q&A. And something tells me that the questions about the global economy, about speculation in China, about the U.S. economy and the stock market are going to be questions that he should be prepared to answer. And so I think a lot of investors are going to be tuning into that.

COLLINS: Yes. And I know you can't see your monitor. I just want to let everybody know that we do have a live shot of that right now right beneath you there, Susan. So we're watching some of that take place.

So if you had to look at this, Susan, as an overall influence on the market, how big of a drop was this really? I mean I realize it was the biggest one -- you mentioned it earlier -- since the stock market reopened and everything after September 11th.

LISOVICZ: Well, it was huge. But I think one of the reasons, and you actually put your finger on it earlier, right after the open, is that the market had been moving straight up. And that's unusual. A lot of pros have been saying this for a while. Of course, you know, in the euphoria that comes with record highs, you know, not that many people are necessarily paying attention. They're enjoying the ride. But that makes the sell-off sometimes that much more vicious. And that's really what we saw yesterday.

But I should also mention that there was confusion. What appeared to be an orderly sell-off, although a tough one, got at times scary, for lack of a better word, at 3:00 when we saw the Dow fall off a cliff. Nobody knew what was going on. There was shouting on the floor and people are wondering. There's confusion and anxiety as to what was going on. And I think that exacerbated the sell-off at a very venerable time, the final hour of trading.

COLLINS: Yes, real quickly, were you talking about those errors in the tabulating and then also the processing the trades, the issues that they had?

LISOVICZ: Yes, exactly. There were two issues. They were technical issues and it didn't help matters.

COLLINS: All right. That's for sure. All right, Susan Lisovicz watching the numbers for us today.

Thank you.

LISOVICZ: OK. You got it.

HARRIS: All right. Let's go back to that live picture at Capitol Hill. Lawmakers there taking stock of developments on Wall Street this morning. Federal Reserve Chairman Ben Bernanke going before a House committee this hour. The House Budget Committee. In his pre-prepared text, he did not comment on yesterday's market plunge. But his testimony on the economy takes on new urgency, that's for sure, as it comes on the heels of comments by former Fed Chairman Alan Greenspan. He warned of a possible recession later this year. Bernanke gave an upbeat assessment of the economy during appearances on Capitol Hill just two weeks ago. We will watch his testimony for you this morning.

COLLINS: Also watching this. Interesting developments in the Libby trial. A note from the jury prompt as hearing. It's happening now in the perjury trial of former vice presidential aide Scooter Libby. The note is said to contain a question of some sort. It was submitted yesterday at the end of the jury's fourth full day of deliberations. Libby is accused of lying to investigators probing a CIA leak. He faces up to 30 years in prison if found guilty, though the term would likely be much shorter under federal sentencing guidelines.

HARRIS: The report, 18 boys killed on a soccer field in Ramadi, Iraq. Shocking, but the military says it's not true. Just a short time ago, a military spokesman told reporters that there was no such incident. He said there had been an explosion yesterday in Ramadi but it was a controlled detonation. The report of the boys killed was first heard on Iraqi-state television and the Iraqi interior ministry confirmed that report to CNN. So what really happened? We will talk to one of our reporters live on the ground ahead in the NEWSROOM. COLLINS: The United States and two long-time foes face to face at last. If all goes as planned, diplomats from the U.S., Iran and Syria will be at the same table next month at a forum in Baghdad. The goal of the so-called neighbors conference, stopping the bloodshed in Iraq. Representatives from Kuwait, Saudi Arabia, Jordan and Turkey are also expected to attend. Engaging Iran and Syria on the war in Iraq would be a major shift for the Bush administration, but a White House official insisting there is no change of heart. He says the U.S. has always been inclined to take part in an Iraqi-led conference.

HARRIS: And we are following two developments in West Palm Beach, Florida. We might hear this morning from the three-judge panel deciding whether to overturn Judge Seidlin's lower court ruling last week that gave custody of Anna Nicole Smith's remains to the guardian ad litem for her daughter. That hearing underway right now with oral arguments taking place at the courthouse with the fourth circuit court of appeals. Susan Candiotti is following these developments for us and she will join us shortly in the NEWSROOM.

COLLINS: No shenanigans there by the look on his face, right?

HARRIS: No. No.

COLLINS: And speaking os shenanigans, though, watch that number in the upper left. Your fortunes sinking or rising? What should the typical investor do today? Gerri Willis with stock advice coming up in the NEWSROOM.

HARRIS: That most American institution dethroned by a British royal. Prince Charles calling for a ban on McDonald's restaurants? Did he cross the line?

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: All he has to do is look to the queen. Does she ever make crass remarks like this?

(END VIDEO CLIP)

HARRIS: Crass. Prince Charles' Big Mac attack in the NEWSROOM.

COLLINS: From hilltop perch to homelessness.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: There was this big, huge roar. The building was shaking.

(END VIDEO CLIP)

COLLINS: The ground just gave way, leaving dozens of people displaced. Should they have seen this coming? Ahead in the NEWSROOM.

CHAD MYERS, CNN METEOROLOGIST: Yes, on that picture you can see where they tried to fence it in and kind of bolt in that land, but it didn't work. A lot of rain out there in San Francisco the past couple of days and a bunch of rain in the plains. Some of it will be severe.

And a snow event. Snowstorm for Minneapolis, Mankato, maybe over into places like Eau Claire, Wisconsin. Some of it could be two feet deep. That forecast is coming up.

(COMMERCIAL BREAK)

COLLINS: It's up, it's down, it's up, it's down. Right now it's up 10 points. Que the numbers. Que the plus sign. We'd like to see it that way after yesterday. And I'm sure you all are well aware now of that major movement, we'll say. Don't want to call it the "c" word. Four hundred sixteen points down. But today now we are on the positive side. Of course, we're watching it for you and trying to figure out what all of it means the best that we can, what it means for you investors at home most importantly.

HARRIS: Well, she died almost three weeks ago now. Still, no final decision on where Anna Nicole Smith's body should be buried. This morning, a Florida appeals court is taking up the question. National correspondent Susan Candiotti joins us from West Palm Beach, Florida.

Susan, we see the proceedings underway right now. Arguments being made on both sides of this. Where do we stand right now?

SUSAN CANDIOTTI, CNN CORRESPONDENT: Boy, I don't know. It's hard to say and here's why. Whenever you have an appeals court and you have three judges before you, they can really make this hearing go as long as they want. They can set time limits, but the more questions they have, the longer it can go. And that's how things are going.

Also, it's always interesting in cases like this because sometimes you wonder, depending on the tone of the questions, that the judges might be leaning in one direction over the other. But you always have to use caution because that could simply mean that they're playing the devil's advocate and so that might not be a good gauge of which direction they're leaning in.

What we have so far heard from attorneys representing Howard K. Stern. Right now at the podium, I believe, you are seeing the lawyer who represents Anna Nicole's mother, Virgie Arthur. She's there. And, in fact, Howard K. Stern is here in court and so is Virgie Arthur and so is naturally the lawyer representing baby Dannielynn. Everybody has a say before these judges.

And the question is, who gets the body. And they're trying to figure out whether the trial judge made a mistake when he made a guardian speak on behalf of the baby, or whether the trial court judge, Larry Seidlin, should have made the mother the next of kin. Well, the way the questioning is going, is they're asking very tough questions of Virgie Arthur, the mother.

And the question is, wait a minute, you're saying that her request to be buried in the Bahamas wasn't in writing? There was nothing in writing. But one of the judges said, isn't that contract that she wrote where she purchased a double burial plot to be buried next to her son, isn't that written evidence?

Another question came from one of the judges. If, in fact, the child decides to live in the Bahamas, wouldn't it be difficult for the child to be traveling to Texas to visit her mother's grave site?

All very difficult questions that are being asked for the attorneys in this case. And there are no clear cut answers. Each case, each lawyer is vigorously promoting their side in all this. And, ultimately, it will come down to, in the end, taking a recess and these three judge will get together and figure out who they think wins and we hope and expect a ruling by today.

Back to you, Tony.

HARRIS: Well, and, Susan, if either side of this is not happy with the decision of the three-judge panel, can't that party then appeal to the entire court? I don't know how many more judges are in that particular court of appeals, but can you then appeal it to all of the judges and then move to the Florida state court of -- supreme court?

CANDIOTTI: That's not expected. Usually this three-judge panel is the final option. In Florida, because it's a state matter. Then it would go to the Florida supreme court. But that time and again we have heard is extremely unlikely because they would have to find the losing side a particular little nook and cranny of the law that wasn't explored earlier and it would set a precedent. Now, it's possible, and certainly we haven't seen many things that are normal in this case. So once again, we'll have to wait and see.

HARRIS: Wait and see. Susan Candiotti for us.

If you'd like to watch the proceedings unfold live now, you can go to cnn.com/pipeline.

Susan, appreciate it. Thank you.

COLLINS: I want to go back and show you some of these pictures now. We are following some of the testimony that is being given by Fed Chairman Ben Bernanke. He is before the House Budget Committee as we speak. They've been there for about 15 minutes or so. Should let you know his prepared testimony apparently will not be touching on the events of the stock market yesterday.

As you well know, a plunge of 416 points for the Dow Jones Industrial average. Today, though, it's looking like those stocks are rebounding, at least in the open of the market. We've been following it for you here. We do think it's possible that in some of the questions that will be asked of Mr. Bernanke, that they will be wondering if he will have something to say about yesterday's activities.

So how significant is it? What should the average investor do? How much do we need to worry about China? We'll be answering all those questions for you the best that we can here at CNN NEWSROOM a little bit later as we watch these proceedings continue. A note from the jury, but still no verdict. The perjury trial of Lewis Scooter Libby ahead in the NEWSROOM.

HARRIS: Iran a key player in the Middle East. It's growing influence a major worry for its neighbors and for the United States. We will hear from an expert in the NEWSROOM.

COLLINS: The Afghan War. A battle against two enemies? The Taliban with terror techniques imported from Iraq. An ex-CIA man tells the story in the NEWSROOM.

(COMMERCIAL BREAK)

HARRIS: OK. Just in to CNN. We understand a three-judge panel that is hearing the appeal from Virgie Arthur, the mother of Anna Nicole Smith, asking that three-judge panel to overturn a lower court ruling last week that gave custody of Anna Nicole Smith's remains to the guardian ad litem for her daughter. That hearing has wrapped up. Susan Candiotti joins us now.

Susan, so what happens next? I guess the judges goes back, they consider and perhaps we'll have a decision later today.

CANDIOTTI: It's entirely possible. And we had a very interesting exchange at the tail end there. One of the judges asked the attorney representing the guardian who's representing the baby, Dannielynn, and the question was, when would she be buried? And the attorney representing Dannielynn said, Friday morning, 10:30, in the Bahamas. Now that was just an informational question. You can read into it what you will. Or read nothing into it. I caution.

But, in any case, right now, the three judges are in recess. They get together behind closed doors. They talk among themselves, figure out who thinks what. And it is entirely possible and usually this is their M.O., to come up with a decision, a ruling, at some point later today.

HARRIS: OK. So, Susan . . .

CANDIOTTI: Now right now . ..

HARRIS: Oh, there you go. OK.

CANDIOTTI: Right now you've just -- got to point out, sorry, the lawyer representing Anna Nicole Smith, as well as Krista Barth, the blond haired attorney who represents Howard K. Stern. They are leaving now. Just swinging the camera over in that direction. So far we'll have to find out what they say. We do expect the lawyers to decide, Howard K. Stern, of course, is there as well. He is Anna Nicole Smith's long-time partner. Of course, he has maintained throughout that it was her wish to be buried in the Bahamas.

But the mother of Anna Nicole Smith wants to take her back to Texas. She tried to make her position clear that in her view it was wrong of the lower court to make the baby the next of kin because, according to Florida law, a child has to be at least 18 years of age. Nevertheless, the lower court represented or appointed, rather, an attorney to represent the best interest of Dannielynn in this case. And so that's what this argument mainly has boiled down to. Some other issues as well, but that's the main point.

HARRIS: OK. And it is in the view of the guardian ad litem that this funeral should take place Friday morning in the Bahamas.

CANDIOTTI: That's right. Obviously ever since this whole thing started, ever since he was presented with the appointment and the judge told him to move ahead last week with whatever plans he wanted to make, he did. He says he's been planning the funeral while waiting for a final decision in this case. Obviously, that's what he has been working on.

So if this goes in his favor, the body of Anna Nicole Smith, as you know, would be moved from the Broward County Medical Examiner's Office, flown to the Bahamas and that's where she would be buried. And now we know what the plan is. It would be Friday morning.

HARRIS: Our national correspondent Susan Candiotti for us.

Susan, thank you.

COLLINS: In a flash, investors dropped more than $600 billion. Tuesday's losses can be Wednesday's gains, though. Market watch all morning in the NEWSROOM.

(COMMERCIAL BREAK)

COLLINS: All right. We are taking a look at this shot. This is the House Budget Committee. This is where the Fed chairman, Ben Bernanke, gave testimony just moments ago. Now we have moved into the question session. We want to go ahead and listen in, see if there are any comments to be made about yesterday's stock market plunge.

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: Of the market correction we saw yesterday. I don't think it would be useful for me to try to pars the movement into the components associated with different pieces of news or pieces of information. I will say that the Federal Reserve, in collaboration with the president's working group, has been closely monitoring the markets. They seem to be working well, normally. We have also, of course, been closely monitoring the economy, looking at new data and trying to evaluate their implications for the forecast. And my view is that, taking all the new data into account, that there is really no material change in our expectations for the U.S. economy since I last reported to Congress a couple weeks ago in the Humphrey Hawkins hearings.

UNIDENTIFIED MALE: Do you expect the growth rate in the economy to decline slightly?

BERNANKE: We are looking for moderate growth in the U.S. economy going forward. And I would add parenthetically that the downward revision of the fourth quarter GDP numbers we got this morning is actually more consistent with our overall view of the economy than were the original numbers. So we expect moderate growth going forward. We believe that if the housing sector begins to stabilize and if some of the inventory corrections that are still going on in manufacturing begin to be completed, that there's a reasonable possibility that we'll see some strengthening of the economy sometime during the middle of the year.

UNIDENTIFIED MALE: Turning now to different topic, we have difficulty explaining to the American public --

TONY HARRIS, CNN ANCHOR, NEWSROOM: Interesting.

HEIDI COLLINS, CNN ANCHOR, NEWSROOM: Yeah, that was a question right out of the gate there, basically --

HARRIS: Great timing. It was like we planned that.

COLLINS: What do you think, Mr. Bernanke, about yesterday's activity in the stock market, the plunge of 416 points. He basically said, you know, it really just wouldn't be helpful for me to comment on that, but I will say that there has been no material change in the U.S. economy forecast since last I spoke and they're expecting moderate growth overall. But would not comment specifically on this, those numbers that we are all watching very closely today and certainly reacted to yesterday. Probably not a huge surprise there that we wouldn't hear any type of analyzation (sic) from the Fed chairman on that. We were trying. We were hoping for it. We'll continue to monitor that situation for you.

Wall Street slide is enough to make the bravest investor at least a little bit nervous. Wednesday morning quarterbacking now. CNN personal finance editor Gerri Willis in New York for us. All right, Gerri, so this is the big story of the morning certainly. What does the typical investor do now?

GERRI WILLIS, CNN CORRESPONDENT: Well, I've got to tell you panicking is a mistake. There's an old saying on Wall Street that you can't catch a falling knife. If markets are going down, that is not the time to sell. Remember, the stock market has been gaining ground for eight consecutive months, so it's normal to see some sell off. Analysts say the market has been overdue for a correction. In fact, a normal market correction Heidi is typically 8 to 10 percent. And what we saw yesterday was 3 percent off the Dow Jones Industrial. So at the end of the day, if you're an individual investor you have to have a little confidence here and keep right on investing.

COLLINS: Yeah, I think that's a great point, a bull market correction I think is what we heard from our trader on the floor of the New York Stock Exchange a little bit earlier. Also you should be looking shouldn't you Gerri past the bottom line?

WILLIS: It's so tempting to just go look at your 401(k) and look at the down arrows. Don't concentrate on what you've lost. Look at the bigger picture. It's a good idea to really analyze the kinds of companies and sectors you're invested in. If it's been a while since you looked at your portfolio, check with morningstar.com. You should be able to check on what stocks and other holdings your mutual bond contains. Remember it's all about diversification. You want a good mix of stocks, bonds, cash and real estate. Getting the right asset allocation is much more important than following the everyday fluctuations of the market.

COLLINS: Don't be negative.

WILLIS: Don't be negative.

COLLINS: You should also consider, too, where you are in life, what age you are at, what your retirement looks like when you make any sort of investment or big changes.

WILLIS: Exactly. I think if you're only a year or two away from retirement or you're already in retirement, it is a good time to sit down and really analyze what you have. Look over the last few months. It was really easy to get swept away by the power of these positive stock returns. You may have thrown more and more money at it. The bottom line here is that the closer you are to retirement, the more conservative you should be. To figure out good allocation mixes, there's some calculators out there that can really help you. Cgimoney.cnn.com, tiaacref.org and fidelity.com, great calculators, will tell you how much to put where.

And just one other point here I want to mention. Professional investors are worried about the economy. That's why you got that question to Bernanke just a moment ago. We just had gross domestic product revised downward and that's a critical number. That happened just not too long ago. As this appears, a weakening housing market which is something else Bernanke just mentioned and there's a lot of worry out there. You could see stock goes down again, is my point. If you should, you should do what we're saying here, don't panic. Only make changes to your portfolio that makes sense for your age, where you are versus retirement and your asset allocation.

COLLINS: Quit freaking out.

WILLIS: Quit freaking out. Take charge, take control because that's the only power you have really is to keep a cool head when everybody else is losing theirs.

COLLINS: Exactly. That's where the advantage will be I think. All right, Gerri Willis, our personal finance editor. Thank you Gerri.

WILLIS: Thank you Heidi.

HARRIS: Well, these are pictures we brought you in the NEWSROOM yesterday. Dozens of people in San Francisco looking for new place to live. Today, remember this after a hilltop perch gave way, clean-up expected to take weeks now. Was it an accident waiting to happen? That's the question. CNN's Chris Lawrence takes a look.

(BEGIN VIDEOTAPE)

CHRIS LAWRENCE, CNN CORRESPONDENT (voice-over): Hundreds of families built their homes on San Francisco's hilltops. They're living on the edge. MAYOR GAVIN NEWSOM, SAN FRANCISCO: There's still movement and there's still the prospect of further damage being done.

LAWRENCE: Mayor Gavin Newsom's office is warning property owners throughout the city in areas that are prone to landslides. This particular hill is still unstable with a patio protruding over the edge.

CARLA JOHNSON, DEPUTY BUILDING INSPECTOR: Our concern is that by being undermined, that it may still collapse.

LAWRENCE: A heavy rain had soaked the city. About 3:00 a.m. Tuesday the ground gave way.

PATRICK McDONNAL, EVACUATED HOME: There was this big huge roar. The building was shaking.

LAWRENCE: Patrick McDonnal lives on the bottom of the hill and watched rocks smash through his neighbor's kitchen.

McDONNAL: I'm up on the third floor and the rubble stopped six feet below my bathroom window.

LAWRENCE: It's not the first landslide in California, nor the most destructive. In 2005 a massive slide killed 10 people and sent families running for their live lives in LaCochia (ph). That same year million dollar homes were smashed to pieces in Laguna Beach. Environmental engineer Nick Sitar says the rock mass naturally fractures. During an intense rain, those fractures fill with water. When the pressure pops, the rocks slide.

PROF. NICK SITAR, UC BERKELEY: Every time you get a good rainy season we will see more of these slides.

LAWRENCE: Knowing that, people keep building homes in San Francisco. Families like this are fully aware they're living atop two major fault lines.

FRED STUDER, SAN FRANCISCO RESIDENT: We built in an impossible place. You know. The bridge, the Golden Gate bridge was built so that people could go back and forth between these two impossible places. But the fact that the quality of life was just so spectacular, just far outweighs the impossibility.

LAWRENCE (on-camera): Some landslides can't be stopped. But about seven years ago, there was a similar landslide on the other side of that hill. The residents paid about a million bucks to re-enforce the hillside. But the neighbors responsible for this side of the hill chose not to re-enforce their side. Chris Lawrence, CNN, San Francisco.

(END VIDEOTAPE)

HARRIS: Great to see Chad Myers back, half the man he was when he left.

CHAD MYERS, CNN METEOROLOGIST: A tenth.

HARRIS: Great to see you again.

COLLINS: Chad, back to that landslide though just for a second. I know you're standing in the middle of the country there where some of the weather is. I haven't seen a gaping hole like that smack-dab in the middle of a landscape of California ever before.

MYERS: Well, you know there were no houses kind of up there. This was the edge of the cliff of the shelf of what we know as Telegraph Hill. This front just came -- this whole, we call it the face, the face came completely off and right down into these people's homes that lived at the base of this place. And the guy said he was on the third floor and the rumble was just up to his balcony. The whole first and second floors had been obviously filled all the way up with that debris. So kind of good news that no one really got all that injured that I heard, is that right? No one was actually hurt.

HARRIS: That's the story, yeah.

COLLINS: Very good.

MYERS: Amazing stuff there. Here's some snow now across the upper Midwest and there's going to be a bunch of it here. Minneapolis, maybe all of the way to Wisconsin and up into the Dakotas as wee. Got an I-report earlier from Harsens Island in Michigan. I want to take you here, because this is a cutter, an ice breaker trying to get through the north channel between really what is mainland, Michigan, and Harsens Island. I've been to Harsens Island a number of times (INAUDIBLE) . And the -- this thing couldn't get through. Didn't get stuck but it couldn't get through. It couldn't open anything up to the people there and this island is closed to the ferry traffic. They're getting back and forth on air boats. Here's a couple of the pictures. This what the ferry says, this is (INAUDIBLE) ferry, ferry closed for the season. They don't know how long it's going to take until that ice moves because obviously the breaker couldn't break it up.

One more thing, obviously people not getting rescued back and forth by the island rescue. If there is an emergency, the fire department there for that emergency, if not there is an air boat going back and forth. Let's go to Google maps real quick. I'll show you where Harsens Island is. Here's Detroit itself. I'm going to zoom into the basically it's delta of the St. Claire River. Now, from Lake Huron down into the St. Claire Lake itself, Lake St. Claire, you have all this delta material here. In the summer you see the boats going back and forth all nice and pretty. Well, this is where the ferry was supposed to go across and it does go across this north channel, but not if there's ice in the way. That little spot right there, right there. That's where the ferry lands and takes you across to either Browns or (INAUDIBLE) bar where I used to go back and forth all the time, used to have to go take one of my friend's boats up there for the season. No getting any boats in or out of there now this morning for sure for a while.

COLLINS: I should say not. MYERS: They are getting back and forth but obviously no cars. That is a passenger ferry and also an auto ferry. So if your car is on the island, it's stuck there.

COLLINS: For a while anyway. All right, Chad Myers, thank you.

MYERS: You're welcome.

COLLINS: The Afghan war, a battle against two enemies? The Taliban with terror techniques imported from Iraq. An ex-CIA man tells the story in the NEWSROOM.

HARRIS: Ever wanted to cut in line at the DMV? Well, this is not the way to do it. A lady's day wrecked with parallel parking. It gets you all the time.

(COMMERCIAL BREAK)

HARRIS: Improving all the time, that's how a spokesman describes the condition of Iraqi President Jalal Talabani. He's been hospitalized in Jordan since Sunday. There are conflicting reports about the seriousness of his condition. Talabani's son says his father suffered dizziness and low blood pressure. The president's private doctor says the Iraqi leader is suffering from exhaustion and lung inflammation. He is undergoing tests. It's described as a precautionary measure. No word on when the Iraqi president might be released.

COLLINS: Afghanistan, it's been called the other war. But while people are focused on Iraq, the Taliban has been hard at work. CNN terrorism analyst Peter Bergen reports.

(BEGIN VIDEOTAPE)

PETER BERGEN, CNN CORRESPONDENT (voice-over): In Afghanistan, suicide attacks like the one the Taliban claims targeted Vice President dick Cheney were once all but unthinkable.

ART KELLER, FORMER CIA OFFICER: They didn't believe in suicide. They believed that was a sin against Islam. And now there are waves and waves of suicide bombers being dispatched.

BERGEN: He knows first hand. Art Keller is a former CIA officer who was most recently based on the Afghan-Pakistan border. 2001 was the start, a single suicide attack n Afghanistan, before that, none. The number crept up gradually until 2005 when there were 27 attacks. Finally last year, the number of suicide attacks in Afghanistan jumped more than 400 percent to 139.

KELLER: Very strong cultural prohibition has been eroded and that's the influence of al Qaeda and the so-called Afghan Arab.

BERGEN: Keller has seen this and he's seen the growing use of IEDs and other weapons used in Iraq and he's made a connection that worries him. KELLER: Well, Iraqis is really a training ground. Tactics from Iraq have migrated, especially the employment of IEDs and suicide bombers.

BERGEN: Certain irony?

KELLER: It is. It seems like the reverse of the way the war on terror was supposed to work.

BERGEN: We met Keller where he lives in New Mexico. It's a landscape similar to Waziristan (ph), the wild and lawless tribal region of western Pakistan on the Afghan border. Keller spent time there last year chasing al Qaeda. His job was to gather intelligence about the terrorists from his post on a Pakistani army base.

KELLER: Probably the movie image that people have of spies running around with guns couldn't be further from the truth. You're more like a spider sitting in a web waiting for people to get caught.

BERGEN: Waziristan is believed to be a kind of enemy sanctuary for hundreds of foreign terrorists possibly including Osama bin Laden himself and his deputy Amin al Zawahiri. At the same time, he says, CIA resources were increasingly directed to the war in Iraq. You didn't really feel there were enough Americans on the job?

KELLER: No, no, I know for a fact that the people there were incredibly shorthanded. That's why it was such a challenging situation.

BERGEN: We're spending hundreds of billions of dollars every year on our national security. We can't send enough people to look for al Qaeda in Pakistan.

KELLER: All I can report is the ground truth that I saw.

BERGEN: So where were the resources going?

KELLER: Well I think a great deal of the resources have gone to Iraq. So it's -- I don't think it's appreciated that the CIA is not really a very large organization in terms of field personnel. So we do not have an infinite amount. If you do a couple large deployments, that uses up a lot of people because we also have the rest of the world that we have to keep an eye on.

BERGEN: So the Iraq war shortchanged the fight against al Qaeda?

KELLER: I definitely think it put a dent in it. We have not stopped the fight, but it's certainly from a resource issue, stretched people incredibly thin.

BERGEN: The CIA declined to comment on operational matters to CNN. However, they did say they're going all out in the hunt for al Qaeda's leaders. But the Taliban have flourished in the years that they were thrown out of power in Afghanistan. They now rule quite openly Waziristan, either co-opting or killing traditional tribal leaders. They even administer their own harsh justice. Keller obtained Taliban-produced videos sold openly in local markets. They serve as a brutal and graphic warning to those who might resist the Taliban.

KELLER: Those are obviously bodies displayed in a public area as an object lesson.

BERGEN: Three men tortured, executed. Their bodies paraded through a dusty town before a large public gathering. Another video speaks to the peril facing the Pakistani army in the tribal regions. It's a Taliban raid planned and executed with precision, targeting a Pakistani army outpost. Attacks like these led to truce agreements in 2005 and 2006. The Pakistani government promised it would scale back on military operations if tribal leaders would give up Taliban and al Qaeda fighters.

MAHMOUD ALI DURRANI, PAKISTAN AMBASSADOR TO US: I do not think that we signed with them as the extremists and the terrorists, not at all.

KELLER: I believe the Pakistani government kept up their end of the deal but on the other end, it hasn't been very successful.

DURRANI: On a daily basis about 200,000 people cross the Pakistan-Afghan border. It becomes very difficult to discern who is a fighter, who is just going to meet family. There would be, I would agree, there would be some people crossing the Pakistan-Afghan border and probably Taliban and maybe al Qaeda. But what you need to realize is that 90 percent of the problem is in (INAUDIBLE)

BERGEN: The bottom line is peace deals seem to have empowered al Qaeda, empowered the Taliban.

KELLER: I would say it's given them a free hand. It was successful in one measure in that attacks against the Pakistani military went down dramatically after the signing of the peace deal. But the question is at what cost.

BERGEN: I think we know that the cost is pretty high for U.S. and NATO troop on the other side right?

KELLER: Yeah. To use a medical analogy, it's like quitting a course of antibiotics too soon. You just leave a reservoir of infection even stronger to come back after you.

BERGEN: The Taliban in their black turbans, gun-toting mullahs in camouflage, foreign jihadists training, launching deadly attacks, graphic evidence that al Qaeda and their allies in the Taliban have largely survived the west's furious assaults and what didn't kill them, has only made them stronger. Peter Bergen, CNN, Washington.

(END VIDEOTAPE)

HARRIS: Let's talk about Iran, a key player in the Middle East, its growing influence, a major worry for its neighbors and the United States. We will hear from an expert in the NEWSROOM. COLLINS: Fast food ban? Can you do that? Prince Charles suggests just that. His push for healthy eating stirs up trouble in the NEWSROOM.

(COMMERCIAL BREAK)

COLLINS: Prince Charles weighs in on healthier eats. Fast food is junk food to a royal. We get the very latest now from ITN's Romilly Weeks.

(BEGIN VIDEOTAPE)

ROMILLY WEEKS, ITN CORRESPONDENT: Another royal tour traditionally a chance for some quiet diplomacy but not for Prince Charles. In the United Arab Emirates he's made his view on healthy eating crystal clear, this time McDonalds is in his line of fire. Talking to a local nutritionist, Charles has said to have asked, have you gotten anywhere with McDonald's? Have you tried getting it banned? That's the key. Court reporter Tony Jones could hardly believe what he was hearing.

VOICE OF TONY JONES, COURT REPORTER: I was a little surprised and just kept on scribbling just trying to get it down. Then after I thought, wow, he actually said that at a public event, maybe privately, but nothing public.

WEEKS: So unlike millions of people, Prince Charles clearly isn't a fan of these. His prerogative, but in attacking McDonald's he's not only taking on a company that hasn't been shy about suing its critics, he's also once again stepping outside the traditionally neutral royal role. Already McDonald's are fighting back saying we know that other royal family members have visited and have probably got a more up to date picture of us. As disappointing as he's clearly unaware of some of the moves we've made over time in choice and variety on our menu.

It's now the first time the prince has got into hot water for his outspoken views. There was the infamous incident with Nicolas Whickel (ph)

PRINCE CHARLES: Bloody people. I can't bear that man. He's so awful, he really is.

WEEKS: Some say the prince needs to curb his tongue.

UNIDENTIFIED MALE: He has over stepped the mark and he has gone into an area of which he has a certain amount of information but not very much. I mean, all he has to do is look to the queen. Does she ever make crass remarks like this? The answer is never.

WEEKS: Clarence House has said Charles was trying to emphasize the need for children to eat a balanced diet in a country that has a huge problem with diabetes. On a tour that was attracting very little in the way of media interest, he's found a provocative way of making the headlines. Romilly Weeks, ITV News.

(END VIDEOTAPE) HARRIS: Fool for the money, how you can deal with yesterday's plunge on Wall Street. Here's one way, get back in the game. We get some wise counsel from a motley fool. He joins us in the NEWSROOM.

COLLINS: Iraq is in chaos. It's drawing the United States and two long-time foes together. We'll have that story coming up in the NEWSROOM.

(COMMERCIAL BREAK)

HARRIS: And good morning, everyone. You're with CNN and you're informed. I'm Tony Harris.

COLLINS: And I'm Heidi Collins. Developments keep coming into the newsroom on this Wednesday, the last day of February. Here's what's on the rundown, blue chips on sale, bargain hunters picking up deals on stocks after Tuesday's jaw-dropping losses. We're talking live hour with the motley fools.

HARRIS: Know your enemies. The Bush administration agrees to sit down with Iran and Syria to discuss Iraq. We'll talk with an expert on Iran.

COLLINS: The vaccine guards against the sexually transmitted disease. Texas moves to make it mandatory for preteen girls.

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