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America Headed For Recession?; What Killed Heath Ledger?; Is it a Good Time to Refinance Your Mortgage?

Aired January 23, 2008 - 15:00   ET

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

DON LEMON, CNN ANCHOR: Meteoric rise, a tragic end. A-list actor Heath Ledger leaves million of film fans in mourning and investigators scrambling for answers.
KYRA PHILLIPS, CNN ANCHOR: Investors are scrambling on Wall Street, and stocks are paying the price. Another bad day is blamed on fears that things only could get worse. We are in the final hour of trading.

Hello, everyone. I'm Kyra Phillips at the CNN Center in Atlanta.

LEMON: And I'm Don Lemon. You're in the CNN NEWSROOM.

PHILLIPS: Well, it is a question heard all over the world today. Can anybody keep America out of a recession? One day after the Federal Reserve slashed a key interest rate, Treasury Secretary Henry Paulson met with some congressional leaders this morning to hammer out a stimulus package.

Asian investors appear somewhat optimistic. Investors in America and Europe do not.

LEMON: And CNN is covering this fast-moving story from all the angles, Susan Lisovicz at the New York Stock Exchange. Poppy Harlow at the Nasdaq and Ali Velshi, well, he is on the road talking to people across the country -- Kyra.

PHILLIPS: Let's begin now with our coverage with Susan Lisovicz live at the New York Stock Exchange.

How are things looking, Susan?

SUSAN LISOVICZ, CNN CORRESPONDENT: Well, things are looking better.

You look up at the Big Board, we are in that witching hour, the final hour of trading. You see a point loss of 16 points, and you don't think rally. You don't think impressive rally, but in fact, we had a rare and elusive sight this very volatile week. The Dow actually turned positive. You guys were in breaking news about a half- an-hour ago, but the Dow actually had a gain of about 18 points, only lasted for a few seconds, so, literally, if you blink, you missed it.

But it is an impressive rally, nonetheless, because at the lows of this session today the blue chips were down about 325 points, so another day where the bulls are trying to pare the losses. We are seeing pockets of strength and pockets of strength from companies that would benefit from a low interest environment.

Citigroup, J.P. Morgan, its shares -- their shares are up each about 5.5 percent or more and GM shares are up nearly 8 percent. One of the things that we haven't talked about today, Kyra, just very quickly, is that we are in the middle of earnings season, and that is always a very volatile time on Wall Street.

We are in the early stages of the earnings season, but the folks that crunch the numbers say 20 percent of the S&P 500 companies have so far reported. And what we are seeing on average so far is that they are reporting a 20 percent decline in profits from a year earlier. And that is the worst we have seen since the end of '01.

So, these are volatile times indeed and we have a couple more weeks of reporting this season. Having said that, there is a lot of action uptown at the Nasdaq. And that is where we find Poppy Harlow.

Hi, Poppy.

POPPY HARLOW, CNN CORRESPONDENT: Hi there, Susan.

Well, it is a another rocky day here at the Nasdaq. We are off of our lows of the session, down just about 1.1 percent for that index right now, but still in negative territory.

What is key here at the Nasdaq is that this index has now dropped more than 20 percent from the cyclical peak it hit in October. That 20 percent decline is the definition of a bear market. So, the Nasdaq also is the worst of the three major U.S. indices, hit the worst so far this year.

Apple is really the catalyst that sparked the sell-off here. Apple with first-quarter fiscal earnings in after the closing bell yesterday, Apple warned. It trimmed its profit for the second quarter. That just really scared investors. Now Apple traded as high as $203 in December, Apple now down 14 percent today trading around $137.

Shareholders have lost more than $40 billion between December and now if they own Apple. Intel big gainer here. Intel up more than 6 percent, not seeing tough competition from its main rival, AMD, or Advanced Micro Devices.

Another stock I want tell you about Motorola, that stock just hammered. It set out quarterly earnings, came in down 84 percent. Motorola taking a hit. That company has not seen success since the RAZR.

Starbucks, though, one bright spot here, Starbucks about trading 4 percent up right now on the Nasdaq. Word is they are going to test $1 cups of coffee in Seattle. A spokesperson for Starbucks saying it is just a phase, won't comment on that. But Starbucks trying to fend off competition from McDonald's and Dunkin' Donuts.

We are going to get earnings from Qualcomm and eBay after the bell today, investors hoping that will help this beat index, will help it. We will also hear from Microsoft tomorrow.

You can get our hits from the Nasdaq everyday on CNNMoney.com.

(CROSSTALK)

LEMON: Hey, Poppy, we have got to get now to Susan Lisovicz. Thank you very much for that, because Wall Street is seeing a rally.

(CROSSTALK)

LEMON: Susan, go ahead.

LISOVICZ: Well, Don, I was talking about a rally, even though we had a deficit. But just savor that image, because we are at the highs of the session. Now, bulls, they have been trying to make a stand all day. They have been beaten back, but we will see if this goes right.

I just wanted to tell you that. While I was talking and while Poppy was reporting, we actually have seen the Dow for a second time today go into positive territory.

LEMON: This morning, what was it? Was it down 200 points or...

LISOVICZ: More than that, Don. It was about 300, 326.

(CROSSTALK)

LISOVICZ: And yesterday the same thing, even though we closed down more than 100. We had been down more than 400, so you have to look at it that way, that we were certainly well off the lows. And right now, we are -- we have got a bona fide rally going on.

LEMON: OK. So this is breaking news. So what are we attributing this to, Susan? Can we...

LISOVICZ: Well, there's some bargain hunting. That's what happens. You beat them down so low and then you are going to have some nibbles, and that is what is happening today.

Is this the end of it? Well, that might be another story. We are in a very volatile time. There's a lot of information coming out to the marketplace, but right now we have a rally.

LEMON: Yes, and it is breaking news when the Dow is in positive territory.

LISOVICZ: Enjoy it.

LEMON: Hey, yes. Stick around. Don't go anywhere, because we may need you.

are going to will go away from Wall Street just for a minute now. So much for Wall Street. Let's check the Main Street now.

And the man on the street, or I should say the man on the bus, Ali Velshi, is traveling across country. He is aboard Election Express. He has been getting some reaction from across the country.

And just average folk, right, Ali?

ALI VELSHI, CNN CORRESPONDENT: Absolutely right, Don.

In fact, I have taken a break from the CNN Election Express, the bus we are touring across the country, and to stretch my legs a little bit. We are in West Memphis, Arkansas, right across the Mississippi River from Memphis, Tennessee, and we are on our way to Little Rock, where we will be tomorrow night and tomorrow morning.

We're asking ordinary Americans what they feel about the economy, what is worrying them. And, Don, the thing on their minds is jobs. It's the fear of a recession. It's home prices. It's interest rates. It's the stuff that we talk about all the time.

They are not following markets in the way that we all do, but everybody is aware of the fact that there is a danger of a recession. They are worried about where the economy is going and they're worried about where jobs will be recreated.

We are hearing this from people across the country. These Southern states that we are swinging through are states where we will have -- they will all participate in Super Tuesday. We're taking six days, going through nine states and 2,600 miles, asking Americans what they are worried about.

And I will tell you this much, Don. They are in fact concerned. The economy has been at the top of everybody's list of concerns about the election and what they would like the presidential candidates to address.

LEMON: All right. Ali Velshi traveling across the country on the Election Express.

Again, Wall Street rallying now, up 40 points, 43 points. It looks like it keeps going up, Kyra.

And make sure you stick with CNN for all the news that affects your financial security. And go to CNNMoney.com for more on money, jobs and the mortgage crisis.

PHILLIPS: An alleged terrorist plot thwarted, the alleged terrorist arraigned and jailed.

We are following breaking news out of Spain today.

Let's get straight to our Madrid bureau chief, Al Goodman.

Al, what can you tell us?

AL GOODMAN, CNN MADRID BUREAU CHIEF: According to the judge at the courthouse behind me, after the arraignments this Wednesday in Madrid, he is holding 10 men as a suspected terrorist cell. He says that they were planning to carry out suicide attacks last weekend between last Friday and last Sunday in Barcelona against public transportation.

He says that three of the suspected of the 10 who are being held, three were suspected suicide bombers, had come to Barcelona from Pakistan since last autumn, including one very recently, and they had come on the heels of another man from Pakistan who was the alleged explosive expert.

PHILLIPS: So, Al, is this in connection to any of the other attacks that we have seen there in Spain within the past couple of years? As you know or as we all know, you have been covering a number of these attacks in the past 24 months.

GOODMAN: Indeed.

The interior minister on Saturday when these arrests were carried out in Barcelona said Spain remains on a state of permanent alert against Islamic terrorism. He mentioned that al Qaeda communiques mention Spain regularly and other countries, but Spain is his concern.

Now, since the train bombings nearly four years ago in Madrid that killed 191 people and wounded more than 1,800, Spain has greatly increased by tenfold the number of police officers dedicated to Islamic terrorism. In this case, it appears that intelligence agencies in Spain and elsewhere got wind of this, were surveilling this alleged group in Barcelona, and as more of these alleged suicide bombers came over, that is when they pulled the alarm trigger and asked the police to move in and start making those arrests, which came just last Friday.

According to the judge, the attacks were going to have been between last Friday and last Sunday in Barcelona.

PHILLIPS: Al Goodman, live from Madrid, appreciate it.

LEMON: As we keep that stock market thing up there to the right, we are going to have that throughout the day and follow that breaking news.

Meantime, we are following this. Adored by fans, respected by peers, mourned by all, actor Heath Ledger dead at the age of 28, and we still don't know how. Right now, the investigation goes on. The reaction pours in.

And our Allan Chernoff is outside of Ledger's New York City apartment. And Brooke Anderson is at the Sundance Film Festival.

PHILLIPS: Prescription drugs were found in Ledger's apartment, but we don't know whether they had anything to do with his death.

In any case, the White House has postponed a scheduled appearance by President Bush promoting an anti-drug campaign. They said that they don't want to appear opportunistic in highlighting the issue.

Let's get the latest now on the Ledger investigation from Allan Chernoff. He's in Manhattan, where the sidewalk outside of Ledger's home has turned into a little makeshift memorial -- Allan. ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: It certainly has.

And, Kyra, I can give you an update on the latest here, because Heath Ledger's body has now been released to a funeral home on the Upper East Side of Manhattan. The family in Australia is making plans for a private memorial to be held here in New York City.

Now, the New York medical examiner did conduct an autopsy this morning. It was inconclusive, but I am told that is not so strange, particularly if you are looking for evidence of a drug overdose. And the police have speculated that that is what may have caused the death of Heath Ledger.

When they did find him here in his apartment yesterday afternoon, they did see plenty of prescription drugs, prescriptions that he had filled by a doctor, drugs for sleep problems and also for anxiety problems.

Anyway, so the police did say that potentially might have been the cause of his untimely death. But the medical examiner now is going to have to conduct toxicology studies. And they say that could take at least two weeks, as much as two weeks, to actually give the results of that, so that we actually do find out what led to this tragic, tragic death -- Kyra.

PHILLIPS: All right, Allan Chernoff. We will follow the investigation obviously as we get the feedback about the autopsy results. Thank you.

LEMON: Ledger had movie star looks and he had the acting chops to back them up. Not even 30 years old, he already had an impressive, impressive resume, an Oscar nomination, and the respect of his fellow actors.

Our Brooke Anderson talked to some of them. She is at the Sundance Film Festival in Utah.

Hello, Brooke.

BROOKE ANDERSON, CNN CULTURE AND ENTERTAINMENT CORRESPONDENT: Hey there, Don. It is a dark day here at the Sundance Film Festival, as fellow actors and fans mourn the loss of Heath Ledger.

We have spoken to many actors and filmmakers. And they are just heavy-hearted about his death. Morgan Spurlock from "Super Size Me" fame is here at Sundance. He is promoting his new documentary, "Where in the World Is Osama Bin Laden?" And he shared his thoughts.

(BEGIN VIDEO CLIP)

MORGAN SPURLOCK, FILMMAKER: It's completely tragic. This guy is one of the greatest young actors that we have today. And just to have something like this happen, it is awful. Your heart goes out to his family, because I just had a son and you think about his young child and it is terrible.

(END VIDEO CLIP)

ANDERSON: And we just heard from actress Jessica Alba. She says that they weren't close friends, but they did audition together one time, and that he was so kind and talented, and that she feels for his daughter and that this is the worst thing that can possibly happen.

Don, I actually had the pleasure of interviewing Heath numerous times over the years, and he was always very warm, very sweet and kind. And while he didn't really particularly enjoy sitting down for an interview, that was not his thing, he didn't really like being part of the Hollywood system, he was always professional, did his job.

Off camera, he was a little bit more upbeat. I got a hug from him once, always just very, sweet. And I think that the outpouring of kind words that we are hearing from all over, fans, friends, fellow actors, filmmakers, people who didn't even know him, is a true testament to how well liked and well respected he really was.

LEMON: And painfully shy, as you said, Brooke Anderson. OK. Thank you very much for that report.

PHILLIPS: Interest rates are down. Is this a good time to refinance your mortgage? We're going to ask personal finance editor Gerri Willis.

(COMMERCIAL BREAK)

LEMON: After months of bad news for people making mortgage payments, there is finally some good news. Interest rates are down, which suggests this may be a good time to refinance.

So, let's see what CNN personal finance editor Ms. Gerri Willis has to say about that. She joins us from New York.

Gerri, first question, what are the options now for homeowners. Do they have any options?

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, I got to tell you, Don, a few mortgage brokers I spoke with late yesterday told me they are being inundated with phone calls from people trying to refinance.

Now, the good news is, mortgage rates are really low and going lower because of what you just said the Fed was doing. And with more rate cuts coming possibly next week, they may fall even lower. A 30- year fixed mortgage right now is going for just about 5.3 percent, those numbers from Bankrate, a fixed jumbo loan for about 6.4 percent.

But don't forget, a re-fi is not free. It typically costs 1 to 2 percent of the value of your home -- Don.

LEMON: All right. Don't forget that.

All right. Let me ask you this. So, to make refinancing worthwhile, how much of a rate decrease should you look for there? WILLIS: Well, you are looking for a gap between what your rate is right now and what you can get in the marketplace of half-a-percent to a full percentage point.

I have got to tell you, this is not as easy as you may think to get this new loan. You have got to have at least 20 percent equity in your home. Used to be you had to have 10 percent. They are asking for more now, because, as you know, the banks are under assault, having lots of problems with the credit crunch.

Now, again, you used to have to have a credit score, for example, of over 660. That was considered excellent. Now you will need a credit score of 720 to be even considered for a prime loan.

One broker even told me that, before the credit crunch, eight in 10 potential customers who walked in the door for a potential re-fi would get it. Now the numbers are like three in 10, because these lending standards are so much more restrictive.

So, we have great rates out there, but it is more difficult to get those loans.

LEMON: And maybe it they had been a little bit more restrictive before, we may not have found ourselves...

WILLIS: Yes. Exactly.

(CROSSTALK)

WILLIS: It's too late for that.

LEMON: Yes. We can't think of everything to ask you, Gerri. And I know you have wisdom when it comes to this. What else? Is there anything else that consumers, especially people refinancing or in a mortgage crisis, or find themselves in a mortgage crisis, anything they should keep in mind?

WILLIS: Well, if you are refinancing, remember a lot of folks have run into lower home prices. Maybe you're in a marketplace. Maybe you're on one of the coasts, where he prices have gone down and gone down dramatically. You may find it impossible to refinance because the value of your home is down.

It has gone down with this problem in the real estate market. You may find it impossible to re-fi, and I know this is really frustrating out there, but you won't know until you investigate. So it is really worth looking into, because a lot of the people are stuck in those really high-rate adjustable-rate mortgages, where the interest rate has reset, and now they are paying so much more for their mortgage each and every month.

Think about a new mortgage. It is time to do it. The rates are down. It is expensive. It is not inexpensive, but it is worth checking out.

LEMON: Get any sleep lately, Gerri? Because I see you on "AMERICAN MORNING." I see you on "LARRY KING." I see you on Headline News. I see you here on CNN, on dot-com.

WILLIS: Well, it's a big story.

LEMON: And then you're working this weekend as well.

WILLIS: It's a big story.

LEMON: It is.

WILLIS: Yes. You have got to join us for "OPEN HOUSE."

LEMON: Of course.

WILLIS: We're going to have great stuff on "OPEN HOUSE."

LEMON: Of course you're right. It's a big story.

And we appreciate all of your advise, Gerri Willis.

WILLIS: Thank you.

LEMON: Get much, much more financial advice from Gerri Willis every weekend on CNN. Join her for "OPEN HOUSE" at 9:30 a.m. Eastern on Saturday. And you can also catch "OPEN HOUSE" on CNN Headline News at 3:30 p.m. Eastern both on Saturday and Sunday.

(BUSINESS REPORT)

LEMON: Media darlings since they arrived in this country joined at the chest, two little girls show they are indeed separate sisters.

PHILLIPS: Dr. Jan Adams, weeks ago, he walked off of the set of "LARRY KING LIVE." Now the physician who performed plastic surgery on the late Donda West returns. And you will hear from him.

(COMMERCIAL BREAK)

PHILLIPS: The doctor who performed surgery on the mother of rapper Kanye West says that he has nearly lost his practice.

Dr. Jan Adams sat down with CNN's Larry King last night. It was a return visit. He abruptly walked off the show in November, shortly after Donda West died following surgery. But now he is talking about what happened.

(BEGIN VIDEO CLIP, "LARRY KING LIVE")

DR. JAN ADAMS, PERFORMS PLASTIC SURGERY ON KANYE WEST'S MOTHER: OK, what went on during surgery, what went after surgery, what went on after she left the surgery center? And where do you go from there? As far as I'm concerned, the autopsy -- at least the autopsy report suggests nothing went on during surgery, nothing went on during recovery.

OK, she's now gone home. We need to look at that period. I think that's what's open. LARRY KING, HOST, "LARRY KING LIVE": Do you continue to practice?

ADAMS: Yes.

KING: How bad has your practice been affected by this publicity?

ADAMS: Horribly. It's almost destroyed.

KING: Is that surprising to you?

ADAMS: It surprises me because I have to ask myself, when people attack you like that -- I'm talking the press -- you have to say, why do they fear you? Generally, people attack someone who they fear. And I'm not sure where all that came from. I do know we got bad information. The real question out there really isn't, from where I look at, this particular patient. The real question out there is, who is this person and why is this kind of attack going on?

KING: What did they say about you that's terribly wrong?

ADAMS: Well, I think the first thing they said that they tried to suggest was this notion of board certification.

I think malpractice suits in today's world, particularly -- don't forget, I'm the guy on TV. People come to me, what happens? You know, you're a target. You don't seriously think those journalists sitting across from you during the day don't think I want Larry's chair. Certainly, I think me having done a TV show makes me a target.

(END VIDEO CLIP)

PHILLIPS: Adams formerly hosted the television series "Plastic Surgery: Before and After. He also sells skin care products and has written two books on plastic surgery.

Remember, you can catch CNN's "LARRY KING LIVE" 9:00 p.m. Eastern, 6:00 Pacific, every night.

LEMON: Healthy, happy, heading home soon. Two little girls from Costa Rica make their first public appearance two months after surgery to separate them.

Reporter Daniel Villareal of CNN affiliate KRON was at the hospital in Palo Alto, California.

(BEGIN VIDEOTAPE)

DANIEL VILLAREAL, KRON REPORTER (voice-over): Formerly conjoined twins Fiorella and Yurelia made their grand entrance at Packard Children's Hospital Tuesday afternoon as separated and healthy twin sisters. The Costa Rican twins were born conjoined at the stomach and chest. They shared a liver and parts of their hearts were connected. In November of 2007 they underwent the risky separation surgery at Lucile Packard Children's Hospital. The doctors involved in the surgery are calling the procedure a huge success. DR. GARY HARTMAN, SURGEON: The girls are doing well. They have healed. They have had all of the procedures that we think they're going to need to have.

VILLAREAL: Hartman, who led the separation surgery team, also spoke about his personal connection to the case and his anxieties had the surgery not gone as well as it did.

HARTMAN: My great fear was that months or years from now, if things didn't work out, would the family look at those pictures and look at their sisters and point to me and say, that's the man who took our sisters, that's the man who took our daughters.

VILLAREAL: But just looking at this footage of the lively twins as they played in the hospital lobby on Tuesday, they appeared to be healthy and happy. And with the help of a translator, the mother of the twins repeatedly gave her thanks to those involved.

UNIDENTIFIED FEMALE: I feel very happy and very content because my girls were born anew in this hospital.

VILLAREAL: Doctors are now saying the girls will soon return home to Costa Rica once the medical teams involved agree they are fit to return.

(END VIDEOTAPE)

LEMON: That was Daniel Villareal of KRON, which is our affiliate there.

Once back in Costa Rica, the twins will have to undergo physical therapy for a while. Doctors expect the girls to live normal lives and have children of their own.

PHILLIPS: A meltdown over a snowy day. A heated voice mail goes viral on the Internet -- the lesson learned by the school administrator's wife.

LEMON: Desperate and determined -- thousands of Palestinians break down the border to Egypt -- literally. Are they welcomed? Well, yes and no. We'll find out what their neighbor is going to do about it.

(COMMERCIAL BREAK)

LEMON: Oh, there they are out on the campaign trail today. That is Barack Obama -- Barack Obama today in Sumter, South Carolina. He's campaigning there. To the right of the screen, you see Hillary Clinton -- presidential hopeful -- with governor of Pennsylvania, Ed Rendell, former mayor of Philadelphia and former chairman of the DNC. And then at the bottom of the screen, you'll see right there, John Edwards, Lancaster, South Carolina.

John Edwards and Barack Obama both in South Carolina. Why isn't Hillary Clinton? Let's talk to CNN producer Dugald McDonnell -- McConnell, I should say. He is with the Edwards campaign and he joins us now by telephone to talk about that.

DUGALD MCCONNELL, CNN PRODUCER: Hey, there, Don.

Well, Edwards is certainly focusing on the rural strategy. The crowd that you saw just there had just listened to a bluegrass band and the crowd is lot of overalls and baseball caps. He was introduced as a homeboy, because, as you know, he was born in South Carolina. And just as minute ago, he did -- as he did earlier this morning -- he knocked Hillary for leaving South Carolina right after the debate.

Here's part of what he said.

(BEGIN VIDEO CLIP)

JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: The question is, if she's not going to spend time here the week before the South Carolina primary, what do you think that the chances are she's coming back after the primary? And what are the chances that she's coming back when she's president of the United States -- or if she were president of the United States?

(END VIDEO CLIP)

MCCONNELL: Now, Edwards is different. He says that he would not forget where he's from if he was elected, that he doesn't think that the rural South is just something you fly over when you're going from -- from New York to Miami. He talked about rural initiatives and also talks about electability -- that he can get elected in red states and more places in the South that other candidates might have some trouble -- Don.

LEMON: Dugald, I have to ask you, because we all saw, you know, that contentious debate. It was right here on CNN. And John Edwards kind of stayed out of the fray there and, you know, stayed out of the bickering. And now he seems to be taking on Hillary Clinton.

Since you have been with the campaign since that debate, have you seen him become more aggressive as it comes to Hillary Clinton and Barack Obama?

(AUDIO GAP)

LEMON: Dugald?

Apparently, we're having a little bit of technical difficulty. Dugald did not hear me.

We'll try to get him back up and running. If we do, we'll bring it to you right here on...

MCCONNELL: Oh, sorry. I'm right here. I didn't...

LEMON: Are you there?

MCCONNELL: I'm sorry about that. I missed that. Yes, but as far as the rural strategy, you know that he's been talking in particular about the one state that he won in 2004. He's talking -- he's trying to empathize with other people, talking about how he knows what it's like when people's kids move away and then can't move back to the rural places because they can't find jobs and what it's like when, for example, a mill closes and jobs leave town...

LEMON: Yes.

MCCONNELL: ...which is what he said he's seen so often with his parent's generation -- Don.

LEMON: So he's sticking to the issue there on the campaign trail in South Carolina.

Dugald, we appreciate your reporting -- your producing, I should say.

MCCONNELL: You bet.

PHILLIPS: Let's stay on the political note there. This just in to CNN. We're getting word that Congressman Duncan Hunter, who withdrew his candidacy for the Republican presidential nomination on January 19th, he's endorsing Mike Huckabee. Duncan Hunter endorsing Mike Huckabee.

Here's the quote: "I got to know Governor Huckabee well on the campaign trail," Hunter says, "and of the remaining candidates, I feel that he is strongly committed to strengthening national defense, constructing the border fence and meeting the challenge of China's emergence as a military superpower that is taking large portions of America's industrial base."

Once again, Duncan Hunter, who is no longer running for the presidency, endorsing candidate Mike Huckabee.

Taking heat over a snow day -- a student called a county school administrator's home phone to complain. But it was his wife who responded -- and did she ever.

Our Tony Harris and CNN Internet Correspondent Veronica de la Cruz discuss the controversy heating up Fairfax, Virginia.

(BEGIN VIDEOTAPE)

TONY HARRIS, CNN ANCHOR: Veronica, this is about a snow day phone call that really has snowballed on the Internet, huh?

Good morning.

VERONICA DE LA CRUZ, CNN CORRESPONDENT: Yes, good morning to you.

It started last week when a senior, Tony, at Lake Braddock Secondary School in Virginia called the listed -- that is the operative word here -- the listed home number of the chief operating officer of the county school system -- Dean Tistadt. He's seen right here in this photo.

About three inches of snow had fallen, Tony, and then the student left a message wanting to know why classes weren't canceled. Later in the day, the student's phone call was returned -- not by Dean Tistadt, but by his angry wife. The student decided to post the voicemail on the Internet.

MRS. TISTADT: And don't you ever call here again! My husband has been at the office since 6:30 this morning. So don't you even suggest that he purposely didn't answer his phone! He is out almost every single night of the week at meetings for snotty-nosed little brats. And he may not have called you, but it is not because he's home, it's because it snowed. Get over it kid and go to school.

DE LA CRUZ: The recording is on YouTube. It has received more than 11,000 views, Tony. The student also created a Facebook page with a photo of Mr. Tistadt, his work e-mail address and phone numbers, and a link to that voicemail recording.

And the group has more than 1,000 members. And Mr. Tistadt says that he is getting even more harassed by phone calls and e-mails.

HARRIS: Is the student, Veronica, facing any disciplinary action?

DE LA CRUZ: Well, we've got a call in to the school's principal. We have yet to hear back. But we did speak with Mr. Tistadt. He said that he didn't think the kid's behavior necessarily warranted punishment. He did feel that the school would handle this matter appropriately, however.

HARRIS: Does Mr. T. believe his wife made the right decision in calling the student back?

DE LA CRUZ: Well, Mr. T believes that the student did cross the line by calling him at home to challenge these decisions, Tony, that are business related. He says that his wife was very emotional when she responded. She perceived this to be an attack on her husband. And Mr. Tistadt says that the student's phone call suggested that he left early because he was worried about his own safety in the snow and that he didn't care about the students, which really wasn't true.

But I think, Tony, the lesson learned here...

HARRIS: Yes? The moral to the story?

DE LA CRUZ: Make sure you have an unlisted number. What was his number doing in the phone book, anyway?

HARRIS: Well, I think the -- I think it's required. I think -- well, I'm not sure.

DE LA CRUZ: No.

HARRIS: I shouldn't say that. But I believe that in -- that it's often the case that these administrators have to have listed phone numbers. I'm not sure, but I think that's the case.

DE LA CRUZ: I think -- seriously, I think, the lesson learned here is think before you speak.

HARRIS: Oh, my goodness. There you go, Veronica. Veronica, appreciate it. That was -- that was fun. Thank you.

DE LA CRUZ: It's nice to see you.

HARRIS: Just another reminder, you can also see Veronica every morning on AMERICAN MORNING, 6:00 until 9:00 a.m. Eastern time.

(END VIDEO TAPE)

LEMON: Feisty, hey?

(LAUGHTER)

PHILLIPS: The kid is a twit. He deserved a call back. I'm sorry.

LEMON: I know. I was going to say, that's nothing, if you heard my mom when she gets ticked off. Hey, get your butts to school now!

(LAUGHTER)

PHILLIPS: Good for her. She's supporting her husband.

LEMON: Absolutely.

OK, 10 years, you know -- can you believe that? Ten years have gone by and the conspiracy theories, Kyra, they still fly -- was it a plot or not? The only survivor of the crash that killed Princess Diana testifies at London's high court.

PHILLIPS: Desperate and determined -- thousands of Palestinians break down the border to Egypt -- literally. Are they welcome? Well, yes and no. We're going to find out what their neighbors are going to do about it.

(COMMERCIAL BREAK)

LEMON: Well, it's one of the last photos before that horrific crash that killed Britain's Princess Diana in Paris. Today, the only survivor of that crash took the stand in London's high court. Trevor Rees, Diana's bodyguard that night, says he remembers nothing about the accident. He testified that even though he received anonymous phone calls and letters threatening him to be quiet, he is no way part of a cover-up, he says, as alleged by the father of Diana's companion, Dodi Fayed. Rees is terrifying at the official inquest into Diana's death.

PHILLIPS: A Middle East border is wide open and unchecked today -- the one between Gaza and Egypt. People can pass freely from one side to the other. It's a humanity necessity or a security breach -- it depends on whom you ask.

CNN's Ben Wedeman is there.

(BEGIN VIDEOTAPE)

BEN WEDEMAN, CNN CORRESPONDENT (voice-over): The walls have tumbled down and the people of Gaza stream out by the tens of thousands -- free for the first time in months to leave their crowded, impoverished land.

"I want to go out to see the world," says Ashva (ph). "We've been closed in for years."

In the dead of night, militants from Hamas and other groups use acetylene torches and high explosives to destroy the wall Israel had built between Gaza and Egypt, effectively sabotaging a tightening Israeli blockade that since last week had subjected Gaza to lengthy power cuts and shortages of food and fuel -- a blockade intended to pressure Hamas to stop firing rockets from Gaza into Israel.

This man cheers Hamas and curses pro-Western Palestinian president, Mahmoud Abbas, as, in his words, "the biggest dog on Earth" for being incapable of breaking what Palestinians call "the siege of Gaza."

For Mohammed Kaleb (ph), it's a chance to breathe again.

MOHAMMED KALEB: Yes, I am very happy, happy. Without (INAUDIBLE) I'm very happy because I feel I was in a prison in Gaza.

WEDEMAN: While some Gazans crossed the border for a taste of freedom, most went in search for goods that have become increasingly scarce.

"We have no flour, no electricity, no water. We have nothing," this woman tells me.

They crowded every store on the Egyptian side -- coming back with food, fuel, cement and cigarettes -- everything, it seemed, but the kitchen sink.

The border between Gaza and Egypt was sealed after Hamas took power last June. Now the people of Gaza are suddenly free to walk the streets of the Egyptian town they could see but not reach.

(on camera): This is one of the new border crossings between Gaza and Egypt. And on this day, there are no formalities, no passports, no I.D.s, no questions. Everybody can come and go as they please.

(voice-over): Egyptian border guards stood by and watched the commotion, while Hamas militiamen performed, at best, cursory checks of incoming groups. Israeli officials say this could be a field day for Hamas to bring in weapons and explosives.

With the walls down and the frontier wide open, it may be difficult close it again.

Ben Wedeman, CNN, on the border between Gaza and Egypt.

(END VIDEOTAPE)

LEMON: It's a different kind of class reunion when a student and her teacher reconnect after 35 years. We'll educate you on this sweetheart of a story.

Police in Washington uncover a man's lifelong fetish. What's the sentence for stealing 93 pounds...

(LAUGHTER)

LEMON: ...of underwear? We're embarrassed to...

PHILLIPS: That's why I didn't want to read it. Did you notice that? I just shut up.

LEMON: Oh, panty thief uncovered, hey?

(COMMERCIAL BREAK)

PHILLIPS: All right, checking on the big board. Look at this. It was tanking and now, just before the closing bell, the Dow Industrials up 294 points. And it's still climbing -- a bit of an unexpected rally, as the president came forward to meet with the U.S. Conference of Mayors today, talking about economic uncertainty and, of course, the mortgage meltdown and how he's trying to convince Congress to pass a stimulus package, hopefully keeping us out of a recession and giving us more confidence with regard to our 401Ks and our investments.

So right now, a big rally we're seeing on Wall Street, up 275 points. It keeps climbing.

LEMON: Yes, and just a few minutes away from the closing bell, who knows what's going to happen?

Meantime, we're going to check out what's clicking on CNN.com -- some of our most popular video.

Darn those kids and their technology. A student posts a fiery voice mail from his school administrator's wife online.

You've heard of the man in the moon. Check this one out. We still haven't figured out what it is.

But what's this human-looking shape on Mars? People are having a great time with this image, recently captured by NASA's Mars Rover. It sure is interesting.

And White House hopefuls skewered on the Web. Presidential paintball is just one -- look at this -- one of the games trying to take the pain out of the campaign season.

These stories and much, much more, of course, available to you at CNN.com. PHILLIPS: And the next story gets an A for adorable. A retired teacher and her favorite student reunited at just the right time -- and you'd never believe how it developed.

That story now from Mark Bullock of our affiliate, WSFA.

(BEGIN VIDEOTAPE)

MARK BULLOCK, WSFA NEWS ANCHOR (voice-over): The story begins with a photograph. It's Pat Craik's senior picture and it's been sitting on 103-year-old Alberta Jackson's nightstand for more than 35 years.

ALBERTA JACKSON, RETIRED TEACHER: She was just an obedient child. She was a sweet child.

BULLOCK: She taught Pat in the fourth grade at Dalraida Elementary School and the two formed a unique bond that lasted all the way through graduation. But ultimately they lost touch.

JACKSON: And it wasn't a day passed that I didn't stop and look at that picture. And I'd say I wonder where Patti is.

BULLOCK: It wasn't until a home health care nurse saw that senior picture on Ms. Jackson's nightstand that the two finally reunited.

JACKSON: And she looked and she said, "Oh, that's my sister's picture."

And I said, "Pat?"

She said, "Yes."

BULLOCK: That's right -- the nurse was Pat's sister.

PAT CRAIK, JACKSON'S 4TH GRADE STUDENT: When my sister told me, I just started crying because I had just thought of all of the times I've had had some rough times and I had three little babies and I was alone. And I thought nobody cared. And, you know, I'm like how many times was I crying thinking that she was thinking about me, wondering where I was and praying for me?

BULLOCK: The reunion came at the perfect time for Miss. Jackson, as well. With health problems, she could no longer live alone. So Pat invited her into her home, then searched high and low for an assistive (ph) living center and helped Miss. Jackson settle in.

JACKSON: You see all of this furniture in this room?

It came from her.

CRAIK: She thanks me, but I almost want to thank her for being able to do something.

BULLOCK: Each helping the other in their own unique way -- an uncommon bond between student and teacher that seems, as though it was meant to be.

JACKSON: Down through the years the lord knew he was going the bring us back together some day. And sure enough, it happened.

(END VIDEOTAPE)

PHILLIPS: Well, Mrs. Jackson has been getting daily visits from her former student at the assisted living center.

LEMON: Oh.

The closing bell and a wrap up of all of the action on Wall Street -- and you don't want to miss it. You never know. We've just got a few minutes. It could go anywhere. It's been crazy.

Back in a moment.

(COMMERCIAL BREAK)

LEMON: OK. You made me read this story, right, Kyra?

We've all heard of Victoria's Secret, but police in Pullman, Washington say this was Garth Flaherty's lifelong and illegal secret.

PHILLIPS: He had to be an Irishman. Knew it.

LEMON: (INAUDIBLE) say...

PHILLIPS: Trying to 'dis my people.

LEMON: ...they confiscated all these women's undergarments -- some 93 pounds worth -- from the 24-year-old man's home and car. That's where they got them. Flaherty pleaded guilty Monday to first degree theft and a dozen counts of burglary, while admitting his lifelong addiction to stealing woman's underwear. He got 45 days in jail. In all, police tabulate his take at 1,613 bras, panties and other undergarments.

(LAUGHTER)

PHILLIPS: I'm going to get straight to the closing bell because it's about to ring on Wall Street.

And I don't want to put Susan in any type of awkward situation.

LISOVICZ: Well, you know, that was kind of a surreal story. And even by Wall Street standards, this has been a surreal day. You know, right before the open we thought there was a possibility that this could be the worst sell-off of this very nasty new year. One trader said to me everything is for sale. That he said a few minutes before the open.

(STOCK MARKET REPORT)

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