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Interview With Suze Orman; 'Harry Potter' Actor Takes on New Role

Aired February 28, 2007 - 15:00   ET

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

KYRA PHILLIPS, CNN ANCHOR: Hello once again at the top of the hour. You're live with us here at the CNN headquarters in Atlanta.
DON LEMON, CNN ANCHOR: I'm Don Lemon.

Wall Street watches the clock. The trading day ticks to a close in one hour. Will it end on an up note?

PHILLIPS: And we have been taking your questions all day -- just ahead, financial advice from Suze Orman. She's joining us live.

LEMON: And a severe weather surprise for South Florida -- the Midwest also bracing for another blast from winter.

You're live in the CNN NEWSROOM.

Top of the hour -- a big spotlight on the Big Board. This may be the most watched set of numbers in the country right now. All eyes are on Wall Street, a day after a global stock sell-off.

As you can see, the Dow Jones industrial average is up 57 points.

CNN's Susan Lisovicz is live on the floor of the New York Stock Exchange.

Boy, what a difference 24 hours make, huh?

SUSAN LISOVICZ, CNN CORRESPONDENT: I think so.

You know, and the most important detail on that Big Board is that there is a plus sign in front of the 56 points. We're on the upside, well off the highs of the session. But, still, you could say that there is a rally as we go into the final hour of trading.

And let's keep that in mind. Twenty-four hours ago -- I'm standing next to a veteran of some 20-some-odd years.

Joe Benanti, you run your own firm here. What was it like as we went into the final hour of trading yesterday?

JOE BENANTI, JOSEPH BENANTI, INC.: Well, of course, yesterday, we had to deal with the Dow Jones glitch, which caused disruption to the Dow index that nobody was prepared for.

The fear factor created from that I think caused a lot of extra volume and a lot of extra activity, probably not warranted. Although the market was weak all day yesterday, I think it was a little bit overdone yesterday.

LISOVICZ: How important is it that the -- that we are actually seeing a rally of any kind today?

BENANTI: Well, here we are, you know, up 58 points with an hour to go. Personally, I would have hoped that we would have a better standing today going into the last hour.

I'm thinking that last -- the last hour today is going to be important. Investors are going to want to see a little bit of a push here late in the day. I think, if we have a little weakness showing up late in the day, it might not spell so well going to Europe's trading tomorrow, tomorrow morning. And the ISM numbers coming out tomorrow might -- also might be a factor that people are going to look at. And, if they're not happy with that number, we could be in some trouble.

LISOVICZ: So, what you're saying is, if -- if this rally doesn't hold here, that could also set the tone in Asia and Europe?

BENANTI: True. I mean, I think, after being down some 400 points yesterday, if we had, truly, it is still a bullish pattern, we might have been rally maybe closer to 150 to 200 points today. So, I'm a little skeptical going into tomorrow.

LISOVICZ: So, if this rally doesn't hold -- because -- because we're way off the highs of the session -- what does that say?

BENANTI: Even more so. I think that the market is on skittish ground right now.

The one saving factor might be -- I know that Mr. Bernanke is supposed to speak at Stanford on Friday. He has another opportunity to quell the markets, if there is a little bit of a rout that goes on tomorrow. So, with that being said, I think we might set ourselves up for a little bit of a downdraft tomorrow and maybe a settling-in on Friday, but on the week's lows, if you ask me.

LISOVICZ: One-day wonder or -- or, you know, is this a warning sign, just very quickly?

BENANTI: I think we're on thin ice, to tell you the truth. I think we have got a little bit more to go on the downside.

LISOVICZ: Joe -- Joe Benanti, who has been here for 20-some-odd years, and he has seen -- seen both big cycles on the upside and the downside.

And, right now, we are still on the upside in the final hour of trading -- back to you, Don and Kyra.

LEMON: All right, thanks for answering our questions.

And you have got answers. She's got answers. Personal finance expert Suze Orman steps in the NEWSROOM to talk about the stock market. Concerned about your 401(k)? Worried about your portfolio? Well, e-mail your questions now to CNNNEWSROOM@CNN.com.

PHILLIPS: Well, our Reynolds Wolf had been telling us about tornado warnings in Florida. And now we're just getting this video in from WSVN, one of our affiliates there out of Miami.

This is Tamarac, Florida.

Reynolds Wolf, what do we -- what exactly happened? Do we know?

REYNOLDS WOLF, CNN METEOROLOGIST: Well, from what have -- from we -- we have had from reports, we actually had a report of a trained spotter getting not only large hail, but also a visual confirmation of a tornado in Tamarac, Florida.

We're seeing some damage here, compliments of WSVN, some -- some pretty -- pretty intensive roof damage in some of these homes caused either straight-line winds or caused by this possible tornado.

We are going to zoom in and actually show you the area. And we're doing to -- with the help of Google Earth. Now, the storm really began to erupt just to the north of Coral Springs, and made its way to the south-southeast to places like Tamarac, doing about 20 miles per hour with that southeasterly spin.

And that's where most of that damage that you saw just moments ago took place. I believe we still have some of that video. And you can see that some of that roof damage has just been intertwined with some of the palm trees that you see there.

As I mentioned, large hail was reported in that area. And, of course, we even had live images of -- of that storm approaching parts of -- of, again, right along the coastline, near Fort Lauderdale.

Now, I'm going to zoom out a little bit, take a look, and show you what we have on our radar at this time. We still have some cells that are popping off. This is the cell you're seeing right about here. That is the one that spawned that possible tornado. North of Coral Springs, we're seeing a little bit of activity.

And just over the peninsula, we're see some storms pop up as well -- not unusual to have thunderstorms in Central Florida or South Florida. Again, you have that converging sea breeze. And, at the same time, you have a little bit of that daytime heating.

But you have just a -- in this situation, a very weak trough that is coming through. And that was just enough to help spawn a few of these showers, storms, and, of course, that -- that tornado.

That's the latest we have you. We're going to keep an eye on this system, but also all kinds of activity that is expected across portions of the Midwest and the Southeast over the -- the rest of the afternoon, through the evening, and for tomorrow, as well. It could be very busy.

Let's send it back to you.

PHILLIPS: All right, Reynolds, thanks.

WOLF: You bet.

LEMON: Another developing story happening.

Let's go the CNN NEWSROOM and Fredricka Whitfield.

What do you know, Fred?

FREDRICKA WHITFIELD, CNN CORRESPONDENT: Well, more now on the situation in the Ohio River, the spill of a toxic chemical.

Officials say they believe up to 8,000 gallons of cumene, which is a liquid toxic which -- chemical -- which is generally used as a solvent in the production of acetone. It spilled into the river overnight, after a barge hit some sort of structure. They're still trying to investigate what that was.

Early reports indicated that it had ran aground. Well, now the Illinois EPA is saying it looks as though that barge hit something, some sort of structure. The EPA out of Illinois believes that no drinking water for their state is affected by this spill.

However, the Kentucky EPA is conducting its own types of testing, because this is the kind of spill that cannot be contained, like, say, in an oil spill, where they use sponge or foam to kind of sop up the oil. This solvent, this liquid, they can't contain it as easily. But they are trying to contain any more spilling from taking place in the Ohio River.

So, tests are continuing to be conducted. It's too early to say whether this will, in fact, impact any wildlife in the area at this juncture -- Kyra and Don.

LEMON: All right, Fredricka, thank you so much for that.

PHILLIPS: It's the most common STD, sexually transmitted disease, in the USA. And, today, we learned human papillomavirus, a leading cause of cervical cancer, is even more common than we thought, especially in young women.

According to "The Journal of the American Medical Association," HPV infects about 20 million people in the U.S. That's more than a fourth of American females ages 14 to 59. Of those, 20- to 24-year- olds are the most affected, almost 45 point. At least 3,500 women die each year of cervical cancer caused by HPV.

We talked earlier to CNN medical correspondent Elizabeth Cohen, who puts the numbers and the genders into perspective.

(BEGIN VIDEOTAPE)

ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: For most people, it's really not necessarily such a big deal. It just clears out of their system. But a small number of people will get cervical cancer. And, also, a relatively small number of people will get genital warts. So, there are two things that you can get from HPV.

LEMON: OK, so, then, why just women are you vaccinating? Why not vaccinate men?

COHEN: Right. The big story has been about vaccination.

There's a vaccine out called Gardasil. And there's been a very heavy marketing campaign. And there's been a lot of talk about girls and women getting this vaccine. And, so, many people say, well, gosh, why not boys and men? They're the ones who give it to the girls and to the women.

The reason is, is that it just hasn't been tested in boys and men yet thoroughly. The tests are under way. But many doctors predict that, in the coming years, this vaccine will be offered to boys and men.

Now, it's interesting. They're offering it to girls and women now 11 years up to age 26. After age 26, they say chances are, you probably already have it. So...

LEMON: Oh, OK.

COHEN: So, you might not necessarily...

LEMON: So, that was my next question.

COHEN: Right. It might not necessarily be so helpful to get it -- to get...

LEMON: OK.

COHEN: ... it after that age.

(END VIDEOTAPE)

PHILLIPS: Elizabeth is back tonight with much more on HPV and the spread of other sexually transmitted diseases in the U.S. Tune in for her special report on "PAULA ZAHN NOW," 8:00 p.m. Eastern.

New drugs could mean new hope for AIDS patients. Researchers testing two experimental drugs from Merck and Pfizer say that they appear to suppress HIV in patients who haven't been helped by current treatments. The government has to sign off before the drugs can be sold.

LEMON: They are young. They are female. And they are felons, bank robbers, to be precise.

Police in suburban Atlanta has some great surveillance pictures and lots of questions for the smiling young women in designer sunglasses. Well, this was bank branch at a supermarket, where detectives say the two handed a teller a note demanding cash. And cash, they got. It's being caused a considerable amount of money.

But a police spokesman told our Fredricka Whitfield earlier they're closing in.

(BEGIN VIDEO CLIP)

WAYNE DELK, COBB COUNTY, GEORGIA, POLICE DEPARTMENT: We have received a lot of phone calls as the images went public.

Once again, like I said, some of them, people are saying, well, this -- this person is someone in my family. And -- and our investigators are following up on the -- the more credible leads. But, apparently, they have gotten some leads today or some -- some information today which has proved to be fairly good information.

And they are working on trying to identify the two suspects. And, hopefully, we will get some -- some good news out to the people today.

WHITFIELD: Well, might these two suspects actually know someone who works at the bank, given that they seem awfully relaxed and at ease?

DELK: That's always a possibility.

That's -- that's the one thing that struck our investigators as quite peculiar, the first -- the first thing being the young age of these two suspects, and then the ease in their mannerisms, and how at ease they seemed, and how this seemed to be a -- a fun thing. They seemed to be having a good time doing this.

(END VIDEO CLIP)

LEMON: And police believe the girls were unarmed.

PHILLIPS: The Afghan war, is it really a fight against two enemies -- the Taliban, with terror techniques imported from Iraq. An ex-CIA man tells the story straight ahead from the NEWSROOM.

LEMON: When Wall Street becomes a roller coaster, how can you keep money from flying out of your pockets? Well, latch that safety bar and hang on for Suze Orman in the CNN NEWSROOM.

PHILLIPS: Ever wanted to cut in line at the DMV? This isn't the way to do it, believe me. A lady's day wrecked -- ahead in the NEWSROOM.

(COMMERCIAL BREAK)

PHILLIPS: Just moments ago, we caught up with the president and the V.P. heading in to meet with that congressional group on the Iraq war.

You will remember that group was created after the State of the Union to improve consultations with the White House with regard to Afghanistan, Iraq, war funding. They're talking terror today. Speaker of the House Nancy Pelosi, along with Senators Harry Reid, Joe Biden, Trent Lott, Charles Lugar, they will -- they are a part of that group, obviously. They -- they arrived just prior to the president and the V.P.

We are going to follow that meeting, let you know what happens, bring it to you as soon as we hear.

Coming up the quarter past the hour here, some of the other stories that we're working on in the CNN NEWSROOM, live on Wall Street, stocks are gaining ground, after yesterday's global sell-off. We are going to talk with financial guru Suze Orman in just a moment.

Also, a first step, but don't expect a breakthrough -- the State Department's caution, as the U.S. and North Korea gear up for talks next week in New York. Tensions have eased since North Korea agreed to scale back on its nuclear program.

And we're waiting for a ruling from a Florida appeals court in the Anna Nicole Smith body battle. Meantime, another court is granting doctors hired by Smith's ex-boyfriend access to her DNA samples. He's one of several men that say they fathered that little baby girl.

LEMON: How now, Dow Jones? It's like, you know, what now, Dow Jones, or what now, brown cow?

Yesterday, at this time, the stock markets were plummeting. Today, they are climbing, though not nearly as fast or as far. It is a wild ride for investors. What should you do with your 401(k) portfolio?

Well, joining me now to answer some of your questions is personal finance expert Suze Orman. Her latest book, "Women & Money: Owning the Power to Control Your Destiny," will hit stores this week.

And it couldn't have been more at a more -- at a right time or a better time, Suze.

Very interesting. I was watching you last night on "LARRY KING LIVE." Great job with the interview. But you said that -- now, I don't want to put words in your mouth -- this could be a blessing in disguise, especially if you're not taking your money out of the market right away.

SUZE ORMAN, AUTHOR, "WOMEN & MONEY: OWNING THE POWER TO CONTROL YOUR DESTINY": Yes.

You know, you just talked about 401(k) plans. Who in the world takes their money out of a 401(k) plan before they're 59-and-a-half, in their 60s or their 70s? Nobody. So, I personally am so sorry that this market is going back up today. I wanted to see this market go down.

The more the market goes down, the more the shares of the mutual funds that are in your 401(k) plan go down. When the shares go down, then, when you put your money in every month, your money buys more shares. The more shares you have, eventually, years from now, the more money you make, when the markets go back up again. And they always go up and down.

So, I'm really sorry that this didn't go down further today, I'm so sorry to say.

LEMON: So, you're looking at it as a correction and not a huge drop in the market?

ORMAN: You know, listen, it was approximately 4 percent. Big deal.

Now, obviously, if you look over the past 100 years, you could probably count 100, 120 times that the market has gone down 5 percent.

LEMON: Right.

ORMAN: So, we're about there. So, that should probably be it for this year and that huge drop.

LEMON: OK.

ORMAN: However, if you went back to 1987, when you had that 500- point drop, that was 22 percent. Twenty-two percent yesterday would have been 2,700 points.

LEMON: Right.

ORMAN: That's not what happened, everybody.

LEMON: Right.

ORMAN: So, stop freaking out.

LEMON: OK.

All right, Suze, we want to get to our e-mails, because we -- our viewers are very interested in this.

The first one is from Andrew from North Carolina. And he wants to know: "For those of us who panicked during yesterday's plunge and dumped all of our holdings, does it make sense to hold for a bit to watch the waters, before jumping back in?"

What's your answer to him?

ORMAN: I have to wonder if you should be in the stock market at all, my dear, because why? If you are an investor that panics, then, in my opinion, you don't have the temperament to be in stocks.

When good stocks go down, you buy more stocks. When bad stocks go down, you sell those stocks, so you can then take that money to buy good stocks with. You should be looking at your portfolio. Decide what stocks do you wish you had kept, what stocks are good for the long run. And that's how you should evaluate it.

LEMON: OK.

ORMAN: If you are doing this based on the market, you are making a mistake.

LEMON: OK.

Next one from Elaine: "Are my IRAs which are in money market funds as vulnerable to yesterday's downturn as stocks are?

ORMAN: No. In a money market fund -- it's like a savings account, so to speak. You have money market shares that are valued at $1. They always stay at $1. Very seldom do they change. So, it doesn't happen -- matter what happens in the stock market. You still have your money.

The question is, is it making a good interest rate, and is that where it should be or not? Should it be in the stock market instead?

LEMON: OK. All right.

Kim in Ohio writes: "My portfolio is 100 percent stocks for the last -- in 100 percent stocks for the last eight years. Should I have the majority in growth stocks? My goal is high returns. I will be changing my asset relocation -- allocation, rather, to 80/20 very soon. I'm 38 years old."

ORMAN: At 38 years old, why are you going to 20 percent right now? I'm not so sure that you should be doing that.

Yes, 20 percent would have to be bonds. Make sure, if you do that, it's bond, bonds, individual bonds. Do not buy bond funds for that 20 percent. That's the advice that I would have for you.

LEMON: All right, Beth in California wants to know: "What is the best way to secure my savings for old age? I want to reduce taxes, have a modest income and security. I have been thinking about municipal bonds, but I'm not sure how to go about it. Can you educate me, Suze?"

ORMAN: Yes, you want municipal bonds if, and only if, you are in a high tax bracket, and you're not going to need the money for a long time, so that you can watch the ups and downs of the bond market.

But the income is something that you need. You might want to look at zero coupon municipal bonds, if you don't need the income right away. Personally, if I were you, if you buy a house, you know this is a house you're going to stay in for the rest of your life, pay off your mortgage.

That's a far better way for you to go. Once you have paid off your mortgage, you feel secure. When you feel secure, you feel powerful. And then you don't make bad moves with your money.

LEMON: All right, Beth, you got that?

(LAUGHTER) (CROSSTALK)

LEMON: We have one more.

(CROSSTALK)

LEMON: One more for you, Suze.

This is from Foster. Foster says: "I was told in a seminar that it is better to have at least seven credit cards with a revolving balance of 30 percent in order to have a better credit score. Is this true?"

ORMAN: Here's what is true.

You want credit cards that don't have a balance on it, because 35 percent of your FICO score is made up of your debt, what you owe, to your credit limit ratio, how much credit limit those cards have given you.

If you have seven cards, and they're charged to the max, you are in trouble. If you have seven cards, however, that don't have much charged on it, that's what you want. Don't close down those cards. You close down credit cards, you close down credit limits, you hurt your debt-to-credit-limit ratio. You hurt your FICO score.

LEMON: OK. We have got it. I think class...

ORMAN: We did it.

LEMON: ... class dismissed, Suze Orman.

And I just want to say, the book is called "Women & Money: Owning the Power to Control Your Destiny." It hits stores this week.

Very good advice, Suze Orman. We thank you so much for joining us today, especially after yesterday's scare.

ORMAN: Any time. Don't be afraid. It's OK, everybody.

LEMON: All right. Thank you.

PHILLIPS: Well, Harry Potter drops trou, and the world does not end. Daniel Radcliffe grows up. And, though his movie fans might not like it, what do theater buffs have to say?

(COMMERCIAL BREAK)

LEMON: Well, maybe she thought the DMV had a drive-through.

Eighty-year-old Therese Smith was apparently in the wrong gear when she hit the gas last week in Deerfield Beach, Florida. Ironically, she was at the DMV to retake her driving test. She was at the DMV to retake her driving test.

Right now, Smith has a more pressing issue: a careless driving charge.

And, by the way, that really is Superman. You see that person in the Superman costume right there...

(LAUGHTER)

LEMON: ... to the right of your screen? Too bad he couldn't have made it a few seconds sooner. No one was badly hurt, in any case.

PHILLIPS: As if by magic, "Harry Potter" star Daniel Radcliffe has erased any chance that he will ever be typecast.

Radcliffe's stage debut in London includes nudity, simulated sex, smoking. He's definitely graduated from Hogwarts.

Here's CNN's Alphonso Van Marsh.

(BEGIN VIDEOTAPE)

ALPHONSO VAN MARSH, CNN CORRESPONDENT (voice-over): Taking a well-earned bow, "Harry Potter" star Daniel Radcliffe receives the admiration of his fans after his West End theater debut.

The play is a world away from the magic of Hogwarts and is a big gamble for Radcliffe. The 17-year-old actor stars in "Equus," a dark psychological thriller about a stable boy who blinds horses.

In "Equus," the former Harry Potter loses not only his trademark glasses and scarf. His clothes come off, too, for a nude scene -- but all in the name of art, you understand.

DANIEL RADCLIFFE, ACTOR: I was never really that worried about the nudity thing. I didn't -- it was just -- I was a bit nervous early on, the first couple months we did it in front of everyone. But, after that, you get over it very, very quickly, surprisingly quickly, actually.

VAN MARSH: After the performance came the praise from a star- studded audience.

BOB GELDOF, MUSICIAN: He certainly proved himself as a proper -- as a serious actor. I mean, Harry Potter is a great role, but this is -- this is serious stuff.

CHRISTIAN SLATER, ACTOR: Yes, it was wonderful, really, really amazing.

VAN MARSH: Critics, it seems, agree. "Daniel Radcliffe electrified the stage," wrote "The Daily Express." "The Guardian" called it "fine acting." "Brilliant," wrote "The Daily Telegraph." "The 17-year-old truly impressed," gushed "The Daily Mail."

(on camera): Daniel Radcliffe's role as an emotionally disturbed teenager is based on real-life events. Now, that's a change from his cinema blockbuster roles based in a fantasy world that's made him one of the richest teen actors on the planet.

(voice-over): Oh, what a ride it's been for Radcliffe since he first brought J.K. Rowling's boy wizard to the big screen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED ACTOR: Harry Potter!

(END VIDEO CLIP)

VAN MARSH: He's traded fighting sinister evil spirits for dealing with the demons in his "Equus" character's own head. In short, the boy actor is growing up.

JEREMY AUSTIN, THEATER CRITIC: We have seen it so many times. You get typecast with one massive, internationally successful role, you never do anything else. He's done exactly the right thing. He's taken a challenge. He's shown that he can act.

VAN MARSH: It seems Daniel Radcliffe has shed his Harry Potter character, yet managed to put a spell on London's theater crowd and its critics. But don't think you have seen the last of the glasses and cape. Harry's back later this year.

Alphonso Van Marsh, CNN, London.

(END VIDEOTAPE)

LEMON: We're following a story here in the CNN NEWSROOM. It's out of Ohio, the Ohio River, a toxic chemical spill between Illinois and Kentucky. Is the water safe? More on that story ahead in the CNN NEWSROOM.

(COMMERCIAL BREAK)

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

LEMON: And I'm Don lemon.

T-minus 30 minutes and counting -- Wall Street holds its breath, as the closing bell looms. We're following it for you live right here in the CNN NEWSROOM.

Well, it turns out the bulls didn't leave town after yesterday's sell-off on Wall Street -- a live look now at the Big Board at the New York Stock Exchange. The Dow Jones industrial average is up 89 points.

If you can stand it, take a look at what happened yesterday about this time. A 100-point drop at the start of the session turned into a 200-point drop by midday. But look at what happened around 3:00 p.m. eastern, the Dow went from minus 285 to minus 524 in just three minutes. We're now hearing a computer glitch made the drop appear more sudden than it was. The Dow finished the day 416 points in the red. Straight now to a developing story in the NEWSROOM, Fredricka Whitfield working on it for us. What do you have?

WHITFIELD: Well more now on the barge that hit some sort of structure in the Ohio River near Brockport, Illinois. Now we're learning from the U.S. Coast Guard that the barge hit the Wicket Dam there on the Ohio River and that's what then led to about up to 8,000 gallons of this toxic chemical called cumene which is used as a solvent in the production of other chemicals such as acetone. And it has spilled into the Ohio River. And unlike say an oil spill where they're able to put the foam like cords or even boards out to absorb the oil, in this case, officials are saying that they believe this chemical will kind of float to the top and it will eventually evaporate from the top of this river.

Now some good news coming out of the EPA both in Kentucky as well as Illinois, that they don't believe the spill will in any way impair or affect the drinking water. That's good news. However, the jury is still out as to whether there is any kind of environmental impact on this spill. So again, this barge which apparently hit a wicket dam over night led to the spilling of 8,000 gallons of this toxic chemical. Good news is drinking water won't be affected, at least that's what the EPA of both Illinois and Kentucky seem to believe, but they are going to continue to check on some environmental impact that this be spill may have had. Kyra and Don?

LEMON: We'll check back with you. Thank you.

PHILLIPS: It wasn't supposed to work out this way. More than five years after the U.S. invaded Afghanistan, the Taliban is not only still there, it's getting stronger, using techniques learned from Iraqi insurgents. CNN terrorism analyst Peter Bergen reports.

(BEGIN VIDEOTAPE)

PETER BERGEN, CNN TERRORISM ANALYST (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 firsthand. 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 in 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: A very strong cultural of prohibition has been eroded, and that's the influence of al Qaeda and the so-called Afghan Arabs.

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, Iraq is really a training ground. Tactics from Iraq have migrated, especially the employment of IEDs and suicide bombers.

BERGEN: Certain irony.

KELLER: Yeah, 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, 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 Ayman 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: I mean we're spending hundreds of billions of dollars every year on national security, we can't send enough people to look for al Qaeda and Pakistan. That's --

KELLER: Yeah, I mean, all I can report is the ground truth that I thought.

BERGEN: So where did the resources go?

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 the not really a very large organization in terms of field personnel. So we do not have an infinite amount. If you do a couple larger 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 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 has flourished in the years they were thrown out of power in Afghanistan. They now rule quite openly in Waziristan by the co-opting or killing traditional tribal leaders. Hey 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: But 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 of 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 a truce agreement in 2005 and 2006. The Pakistani government promised it would scale back military operations if tribal leaders would give up Taliban and al Qaeda fighters.

MAHMUD ALI DURRANI, PAKISTANI AMBASSADOR TO U.S.: They do not think that the deal that we signed with them has helped the extremists and the terrorists. Not at all.

KELLER: I believe that 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. And it becomes very difficult to discern who's a fighter, who just moved to meet family. 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, that 90 percent of the problem is in Afghanistan.

BERGEN: The bottom line is these peace deals seemed to have empowered al Qaeda and empowered the Taliban?

KELLER: I would say it's given them a free hand. I mean 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: Well I think we know that the cost is pretty high for the U.S. and NATO troops 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 jihadist training, launching deadly attacks. Graphic evidence that al Qaeda and their allies in the Taliban have largely survived the west's furious assaults. And that what didn't kill them has only made them stronger. Peter Bergen, CNN, Washington.

(END OF VIDEOTAPE)

PHILLIPS: Well, no discussion of the Taliban or al Qaeda can leave out Osama bin Laden. Many say bin Laden's trail has long since gone stone cold. And a man we talked to earlier in the NEWSROOM says he knows why. Michael Scheuer is a former head of the CIA's bin Laden unit.

(BEGIN VIDEO CLIP)

MICHAEL SCHEUER, TERRORISM ANALYST: As long as bin Laden is alive, al Qaeda is the one entity on the earth that can attack inside the United States.

PHILIPS: Is the hunt still on for Osama bin Laden?

SCHEUER: I think to the extent we have resources available, Kyra, yes. But so many of our intelligence officers and military people are tied up now fighting the Taliban that there's not a lot of resources left to spare to go after al Qaeda, bin Laden and Zawahiri.

PHILLIPS: But this was your gig, this was your unit. What happened? Why didn't we get him?

SCHEUER: Mr. Clinton wouldn't kill him. At the end of the day, you only get so many chances. We gave President Clinton 10 chances to kill him between May of 1998 and May of 1999 and he didn't do it. And Mr. Bush didn't get him when we had a chance to get him at Tora Bora in 2001.

PHILLIPS: But did you have your sights on him in Tora Bora like you had your sights on him during the Clinton administration?

SCHEUER: I think the answer probably is not, although if we used our own troops, we could have hemmed him in there and eventually would have gotten him. But we subcontracted the job to a couple of Afghans who had fought alongside bin Laden against the Russians.

PHILLIPS: So during the Clinton administration, how did you know that you had him, you knew exactly where he was and that you would be able to get him?

SCHEUER: We had signals intelligence, we had human intelligence, and we had satellite imagery that corroborated it.

PHILLIPS: So did the president think, well he just isn't a big enough threat yet?

SCHEUER: I'm not sure, ma'am. The answer many times was simply they were afraid of what international opinion would say if we tried and we missed or if there was collateral damage to buildings or other people.

(END OF VIDEO CLIP)

PHILLIPS: Well this week, Vice President Cheney discussed the hunt for bin Laden in Pakistan. Pakistan's president insists there's no evidence bin Laden is in his country.

LEMON: Well exactly what would possess a respected judge to do this? That's not the Anna Nicole judge is it? Oh, we'll have the details a little bit later on in the NEWSROOM.

(COMMERCIAL BREAK)

PHILLIPS: The Daley dynasty lives on. The legendary Chicago Mayor Richard J. Daley died in 1976. Many people thought that his record 21 years in office would stand forever. Turns out it probably won't and his own son will break it. Despite a city hall corruption scandal, Mayor Richard M. Daley was reelected yesterday with more than 70 percent of the vote. If he serves out his sixth term he'll have 22 years at City Hall but he says he for one isn't counting.

LEMON: There's no surprise in that one, but maybe a surprise in this one. No food, no shelter, no free handouts. A radical change for Chicago's Urban League which could spread across the country. The organization is hoping to provide more by giving less. I came to CNN from Chicago and I went back for this story.

(BEGIN VIDEOTAPE)

LEMON (voice-over): The great northern migration sculpture on Chicago's south side. A symbol of how more than a century ago, black Americans headed north by the tens of thousands, escaping Jim Crowe and looking for jobs. This area was a cultural Mecca then. Now, it's overrun by poverty, gangs and vacant lots.

UNIDENTIFIED FEMALE: There's a lot of opportunity that we just haven't tapped in the right way.

LEMON: Cheryle Jackson says she knows how to end blight here and all over the U.S. The newly appointed president of Chicago's Urban League says the league will no longer provide social services such as cold weather clothing, food and shelter. There is a need to help people get through it with social services.

CHERYLE JACKSON, CHICAGO URBAN LEAGUE: Right, I agree. Go to one of the other 10,000 agencies that do that. People need their social services. But if everybody focuses on it and all of our organizations focus on social services, who's looking after this?

LEMON: Her focus now for the Urban League, economic development, giving new and existing small businesses the tools to succeed.

UNIDENTIFIED MALE: Entrepreneurs create jobs for other people.

LEMON: Northwestern University's Kellogg School has partnered with the Urban League to train business owners about finance and growth.

STEVE ROGERS, NORTHWESTERN UNIVERSITY: We don't want them the way they're run today because we want those people to aspire to be big time high growth entrepreneurial players.

LEMON: Admittedly for the league, the risky move has had some opposition from the old guard, but those in social services say --

DR. CAROL ADAMS, ILLINOIS DEPT. OF HUMAN SERVICES: Well we've had people try to be all things to all people. We haven't had for quite a while an agency just concentrating on economic development. LEMON: Dr. Carol Adams, Illinois's director of human services says she welcomes the change.

ADAMS: It's a building block to a level of independence and self-sufficiency that we all want to see happen.

JACKSON: The goal is you know, to create wealth that's shared by many, not a few, not the already wealthy, but by many and you know, by a lot of people, by this community.

LEMON: A new day for an old agency looking to the future with an eye on the past.

(END OF VIDEOTAPE)

PHILLIPS: Is it spread across the country?

LEMON: Yeah, the national chapter is looking at that as a model for the rest of the country. But if anybody can do it, Cheryle Jackson can do it. She has lots of experience in business but also was governor Rod Gobayavech's communications director in Illinois, so she knows the political side, as well. So she's trying to bring the two together.

PHILLIPS: Well she's tough and she's progressive.

LEMON: Yeah, she certainly isn't the first woman of the Urban League anywhere in the U.S.

PHILLIPS: All right, well coming up your iReports with Reynolds Wolf. He's going to tell us why air boats were speeding across this ice. (COMMERCIAL BREAK)

PHILLIPS: An island isolated by ice. Who are you going to call to get around? Well you're looking at an iReport, video sent by Edward Hyslop of Harsens Island, Michigan. A ferry is Harsens Island's life line, but the ice has kept it out of commission since Friday. So the fire department has been using an air boat to get people to and from for doctor's appointments, dialysis, things like that. So is the warm-up in the cards or will the cold and ice persist?

(WEATHER REPORT)

LEMON: This next guy he was so excited about your weather video that he's doing this. I'm just kidding. It's in the Tar Heel state, a judge in North Carolina drug treatment court is living up to his end of the bargain by doing cartwheels. Bad form maybe, but it was certainly a good cause and you may wonder, what possessed him to do it?

(BEGIN VIDEO CLIP)

JUDGE HUGH LEWIS, MECKLENBURG CO. DISTRICT COURT: I have a standing pledge to anyone that comes into any of my courtrooms, that if they will do 90 meetings in 90 days, I will do cartwheels for them.

UNIDENTIFIED FEMALE: Just the anticipation of him doing it up to this moment was fantastic. And like I said, I'm doing another 90 in 90 so he can do this again. Until I'm finished with the program, he'll be doing cartwheels.

LEWIS: I will make a fool out of myself and waddle on the floor for anyone who's willing to do 90 meetings in 90 days to get clean and sober.

(END OF VIDEO CLIP)

LEMON: Good for him. We can't see this enough times, but it certainly was a good cause. The second time someone has taken the judge up on his offer. It was only the second time, but it sounds like it won't be the last time.

PHILLIPS: We're always doing cartwheels, flips, and rah-rah cheering when it comes to Wolf Blitzer.

LEMON: "THE SITUATION ROOM," we're doing cartwheels all the time because it's always such a great show.

WOLF BLITZER, CNN ANCHOR: Guys, thanks very much. We're coming up at the top of the hour with more on what's happening in Iraq. Baghdad's continued bloodshed, bombings and bodies found. Some suggest they're signs the plan to secure the Iraqi capital is simply not working, but is it? I'll ask the commander of the multinational corps in Iraq, Lieutenant General Raymond Odierno. Also, can Congress strip the president's war powers? We'll have the latest on efforts to repeal the authorization for the war in Iraq. I'll speak with Republican Senator Arlen Specter, he has some strong views. And in the hot seat, he's the congressman accused of stashing $90,000 of bribery cash in his freezer. He's been stripped of a key House committee seat but now he has another seat, that's putting Speaker Nancy Pelosi in the hot seat, as well. All that coming up, right here in "THE SITUATION ROOM." Back to you guys.

PHILLIPS: Thanks, Wolf.

LEMON: Closing bell, wrap of all the action on Wall Street, straight ahead.

(COMMERCIAL BREAK)

LEMON: So we've been watching Wall Street all day and now the closing bell is about to ring. And this time yesterday, we were in stock shock I should say, as the Dow lost a whopping 416 points. But it's a far different story today. Let's check in with Susan Lisovicz, she's on the floor of the New York Stock Exchange. Susan, yesterday, we were like what the heck is going on. Now, the Dow's up.

LISOVICZ: How do you spell relief, Don? It's D-O-W. The Dow Jones Industrials not staging the most resounding of rallies today, but it is a relief rally nonetheless and it looks like we will close this day with some gains. Well off the highs of the day, Don, the Dow Industrials right now up about half a percent. We had triple digit gains earlier in the day. That coincided with Ben Bernanke the chairman of the Federal Reserve speaking and offering some reassuring words to investors, saying that the financial markets are performing as they should. And that he has not changed his opinion about the shape of the U.S. economy. But questions about the U.S. economy persist. We did get a big drop in housing sales last month, down nearly 17 percent. That was the biggest one-month drop we saw in 13 years. Home Depot says that it doesn't think that the housing slump is really going to correct until late this year or maybe next year. And we got a revised downward number on fourth quarter GDP. So there's still some questions, but the bears crawled their way back on to Wall Street today, and one day after the worst single point loss since the markets reopened after 9/11, it looks like we're going to close with a rally and Don, there's applause.

LEMON: Instead of boos yesterday.

LISOVICZ: Yeah the markets performed. There were no glitches today and that's one of the big reasons there was so much anxiety at the close yesterday, where people didn't know what was going on. We know what's going on. There was a rally today. We'll see if it happens. We can make it day two. See you tomorrow Don, now it's time for "SITUATION ROOM" Wolf Blitzer.

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