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Israel Moves Tanks to Border with Gaza; Bush Administration Blames Hamas; Credit Crunch Takes the Color Out of Financiers; Final Toast for a Wall Street Restaurant

Aired December 29, 2008 - 09:00   ET

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

RICHARD LUI, CNN ANCHOR: All right. Thanks, guys.
Gaza pounded again. Israeli air strikes target Hamas for a third day. This hour, a live report from the border.

Plus the first payout. Today, two automakers get their hands on your money.

I'm Richard Lui in for Heidi Collins. It is Monday, December 29th. You are in the CNN NEWSROOM.

Straight to it. Fast-moving developments from the Middle East. Israel's defense minister declaring his country in all-out war with Hamas. That's the Palestinian militant group that controls Gaza.

Israeli warplanes are pounding Hamas targets for a third day. Now its tanks that are on the move. Israeli leaders say the raids are aimed at stopping Hamas rocket attacks from Gaza, yet they continue.

Palestinians report more than 300 people have been killed by the air strikes. More than 650 wounded.

The United Nations is calling for an immediate end to this violence.

The area we're talking about is slightly more than twice the size of Washington, D.C., as you look down on the lower part of your screen here. Gaza is wedged between the Mediterranean Sea and southern Israel, and shares a seven-mile border with Egypt.

CNN's Paula Hancocks has made her way to the Israeli side of the border.

Paula, you were there yesterday as well. How does today compare?

PAULA HANCOCKS, CNN CORRESPONDENT: Well, Richard, we are still seeing the same amount of Israeli air strikes. Certainly, Saturday, the first day, there were an incredible amount of air strikes, very many simultaneous air strikes, but sources in Gaza, just to the right of me, were saying they had never seen such devastation in years, so certainly these Israeli air strikes are continuing.

Just about half an hour ago we had another one from an apache helicopter. And what they are doing is targeting Gaza City. You can see it's in the background there, if we can just zoom in and show you Gaza City.

This is as far as we are allowed to go. The Israeli government won't allow us into Gaza at this point but we know that the death toll is rising in here. But this is a densely populated area and any air strike runs the risk of involving civilian deaths.

Now we've been told by Palestinian medical sources, more than 300 have been killed. We've just been told by Chris Guinness -- he's a spokesperson for the United Nations agency in Gaza. And he estimates, according to the U.N., that 62 of those were civilians.

And he also points out that that is a very conservative guess, and that number is likely to be much higher, so civilians really are getting caught up in these air strikes.

At this point we're not seeing a ground operation. We are seeing a lot of preparations for a ground operation. We just got kicked out of the area where we were earlier on and that became a closed military zone and also we're seeing a lot of tanks patrolling along the border, so they're ready for a ground operation should that be necessary.

But, of course, the fire is not just one way. We are having rockets coming here into Israel. 30 rockets today, according to Israeli security sources, 10 mortars, one person killed just 15 kilometers north of Gaza.

So this conflict, this escalation in tension, this operation by the Israelis, it is showing no signs of calming down. Richard?

LUI: Paula, you also covered the 2006 Hezbollah/Israel war. You saw the troop carriers also pull up then. When you compare that two today, what are you seeing? Any indications, evidence of an impending ground assault?

HANCOCKS: Well, it is very difficult to say, and the defense minister isn't saying for obvious reasons. None of the soldiers that are just inside Gaza, about half a mile inside are saying -- sorry, just inside that-- this area here, not in Gaza yet. We're being told very specifically they are not in Gaza yet but they are all moving towards that area.

Ehud Barak, the defense minister, has approved the call-up of 7,000 reservists so clearly all the signs are that there could well be a ground operation, but it's also worth remembering, when we saw tanks heading towards Gaza behind us, when we had the cameras on, this is something that Hamas would also see, and this is something that Israel would be very aware of as well.

So this could well be a show of strength, although we are seeing a show of strength from the air, certainly so many air strikes happening, and you have to remember there are 1.5 million residents on that tiny strip of land and they are still stuck in there.

Many at the -- U.N. agencies and many of the other aid agencies are saying there is a serious worry of a humanitarian catastrophe in there. Richard? LUG: Paula Hancocks there on the border of Gaza and Israeli, underneath the fire, the air strikes, as well. Thank you so much for that live report.

President Bush remains at his ranch in Crawford, Texas. Meanwhile, the Bush administration has put the blame here for the renewed violence squarely on Hamas. The United States says that Hamas broke a cease-fire by firing rockets deep into Israeli territory.

Well, he's still three weeks from becoming commander in chief but Barack Obama is being briefed on what could be the first international crisis of his administration.

CNN's Ed Henry reports from Honolulu.

(BEGIN VIDEOTAPE)

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Here in Hawaii President-elect Barack Obama is trying to stay on top of the situation in Gaza. On Saturday he had an eight-minute phone call with current Secretary of State Condoleezza Rice and then on Sunday evening, he had phone calls with retired Marine General Jim Jones, his incoming national incoming national security adviser, and Senator Hillary Clinton, his incoming Secretary of State, as long we she's confirmed by the United States Senate.

And the point is that the president-elect is trying to make sure that he's on top of the crisis, but he doesn't want to step on President Bush's toes. In fact, senior adviser David Axelrod appeared on NBC's "Meet the Press" noted that as a candidate Barack Obama last summer visited Israel and spoke out on the fact that in a situation like this Israel has a right to defend itself but Axelrod also noted that Obama is being very careful right now to make sure the U.S. is speaking with only one voice.

(BEGIN VIDEO CLIP)

DAVID AXELROD, SENIOR ADVISER TO PRESIDENT-ELECT OBAMA: He did, as you said, visit Sderot in July, and he said then that he thought that when bombs are raining down on your citizens, it's obviously unacceptable and there is a -- an urge to act, but, again, I don't want to go beyond that because we only have one government and one president at a time and he's going to continue to consult with Secretary Rice and the president and the administration on this, and monitor these events and he'll be prepared to take over on the 20th and discharge his responsibilities then.

(END VIDEO CLIP)

HENRY: The clashes in Gaza are a fresh reminder that for all the focus in recent weeks on financial security crises it's still national security crises that could define the Obama presidency.

Ed Henry, CNN, Honolulu.

(END VIDEOTAPE) (BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Occupation must go.

CROWD: Occupation must go.

(END VIDEO CLIP)

LUI: Well, across the United States people are taking to the streets in Phoenix. Palestinian-Americans calling for an end to what they see as Israeli hostilities. Then in Chicago, one group demonstrated against the air strikes. Across the street, a counterdemonstration in support of Israel. Pro-Palestinians also voiced their anger in Anaheim, California.

Well, to keep up with all the latest from the Middle East, the video, the stories, how world leaders and your neighbors are reacting and the stories behind the story, you can also go to CNN.com and CNN.com/live.

Turning to "ISSUE #1" now, the economy. Two of the nation's top automakers get the first portion of their government loan today. General Motors and Chrysler each received $4 billion from the emergency fund.

GM is scheduled to receive two more installments in the next two months totaling $9.4 billion.

We are the ones paying for this big loan, if you didn't already know it, with our tax dollars.

The CNN money team is breaking it all down for us. Our Christine Romans picks up the story for us in New York.

Good morning to you, Christine.

CHRISTINE ROMANS, CNN CORRESPONDENT: Good morning, Richard.

It gives paying off the car note a whole new meaning. This time the auto loan is for the automakers, two of them, Chrysler and GM, who will be taking American taxpayer money and putting it to work to try to keep their companies alive.

Ford, in a better position, said it did not need low-interest government loans at this time. So Ford and GM, each today, will get $4 billion from the treasury and this is, of course, the, the big auto, quote, unquote, "bailout," that had caused so much controversy for several weeks.

A deal died in the Senate and the White House had to step in and orchestrate this bailout, a bailout in terms of low-interest loans. Today, $4 billion to Chrysler and GM, January 16th, 5.4 billion more to GM, and then the final installment to GM comes in February, another $4 billion, that -- Congress has to finally sign off on that last trench of the 4 billion. Separately, an interesting car note as well, and that's from Edmonds.com that said in December they think that light trucks and SUVs will outsell automobiles for the first time since early last year.

That's because of -- low gas prices, declining gas prices, and huge incentives of the car dealers, which I don't know if you've seen it, but, boy, some of the incentives on these light trucks and SUVs are pretty, pretty big so they're looking for, for sales to pick up on those. Richard?

LUI: Still kind of hard to believe, though, right, that light trucks and SUVs will pick up during this very slow time.

ROMANS: Indeed, and especially since it was just a few months ago that people were so concerned about $3 and $4 gasoline. They were talking about hybrids and small cars, and now the gas prices are low again and the incentives are big, at least people look like they are interested again in those light trucks and SUVs.

LUI: We'll have to check our collective memory in a month or so then.

ROMANS: Yes.

LUI: All right, Christine Romans, thank you so much, in New York.

And a reminder for you. We'll be watching Wall Street all morning. The big board goes into motion at the bottom of the hour. That in about 20 minutes.

Snow with nowhere to go. The heavy weight of white stuff brings down one roof at least. We've got a severe weather check.

(COMMERCIAL BREAK)

LUI: Well, flooding is a major issue in parts of the Midwest right now. In northern Illinois, for instance, rivers are cresting and the rising water is spilling over into the yards of homes. Over the weekend some residents were encouraged to evacuate as well.

Then in Washington state, keeping an eye there. The problem is snow and a ton of it. As it piles up it is knocking structures down. Some roofs, as you see here, and carports just can't handle the strain.

Forecasters say it's going to stay so cold that the snow is not going to melt any time soon.

Reynolds Wolf is in the Weather Center right now looking at that for us, and a lot to watch there in the Pacific Northwest. They don't seem to get a letup there.

(WEATHER REPORT) REYNOLDS WOLF, CNN METEOROLOGIST: Richard, again, another big weather day. Always seems to happen like that. Go figure. Let's send it back to you at the desk.

LUI: I wanted to ask you about that snow/flood cycle in the Midwest. Is that pretty typical?

WOLF: You know, when you have any kind of a warm-up like that, obviously, that's going to be an issue you're going to be dealing with. And you get some decent snow pack that formed there...

LUI: Right.

WOLF: ... just over towards the end of the week and then when temperatures come up you have that quick rapid transformations, so now, all of a sudden on snow, but -- total, total overflow...

LUI: Right.

WOLF: ... of moisture, so yes, flooding is going to be an issue.

LUI: OK. Reynolds Wolf, thank you so much. We'll be dropping by with you in just a little bit.

WOLF: Anytime.

LUI: Hey, cleanup crews are still working around the clock in central Tennessee after a breach in the wall of a power plant. That sent more than a billion gallons of coal waste into a residential area.

CNN's Brooke Baldwin has the latest now from Kingston, Tennessee for us. Basically, a sludge tsunami hit that city, didn't it?

BROOKE BALDWIN, CNN CORRESPONDENT: Sludge tsunami, sea of sludge, I feel like I've heard it all this morning, but words cannot, Richard, describe this story.

Really, just to put it into perspective, you've seen the pictures. It was a catastrophic collapse of this plant's retention wall. Some people referred to it as a spill, others calling it a tidal wave.

You mentioned more than a billion gallons of this stuff. This is the sludge. It took out trees, it crippled cars and it damaged homes all in its wake.

(BEGIN VIDEOTAPE)

BALDWIN (voice over): Situated in the shadow of the TVA Kingston Steam Plant.

TOM VEREB, HOMEOWNER You couldn't see the smoke stacks from our house.

BALDWIN: That's Tom and Wendy Vereb's dream house complete with a dock, a boat and this love-seat swing, now, it's all gone.

(On camera): So looking at this and then looking at this, what, what goes through your head?

WENDY VEREB, HOMEOWNER: Depression really. I mean, it's so sad because it was so pretty here. I mean, we used to sit here and do -- have fires, you know, have a fire going and stuff and they'd row across the way to us and have some wine together, and stuff like that, and sit out here. It's really peaceful.

BALDWIN (voice over): One week ago, a tidal wave of water and coal ash burst out of the plant's retention pond, cascading sludge onto 300 acres of surrounding land and waterways including this couple's cove.

T. VEREB: And as we walked around, we down here and said oh, man, it was just kind of hard to believe the view of it.

BALDWIN: Some families just stop and stare but most want answers. Sunday night so many people packed into this emergency meeting that last minute city council had to change the venue and then the questions came.

UNIDENTIFIED MALE: When was the last time this levee had been inspected?

UNIDENTIFIED FEMALE: Did have you an emergency plan in place for such a thing?

BALDWIN: The target, TVA. The president and CEO tried to assure everyone that cleanup, containment and safety are TVA's top priorities.

TOM KILGORE, PRESIDENT, TENNESSEE, VALLEY AUTHORITY: I'm hear to tell you we'll clean it up, and we're going to clean it up right, and we're focused on that job.

BALDWIN: It's a job that Tom Vereb knows for now has no end in sight.

T. VEREB: This mess is going to be around for a while.

BALDWIN: And if they decide to sell who would want to buy?

(END VIDEOTAPE)

BALDWIN: So the cleanup, the air quality, the water quality testing, that is all under way.

One bright spot to this tremendous mess, though, is the fact that no one was injured which was pretty amazing according to some of the folks and even TVA who say this is a big recreation area.

This is where two rivers, the Emory and the Clinch converge. Very popular spots, Richard, for fishing, boating, water skiing, so if this tidal wave had happened in the middle of summer with people out here, people would have been crushed. It would have been much worse.

LUI: Very luck. Brooke Baldwin, thank you so much with the latest for us there in Tennessee.

BALDWIN: Sure.

LUI: You know, hope could be fading for eight people still missing after a double avalanche in the mountains of western Canada. The mayor of a town nearby said a search party was sent out at daybreak but it doesn't look good.

According to Canadian Royal Police, the second avalanche struck after members of the group tried to rescue people trapped in the first avalanche. 11 people were buried alive after the avalanche struck but three of them were rescued. They were taken to the hospital.

The search is still on for a missing cruise ship passenger. Mexican Navy and U.S. Coast Guard crews are searching the Gulf of Mexico for 36-year-old Jennifer Seitz. Her husband reported her missing from the Norwegian Pearl cruise ship Friday morning.

Some passengers aboard the ship are speculating about what may have happened there. One woman saying the couple may have had an argument after they played a game on that ship.

(BEGIN VIDEO CLIP)

STEPHANIE GARCIA, PASSENGER: There was a lot of rumors about everything but all -- all the stories were pretty consistent, that they were at the Not-So-Newlywed game and something happened, something maybe was said. So they went back to the room and the neighbors heard arguing.

From that point that's when all the stories and speculation started of having her maybe being murdered or thrown off the balcony.

And so the guy was supposed to be in isolation but on Saturday he was walking around the ship like nothing had happened.

(END VIDEO CLIP)

LUI: Authorities have not confirmed anything and are still trying to figure out what happened to Seitz. So far they have covered more than 2500 square miles in their search for her.

Israeli air attacks continue in Gaza with tanks at the border. Could a ground assault be next? We've got a live report from the Mideast.

(COMMERCIAL BREAK)

LUI: Caroline Kennedy feeling the glare of the media spotlight after being included on a short list of potential replacements for Hillary Clinton as New York's Governor David Paterson continues to mull over who to pick.

Kennedy seems to be making headlines worldwide.

CNN correspondent Deborah Feyerick is live in New York with more for us.

Hey, Deb.

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, you know, it's almost inevitable that she's going to be making those headlines.

Caroline Kennedy said she knows she's an unconventional choice to take over Hillary Clinton's Senate seat. Still she believes that has a, quote, "lifetime of experience," unquote, and also visibility which can make her an effective senator for New York.

Now responding to criticism that she's brushed aside reporters since expressing interest in a political future nearly a month ago, Kennedy answered questions for select newspapers this weekend, even sitting down for an extended TV interview with a local New York City cable station.

Kennedy says her mom believed strongly in having the (INAUDIBLE) do the unexpected.

(BEGIN VIDEO CLIP)

CAROLINE KENNEDY, RUNNING FOR NEW YORK SENATE SEAT: I haven't followed a traditional path, but I think I bring a lifetime of experience to this. In my family, you know, public service is really, you know, the greatest honor that anyone can have. It's a legacy that I cherish and that I have tried to live up to my whole life.

(END VIDEO CLIP)

FEYERICK: Kennedy says she knows she will have to work twice as hard to prove herself, something that she's ready to do. Twice as hard to prove herself. Something that's she's ready to do. Her top priorities include the economy, health care and also education.

She said she was, quote, "dismayed," unquote, by her voting record in New York which show she's skipped many local elections. Kennedy stayed away from talking about her personal wealth and said she'd be happy to discuss it privately with Governor David Paterson who is going to be choosing the next senator.

She said it was September 11th and supporting Barack Obama that moved her to get back to her community.

A top aide to New York City Mayor Michael Bloomberg, a Republican turned independent, has been advising Kennedy and while Democrats have showed that they're concerned that the 51-year-old mother of three says she will not be beholden to anyone. Richard?

LUI: That's to be continued.

Deborah Feyerick, thank you so much. It's a trading year that investors cannot wait to finish. Wall Street about to open for the very last week of 2008. We take you there.

(COMMERCIAL BREAK)

ANNOUNCER: This is CNN, the most trusted name in news. Now back to the CNN NEWSROOM.

LUI: Hi. I'm Richard Lui in for Heidi Collins this day. The opening bell is about to ring on Wall Street and investors -- well, they are hoping that major averages can add on to Friday's modest gains.

Stephanie Elam is at the New York Stock Exchange with more on how the trading day is shaping up.

And, Stephanie, folks are hoping that will be up.

STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT: Yes, they're they'll hoping it will be up. I think a lot of people just ready to have the year over, Richard, to be to be honest here.

We're kicking off the final trading days of the year and for most investors saying goodbye to 2008 cannot come soon enough. All the three of the major averages are down sharply in what's been one of the worst years in market history.

The spotlight will remain on the financial sector today, in particular, on reports that a group of hedge funds and private equity firms are close to a deal to buy the assets of failed mortgage lender IndyMac. The company went belly up back in July in one of the largest bank failures in history.

Automaker shares are also in focus. Today General Motors and Chrysler get the first portion of the nearly $13.5 billion in emergency loans the Bush administration agreed to give them.

Meanwhile, oil prices, they are climbing nearly two bucks to around $40 a barrel on concerns about tension in the Middle East, along with indications that key OPEC members will act on commitment to cut production the production.

And one stock that we are keeping an eye on, chemical-maker Roman Hawes. It shares appoints to fall more than 20 percent after Kuwait scrapped a more than $17 billion joint venture with Dow Chemical. Dow had hoped to use proceeds from that deal to help finance its $15 billion acquisition of Roman Hawes.

All right, you guys just heard the bell there right behind me. In the early going here, the Dow off six points, 8510, Nasdaq off one at 1528, so -- so far, Richard, not so much to the upset. But hey, we've got a whole trading day ahead of us.

RICHARD LIU, CNN ANCHOR: And folks just starting there. You know, we were seeing last week, how they were playing backgammon, singing songs. Hoping there will be more people there today doing some work.

ELAM: I wouldn't count on it. I'm not going to count on it. Look, the Dow just went positive. But it's probably going to be volatile since a lot of people aren't here, so there's less to trade. So you see a lot of volatility on days like today.

LIU: OK. Up, up, up, we hope. Thank you, Stephanie Elam. Appreciate it.

ELAM: Thanks.

LIU: A territory roughly twice the size of Washington, D.C. is at the heart of renewed violence in the Middle East. Israel has declared all-out war with Hamas, the Palestinian militant group that controls Gaza. Its tanks are moving towards the border as airstrikes continue for a third day. Palestinians saying more than 300 people have been killed, and people in Gaza City are panicking. Israel saying it's trying to stop Hamas from firing rockets into its southern towns, but it has not. One person was killed in a missile attack today.

And CNN is all over the crisis playing out in the Middle East. In a moment we'll hear from Elaine Quijano who's waiting to hear from the president right now at his ranch in Crawford. But first, Cal Perry is reporting in Jerusalem. He's on the ground there for us at this day.

Well, you know, we're starting to get a real look at how much destruction there is in Gaza. The airstrikes have caused a bustling town to be reduced nearly rubble. Here's Cal Perry with his report.

(BEGIN VIDEOTAPE)

CAL PERRY, CNN INTERNATIONAL CORRESPONDENT (voice-over): As the sun rises over Gaza, the extent of the damage from overnight airstrikes is revealed. The Ross Municipality Building, a Hamas Intelligence Compound, the Gaza Harbor, a mock, and university all hit. And another important look at Israel's overnight movements, more tanks, jeeps and equipment staged just outside of Gaza poised for a possible ground invasion.

EHUD BARAK, ISRAWEL DEFENSE MINISTER (through translator): We want peace. We have stretched our hand in peace many times to the Palestinian people. We have nothing against the people of Gaza, but this is an all-out war against Hamas and its branches.

PERRY: Hamas targets have been pummeled by Israeli airstrikes. Gaza is one of the most densely populated areas of the world, now a mass of rubble and destruction. As the dead are covered, some of the residents of Gaza are quick to not only blame Israel, but their Arab neighbors as well.

"It's Egypt and other Arab countries that are backing Israel's aggression against Gaza," the man says. Israel says the goal of its operation is to stop an ongoing stream of rockets fired from Gaza into its south, but since Israel's campaign began more than 150 rockets have been launched from Gaza according to the Israeli military. And on Monday, one of those rockets claimed a second Israeli life in the city of Ashkelon. Southern Israel now, too, in a state of fear and chaos.

(END VIDEOTAPE)

LIU: All right, Cal, joins us now live from Jerusalem. You know, Cal, the big concern is might this spark off the powder keg we call the Middle East.

PERRY: Well, that is the big fear. And, of course, in 2006, that's exactly what happened. There was trouble in Gaza. Let's not forget Gilad Shalit, the Israeli soldier who was abducted by Hamas and is still being held captive, unclear if he's alive or dead. So all the factors are there. And, of course in, 2006, what happened was a major war sparked off with Lebanon that lasted over a month. They now call that the summer war of 2006. All the factors are there.

We've heard again from Hassan Nasrallah, the leader of Hezbollah in Lebanon. He has declared this a humanitarian disaster. He's called for millions of people to take to the streets of Egypt, but, Richard, so much has changed in a place like Lebanon since 2006. Hezbollah is now part of the government. Worth mentioning but Hamas also part of the Palestinian government. So unclear if it will widen. Certainly, that is the fear on the ground. But as of right now, the violence does seem to be concentrated in and around Gaza, Richard.

LIU: Many parallels there. What about international journalists? Are they being allowed into Gaza yet?

PERRY: They are not. And this is the subject of problems here on the ground. International journalists are appealing that to the Israeli government. The Israelis are not letting journalists cross into Gaza, and what makes it interesting is that in the past, when there has been major combat or conflict in Gaza, journalists have been able to come and go as they please. This time, they are not able to.

Now, the Israeli defense force, the Israeli army, they are saying straightforward it is for the protection of international journalists. But, again, journalists here are appealing that decision.

Richard?

LIU: All right. Cal Perry live there in Jerusalem. Thank you so much.

You know, from his Texas ranch President Bush has yet to come out and talk about these renewed attacks. But in statements, his administration puts the blame for it all squarely on Hamas.

Straight over to CNN White House correspondent Elaine Quijano, who joins us from Crawford with the latest on that. Any response?

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Well, we haven't heard from the president. As you noted, in fact, the last time that we saw the president was back on Friday when he arrived here in Texas aboard Air Force One. Have not seen him all weekend, but certainly through his spokesman, the White House is making very clear that the Bush administration views this action on the part of Israel as really a necessary step, justifiable self-defense and pinning the blame, as you noted, squarely on Hamas.

Now the president, we should say, is getting his regular updates, his intelligence briefings from his top advisers, including his national security adviser Stephen Hadley. Also getting updated by his Secretary of State Condoleezza Rice. He is getting those updates not in person, but by phone, and by secure video conference.

And we should also mention as well that we'll be having an opportunity here in just about an hour and a half or so to pose some questions to his spokesman. They are scheduled to hold a briefing here at the work space in Crawford at 11:00 a.m. Eastern Time. So we'll wait to see what other comments the White House might have.

One point I wanted to make is that I did pose a question to a spokesman. What about the White House comment or reaction to the Israeli cabinet deciding to call up reservists. Of course, as you've been talking about, there's a lot of speculation about possible ground operation. Notably, there was no comment back. They are obviously being very careful watching and waiting to see what happens on the ground in Gaza in the next 24 or 48 hours or so.

Richard?

LIU: Yes, very important question.

Hey, Elaine, have you heard how President-elect Obama is being kept up to date about this very issue?

QUIJANO: Yes. We understand from the transition side that the president-elect actually placed a phone call to Secretary of State Condoleezza Rice over the weekend. We understand they had a brief conversation. It lasted just about eight minutes. But in that time, he was updated on the developments happening in the Gaza strip.

But at the same time, it's sort of a fine line here for the president-elect and his advisers. They are very much trying to defer to the current president saying that there is only one president, one government at a time. At the same time, top adviser was asked over the weekend on a Sunday talk show about President-elect Obama's statement back in July, when he basically said that Israel does have a right to defend itself. This adviser went ahead and reaffirmed that that was the president-elect's view but, again, tried to emphasize, look, there is only one government, one president at a time, and left it at that, Richard. So really deferring to the current president right now.

LIU: At the moment. Elaine Quijano with the president in Crawford, Texas. Thank you.

And more on the crisis in Gaza. Hundreds of people across the Middle East are mounting protests against the bombings in Iraq. Supporters there of radical cleric Muqtada al-Sadr demonstrated against the attacks. Protesters waved Iraqi and Palestinian flags, while they protested. They also chanted anti-Israeli slogans while they burned a flag of Israel along with a picture of President Bush.

Then in Beirut, Lebanon. Pretty much the same story there as demonstrations and protests have been going on there since yesterday. A pro-Palestinian rally was also scheduled for this morning.

14 children killed in a suicide car bombing, a soldier and a security guard also died in the blast near a voter registration side in southeastern Afghanistan. The Taliban claiming responsibility here. Dozens of tribal elders were meeting nearby at the time of the attack on Sunday.

Avoiding conflict. That is the goal of Pakistan's army general amid the tensions with India following last month's terror attacks on Mumbai. His comments are perhaps the strongest signal yet that Pakistan does not want to see a fourth war with its neighbor India over these attacks. They are believed to be his first in relation to these tensions.

And then there's the jolt to China today. A 5.0 magnitude earthquake rocked China's Sichuan Province. So far there are no reports of injuries or damage. We'll be watching that for you.

Also, watching that weather in the northwest. And we go to Reynolds Wolf who is checking all the latest information and so much to keep an eye on, especially in the Midwest and Pacific Northwest over the last week.

(WEATHER REPORT)

LIU: All right, thanks a lot, Reynolds.

REYNOLDS WOLF, CNN METEOROLOGIST: You bet.

LIU: In Philadelphia is where we take you now. There's a trip to the movies that turned into drama off the screen for one family. A woman says a man got upset when her three kids and boyfriend were laughing during the movie. She says he told them to quiet down and then things turned very ugly after that.

(BEGIN VIDEO CLIP)

KEYIA BANNER, VICTIM'S GIRLFRIEND: He threw the popcorn on my kids. The whole bucket of the popcorn he threw it on my kids. And next thing you know, he's swinging.

Who brings a gun to a movie theater? I don't understand that.

(END VIDEO CLIP)

LIU: Well, the woman says after her boyfriend jumped in front of her kids, and then she says the man fired a shot. Her boyfriend was hit in the arm. CNN affiliate WPVI quote a sources saying Suspect James Cialella told police he shot in self-defense. Police cannot confirm it and are unable to say whether Cialella has entered a plea or remains jailed at the moment.

Then we take it to Illinois. The House committee investigating a possible impeachment for Governor Rod Blagojevich. He is scheduled to meet again today. The governor's defense team was dealt a huge blow after the panel opted not to subpoena members of President-elect Obama's transition team, including incoming chief-of-staff Rahm Emanuel. Prosecutors decided any testimony from the transition team could jeopardize their criminal investigation.

Should lousy 401(k) statements be forgotten? Saying good riddance to a bad financial year. We've got the shred of evidence.

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LIU: Making their predictions for the New Year. The shamans use cocoa leaves, flowers and incense to send positive vibes to world leaders. But they are warning that some leaders may need extra help. The main shaman says President-elect Obama could be under threat of attack from people who do not believe in world peace. And the shamans say the U.S. financial crisis will become desperate.

A woman in China is cashing in on her obsession with plastic surgery. She had so many she's lost count. CNN's John Voss looks at the extremes this woman and others in China are willing to go to for beauty.

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JOHN VAUSE, CNN INTERNATIONAL CORRESPONDENT (voice-over): There's no mistaking who runs this plastic surgery clinic in Beijing, there's a life-like mannequin in the foyer, her oversized photo on the wall and there she is. She's Shi Sanba, 56 years old, divorced and walking billboard for almost every cosmetic procedure.

"I'm an example for all Chinese women who pursue beauty," she told me. "Most of them are my fans." Sanba has had a wrinkle-smooth, chin change, nose raise, breast firmed, stomach flattened and more. So many operations, she says, she's lost count. This is how she looked 20 years ago before having any work done. All of this has turned her into a mini celebrity here and that keeps the customers coming in.

This year she says about 3,000 people had some kind of cosmetic procedure performed by one of the dozens of surgeons who works for her. And while China's economy has dramatically slowed she doesn't expect any major impact on her business.

"The desire for beauty is getting stronger and stronger," she says. The old want to be young, the ugly want to be pretty. 23-year- old Feng Xue wants her cheekbones, jaw, chin, lips and nose reshaped.

"I work in international finance," she says. I have to meet many different people, and I think a good appearance will help me make a better connection.

(on camera): Each year, the Chinese spend more than $2 billion U.S. on some kind of cosmetic procedure. Many undergoing the knife are students often paid for by their parents who believe a better look will lead to a better job.

(voice-over): Sanba says business picks up during June and July when school finishes. It's all about trying to stand out in a crowd. Not easy when you're in a crowd of more than a billion people. John Vause, CNN, Beijing.

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LIU: All right. A candidate to run the Republican Party running head on into controversy.

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(SONG PLAYING) Barack the Magic Negro lives in D.C. The "L.A. Times," they call him that because he's not authentic like me.

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LIU: The crude remake and the push back by the current GOP leader.

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LIU: What they're doing there? Well, they're trying to stretch some bad memories of 2008. They did that in New York yesterday. Some people shredding worthless stock certificates and depressing bank statement from the financial meltdown. Lots of folks have those things.

A few looking to make a clean start also shredded some photos of their cheating lovers. Even got the sledge hammers out. You name it. People shredding, slamming on things, in hopes of a better 2009. Let all that aggression out. Why not?

LIU: Losing money in the markets is enough to make anyone go pale, of course. And that color change is now a fashion switch for many who know the markets best. Here's Jim Boulden with that.

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JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): This might be the quintessential outfit of a London banker, loud tie against the clashing colored shirt, all tucked under pinstripes. It appears some men in London's financial district are still bucking the newest trend, brought on by the credit crunch, blending in.

ROGER TALBOT, HILDITCH & KEV: When money gets a little bit tighter, people refer back to basics. White shirts in particular so far better than any other shirts.

BOULDEN: Shirt makers along London's fame Jermyn Street say multi-colored shirt are usually the best seller, not now.

UNIDENTIFIED MALE: And that comes with the double cuff. BOULDEN: Consultant Ron Collins got himself a new white shirt.

RON COLLINS, CUSTOMER: It's just better not to kind of project yourself quite so much these days.

BOULDEN: Now, you're wearing a very bold shirt at the moment.

COLLINS: Yes, that's why I came in to buy a white one.

BOULDEN: Even the Thomas Pink stores are focusing on this trend.

(on camera): It maybe Thomas Pink but white is all the rage here at the white shirt bar. You get a menu, where you can go through it, and pick from 19 different white shirts.

(voice-over): And it's not just London.

TALBOT: I just came back from America. I notice a lot of (INAUDIBLE), first time I sold neater patterns.

BOULDEN: Two movies define the good times on Wall Street back in the 1980s. In "Working Girl," Harrison Ford conformed by wearing white shirt after white shirt, but it wasn't just greed that was Wall Street's Gordon Gecko.

(on camera): I couldn't stand it myself. To be honest with you, I'm glad they've been out of style.

(voice-over): But they haven't apparently, and the economic meltdown forces people to reach in the back of the closets.

TALBON: The credit crunch is here. People will bring their old shirts into us to be re-colored. White colors and cuffs. So now it becomes a new shirt.

BOULDEN: It's all nonsense said this man.

UNIDENTIFIED MALE: I think there's no relevance on the economy whatsoever. I think it's just that the fact that people have pick up on, and they just decided that it has to do with the credit crunch.

I only own one white shirt, and it was in the wash this morning so this is the one that came out out of the water.

BOULDEN: Call it the credit crunch shirt or the fickle wins of fashion. For some, it's back to basics time.

Jim Boulden, CNN, London.

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LIU: I guess it's time to get rid of my blue shirt.

Wall Streets dive leads to a fallen saint.

(BEGIN VIDEO CLIP) UNIDENTIFIED FEMALE: I'm trying not to cry, and I can't. But be that as it may, I wish all the families here now.

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LIU: Closing time at St. Maggies.

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LIU: Straight to the Dows. We take a look at numbers. Well, given a little back. Down 16. Of course, we're only 30 minutes into the day so far. The Nasdaq also not looking positive. We'll keep an eye on Wall Street for you.

It was a place where people on Wall Street gathered in good times in one final time last week amid bad times. CNN's Richard Roth on the sad passing of a tradition.

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RICHARD ROTH, CNN SENIOR U.N. CORRESPONDENT (voice-over): For 25 years the tycoons of Wall Street ate and drank here at St. Maggies. But their financial excesses have indirectly created another casualty, St. Maggies Cafe itself.

UNIDENTIFIED MALE: I feel sad. It's an institution.

ROTH: Just before Christmas Eve, St. Maggies close. Their biggest customers, AIG, Goldman Sachs and Citibank had slashed spending.

KATHY BARSA, CUSTOMER: The big financial institutions that didn't do the right thing, and now people like St. Maggies are suffering from what the industry has done to them.

ROTH: There were hugs and tears as long time customers said farewell to owner Bill Galvin.

UNIDENTIFIED MALE: Coming from various business lunches and the after work, so we're going to miss you guys.

UNIDENTIFIED MALE: Thank you so much.

UNIDENTIFIED MALE: We want to thank you.

UNIDENTIFIED MALE: Thanks.

ROTH: St. Maggies was old world classy with a family touch.

ANNIE KIMBALL, BARTENDER: Respect, a genuine camaraderie, which was very evident in Wall Street many years ago.

ROTH: The giant financial companies would frequently book the large back rooms for parties.

ANNIE HANNONCHIN, COAT CHECK: I worked in Wall Street area since 1974 in the restaurant business. And I've never seen what has happen as of the last year. The way business has fallen off down here.

ROTH: 25 employees lost their jobs. The owner's sister doesn't blame the Wall Street wizards for what happened to St. Maggies.

MARGARET GALVIN, GENERAL MANAGER: You know, a lot of them said we feel worse about what's happening to you here than we do what's happening in our own offices.

BILL GALVIN, OWNVER, SAINT MAGGIES: This fellow was about so big and came to work here. He's been here forever. Forever. He's like my other son.

The people I'd met here and the people who work for me, that's the best. They're going to be missed. It's like a funeral. It kind of breaks my heart.

ROTH: Bill kept the place open one extra day for the regulars to gather for the last time.

UNIDENTIFIED FEMALE: I'm trying not to cry. And I can't. But be that as it may, I wish all the families here well.

RICHARD JEAN, CUSTOMER: It's a sad day for Wall Street, you know. The place is drying up. What can you say? Cheers.

ROTH: Richard Roth, CNN, New York.