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Highlights of 2009; Fixing 'Systemic Failures'; Defending Abdulmutallab

Aired December 31, 2009 - 14:00   ET

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

KYRA PHILLIPS, CNN ANCHOR: Pushing forward now on some of our top stories.

The White House likely facing some facts today. The president gets an early report on the Christmas Day terror attack. Details of missed opportunities and mishandled information still trickling out, more on that in just a few minutes.

Police in Finland trying to piece together what's led to today's bloody shooting spree. The gunman killed his ex-girlfriend, four people at a shopping center, then himself.

Heavily police presence in New York too trying to head off any hint of trouble as Times Square fills up for New Year's Eve.

Out with the old and in with the new. 2010 is just hours away here in our part of the world, but before we kick 2009 to the curb, we could forget balloon boy, Ted Kennedy's passing or "The Miracle on the Hudson." How could we forget those stories?

Here's Anderson Cooper with 2009's memorable headlines.

(BEGIN VIDEOTAPE)

ANDERSON COOPER, CNN CORRESPONDENT (voice-over): Sully becomes a household name. Captain Sullenberger lands U.S. Airways Flight 1549 safely in the Hudson, despite losing power minutes after takeoff.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I, Barack Hussein Obama, do solemnly...

COOPER: Barack Obama sworn in as the 44th president.

"Slumdog Millionaire" wins eight Oscars, including best picture.

Stock market bottoms on March 9, soars the rest of the year.

Daring rescue: Navy SEALs free the captain of the Maersk Alabama, killing three pirates.

Carrie Prejean wins first runner up in Miss USA 2009, where she famously objects [SIC] to...

CARRIE PREJEAN, FIRST RUNNER UP, MISS USA 2009: Opposite marriage. COOPER: H1N1, or swine flu is deemed a global pandemic. Mahmoud Ahmadinejad is re-elected as president of Iran.

On the verge of a comeback tour, music legend Michael Jackson dies at 50.

Legendary sex symbol and Charlie's Angel, Farrah Fawcett, dies at 62 after a long struggle with cancer.

A hundred and fifty years, that's the sentence for Ponzi scheme mastermind Bernie Madoff, who bilked investors of at least $13 billion.

WALTER CRONKITE, FORMER CBS NEWS ANCHOR: And that's the way it s.

COOPER: America's most trusted man in news and former host of "CBS Evening News," Walter Cronkite, dies at 92.

EDWARD KENNEDY, FORMER MASSACHUSETTS SENATOR: The hope rises again.

COOPER: Long-time Senator Ted Kennedy, champion of civil rights and universal health care, dies of brain cancer at 77.

A surprise winner, President Obama gets the Nobel Peace Prize. Many ask why.

FALCON HEENE, BALLOON BOY: We did this for a show.

COOPER: Balloon Boy and the Heene family. Need we say more?

Tiger Woods crashes a car, admits transgressions, and takes an indefinite leave from the PGA tour. Stay tuned.

(END VIDEOTAPE)

PHILLIPS: And the year winds down with surge and concern over terrorism and the government's ability to stop it. It was six days ago that a young Nigerian allegedly tried to blow up a flight from the Netherlands to Detroit.

Each day since we have learned more information that the government learned weeks, even months ago, that information that might have stopped this plot on the ground had it all been shared and connected. And it's that systemic failure, in President Obama's words, that was addressed in a report that he actually is going to get today.

Ed Henry joins me now from Hawaii, where the first family actually celebrated Christmas and will ring in the new year.

So, Ed, what can you tell us about the report?

ED HENRY, CNN SR. WHITE HOUSE CORRESPONDENT: Well, Kyra, we know we're going to get a readout from White House officials probably in the next couple of hours about what the president has seen. But this is what we know so far.

This report is likely to include various pieces of information about missed signals, about how, for example, the CIA, as our Jeanne Meserve has been reporting, had some information, particularly from the suspect's father, suggesting he had tied to extremists, but the information wasn't shared necessarily with other agencies, shared within the government, the kind of thing that happened pre-9/11 and was supposed to have been fixed.

Secondly, despite the various warning signs, this eventual suspect was not put on the no-fly list. That is likely to lead to some sort of a close examination of whether the so-called terror watch lists really need to be fixed, part of the systemic change that the president talked about a couple of days ago.

And finally, as well, the TSA, the Transportation Security Administration, created after 9/11, they've gotten billions of dollars to beef up security, and yet here this suspect got explosives on to a plane. This report may take a look at what could be done, whether it's full-body scanners or the like.

You also know about the fact that this suspect had a visa. And why is it that the State Department and others didn't alert people in the chain that there was suspicious information about somebody? Does he have a U.S. visa like he did in this case? The State Department announcing this morning, already, that they're going to make changes so that when information like that about potential terrorists is passed on, the fact that they have a U.S. visa will also be passed on.

So within the government they'll have a better sense to try to connect the dots -- Kyra.

PHILLIPS: So, is there anything that the president is doing now to get more of a security team in place, Ed?

HENRY: Well, one of the biggest problems the president has right now is that he does not have a full-time chief at the Transportation Security Administration. Erroll Southers, a former FBI special agent, somebody the president has wanted, has got a lot of experience. Republican Senator Jim DeMint has been blocking that nomination over a union issue.

The bottom line is the president, in consultation with Senate Majority Leader Harry Reid, is pushing for the Senate to vote on this in mid- January, when the Senate comes back, to try to force the Republican's hand, making the case that at a time when aviation security is at risk, you need a full-time chief of the TSA -- Kyra.

PHILLIPS: Ed, just now I'm getting my hands on this letter, a copy of the letter that the president sent the men and women of the CIA since we learned of the deaths of those agents in Afghanistan, making the point that he wanted to express, "Their duty was filled with courage, honor and excellence."

I know you just got this letter as well. What do you make of it?

HENRY: That's right. Well, I mean, when you look right at the top, the president saying he and Michelle Obama, the first lady, here in Hawaii, saddened by this development, this attack in Afghanistan, saying in part, "These brave Americans were part of a long line of patriots who have made great sacrifices for their fellow citizens and for our way of life."

I mean, let's connect the dots on these various stories. The president here reaching out to the CIA losing seven of their colleagues at a time when the CIA is kind of getting beaten up for maybe missing some of these signs, maybe not connecting the dots in the Detroit terror case.

So, clearly, here, the president trying to show his respect to the CIA at a time when they're a little bit under fire, saying, look, given this attack in Afghanistan, seven people losing their lives, certainly a time to pause and reflect on those lost lives here on New Year's Eve -- Kyra.

PHILLIPS: Ed Henry, live from Honolulu.

Ed, thanks.

When Umar Farouk Abdulmutallab appears in federal court in Michigan -- and we think that will happen for the first time late next week -- he'll have a well-respected lawyer who won't be costing him a cent.

More on that now from CNN's Chris Lawrence.

(BEGIN VIDEOTAPE)

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT (voice-over): Umar Farouk Abdulmutallab comes from a wealthy family, ,but his legal defense won't cost a dime. The suspect cut off contact with his parents, so American taxpayers will foot the bill for his court-appointed attorney.

(on camera): There can be this perception that if someone has a public defender, even if it's a federal one, they are getting a lesser quality attorney. Is that the case with Abdulmutallab?

ALAN GERSHEL, THOMAS COOLEY LAW SCHOOL: No, quite the contrary. He is getting perhaps one of the most experienced attorneys in town, if not the country, with respect to his situation. He is getting very high quality representation at no cost to himself.

LAWRENCE (voice-over): He is getting Miriam Siefer.

GERSHEL: It's not every defense attorney who is universally respected and admired and I would say that she is one of the few that falls in that category.

LAWRENCE: Alan Gershel would know. He's the former head of criminal prosecutions for the U.S. Attorney's Office in Detroit. Siefer is chief federal defender in an office with 19 attorneys. How do you go about defending this?

MIRIAM SIEFER, SUSPECT'S ATTORNEY: It's very premature because the criminal complainers are really considered just preliminary charges. LAWRENCE: In the first major terrorism trial after September 11, Siefer defended a man accused of being part of a Detroit terrorist cell plotting to blow up military bases and Disneyland. His conviction was overturned and he is now living in a Detroit suburb.

Siefer was also assigned to represent Terry Nichols' brother James when the Michigan native was a suspect in the Oklahoma City bombings.

(on camera): So this office isn't new to terrorism cases.

GERSHEL: No, they're not rookies, they're not novices when it comes to representing clients based on these types of charges.

(END VIDEOTAPE)

PHILLIPS: Chris joining me live now.

So, Chris, Siefer is an experienced lawyer. What can she hope to do with the evidence against her newest client?

LAWRENCE: Yes, you're right, Kyra. I mean, obviously, she is going to have some challenges, not the least of which is this plane full of witnesses to the actual incident.

But I spoke to Allan Gershel. He says she may have some bargaining chips, not the least of which is whether Abdulmutallab has any information at all regarding connections to terrorists organizations overseas. That has a possibility of being parlayed into possibly reducing some of the charges against him.

PHILLIPS: Chris Lawrence, thanks.

Out with the old, in with the new job. Lots of people hope that the tight job market will end as the new year begins. And we have a very creative "30 Second Pitcher" who hopes to ring in the new year with a new gig.

(COMMERCIAL BREAK)

PHILLIPS: All this week we're looking back at 2009 as we look ahead to 2010, and we're asking our correspondents to talk about the big stories that they have covered this year.

Right now, Christine Romans and troubles in the job market.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: I'm Christine Romans in the CNN newsroom in New York, a newsroom that's been buzzing all year with a big story for us, and that has been jobs.

In the beginning of this recession, 4.9 percent was the unemployment rate. By the end of the year, it was 10 percent. There are some signs that maybe things have been -- the peak in unemployment may be here, but, still, there are still way too many people out of work in this country for anyone's comfort, and that will likely be the big story of 2010.

The government has pumped tens -- hundreds of billions of dollars into programs to try to beef up the safety net for people, put more money into ton employment checks, also to try to create jobs. All the stimulus bailouts, all of this stuff will working further into the economy next year, and many people hope that means that at some point in 2010, the story will be we're actually creating jobs.

(END VIDEOTAPE)

PHILLIPS: Well, times are tough, but here's a bright spot. There are 432,000 new claims for unemployment benefits last week. That's 22,000 fewer claims than the week before and the lowest weekly total since July, 2008. Economists had suspected the number would go up.

Well, it's Thursday. You know what that means, "30 Second Pitch" time.

This time around we didn't just get an e-mail pitch by somebody, we actually got an audition tape.

Let it roll, Dee (ph).

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Welcome to a special edition of "LARRY KING LIVE."

Here, (INAUDIBLE), Keith Miks, digital creative director. And we thank him for being in his career. Let's get to it.

He's smart, handsome and great at what he does. Not exactly sure what he does since it deals with social media, digital design, interactive strategy and user experiences for the brands online. At least that's what he tells me.

What's your reaction? Send me or Keith your best questions. Come on, let's see what you got.

(END VIDEO CLIP)

PHILLIPS: I love it. A recommendation from our own Larry King, himself.

Keith Miks created that video as part of a search for a job as a digital creative director. Creative, yes. Innovative, yes. Everything you can imagine.

Keith joins me from Denver.

Not bad, Keith.

(LAUGHTER)

KEITH MIKS, JOB SEEKER: Thank you. It was fun to put together.

PHILLIPS: Well, it was fun for us to watch. It definitely caught our attention.

So, tell me what happened. I mean, you're the second guy I've talked to today with our "30 Second Pitch" that has so much creativity and such a great sense of humor and fantastic experience.

What happened in the job market for you?

MIKS: I think it's just -- it's been a holding pattern this last year. When you have senior level roles, you know, people are a little hesitant, because it's a different kind of fit. So when things actually line up as we look into the new year, I think those opportunities are going to open up a lot more.

PHILLIPS: What is it that you love so much about what you do? Is it just the fact that you can create anything you want and make people laugh and grab people's attention like all of us here?

MIKS: Yes, I think that's it. You know, it's bringing that message, that idea to life, you know, and it is really does come from nothing. And once you bring it to life and you actually get a response, or get someone's attention, you know, that is the best reward.

PHILLIPS: Well, are you ready for your "30 Second Pitch"?

MIKS: I sure am. Let's do it.

PHILLIPS: All right. Let's fire it up. Take it away. Go ahead, Keith.

MIKS: Digital is moving at the speed of culture. We see it with our mobile phones, all the way to our social networks. It's giving consumers a bigger voice online and brands an even bigger responsibility to connect in a positive way.

Bringing these experiences to life is what I love to do. I'm Keith Miks, an interactive creative director. Please visit me at KeithMiks.com and let's change things up.

PHILLIPS: Wow, and seven seconds to spare. Anything else to add?

MIKS: Just KeithMiks.com, and, yes, feel free to drop me a line any time.

PHILLIPS: All right, Keith. Great talking to you, and thanks so much for the creative pitch there. We absolutely loved it, obviously.

MIKS: Thank you to CNN and everybody for doing this. This is a great idea. So, I appreciate being on this.

PHILLIPS: Well, it's great helping you out.

MIKS: All right.

Here's Keith's e-mail once again: 30SecondPitch@KeithMiks.com.

So, come on, people, hire him. We'll post his e-mail also on our blog. That's at CNN.com/Kyra.

And if you want to be a part of the pitch, just e-mail us your resume at 30SecondPitch@CNN.com, or, heck, give us an audition tape like Keith did. Or you can, of course, tweet us at Kyra@CNN.

Now, here's a possible paycheck. Why not ask AT&T if they will sponsor you? Because as of today, well, there's a pretty big opening. Things apparently didn't work out so well with this guy.

(COMMERCIAL BREAK)

PHILLIPS: Well, get ready for a pat-down and bag search if you're flying into the U.S. from abroad. We just got word that heightened airport security measures will be extended through the weekend after the incident over Detroit last week. And the TSA is giving airlines the option to take even stricter measures to keep explosives off of planes.

A king of conservative talk radio hospitalized with chest pains during his Hawaiian vacation. Rush Limbaugh was taken to a medical center in Honolulu yesterday afternoon. His guest host says today that the 58- year-old felt a heart attack coming on, but doctors are still running tests to figure out what happened.

It looks like Tiger Woods will have to find a new golf bag, one without the AT&T logo. The phone giant is joining Accenture and dumping sponsorship of the world's top golfer. Woods has taken a break from the sport after admitting that he cheated on his wife.

(WEATHER REPORT)

PHILLIPS: Happy New Year to the world's second most populous country. India ringing in 2010 just about an hour ago. Along with the new year, a new push by farmers to go green as they grow their crops. They have turned an ancient practice known as biochar.

Here's CNN's Liz Neisloss.

(BEGIN VIDEOTAPE)

LIZZ NEISLOSS, CNN CORRESPONDENT (voice-over): In the fields of Andhra Pradesh, they are harvesting rice and plowing the muddy plots, preparing for a new crop. Shrina Ves (ph) follows in the steps of generations before him. He and his wife burn waste from rice plants, making lots of thick, polluting smoke and a little ash to fertilize the soil. But now he's testing a different approach, making a compost mixed with organic charcoal, an old idea getting new attention.

These days, the charcoal is called biochar.

(on camera): These farmers are making biochar. They've taken a giant mound of plant and soil and buried a smoldering fire deep within. This is an ancient practice, but it may hold a lot of promise for the future when it comes to slowing global warming.

(voice-over): Biochar is made by burning material with little or no air so oxygen stripped from the plant waste fuels the burning. The result, a rich charcoal, pure carbon locked in and not released back into the atmosphere. Another benefit, biochar improves soil quality.

SAI BHASKAR REDDY, ENVIRONMENTAL SCIENTIST: You can see the pieces are better.

NEISLOSS (on camera): Yes.

REDDY: Dark little (ph) pieces.

NEISLOSS (voice-over): Dr. Sai Bhaskar Reddy has brought biochar testing to the fields of this village. He says adding it to the soil allows air to circulate, keeping soil moist and drying microbes and worms.

REDDY: And there is life in the soil. Ultimately, we have a healthy soil.

NEISLOSS: Farmer Shrina Ves (ph) says his cotton field with biochar has nearly doubled the cotton buds of his non-biochar field. He tells me, "Our costs are lower because with biochar, we are seeing a healthier crop, so we have been using 50 percent less chemical fertilizer."

But critics say a boom market for biochar will encourage the cutting down of forests and giving up farmland to grow crops just for biochar. Reddy says the forests can be spared if only local plant life is used. He has introduced a low-cost, low-polluting stove that produces biochar during cooking.

Balraj (ph) uses one in his tea shop. He tells me, "It requires less wood and it has more heat than the traditional stove, so cooking is faster."

An idea revived from tradition that just might slow down the warming of our planet.

Liz Neisloss, CNN, Pedamadoro (ph), India.

(END VIDEOTAPE)

PHILLIPS: As you're picking out your New Year's Eve outfit, maybe adding a goofy hat or a pair of those 2010 glasses, New York's finest are suiting up and securing Times Square. How they're making sure that they don't drop the ball when it comes to your safety.

(COMMERCIAL BREAK)

KYRA PHILLIPS, CNN ANCHOR: The day after seven CIA officers were killed in eastern Afghanistan, President Obama is saluting their courage, honor and excellence. It's one of the worst known attacks in CIA history, a suicide bomber going off in a forward operating base in Khost province. A U.S. official tells CNN that's a crucial CIA outpost. And the "Associated Press" is reporting, the head of the operations there, a mother of three, is among those killed. We're also getting word that two French journalists have been kidnapped, along with their Afghan translator while traveling out of the Afghan capital of Kabul. This happened yesterday. And the French foreign ministry says it hasn't heard since.

This morning, four soldiers and a journalist killed by a roadside bomb. This also happened yesterday in the southern Afghan province of Kandahar. Michelle Lang was a reporter for the "Calgary Herald." She was 34 years old, and had been in country only two weeks.

A gunman dressed in black went on a shooting rampage in Finland, reportedly killing his ex-girlfriend, four people at a crowded shopping center and then taking his own life. Six people total died.

The police have identified the gunman as 43-year-old Ibrahim Shkupolli, an immigrant who had been living in Finland for several years. Some witnesses at the mall say that it took a moment for panic to set in, they mistook the gunshots actually for New Year's Eve fireworks.

U.S. embassy in Jakarta warn today of a potential new New Year's terrorist attack in the tourist hot spot of Bali. The embassy cited a message from Bali's governor, but the governor's office later says that it had no knowledge of the new terrorist threats. Repeated terror attacks since 2002 have killed dozens of people on the Indonesian resort island.

New Year means new rules on everything from mortgages to dog breeding. Alison Kosik is in the CNNMoney.com newsroom with the sampling of the new laws that are going to take effect after the ball drops.

So, Alison, let's start with these new rules on mortgages. These could helpful, I guess, to people looking to buy a home in 2010, right?

ALISON KOSIK, CNN CORRESPONDENT: Exactly. They will be helpful. And these rules that you're talking about take effect tomorrow, and they're going to help clarify the cost of mortgages for consumers. Now, the rules are going to mandate a standard three-page good faith estimate for consumers to be received within three days of applying for a loan.

Now, good faith estimates, they've been around for years, but they're all different and that makes it almost impossible to really figure out the true cost of a loan and compare to offers from other banks. Often, the bank with the lowest interest rate isn't even offering the best total cost because of high fees and other expenses.

The new rules also force banks to consolidate the fees they control into one origination charge and that charge will not be allowed to go up.

Now, this is the first major update to federal mortgage rules since 1994. And if you are savvy consumer, Kyra, the government estimates that the changes could save you about $700.

PHILLIPS: Wow. All right, that's not bad. Well, federal...

KOSIK: Yes, it's a good thing.

PHILLIPS: Yes, that is a good thing. Well, that's federal. And many new state laws are also taking effect tomorrow, right? Why don't you take us through some of those?

KOSIK: Sure, some of the state ones.

And we're going to start in Kentucky where new limits on payday loans go into effect. These high-interest loans became a big concern this year and several states have imposed restrictions of some kind. The new law in Kentucky caps the annual interest rate at 36 percent and limits borrowing to just $500 at a time.

Let's go elsewhere -- to California. California is going to become the first to impose a statewide ban on restaurants that cook with trans fats. If they violate this, they are subject to $1,000 fines. But restaurants there, they've had almost 18 months to make the transition. So, most have already done so.

And a restaurant smoking ban goes into effect in North Carolina. Smoking bans exist right now in more than 25 states. But this is significant, Kyra, because North Carolina is a major tobacco grower. So, this is seen as a symbolic advance for anti-smoking forces.

And finally, in Washington State, new limits on dog breeders -- they will only be allowed, only, of course to, own or control 50 dogs at a time, which I can't imagine doing, 50 dogs.

(LAUGHTER)

PHILLIPS: How about the people that you see with their 50 dogs, 30 cats, 12 birds. I don't know how they do it.

KOSIK: Yes, why not?

PHILLIPS: Yes, really. All right.

KOSIK: Feed all of them, walk 'em. Yes.

PHILLIPS: I don't know how they do it.

All right. Tell me about this little video that you got, a New Year's Eve tradition that took place at the New York Stock Exchange just a little bit ago?

KOSIK: Exactly. Every year, on the last trading day of the year, take a listen...

(BEGIN VIDEO CLIP)

(CROWD SINGING)

(END VIDEO CLIP) KOSIK: So, yes, every year these traders gather on the floor of the NYSE to sing. The song is "Wait 'Till the Sun Shines Nelly." It's an old standard about a sweetheart waiting for the rain to stop. The tradition dates back to the Great Depression. And you saw some of the exchanges elder statesmen in front there. But there are fewer and fewer traders left to sing each year on the floor of the exchange, pretty empty, everybody is kind of on vacation or just kind of checked out for the year, Kyra.

PHILLIPS: Yes. Well, OK, I can understand that in some ways. Well, it's nice to see the tradition.

KOSIK: Yes.

PHILLIPS: At least there are some folks there that are still singing.

KOSIK: Exactly.

PHILLIPS: Thanks, Alison.

Some call it the ground zero of the foreclosure crisis with so many bank-owned homes on the market. Is it showing any signs of recovery? And what could that mean for your neighborhood? We'll talk about it.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE SOLDIER: I'm PFC Wyland (ph) here in combat in Iraq and I want to wish my family back in Sacramento, California, a happy holiday and happy New Year.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

PHILLIPS: Well, it is the New Year's celebration that's the envy of the entire world. New York City knows how to party with the Times Square countdown topped off with the famous ball drop, of course.

All platform journalist, Jim Spellman, show us how police will protect the partygoers this year.

(BEGIN VIDEOTAPE)

JIM SPELMAN, CNN ALL-PLATFORM JOURNALIST: Excitement is already starting to build here in Times Square. People are pouring. Already, it's hours and hours before the ball drops. But look at these people down here -- they want to be first in line here right up against the stage.

I'm standing on the stage right now where the performers will be tonight, and the ball is just a block or so down here. Already starting to see the people pour in, and the police will close off the streets soon, and everybody is ready to have a good time.

I'll tell you, Kyra, nobody seems to be bothered at all by the bad weather here. You know, it's not so bad right now, it's cold and damp. But these revelers are ready to do their thing, and say good- bye to 2009 and see what 2010 has to offer. Kyra?

(END VIDEOTAPE)

PHILLIPS: All right. Jim, thanks so much.

Well, we'll be sure to ring in the New Year with a CNN tradition. Anderson Cooper and Kathy Griffin live from Times Square tonight. The countdown starts at 11:00 p.m. Eastern.

He will be remembered for overseeing Bank of America's controversial purchase of Merrill Lynch.

(MUSIC)

PHILLIPS: He will be remembered for overseeing Bank of America's controversial purchase of Merrill Lynch. Today, Bank of America CEO Ken Lewis officially steps down. Shareholders stripped him of his title as bank chairman back in April and Lewis announced his retirement in September. New CEO, Brian Moynihan is taking over.

The end of the year and end of an era for New York's Tavern on the Green restaurant. The 75-year-old Central Park landmark lost its license with the city last summer and recently filed for bankruptcy. Fifteen hundred people are expected for tonight's last bash, and then a new owner and new menu will take over.

And any good news about the economy is worth noting on this last day of 2009. The government says there were 432,000 new claims for unemployment benefits last week. That's 22,000 fewer claims than the week before and the lowest weekly total since July of 2008. Economist were worried last week's number would go up, not down.

CNN's John King has traveled to all 50 states to get a real glimpse of the state of the Union, especially of the end of the year. Today's destination: Nevada and a city known as ground zero of the foreclosure crisis.

(BEGIN VIDEOTAPE)

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT (voice-over): To some, this is the sound of recovery. New homes being finished on the outskirts of Las Vegas. Few doors down, Donald Leffert and Robyn Eddy-Leffert are moving in, excited to own their first home.

DONALD LEFFERT, LAS VEGAS HOMEOWNER: It was pretty wired for stuff, you know, networking. It was -- it was in a location we wanted. There was very little that needs to be done.

ROBYN EDDY-LEFFERT: Tada!

KING: And the price was right. Two years ago, this house sold for $400,000. But now, on the market for $179,000.

LEFFERT: Everything else on the paper is the exact same, the only difference is the date and the price.

KING: Las Vegas is ground zero in the nation's housing crisis, more inventory means lower prices.

(on camera): Had the market not gone down significantly here, would you guys be able to afford this?

LEFFERT: This particular house, no. No. We would have been able to afford a house, but not this house.

EDDY-LEFFERT: And not a decent house.

LEFFERT: And not a decent house.

And there's another walk-in closet over there.

KING: Donald and Robin are mindful their gain follow someone else's foreclosure.

EDDY-LEFFERT: It is pretty sad when you think about the people who have lost their home. But you can't go into the house thinking of someone's house or someone's home. You have to think of it as a new experience.

KING (voice-over): The bank-owned signs are all over town, so many of them that the real estate firms offer foreclosure bus tours.

UNIDENTIFIED FEMALE: We're looking for a bargain. We may move from Florida to Las Vegas.

KING: Some agents do see some hopeful signs, like more offers as of late.

UNIDENTIFIED MALE: And if you hear the doorbell ring, that means that you've just bought the property, and we have left. OK? All right. Let's go.

KING: Neal William also sees evidence of profound change -- of the worse.

NEAL WILLIAMS, LAS VEGAS HOMEOWNER: I have sat in my upstairs window and watched kids try to break into the house next door.

KING: William says that a wave of foreclosures have dramatically changed the street he picked 14 years ago with his children in mind.

WILLIAMS: A nice neighborhood with a lot of comfortable people to be around. Enjoy the nights like tonight, a beautiful night, and walk around and walk down the street and say hi and talk to people.

KING: No more. Someone recently threw a rock through one of the windows and Williams plans to add cameras to the security lights. And he doesn't oil the gate on purpose.

WILLIAMS: This is my infamous squeaky gate which is one of my alarms. KING: Williams says renters have moved into some of the foreclosed homes and the sense of community has collapsed, yards in disrepair, trash in the streets, graffiti and crime.

WILLIAMS: There was a shooting recently a couple of doors down. There's -- we have been robbed on several occasions.

I'm impressed, buddy.

I love my son. In one of his classes, he has a gang member. I go shooting once in a while, and he asked my son, Thomas, to steal my guns and knives out of my house and give it to him.

KING: Adding to the fear and frustration is the financial price. He keeps current on his mortgage, but his home's value has collapsed.

WILLIAMS: I am really scared to look. I know it's gone down quite a bit. My wife says more than half, I honestly don't know.

KING: His neighbor of six months is moving at a big loss because of the rising crime, but Williams is, for now, adding security systems and holding firm.

WILLIAMS: Do I want to put up with the embarrassment of people saying, you look like you live in a prison? Yes, I'll deal with that embarrassment, but I know that I'm safer. I'm a stubborn son of a gun. This is my house. This is where I'm staying.

KING: John King, CNN.

(END VIDEOTAPE)

PHILLIPS: Well, Nevada's unemployment rate is so high, too. Well, new job opportunities are hot ticket. Some, though, way hotter than others. Help wanted, gents who can give clients that personal attention and don't mind working for a shady lady.

(COMMERCIAL BREAK)

PHILLIPS: As always, Team Sanchez back there is working hard on the next hour of CNN NEWSROOM.

Rick, what are you working so hard on?

RICK SANCHEZ, CNN ANCHOR: Hi, Kyra. How are you?

PHILLIPS: I'm OK. How are you? Happy -- well, Happy New Year.

SANCHEZ: Happy -- well, almost.

PHILLIPS: We're almost there.

SANCHEZ: We're Close. Tonight, we will be eating -- do I look a little weird on this shot?

PHILLIPS: Yes, you do. But you always look kind of weird, but for some reason, you look a little -- something. Have you been drinking already?

SANCHEZ: I can only work with what my mama and papa gave me.

(LAUGHTER)

PHILLIPS: I've have seen your mama, she's a good-looking woman.

SANCHEZ: Hey, listen, I'm fascinated by this whole idea that we could have stopped this PETN stuff by using something as easy as a dog, canines. They are wonderful at sniffing out terrorists and -- oh, what's this? Oh, wait.

You know what I am going to do? I'm going to show you a video of me being hunted by a canine dog. I go into the woods and I get all of the law enforcement guys to get their best dogs, and they give me a head start and they try and track me during a manhunt. I'm the man being hunted. Me and several other guys.

I want to take you through this video, it's pretty cool.

PHILLIPS: Hey, Rick -- Rick, I remember when you did, and you were huffing and puffing. So...

SANCHEZ: Well, that's what -- that's what you do when you get old, Kyra, you huff and you -- by the way, I have a question for you.

PHILLIPS: Uh-oh.

SANCHEZ: This is a tough one, I didn't know by the way. I don't think you will, but do you know the name of the Georgia state dog?

PHILLIPS: Ooh! The Georgia state dog, the bulldog.

SANCHEZ: You'd think it'd be the bulldog, right?

SANCHEZ: It is -- Jim, what is it again?

UNIDENTIFIED MALE: The black and tan coon dog.

SANCHEZ: The black and tan coon dog.

PHILLIPS: Oh, no.

(LAUGHTER)

PHILLIPS: You know what I -- yes, it's -- after coon don't forget hound.

SANCHEZ: Right.

PHILLIPS: OK.

SANCHEZ: Yes.

PHILLIPS: You just wanted to say that on live television. Oh, Lord.

You know, this is a perfect segue. This story is just for you, Rick Sanchez...

SANCHEZ: All right.

PHILLIPS: And all those coon hounds in the back there.

Nevada business wants to broaden its clientele and pump up the economy to boom. They're actually looking to fill several positions in customer service shall we say.

Details from Drew Karedes of our affiliate KTNV.

(BEGIN VIDEOTAPE)

DREW KAREDES, KNTV CORRESPONDENT (voice-over): A drive through the small night county town of Beatty and not too far away, tucked in the open dessert is a brothel that could soon offer a lineup already attracting plenty of attention.

BOBBI DAVIS, OWNER SHADY LADY RANCH: We've got several males set aside for women that want to know when. So, let's see what happen. You know, there's always the novelty, and we will see how long that lasts, too, you know?

KAREDES: Bobbi Davis is the proud owner of the Shady Lady Ranch. Since the downturn of the economy, she's been looking for a little something to spice up business, and it seems there is no shortage of men willing to do the job.

DAVIS: There are different types of guys from the guy next door to people who are professional business and their businesses have gone down tubes during this economy.

KAREDES (on camera): And the final step for the Shady Lady ranch is getting approval from the county to become the first of Nevada's 24 legal brothel offer services from men.

(voice-over): Feedback from the surrounding community has been positive for the most part.

UNIDENTIFIED FEMALE: There is women who need it, too.

UNIDENTIFIED MALE: It could be good for the economy, right? More business, whatever.

KAREDES: Business that Davis is banking on. She gave us a tour of the peacock cottage where she hopes male sex workers will soon be able to work their magic. And despite the flood of applications, she is still looking.

DAVIS: If you want to change professions, let me know.

KAREDES (on camera): OK.

(LAUGHTER)

KAREDES (voice-over): A new twist to world's oldest profession, Shady Lady is hoping to pave the way for Nevada by putting a price on a man.

(END VIDEOTAPE)

PHILLIPS: All right. Well, the owner of the Shady Lady meets with county officials next week to see if she can start hiring. We'll let you guys and ladies know how that all goes.

2009, what a year for politics. It seems like there was enough drama to fill a whole decade, highlights, lowlights, a rarely a dull moment. This is a story that begs for some Candy Crowley. And guess what? We got her live next.

(COMMERCIAL BREAK)

PHILLIPS: Well, a sea of change in Washington. The nation's first African-American president takes the oath of office, and Republicans find themselves with the short end of the stick in both the House and the Senate.

2009 has been a remarkable year on the political stage, and our remarkable senior political correspondent Candy Crowley had a front- row seat.

(BEGIN VIDEOTAPE)

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT (voice-over): It was the moment of 2009, literally changing the face of the American presidency.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I, Barack Hussein Obama do solemn swear...

CROWLEY: The new president, Barack Obama, began with a 75 percent approval rating, considerable capital that he spent to create more history.

OBAMA: We have begun the essential work of keeping the American dream alive in our time.

CROWLEY: It was one for books. A massive $787 billion stimulus plan to fuel a failed economy -- a huge victory for the neophyte president, and flash point for an emerging political voice.

UNIDENTIFIED FEMALE: President Obama, can you hear us now?

CROWLEY: The tea party people were out enforce on tax day.

An umbrella group of furious fiscal conservatives, they protested big government spending and by August, "big brother" overreach: the tea party at town halls.

(CROSSTALK)

UNIDENTIFIED MALE: Wait a minute.

CROWLEY: They were as effective as they were loud. The right left for dead at the side of the 2008 campaign trail stirred, sometimes a bit too vocally.

REP. JOE WILSON (R), SOUTH CAROLINA: You lie!

(CROWD BOOING)

CROWLEY: It was that kind of year, bare knuckles' politics and nation defining moments.

SONIA SOTOMAYOR, SUPREME COURT JUSTICE: I am an ordinary person who has been blessed with extraordinary opportunities and experiences.

CROWLEY: The president wrote more history with the nomination of the Supreme Court's first Latina justice, and he saluted history after the death of Senator Ted Kennedy, a political tour de force, and one of the most accomplished lawmakers of the 20th century.

SEN. TED KENNEDY (D), MASSACHUSETTS: The work goes on, the cause endures, the hope still lives and the dream shall never die.

CROWLEY: Beyond history, there were the politics of the moment. The president made nice at a beer summit with a Harvard professor and the Cambridge cop. And he won a Nobel Peace Prize even he didn't think he'd earned. It was not always about the president...

SARAH PALIN (R), FORMER ALASKA GOVERNOR: Only dead fish go with the flow.

CROWLEY: Who could quit their job as colorfully as Sarah Palin who left the governor's office in Alaska 18 months short of her first term?

PALIN: Thank you for being here.

CROWLEY: She promptly wrote a best seller and slammed the McCain aides for bungling the 2008 campaign and laughed all of the way to the bank. Not laughing...

GOV. MARK SANFORD (R), SOUTH CAROLINA: I won't begin in any particular style...

CROWLEY: Two family-value conservatives Republicans, South Carolina Governor Mark Sanford and Nevada Senator John Ensign. It looked like presidential material in January and toast by December. Cherchez la femme.

SEN. JOHN ENSIGN (R), NEVADA: Last year, I had an affair and I violated the vows of my marriage.

SANFORD: I have been unfaithful to my wife.

CROWLEY: Despite diminished numbers and some boys behaving badly, it turns out that the Republican Party did not die this year. The GOP won governor seats in Virginia and New Jersey, and the president who enjoyed in February the approval of three out of four Americans had dropped by more than 20 points in December.

So ring out the old, ring in the new and strap yourself in -- 2010 is an election year.

(END VIDEOTAPE)

PHILLIPS: And our Candy Crowley is with us live from Washington.

I couldn't think of a better way to wrap up my 2009. So, Candy, your most memorable political moment of the year -- what do you think it would be?

CROWLEY: Listen, I mean, it is just in the moment for momentary "whoa" as you would call it, the "what the" factor, it is really hard to beat a conservative South Carolina governor who tells his staff that he is off hiking in Appalachian Trails and he's actually in Argentina with his mistress who he later calls his soul mate right after apologizing to his wife. So, I mean, I got to tell you, those sorts of stories, they're so shocking and we love those stories that we can't predict or don't see coming. So, that's great.

But just long term, I have to tell you, Grant Park in Chicago on election night -- I was there, and not that far from the president on the press stand. And, you know, even though we saw it coming and the polls saw it coming, there are so few times, you know, history kind of moves in a broad swath, and there rarely kind of moments that you cover that you think, wow, history book, new page.

This is one of those moments, and as a reporter, you know, there was that UPI correspondent that once called reporting -- White House reporting a front row seat in history, that night was a front row seat in history. So, it was amazing to watch as was the inauguration, but it first hit me that night in Grant Park.

PHILLIPS: I'm with you. I feel the same way. I didn't get a chance to be there, obviously, but I was at the inauguration and, boy, it's something you'll just never forget. Whether you are a Democrat or Republican, it was a incredible moment in history.

CROWLEY: Truly, and it's one of those thing where, you know, you see something in the history books and very few people who say, I was actually there. So it's when you realize what an extraordinary privilege to actually do what we do.

PHILLIPS: Happy New Year.

CROWLEY: You, too.

PHILLIPS: All right. Candy, see you soon.

That does it for us. Hope you guys ring it in safely.

Rick Sanchez picks it up from here.