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North Korea's Kim Jong-il Dies; Tax Break Faces Trouble; Iowa Caucuses 15 Days Away; The Enigma of Kim Jong-il

Aired December 19, 2011 - 09:00   ET

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

WOLF BLITZER, CNN ANCHOR: Thanks very much, guys.

We begin this hour with the death of Kim Jong-il. Late last night North Korea dramatically announced his death and allowed a rare peek inside the secretive country. State-run newscasts showed citizens weeping and inconsolable.

Kim was revered in a nation that's often been described as a cult, but his almost cartoonish appearance belied a fearsome determination. His people starved while he developed nuclear weapons and amassed a huge military, always potentially ready to strike.

The man likely to take over, Kim's youngest son, Kim Jong-un, is mostly unknown, mostly entirely untrained for the job ahead of him. And today the world is asking what happens next.

I'm Wolf Blitzer in Washington. We want to welcome our special -- our viewers through our special coverage of Kim Jong-il's death. We're covering all the angles of this developing story. We have reporters across the world from Beijing to the Pentagon, to London, to the White House and beyond.

Instability in the region is a major worry right now. Stan Grant is in Beijing, he's joining us now live.

Stan, just a couple of hours ago we learned North Korea test fired a short-range missile. What's the reaction in China, which obviously has the closest of relations with North Korea?

STAN GRANT, CNN SENIOR INTERNATIONAL CORRESPONDENT: No reaction to that report of the short-range missile being fired. We know that North Korea has these in its arsenal and has carried out these types of firings -- test firings before.

Out of South Korea there have been reports that they don't see this as having been a hostile act towards South Korea or anything related to that. However, this once again leads to the uncertainty and that's what the situation is, Wolf, it is uncertain.

China, of course, stressing once again the need for stability in the region. This is the key relationship. China and North Korea described in the past as close as lips and teeth. A relationship forged on the battlefield when Chinese fighters fought alongside North Koreans in the Korean War. China seemed to exert the most influence over North Korea, bringing North Korea to the negotiating table with the six-party nuclear talks. But remember, China has influence but it does not control North Korea. North Korea has caused strains in that relationship before, particularly with the nuclear tests in 2006, 2009.

China concerned about its own border. There are a lot of people who fled across that border into China. Around about 30,000 refugees. Here at the moment China very concerned that any implosion in North Korea could see more of those people heading for the border.

Now Kim Jong-un has been brought here in the past, too, by his father to get the Chinese leader's approval. They are now going to see if he can be the leader in North Korea that China needs -- Wolf.

BLITZER: We're going to learn a lot more about Kim Jong-un in the coming days. But let's back up for a moment, Stan, right now. What do we know specifically about Kim Jong-il's death? We know he had been ill for several years, but over the past year I at least got the impression and a lot of observers got the impression that he seemed to be OK. But all of a sudden he has a heart attack. What happened on Saturday?

GRANT: Absolutely, Wolf. You know I remember reporting about six years ago, when he started to look a little bit more frail. When you started to see the hair thinning, the weight loss, the reports of having a stroke in 2008. But you're absolutely right, in recent times he appeared to be more robust. He certainly had a punishing schedule. He was here in China, he's been touring around his own country.

A lot of speculation. The official report is that he had a massive heart attack. There was one report earlier coming out of North Korea that he died from overwork, working as the state broadcast there said for the good of North Korea. But it seems to have been a massive heart attack that happened very suddenly.

Some, though, and this must be stressed purely speculative are actually raising the prospect of perhaps some foul play. But once again a secretive state, getting any information out of there is always difficult -- Wolf.

BLITZER: Stan, stand by. We're going to be coming back to you.

Earlier this morning President Obama spoke to his counterpart and close ally in South Korea. Our White House correspondent, Dan Lothian, is standing by.

Dan, what's the latest reaction we're getting from the Obama administration, because clearly this is a very, very tense situation on the Korean peninsula right now.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: This is a tense situation and it does remain uncertain. No new information from the White House, Wolf, beyond what administration officials had earlier told us, that President Obama in fact did speak at midnight with his South Korean counterpart, President Lee, a very close ally in the region.

There's concern about security in South Korea in light of what has happened in North Korea. During that conversation they talked about security in the Korean peninsula. They said they would continue to stay in touch and would continue to coordinate their national security teams.

But as you know, Wolf, the United States and its allies and those in the six-party talks have been concerned about trying to tame North Korea's nuclear ambitions, and there have been some small steps in trying to improve the relationship between the United States and North Korea. But at the same time there has been tough talk from this administration, trying to use sanctions and also isolation of North Korea to try to get them to tame their nuclear ambitions.

So the big question now is what happens next? Is this a chance for change and opportunity or will it be more of the same? And as far as the American people who are closely watching this, the feeling has been all along one of unfavorability towards North -- North Korea. In fact the most recent polling done in may, an ORC/CNN poll showing that 81 percent of Americans have an unfavorable view of North Korea and 49 percent view North Korea as an enemy.

So it will be interesting to see if what happens next will change the view of the American people -- Wolf.

BLITZER: I was in North Korea, Dan, exactly a year ago in December of last year. Spent six days in Pyongyang. And I know how paranoid the North Koreans can be, but at the same time how sophisticated the top leadership is in watching what's going on.

Here's the question, and it's a delicate question for the Obama administration. I don't know if they have an answer to this yet but I'm sure officials in North Korea will be watching and waiting carefully to see if, if the Obama administration expresses condolences to the people of North Korea for the death of Kim Jong-il.

What are you hearing at the White House?

LOTHIAN: And we simply don't know. But you are so right about that. How will the administration, when they finally do, whether it's the president coming out or whether they release a broader statement on the situation in North Korea, whether it will be one of more calm the nation, whether there will be condolences or whether there will be a balance between the two.

At this point we simply don't know. But whatever that language is, it will be key, perhaps, in determining the future relationship between the United States and North Korea.

BLITZER: Dan Lothian, I want you to stand by as well. As all of our viewers know, there are nearly 30,000 U.S. troops in South Korea along the demilitarized zone just below North Korea. This morning they are ratcheting up surveillance of the North and its military.

Chris Lawrence is our Pentagon correspondent. Chris, give us a sense of what the U.S. military, the Defense Department wants, is doing right now, because, as you know, there are a million North Korean troops just north of the DMZ, nearly a million South Korean troops south of the DMZ, 30,000 American forces almost in between. What's the -- what's the reaction from the Department of Defense?

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Well, right now, Wolf, it's a very cautious response. Talking to their counterparts with the South Korean military. Again as you mentioned, doing perhaps more reconnaissance over or around North Korea, getting more intelligence analysts on board to try to decipher what's going on.

But not rocking the boat, so to speak. In many ways, Wolf, this scenario is what some in the U.S. military feared. Just about six months ago the man who now runs the U.S. forces in Korea warned the United States Senate that Kim Jong-il's death could make North Korea a bigger military threat.

And by that he told us -- or he told the Senate basically that Kim Jong-il's son had an imperative to sort of establish his credibility with the hard liners within North Korea's military and he said that, combined with the son's youth and inexperience, increased the possibility of a miscalculation.

And he said so in the short term, the son could be possibly more unpredictable. So, again, that is the worry right now. A miscalculation, Wolf, that could escalate tensions.

BLITZER: Is that the sense of why the North Koreans launched just a little while ago this short-range missile which clearly could be seen as an act of provocation?

LAWRENCE: I don't get that sense, Wolf. I get the sense that this was something that they possibly even -- that U.S. forces and South Korean forces knew was coming. The North does do these short- range tests from time to time. This doesn't rise to the level of their long-range, you know, ballistic missile tests that they conducted, say, in 2009 and 2006 when you saw a rapid escalation of tensions.

These short-range missile tests do happen from time to time. But what we're hearing from some defense officials, you know, as recently as just six weeks ago, they were saying that what the North is -- North Korea has told them, that the feeling in North Korea is that one of the reasons that Moammar Gadhafi's regime was ousted in Libya is because Libya did not retain its WMD program.

It abandoned its weapons of mass destruction. And the official said, you know, when you sit down to negotiate and you hear the other side saying that, it really calls into question how serious they are about negotiating an end to their nuclear program or even a reduction of it.

BLITZER: Chris Lawrence, we'll stay in close touch with you. He's watching what's going on from the Pentagon. Let's turn overseas for a moment. Let's go to London right now to look at what the international news media have been saying about the death of North Korea's long-time leader.

Max Foster is joining us from London.

From your vantage point, Max, what are you seeing, what are you hearing, what's the reaction?

MAX FOSTER, CNN INTERNATIONAL ANCHOR: Well, Wolf, there's so much confusion. It's the same debate really, how to make sense of it -- this. You said already what happens next. And the international media are grappling with it as much as everyone else.

This is "The Guardian's" take on it here in the UK. "Kim Jong- il's death, an uneasy legacy." "In western eyes, the age of dictators is over. China sees things differently, though, and has just given its blessing to the enthronement to a brand new one."

"The Guardian" always saying that China is a big part of this story.

"The National," in the United Arab Emirates, "What now for North Korea." "For all the cult of personality, any dictator needs a whole supporting apparatus of military and civilian officials. What ideas for change these people will offer the new ruler and how he will respond will be watched with great anxiety."

And "The Sydney Morning Herald" over in Australia saying, "World watches as North Korea mourns the death of its dear leader. Everyone will be watching sideways to see who might emerge as North Korea's Khrushchev or Gorbachev. The People's Army will have its work cut out watching both the demilitarized zone," you've been talking about. "And trying to stop a mass breakout into China."

So Wolf, it's almost the sense of the better the devil you know in North Korea Didn't know much about Kim Jong-il but sort of knew what to expect from him. Not the same for his son. Much more mysterious.

BLITZER: Yes, it's going to be a very, very tense situation on the Korean peninsula. Arguably one of the, if not the most dangerous spot on earth for so many decades.

All right, Max, thanks very, very much.

Coming up, we'll continue our special coverage as attention shifts from Kim Jong-il to his son and apparent successor, Kim Jong- un. We're going to take a close look at Kim Jong-un. What do we know about? The Korean expert Victor Cha standing by to join us live.

Also a tax break approved over the weekend by the U.S. Senate for 160 million Americans could be in serious jeopardy right now. We're taking you live to Capitol Hill where an important vote is being taken in the House of Representatives.

(COMMERCIAL BREAK)

BLITZER: From what we know, he's not even 30 years. He has no practical experience, but Kim Jong-un, Kim Jong-il's youngest son, will apparently takes the reins in North Korea.

Let's get some more on the "great successor," as he's called.

Victor Cha is joining us. He's a professor at the Georgetown University here in Washington. He holds the career chair at the Center for Strategic and International Studies. He also served on the National Security Council as the director of Asian affairs under the President George W. Bush.

Victor, thanks very much for coming in.

VICTOR CHA, PROFESSOR, GEORGETOWN UNIVERSITY: My pleasure.

BLITZER: Kim Jong-un, 29, 28 years old, we don't even how old he is. We don't know much about him, although when I was there a year ago in North Korea, folks said he studied at least briefly in Switzerland.

So, do we know about him?

CHA: Well, you're right, Wolf. We know very little about him. There are these wide reported stories that in high school, he spent some time in Switzerland, and people hope that means he's going to be more of a reformer.

But the fact of the matter is that we don't know. This is the most opaque regime that is a nuclear weapons state and now they have a leadership vacuum in which a kid is basically trying to run the country. So, it's not a good situation at all.

BLITZER: This talk that his uncle would be the regent, if you will, at least for the time being, is that serious talk or is that just guesswork?

CHA: I think it's -- it is a bit of guesswork. I think essentially when you have a young leader like this, they are going to try to surround him and that's what they have done in the past two years. They try to surround him with elders in the party and the military.

The problem is that all of those folks are untested quantities themselves without Kim Jong-il in the picture.

BLITZER: Are you among those analysts who believe that because he is so untested, because he is so young, he has to prove his bona fides, if you will, and be very tough and assertive and do provocative things?

CHA: I think that is certainly the concern. That's certainly one of the dominant theories out there for why the North Koreans did the provocations in 2010. So, I think that concern is certainly there.

But, again, we just don't know because there's so little that we can tell about this regime. The thing that I'm concerned about is that the first sign, first news of some sort of instability within North Korea, it will raise all sorts of alarm bells here and in Seoul about who has control of the nuclear weapons. And that's obviously a big concern for the United States.

BLITZER: Because instability -- there's long been this dream in the West and certainly in the United States that the North Korean regime would unravel, especially after a succession. Is that a realistic scenario?

CHA: I really don't think you can rule it out. I mean, before this event happened, if you had asked any analyst inside or outside the U.S. government, they would have told you the most likely scenario for collapse would be a sudden death of the North Korean leader. So, we are now living in that scenario today.

BLITZER: This was not necessarily -- I mean, he's been sick for years, even though -- he had a massive heart attack, which is what the North Korean state media say, that would have been a sudden death. So they weren't necessarily prepared for it. Is that what you're saying?

CHA: I think they're completely unprepared for this. The idea was to have the young son basically in a transition process that would take at least a decade, if they could have it their way, but that's certainly not going to happen. He's only been doing this job, if you will, for about two and a half years now.

So, I think there are lots of questions about whether he has control of the military, which is the all-powerful group within North Korea, whether he has respect of the party, whether they even have a new ideology in which to bring him into this leadership position because that is necessary in the North Korean system. They're completely unprepared for this.

BLITZER: Here's my concern and it's a deep concern based on six days I spent in Pyongyang last December and studying the region over many years, a miscalculation right now. The South Koreans go on a higher state of military alert. U.S. forces along the DMZ go on a higher state of alert. That's seen by elements by North Korea as they have got to respond to that, otherwise they'll be seen as weak. And their response could lead to further response and nuclear tensions could emerge.

CHA: Right. You have it just right, Wolf. I think from a U.S. perspective, the way the forces are arrayed on the peninsula, both sides are on a hair-trigger response. This is why it's so critical to know whether the United States and (INAUDIBLE) are going to a higher level of alert status in terms of their combined forces, not just South Korean national forces.

BLITZER: And very quickly, one final question: Should the Obama administration -- if you were advising them -- express condolences to the people of North Korea?

CHA: I think at this point, it's best to sort of stay put and just watch the situation. Anything that you do in terms of that sort of thing could create unknown dynamics in the system and I don't think we want to do that.

BLITZER: No one from the U.S., unless they're private citizens, would go for the state funeral on the 28th?

CHA: Highly unlikely.

BLITZER: Victor Cha, thanks very much. We'll continue our conversation later.

Exactly a year ago, I was in Pyongyang for six days. Coming up, we'll revisit the lockdown North Korean capital.

(COMMERCIAL BREAK)

BLITZER: The entire world is watching a rather tense situation on the Korean peninsula right now -- none watching it more closely than the U.S. military.

Our Barbara Starr is our Pentagon correspondent. She's traveling with the chairman of the Joint Chiefs of Staff, General Martin Dempsey there in Ramstein Air Base in Germany right now.

Barbara, what are you hearing, what's going on as far as the U.S. military is concerned?

BARBARA STARR, CNN PENTAGON CORRESPONDENT (via telephone): Well, Wolf, we have just concluded an on-camera briefing with General Dempsey. We'll be bringing that material to you shortly. But General Dempsey has given us extraordinary insight into what went on overnight when he was woken up here in Germany, given the news and joined an overnight interagency call with top military and civilian national security officials to discuss the crisis.

General Dempsey telling us the first thing they wanted to know was whether anybody had seen any unusual movements by North Korean troops or weapons. So far, everything appears status quo, he said. U.S. troops in South Korea, 28,000, not on any heightened state of alert. But General Dempsey said the U.S. military in his words is remaining vigilant in the wake of the death of the North Korean leader. They are keeping all eyes and ears on the North to get any indications of what is going on inside the regime.

And like so many people have already said today, Wolf, you know, front and center, they want to get a better sense of whether the designated succession into Kim Jong-il's son is what will happen in North Korea -- will he be able, despite his youth and inexperience, to take control of the government and exert control, and what type of leader will he be. These are the key questions facing the chairman of the joint chiefs, the U.S. Pacific Command and, of course, President Obama and the Obama administration -- Wolf.

BLITZER: Did he get -- did he offer a good analysis, any sense of insight into Kim Jong-un, the 28 or 29-year-old successor? We do know that Kim Jong-un has been named the head of the funeral arrangements for his father, about 250 leaders of North Korea on that committee.

What did he say? Because we know that General Dempsey is privy to the best analysis and most sensitive information that the U.S. government has.

STARR: Well, you know, exactly. And what he talked about is the very question that you have already raised, youth and inexperience. Kim Jong-un is the designated successor obviously from his late father. He is the one that the U.S. is looking at.

But the U.S. military is the first to acknowledge that intelligence about the North Korean regime is imperfect at best. So what they are looking for is despite this young man's designation as the successor, with his youth and inexperience, will he be able to take charge? Will he take charge of the regime? And if he does, will he be the key player that exerts control, or will there be other people, perhaps, to emerge behind the scenes who are exerting more control?

That will be a very tough intelligence problem for the U.S. to begin to understand because, of course, there's no direct knowledge really, perhaps maybe through the Chinese, about the North Korean regime and North Korean leadership. So these are the key questions that they are watching right now, Wolf.

BLITZER: All right. Barbara, we'll stay in close touch with you. Obviously, Barbara Starr is traveling with the chairman of the Joint Chiefs of Staff in Germany right now.

We're going to have much more on the death of Kim Jong-il. That's coming up.

But there's other important news we're watching right here in Washington. Serious trouble brewing on Capitol Hill for that payroll tax cut extension. The two-month extension approved by the Senate over the weekend could be shot down in the House of Representatives when it votes on the measure later today.

Let's bring in our congressional correspondent, Kate Bolduan. She's up on Capitol Hill.

Everyone seemed to be so positive over the weekend when the Senate overwhelmingly passed this two-month compromise to keep this tax cut going. But all of a sudden yesterday, it seemed to explode.

What's going on, Kate?

KATE BOLDUAN, CNN CONGRESSIONAL CORRESPONDENT: Yes, it seems this is the latest twist in this fierce, bitter, year-end battle, Wolf.

Over the weekend, as you mentioned, the Senate passed this two- month extension with broad bipartisan support. The vote was 89 to 10. And on a conference call following that vote we're told by a Republican source that House Speaker John Boehner called -- described the deal, the compromise in the Senate as a victory, as a good deal and as a -- you know, way to live to fight another day, if you will.

But he faced some serious pushback from his Republican members who, as you heard then from Speaker Boehner yesterday, that House Republicans now stand opposed to the short-term deal. Quite frankly, they say they're sick of these quick fixes, these, you know, kicking a can down the road. If they're going to support a payroll tax extension at all, they want it to be for a year.

Well, not surprisingly, that has Democrats from the White House on down pouncing on this. Democrats are saying that the House has two options here. One, pass the Senate compromise or the other, be responsible for many millions of Americans seeing a tax increase come January 1st.

So, we'll have to watch how it plays out today, Wolf, as there is a vote in the House on the Senate compromise this evening. But one top Democrat tells me -- and this is an interesting point -- that nothing is stopping the two sides from negotiating this full deal that Speaker Boehner says he wants, but only if -- and this is important from this perspective -- only if the House will pass this two-month extension. So, it seems the staring contest is continuing today, Wolf.

BLITZER: And huge -- everything is at stake for about 160 million Americans because If they don't work out a deal, taxes are going up starting January 1st.

Thanks very much, Kate. We'll stay in close touch with you.

Coming up, the death of one of the most powerful dictators in the world. We're taking a closer look at the life, the legacy of North Korea's Kim Jong-il.

(COMMERCIAL BREAK)

BLITZER: From Washington to Tokyo, world leaders are weighing the death of North Korea's mysterious dictator. The communist nation says Kim Jong-il died of a heart attack over the weekend.

Their government has dubbed his youngest son the "great successor". Kim Jong-un will have to rely on advisers since he's had little grooming for the job, barely 30 years old.

South Korea responded to the news by putting its military on a higher state of alert. The United States has nearly 30,000 troops in South Korea. It has stepped up its monitoring of North Korea and of its military.

Just over a year ago, Kim Jong-un entered the international spotlight, getting a promotion, an important title, and become his father's presumptive successor. His coming out party, if you will, was an important military parade in Pyongyang.

CNN's Alina Cho was there.

Before we get to the trip, and I want to share with our viewers your impressions of what happened then, what you think is going on right now, give us a little news that you might have, Alina, because I understand you've been on the phone with some sources.

ALINA CHO, CNN CORRESPONDENT: You know, I just traded some e- mails with a high-level source, Wolf. As you know, the funeral of Kim Jong-il will be on December 28th. The official mourning period in that country ends on the 29th. A lot of questions about whether Westerners or outsiders will be let in. It doesn't appear that that will be the case.

This e-mail that I received was from a high-level source again saying that he has just landed from Pyongyang to Beijing, was hoping to get into the country, was turned away at the airport and was told that no outsiders will be let in for the next 10 days. So an interesting development there.

BLITZER: It's -- you know, we don't really know much about the successor, if, in fact, he turns out to be the successor, Kim Jong-un. But reflect a little bit because you're one of the few Western journalists who got into North Korea.

CHO: You as well.

BLITZER: I was there at a different time. It was a very tense situation when I was there.

When you were there, they were trying to promote their country and show off some of the best qualities, if you will, of North Korea.

CHO: That's right. And what's interesting about that trip, Wolf, is I remember very distinctly, because I had just come back from a vacation actually, my first day back. We had gotten word that we were invited into the country, but we weren't told exactly why. We were only told that it would be -- that we would witness the largest military parade in the country's history.

Now, as you know, when you land in North Korea, your passport is immediately confiscated. Your BlackBerry, your cell phone is immediately confiscated. And we were whisked away to May Day Stadium and we saw an amazing display of acrobatics and dance called the Mass Games there.

And I must tell you that I was stunned, because many times Kim Jong-il does not attend those events, but he was there. And I saw him on three separate occasions during that trip.

And what we quickly came to learn was that it was the unofficial unveiling of this son, Kim Jong-un. And as you mentioned, we don't know much about him. We don't even know his age. He is said to be 27 or 28 years old. He know he's studied in Switzerland, is a fan of American basketball.

But outside of that, no military experience to speak of. And so, a lot of questions about whether he will be a figurehead leader or a true one, Wolf.

BLITZER: Yes, just around that time they said he was in his mid-20s and whatever, and they made him a general to give him some credibility. This is after his father became ill.

His father has been sick for several years, but suffered what was described by North Korean media as a massive heart attack on Saturday and died, even though over the past year he was traveling to China and he seemed to be making many public appearances, seemed to be getting better from that illness. But obviously didn't work out all that well for Kim Jong-il.

Getting back to the news that you have, when your source says that no foreigners are being allowed into North Korea right now, I assume this is the situation during this period of mourning leading up to the funeral on December 28th, they're not going to let foreigners visit unless they're very special foreigners.

Is that what you're hearing?

CHO: Well, you know, it's unclear. What I do know, or at least what I can tell you that I've read is that Kim Jong-il's body is on display at a mausoleum in the center of Pyongyang, the same place where his father, Kim Il Sung's body is on display in a glass case, I might add.

And what I understand is that North Koreans will be able to pay their respects, if you will, during this official period of mourning, but that no outsiders will be let in. And so, it would stand to reason then that this will not be as journalists had hoped, it will not be another propaganda opportunity for North Korea to put an elaborate show on for the Western world, although as a journalist, of course, you're always hopeful that we might get an invitation.

BLITZER: We'll see if they do. They have big celebrations coming up in April. We'll see if those are still in the works what happens then.

Alina, thanks very much.

Alina Cho, one of the few Western journalists who's actually spent some time in North Korea for CNN.

Thanks very much, Alina.

We have a lot of other news going on, what's happening in Washington, a lot at stake. Also the markets, what's the reaction to all the tension on the Korean peninsula., and elsewhere in Europe.

Stand by. Much more news right here in THE CNN NEWSROOM right after this.

(COMMERCIAL BREAK)

BLITZER: Let's turn to the markets right now.

CNN's Alison Kosik is monitoring the New York Stock Exchange for reaction to the tension on the Korean peninsula.

Asian markets, Alison, as you know, were down overnight. What are we seeing here?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Right, exactly. You saw the major reaction in the Asian markets, Wolf, falling anywhere from 1 percent to 3 percent. South Korea's market was hit the hardest, 3 percent. That's how much it fell.

Right now, European markets are trading, seeing a muted reaction there. Same thing to the U.S. markets here. You'll see the Dow is up 48. The NASDAQ, S&P 500, they're all in the green. So not really much reaction from Kim Jong-il's death.

Now, one thing you can expect to happen this week, Wolf, expect investors to sit on the sidelines this week because it's going to be one of these holiday weeks. That's how the markets view it. The bond markets are actually closed on Friday and then we sort of edge up to Christmas.

But what may wind up happening, you may see the markets actually have some exaggerated swings because not many investors are taking part.

Now, the big concern for Wall Street continues to be Europe. There is some new hope today because European finance ministers -- they are discussing today the new eurozone fiscal agreement. Now, this is just a draft. It's not going to be finalized until January, but at least things seem to be moving forward.

Still, we've got some lingering concerns about a possible credit downgrade for France. Fitch has already cut its outlook for France. Standard & Poor's is up to bat next with rumors of a possible downgrade for France.

So, those are kind of the issues that really Wall Street is going to be focusing on today. It's really, really Europe -- Wolf.

BLITZER: All right. Thanks very much, Alison. We'll stay in close touch with you.

Coming up much: more coverage of Kim Jong-il's death, the tension on the Korean peninsula.

Also, the Iowa caucuses only 15 days away. Mitt Romney picks up another key endorsement. We'll read the tea leaves with our political reporter -- a political reporter from the "Des Moines Register" right after this.

(COMMERCIAL BREAK)

BLITZER: Fifteen days until the Iowa caucuses, Mitt Romney picking up a key endorsement from "The Des Moines Register" in an editorial.

Joining us now is Jennifer Jacobs. She's the chief political reporter for "The Des Moines Register."

Jennifer, you wrote a piece about the state of play in Iowa yesterday, a strong article, I must say. Is Newt Gingrich likely to pull this out in Iowa? What's the sense 15 days and counting?

JENNIFER JACOBS, CHIEF POLTICAL REPORTER, DES MOINES REGISTER: The sense is that he has the momentum here. Our last poll showed that there is a lot of intensity, of passion for Newt Gingrich, but it seems like he's slipping a bit in the polls and he's taking a serious pounding from a lot of different directions here.

BLITZER: A very serious pounding from Ron Paul. Ron Paul, as you know better than most, has an excellent ground operation in Iowa, throughout Iowa; a lot of devoted supporters out there. I wouldn't be surprised if he pulls an upset. Would you?

JACOBS: It would not be a surprise at all. And we know that Newt Gingrich's ground game is quite a bit weaker than Ron Paul's. And Ron Paul is really appealing to those Independents and Democrats so he definitely has a shot at the lead here.

BLITZER: What about Mitt Romney, he sort of ignored Iowa for a long time. Lately he's paying a lot more attention to it, but still, I suspect, not as much as a lot of his supporters in Iowa would have liked.

JACOBS: That's for sure, but he had that base from four years ago. He's definitely carrying a lot of that over. I don't think it's hurt him too badly. He has a lot of support from the establishment Republicans here. I think there's a lot of quiet endorsements that might show up in the next -- in the next few weeks. There's definitely a strong ground game for him as well. So I would predict that he's still in the top three at least.

BLITZER: Your editorial -- you didn't write it, you work on the news side of the newspaper -- but the editorial board of the "Des Moines Register" cited Romney's sobriety, wisdom and judgment in endorsing him.

Step back a little bit, forget that you work for the "Des Moines Register." What's the track record of endorsements in Republican contests by the "Des Moines Register." How good or bad is it in terms of predicting the winner?

JACOBS: Well, we don't always predict the winner, but it's not meant to. It's just five people sitting in a room sharing their opinion. Five people have really close access to these candidates who are smart people who are just sharing what their opinion is at the moment. So it's not meant to help or hurt, it's just to let people know where they think the candidates are at.

BLITZER: But does it have a lot of influence in these Republican caucuses? I assume it does, it's the major newspaper in Iowa.

JACOBS: I don't think there's many insiders in Iowa that thinks it hurts the candidate. There's nobody that thinks that this kills a candidate's momentum. It can't do very much to hurt them so yes it's -- it's nothing but momentum for these people. It's a lot of conversation. It gets people talking, so I think it's a good thing.

BLITZER: Are these candidates by and large going to stick around in Iowa during Christmas, getting ready for New Year's or are they going to go back to their homes and stop campaigning during -- during these holiday days?

JACOBS: Some of them are. Your lower tier candidates are really going crazy with the stops. Michele Bachmann has 18 campaign stops today and tomorrow. And then you've got Rick Perry and Rick Santorum who have about seven or eight stops today and tomorrow. Yes, they'll take a short break for Christmas, but then we expect this -- you know a full barrage in the next couple weeks.

BLITZER: We'll be watching every step of the way. Jennifer, thanks very much. Jennifer Jacobs writes for the "Des Moines Register."

Coming up, the death of one of the most powerful dictators in the world. We're taking a closer look at the life and the legacy of the North Korean dictator, Kim Jong-il, who passed away over the weekend.

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BLITZER: We're following lots of developments in the next hour here in the CNN NEWSROOM. Let's check in first with CNN's Anna Coren. She's in South Korea -- Anna.

ANNA COREN, CNN CORRESPONDENT: That's right Wolf. We are coming to you live from Seoul. We're going to tell you about how people are feeling on the streets of the capital and the deep concern that is growing here in South Korea following the death of North Korea's "Dear Leader" Kim Jong-il. That's coming up Wolf at the top of the hour.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: I'm Dan Lothian at the White House. The Obama administration is closely monitoring the situation on the ground on the -- on the Korean Peninsula. But so far a measured response from President Obama. I'll have the details at the top of the hour.

BLITZER: Thanks very much, guys.

Kim Jong-il was as peculiar as he was powerful. The puffy hair- do, the jump suit, the massive eyeglasses. He sometimes looked more like an aging Elvis impersonator than the man who assembled a fearsome nuclear power house.

Dan Rivers takes a look at the enigma and the legacy of Kim Jong- il.

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DAN RIVERS, CNN INTERNATIONAL CORRESPONDENT: Kim Jong-il always cast a slightly bizarre figure. His diminutive stature and characteristic hair were parodied by some in the West. But for the citizens of the Democratic People's Republic of Korea Kim was the embodiment of this reclusive state. Feared, loved, worshiped, obeyed, his cultive (ph) personality was deeply entrenched.

His father was Kim Il Sung who founded North Korea with Soviet backing after World War II. Kim Jong-il was just a little boy when the Korean War broke out in 1950 with the Soviet-backed North invading the American-backed South. After fighting ended, Kim Jong-il became steeped in his father's philosophy of "Ju che" (ph) or self-reliance. And the North became ever more reclusive.

The North and South never formally signed a peace treaty and remained technically at war separated by a tense demilitarized zone. Gradually Kim Jong-il was groomed for the top making public appearances in front of cheering crowds.

When Kim Il Sung died in 1994 he was declared eternal president so his son instead became General Secretary of the Ruling Workers Party of Korea, and by 1998 as head of the army he consolidated his position of absolute power.

ANDREI LANKOV, PROFESSOR & NORTH KOREAN ANALYST: He will be remembered as a person who was responsible for awful things. For the existence of one of the worst dictatorships in probably not only Korean history but in the world history, at least in the 20th and 21st century. Yes, he did not create his dictatorship, it was his father's, but he took responsibility and he made sure that it continued for many more years.

RIVERS: He was known for his love of fine wines, at odds in a country where food shortages and privation were common. While the "Dear Leader" as he became known is said to have indulged in his appetite for the finer things, his people were literally starving to death. The collapse of the Soviet Union hit North Korea hard, suddenly ending guaranteed trade deals.

And then devastating floods compounded the famine. Estimates vary for the number that died, but even the regime itself admitted that almost a quarter of a million perished between 1995 and 1998. Some say it was more like ten times that figure.

But in the capital, Pyongyang, the artifice of a successful state was maintained. An opulent subway, proof the "Dear Leader" would say of the DPR case progress under his and his father's leadership.

Kim Jong-il was well known as a film buff. Here visiting the set of a North Korean production. His personal video library was said to include 20,000 titles with Rambo and "Friday the 13th" supposedly topping the "Dear Leader's" favorite flicks.

In 2000 there appeared to be a thaw in North-South relations. The first ever summit meeting between Kim Jong-il and his counterpart from the South, President Kim Dae-Jung. The South's so-called sunshine policy of engagement seemed to be bearing fruit.

But Kim Jong-il pressed ahead with his nuclear weapons program. The U.S. labeled it part of the Axis of evil in 2002. A year later North Korea withdrew from the nuclear non-proliferation treaty. In 2006 the north conducted a nuclear test and test-fired missiles. It added extra urgency to the six-party talks designed to deal with North Korea's nuclear program.

A breakthrough came in 2007 when Kim Jong-il finally agreed to disable the nuclear reactor at Yongbyon in return for fuel and better relations with the U.S. But despite dramatically blowing up the cooling tower, North Korea seemed to backtrack afterwards. The deal appeared to be in jeopardy.

The capture of two U.S. journalists, Laura Ling and Euna Lee, on the North Korean border sparked another crisis in 2009. It ended when former president Bill Clinton flew in and successfully negotiated their release prompting hopes there would be further engagement.

Observers say Kim Jong-il will be remembered as a nearly impossible man to bargain with, stubborn and fickle in equal measure. A man who kept 23 million people in a totalitarian nightmare, in one of the most repressive, reclusive regimes in the world.

Dan Rivers, CNN.

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BLITZER: Still ahead we'll have special insight into the upheaval in Pyongyang from the American diplomat Christopher Hill. He headed up the U.S. delegation to the North Korea nuclear talks. That's coming up in our next hour.

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