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Obama Ponders Cabinet Posts; Raging Wildfire: Mobile Homes Scorched in Sylmar; Citigroup Cutting 53,000 Jobs

Aired November 17, 2008 - 12:00   ET

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

TONY HARRIS, CNN ANCHOR: And hello, everyone. I'm Tony Harris.
Here are the headlines from CNN this Monday, November 17th.

Fire teams in the Los Angeles area are finally getting a break from fierce winds, but is it too late for hundreds of homeowners?

President-elect Barack Obama eye-to-eye this hour with his formal rival, John McCain.

And let's show you these pictures, live pictures right now. Massachusetts Senator Ted Kennedy promised that he would return to work at the Senate. His wife at his side there, and here he is.

I wonder if we could listen in?

(JOINED IN PROGRESS)

SEN. EDWARD KENNEDY (D), MASSACHUSETTS: ... working with Barack Obama on health care, and we're looking forward to working with all the administration on our agenda. So we're very thankful for all the good thoughts and prayers that we've received over the time. We're looking forward to this session, and we're delighted to be back.

UNIDENTIFIED MALE: Senator, are you going to introduce a universal health care bill?

KENNEDY: We're going to have -- I'm very hopeful that this will be a prime item on the agenda. Barack has indicated this would be a prime issue, and I believe that it will be.

There's some major issues -- obviously the economy, and also environmental issues. But the president-elect has indicated that this is going to be a priority, and I certainly hope it will. We've got a good team. They've been working over the period of the late summer and into the fall, and they've been doing a lot of good work, and I think we've got a good start on it.

UNIDENTIFIED MALE: Do you think he would like to sign that bill early next year?

KENNEDY: Well, yes, and he's stated that.

UNIDENTIFIED MALE: All right. Thanks, everybody. We appreciate it. Thank you very much. HARRIS: How about this? Senator Ted Kennedy went six months to the day of his seizure, his brain seizure, and then the subsequent diagnosis, the surgery, the recovery. He promised -- and how about his appearance at the Democratic National Convention? He promised that he would get back to work, and here he is, six months to the day of his seizure, returning to work at the Senate and promising to work with President-elect Barack Obama on his passion project -- it always has been -- that's health care. And he promises to get to work on legislation.

Senator Kennedy, as you can see there, with his wife. What you can't see just in that shot, the dogs are with him. He brought his two dogs as well.

What a great scene. About 100 members of his staff there to greet him as well.

Senator Ted Kennedy back to work on Capitol Hill in the Senate.

And how about this? Former rivals face to face.

For the first time since their presidential showdown, President- elect Barack Obama meeting with Senator John McCain in Chicago. This is a live picture of Chicago, along the street and the building there that holds the office for the Barack Obama transition team. Obama aides say the two will talk about ways they can work together on issues that they have in common.

Suzanne Malveaux now live from Chicago with more on what we can expect.

Suzanne, good to see you.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Good to see you, Tony.

We just got some pictures of John McCain in his van going to the transition office. We have cameras, as well as a producer, who will be ready to go in and get what they call a photo spray. It might just be 90 seconds of video of seeing these two men together, but it really is a significant picture when you think about it.

The last time they were together, obviously they were at odds. It was that last debate or so.

Since then, John McCain has delivered a very nice, conciliatory concession speech. So expect that the mood is going to be somewhat different, but this really is Barack Obama's own home turf here in Chicago. He gets some points even for just kind of reaching out to John McCain, but this is something he said he was going to do.

He was going to bring Republicans into the fold. But aides say don't expect here that there's going to be any kind of job for John McCain, any kind of formal role in the administration. But they're looking at ways that they can bridge to cross the aisle. Climate change is just one of them, perhaps ethics reform. We even heard Barack Obama yesterday talking about this in his "60 Minutes" interview, that he thought there was an opening, this global financial crisis, that there's a consensus forming between Republicans and Democrats, people on both sides, about what needs to happen to make sure that the economy is fixed.

Take a listen.

(BEGIN VIDEO CLIP)

BARACK OBAMA (D), PRESIDENT-ELECT: I think it's important to get a national security team in place, because transition periods are potentially times of vulnerability to a terrorist attack. We want to make sure that there is as seamless a transition on national security as possible.

(END VIDEO CLIP)

MALVEAUX: Tony, that's just one of the priorities, national security. But the other thing that Barack Obama was talking about is that he says he believes Republicans and Democrats, both sides, economists, believe that the government has to do a lot of spending here to bail out these banks, to get the credit flowing again, not even to worry about the federal deficit in the next couple of years or so. They said in the short term, you just don't want this to have a deepening recession, that that is something these two men are going to talk about. They believe they can come to some sort of agreement on that.

And Tony, I have to tell you, they're not going to be just those two in the room. There are going to be two others.

On McCain's side, Senator Lindsey Graham. They're buddies. On Barack Obama's side is going to be his chief of staff, Rahm Emanuel. Those guys are friends. And behind the scenes, they worked this thing out so they could get Obama and McCain in the same room to sit down and talk about some of these things, at least they believe to kind of get over that initial hump, if you will. It was a pretty bitter race.

HARRIS: That's for sure. Boy, I can't wait to see those pictures. I believe we're trying to turn those around.

Suzanne, great to see you in Chicago. Thanks, Suzanne.

And turning now to the line of fire, crews gaining ground against three massive wildfires in southern California. More than 800 homes destroyed, thousands of families displaced right now. Fire officials tell us the blaze in Orange and Riverside counties has jumped to almost 30,000 acres charred. It's now 40 percent contained. That's also true for the 10,000-acre fire in Los Angeles County and the 1,900-acre fire in Santa Barbara County, now 94 percent contained.

Charred ruins are all that's left of a mobile home park in Sylmar. Our Jim Roope joins us by phone from the evacuation headquarters located in Diamond Bar.

Jim, good to talk to you. If you would, tell me, how many people are using that headquarters? And generally speaking, what's the mood?

JIM ROOPE, CNN RADIO: Well, some of the evacuations have been lifted, but 26,000 people have been evacuated. There are a couple of different evacuation centers. This one is Diamond Bar, then there's Yorba Linda and a few others in this area here, but several thousand still taking advantage because they really have no place to live right now.

And it's odd, Tony. The mood is -- you know, it fluctuates a little bit.

I think people are so happy they got out alive, they got out with their pets, they got out with their families, that it's almost as if the structure itself doesn't matter. They're very -- some of them who have lost personal items and some mementos and things like that inside the home, that's a different story, but as far as the house itself is concerned, they figure they can rebuild. They're just happy that they got out and everybody that they know, anyway, is safe.

And they're also a little confused at the fire behavior. Very indiscriminate. One house would be left in tact, and the house right next to it burned to the ground. And it's almost like a tornado effect, as a tornado jumps from house to house, or over a house, and destroys another house. So the mood is kind of -- it's an interesting mood here.

HARRIS: Yes. OK. Jim Roope for us.

Jim, good to talk to you. Thank you.

You know, the biggest of the wildfires is what's know as the Triangle Complex or Freeway Fire. It includes the city of Yorba Linda, where our Thelma Gutierrez is standing by.

And Thelma, boy, that scene behind you, look at that where once a house stood.

What's the latest that you can give us on the firefighting effort there?

THELMA GUTIERREZ, CNN CORRESPONDENT: Tony, I have an update for you. And it's the first time I've heard a fire official actually sound optimistic in the last four days.

But Riverside County, a fire official told me just a short time ago that this Triangle Complex Fire now that has burned 211 homes and some 11,000 acres, and caused the evacuation of 22,000 people in the area, is now under control. They still have firefighters out here that are watching the lines, making sure that the hot spots don't flare up, but they're saying this is very, very good news. And still, many of the evacuees who are returning home today will be returning home to destruction scenes just like this.

(BEGIN VIDEOTAPE) GUTIERREZ (voice-over): Andrew Caulder saw it coming, a wall of flames that raged towards him.

ANDREW CAULDER, HOMEOWNER: I saw it before it actually started, and it was just a little ways farther back in the canyon. Within minutes, it's engulfed the entire hill.

GUTIERREZ: Fires jumped from one county to another across southern California, charring neighborhoods and devastating lives. The firestorm began devouring homes in Montecito Thursday night. Wind-swept flames roared through the hills of multimillion-dollar homes.

Two hundred and ten were destroyed. The cause suspicious and believed to be manmade.

Friday night, Sylmar, north of Los Angeles, winds clocked as high as 70 miles an hour, fan a wall of flames through the hillside, destroying nine homes and mercilessly taking 400 mobile homes. Augustine Reyes lost everything.

AUGUSTINE REYES, HOMEOWNER: This is all that's left of my house. This is it.

GUTIERREZ: Saturday, fire breaks out in Corona. It quickly spread to Yorba Linda, where this man stayed behind to save a home.

UNIDENTIFIED MALE: We're trying to do everything as much as we can to prevent my grandparents' house from burning down. They've been here for -- since I was a baby, so, you know, this is memories here, you know?

GUTIERREZ: The flames quickly jumped to homes in nearby Anaheim Hills, then hopscotched toward the town of Brea. All said on one terrible Saturday, four fires merged as one, incinerating more than 200 homes.

On Sunday, the fire made its way to Chino Hills, where 30-foot flames threatened 1,000 homes. Finally, weary firefighters got a break. The Santa Ana winds eased up, allowing them to make their stand and save the community.

CHRIS GARCIA, HOMEOWNER: You know, the magnitude of the fire and everything connecting, you know, growing together as one, these guys, you've got to tip your hats to them. There's just no way you can thank them.

(END VIDEOTAPE)

GUTIERREZ: This is the kind of devastation that we have seen from neighborhood to neighborhood. But the good news is that the Triangle Complex Fire is now 40 percent contained. And still, there are 3,600 firefighters who are out here keeping an eye on things and putting out hot spots -- Tony.

HARRIS: All right. Thelma Gutierrez for us in Yorba Linda, California.

Thelma, thank you.

(WEATHER REPORT)

HARRIS: Citigroup revealing some big layoff plans. Our Christine Romans has that. And from Capitol Hill, Kate Bolduan.

Maybe we can get a little help for the auto industry. Maybe.

We're back in a moment.

(COMMERCIAL BREAK)

HARRIS: How about this? Check out this iReport from Dr. Laura Triplett. She was at her parents' home in Orange County and says this glow looked like an erupting volcano. Dr. Triplett says you could smell the fire two-and-a-half miles away. She says it was absolutely horrible. She slept in a closet since it had no windows just to breathe.

(COMMERCIAL BREAK)

HARRIS: More indications today the financial crisis here and overseas is showing no signs of letting up on Wall Street. The Dow has been in negative territory since the opening bell. We will check in with Susan Lisovicz at the New York Stock Exchange in about 15 minutes.

The world's second largest economy slides into recession. Government officials in Japan said today the country's economy shrank for the second straight quarter.

And Citigroup says it plans to cut more than -- listen to this -- 50,000 jobs. It is the latest move by the struggling bank to cut costs in response to the credit crisis.

CNN's Christine Romans of our money team is following the Citigroup layoff, and she joins us now from New York.

And Christine, I'm just sort of curious here. Citi was certainly exposed to the subprime mortgage market meltdown, but also, it seems to me, some of its veracious appetite for acquisitions. And now it looks like the employees are taking the brunt of this.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Well, that's a very good question. You know, Tony, more than a few economists have told me that there was a lot of excess in the financial services industry overall, and that with or without the housing crisis, you needed to have maybe the pendulum swing, then you needed to see some contraction in that sector.

I know I'm talking with a lot of jargon here, but what that means is that, you know, even without the housing crisis, you saw such great, huge growth in financial services, that some people had thought it was ready for a downturn. No one thought anything like this. I mean, this is an awful lot of jobs, Tony. I mean, 50,000 jobs on top of 23,000 that have already been announced or cut so far this year.

At the end of last year, this company had 375,000 employees worldwide. They're angling for what they say is a "near-term target" of 300,000. "Near-term," that has some people wondering if maybe there could be more job cuts even further into next year.

How does this rank in the realm of the kind of job cuts we've seen? It's massive.

HARRIS: Yes.

ROMANS: Fifty thousand jobs is a lot.

Take a look over the past 15 years. This is complied by Challenger, Gray & Christmas.

Back in July of '93, IBM slashed 60,000 jobs. That ranks as the highest sort of mass layoff in modern memory. January '93, Sears Roebuck cut 50,000.

And there's Citi. Today's announcement putting it right there in the top three of massive job cuts in the past 15 years.

A lot of folks there will be looking for a new job. Some of these folks are going to be in companies that Citi is going to spin off and sell to somebody else. Their job still is uncertain. There are a lot of positions that have not been filled, but clearly, any way you slice it, there are going to be an awful lot of job cuts there -- Tony.

HARRIS: Yes. I'm just sort of curious, Christine, what does history tell us about these big layoffs when they're announced? Do the companies actually follow through and lay off those numbers, the big numbers that we see in these announcements?

ROMANS: That's a good question, because actually, those big layoffs kind of mask something that's a little bit different underneath, and that is, before you get to the big layoffs, where they say, look, we're cutting this division, we're cutting 10 percent here, we're cutting 15 percent there, before you even get to that, you have jobs that aren't filled, you have hourly workers whose hours are cut back, and you have temp workers who are not asked back.

So when you look at 50,000 sometimes it's rare to see 50,000. When you look at a bunch of job cuts, there usually are even more job cuts around it, but aren't classified as a single job cut.

HARRIS: Yes. OK, Christine. Appreciate it.

Christine Romans for us in New York.

ROMANS: Sure.

HARRIS: And in 20 minutes, we will see what the mood is outside company headquarters in New York. Our Richard Roth is there.

You know, the lame duck Congress is still quacking today. Democrats are focusing on a $25 billion rescue plan for the auto industry. They want to pull the money from the overall $700 billion bailout. Republicans complain the bailout was meant for the financial sector. They want to modify an existing loan program for automakers. President-elect Barack Obama says the collapse of one or all of the big three is not an option.

(BEGIN VIDEO CLIP)

OBAMA: My hope is, is that over the course of the next week, between the White House and Congress, the discussions are shaped around providing assistance, but making sure that that assistance is conditioned on labor, management, suppliers, lenders, all the stakeholders coming together with a plan. What does a sustainable U.S. auto industry look like so that we are creating a bridge loan to somewhere, as opposed to a bridge loan to nowhere?

(END VIDEO CLIP)

HARRIS: Well, General Motors has said it will likely run out of cash and be forced into bankruptcy by the end of the year if Washington doesn't help out. A test vote in the Senate could come at midweek.

Perhaps you and I are watching what we spend, but what about our kids? We're asking CNN Personal Finance Editor Gerri Willis, how do you teach young people about saving and surviving in difficult times?

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: We're not going through something comparable to that, but I would say that this is as bad as we've seen since then. And if we don't take some significant steps, then it could get worse.

(END VIDEO CLIP)

HARRIS: Well, the incoming president on "60 Minutes." He was asked if the nation's economic situation is comparable to the Great Depression in the 1930s. Close, but not yet.

Solutions to America's money crisis our daylong focus right here in the CNN NEWSROOM.

While politicians grapple with the big picture, Personal Finance Editor Gerri Willis is here to talk about you, specifically your big- spending kids.

Boy, do I identify with that.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Yes.

HARRIS: They see the stuff on the commercials, and they just want it.

All right, Gerri. How do we teach our children to be responsible with money? And I'm paying close attention here. Thank you.

WILLIS: OK. All right. You got your ears on it?

HARRIS: Oh yes.

WILLIS: Start with an allowance. The allowance.

You know, look, the personal savings rate for the country is two- tenths of a percent. And the average American household has a credit card with nearly $10,000 worth of debt on it. OK,, we're in financial trouble, but can't save our kids from the same fate.

Job number one, it's the allowance. This is your child's first experience with having a consistent form of income. So don't just give your child the money, use it as a teaching tool.

Show them how you use your money. Explain that people have to budget their money, decide how much they're going to spend, safe, invest and donate.

Help your child set up a bank account for saving and show them how money earns interest in a bank. You might even offer to match money your child chooses to save for long-term goals.

And then Tony, and this is critical, help your child buy stuff. Instead of just giving your kid what they want -- and I know they can be pretty persistent in asking for it -- ask them to pay for half. Or tell the child that he can earn it by doing extra chores. Once he's earned enough to pay for the new toy, you can go buy it together, and this teaches your child the value of a dollar. A very easy way to do it.

HARRIS: Well, you know, this is interesting. But you know, you talk about financial matters, and this is pretty grownup stuff here we're talking about, Gerri. I'm just thinking, what should we actually tell kids about how we're handling money here?

WILLIS: Well, you know, it is adult. A lot of parents don't even talk to their kids about money because they don't want them to worry.

HARRIS: Right.

WILLIS: But letting your kids see how you handle money makes a big difference in how they are going to handle money. Take your child with you to the bank, the grocery store. Hey, money just doesn't get manufactured by the ATM.

Involve your children in your family budget. Your kids will model their financial behavior on yours. So it's really important how you act in front of them.

And of course, your kids know something is wrong when it comes to the financial crisis. They watch TV.

HARRIS: Right.

WILLIS: You should talk with them about it so they understand what's going on. Otherwise, they're just going to imagine the worst.

HARRIS: Yes.

WILLIS: They have big imaginations.

Be honest with your children. You don't have to tell them every detail of your financial worries, but don't pretend like nothing's wrong.

And encourage the kids to help out. Maybe they can make their holiday wish lists a little shorter. They will be happy to be part of the team and to be helping you out.

And if you have questions, send them to us, to Gerri@CNN.com. We'll be answering those questions. We love to hear from you.

HARRIS: Boy, take them to work with you, if the employer will allow it. Let them see how you actually earn the money that they keep asking for, for these games -- all right, I'm getting a little salty here.

WILLIS: That's right.

HARRIS: All right, Gerri...

WILLIS: I think that's a great idea. Absolutely, because otherwise, it's a black box. They don't know what's going on.

HARRIS: Yes. Yes. All right, Gerri. Thanks. Great solutions today.

Appreciate it. See you tomorrow.

WILLIS: My pleasure. Thank you, Tony.

HARRIS: Yes. Thank you.

Could Hillary Clinton be the next secretary of state? The substance and symbolism of a big-time decision for Barack Obama.

(COMMERCIAL BREAK)

HARRIS: So about, let's see, half past the hour, three hours into the trading day. There's the lady I want to talk to now, Susan Lisovicz. Stocks sold off last week losing, what, $800 billion in value, Susan.

And today we're talking about more massive job cuts and even more talk about a recession. I tell you what. If you've lost your job or are in line to maybe lose your job, it sure feels like a recession to you. SUSAN LISOVICZ, CNN CORRESPONDENT: Yes, and I think the old saying goes, Tony, I mean, you know, when your neighbor loses his job, it's a recession. When you lose your job, it's a depression.

HARRIS: It's a depression, yes.

LISOVICZ: Yes. And we have been seeing depressed stock prices because of that kind of scenarios. The job cuts today are really front and center. They are huge and they're all at one company. Citigroup slashing more than 50,000 positions.

Outplacement firm Challenger Gray and Christmas says it hasn't seen a single company cut that many jobs at one time since IBM slashed 60,000 positions and that was 15 years ago. Citi, one of the hardest hit financial institutions in the current credit crisis, with $20 billion in losses over the past year.

Big job cuts like those and small ones at thousands of small companies are prompting forecasts of rising unemployment. A regional Fed survey shows economists believe the jobless rate will near 8 percent next year. Those economists also say the U.S. entered recession this past April and expect it to last until next summer. It's certainly not just a U.S. problem. Japan and the euro zone officially in recession.

On Wall Street, well, stock prices are not receding. The Dow, which had been down 250 points this morning, is now up 39 points, or half a percent. The Nasdaq's up a third of a percent.

And Citi has changed direction, too. Its shares were under pressure. It's up 2 percent.

But I have to say, Tony, when you have a company that takes that kind of drastic action, often times you'll get a big response on Wall Street thinking that the company is doing the right thing, taking the right medicines.

A quote from an analyst who follows the stock on CNN Money who says, you know, the patient, Citi, was diagnosed with cancer a year ago when the credit crunch was first -- first really came to the fore on Wall Street. And he says, and only now the patient is getting chemo.

I think it's a little bit to late. To little too late. So, you know, oftentimes you'll get a bigger response when you have that kind of dramatic action.

HARRIS: This is good news.

LISOVICZ: But at least there is a rally somewhat for the stocks. But for employees, terrible news today.

HARRIS: Terrible news.

All right, Susan, appreciate it. Thank you. And, you know, as Susan mentioned, the nation's second biggest bank, 53,000 jobs slashed from its payroll. Richard Roth live outside Citigroup offices in New York.

And, Richard, again, I'm just sort of curious, are you hearing any reaction to this news from Citi employees?

RICHARD ROTH, CNN CORRESPONDENT: Well, we did talk with one woman who worked for Smith Barney, one of the retail stock sales and brokerage units of Citicorp. Her name is Jane. And I asked her how she felt. She had just heard the news from another reporter on the street.

(BEGIN VIDEO CLIP)

JANE OSIPOVA, SMITH BARNEY SALES ASSISTANT: Of course it troubles me. But I'm in -- it does, yes. It does trouble me. But it's not the first time that I -- if I will be out of job, you know. So it's not the first time. So it's nothing -- that scary.

(END VIDEO CLIP)

ROTH: When you lose over $2.5 billion in the third quarter, Citigroup or any company is going to take action. And they're slashing 53,000 jobs. They had cut some 20,000 earlier in the year. Citigroup says retail sales, unit financial business units, some in Germany, that's the cuts they've announced. They haven't said where some of the other cuts will come from. I asked Jim Awad, long time market watcher, to assess the Citigroup announcement.

(BEGIN VIDEO CLIP)

JIM AWAD, MANAGING DIRECTOR, ZETHYR: The U.S. economy is not in good shape. It appears that business fell off a cliff in the September/October period, simultaneous with the Lehman bankruptcy and the TARP hearings. So it's bad. It's getting worse. Companies have to react. They have to get their costs in line. They've got to protect capital, put themselves in a position strategically where they can benefit when it does turn because it always does turn in this country. But you've got to be there in a strong position to position yourself for that.

(END VIDEO CLIP)

ROTH: The analyst says that the customer of Citibank does not have to worry at this point. Citibank, the sales on the stock exchange are up today, Tony. But, of course, it's still bitter news for the 53,000 who will be laid off in the coming weeks and months.

HARRIS: OK. Appreciate it, Richard. Richard Roth for us in New York.

You know, there will probably be at least one Republican in Barack Obama's cabinet and Hillary Clinton may play a role, but we're still waiting to learn exactly who will be in the inner circle. The president-elect discussed the issue with Steve Kroft on CBS' "60 Minutes."

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA, (D) PRESIDENT-ELECT: It takes some time to work those things through.

STEVE KROFT, "60 MINUTES": When are you going to make your first announcements?

OBAMA: Soon.

KROFT: Next week?

OBAMA: Soon.

KROFT: You met with Senator Clinton this week.

OBAMA: I did.

KROFT: Is she on the short list for a cabinet position?

OBAMA: You know, she is somebody who I needed advice and council from. She is one of the most thoughtful public officials that we have. Beyond that, you're not getting anything out of me, Steve.

KROFT: Will there be Republicans in the cabinet?

OBAMA: Yes.

KROFT: More than one?

OBAMA: You're not getting any more out of me.

KROFT: You've spoken to some former presidents.

OBAMA: I have.

KROFT: Any advice? Any good advice they gave you?

OBAMA: You know, they were all incredibly gracious. But I think that all of them recognize that there's a certain loneliness of this job. That, you know, you'll get advice and you'll get council. Ultimately you're the person who's going to be making the decisions. And I think that even now you can already feel that fact.

KROFT: What are you reading right there?

OBAMA: Briefing papers.

KROFT: A lot of briefing papers?

OBAMA: Yes. I've been spending a lot of time reading Lincoln. There's a wisdom there and a humility about his approach to government, even before he was president, that I just find very helpful.

KROFT: He put a lot of his political enemies in his cabinet.

OBAMA: He did.

(END VIDEO CLIP)

HARRIS: Hillary Clinton, one of the names on the list as a possible secretary of state in the Obama administration. CNN's Jim Acosta looks at the pros and cons of picking Clinton.

(BEGIN VIDEOTAPE)

SEN. HILLARY CLINTON, (D) NEW YORK: Let me just say that I'm not going to speculate.

JIM ACOSTA, CNN CORRESPONDENT, (voice over): Barack Obama's first potential cabinet pick, Hillary Clinton as secretary of state, has the makings of a blockbuster. Prominent Republicans are weighing in. With Nixon era, Secretary of State Henry Kissinger saying she would be an outstanding appointment.

ED ROLLINS, GOP STRATEGIST: I think it's a brilliant move. I personally think that, you know, she came within 100 delegates of being president of the United States. You know, I think she's got worldwide experience.

ACOSTA: Still, there's enough baggage in the Obama-Clinton relationship to fill Air Force One. Like the 3:00 a.m. ad Clinton ran trying to raise doubts about Obama's ability to handle a foreign crisis.

UNIDENTIFIED MALE: It's 3:00 a.m. Time for a president who's ready.

ACOSTA: During the campaign, the New York senator questions Obama's stated interest in diplomacy with countries like Iran. She gave this dire warning to the Iranians should it ever launch a nuclear strike against Israel.

CLINTON: We would be able to totally obliterate them.

ACOSTA: And Clinton once ridiculed Obama's opposition to the war in Iraq.

CLINTON: And Senator McCain will bring a lifetime of experience to the campaign. I will be bring a lifetime of experience. And Senator Obama will bring a speech that he gave in 2002.

ACOSTA: Then there are the political implications. Analysts point to the upside. Picking Clinton would reward her legions of supporters, many of them women. Downside, passing on Bill Richardson could disappointment Hispanic voters. Also, where would Joe Biden's years of global experience fit in with Clinton at state. And then there's the matter of the former president. Yet campaign strategists say it is this unforgettable rivalry that could strengthen Obama as a new president. JAMES CARVILLE, CNN POLITICAL CONTRIBUTOR: She's, you know, terrific for that position. And the fact that he's willing to put all this aside and go with, obviously, the best choice for the position here says a lot really good about him.

ACOSTA: Barack Obama is often praised the book "Team of Rivals" written by historian Doris Kearns Goodwin. The book is about Abraham Lincoln's decision to appoint political adversaries to his cabinet. Lincoln wanted debates in his White House, not group think.

Jim Acosta, CNN, Washington.

(END VIDEOTAPE)

HARRIS: First tape. First tape. Wanted to get this on the air to you as quickly as I possibly can here. And let's see it right now. This is a first tape of the meeting between President-elect Barack Obama and John McCain. I want to listen to see if there's something there we can pick up.

UNIDENTIFIED MALE: Can we ask you what the goal is for the meeting beyond symbolic?

SEN. BARACK OBAMA, (D) PRESIDENT-ELECT: Just going to have a good conversation about how we can work together to fix up the country and also to offer thanks to Senator McCain for the outstanding service he's already done.

UNIDENTIFIED MALE: Senator, it was a tough campaign.

OBAMA: All right. We're not going to do it alone (ph). Thanks, guys.

HARRIS: Well, there you go. Boy, I'm happy we could get that on the air as quickly as we did. And you've got a little bit there. The men seem to be pretty comfortable together, or am I reading to much into that body language. We will get more from Suzanne Malveaux, who is following this meeting, next hour right here in the CNN NEWSROOM.

You know, those devastating fires in southern California leaving some people with little more than the clothes on their backs and their faith.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: And when you live right here and it's your own place, not there anymore, going on fire, you know, everything burning, it's devastating.

UNIDENTIFIED FEMALE: We can see it for here that it's gone. Everything is gone. But we have each other and we have family and we just wanted to come here and have closure.

It's a blessing in a strange way, you know? It's -- when you have everything just taken from you, but you still have faith and you have each other, it's the most amazing thing. (END VIDEO CLIP)

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HARRIS: You know, firefighters say it could be several days before they get a real handle on all of the wildfires burning in four California counties. Veronica De La Cruz joining us now and she has been watching the fires and has an update for us.

What do you have for us, Veronica?

VERONICA DE LA CRUZ, CNN CORRESPONDENT: Well, you're right about that, it is day four now in the fight against these wildfires raging across southern California, Tony. More than 800 homes have been destroyed. Thousands of families have been displaced.

So getting you up to speed. The Freeway Complex Fire is the biggest fire burning right now. Earlier, Tony, our Thelma Gutierrez stated that it does look like the firefighters there have gotten things under control. Thirty-six hundred firefighters working this blaze, which started in Orange County, spread to Riverside. Almost 29,000 acres scorched. And to put in perspective, that's about 45 square miles.

Then there's a 10,000 acre Sayre Fire in Los Angeles County. That blaze is about 40 percent contained now. More than 515 homes scorched there. At least 1,100 firefighters battling the blaze. The cause of the fire is still under investigation.

And then there is the so-called Tea Fire in Santa Barbra County. Almost 2,000 acres have burned and fire crews have been working around the clock to get this one under control. That fire now 95 percent contained. Fire officials say that blaze was human caused. Possibly arson. Officials estimate nearly $5 million worth of damage done.

And, in all, Tony, about 41,000 acres or 64 square miles have burned.

HARRIS: Boy, that is something. We've got a little bit more for you here, Veronica. Check out these i-Reports sent to us by Aaron Ayala. He says you could actually see the plumes of smoke from the Freeway Complex Fire all the way to Chino Hills and Diamond Bar. Aaron says the amount of smoke in the air, absolutely suffocating. He witnessed ambulances transporting several patients from the evacuated areas.

You know, there are real medical risks for people in California. Inhaling the smoke and the fumes hanging in the air from the wildfires. CNN medical correspondent Elizabeth Cohen is here with some important information.

And, Elizabeth, let's start with the risks. What are the risks in inhaling all this?

ELIZABETH COHEN, CNN CORRESPONDENT: The risks are is that in that air there are teeny, tiny particles that can lodge in the lungs causing possibly short term problems -- and you can feel that when you're out there, the coughing and feeling awful -- but also possibly long term problems because once those little tiny particles are in your lungs, it's hard for them to get out and damage does get done.

So let us take a look -- I was on the phone earlier today with an official from the state of California and he talked about monitoring that they've been doing. So they've been doing monitoring right here in this area. You mentioned earlier Diamond Bar. Right here in this area.

Let me give you some perspective here. For these little tiny particulates, the standard is no more than 35 -- units of 35 in a cubic meter. And what they're finding here, they're finding 200. They're finding 200. And anything over 35 is considered dangerous. So that's a lot.

HARRIS: That's a lot.

COHEN: That's a lot.

HARRIS: Well, what's in that? So what's in this . . .

COHEN: There is all sorts of stuff in that. You've got soot. You've got ash. You've even got formaldehyde because there's formaldehyde in building materials. And when buildings burn, when mobile homes burn, when insulation burns, all that stuff ends up in the air that people are breathing.

HARRIS: So, what do we do? We wear a mask? But then all masks aren't created equal, are they?

COHEN: They definitely are not created equal. So I'm going to show you the gold standard mask. They make people look a little funny. You see this guy here. He's got what are called hepa filters on the side of his mask. And those are really the ones that allow -- that filter out stuff. Paper masks, those are a little bit problematic. Sometimes they'll seal to the face. Other times they won't.

HARRIS: Boy, that's good information. That particulate number is not good at all.

Elizabeth, good to see you. Thank you. Thanks for that information.

A ship off the starboard bow. How was that? Did I handle that OK?

COHEN: Yes.

HARRIS: A friend or foe. Piracy on the high seas. Three incidents this past weekend alone. We have a live report. That's coming up next.

(COMMERCIAL BREAK) HARRIS: So you say you're looking for some financial relief? Look no further than the local gas pump. Cnnmoney.com's Poppy Harlow has our "Energy Fix" from New York.

Let me say that, Poppy. Good to see you, Poppy. Hi.

POPPY HARLOW, CNNMONEY.COM: Good to see you, too, Tony.

Smiles at gas stations across America right now really a remarkable milestone. Gas prices have fallen for 61 straight days, every single day for two months. The national average now $2.09 a gallon. Close to a three year low. Prices are down $1.77 or 46 percent over just the past two months. Seventeen states now have an average of below $2 a gallon. Lucky folks.

The national average half of what it was in July when we saw that record highs for gasoline. While there are plenty of financial stresses on family's minds right now, Tony, one place they're not to concerned about is going to the gas station.

HARRIS: Well, you know, I'm looking to the calender here for this next question. It's November. It's getting colder in many places. I'm just wondering, will heating costs be lower.

HARLOW: The good news, yes. This summer, we were talking about expecting those higher bills. A big change since then because oil prices are tumbling. Oil impacts the price of propane and, of course, home heating oil.

The Energy Department tells us heating oil prices are expected to be 17 percent lower than they were last year. Propane should be 10 percent cheaper. The news not so good for people that use natural gas or electricity to heat their homes. The price of natural gas, that will be up 2 percent. Electricity will be 6 percent more expensive than it was a year ago. Though some energy companies say they're considering a rate cut due to all the stresses on families right now when it comes to the economy.

So here are some tips for how to save, how to survive if you're facing those threats. Yes, we want to help people out there.

HARRIS: OK.

HARLOW: We talked to you a lot this year about buying alternative heat sources for your home. This might not be the time to do it. We're seeing those energy prices really flat-lining, staying pretty stable. On the other hand, if your in good financial shape, you're saving some money on your gas bill, you want to put it towards some alternative way to heat your home, maybe make that investment down the road because if energy prices spike again, I could help you out.

So there are some tips. Many more on our web site, CNNMoney.com.

HARRIS: Solid stuff. Thank you, Poppy. Appreciate it.

HARLOW: You're welcome. HARRIS: Former rivals face to face. Boy, we got this video in just moments ago, turned it around as quickly as we could. This is the meeting happening right now between President-elect Barack Obama and Senator John McCain. The president-elect says they will discuss working together to fix the country and he says it's an opportunity to thank Senator McCain for his service to the country and all the service he has provided, as a senator, as a fighting man, through the years. President-elect Barack Obama and John McCain. We're back in a moment.

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HARRIS: Twenty-first century pirates hijacking ships and kidnapping crews. Three incidents this past weekend alone. The most resent, a Saudi oil tanker and its crew seized off the coast of Kenya. For the latest we go to CNN's David McKenzie in Nairobi.

David, what happened?

DAVID MCKENZIE, CNN CORRESPONDENT: Well, Tony, it's quite extraordinary. What happened is that a group of armed Somali pirates hijacked this massive vessel, the Syrian (ph) Star, off the coast of Kenya, about 450 nautical miles southeast of Mobasa (ph), the port in Kenya. They hijacked this vessel. The latest we hear is that they are taking this vessel off the coast of Somalia so that they can negotiate a ransom.

This is important for two major reasons. It means that the pirates are expending their area of operation massively. The U.S. Navy saying now they cover an area of over a million square miles. And the second reason that it's fully laden (ph) with oil. So the merchant navy associations and the oil industries will certainly be watching developments.

Tony.

HARRIS: Well, David, how easy is it to -- I hate phrasing the question this way, but it seems to be more and more prevalent here. How easy is it to hijack a super tanker?

MCKENZIE: Well, you would think it's very difficult. I mean this is like someone on a bicycle hijacking a building because they're taking these small skips, these motor vessels, and they're taking on tankers that are 300,000 metric tons. That's three times bigger, Tony, than American warships. Particularly warships -- the biggest warships they have. So really it's quite extraordinary they're managing to do this. But they're doing it. And they're doing it almost every week off the coast of Somalia.

HARRIS: It's crazy. And what's being done to prevent these attacks?

MCKENZIE: Well, there's coalition forces in the area. There are U.S. warships. I've been on those warships. They're very impressive. They have impressive hardware, remote capabilities. But the problem is, because of the size of this area, they can't be all places at all times. The solution really would be in political solution in Somalia. But that's far from coming to fruition.

Tony.

HARRIS: Yes. All right, David McKenzie for us in Nairobi, Kenya. David, thank you.

Time to get to Kyra Phillips now. CNN NEWSROOM.

You know, they're paying these ransoms. That's part of the issue.

KYRA PHILLIPS, CNN ANCHOR: Sure.

HARRIS: Have a great show, Kyra.