Return to Transcripts main page
Issue Number One
Record Gas Prices; Severe Storms; Gated Ghost Towns; Real Estate Survival; Gas Theft
Aired May 08, 2008 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAL PERRY, CNN CORRESPONDENT: But when you talk about not only this urban area being Beirut and how it feeds the rest of the country, it holds true for the airport, it holds true for this entire nation -- Tony.
TONY HARRIS, CNN ANCHOR: Terrific point. Can't wait to see the piece you put together on this day, Mr. Cal Perry.
CNN's Cal Perry in the middle of a raging gun battle in Beirut, Lebanon for us.
BETTY NGUYEN, CNN ANCHOR: CNN NEWSROOM continues one hour from now. We will, obviously, be following this and many other stories very, very closely.
I'm Betty Nguyen.
HARRIS: And Tony Harris, coverage of the battle in Beirut on "ISSUE #1," which begins right now.
ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Betty and Tony, this is "ISSUE #1." And on most days "Issue #1" starting out on the show is the economy. But right now we are all watching what is developing in Beirut.
Our Cal Perry is on the ground there, just moments ago. He and his crew were pinned behind a building as gun fire rages in the streets of that city. This is, according to some people we've spoken to, a major escalation in a place that has seen escalation and has seen violence in the streets.
To get a little bit of perspective about what is going in Beirut -- going on in Beirut, in Lebanon, what is happening here, how serious it can get and how concerned we should be, I'm joined by our chief international correspondent Christiane Amanpour, who has spent a great deal of time covering this situation for so long.
Christiane, is it fair to say this is a fairly major development. This isn't sort of what we've seen over the last year or so, skirmishes in the street?
CHRISTIANE AMANPOUR, CNN INTERNATIONAL CORRESPONDENT: That's right and it's between the two Muslim factions in west Beirut, which is traditionally the mostly Muslim part of Beirut. They are using, we're told, guns and RPGs, rocket-propelled grenades. This is an escalation in any urban situation and it's possibly the worst violence in more than 10 years.
It's very worrying because it is the Iranian-backed Shiite Hezbollah against the U.S.-backed Sunni government that's in Beirut right now, in Lebanon right now. It comes at a time of complete political paralysis. The parties -- the political situation there is really paralyzed because they have not been able to even elect a president. They've tried 19 times over the last more than a year to do that. They haven't been able to.
There's a huge amount of friction between both sides on this issue. This has really been a very sad development because Beirut and Lebanon was proceeding along a fairly good road to development under former and late prime minister Rafik Hariri. When he was assassinated back in 2005, the situation in Beirut and in Lebanon in general took a very sharp dive.
And tow there's a major political and military struggle, there's a power struggle going on. And it has been going on. And it's almost like a proxy war, if you like, between...
VELSHI: Right.
AMANPOUR: ...those who back one side and those who back another side being played out right in the heart of this critical country which is Lebanon.
VELSHI: Lebanon has been party to proxy wars for decades. Our Cal Perry, as we just heard, is on the streets of Beirut now. He had repositioned because he and his crew were pinned behind a building as gun fire was raging around them. They are repositioning once again to try and get into a safer vantage. And he'll check back in with us as soon as they're back on the ground.
Christiane, what is the broader implications? Cal talked about the fact that there's Israel, there's Syria, there's Iraq. What's the broader implication of this fighting?
AMANPOUR: You know, the broader implication anywhere in the Middle East is always that other nations or other parties can be drawn in. That's always the big worry. You remember just two summers ago there was the war between Hezbollah and Israel.
VELSHI: Right.
AMANPOUR: At the time people thought and even governments in the regions thought that Israel with its far superior military might would be able to defeat Hezbollah and give a clear sign according to many of the Sunni governments, who are American allies and western allies in the region, that Hezbollah could be beaten and probably the Sunni governments would have liked to have seen that.
This is happening, Hezbollah flexing its muscles. And remember, Shiite Hezbollah flexing its muscles in Lebanon at the same time that Iran is ascendant and is also flexing its muscles politically around the Middle East and, indeed, lots of trouble going on in Iraq, as well. So it's really a power struggle between a Shiite minority in the Middle East, but rising, and a Sunni established group of countries which are the majority, but are very concerned about the rise of Shiite power as exemplified by Iran. Then you've got the Syrian aspect. For a long time Syria has been under deep suspicion and investigation about its potential role in the murder of the Rafik Hariri, the prime minister of Lebanon.
And Syria has been blamed, as well, for a series of attacks and assassinations of officials connected to the current government in Lebanon. So it is a very, very precarious situation. All one has to do is cast one's mind back just 30 years ago, 20, 30 years ago when a civil war raged from 1975 onwards, mostly between Muslim and Christian, but nonetheless, brought what was then called the engine of the Middle East, the Paris of the Middle East, the business capital of the Middle East, which was Beirut, to a grinding halt.
And only in the last 10 or so years was it beginning to rise again like a phoenix from the ashes. And this kind of military escalation and spillover is the kind of thing that not only puts page to its current resurgence but really worries the whole region there.
VELSHI: Right. And much of the economic might have Lebanon left and moved into the Emirates, which is really now the economic capital of the Middle East.
That said, does your radar go off? When you see something like this, how do you determine whether or not, boy, this is very worrisome? This is the kind of things that...
AMANPOUR: Well, it is. It is very worrisome because shouldn't ascribe rational motives to those who are basically have got RPGs and gun fire in the street. We shouldn't hope for the best because we've seen where that leads to. It needs really deep engagement by, let's say the United States on one hand...
VELSHI: Right.
AMANPOUR: ...other allies on the other hand of the other countries. It's basically showing what happens when there are counties adrift in that area that are able to basically do what they want to do and cause whatever mayhem and mischief. And the U.S., for instance, has alienated, or rather has put Syria at arm's length, has put Iran at arm's length. There is no engagement.
VELSHI: Now they're engage.
Let's go back to the streets of Beirut. And I remind you this is happening in the city of Beirut. You're looking at those pictures. There is smoke in the streets. We -- I have heard gun fire and RPG fire. And CNN's own Cal Perry is right in the midst of this thing.
Cal, have you repositioned to a safer spot? Because we were listening to you on the phone and we could hear that gun fire and RPG fire behind you. CAL PERRY, CNN CORRESPONDENT: I have to tell you our cameraman and I, Christian (INAUDIBLE) decided as darkness sort of comes on Beirut, we don't have any medical gear. We don't have security (INAUDIBLE) with us. We made a runner, as you say, back to the office as the situation continues to unfold here on the streets of Beirut. We've heard an exceptional amount of automatic gun fire. We've heard RPG fire.
And I can tell you that sound, that sound of rocket-propelled grenades has not been heard in Beirut for some years. This may be everybody's worst fear realized. We heard a fiery speech from the head of Hezbollah today coming out and condemning the government, calling it open war against Hezbollah.
The government two days ago said that Hezbollah needed to basically dismantle its telecommunications network. As (INAUDIBLE) said today that they needed to help protect Lebanon. So really here, we're hearing a lot of gun fire. People have totally abandoned the streets. I'm sure you can see the video of that.
But many sections of Beirut at this hour, a ghost town as there is, these clashes between what we believe to be anti-government protesters and pro-government protesters.
VELSHI: What's the sense, Cal, since you started calling this in maybe within the last hour? What's the sense of how it's developed? As darkness starts to descend on Beirut, are things cooling down a little bit?
PERRY: The pace of it seems to be going exactly as it was about an hour ago or so when this broke out. I haven't heard a letdown in the gun fire. I have not seen the Lebanese army take any steps back. They are really, at this point, staging in areas near where these clashes are taking place. But the Lebanese army really in a very difficult position, of course, they're supposed to try to keep this from happening and calm down the situation if it does happen.
That's really a difficult thing to do, of course, as you're dealing with two heavily armed fashions fighting each other in the streets of Beirut.
VELSHI: Christiane, just give us a little bit more context on that. He's talking about the government being in a tough position. These are people who are waging battle, who, in some cases support the government, but in other cases are -- have entirely different interests.
AMANPOUR: Well, that's right. And you remember after the Lebanon, rather, the Hezbollah-Israel war, the sort of resurgent Lebanese army was tasked with trying to disarm Hezbollah militias. Well, I mean, it just didn't work.
And what's happening is that you have a very strong political party which is Hezbollah. It's strongly represented in parliament. It's strongly represented in all grassroots matters of society, whether it's education, religion, health, all those issues which is why Hezbollah has such a strong political following because it delivers to the people and to its constituents, and it has a very strong military wing, as well.
And this is our essentially a challenge to the central government. And as yet there has not been an effective way or effective -- an effective way that they figure out how to co-exist politically without erupting in this military free-for-all. But as I say, it does make people very concerned because people see it as a proxy situation. They see it as Hezbollah and therefore, its backers in Iran, gaining power.
And they see it as certainly as a worry from the Sunni Arab allies of the region and of the United States, a worry, as well.
VELSHI: Cal, you -- we've seen the pictures of tanks, military armored personnel carriers moving around Beirut. You said they are staging, but you don't see military involvement at the moment in what's going on.
PERRY: It's really hard to say, of course, for the entire city where we just were, the military was faced between a Shia neighborhood and a Sunni neighborhood. We were right along what's known as the green line during the civil war, and that's not a place you want to stand. You're standing, of course, between two heavily-armed groups.
I think Christianne makes the central point to what's going on here. Hezbollah has an incredible amount of support and a lot of that comes from the war as she said. When I was down south last summer on the anniversary of the war of what Hezbollah calls, a quote, "divine victory," talking to people, you would speak to people. Their houses would be destroyed. You say, how can you support Hezbollah? And they would say, well, Hezbollah pushed the Israelis back and we were able to come home.
That's something they weren't able to do in the last war. So the government here is faced within a group with incredible support. Somewhere roughly around a million supporters. This is a huge...
VELSHI: It is a country of 5 million people.
PERRY: Then a country of 5 million people, exactly. And this is a very powerful Shia group. It has incredible support not only here in Lebanon, but as Christiane mentioned, in Iran, as well. So the army really, I hate to use the phrase, but between a rock and a hard place.
How do you put yourself out on to the streets when there is such heavy fighting in the Lebanese civil war that lasted some 15 years? And this is really the fear that everybody has, is that this country is headed back in that direction during the civil war.
The Lebanese army almost was fractionalized. It stayed in its bunkers a lot of the time and didn't come out. And the fear here on the street is that that could happen again, that this could slowly spiral into something worse, something sectarian. When you walked down the streets of Beirut, you 're faced every day with the scars of the civil war literally.
There's buildings that still have bullet holes and shell casings that have gone through the building. So it's absolutely fresh in everybody's mind.
VELSHI: Cal, stand by. In Beirut as well is CNN's Brent Sadler.
Brent, where are you and what's your vantage point?
BRENT SADLER, CNN BEIRUT BUREAU CHIEF: I'm in a Christian district to the Lebanese capital. The Christian areas, Ali, have been quiet throughout the day escalating tension and gun battles. But not very far away from my location I've certainly heard the thump of rocket-propelled grenades and very heavy machine gun battles with the kind of intensity I haven't heard here for a long, long time.
And I covered the civil war throughout much of its entirety. And also I saw what happened in the 2006 civil war along with Cal. This is a very, very destabilizing moment. A possible pivotal moment for what happens next in Lebanon.
But let's not forget this street fighting has not come out of the blue. This is a result of polarized, vicious internal politics, essentially involving outside powers, as well. Syria and Iran backing the anti-government forces and the United States and other allies of the U.S. backing the Lebanese prime minister.
VELSHI: Very good point.
SADLER: It's a very serious moment certainly.
VELSHI: Very good point that you've made and Christiane has made and Cal has made, because when we think about his, maybe having been a result of a telecommunications matter or a labor strike. Clearly, we're not used to seeing this sort of results. So it's definitely something much bigger.
The context that we continue to try and understand, because our viewer will have seen tensions arise in Lebanon as far back as one can remember. Decades to the war into 1996 to 2006.
What is different this time to you, Brent? What's the thing that has changed?
SADLER: Well, that's a very sad and tragic point, Ali. If you look at what's been happening in the streets today, this is reminiscent of what happened at the start of the civil war back in 1975. Young men with guns, assault rifles, wedding with -- magazine, bullet magazines attached on grenades, and hammering it out for turf wars trying to take over each other's political offices.
And the army trying to stabilize the situation but not getting involved, because if it did, that could make matters much worse for the militarily, because the military is made of religious groups itself and put pressure as it did back in the 1980s. So Lebanon really is on the verge of another abyss right here at the moment. VELSHI: Brent, what could happen -- you know, Cal has said this could be everybody's worst nightmare that it escalates further than it has. And frankly when you think that there are not just gun fire in the streets, but rocket-propelled grenades, for most of us, that sounds like about a bad an escalation as you can have. What can be done to stop this? What can turn this around?
SADLER: We heard the comments of Hassan Nasrallah, Hezbollah's leader. We have not heard yet the Lebanese prime minister in any great depth. We have not heard from Saad Hariri, who's the leader of the parliamentary majority and whose supporters have been locked in some of these battles trying to say they claim to push our armed opponents out of their turf.
And really, if this is a situation that's made internally by the political leaders themselves, then that's a very dire situation, because that means that for the many months we've reports of formal militia re-arming and training for a possible civil war, then that's very much where this could be headed. That is what every fears here. There is a hope outside powers involved in this do not want to see Lebanon degenerate into another civil war at this time. And at the international level they may calm it down.
As for that street, the escalation for street levels began. And that's what everybody is seriously -- there is a hope that outside powers involved in this, do not want to see Lebanon degenerate into another civil war at this time. And head's up international level may (INAUDIBLE) what comment down. But given what we've heard from this throughout the day, it seems that after that speech, that's when the escalation in terms of the street battles begun.
But this is not throughout all areas of the Lebanese capitol. This is still relatively speaking confined to areas where the divided Shia to Muslim communities or Sunni communities are face-to-face, cheek by jaw, shooting at each other.
VELSHI: All right, Brent. Thank you so much.
Brent Sadler is our Beirut bureau chief. Cal Perry is on the ground in Beirut. We are going to continue to follow those. For those of you who have joined us, there's been a fairly serious outbreak of violence in Beirut. There's gun fire on the streets, we have reports of rocket-propelled grenades. We are continuing to cover this in CNN.
Our chief international correspondent is with us, Christiane, having seen what you've seen in the last hour, give us some sense as we take a break away from this for a few minutes. What you think is going on right now.
AMANPOUR: Well, just very quickly as Brent said, it's not citywide. It's in the Muslim suburbs basically between the two Muslim fashions, Shiites and Sunnis. Back in the civil war in '75 it was between the Muslims and the Christians and it raged over most of the city. But the real issue is that this is a place of vital interest for the United States and for the region. It cannot be allowed to sit and degenerate into this. Engagement needs to happen. And politics has to be -- or policy has to be made by outside powers who can and who have influence there to stop this. If it does escalate because it does escalate, it will be like it was in 1975.
VELSHI: Very hard to pull out also.
AMANPOUR: I would be very, very difficult.
VELSHI: OK. Christiane Amanpour, or chief international correspondent. CNN hasn't all our resources covering this. And we will break back into this story with any other developments or news that we have. We are following closely the escalation of violence in Beirut. -- Gerri.
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Up next, record gas prices, record oil prices. What one man says needs to happen to break the cycle. And we'll have the latest on the biggest housing bill on the House floor.
(COMMERCIAL BREAK)
WILLIS: Welcome back to "ISSUE #1." Law makers on Capitol Hill are about to take a step toward what they believe will help heal the downed housing market. Home values, as you know, are down, foreclosures are up with many, many folks struggling just to stay in their homes. And just hours from now a major housing bill will likely pass on the house floor even as the president is threatening to veto it.
CNN's Jeanne Meserve is live on Capitol Hill right now with the very latest.
Jeanne, what's going on?
JEANNE MESERVE, CNN CORRESPONDENT: Well, Gerri, the neighborhood stabilization bill has just passed. But the big debate today is going to be over legislation that would provide up to $300 billion in government-guaranteed loans to people facing foreclosure. The sponsor of the bill, Congressman Barney Frank says it is absolutely imperative for the overall economy that the housing prices be dealt with aggressively, but the White House has said, wait a minute.
Should responsible taxpayers, people who have made wise judgments, be bailing out people who are imprudent in the investments they made and the White House has threatened to veto. Despite that fact, Democratic aids say they do expect this bill to pass. They are looking for Republican support, particularly from Republicans in states hard hit by the housing crisis.
That would be people from California, Ohio, Nevada and Florida. As for what's happening in the Senate, well, we have one of the experts here, Senator Richard Shelby of Alabama, ranking Republican on the Senate Banking committee. The Frank's bill, as it stands now, is that something you could support?
SEN. RICHARD SHELBY (R), ALABAMA: Well...
MESERVE: ...if it came to the Senate?
SHELBY: Well, I would have to evaluate it. How are we going to pay for it? What is it going to really do at the end of the day? And have -- do we really know if housing prices have bottomed out? All these factors have to be considered.
The president that you referenced has already said gosh, you know, we look -- could look at a veto because of where we're going to get the money and what it's going to do? I think Senator Dodd and I are in negotiations in the Senate on GSE reform, FHA reform and, of course, on housing project.
MESERVE: Do you think you're going to be able to reach a compromise that would be acceptable to the White House, too?
SHELBY: Well, I think if we reach a compromise, it would be acceptable for the White House because as a Republican and the former chairman of the committee, I'm going to do everything I can, work with the administration, make sure that the program works for those it's intended to do and make sure we can afford it as a nation.
MESERVE: Is there a real possibility that Congress could do absolutely nothing towards the rest of the house?
SHELBY: Well, it's always a possibility. But I think right now that the best of me says we ought to try to work this project out. In other words, the proposal and see if we can have GSE reform, see of we cam have FHA reform and see if we can reach some kind of accommodation on housing where it would work and if we can work out the costs.
MESERVE: Because you as a member of Congress have to be getting pressure from your constituent once this?
Well, some. Well, some, but in my state of Alabama the economy has been good. We have not had that many foreclosures. But we have to look at the whole nation, not just my state.
MESERVE: Great. Senator Shelby, thanks for joining us today.
SHELBY: Thank you, Jeanne.
So that's the forecast, Gerri, on what's going to be happening on the Senate side. Still very deep in negotiations.
Back to you.
WILLIS: Jeanne, thank you for that. I guess the beat goes on. And we'll see what Congress said -- eventually comes up with. The folks in Congress, of course, aren't the only ones split on whether to help people facing foreclosure. The rest of the country is split, too.
Senior political analyst Bill Schneider now joins us with the very latest poll numbers.
Bill, what you got?
BILL SCHNEIDER, CNN SENIOR POLITICAL ANALYST: We'll, people were reminded that in the past few years banks and other financial institutions have lent money to people who eventually found they couldn't afford it and they are facing the loss of their homes. But whose fault is that? The lenders who gave it to people without enough security or the people who borrowed the money without being able to afford it?
Well, we asked. Do you think people should receive special treatment that would prevent them from defaulting on their mortgages and the answer is -- people are split. 49 percent in favor, 48 percent say they oppose such help. They are divided pretty much down the middle on this issue. They just don't know.
WILLIS: Well, Bill, you know, obviously a divisive issue out there. Who is on each side of that issue? Is it Democrat-Republican? Does it split another way?
SCHNEIDER: Well, you just saw the Democratic House passed the bill to assist people, to provide some sort -- assistance to people facing foreclosure. The Republican president said he would veto that measure. Well, it does split along Democratic-Republican lines. By nearly 2 to 1 Democrats say they would support special assistance to people who are facing closure.
Republicans, by nearly 3 to 1, say they oppose that kind of special interest. Republicans usually are closer to business and financial institutions and have a strong belief in personal responsibility. Democrats historically have been more sympathetic to the poor and people who are facing financial crisis. Independents, well, just as you might guess, they're divided right down the middle.
WILLIS: Bill, fascinating numbers. Thank you for that.
VELSHI: OK. Well, it is a busy, busy day. We've got strong storms in the south. Chad Myers is keeping an eye on them. Plus we're keeping an eye on the situation that is escalating in Lebanon. We're talking about the price of oil and what it is going to take to bring it down.
Stay with us, you're watching "ISSUE #1" right here on CNN.
(COMMERCIAL BREAK)
WILLIS: More pain at the pump after a slight, very small reprieve. Gas prices have jumped yet again to a new record high, according to AAA. The new national average price for a gallon of regular unleaded is $3.65. That is 20 percent more than this time last year when the price was $3.03.
Now the spike is attributed to the new record high for crude oil with the futures price closing in on $124 a barrel.
VELSHI: Thanks, Gerri. Well, for more on oil we turn to Dr. Stephen Leeb, he's an economist with Leeb Capital Management. He's also an -- the author of a book called "The Oil Factor." And I have you called "The Oil Factory," and I have to say Steven, you called this a long time ago. You thought that we're going to see these gas prices and these oil prices where they are.
Now tell us what's next? Where are we headed with oil prices? We've heard $150, we heard $200 a barrel. .
STEPHEN LEEB, LEEB CAPITAL MANAGEMENT: Ali, I think it's a protracted uptrend. I don't see it ending any time soon. I mean this country and the world has to wake up that there really is no easy answer to this. I mean the only real answer from our perspective is to declare war on energy. I mean we have to build out on a massive level an alternative energy infrastructure.
VELSHI: Hillary Clinton said actually said something like we have to treat it like we're putting a man on the moon.
LEEB: I think even more so. We have to treat it like it's World War II but mercifully no one has to die if we do things right. We have to prepare to spend trillions of dollars, maybe that's that what we've spent for putting a man on the moon. But yes, it's not a Manhattan project. It's probably 50 or 100 Manhattan projects. But the nice thing about it, Ali, we do have the technologies, but we just don't have the recognition of how serious this problem is.
Last month, Russia and in not-so-many-words, but insistently Saudi Arabia announced. They really don't have a whole lot more or else provide the world, at the same time, the developing word, 5 and a half billion people strong, are craving more oil.
They cannot conserve. We can conserve here. Europe can conserve. But 5.5 billion people, whose economy now is greater.
VELSHI: They're not talking about in India and China. Boy from SUVs to smaller cars. You're talking about people who are getting the first cars they've ever had. So they're only going to be on an up trend in terms of how much they consume.
LEEB: For the foreseeable future. I mean, if they just get to halfway where we are now, where the world is now, that's another 200 million barrels per day. There's no way that happens. It's impossible. Game over. We have to really change the way we're doing things and this has to be priority number one, issue number one, for this country, if you will, has to be energy or, Ali, I really fear for our way of life.
VELSHI: We have talked for years, Stephen. We talked when oil was $20 a barrel and we talked about it going to $50 and then $60 and $70 and all of these things. And one of the things that always came up is, as oil gets to $50, all these new technologies will be viable. And then at $80, all these new technologies will be viable. I'm guessing at $120 a barrel, I can get oil out of paper. Why is this not the point where we do all of that?
LEEB: It just is not there because we're almost chasing our tail. The more you try and get oil, the more oil it takes. I mean, you just take this discovery that Petrobras (ph) made.
VELSHI: In Brazil.
LEEB: In Brazil. They claim to have as many as 30 billion or 35 billion barrels of oil. But where is that oil? It's 30,000 feet deep in the ocean. You have to go through 7,000 feet of salt flats. It's very likely, and I don't know this and no one knows it, but it's very likely it would take more energy to go down there than the energy you would get out.
It takes oil to make oil. And as the oil becomes harder and harder to find, whatever technologies you have really don't work.
Now where the technologies can come in is that this is a kind of vicious circle. Because as oil goes up, it becomes more expensive to find other commodities. It's no coincidence that it's not just oil that's rising, but so is zinc, so is aluminum, so is everything else. Where the technologies can come is energy efficiencies in finding these other commodities, which are all so vital and they're going to be vital for building out an alternative energy infrastructure. It's a mess we're in but we can get out of it if we recognize how serious it is.
VELSHI: Stephen, we have so much more to talk about. We haven't even touched on it. We want to talk about some of those other technologies. So we're going to have you back on to do that. Economist Stephen Leeb of Leeb Capital Management and the author of "The Oil Factor."
Gerri.
GERRI WILLIS, CNN ANCHOR: Up next, yesterday's hot spot is today's ghost town. So we'll explain what that's all about.
And we'll tell you why gas theft is quickly rising and what's being done to put a cap on it.
ISSUE NUMBER ONE rolls on next.
(COMMERCIAL BREAK)
WILLIS: Busy news today here on ISSUE NUMBER ONE. We have some severe weather in Mississippi and Alabama. For that we go to Chad Myers in the CNN Weather Center.
Chad, what do you have?
CHAD MYERS, CNN METEOROLOGIST: Well, it's Mississippi and Alabama right now. That's where the tornado watch is. But this is going to go all night long, Gerri. It's going to run into Atlanta, Georgia. It's going to run into the Carolinas. Maybe another small batch out through the mid Mississippi valley. Here's what the radar is showing now. The big box you see, it's kind of a parallelogram. That is the tornado watch box. That means inside that box some storms may spin. Those spinners may produce tornadoes. That's two mays and a maybe in there.
So we're not seeing anything spinning right now. We're not seeing anything significant at this point. But we do have what's called super cell tornadoes. See how they're out there all by themselves? Those are the ones that I'm worried about for today.
It is going to be busy all afternoon long. And not just here in this area, but anywhere that is painted red. Look at this, all the way from Virginia through the Carolinas, back into Tennessee, as far south as New Orleans and then one small spot there back out to Kansas.
The one that I'm really worried about though, I'm worried about central Alabama. You are right in the bull's-eye for a large, developing tornadoes, large hail and isolated tornadoes here coming through from the south and a lot of lightening too. We'll keep you advised here all afternoon long as those tornadoes fire throughout the day.
Gerri.
WILLIS: Wow. What's a super cell, Chad? I've never heard of that.
MYERS: It is when you get a line of cells, Gerri, they're all fighting for the energy. And they can't make one big -- it's like, OK, here's a good example. You've got 10 puppies and one bowl of food. You put 10 puppies in. The 10 puppies all stay small. But then you put one puppy with that one bowl of food, he gets to be the big dog. Well, the one puppy gets to be the big dog. We want a lot of little puppies and not a lot of big . . .
WILLIS: That was a great metaphor. Thank you, Chad. I know you're going to be busy. It is a severe weather day. You'll be on this all day through "AC 360." And we'll check back in with you if something new pops up.
MYERS: Fair enough.
WILLIS: Thank you for that.
VELSHI: All right. During the housing boom, there was lots of brand-new, shiny housing communities popping up all over where there was great demand for new homes. Now in the middle of the mortgage meltdown, some once prosperous areas are becoming these gated ghost towns. CNN's Thelma Gutierrez has the story.
(BEGIN VIDEOTAPE)
THELMA GUTIERREZ, CNN CORRESPONDENT, (voice over): Remember the housing frenzy just three years ago, when frantic buyers camped out in front of sales offices? FAFIE MOORE, BROKER OWNER, REALTY EXECUTIVES: It was like getting rock star tickets. They would bring their sleeping bags, they'd spend the night so that when the next release came they could be in the lottery.
GUTIERREZ: A lottery to buy mega homes, sight unseen.
KATHLEEN BOYD JONES, HOMEOWNER: We stood in line to get this particular house. And my husband went out at 7:30 the night before.
GUTIERREZ: For the Jones, it was their big chance to buy into this brand-new, upscale, gated neighborhood in Las Vegas.
JONES: Dream house and then dream community, yes. Absolutely.
GUTIERREZ: So when Kathleen Boyd Jones and her husband, Robert, finally closed on their $800,000 custom home in the desert, it was like winning the lottery. Now it all seems like a distant memory.
Which homes are actually unoccupied?
JONES: Well, the one right here on our left and the one next to it. This is foreclosed on. Over here, nobody's ever moved into that house at all.
GUTIERREZ: And this home?
JONES: The house next to it was a renter. And they got foreclosed on at the beginning of the year.
GUTIERREZ: The Jones' gated neighborhood is virtually a ghost town with 75 percent of the homes vacant. It's now up to Jones and two other families who live here to maintain the community because the homeowners association is broke.
JONES: With the dues not being paid, we can't pay the landscaper. The landscaper doesn't want to work. There is three of us that are going around spraying for the weeds, cleaning the shrubbery up. On the outside of our property, which is one square block.
GUTIERREZ: So you found yourself not just having to take care of your yard, your property, but you're also pretty much taking care of this entire community.
JONES: Yes. Someone has to do it. And I have too much invested here.
MOORE: This is a four-bedroom home with three and a half baths and it's over 4,000 square feet.
GUTIERREZ: Fafie Moore is a Las Vegas real estate broker. She says even homes like this one are not immune to the mortgage meltdown.
MOORE: Well in 2005 and even into some of 2006, we were like an out-of-control freight train here in Las Vegas. People were in a frenzy. They were buying. They were not thinking about what the values were. Now we're like we're in the emergency room and we're trying to stop the flow of blood and stabilize everybody.
GUTIERREZ: The Jones say they will weather the storm and protect their investment, even though it's worth $300,000 less than when they bought it.
Thelma Gutierrez, CNN, Las Vegas.
(END VIDEOTAPE)
WILLIS: A new study says more than half of homeowners who purchase during the market peak in 2006 now owe more on their mortgage than their home is worth. That's what's known as being up side down in your mortgage. So just what are the new rules for survival in such a tough market? Amanda Gengler is from "Money" magazine. She's joining us now.
Great story in "Money." Really interesting stuff. Let's get right to it. Let's talk about the buyers because those are the folks would could really benefit right now. You say, you know, it's time to buy. But I've got to tell you, you could buy a house now and it could be worth less in 12 months.
AMANDA GENGLER, WRITER, "MONEY": You have to face it. If you buy today, your house is, more than likely, going to be worth less next year. So that might have you thinking about wanting to time the bottom of the market.
WILLIS: Can you do that?
GENGLER: That's really hard to do. And also recognize, this is the best buyers have had it in nearly two decades. You have an unbelievable number of homes to choose from. You also have relatively low mortgage rates. So we would suggest taking your time, finding a property that you truly love and then making an offer say 10 percent below what you think it should go for.
WILLIS: All right. Let's talk a little bit about a subject I know is near and dear to the hearts of a lot of buyers out there, which is foreclosures. They think they can get a great deal out there. You say avoid the foreclosure. You don't need to try that. You can get a good deal without even going there.
GENGLER: The problem is, when you buy a house, you're also buying into a neighborhood. And foreclosures tend to be bundled together in places where investors and owners used risky mortgages to buy homes that they couldn't afford. So prices are likely to continue to drop in those areas. And the quality of life is also likely to come down as well. That's particularly a problem in developments that popped up in the last year or two because there you have the most owners with little equity and these risky mortgages (ph).
WILLIS: All right. So if I am a seller out there though, and these are the people who are really in trouble, you say drop your price 10 percent before you even come to market. Why would I be cutting my price so quickly?
GENGLER: You don't want to price the market according to yesterday. That's the biggest mistake sellers can make because the first people that come and look in your house are the people that are most likely to buy and also to pay the highest price. So if there's a glut of homes on the market, we suggest come in at a price 10 percent below what you think others are going for. The best-case scenario, it will generate buzz, you'll attract more than one buyer . . .
WILLIS: And you'll get some folks in, right?
GENGLER: And you'll push the final price up.
WILLIS: All right. Let's talk about -- we've got to get something on home staging because you say hire a home stager, pay them thousands of dollars. Pay them thousands of dollars? Can't I just neutralize my walls and clear the clutter myself?
GENGLER: First of all, we definitely recommend an initial consultation. And that can be, you know, a couple, $200, $300. But home stagers are going to see things that you don't see. And in today's market, it's very important that you make your home stand out. So you might have thought or you might think that you've cleared away all of the clutter, but the home stager may come in and say, all of those family photos, that trophy collection that you have, that furniture needs to go.
WILLIS: All right then. All right. Amanda, great story. You can see it in "Money" magazine's special issue on housing. You'll definitely want to pick that up. And we'll have Amanda back to talk more about these issues.
Ali.
VELSHI: Thanks, Gerri.
Up next, why gas theft is a fast growing crime and what's being done to stop it. You're watching ISSUE NUMBER ONE right here on CNN.
(COMMERCIAL BREAK)
VELSHI: Well, the slow economy could be to blame for higher crime rates. One place crime is definitely increasing is at the gas station. Gas is more expensive than it's ever been. And you'll be amazed at the lengths that thieves will go to to steal gas. CNN's Kathleen Koch takes a look at this disturbing trend.
(BEGIN VIDEOTAPE)
KATHLEEN KOCH, CNN CORRESPONDENT, (voice over): It's become a regular feature on convenience store security cameras, a driver taking off without paying despite the owners efforts to chase him down.
UNIDENTIFIED FEMALE: The drive-offs are becoming more frequent.
KOCH: One Seattle area thief would pull in after hours and use a master key to unlock the pumps, filling barrels with hundreds of gallons.
Individuals, too, are becoming targets. Thieves in this Almir Vilacheck's Atlanta apartment building.
ALMIR VILACHECK, GAS T HEFT VICTIM: I wake up in the morning on the way to work and the gas tank is empty. I mean this happened probably about four or five different times.
KOCH: Matri Edwards and two of her Shelton, Washington, neighbors awoke to find their gas tanks bone dry.
MATRI EDWARDS, GAS THEFT VICTIM: That was ours, you know, why would you take that from someone?
OFC. MIKE FIOLA, SHELTON, WASHINGTON POLICE: Whenever we have an increase in gasoline prices, we have an increase in gasoline thefts.
KOCH: Convenience store report so-called drive-offs surge every spring. Gas theft cost the industry $134 million in 2007. Who pays? The station owners. Most who have just one store and make little profit on gas sales.
JEFF LENARD, NATIONAL ASSOCIATION OF CONVENIENCE STORES: In the course of a year, they'll make about a penny and a half profit per gallon. So you're looking at about $60 a day in profit at the pump. When somebody peels out stealing $60 worth of gas, you're essentially looking at the day's profits.
KOCH: How to stop thieves? Switch all stations to prepay.
But some store owners are reluctant because many customers then use credit cards, which charge the store fees of 9 cents a gallon or more.
Increase penalties. Twenty-seven states allow judges to suspend the license of someone convicted of gas theft. Park in garages or on the street in well-lit areas with the gas cap on the traffic side.
EDWARDS: They were $20 each.
KOCH: Matri Edwards bought locking gas caps to protect an increasingly valuable commodity.
EDWARDS: People are going to be trying to get it however they can if they can't afford it.
KOCH: Kathleen Koch, CNN, Washington.
(END VIDEOTAPE)
WILLIS: Up next, we'll open up the Help Desk. You sent us questions. The CNN Money team, they have the answers. The address, issue1@cnn.com. You're watching ISSUE NUMBER ONE.
(COMMERCIAL BREAK) WILLIS: Well, you sent us questions. We give you answers. The Help Desk is back with answers to your e-mails. All right. Let's start with Amanda Gengler. She's a writer for "Money." Jeanne Sahadi is a senior writer with cnnmoney.com. And, of course, our very own Allan Chernoff. He is a senior correspondent for CNN.
The first e-mail here is from Amber in North Carolina. She asks, "where can I find an affordable financial adviser?"
Everybody asks this question, Amanda. And, of course, it does cost a lot of money to get professional money help. Where should folks look?
GENGLER: One of the first things you want to look for is someone who charges by the hour. A fee-only planner who's not going to charge you based on the product that they put you in. The National Association . . .
WILLIS: And take a commission, right?
GENGLER: Yes. It's napa.org is their web site for the National Association of Personal Financial Advisers. Garrettplanningnetwork.com is also a great nationwide group.
WILLIS: I like that idea because then you only pay for what you need.
Let's go to the next e-mail. Thomas in Florida asks, "I would like to understand why, with the price of a barrel of oil goes up, we feel it immediately at the pump? Yet when the barrel price goes down, it takes forever to appear at the pump."
Allan, I think everybody feels this pain, that we don't feel like we're getting the best price out there. Why is that?
ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: The retailers say they feel the pain, too. If you can believe that. The fact is, the margin for selling gasoline at the pump is very, very thin. And the retailers, they say that they do bring the prices down as quickly as they move them up. Of course, I think we're all entitled to disagree with that. The pain we feel, of course, much more when the price does go up. They gradually -- they do get around to lowering that price but, yes, maybe it does take a little bit longer to pull it down.
WILLIS: It sure feels that way, yes. It seems like prices always go up faster than they come down for any commodity.
An e-mail from Adrian who asks, "I am anxiously awaiting my stimulus check from the government. If I owe back taxes, will (the check) go to pay off that debt?"
Jeanne, I come on.
JEANNE SAHADI, SENIOR WRITER, CNNMONEY.COM: It's a bad answer. The answer is, yes. If you owe back taxes, the federal government, the state government, you're going to see your rebate reduced or eliminated. They're going to take that money first to pay what you owe. The same thing with child support payments, if you're back on your student loan payments. Yes, you're not going to see as much as you thought, if anything, depending on how much you owe.
WILLIS: And I know a lot of people are looking forward to these stimulus checks, but I think a lot of it is going to go right to the gas station.
Jim in New York has a question. Jim asks, "banks are charging double-digit credit card interest rates, yet banks can borrow from the fed at very low rates and certainly are paying very low interest rates to those with savings accounts. Who do we put pressure on to get those usury laws back on the books? We would have a lot more income to spend if we weren't being mugged by big corporations in bed with big government."
You guys need to pile on here. I mean, people are frustrated out there with their what they're paying on their credit cards.
CHERNOFF: Good luck. I mean, yes, it is a great business. You're minting money really if you're in the credit card business. And the fact is, you can complain all you want. With the lobbyists that the bankers have in Washington, this is not going to change. My advice is, just keep your level of debt on your credit card as low as possible. Wipe it out if you can.
WILLIS: But, you know, come on, Jeanne, you can call and ask for a lower rate. You can certainly jump card to card. But at the end of the day, isn't the best idea just not to carry credit card debt?
SAHADI: Well, yes, that's the best idea. But if you are carrying credit card debt, if you're paying it off responsibly, you can really make a case with your credit card company, especially if you've been a customer for a long time. Call them up and say, hey, you know what, I can go get another credit card. I can take my business elsewhere. You're making some nice interest off of me, so don't . . .
WILLIS: Right. I think that's a great idea.
Great questions. Great answers. I'm going to say thank you to the panel. Amanda Gengler with "Money," Jeanne Sahadi and, of course, Allan Chernoff.
Guys, thanks for the great answers. We appreciate it.
Ali.
VELSHI: Gerri, we keep telling people, if you want to book a flight, do it now because air fares are going up. We're going to tell you now who is charging you more for your next flight.
Then, coming up at the top of the hour, the latest on the violence in Beirut and the latest on severe weather in the south. Chad Myers is keeping an eye on that.
You're watching ISSUE NUMBER ONE on CNN. Stay with us.
(COMMERCIAL BREAK)
VELSHI: Well, if you think you're paying too much for your airplane tickets right now, these prices might leave you grounded in the future. Delta Airlines is raising airfares. It's the 15th attempt by airlines this year to up prices. Now they say it's to offset high oil prices. They're charging an extra $20 on round-trip tickets.
Now American Airlines and Continental are following suit. American is matching the full fare increase, while Continental is starting to charge more on 20 percent of its flight routes. Fuel surcharges on many flights now exceed the actual base air fares. What a thing. It's really getting expensive.
WILLIS: It's getting expensive to fly. And I'll tell you, if prices go where Goldman Sachs is forecasting, I think the airline industry will change entirely.
VELSHI: And those prices, Goldman Sachs, talking about $150 a barrel to $200 a barrel for oil sometime between the next six months and two years. Wow, that's a lot of money. We're all going to change our habits.
WILLIS: That's a very big deal. We'll start taking the train, OK.
VELSHI: Yes.
WILLIS: For more ideas, strategies and tips to save you money and protect your house, watch "Open House" Saturday's, 9:30 a.m. Eastern, right here on CNN.
And for more on how the news of the week affects your wallet, tune in to "Your Money" Saturday's at 1:00 p.m. Eastern and Sunday at 3:00 right here on CNN.
VELSHI: The economy is issue number one. We here at CNN are committed to covering it for you. ISSUE NUMBER ONE will be back here tomorrow, same time, 12:00 p.m. Eastern, right here on CNN.
A lot of breaking news to follow today. Let's go back to Don Lemon and Brianna Keilar in the CNN "NEWSROOM."
