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New York Ramps Up New Year's Eve Security; Arctic Freeze Moves In For New Year's Eve; Residents Evacuated After Fiery Train Crash; Chopper Rescue Planned For Ice Bound Ship; Consumer Confidence Rebounds In December; Final Hours Before Colorado Pot Sales; Boss Of Botched Obamacare Site Retires; Target: Some Gift Cards Not Fully Activated; The NSA's Secret And Elite Spy Unit

Aired December 31, 2013 - 10:00   ET

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

UNIDENTIFIED MALE: (Inaudible)

KYRA PHILLIPS, CNN GUEST ANCHOR: I wish I could translate, but I can take a pretty good guess, happy New Year, something like that as they bring in 2014. Traditionally they ring a bell 33 times, by the way, or the gong to mark the New Year.

And just hours ago, Sydney, Australia, welcomed 2014 with a spectacular fireworks show. Here is a taste. I tell you what, that is a phenomenal show.

Here in the U.S., cities across the country are preparing for their own festivities, of course, live pictures from Times Square now where officials are ramping up the security as thousands of people get ready to watch that ball drop.

And if you're planning to ring in the New Year outside, brace yourselves because an arctic blast is pushing east. Apparently by midnight, places like Minneapolis will feel like 18 degrees below zero and a New Year could mean a new snow storm in the northeast as well. CNN meteorologist, Jennifer Gray, has more.

JENNIFER GRAY, AMS METEOROLOGIST: Well, Times Square is gearing up for a busy day and night. It is cold here. Temperatures are in the 20s. It will warm up into the low 30s this afternoon. But when that ball drops, temperatures will feel like the teens. So the key word here in Times Square, layers.

(BEGIN VIDEOTAPE)

GRAY (voice-over): A brutal freeze is gripping the eastern half of the country in the final hours of 2013.

UNIDENTIFIED MALE: It's a cold day, but it's a fun day.

GRAY: Revelers are bundled up and ready to watch the ball drop in New York's Times Square where temperatures will feel like they're in the teens tonight.

UNIDENTIFIED FEMALE: It's freezing. I've learned layers. I'm all layered up. GRAY: The bitter cold temps won't keep people away from the excitement.

UNIDENTIFIED FEMALE: We have lots of layers and we'll keep together and we'll have a good time.

GRAY: New York is not alone. The Midwest is contending with even colder temps for their festivities. Parts of Minnesota, Iowa, Illinois, Wisconsin and Michigan are under wind chill warnings and advisories. The extreme bitter temps are hard to fathom in some parts. This landmark waterfall in Minneapolis, frozen solid with wind chills in Northern Minnesota Monday plummeting to 50 below zero.

The windy city will mark the New Year with temps in the teens and wind chills that feel like 10 below. Winds gusting up to 50 miles per hour created dangerous conditions for drivers in Minnesota and North Dakota Saturday. The arctic blast is also triggering heavy lake-effect snow for parts of the Great Lakes and the New Year is expected to get off to a snowy start.

Two weather systems converge on the first day of 2014. One model suggests that New England and parts of the I-95 Corridor could get hit by a powerful nor'easter, packing heavy snow and bone-chilling temps that could be the coldest in years. Some estimates have the storm dumping as much as 6 inches in New York and 10 inches in the Boston area.

(END VIDEOTAPE)

GRAY: Streets will be busy as we go through the afternoon hours. Of course, this is just setting the stage for a bigger system as we roll into the second half of the week, of course, temperatures in the teens tonight. But this is just the beginning. We will see temperatures plummet as we got into the second half of the week -- Kyra.

PHILLIPS: All right, Jennifer, thanks so much. Be sure to tune in tonight for CNN, 9:00 p.m. Eastern Time, Anderson Cooper and Kathy Griffin welcome in the New Year from right there in Times Square. It's expected to be absolutely politically incorrect and crazy. That's tonight 9 p.m. Eastern here on CNN.

All right, people near Casselton, North Dakota, are being urged to leave their homes after a train collision caused a massive explosion. Two trains collided yesterday afternoon, one of them was carrying crude oil. The collision sparked this huge fire that sent plumes of black smoke hundreds of feet in the air. The smoke can actually be seen as far away as Fargo, which is about 25 miles away.

Now earlier the Cass County sheriff spoke to CNN about the evacuation order and where the fire stands right now.

(BEGIN VIDEO CLIP)

SHERIFF PAUL LANEY, CASA COUNTY, NORTH DAKOTA (via telephone): We just met with them a short time ago. They have two or three crews up near as close as they can get to the area. With the additional housing that's nearby the scene. They're starting to spread their way out into the community. The next few hours will tell us a lot as far as the current situation and when we can start bringing people back.

Right now, we're going to hold the line. The areas safe, people are out, everybody is accounted for. And we're going to let the expert tell us what kind of readings they're getting. Railroad crews are responding and getting set up and getting ready to attack the fire at daylight. Things are happening. Everybody is safe. No fatalities or injuries. We're thankful for that.

(END VIDEO CLIP)

PHILLIPS: The NTSB is leading the investigation along with the Federal Railroad Administration.

The 74 people on that stranded research ship in Antarctica. The New Year has already arrived. What wasn't arrived yet, though, is that rescue crew to get them off the ice bound vessel. That's all about to change, though, if Mother Nature cooperates. That's the big questions. The passengers and crew are doing their part to lay the groundwork, literally. Senior international correspondent, Matthew Chance, has that story.

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, Kyra, it's the new plan. Apparently it's the only plan that's going to work at this stage. All attempts to rescue this stranded research vessels by sea have been abandoned. The pack ice is too thick for the ice breakers to break through. Instead, they're going to be air lifted. The passengers on board will be air lifted to safety by helicopter. But they can only do that once the weather conditions allow.

(BEGIN VIDEOTAPE)

CHANCE (voice-over): This morning, new video, dozens of passengers walking arm in arm doing what they can to speed their rescue.

CHRIS TURNER, EXPEDITION LEADER: We just learned they can't reach us. They're getting the team to stomp down the snow and ice so the Chinese helicopter can reach us when the weather improves.

CHANCE: The weather conditions are not expected to get better until at least one more day. In the meantime, the crew has marked the spot in the ice where the chopper can land. Once it does, it will transport 12 people at a time to a Chinese icebreaker. Then a barge will ferry them from the icebreaker to another ship from Australia. The stranded research ship had set out to study climate change in Antarctica and retrace the steps of explorer, Douglas Mawson who studied life on the frozen continent a century ago.

But they got stuck in thick ice. Lots of years' worth of growth. Since Christmas, three separate icebreaker ships have tried and failed to cut a path to the research vessel. Once the rescue does happen, a skeleton crew will be left behind. But for most of the 74 people marooned, this ordeal may soon be coming to an end.

(END VIDEOTAPE) CHANCE: We're keeping a close eye on the situation. At the moment, the winds are far too strong for the helicopter to safely operate. But that can change at any moment and so the rescue teams are on standby to step in when they need to. Back to you, Kyra.

PHILLIPS: All right, Matthew, thanks so much. Well, watch it. It's the last trading day of 2013. Investors are weighing a strong new report on home prices and a measure of consumer confidence that just came out minutes ago as well. Alison Kosik at the New York Stock Exchange with the good news. Hi, Alison.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: So this is the second piece of good news. This one on consumer confidence and at least according to this survey, people are saying we feel more confident this month. The Conference Board says consumer confidence moved higher from last month. The reading we got today, lands at 78.1. It doesn't mean that much to you. But to give you a little perspective, it was actually way down at 26.9 during the recession so clearly we've come a long way.

As we get closer to 90, because that's the level that actually indicates people believe the economy is on solid footing. It's good news as we get toward that number. So overall, confidence has held up pretty well this year. There was a lull during the government shutdown in October. That kind of shook Americans up a bit, but generally, people have been pretty upbeat thanks to higher home values and big gains that we've been seeing in the stock market for the past 12 months.

Now this is a key reading to Wall Street because of what it says about the consumer because if the consumer is not confident, they're not going to spend money and consumer spending accounts for about two thirds of the country's GDP. So, it's really important for people to kind of get out there, perform their own form of economic stimulus, pay the cash, pay the credit card to go shopping a bit -- Kyra.

PHILLIPS: There you go. That doesn't sound like a bad idea.

Well, still to come, the final countdown to legal pot sales in Colorado, but is the state ready for the new rules and controversy that's sure to follow ? I'm speaking to the president of the Denver City Council, next.

(COMMERCIAL BREAK)

PHILLIPS: Well, it's a first for our nation. Come tomorrow, Colorado starts selling marijuana for recreational use. Pot by the way is already the third most popular recreational drug in America. Just about anyone over 21 in Colorado who wants it will be able to buy marijuana in stores much like alcohol. Anti-drug crusaders argue that legalization will not only create more potheads, but lead to violence and of course, hurt our kids.

But the controversial drug will be taxed and regulated from seed to sale, and right now hundreds of businesses across the state are getting ready for what they, at least, are hoping will become a weed revolution.

Mary Beth Susman, the president of the Denver City Council joins me live in Denver. Mary Beth, it's a big day for all of you tomorrow, no doubt. Your city and state's image will now change when pot shops open their doors at 8:00 a.m. Mountain Time. Are you ready for that and are you OK with that?

MARY BETH SUSMAN, PRESIDENT, DENVER CITY COUNCIL: I think we're very ready. We have thought about this and regulated it to the extent that we can. We want to make sure that this is done very carefully. I hope that it also becomes something that's not too exotic and special. After we're the first, other states will legalize this and it won't be anything special. There are a lot of reasons to come to Colorado and we hope people will continue to come to Colorado for all the adventure you can have, not just pot adventures.

PHILLIPS: Of course, point well made. I agree with that. It will be interesting, though, to see how the marijuana impacts your state. You actually voted against this. Tell me why.

SUSMAN: Well, I just didn't think it belonged in our state constitution. It seems a rather strange thing to put in a straight constitution and if you want to tweak a law, you've got to get an amendment.

PHILLIPS: And you also think it shouldn't be criminalized?

SUSMAN: That's true. I have never felt that drugs should be criminalized. I think they're social and medical issues, and probably could be dealt with more effectively with better outcomes if we thought of them in that way.

PHILLIPS: All right, so let's talk about the concerns, then, for a moment here. Teens smoking, robberies due to the cash only businesses, feds hovering over you, DUI problems, you know, there's a lot of concerns out there. What are you paying attention to the most? Let's start there. What are you paying -- what are you most concerned about?

SUSMAN: One of the reasons why a person would decriminalize -- why a state might decriminalize this is to try to get the illegal activities out of the way. I mean, it is the illegal activities that cause the violence and the danger. The fact that these businesses cannot legally bank and therefore make it a cash only business, still opens the way for this shenanigans. I feel sorry for the business owners who have to carry around thousands of dollars in cash to pay their utility bill.

And I know that we've got our representatives working on that in Congress. And pretty soon I hope that there will be a way for these businesses to legally bank. As for kids, they certainly already know about marijuana from all kinds of sources in the -- television, their friends. I'm hoping that if we normalize this, and it's something people can do, it's not going to be something you can do to rebel with. When it's not allowed, sometimes it becomes more appealing to the youngster that wants to rebel. And I think parents are going to do a good job of teaching their children, just as they do with cigarettes and alcohol, that they need to be adults to make those kind of decisions whether they're going to use that. And to let them know what the effects are of those substances.

PHILLIPS: I'm going to play devil's advocate for a moment. If this completely blows up and bad outweighs the good, have you and members of the city council discusses what you would do? What the plan of action would be?

SUSMAN: You know, if it does outweigh the -- if the bad does outweigh the good, that's an excellent question. We have the ability through our -- because of the way in which the law is written to ban the sale of it from our city. Some cities have opted out and not allowing retail marijuana or growing facilities or manufacturing facilities. We always have that option too. We have the option to create stricter laws for it than the state laws are and because it's an ordinance now, we can make changes that we may want to do if the bad outweighs the good.

PHILLIPS: Before I let you go, you are in a cannabis shop. I'm assuming that you will not be purchasing anything behind you to take away for the New Year. Is that right, Madame President?

SUSMAN: That is exactly right. I think it wouldn't be a good idea for me to take advantage of the new law in Colorado.

PHILLIPS: Happy New Year. Mary Beth Susman, the president of the Denver City Council. Thank you.

SUSMAN: Thank you very much.

PHILLIPS: Colorado schools definitely have a pot problem. More and more younger people are finding ways to get their handed on the drug and there's a fear that this situation will only get worse come tomorrow. We'll have more on this discussion in about 15 minutes, but first, top stories for you.

Got new video into CNN showing that moment that formula one legend Michael Schumacher was air lifted to that French hospital after hitting his head on a rock while he was skiing in the French Alps. He's being kept in a coma. Doctors say that he's shown slight improvement but not out of danger yet.

And just hours before the coverage kicks in for enrollees, Michelle Snyder's officially retiring. The glitch plagued site infuriated millions of you trying to shop for health insurance.

And this morning, there are some good news for American homeowners who took a beating during the housing slump. A research group says that October prices shot up 13.6 percent in October compared to the year before. But according to the S&P, Case-Shiller report, those climbing prices are slowing down. Another problem for retail giant, Target, first it was the debit cards and now it's the gift cards. It turns out that a number of them were never fully activated. CNN's Zain Asher joins me for more. So what are you hearing from Target, Zain?

ZAIN ASHER, CNN PERSONAL FINANCE/BUSINESS CORRESPONDENT: Hi, Kyra. Target confirming to us this morning that a number of gift cards that were bought in the store were not fully activated as you mentioned. So what that means is that customers who received gift cards as part of their Christmas gifts basically took them to the store and only to find out that they were worth nothing.

There were reports that cashiers may have scanned the wrong code. Target has stressed to us that only a small number of cards were actually impacted, they stressed 0.1 percent. So we're trying to figure out how many cards that actually mean, but I also stress that they will honor these cards. If your card was not activated, you can go to the store or call the hotline as well.

But this is a pretty big blow for Target. They're deal with a lot right now as you mentioned that data breach. And last week the encrypted pin data was always compromised in that hack as well. Kyra, I tried calling Target this morning. They are experiencing very heavy call volume right now especially in the wake of that massive data breach. It might be better to go to the store in person to get your gift card reactivated.

PHILLIPS: So Zain, what do you think? Right when you thought it was OK then there was another problem and another problem. And there's talk about we might see lawsuits. What are experts saying to you about Target and what it's going to do to the company and could it, you know, could this be disastrous for Target?

ASHER: Well, I think what Target has to be concerned about is basically keeping customer loyalty. So one minute you have that data breach and then I think where they really sort of went wrong, they told us, they sent CNN an e-mail telling them that no pin data was compromised during that hack. And then we heard about a day later they corrected themselves.

They said pin data was compromised, but it was encrypted. But I think they have to become open and honest with customers and try to get the problems fixed as soon as possible. They might have a problem in the short-term at least with brand loyalty, I think -- Kyra.

PHILLIPS: All right, Zain Asher, thanks so much.

A secret within a secret, we're going to take you inside Edward Snowden's NSA and the cloak and dagger details of an elite hacking unit. That's next.

(COMMERCIAL BREAK)

PHILLIPS: Many of us will log onto a computer sometime today. Will the government be watching? That question would have easily been dismissed as paranoid just months ago before Edward Snowden blew the lid off a secret surveillance program by his employer, the National Security Agency.

Now there are new claims that the NSA has an elite unit that is even more daring. CNN's Brian Todd in Washington with a closer look. It's pretty fascinating that you got access to this.

BRIAN TODD, CNN CORRESPONDENT: It is, Kyra. It's a fascinating program. This group of NSA hackers is young, highly skilled and always coming up with head-spinning techniques to infiltrate computers. But the agency insists that no people inside the U.S. are targeted and that they're need to protect America.

(BEGIN VIDEOTAPE)

TODD (voice-over): A typical error message from Microsoft telling you of a bug in your computer. Many of us get them all the time, but for some users that error message maybe a way into their computer or an elite unit inside the NSA.

MATTHEW AID, AUTHOR, "THE SECRET SENTRY": This is NSA hacking organization. It's 1,600 men and women, military and civilians, average age, mid-20s, maybe early 30s. It's a very young and very tech savvy organization.

TODD: The unit is called "The Tailored Access Operations" or TAO. New details of its activities are reported in the German magazine, which sites internal NSA document. The magazine says that some of the hackers in this building in San Antonio. Aside from getting in through an error message, they can access cookies, those tags that pop up showing a computer's favorite web sites. And they can redirect users to a dummy site. It looks like a real page, but it's a fake one controlled by the NSA.

(on camera): When you go there, what does the NSA want to find out?

MICHAEL SUTTON, ZACALER, INC.: One would be to intercept and sniff your traffic. I would be logging into this page and they would be able to see. Now they have my user name and password. But in this particular scenario, what they want to do is infect my machine.

TODD: But the unit doesn't do just remote hacking. They physically intercept some computers being delivered to plant spy wear and plant their own monitor cables and USB plugs on the targeted computers to collect data. An NSA official told CBS's "60 Minutes," the agency was concerned enough about the connecting cables on Edward Snowden's computers that they removed those. And this NSA hacking unit targets potential terrorists, foreign security agencies and corporations.

SUTTON: This is a gold mine. If I can own your computer, if I can gain access to it and gain a foot hold into it, now I have access to all of your secrets.

(END VIDEOTAPE)

TODD: We contacted the NSA for a response to the report. In a statement, the agency said, quote, "Tailored Access Operations is on the front lines to defend the nation and its allies. TAO's work is in support of foreign intelligence collection." Kyra, that is translated to saying that no Americans inside the U.S. are targeted by this.

PHILLIPS: So this is the group of NSA hackers that works with the CIA and the FBI, right, to actually physically infiltrate some places?

TODD: That is according to Des, they do. The magazine says they work with the CIA and FBI to fly to some places and use operatives to place spy wear on computers. The CIA wouldn't comment on this. The FBI would only say that any tools it uses in investigations are legal. No one really is denying that they take part of this.

PHILLIPS: Brian, thanks so much, pretty interesting insight. Well, still to come, pot will still be illegal for those under 21 even after it goes on --