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Fast-Moving Wildfire Consumes Homes; Global Leaders to Meet on Economy; Obama Transition Team Weighs Possibilities; FDIC Proposal Would Backstop Mortgages; Nebraska to Reconsider Safe-Haven Law
Aired November 14, 2008 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)
T.J. HOLMES, CNN ANCHOR (voice-over): It's a small world, and economically, getting smaller all the time. Could a global get- together in Washington prevent or slow down, or reverse a global recession?
UNIDENTIFIED MALE: You can see when those winds gust up just how powerful that fire is.
HOLMES: It came out of nowhere. Wildfire consumed more than 100 homes, threatening hundreds more overnight. We're live in the canyons (ph) of Southern California.
UNIDENTIFIED MALE: I would say, run, won't walk to that store, and buy something quickly.
HOLMES: Tightwad Todd, tips for you on how not to get stuck with worthless gift cards in a brutal economy.
(END VIDEO CLIP)
HOLMES: High there, everybody. I'm T.J. Holmes live in CNN headquarters in Atlanta, Georgia, sitting in today for Kyra Phillips. You are in the CNN NEWSROOM.
We need to start out west with some wildfires, a wildfire that is just a big, scary monster right about now. Fast moving, being waged -- a war all-out in Southern California. This one you're looking at in Montecito. This is near Santa Barbara. It's destroyed more than 100 homes so far. And this is a pretty ritzy area over there. Several buildings on a college campus, Westmont College specifically, have been burned to the ground or have suffered major damage. Thirteen people have been injured in this fire that we know of.
It started yesterday, just last night. Spread quickly. And it's giving thousands of people little time to pack up and get out of there. Well, right now the flames being whipped by high winds, and it's torched more than 2,500 acres.
CNN's Ted Rowlands there with us, along the front lines in Santa Barbara, as hundreds of firefighters battle those flames. Also, our meteorologist, Chad Myers, keeping track of things out there. The water conditions all-important in this particular fire. We'll check in with Chad in just a second. We do want to start out there with you, Ted. Ted, what are the signs? This thing keeps getting bigger? Or do they feel like they're starting to get this thing under control a bit?
TED ROWLANDS, CNN CORRESPONDENT: Well, T.J., the weather really is the headline at this hour. And as bad as it was last night, it is fantastic right now, and firefighters are using this window of opportunity to really battle this thing. They say it's not under control by any stretch of the imagination. Still have 5,000-plus people evacuated from this region, and that will be the case for at least the rest of today, while they battle this blaze. Zero percent containment.
But because last night the winds were about 70 miles per hour. Now, just a whisper of wind. Because of that they're able to use the heavy air tankers and the helicopters. And they say this fire's not moving in any direction significantly, because there's no wind. So upper hand right now to firefighters.
Last night, totally different story. The upper hand went to Mother Nature. This fire ripped through the hillsides here. And you mentioned these multimillion-dollar homes. There's an array of homes in this area, and every one of them was in danger. And people were given literally moments to get out of their homes, grab their pets if they could, grab their valuables and get out. They were on mega phones saying, get out, get out. And for the most part, people did.
You mentioned the 13 injuries. Two of them were significant burn injuries to civilians. One of -- one firefighter was also burned. But those civilians are in a burn unit at this hour, being treated for those injuries.
Bottom line, according to authorities, this fight is not over yet.
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RON PRINCE, SANTA BARBARA FIRE CHIEF: We are going to, I guess, have a tough day ahead. Control of this fire is not even in sight. We are bringing in an incident management team, CalFire incident management team. We're doing a transition this afternoon. And the next 12 hours is going to tell the tale terms of what we can really do with this fire.
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ROWLANDS: Firefighters say one thing that really worked out well during this chaos was, you mentioned the Westmont College. A number of students were up there. In excess of 1,000 students all went into a gymnasium, which is a fireproof building. They ha=d practiced this drill before. They went in there. The fire ripped through the campus, took down some dorms and some other buildings, but all of those students and the faculty members there were safe. So a possible tragedy averted because of pre-planning.
They're still fighting this thing. But given the amount of homes, T.J., in excess of 100, the fact that nobody perished in this fire really, truly is amazing.
HOLMES: Indeed, absolutely is. Ted Rowlands for us. And looking at these pictures, they are amazing. Ted, we'll check back in with you.
Chad, let's go to you now. All-important in this fire has been these wind conditions, and the wind has been whipping this fire. I mean, it's amazing to think this just started last night.
CHAD MYERS, CNN METEOROLOGIST: Right. And Malibu Hills still has winds of about 53, gusts of 53 miles per hour. Ironically, the area now that has the fire, the winds are calm. And this is great news, because there's air support out there now. At least ten helicopters, according to KTLA's helicopter pilot, and now big tanker truck, big tanker planes flying over, putting that down, that retardant.
Here's what we've got, really. We have a number of scenarios coming down. As the fires whipped up the canyons and up to the top of the mountains yesterday, the wind that blew the fire and blew the flames, the flames fanned -- the flames, he tried to say -- all the way up to the top. And then, by the time they got there, what happened? These sparks are going to fly. Fly from one to another. And they flew all the way across and jumped -- jumped fire lines that they thought they had. And then the homes are right there, and the homes were really, really in trouble.
So what do we have for you for this year so far? 2008, about 5 million acres burned. An average year, 6.5. We're not even there yet.
Some of these iReports. You can see. There's the city right there. The fire's right there in the background.
Another one here, from Ted Daniels (ph). How about waking up to that picture? That's a little bit scary.
Let's flip to the other side, Dave. We'll get to where we are here. We don't need that right now. Here's L.A. Basically, so you have to go all the way up toward Oxtown (ph), all the way up towards Santa Barbara. This is where the fires are right now. We'll get right here to the middle. The fires are here along the coastal range. Not so much in the mountains, and that's the problem. Because right here along the coast, that's where the homes are.
And right now, the KTLA helicopter pilot said, "You're saying 100 homes? That's a conservative number." He can count 100 -- 100 homes just looking down in one spot. There are probably more homes destroyed than that.
HOLMES: Wow. All right. Chad Myers, keeping an eye on those weather conditions. Chad, we appreciate you. We'll be checking in with you plenty this morning.
We do want to turn now to the economic mess we've been reporting about the past several weeks now. In 1944 -- excuse me -- allies on the verge of victory in World War II met in New Hampshire and wrote the rules for the post-war global economy. It was the so-called Bretton Woods agreement. It happened in Bretton Woods, New Hampshire. Well, they still apply, but maybe not for much longer.
A live look at the White House right now on a gloomy day in Washington, D.C. Well, today 20 of the world's most powerful and/or fasted developing countries are meeting there in D.C. to look for a common solution to the worldwide economic meltdown.
CNN's Richard Quest joins me now with a preview of this.
Richard, always good to see you. But tell us -- here we go again. You've got a bunch of world leaders meeting. Are they going to come out of it with anything that can help people out?
RICHARD QUEST, CNN CORRESPONDENT: I think they've got to on this occasion, T.J., for one simple reason: their credibility rests upon it.
We're already hearing words from both Nicolas Sarkozy of France, Dmitri Medvedev of Russia, Gordon Brown of Britain. They're all saying the same thing. They are not coming to Washington for a photo op, for a talking shot, for a meaningless declaration.
So in the background, their ministers and their assistants have been crafting something that they hope can be put together, that they can agree a framework.
Don't expect any single document that's going to put things right from this meeting. T.J., what's going to happen here over the weekend is a process is going to begin, and, really, the disagreement, if and when it arrives, is exactly what that process should be.
HOLMES: Well, the person who will be negotiating for the U.S., or talking for the U.S., at least, is only going to be in office a little while longer. This economic crisis is going to go on for quite some time. So the person, maybe one of the most important people that needs to be at that meeting, is not going to be. That's President- elect Obama?
QUEST: And it doesn't matter to the other 19 around the table. And you may say, why? Simple. They know nothing's going to happen this weekend. But they can start the agenda setting. They can get their oar in first before anybody else manages to get a word in. They can set an agenda that Barack Obama has to, then, follow on from.
So they are delighted to come here, get their message in, get their -- get it started, and then just wait.
HOLMES: All right. Richard Quest, keeping an eye on things there for us in Washington, D.C. Richard, we appreciate you.
Car, clothes, campers (ph). You name it; consumers not buying it. The Commerce Department says retail sales dropped 2.8 percent last month, the biggest monthly drop on record. Gasoline and auto sales led the way.
We did notice bars and restaurants, health and beauty stores posted gains. Tiny gains, but still, any gain is welcome news right about now.
Though clouds are building over Sun Microsystems. That mainstay of Silicon Valley plans to cut as many as 6,000 workers or 18 percent of its payroll. For a while now, Sun's brightest prospects have been in open source software, which anybody can access free. Paying customers for Sun's big-ticket networking gear are scarce.
Well, the economy is just one of the many big challenges facing President-elect Barack Obama. And he's moving forward with his team of potential advisers, including talks with a big-name senator who just happens to be his former campaign rival.
Our Ed Henry, standing by for us in Chicago.
Ed, I assume he wasn't just meeting with the former rival to rub it in that I beat you. So tell us what this is all about.
ED HENRY, CNN CORRESPONDENT: Well, you're right, T.J. What we do know is that they met here very quietly in Chicago yesterday afternoon. What we don't know is exactly what was discussed. Both sides obviously wanting to keep their counsel over such a high-level private meeting.
But what we do know is that officials within the Obama transition say that Hillary Clinton is being looked at potentially to be secretary of state. But that does not mean that she's likely to get it. It just means she's one of many people who are being looked at closely.
And they say that there are some real strengths to her and that she would bring to the table, people close to Barack Obama saying that he wants a heavyweight in this job, somebody who can carry the torch on the international stage.
And also that he is someone who has spoken previously, when you mentioned the word "rival," he's said that he enjoyed the book "Team of Rivals" about Abraham Lincoln bringing together rivals within his cabinet so that there was a healthy clash of ideas.
And in fact, one person close to the transition a little earlier telling me that this would show Barack Obama to be big, that he was bringing in a rival like this, that they had put aside their differences.
There also, though, obviously, are some real potential downsides, largely the fact that, because of her large international profile, Hillary Clinton could end up overshadowing Barack Obama on some issues. What would he do if she started veering off course on some of these issues? Let's remember in the primaries, they had some sharp differences on issues like Iraq and how quickly to pull troops out of there. And also it would bring Bill Clinton back into the mix. A lot of questions, a lot of scrutiny about his international business dealings, about his presidential library, and the fact that foreign countries are believed to have donated to that. That has not been disclosed before. Some of that stuff now would have to be put on the table.
So there are clearly some pluses and minus. But we should remember, as well, there are other people beyond Hillary Clinton, such as John Kerry, Bill Richardson, and other prominent Democrats who are being considered for this post, as well, T.J.
HOLMES: And, Ed, we -- I know you know. Every year in college football, they have what they call a rivalry week, you know, where the major schools, the big rivals, they meet up with them and play. Well, Obama continuing with his rival week, if you will. He wants to meet with Clinton. He's doing that. Now John McCain, as well?
HENRY: Now, Georgia versus Florida they call the biggest cocktail party in the world, right, as I remember? I don't think that's the way it's going to be here Monday in Chicago. It's going to be these two formal rivals, John McCain and Barack Obama, sitting down here in the Windy City.
And I think this was to be expected. When you look back at what they both said on election night, especially John McCain, who was very gracious in defeat and talked about working with Barack Obama. And now John McCain is going back to the United States Senate.
And so this gives both men a chance to sit down and talk, not just about the things that divided them in the campaign, but the things that could bring them together. And one issue the Obama camp talks about is global warming, where both men have talked about the need for action. So we can expect that's one of many issues they'll address on Monday -- T.J.
HOLMES: All right. Ed Henry for us in Chicago. Ed, we appreciate you, as always.
Well, if you are about to lose your home, the FDIC might be able to help you out. In a surprise move today, the agency unveiled an aggressive plan to help homeowners who are behind on their mortgages. We'll spell out the details for you.
Also, gift cards. Great idea if you don't know what to get someone for Christmas or other special occasions. But are they really good idea? In these hard times you might want to rethink that idea. We'll explain.
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HOLMES: Teenagers dropped off at hospitals. A family of nine kids abandoned? Nebraska officials were stunned how their safe haven law was used. And today they're moving to change it.
(COMMERCIAL BREAK) HOLMES: Well, can a lame-duck Congress save a crippled economy and an industry? Well, we'll find out. On Monday, senators will take up $25 billion in government loans to the quickly failing big three automakers. A test vote is set for Wednesday. Now, this cash would come from the $700 billion bailout package and may or may not come with strings attached.
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SEN. CHRISTOPHER DODD (D-CT), BANKING CHAIRMAN: the automobile industry is very important. One out of every ten jobs in the country is related to the automotive industry. But clearly we shouldn't be writing checks without some clear conditionality of what's going to happen with that industry if they're going to change and get back on their feet again. So I'm hopeful we can do something but I want to make sure, if we do it, we're going to do it carefully.
(END VIDEO CLIP)
HOLMES: Most Republicans lined up against it. Chairman Dodd says he doubts the votes are there. But we're also hearing Senate Majority Leader Harry Reid is asking the Republican leader to stand down on a filibuster. No response to that just yet.
Well, the government office that protects your bank deposits wants to backstop your mortgage. The FDIC is proposing new guarantees for home loans if lenders agree to rework for less than their original value. This is not a done deal just yet, but many in Congress do like it.
CNN's Gerri Willis here to talk us through it, help us understand this one.
Gerri, hello to you.
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Hi, there, T.J.
"Proposal" is the key word here. It's certainly not yet, but if you're in trouble with your mortgage, you'll want to listen up, because this proposal could reduce your mortgage payments to 31 percent of income. And that is the threshold for affordability. That can make you able to pay your mortgage each and every month.
It will also bring down mortgage rates as low as 3 percent.
And the way they would get this done, is the government would share in default losses as much as 50 percent with the lenders, which would be a very big deal for folks out there.
Now, to qualify for this thing, you'd have to be at least 60 days late on payments, and that's as of June 2008. That's what they're proposing here. Keep in mind right now, only 4 percent of seriously delinquent loans are getting help out in the marketplace, so there's a big need for it.
Also you've got to own your own property. This can't be something that is an investment property.
At the end of the day, this mortgage proposal could help as many as 2.2 million borrowers. And actually, the FDIC would be reaching out to over 4 million. They think that 2.2 of those would actually be eligible, and it would cost $24.4 billion, T.J.
And of course, the devil's in the details there. Where is that money going to come from? Can it come from TARP? Where would it come from? That's going to be the decision that Congress will face -- T.J.
HOLMES: There's got to be only so much money out there. All of these programs you're talking about. Where is all this stuff coming from?
WILLIS: Right.
HOLMES: But back to this program, which as you say, just a proposal still. But a lot of people, this will raise a lot of interest. And this could help a lot of people out. Where do they get more information? How do they keep up with it? And where do they possibly sign up?
WILLIS: Well, as I said, it's not law yet. We don't know if it will be put in place. Actually, the FDIC, the Federal Deposit Insurance Corporations, have been negotiating this with the administration. They don't like it, but they're starting to see some support in Congress to this idea.
As a matter of fact, it's what the FDIC used with IndyMac debtors. Remember that company that had so many problem, went out of business. That's what they're using with them, and it seems to be working, getting people into new loans.
So if you are in the situation, you're thinking, "Hey, this is something I'd really like to be a part of," most of the these programs have worked by having the individual go to the lender themselves, approaching the lender, saying, "I want to be part of this program. Can you help me?"
If that doesn't work, go to the Department of Housing and Urban Development, make a phone call, get a counselor in your area to keep on knocking on doors. But you've got to wait to see if Congress actually gets behind this.
This could make a very big difference to people out there who are already late on their mortgage loan, having a hard time paying. This new threshold, this new level of debt, well, you know, you'd be able to afford your mortgage payment. It would keep more people in homes, bring down the foreclosure problem, stabilize some neighborhoods. Could be a good deal.
Of course, you know, lenders say -- just to give you the flip side of the argument, T.J., here -- lenders say if you put a program like this out here, what's the -- what's the incentive to borrowers...
HOLMES: Yes. WILLIS: ... mortgage borrowers to actually pay their mortgage?
HOLMES: Yes.
WILLIS: If they can't get into a program like this? So that's -- that's the program, and we'll be keeping an eye on it.
HOLMES: Gerri, we know you will. Thank you so much.
WILLIS: My pleasure.
HOLMES: Well, world leaders, as we've mentioned earlier, gathering in Washington. The U.S. playing host, but some rising economic powers want to influence the agenda.
Also, call me back when you're going to talk to me. Many of you might have gotten that before from some of your friends or whatnot on the phone. But you're not used to getting that from a 911 operator and then have that operator hang up. A caller looking for help got some attitude, he says.
(COMMERCIAL BREAK)
HOLMES: Part of a city block in Pueblo, Colorado, reduced to rubble by a huge explosion -- excuse me. The blast leveled two businesses, trapping several people yesterday. A woman, pulled out after 90 minutes, died soon after at the hospital. Seven other people hurt.
Police found a leaking natural gas pipe, but it's not clear if that line was broken before or in the blast.
Definitely a ruptured gas line here to show you in central Oklahoma. This blast happened overnight, destroying several homes and injuring two people. It also blew a 40-foot crater in the ground, shutting down a state highway. No word on what caused the pipe to break. The company says an inspection last year found no problems.
Well, a Wisconsin sheriff has a pretty big problem right now with a 911 operator's handling of an emergency call. He's recommending the dispatcher be fired over the incident, which happened in August.
What happened was a frantic woman called for help after her boyfriend allegedly attacked her. She's screaming, she's crying and talking to her little girl. Listen.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Nine-one-one.
UNIDENTIFIED FEMALE: No. There's nothing to talk about.
UNIDENTIFIED MALE: Nine-one-one, what's your emergency?
UNIDENTIFIED FEMALE: There's nothing to talk about. Get away. Get away! UNIDENTIFIED MALE: Hello?
UNIDENTIFIED FEMALE: Hello. No. Get away from me!
UNIDENTIFIED MALE: 911, what's your emergency?
UNIDENTIFIED FEMALE: I don't want you. No. Come here, baby girl. Come here. Come on, come by me. No. Don't leave your momma. He's going to hurt her. Don't leave me.
UNIDENTIFIED FEMALE: Call me back when you're going to talk to me.
(END VIDEO CLIP)
HOLMES: Well, the dispatcher says the caller hang up on him. He also thinks he's facing retaliation for filing a lawsuit over his work conditions.
Well, Nebraska legislators are opening a special session today to change the safe-haven law they enacted. The state's governor called them back to Lincoln after older kids and teens continued to be abandoned at hospitals. The number: up to 35 now.
Ed Lavandera with the story.
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ED LAVANDERA, CNN CORRESPONDENT (voice-over): T.J., since Nebraska's safe haven law went into affect about four months ago, it's created a disturbing trend: parents dropping off not newborn babies but, in most cases, troubled teenagers.
It happened again Thursday.
UNIDENTIFIED MALE: The boy is 14, the girl is 17.
LAVANDERA: A mother left her two teenage children in this Omaha hospital. Parents taking advantage of the no-age limit loophole in Nebraska's safe-haven law. A Georgia mother who drove her teenage son here says she was desperate to help him.
UNIDENTIFIED FEMALE: You may have a great life and you may have great kids, and be grateful for that. You know? And just don't knock the parents that -- that end up dropping their child off there.
LAVANDERA: The safe-haven law was designed to protect infants, but almost all of the children left so far are over the age of 10. Nebraska's governor says an age limit must be established immediately.
GOV. DAVE HEINEMAN (R), NEBRASKA: Please don't bring your teenager to Nebraska. It's not appropriate. And think what you're saying. You know, we've all raised teenagers, and they can be a challenge, but you don't abandon them.
LAVANDERA: So Nebraska lawmakers are gathering for a special session to change the law. Most appear ready to establish a three-day age limit, but some are pushing for a limit closer to 30 days.
TODD LANDRY, NEBRASKA DEPARTMENT OF HEALTH AND HUMAN SERVICES: The real purpose of this special session, I believe, is to make sure we get back to that intent of protecting newborns and infants. I think three days is the right amount of time.
LAVANDERA: There's a sense here that something must be done quickly to stop the flow of troubled teens left on the state's doorstep. Five children were brought from other states. In one of those cases, a father flew his son into Nebraska from Miami, and then left.
TOM WHITE, NEBRASKA STATE SENATE: What you've seen is an extraordinary cry for help from people across the country. That shocked me. But we can't -- Nebraska can't afford to take care of all of them.
LAVANDERA (on camera): Nebraska lawmakers will start a special session today to add the age limit to the safe-haven law, but that process is expected to take at least a week, and many state officials here are worried that some parents from across the country will race here to leave their children.
T.J., back to you.
(END VIDEOTAPE)
HOLMES: All right. Well, gift cards.
Some of the most popular gift items for the holidays, but in this economy, are they really a good idea? We're taking a look.
(COMMERCIAL BREAK)
HOLMES: 1:30 here in the CNN NEWSROOM. Here are some of the stories we are working on.
Those big fires in California chased thousands of people from their homes in the Santa Barbara area. Thirteen people have been injured, more than 2,500 acres have burned, more than 100 homes destroyed so far.
In politics, sources telling CNN that Barack Obama and Hillary Clinton met yesterday to discuss a possible role for Clinton in the Obama administration. Obama plans to meet with John McCain on Monday.
And the weather, a bit iffy for tonight's scheduled launch of the space schedule Endeavour. A live look at it sitting there on the launch pad. Don't know if it will leave that launch pad at 7:55, when it's scheduled to lift off tonight. Our Miles O'Brien of course going to be joining us from the Kennedy Space Center here in just a few minutes.
Leaders of 20 countries are gathered in Washington this weekend, working toward a unified response to the global financial crisis. The U.S. hosting the summit, but it will not be the only voice in setting the agenda. We get more from our State Department correspondent, Zain Verjee.
(BEGIN VIDEOTAPE)
ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: BRIC, the new buzzword for a new crowd coming to town. Brazil, Russia, India, China. Their economies are exploding. They're using deep pockets to demand more power in the world's financial system.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: This weekend leaders will establish principles for adapting our financial systems to the realities of the 21st marketplace.
VERJEE: BRIC countries, along with other developing nations, like South Africa, Turkey, Indonesia, Mexico, want a say in how to fix the financial mess.
ARVIND SUBRAMANIAN, PETERSON INST. FOR INTL. ECONOMICS: Until recently, the system has been dominated by the United States and Europe. Now, I think the new powers, the rising powers, Brazil, Russia, India and especially China, are going to say we have to run this very differently now.
VERJEE: The BRIC countries stretch across the world, with a combined population of about 2.8 billion. They're demanding membership in the elite club of industrialized nations. They say more developing countries should be at the table, not just the traditional eight. They want to revamp the World Bank and International Monetary Fund, both created in 1944 for a smaller world economy. Some, like India, want a permanent seat on the exclusive United Nations Security Council, a privilege only Cold War powers have now.
President-elect Obama won't personally be at the financial summit, but he will have to navigate this new landscape.
SUBRAMANIAN: This is going to be a long period of adjustment for the United States, that it no longer calls the shots exclusively. Therefore, it has to work -- it's still the world's greatest power. Nothing can be done without the United States, but it will have to cooperate with the others for whatever it wants in the future.
(END VIDEOTAPE)
HOLMES: And Zain Verjee joining me now live from Washington.
Zain, hello. And tell us, we know we've got big problems to deal with, but do we have big or little expectations going into this summit?
VERJEE: Well there are expectations. It's a pretty important summit.
You've got world leaders of the group of 20 countries. They have never met before all together like this. They do have expectations, even though many of them see President Bush essentially as a lame duck president. They know, though, that what's going to happen this weekend is an absolutely critical step in a major process that will change the entire terrain of the international financial system.
They also have acknowledged that the real work will happen once the Obama administration takes over the reins.
HOLMES: All right. And you know what? Some of these developing countries, other countries, may feel a little emboldened. I know some maybe have a little attitude towards the U.S., thinking the U.S. really is responsible for so much of this mess.
So are some of the developing countries making a bigger demand and, again, feeling a little more emboldened like they have more of a say here?
VERJEE: Right, they do. They feel emboldened, especially Brazil, Russia, India, China because they have deeper pockets, more money, and they feel that they're owed something. They are also really angry at the U.S., blaming it for much of the crisis.
Now, experts have said it's not just the U.S. to blame, but a whole host of other things. But what these countries are demanding, too, is they're saying, don't cut foreign aid to us because of the financial crisis. Countries like Africa in particular, President Bush has launched some pretty successful programs, the HIV/AIDS and malaria programs in Africa, for example. That is something that really has been working very, very well. And President-elect Obama could build on it.
So that's part of the case that these emerging nations are going to make.
HOLMES: Absolutely right. You mention that PEPFAR program. Certainly one a lot of people look at that's been successful and don't want that one to go away.
Zain Verjee for us in Washington.
Zain, we appreciate you.
And you can stay with CNN for complete coverage of tomorrow's G- 20 meeting in Washington as that gets kicked off this weekend. Join me and Betty Nguyen first thing tomorrow morning, 7:00 Eastern, right here for CNN Saturday morning.
The economy, taking another big hit. This time we're talking retail sales. And they have plunged. The timing couldn't be worse here. Stephanie Elam at the New York Stock Exchange with details of a new and once again another troubling economic report.
Stephanie, hello to you dear.
STEPHANIE ELAM, CNN CORRESPONDENT: Yes, T.J., I just bring you all the sad news. This is what I do, day in, day out.
The this time we are talking about the retailers. In malls across America holiday decorations are up, but where are the shoppers? Retail sales tumbled last month by the biggest amount on record -- 2.8 percent. That tops the previous record, which was set in the wake of 9/11.
Now the auto sector took the biggest hit. But sales of everything from clothing to furniture and electronics dropped. That is sending the Dow down 235 points, at 8599 right now. Nasdaq off 56, to 1540. Of course, the Dow was down more than 300 points early yesterday afternoon, but then ended the day up more than 500 points. So you know, things could change there.
Now, one of the few areas that did show an increase in sales last month was restaurants and bars. And T.J., I don't know if that means that folks are trying to ease their pain way a drink or two, but that is the case.
HOLMES: You know it happens. Everybody after a tough day sometimes, oh my goodness, I need a drink.
ELAM: Got to find your way to deal with it.
HOLMES: Well, that is some good news, at least.
But still, back to these retail sales. How crucial is it? People are holding on to their cash for good reason; they're not just out there -- discretionary spending. So how much is that hurting, the fact that we aren't spending money?
ELAM: It's so important. Think about this way, two-thirds of the U.S. economy is driven by consumer spending. And weak consumer spending was one of the key reasons the economy contracted last quarter. Now, it doesn't look like things are going to get better anytime soon. JCPenney, Kohl's, Nordstrom, and many other retailers have slashed their earnings forecast because of weak sales. The problem is that we're in a recessionary cycle, companies cut jobs, that hits consumers, who stop spending, and that leads to more job cuts.
And then it goes on and on from there, T.J. So you know, you should do your part and start shopping early for my Christmas gift.
HOLMES: Yes, I'll get right on that.
ELAM: And the -- the birthday gift and the wedding gift, too. All of that.
HOLMES: Oh, my goodness. All right. I got to go. But I will talk to you again here soon. I'll get you a gift card. That's what we're going to be talking about here next.
ELAM: Oh great. That's a good one.
HOLMES: All right, Steph, good to see you.
ELAM: Good to see you, too.
HOLMES: Gift cards, I think I'll get Stephanie one from Circuit City. Well a gift card is usually a fail-safe present for people who are never sure what to get. But now some of those gift cards are anything but safe as more companies are going belly up in this struggling economy.
Christine Romans reports.
(BEGIN VIDEOTAPE)
CHRISTINE ROMANS, CNN CORRESPONDENT: Still holding onto that gift card from the Sharper Image or Bombay Company? Too late, out of business. How about Linens-N-Things? Better move fast, it's closing shop and liquidating.
Consumers will lose $100 million this year on worthless gift cards from restaurants and stores that have gone belly up. It's tough out there for retailers. Mervyn's is going out of business for good. Comp Usa has closed most of its stores. Starbucks is shutting down about 600 stores. Circuit City, has filed for bankruptcy.
Todd Marks writes a blog for Consumer Reports called "Tightwad Todd."
TODD MARKS, CONSUMER REPORTS: What I would suggest people do, if they have a gift card from a Circuit City or another store that happens to be in Chapter 11 right now, I would say run, don't walk, to that store and buy something quickly. Because you just don't know when the plug may be pulled.
ROMANS: For now, your Circuit City gift card is safe. A judge Monday said the retailer could continue to accept them and even issue more cards while it reorganizes. And the big retail trade lobby says, have no fear.
ELLEN DAVIS, NATIONAL RETAIL FEDERATION: Most gift cards in this country, regardless of if a retailer has declared bankruptcy, are perfectly safe and can be redeemed.
ROMANS: In many cases, the bankruptcy court allows retailers to accept gift cards even though the company is in Chapter 11.
(END VIDEOTAPE)
HOLMES: Well, Consumer Reports says a quarter of all gift cards are never redeemed in the first place. So if you get them, you should definitely spend them.
Barack Obama made some pretty big promises in improving health care, but can he deliver? And how would he pay for them? Our medical correspondent, Elizabeth Cohen, has some answers.
Also, a milestone at Pentagon. Jamie McIntyre tells us about the first woman in the U.S. Military's history to be promoted to four-star general.
(COMMERCIAL BREAK)
HOLMES: Well no milk products from China. The Food and Drug Administration issued the order because of fears of melamine contamination. The FDA lists dozens of products, including cheese, ice cream, pudding and pet foods that could be tainted by that chemical. In September, more than 53,000 Chinese children got sick after drinking contaminated infant formula.
And beware if you're planning a trip to Mexico. Lot of frisky older men running around. In Mexico City, come December 1st, there may be a lot of happy women there as well. The Mexican capital plans to hand out free drugs, either Viagra, Levitra or Cialis to help those older guys suffer from erectile dysfunction. As the local governor says, everyone has the right to be happy.
What are you grinning about over there, Elizabeth?
Now, under this plan those who suffer from E.D. will have to first get a checkup to screen for other ailments. Mexican authorities say 70 percent of older men suffer from that condition.
All right. Every candidate makes promises and Barack Obama made some big ones when it came to heath care reform. Now that he's the president-elect, can he deliver? How can it pay for it all? That's the big question here. Elizabeth Cohen here.
All right. So what have got? Is this stuff possible?
ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: This is a doozy of a problem. Health care reform is a doozy of a problem, as Hillary Clinton found out in 1993.
And you know what else is a doozy? The price tag. This is going to be very expensive. So after the campaign promises, let's have a reality check. How much will this cost?
Well we broke down Obama's health care plan into a couple of different components, a couple of different things. First of all, how much will it cost to insure all children? That's one of the things that President-elect Obama wants to do. This is the cost. Our experts tell us, somewhere between $6 and $9 billion just to do that one part of it. That's, as you can see, a lot of money.
Let's look at a second part, another thing, which would be helping employers in small companies insure their employees. Because a lot of small companies have a hard time doing that. That price tag would be $6 billion. Just, again, for that one component.
So let's talk about a third one. A third component would be new health information technology. You know how you go to the doctor, and they are still working off paper charts. Right, they shouldn't be doing that. They should be using computers like the rest of us. That alone, per year, would be $10 billion.
HOLMES: Per year?
COHEN: Per year. Per year.
So, as you can see, this is going to be a very expensive thing to do. It will be interesting to see how much political will there is to do it given the economy that we're in. HOLMES: OK. I didn't keep up with all the numbers there, from six to nine to six to eight. So altogether, what is the total we're possibly look at to pay for all this stuff?
COHEN: Right, these three components, plus a whole bunch of other ones, it totals out to between $52 billion and $106 billion. $52 to -- as you can see there, $52 billion to $106 billion for the health care plan.
HOLMES: OK. Where is that money supposed to come from?
COHEN: Well, this is what Obama says. He says that President Bush gave wealthy Americans this big tax cut and that he's going roll that back, and so that will save some money. And he also says, health care is pretty bloated, there is a lot of waste. And everybody agrees with that. Nobody disagrees. And so he says that if we get rid of some of that waste it will make health care cheaper for consumers. So that's another plan.
HOLMES: So we're just hoping that with those cost-cutting measures, that maybe we'll find $52 billion --
COHEN: Right. That we'll get up to this amount. Somewhere, under a mattress somewhere. No, I'm just kidding.
But yes, that's the hope, is that we'll be able to afford this to do a new health care plan.
HOLMES: A lot of it sounds great, but some lofty expectations there for Barack Obama to deliver on some of this stuff.
COHEN: Time to govern. Right.
HOLMES: Time to govern.
Elizabeth Cohen, thank you so much.
Time to govern, well it is it time to go for the space shuttle Endeavour? It's loaded, fueled up, ready to roll, but I don't know. The weather is kind of causing some problems. It's a makeover mission it's supposed to be taking, and the international space station will never be the same.
(COMMERCIAL BREAK)
HOLMES: Well, Barack Obama's strong appeal to younger voters helped him win the White House, now some Boston students still too young to vote are making their voices heard through poetry.
CNN's Dan Lothian with their story.
(BEGIN VIDEOTAPE)
DAN LOTHIAN, CNN CORRESPONDENT (voice-over): Their large cardboard telephone doesn't work, but these student hope their call to President-elect Barack Obama -- UNIDENTIFIED GROUP: We have a message for you to hear.
LOTHIAN: Gets through loud and clear.
UNIDENTIFIED MALE: Can you please focus on immigrants, because this is ridiculous.
LOTHIAN: They use poetry to plead for immigration reform and a greener future.
UNIDENTIFIED MALE: We need a pollution solution. So, help us out. We need you in this fight to end this crime.
UNIDENTIFIED GROUP: Help stop global warming. This is a serious issue. If you don't help us, who will?
LOTHIAN: They're worried about guns and violence in their neighborhoods.
UNIDENTIFIED MALE: Stop violence. Violence is painful. If you don't stop it we'll all hurt.
LOTHIAN: They write about the homeless and urge Obama to help.
UNIDENTIFIED FEMALE: They live in the street with no food to eat. They are dying for hunger in the thunder. So send in your men and help them live --
LOTHIAN: These students are all parts of America Scores New England, a sports and literacy after school program helping at-risk urban kids. President-elect Obama recently recognized the national group in this letter, urging young people to quote "challenge yourselves to make a difference."
Now these kids issue their own challenge.
UNIDENTIFIED MALE: Create jobs for people who don't have them. Build houses for people who don't have them.
UNIDENTIFIED FEMALE: How do we stop the war in Iraq?
DWAYNE SIMMONS, AMERICA SCORES NEW ENGLAND: A lot of their issues, a lot of their concerns are relevant and prevalent and they pay more attention to, you know, the election and what's going on in the world than we realize.
LOTHIAN: Now they want the President-elect to pay attention to them, to answer the call.
(END VIDEOTAPE)
HOLMES: All right. We'll stay with us here, folks. The group's education director, as you just saw there, says these students really feel like their message will reach the new president. And he plans to help out by sending Mr. President-elect a videotape of that event.
(BEGIN VIDEO CLIP)
NEEL KASHKARI, INTERIM ASST. TREASURY SECY.: Our system is stronger -than it was just `a few weeks ago. Although a lot has been accomplished, we have many challenges ahead of us. We will focus on the goals outlined by Secretary Paulson and develop the right strategies to meet those objectives. Foremost among these will be to ensure that the financial system has sufficient capital to get credit flowing to businesses and consumers.
(END VIDEO CLIP)
HOLMES: All right. That was the interim Assistant Secretary Treasury Neel Kashkari, testifying today, before a sub-committee of the House Oversight and Government Reform Committee. The hearing is to determine whether the bailout funds are being used as intended and being used appropriately.
Well, Congressman Dennis Kucinich, the sub-committee chairman, joins us now live from Capitol Hill. Sir, thank you for being with us.
What were you hoping to hear from Mr. Kashkari today, and did you hear it?
REP. DENNIS KUCINICH (D), OHIO: Well, I didn't hear it. What I was hoping to hear is that the administration through Secretary Paulson is going to do something about modifying loans for millions of Americans who are facing foreclosure.
I mean, by -- essentially what Secretary Paulson did the other day, was to say, well, we're going the money to banks and maybe the banks will help millions of homeowners, instead of engaging in a controlling interest in mortgage-backed securities and enabling the loan modification in which you lower interest rates and principal and stretch out the terms of the loan, keeping people in their homes. They've done something else.
This is a dangerous moment for our country. Banks are hording the capital, they're using it to buy other banks and there's a squeeze on credit. Our auto industry's in trouble because of it. Our steel industry is in trouble because of it and also, millions of homeowners are in trouble of it. What's going on here? I mean, the American people are really getting hurt with these economic policies.
HOLMES: All right. Do you not think sir, Mr. Paulson is just -- doesn't know what he is doing, if you will? Is he making bad decisions? Or, is he being influenced by some outside forces? I mean, what do you think it is? Do you not think he's just making the best decision he could make?
KUCINICH: There are enormous financial tides that are at work here. And financial capital, the control by big banks is getting stronger and stronger. And they're using their control to essentially crush home ownership in America, and to crush industrial capital and to crush auto plants and steel plants in the country. Our country's national security's at risk here. This is a major economic matter that isn't being appropriately addressed by the Bush administration and by his Treasury secretary. Congress was sold a phony bill of goods.
There was a bait and switch here. We were told that is going to help people keep people in their homes. Now, I had skepticism about it. I voted against it. But members who voted for the Troubled Assets Relief Program, voted for the $700 billion, they were expecting something would be done to help people stay in their homes.
Well, that's not true now. Now, you got money for bank consolidation, money for parties and for bonuses. What's going on in America?
HOLMES: Well, Congressman, what can be done at this point because many -- like you said, you didn't vote for it. But many others did and gave this power to Henry Paulson to essentially do what he wants to do with it.
What can be done at this point?
KUCINICH: Well, Congress is coming back into session next week. We'll hopefully come into session, we'll come into Congress -- into Washington next week.
We should take this up again. We should have tightened restrictions with an amendment on the Troubled Asset Relief Program. There's $350 billion that haven't been given away yet. We have to put more emphasis on making sure that homes are protected and also we have to look at the effect of this credit freeze.
There is a game going on here. It's almost like a level of racketeering on a scale that we've never seen in the history of this country. Capital's being horded. The money that's needed to keep our economy going isn't. This country's being crush and our new president is going to be put in grave jeopardy, because he's not going to have the ability to control the economy if we turn all of the controls over to banks.
Government has to step in here in an aggressive way to protect home ownership and our basic industries. And also to protect regional banks, like National City in Cleveland, just gobbled up with the help of the Treasury Department.
HOLMES: All right. Well, Congressman Kucinich, we appreciate you coming over from that hearing and getting in front of the camera, here. Wish we could take some more time to talk to you. Big issues, big problems, big questions yet to be answered.
But, sir, thank you for your time today.
KUCINICH: Let's talk again. Thank you.
HOLMES: All right. A milestone day for the Pentagon. Jamie McIntyre is going to tell us about the first woman in the U.S. Military's history to be promoted to a four-star general.
(COMMERCIAL BREAK)
HOLMES: All right. You see a space shuttle. That means we're going to hear from our Miles O'Brien, not too long after that.
Miles, hey there to you, sir. Tell us what's happening here, what we're looking at. What we could be looking at tonight and about the Extreme Home Makeover space edition we're about to see.
MILES O'BRIEN, CNN CHIEF TECHNOLOGY AND SPACE CORRESPONDENT: Yes, T.J., I don't have a lot of time. I just want to tell you. In just a minute, you're going to see a cable news television first. All right. Just put that aside for a minute.
Let me tell you what's coming up. Weather is good -- 70 percent go for the space shuttle Endeavour. Seven person crew, international space station. They're up there. They're going to put in a new toilet, they're going to put in a new sleeping quarters, all kinds of things in order to make the station capable of holding six people.
In addition, a rather expensive recycler of waste. And we're talking about all kinds of waste that would be on the space station. Urine, perspiration, food vapors, bath water, simulated animal waste, along with a touch of iodine. Take a look at these ingredients here. This is a bottle of water, which has been recycled by the device, which the crew will put on the space station once they launch here. Zoom in on that, I just want you to see what it is. There is it. OK.
T.J., I am now going to drink this to prove that an astronaut can do this. I'll let you know how it tastes.
HOLMES: Oh, Miles. Come on!
O'BRIEN: A little bit of iodine. But, otherwise, this is going to be -- Now, just to tell you. They had to take 70 tons of water up to the space station right now. That costs $140 million. So, this is going to be a lot cheaper way to go. But, boy, oh, boy. Got to go.
HOLMES: All right, Miles. We're going to talk to you again here soon. We hope you're all right.
The next hour of CNN NEWSROOM starts right now.
