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Lou Dobbs Tonight
Interview with Senator Charles Grassley; Hormel Foods Files Suit to Protect Brand Name Spam
Aired July 07, 2003 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: This is LOU DOBBS TONIGHT for Monday, July 7. Sitting in for Lou Dobbs, Kitty Pilgrim.
KITTY PILGRIM, GUEST HOST: Good evening, everyone. The bulls charged into the market today, and investors put away lingering fears over the technology sector, and they showed optimism over corporate earnings and economic rebound. Christine Romans joins me now with the latest -- Christine.
CHRISTINE ROMANS, CNN FINANCIAL NEWS CORRESPONDENT: Kitty, the Nasdaq soared to its highest level in 14 months. The S&P 500 is above 1,000 again and the Dow had its best one-day performance in three weeks.
Several catalysts today. A report showed better CEO confidence. There are a handful of merger deals announced. And momentum continued out of the bond market. Benchmark yields rose to the highest level in eight weeks, and the dollar also hit a two-month high versus the euro.
Technology stocks led the rally on Wall Street. An upbeat report on tech spending from Goldman Sachs and bullish sales news from Taiwan semiconductor leading there.
The rally was broader than that; 271 Big Board stocks hit new 52- week highs. Eighty percent of the volume today at higher prices. And investor sentiment remains very strong. More than 70 percent of newsletter writers surveyed by investor intelligence are bullish. The latest reading from the individual investor, a bit less so, but still, 41 percent bullish there -- Kitty.
PILGRIM: All right. Thanks, Christine. We will take 41 percent.
Well, this stock market rally, like all rallies, is built on optimism, optimism but also a dose of realism. Peter Viles reports on the expectations behind the bullishness.
(BEGIN VIDEOTAPE)
PETER VILES, CNN CORRESPONDENT (voice-over): Why the big rally and why now? Well, first the obvious. Interest rates are so low and the world economy so sluggish that American stocks are benefiting from a process of elimination. Where else would you put your money? But the real rally maker, as always, is optimism. that corporate profits will continue their modest comeback and that the American economy will finally show enough strength to start creating jobs. Neither is a sure bet.
First, earnings. They're up four quarters in a row, but that is not enough. That growth must continue. Analysts now predict a 5 percent increase in soon to be released second quarter numbers, and 12-plus percent in the third quarter.
CHUCK HILL, THOMSON FIRST CALL: Second quarter's not the problem. The problem will be whether these expectations for the second half are going to hold up, unlike what happened last year in looking for a big pickup in the second half.
VILES: The broader bet by investors, that the slumbering U.S. economy will finally wake up in the second half and start creating jobs. And there's zero evidence on that score. First-time jobless claims have been running above 400,000 per week, which means a crummy job market. The stock market is betting that those claims will drop.
JOSEPH BATTIPAGLIA, RYAN BECK & CO: We need to see that to start to come down to and below the 400,000 persons a week level. If we have that, then we can start to grow confident about how the economy is expanding, where the job growth may be coming from, and we stem the tide of job losses in manufacturing, which is quite severe.
VILES: Another economic number to watch, it's boring but important. Capacity utilization. Still running well below its 30- year average. And America doesn't need new factories and new jobs until it starts running the old ones.
(END VIDEOTAPE)
VILES: Another note of caution here. For the Dow this is not obviously a breakout rally. Now, why do we say that? Because we had a bigger rally, a 29 percent rally off of the September 11 lows, but the market could not hold that rally early last year -- Kitty.
PILGRIM: Thanks, Pete Viles.
Well, later in the show I will discuss the market and other issues with Stephen Shepard of "BusinessWeek," Rik Kirkland of "Fortune," and Tim Ferguson of "Forbes." We will also have more from Christine Romans.
Well, the top international story tonight is Iraq and the rising casualties among coalition troops. Three U.S. soldiers were killed in the past two days. General Tommy Franks, who led coalition forces in the war against Saddam Hussein, today said that no additional troops are needed in Iraq. Pentagon correspondent Barbara Starr joins me now -- Barbara.
BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Kitty, U.S. troops still taking casualties in Iraq. Two soldiers killed over the weekend by gunfire in Baghdad. Another earlier today by an improvised explosive device.
But as you say, no indication so far that additional troops are headed towards Iraq. The goal now is to get the allies to contribute additional troops and to see what can be done to rotate some U.S. troops home who have been there the longest period of time.
But the attacks do continue. Since May 1, when the president declared major combat was over, some 30 U.S. troops now killed by hostile fire across Iraq.
All of this remembered today in Tampa, Florida, where indeed General Tommy Franks relinquished the reins of command as head of U.S. Central Command to General John Abizaid, the man who will take over from him and now lead the U.S. effort both in Iraq and in Afghanistan.
But in Iraq for the U.S. Central Command, for General Abizaid, the major issue still will be bringing security to the streets and the hunt for Saddam Hussein, now with a $25 million price tag on his head.
Officials saying today that that recent audiotape purported to be of Saddam Hussein's voice most likely is him. He most likely is alive and somewhere inside Iraq. So the hunt for him goes on -- Kitty.
PILGRIM: All right. When we look to you to bring us up to speed on all of that. Barbara, thanks very much. Barbara Starr at the Pentagon.
A team of U.S. military experts arrived in Liberia today to assess security after years of civil war in the West African country. Now, the team's report will help determine whether the United States sends up to 2,000 peacekeeping troops. Jeff Koinange joins me live from the Liberian capital, Monrovia.
Jeff, what are the U.S. military experts planning to do over the next few days?
JEFF KOINANGE, CNN CORRESPONDENT: I can tell you, Kitty, it's a little after 10:00 right now here in Monrovia, and the team is getting ready to bed down for the very first night in war-torn Liberia. Now, they have a huge day ahead of them tomorrow.
They're going to start off by meeting with non-governmental organizations, or NGOs. They're going to be telling them how desperate the situation is right here on the ground. After that, they're going to visit the displacement camps.
Just imagine for a moment, Kitty, over 100,000 displaced Liberians who had fled fighting in the countryside here in the capital, Monrovia. They are now staying in abandoned buildings, abandoned schools, at the local stadium. All they're looking for right now, Kitty, is food, water, medication. You can imagine.
This is the rainy season right now. And often it rains continuously for 24 hours, and then the sun comes out. In a tropical country like this, every disease under the sun, this is the perfect breeding ground for it. Everything from cholera to measles to malaria.
We understand children are malnourished in those camps. This assessment team literally has their work cut out for them. They're going to have to hit the ground running, because there's a lot of work to do in the coming days. Once they assess that, they'll find out in terms of quantity, what kind of water, what kind of shelter, what kind of food is required, and most importantly what kind of help in terms of numbers of troops or peacekeepers or help that they will need to bring on the ground.
In the meantime, Kitty, President Taylor, a day after he announced that he had accepted a deal for a soft landing or safe haven in Nigeria, he spent most of the day with his ruling party, the National Patriotic Party. There they were assessing who is going to be the next person in line, the flag bearer for the country to be used in a transitional government along with other opposition members and rebel groups who will form the next government. So he is indeed preparing for his departure to his new home away from home, Kitty.
PILGRIM: All right. Thanks very much, Jeff Koinange, reporting from Monrovia, Liberia. Thank you, Jeff.
President Bush travels to Africa tonight. He will be only the fourth president to visit Africa that's south of the Sahara Desert, by the way. He'll focus on AIDS, terrorism, the fight against poverty. President Bush will visit five countries in five days. He'll begin in Senegal and in Nigeria. And there's a map of his route.
Charlayne Hunter-Gault reports on the likely reception for President Bush, compared to his predecessor, President Clinton.
(BEGIN VIDEOTAPE)
CHARLAYNE HUNTER-GAULT, CNN CORRESPONDENT (voice-over): President Bill Clinton brought more charisma than cash, but charisma counted for something on a continent starved for attention as well as assistance. Also, Clinton didn't have any demons to lay to rest here. George W. Bush does, starting with the Iraq war.
NELSON MANDELA, FORMER SOUTH AFRICAN PRESIDENT: What I am condemning is that one power with a president who has no foresight, who cannot think properly, is now wanting to plunge the world into a holocaust.
HUNTER-GAULT: Condemnation echoed in the streets.
JOHN STREMLAU, WITWATERSRAND UNIVERSITY: But the perception of Bush in Africa is of a cowboy, that he is a unilateralist, that he is a militarist, that he doesn't listen to what other people say.
HUNTER-GAULT (voice-over): Especially grating, his failure to come to South Africa for the World Racism Conference and later the Earth Summit, leaving it to his secretary of state to take the heat.
UNIDENTIFIED MALE: So I did this cartoon where his aides are asking him to speak to them and he essentially just gives insults to the camera and then laughs his head off. That's how people feel that George Bush views the developing world.
MOELETSI MBEKI, SOUTH AFRICAN INSTITUTE FOR INTERNATIONAL AFFAIRS: I think Bush will do very well coming to South Africa and in Africa generally. The United States' policies have been fairly sympathetic to Africa in terms of its economic plight, in terms of its HIV-AIDS crisis. The United States is making huge investments in developing the oil industry in West Africa.
HUNTER-GAULT: Mbeki's brother, President Thabo Mbeki, will be hosting George W. Bush hours before going to the largest gathering of African leaders on the continent, the African Union in Moputu, Mozambique.
(on camera): Questions are being raised about why the American president would travel this far and not take the one hour flight next door to Mozambique, one of the many questions Africans are asking about a leader who made many of them nervous calling Africa a country instead of a continent.
Charlayne Hunter-Gault, CNN, Johannesburg, South Africa.
(END VIDEOTAPE)
PILGRIM: From Africa to the Persian Gulf.
Iran today said it has completed tests of a long-range surface- to-surface missile. Independent experts believe the missile could hit Israel. The United States says Iran is developing nuclear weapons and the means to deliver them, and Iran says its nuclear program is for peaceful purposes and the missiles are only a deterrent.
Coming up, the Los Angeles Lakers star Kobe Bryant could face a criminal indictment.
Frank Buckley will have the details from Eagle, Colorado.
And broke in America. We'll have the first in a series of special reports on the epidemic of bankruptcies in this country. Senator Chuck Grassley will tell us why it's time to reform the bankruptcy code.
(COMMERCIAL BREAK)
PILGRIM: A settlement today between WorldCom, now known as MCI, and the Securities and Exchange Commission. It is the latest development in a massive accounting scandal that rocked Wall Street and also shattered investor confidence. Shareholders will receive $750 million in compensation. That's 50 percent more than originally proposed. The company filed for bankruptcy last July, after inflating its financial results by more than $11 billion.
Let's return to our top story tonight, the running of the bulls today on Wall Street, and stocks rocketed higher, a surge in technology shares lifted the Nasdaq to its highest level in more than a year. Now, the Dow soared more than 146 points. The Nasdaq gained nearly 58 points. And the S&P 500 rose really 19 points and did pass the key 1,000 mark.
Christine Romans is here again with some of the day's top performers -- Christine.
ROMANS: Well, Kitty, the market started higher and never looked back, and tech stocks soared today in particular. IBM rose 2 1/2 percent. Intel and the semiconductors were sharply higher on hopes there for a better second half. And Microsoft rallied on a "Financial Times" report that the company may consider paying out a special $10 billion dividend to its shareholders.
But mostly traders talked about the momentum of this market. The S&P 500 is now up more than 14 percent this year, and it's coming off a string of five monthly gains, something that hasn't happen since late 1998. Back then, of course, that stretch ushered in more than year long winning streak for stocks.
Internet stocks rallied today. Amazon, eBay, Yahoo!, all at two or three-year highs. Tech investors are optimistic about the group's earnings reports. Yahoo! will report on Wednesday. And kitty, other earnings this week include Alcoa tomorrow and general electric later this week. More than two stocks rose for every one that fell, but it wasn't all good news on Wall Street. It hardly ever is. In the Dow three stocks closed lower, Johnson & Johnson, Exxon Mobil, and Coke. And Schering-Plough fell 4 percent after it warned on earnings again -- Kitty.
PILGRIM: Christine, what about summertime volume? Sometimes it's really deadly, it could shoot a cannon across the floor of that exchange. What's it like these days.
ROMANS: You would think it would be a slow and lazy startup again after the holiday weekend, but it really wasn't. Almost 1.4 billion shares changing hands here today. Last week was also a pretty decent week, even considering a shortened day and a holiday. So traders are saying that there still is interest in this market. A lot of folks keep using the m word, momentum. They're talking about the momentum of this market. They don't want to miss anything.
PILGRIM: All right. We'll take that. Thanks very much. Christine Romans.
Still to come, we have police, they stop a murderous plot by three heavily armed teenagers.
Jason Carroll will have that report.
Basketball star Kobe Bryant under arrest. Could face criminal charges.
Frank Buckley will have that latest.
And editors from this country's top business magazines will join us to discuss the market, the president's trip to Africa, a lot more.
Stay with us. (COMMERCIAL BREAK)
PILGRIM: Tonight Colorado police are deciding whether to file criminal charges against basketball star Kobe Bryant. A woman in Colorado says the L.A. Lakers guard sexually assaulted her last week.
Frank Buckley is in Eagle, Colorado, with the very latest -- Frank.
FRANK BUCKLEY, CNN NATIONAL CORRESPONDENT: Yes, Kitty. The allegation involves alleged sexual misconduct involving Kobe Bryant, the great basketball player for the Los Angeles Lakers. According to the complaint from the alleged victim, this took place on June 30, that is, last week into July 1 at some point when the investigators became involved in hearing of the complaint. At some point during last week, we believe it was July 2, investigators made contact with Kobe Bryant himself.
They say Kobe Bryant has been completely cooperative throughout the course of this investigation. At some point a judge decided that there was enough there, enough probable cause in the affidavit put forward by sheriff's investigators here in Eagle County to issue an arrest warrant, and on July 4 Kobe Bryant turned himself in and posted bond. But at this point Kobe Bryant is not formally charged with sexual assault.
(BEGIN VIDEO CLIP)
MARK HURLBERT, DISTRICT ATTORNEY: As of this time no charges have been filed on Mr. Bryant. I got the police reports from the sheriff's department today, and after I get done here I will start reviewing those police reports and the evidence there to make a filing decision.
(END VIDEO CLIP)
BUCKLEY: So at this point the district attorney in this county is still reviewing this case. We can tell you that the attorneys for Kobe Bryant and one of his agents issued a statement earlier today, this from Harold Hadden (ph), Pamela Robelard Macky (ph) and Robert Polincca (ph). They say that, quote, "Mr. Bryant is innocent and expects to be completely exonerated."
They say the actions of the sheriff's office are biased and unfair. They believe that they had an agreement with the district attorney's office that no actions would be taken against Kobe Bryant until at least Monday. They say the fact that the sheriff's department went ahead, sought an affidavit, sought an arrest warrant and tried to get Kobe Bryant arrested suggests some bias. The sheriff's department denies that.
So the bottom line at this point, Kitty, is that yes, Kobe Bryant has been arrested, yes, he has posted bond. He is not in custody now. But there could be a charge of sexual assault pending, depending on the outcome of the investigation by the district attorney -- Kitty.
PILGRIM: All right. Thanks very much. Frank Buckley.
Let's take a look at some of your thoughts. And Molly Baxter from Houston, she wrote about illegal workers and the rise in U.S. unemployment. Here's what she wrote: "Our jobs will never come back until the government fines these companies that are constantly hiring illegals instead of Americans."
Peter Lambrecht of Kings Park, New York said: "Foreign guest workers should not be allowed to work in this country. It takes away jobs from U.S. workers who need it most."
Barbara Heilmann of Holbrook, New York, echoed the words of our president: "Now that unemployment has shot up to 6.4 percent in spite of the passage of the tax cut, I say to President Bush in regards to new jobs, 'bring'em on.'"
Philip Hagler of Bristol, Virginia, wrote about our latest series, the special reports "Going Broke in America." And he writes: "Bankruptcy is as American as apple pie. If bankruptcy is good enough for UAL and Enron, then it's good enough for the rest of us too."
Don Danley of Garden Grove, California, wrote -- about the government's do not call list. And he says: "The recent ruling that allows telephone customers to opt out of telemarketing junk calls is wonderful and appreciated by all. Now, how about a follow-up and allow postal customers to opt out of receiving 3rd class junk mail?"
Well, that sounds pretty good to us. And we do love hearing from you. Send us your thoughts. Loudobbs@cnn.com.
Still ahead tonight -- a teenage murder plot in New Jersey. Police arrest three teenagers planning a killing spree. We're going to have a live report.
And also, editors from "Forbes," "Fortune" and "BusinessWeek" will join me to talk about the stock market and a lot more in our weekly "Editor's Circle."
(COMMERCIAL BREAK)
PILGRIM: A chilling story out of suburban Philadelphia tonight. Three teenagers are under arrest for planning a killing spree in their own town. Now, police say the scenario could have been catastrophic. Jason Carroll has the very latest story from Oaklyn, New Jersey -- Jason.
JASON CARROLL, CNN CORRESPONDENT: And Kitty, prosecutors say that the three teenagers had been planning this plot for months. The apparent motive -- retaliation for being made fun of while at school.
(BEGIN VIDEOTAPE)
CARROLL (voice-over): Matthew Lovett's father says his son has always been a quiet, good kid, until now.
Police say the 18-year-old was the mastermind of a murder plot to kill three students and then randomly kill as many people in town as possible.
VINCENT SARUBBI, CAMDEN COUNTY PROSECUTOR: Whether you want to call it Columbine, whether you want to say it's similar to situations like this that have happened in Virginia, in Florida, in other parts of the United States -- they're sad situations. They're disturbing. They -- you know, they strike at everything that I think our communities and our neighborhoods stand for.
CARROLL: Police say they discovered the plot early Sunday, when Lovett and two other teenagers, one 14, the other 15, tried to carjack a motorist.
MATTHEW RICH, CARJACKING VICTIM: They had the intent to kill. I mean, I've seen that look before. They had the intent to kill. And that's when I knew -- my sixth sense told me it's time to move on. Don't stand. Don't play around with these guys. Just get out of there.
CARROLL: Police say the three teenagers had rifles strapped to their backs. At the Lovett home, police also found a mini arsenal of weapons, including several handguns, a shotgun, swords and 2,000 rounds of ammunition. Police say Lovett's father had permits for the weapons. Lovett's father spoke to CNN by phone saying his son was not the kind to look for trouble.
RON LOVETT, FATHER OF SUSPECT: He's never been in trouble with the law. I had no complaints all throughout high school about his behavior. And he's never been interested in guns, never fired one, never loaded one. Doesn't know how to drive a car.
CARROLL: Lovett's former classmates paint a different picture, saying he drew violent cartoons and that he and his younger brother, who had a cleft palette, were constantly picked on. Paul Phillips has known Lovett since kindergarten.
PAUL PHILLIP, CLASSMATE OF LOVETT: This is a shame because everyone would always pick on him because of the way he dressed or just because.
CARROLL (on camera): What was it about the way that he dressed?
PHILLIP: He used to wear, like, raggedy clothes, like sweatpants, and just, like, -- sometime she'd wear torn shirts and everything.
CARROLL (voice-over): Paul Phillip got Lovett to sign his yearbook. He says Lovett became more withdrawn after his mother's death several years ago. But, he says, nothing led him to believe Lovett would become violent.
PHILLIPS: I'm a little surprised but, I mean, you can only push somebody so far, you know? I mean, people have been making fun of him for the longest time.
(END VIDEOTAPE) CARROLL: Lovett left a note behind, but prosecutors aren't commenting on the contents of that note. Nor are they commenting on why they confiscated the teenager's computer. The names of the 14- and 15-year-olds not being released because they're minors, but prosecutors are saying, Kitty, that they are going to be seeking to try the 14- and 15-year-olds as adults.
Lovett has not entered a plea at this point. That's because his family is still in the process of trying to find him an attorney -- Kitty.
PILGRIM: All right, Jason. Not a good story, and a tough one. A tough one to report. Thanks very much, Jason Carroll.
Well, let's get on to some other news of the day. A member of the Columbia accident investigation board says a panel may have found a smoking gun. Scott Hubbard (ph) made his comments today after another test that involved insulating foam. And once again, a chunk of foam was fired at a shuttle wing, and today dramatic results.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Three, two, one. Zero.
(END VIDEO CLIP)
PILGRIM: The impact of the foam left a gaping hole nearly two feet wide in the wing. Now, the working theory is that chunks of foam broke away from Columbia's external tanks, damaging the shuttle wing and leading to Columbia's eventual disintegration.
Another story. The FBI investigating a series of suspicious fires in and around Washington, D.C. Now, five of the 29 fires that have occurred since late March have been linked, and many of the rest have been ruled similar in nature.
The Aspen wildfire in Arizona has now grown to 76,000 acres. The three-week-old fire is within a half mile of some homes near Tucson. Cooler weather, though, has helped keep the fire away from those homes.
And flood warnings remain in effect tonight for many rivers across Indiana. Several days of heavy thunderstorms have killed at least three people. Fifteen thousand people remain without power tonight, and forecasters warn that the area may experience more severe weather over the next several days.
As we reported today, it was a very strong day for the stock market on the first day back from a holiday weekend, which I'm sure you're aware of. Now, on the way back, on Thursday, markets sold off because investors worried about a nine-year high in the unemployment rate.
Well, tonight we have a panel of leading business editors with us to talk about the market and short-term memory loss and other topics. And the latest edition of "BusinessWeek" focuses on Hollywood, whether it can avoid the piracy that crippled the music industry. "Fortune" looks at the phenomenon of Krispy Kreme doughnuts, and we don't want to go there too much, and "Forbes" examines millionaire mullahs running Iran.
So joining us now is Steve Shepard, the editor-in-chief of "BusinessWeek." Rik Kirkland is the managing editor of "Fortune," and Tim Ferguson is the executive editor of "Forbes" global.
And thank you for joining us. And what a way to come back, a nice week in the markets. Was this a total surprise? I have to say, I don't remember coming back from a long holiday weekend and coming into a blast like this in a long time.
STEPHEN SHEPARD, BUSINESSWEEK: Well, I think both the stock and the bond markets are anticipating a stronger recovery. I think the really interesting news is in the bond market rather than the stock market. Bonds are going down, long-term interest rates are starting to rise, and most people are worrying that that will hurt the recovery. I would take the opposite view and say that the bond market is telling us that interest rates are rising because there is going to be a recovery. And that's the most significant news to me today.
RIK KIRKLAND, FORTUNE: The question is how much of a recovery. I mean, I found it kind of interesting today that part of why the market was up was people were excited about Microsoft maybe paying a $10 billion special dividend. We don't know for sure what they're going to do. But the notion of Microsoft paying a dividend -- well, that's because they don't have anything to do with their money. They're not growing very fast. So that shouldn't necessarily feed into a huge tech rally.
So yes, things are better, but are we really -- are happy days really here again to the extent the market thinks they are? That's the big question.
PILGRIM: A dose of cold realism on some of this news. And Tim, are you as skeptical as...
TIM FERGUSON, FORBES: I tend also to regard this as kind of a trading rally as opposed to an investor's rally. No doubt that the dividend tax reduction is having a real effect in the market. But I don't think that's what's driving up most of these tech stocks, aside from the Microsoft play.
PILGRIM: What do you think? Do you think it's taxes? It hardly seems that taxes...
SHEPARD: I think the market has been repriced somewhat to take account of the lower capital gains rate and the lower dividends rate. But I don't think that was what was going on today or in the last few days because that -- we've known that for some time now. I think we are anticipating a recovery. I also think the other good news is that all of the talk about deflation is dead because the bond market wouldn't be doing what it was doing if we were really worried about deflation.
PILGRIM: So you buried the deflation scenario?
SHEPARD: I really do. I thought it was exaggerated to begin with, an now I'm prepared to bury it, yes.
PILGRIM: OK. All right. What about -- what about....
KIRKLAND: We're writing a memo to Alan Greenspan. Relax, Alan. It's OK. Take it easy.
PILGRIM: I'm sure he would really appreciate that.
But let's talk about the unemployment rate, 6.4 percent. That's serious. A ripple effect certainly in terms of spending when you're at this level. Any worries about there? I mean, it seems that it is not ever going to improve. It just keeps climbing.
SHEPARD: Well, I mean, there are a lot of things to say. But one is that the economy has to grow at least 3, 3.5 percent before you see unemployment starting to come down. And that's because productivity continues to be strong. Business is able to do more with less. And we're not going to see unemployment coming down until we get those higher growth rates, which means the end of the year at best.
KIRKLAND: And the politics are interesting because this president would like to avoid the fate of his father. And the truth is, even if we have a decent second half, and by decent I think we will get the 3.5 to 4 percent growth, that probably means you're waiting until '04 before you really see hiring because business wants to see the whites of the eyes of this demand out there. So it's going to be well into the political season before you see unemployment coming down. It may even go up a tiny bit more.
PILGRIM: Yes, unemployment does lag, and so it may not help President Bush as we move towards the political season.
FERGUSON: It might not, and in some cases even if the economy has an uptick, employment, adding new people to the work force is still a very expensive proposition. And I think in a state like California, for example, you're going to see that number lag for a long time.
PILGRIM: What about the summer, though? I mean, when we have such a weird abberant start -- I mean, normally the summer is very, very quiet. Do you expect the whole summer to be as volatile? Tim, what do you think?
FERGUSON: Oh, I think it will depend on events, the way it always does, and if we continue to have a quiet, balmy summer, perhaps we'll have nothing to watch but the stock and bond market. But you never know what lies ahead tomorrow.
KIRKLAND: Everything about this recovery, this period we've been in since the bubble popped, has been the inverse of the usual rule. So the usual rule is sell in May and go away. Maybe this summer you have to hang around and sell in September. I don't know. PILGRIM: It seems to me, though, this is one of the more calm summers we've been through in recent days. Certainly last summer was a bit jittery. We had terrorist threats that were, you know, very worrisome.
KIRKLAND: WorldCom blew up.
PILGRIM: Yes, a lot of corporate scandal. It seems like a reasonably calm summer.
SHEPARD: Kitty, it's very early. It's only July 7.
KIRKLAND: We're pulling for calm, though, Kitty. We're pro- calm.
PILGRIM: All right. No, I'm not complaining at all.
All right. We're going to take a break. We will come back with Tim Ferguson of "Forbes," Steve Shepard of "BusinessWeek," and Rik Kirkland of "Fortune." Stay right with us.
We'll have more with our weekly "Editors' Circle." First let's take a look at tonight's poll. The question is: "When it comes to the stock market are you a bull, a bear or a chicken?" Cast your vote at cnn.com/lou, and we will bring preliminary results later in the show.
Coming up next, we'll have more with our weekly "Editors' Circle" about the major news of the week.
Plus, going broke in America. The number of companies and individuals filing for bankruptcy is approaching record levels. We'll have a special report on that.
Stay with us.
(COMMERCIAL BREAK)
PILGRIM: In the news "Around the World" tonight, a landslide has killed at least four people in Peru. Dozens more were injured when mud completely covered a northern town.
Torrential rains have washed over eastern China this weekend. More than 200,000 people have been evacuated, and at least one person has died as a result of the floods.
Painstaking work in Singapore. Doctors there are trying to separate conjoined adult twins. The brains of the Iranian twins have been separated, but it is not clear right now if either will survive.
In Pamplona, Spain today, the first running of the bulls. Now thousands joined in the traditional running. No one was gored, we're happy to report, but minor injuries were reported from people who were stepped on by the animals.
And speaking of running of the bulls, that brings us back to our weekly "Editors' Circle," and no one was stepped on here, and try not to step on each other.
But, you know, we just talked about the markets. Let's move a little bit to the foreign policy arena. We do have President Bush going to Africa. Is that a what for for you or do you think that this really has real meaning and is a really important trip?
SHEPARD: Well, I think it's great that he's going to Africa. I think it's great that he's trying to get $15 billion in money for aid.
You know, you sort of have to wonder a little bit why he's doing this. He's doing all of the things that he was very critical of early on: nation building, troops for humanitarian purposes in Liberia. So you sort of -- it gets a little hard to understand exactly the motivation.
PILGRIM: Yet isn't it a damned if you do, damned if you don't because...
KIRKLAND: Well, one cynical answer, this is not me, but some of my cynical friends suggest that you remember in the election, the president got about 10 percent of the vote of black Americans. Now, I don't think this is a play for votes. I think he is doing it for real reasons. But it doesn't hurt, if you're Karl Rove, that you are showing that compassionate conservatism that he keeps trying to associate himself with by going off and talking about AIDS and talking about something other than wielding a big stick in terms of a military sense.
So I think that's part of -- there's a little bit of an eye somewhere to the 2004 election here.
PILGRIM: Yes, and also...
KIRKLAND: The suburban voter, by the way, not winning back the African-American, but winning that swing voter that he wants to make sure.
PILGRIM: Right, and also not being tarred with the brush of being completely subservient to our interests, having the world -- but yet, it is a weird digression in the middle of what we're dealing with, and yet Liberia comes up right at this moment. Certainly a coincidence, but certainly a timely event. Tim?
FERGUSON: Yes, it's the conflict du jour, I guess. And certainly, there's a lot of hemming and hawing and tussling over whether the U.S. is going to make a commitment there.
I want to jump ahead a couple of stops to Botswana, where Bush will also be landing, which is actually one of the most profound economic success stories by African standards across the whole continent, a government that is functionally relatively honest. Unfortunately, the country also has the worst HIV infection rate in the world, a tragic coincidence.
PILGRIM: The issue of AIDS will certainly be a big topic. It's certainly been a big topic in Washington and President Bush is... KIRKLAND: It's really important. I think if I remember right, President Clinton, when he went did not talk very explicitly about the AIDS problem. I think this is something the president can get awareness raised. I mean, the South African leadership is resisting this to some extent, and Africa has got such a huge AIDS problem. It's not just Africa, India, China, Russia. These are even more economically significant countries, which have been in denial about this. And we've really got to start raising awareness or we're going done in bad shape.
SHEPARD: He's got to get the $15 billion from Congress, and there are signs he won't get the $15 billion he's asked for over five years. So that's an issue, too. He's going to have a battle when he gets back, I'm afraid.
PILGRIM: Certainly he'll have to produce some results after this very high profile trip. We have just a minute or so left. But we can't leave off without discussing Iraq. I mean, we see this attrition on U.S. troops. It's appalling. Every day you read one more thing has happened. Your views on this as editors.
How do you cover this?
How do you not get eroded in your interest as the same sort of thing happens over and over again?
And how do you keep your viewers really fresh on this?
SHEPARD: Well, the war was what galvanized everybody. And people tend to forget that there's still a war going on and we're losing people. I think we have to make an issue out of it. I think we have to raise questions over whether more forces are needed not so much from the U.S. but other countries, whether we have to engage NATO is going to be a big issue, and I think the president has to stand up and say something about it.
KIRKLAND: We have a long -- Senator Lugar, a Republican, said this week that we're going to be in Iraq five years. I mean, I think we need to start talking now about how big a problem, what kind of commitment, how we can get help, and it's a pretty interesting story. It's not going away.
PILGRIM: As a news story how much does it dominate your editorial discussions?
FERGUSON: It's there probably every other cycle, I guess, while we, you know, toggle back and forth to the issues of the day. In our latest issue we actually have a story make the point that the Iraqis themselves are surprisingly enough, getting their oil industry back on its feet.
PILGRIM: Well, let's end on that note because it certainly is a positive one. And thank you gentleman, for joining me today.
Tim Ferguson of "Forbes."
Steve Shepard of "Business Week."
And Rik Kirkland of "Fortune."
Thank you.
Let's give you a reminder to vote in tonight's poll.
When it comes to the stock market, are you a bull, a bear, or a chicken?
Cast your vote, cnn.com/lou. We'll bring you the preliminary results in just a few minutes.
"Tonight's Quote" comes from Tampa, Florida, where a transfer of CENTCOM leadership took place earlier today. And the outgoing CENTCOM leader had this to say about the coalition's attitude going forward.
"We'll still stand and we'll still say it, rough road behind, rough road head. Bring it on."
And that's from the outgoing CENTCOM commander, General Tommy Franks.
Coming up next, an explosion of bankruptcy in this country.
We'll talk with the Senate Finance Committee chairman, Senator Charles Grassley, about what Congress is doing to stop that.
Plus, spam. It's not just junk on your computer. In fact, the maker of the original spam is going to court to try to probe that point. We'll have an explanation on that and a good deal more, so stay with us.
(COMMERCIAL BREAK)
PILGRIM: Tonight we begin a special series of reports, "Going Broke in America." Bankruptcies have hit epidemic proportions in this country, and it looks like the situation is getting worse. Well, tonight we look at the debt trap that many Americans have signed up for.
(BEGIN VIDEOTAPE)
CHARLIE LINCOLN, UNITED AIRLINES MECHANIC: My dream is to go live on a lake, working on boats and motorcycles up on a lake, and that was my vision. That vision has been put off.
PILGRIM, (voice-over): Meet Charlie Lincoln. He's worked for United Airlines for nearly 20 years. He put his nest egg in the company and is now a victim of one of the largest corporate bankruptcies in U.S. history. Charlie lost more than $100,000 in UAL stock, which he had invested as part of the company's employee ownership program. He's put off hopes for a comfortable retirement for a long time. Though he's grateful to still have a job. Charlie is angry about his financial reversal. LINCOLN: I'm bitter about it. But I'm angry at the mismanagement of the company that has allowed the -- you know what I say the billions of profits that they've made that has disappeared.
PILGRIM: Seven of the nation's ten largest bankruptcies have occurred during the last two years, some due to greed, some to accounting flimflam, and some just a bad business climate. But the bigger they are and the harder they fall, the more damage they do.
SAM GERDANO, AMERICAN BANKRUPTCY INSTITUTE: They are extraordinary because of the size of the case and the amount of time it's going to take to rescue those companies if they can be rescued and the fact of the collateral damage that they do to other businesses.
PILGRIM: 2001 was the worst year for corporate bankruptcies. Add in personal bankruptcies, and the rate is still climbing. Last year a record 1 1/2 million individuals and businesses filed for bankruptcy protection. 97 percent of those were personal bankruptcies. American households are carrying more debt than ever. Lured by zero interest car loans, low-interest credit card deals, and low mortgage rates.
CHARLES BROWN, NATL. FOUNDATION FOR CONSUMER CREDIT: They are living from paycheck to paycheck in terms of making their payments. It doesn't take much to push them over the edge. Employers have reduced hours. Overtime is not where it was. And a lot of people use overtime to really make their budget.
PILGRIM: But filing for bankruptcy is not an easy out.
THERESA SULLIVAN, UNIVERSITY OF TEXAS: The bankruptcy goes on your credit record for 10 years. And so for some lenders they just won't touch you for 10 years afterwards. It's not that they can't get credit, but they can't get credit at a reasonable rate.
PILGRIM: Congress is outraged over the bankruptcy as a solution mentality. Legislation to crack down on frivolous bankruptcies has hit snags on Capitol Hill since 1997. Critics have held up the bill because they believe it punishes innocent victims who have no other choice. The House passed the latest version in March, and the Senate may take up the issue this summer.
(END VIDEOTAPE)
PILGRIM: Now, even if economists are telling us that the economy's improving, don't look for bankruptcies to drop off. Bankruptcy, personal or business often lags behind what's happening in the economy. And with debt levels this high, it shows no sign of improving for a very long time.
Well, Senator Chuck Grassley's been trying to overhaul the nation's bankruptcy code for the past six years, and now it appears he may be close to passing the legislation he wants.
Chuck Grassley is the chairman of the Senate Finance Committee, and he joins me now from Capitol Hill.
And thanks for joining us, senator.
SEN. CHUCK GRASSLEY (R-IA), SENATE FINANCE COMMITTEE: Glad to be with you, Kitty.
PILGRIM: It's been a tough struggle to pass bankruptcy legislation, why?
We were looking back, and there's been attempt after attempt where it passes both the House and the Senate and yet there's always some snag.
GRASSLEY: Well, two times it was relatively new. You know, it's been 20 years since we've dealt with bankruptcy as a major overhaul. Then one time we got it to President Clinton, and he didn't like it, and he vetoed it. And now it's been through the House four times, the Senate three times. And if we get it through the Senate this time, the president will sign it.
PILGRIM: Now, you've been in for the long haul.
What is the worst, egregious abuse of this, and what would you like to see fixed?
GRASSLEY: OK. The basic principle behind it is this -- that people are gaming the system, and with some ability to repay still going into chapter 7 bankruptcy. My goal is to make sure that people who have the ability to repay some of their debt do not get off scot- free.
There's a special case for farmers, and they have real issues where if they give up all their assets, then they sort of give up the farm literally, and they can't come out. You're trying to make special consideration for farmers. What are the...
GRASSLEY: Well, those special considerations are the fact that farming has never had a permanent chapter in the bankruptcy bill. In fact, 50 years from the 1930s until 1980s, there wasn't any chapter just for farming. And farming's a little bit different than corporate bankruptcy. So farmers that would have to go into corporate bankruptcy, the corporate chapter, Chapter 11, did not have a very fair shake. So what we're trying to do is write a chapter for farming that deals with the special needs of farming, and we want to make it a permanent chapter of the bankruptcy code as well.
PILGRIM: You know what really struck me is also your efforts with nursing homes, protecting patients in a nursing home that goes bankrupt. What measures do you think are important there?
GRASSLEY: Well, we set up ombudsmen to take care of hospitals or nursing homes that are in bankruptcy, because we had a situation in California a few years ago where people were put right out on the street, when an institution went into bankruptcy. And those people don't have any place to turn. And so we would make sure that the bankruptcy court sets up an ombudsman to make sure that their needs are taken care of, either keeping the nursing home open, to take care of them there, or find another place for them to be housed.
PILGRIM: Let's talk about protecting the person's home who's filing for bankruptcy. Now, there's a double whammy here because some people really need their home protected, and others are using that home to shelter assets. How do you walk a fine line between those two sets of people and differentiate? What measures have you put in?
GRASSLEY: Well, in previous legislation -- or I mean in previous law, there's been a kind of a state rights that the state could set the amount of the bankruptcy that the home would be worth and how much could be protected. But seven states have some constitutional protections that give extraordinary rights to homeowners and the home itself. And consequently, you can find a lot of people that anticipate going into bankruptcy just pouring a lot of money into very costly homes and protecting millions of dollars from bankruptcy.
So basically, what we do is two things -- we set a minimum standard around the country and only let a higher amount to be protected, unless there was a fraud involved in the filing of the bankruptcy. In other words, somebody anticipating that maybe within the next two years they're going to go into bankruptcy, so we'd call that a fraudulent approach, and you would not protect the massive amount of money at that point.
PILGRIM: Well, you've clearly taken a very thorough approach to this very complicated issue, and we wish you the best of success getting it through the Senate. Senator Chuck Grassley, thanks for joining us.
GRASSLEY: Thank you.
PILGRIM: Tomorrow we will continue our series of reports on going broke in America with a look at state and local governments. Many of them are in the red, and we'll tell you why, and also what that means to you. And we'll also tell you which states are doing well and why they're doing well.
Now, tonight's thought on debt. And here we go. "The human species, according to the best theory I can form of it, is composed of two distinct races, the men who borrow and the men who lend." And that is from the British author Charles Lamb.
Still ahead -- the preliminary results of tonight's poll. Plus, fighting to protect the good name of spam. That's right. We'll tell you why and what there is to fight about. The computer junk mail and meat in the can, headed to court. Stay with us.
(COMMERCIAL BREAK)
PILGRIM: Arnold Schwarzenegger back at the box office. "Terminator 3: Rise of the Machines" took the top spot this weekend. It grossed $44 million over the weekend, $72 million since its Wednesday opening. And that five-day gross makes it the second highest debut for an R-rated film. That's behind "The Matrix: Reloaded." "Legally Blonde 2: Red, White and Blonde" opened at no. 2. "Charlie's Angels: Full Throttle" slipped to no. 3. "Finding Nemo" and "The Hulk" rounded out the top five.
Let's have a preliminary results of tonight's poll. And the question is, when it comes to the stock market, are you a bull, a bear, or a chicken? And 25 percent of you said bull, 16 percent said bear, and 60 percent said chicken. Sixty percent?
OK. Finally tonight, the word "spam" has become synonymous with junk, junk e-mail, that is. And Hormel Foods is not happy about that. Hormel says spam is spam when it's in a can and it's rolling off the factory line. And the company has filed suit to protect its good name. Bill Tucker has the report.
(BEGIN VIDEOTAPE)
BILL TUCKER, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): A funny thing happens in the marketplace. Facial tissues, regardless of brand, become known as Kleenex. Cuts are covered with a Band-Aid. And spam?
(BEGIN VIDEO CLIP, "MONTY PYTHON'S FLYING CIRCUS")
UNIDENTIFIED ACTOR: Could I have egg, bacon, spam and sausage without the spam?
UNIDENTIFIED MALE: Ewww.
UNIDENTIFIED MALE: What do you mean, ewww? I don't like spam.
(END VIDEO CLIP)
TUCKER: Becomes spam. Thanks to that Monty Python moment, which is widely credited with giving unsolicited e-mail its name. Hormel is not amused. It doesn't want its spam confused with just any spam.
Spam Arrest is learning that firsthand. Hormel is suing the company to stop it from using the name. Spam Arrest makes a product to block spam.
DEREK NEWMAN, ATTORNEY FOR SPAM ARREST: It's my understanding that Hormel is going after any company that incorporates the word "spam" into its trademark, even if the use of the word "spam" is being used in connection with computer services or filtering unsolicited commercial e-mail.
TUCKER: As far-fetched as the suit might sound, Spike Lee and Viacom are headed to court in August over a network that Viacom wants to call Spike TV. Consumer confusion and brand dilution are at the heart of both suits. In Hormel's case, the company has to prove that consumers are confused about spam the meat, and spam the mail.
UNIDENTIFIED MALE: I think it's a very difficult case for Hormel. To win a trademark infringement case, you have to show that there's a likelihood of consumer confusion. And here I think it's very unlikely that Hormel's going to be able to prove that consumers think that this junk e-mail product is sponsored by or somehow affiliated with Hormel. TUCKER (on camera): Ironically, as ubiquitous as the phrase spam is for unsolicited commercial e-mail, if you go to the Web site www.spam.com, it isn't at all about e-mail. It's about spam the meat. And the spammobile.
Bill Tucker, CNN, New York.
(END VIDEOTAPE)
PILGRIM: That's our show for tonight. Thanks for joining us. Tomorrow in our series of special reports, "Going Broke in America," we look at why some state and local governments are deep in the red. And we'll also be joined by Senator Carl Levin, who has just returned from Iraq. For all of us here, good night from New York. "LIVE FROM THE HEADLINES" with Cooper Anderson (sic) is next.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Files Suit to Protect Brand Name Spam>
Aired July 7, 2003 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: This is LOU DOBBS TONIGHT for Monday, July 7. Sitting in for Lou Dobbs, Kitty Pilgrim.
KITTY PILGRIM, GUEST HOST: Good evening, everyone. The bulls charged into the market today, and investors put away lingering fears over the technology sector, and they showed optimism over corporate earnings and economic rebound. Christine Romans joins me now with the latest -- Christine.
CHRISTINE ROMANS, CNN FINANCIAL NEWS CORRESPONDENT: Kitty, the Nasdaq soared to its highest level in 14 months. The S&P 500 is above 1,000 again and the Dow had its best one-day performance in three weeks.
Several catalysts today. A report showed better CEO confidence. There are a handful of merger deals announced. And momentum continued out of the bond market. Benchmark yields rose to the highest level in eight weeks, and the dollar also hit a two-month high versus the euro.
Technology stocks led the rally on Wall Street. An upbeat report on tech spending from Goldman Sachs and bullish sales news from Taiwan semiconductor leading there.
The rally was broader than that; 271 Big Board stocks hit new 52- week highs. Eighty percent of the volume today at higher prices. And investor sentiment remains very strong. More than 70 percent of newsletter writers surveyed by investor intelligence are bullish. The latest reading from the individual investor, a bit less so, but still, 41 percent bullish there -- Kitty.
PILGRIM: All right. Thanks, Christine. We will take 41 percent.
Well, this stock market rally, like all rallies, is built on optimism, optimism but also a dose of realism. Peter Viles reports on the expectations behind the bullishness.
(BEGIN VIDEOTAPE)
PETER VILES, CNN CORRESPONDENT (voice-over): Why the big rally and why now? Well, first the obvious. Interest rates are so low and the world economy so sluggish that American stocks are benefiting from a process of elimination. Where else would you put your money? But the real rally maker, as always, is optimism. that corporate profits will continue their modest comeback and that the American economy will finally show enough strength to start creating jobs. Neither is a sure bet.
First, earnings. They're up four quarters in a row, but that is not enough. That growth must continue. Analysts now predict a 5 percent increase in soon to be released second quarter numbers, and 12-plus percent in the third quarter.
CHUCK HILL, THOMSON FIRST CALL: Second quarter's not the problem. The problem will be whether these expectations for the second half are going to hold up, unlike what happened last year in looking for a big pickup in the second half.
VILES: The broader bet by investors, that the slumbering U.S. economy will finally wake up in the second half and start creating jobs. And there's zero evidence on that score. First-time jobless claims have been running above 400,000 per week, which means a crummy job market. The stock market is betting that those claims will drop.
JOSEPH BATTIPAGLIA, RYAN BECK & CO: We need to see that to start to come down to and below the 400,000 persons a week level. If we have that, then we can start to grow confident about how the economy is expanding, where the job growth may be coming from, and we stem the tide of job losses in manufacturing, which is quite severe.
VILES: Another economic number to watch, it's boring but important. Capacity utilization. Still running well below its 30- year average. And America doesn't need new factories and new jobs until it starts running the old ones.
(END VIDEOTAPE)
VILES: Another note of caution here. For the Dow this is not obviously a breakout rally. Now, why do we say that? Because we had a bigger rally, a 29 percent rally off of the September 11 lows, but the market could not hold that rally early last year -- Kitty.
PILGRIM: Thanks, Pete Viles.
Well, later in the show I will discuss the market and other issues with Stephen Shepard of "BusinessWeek," Rik Kirkland of "Fortune," and Tim Ferguson of "Forbes." We will also have more from Christine Romans.
Well, the top international story tonight is Iraq and the rising casualties among coalition troops. Three U.S. soldiers were killed in the past two days. General Tommy Franks, who led coalition forces in the war against Saddam Hussein, today said that no additional troops are needed in Iraq. Pentagon correspondent Barbara Starr joins me now -- Barbara.
BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Kitty, U.S. troops still taking casualties in Iraq. Two soldiers killed over the weekend by gunfire in Baghdad. Another earlier today by an improvised explosive device.
But as you say, no indication so far that additional troops are headed towards Iraq. The goal now is to get the allies to contribute additional troops and to see what can be done to rotate some U.S. troops home who have been there the longest period of time.
But the attacks do continue. Since May 1, when the president declared major combat was over, some 30 U.S. troops now killed by hostile fire across Iraq.
All of this remembered today in Tampa, Florida, where indeed General Tommy Franks relinquished the reins of command as head of U.S. Central Command to General John Abizaid, the man who will take over from him and now lead the U.S. effort both in Iraq and in Afghanistan.
But in Iraq for the U.S. Central Command, for General Abizaid, the major issue still will be bringing security to the streets and the hunt for Saddam Hussein, now with a $25 million price tag on his head.
Officials saying today that that recent audiotape purported to be of Saddam Hussein's voice most likely is him. He most likely is alive and somewhere inside Iraq. So the hunt for him goes on -- Kitty.
PILGRIM: All right. When we look to you to bring us up to speed on all of that. Barbara, thanks very much. Barbara Starr at the Pentagon.
A team of U.S. military experts arrived in Liberia today to assess security after years of civil war in the West African country. Now, the team's report will help determine whether the United States sends up to 2,000 peacekeeping troops. Jeff Koinange joins me live from the Liberian capital, Monrovia.
Jeff, what are the U.S. military experts planning to do over the next few days?
JEFF KOINANGE, CNN CORRESPONDENT: I can tell you, Kitty, it's a little after 10:00 right now here in Monrovia, and the team is getting ready to bed down for the very first night in war-torn Liberia. Now, they have a huge day ahead of them tomorrow.
They're going to start off by meeting with non-governmental organizations, or NGOs. They're going to be telling them how desperate the situation is right here on the ground. After that, they're going to visit the displacement camps.
Just imagine for a moment, Kitty, over 100,000 displaced Liberians who had fled fighting in the countryside here in the capital, Monrovia. They are now staying in abandoned buildings, abandoned schools, at the local stadium. All they're looking for right now, Kitty, is food, water, medication. You can imagine.
This is the rainy season right now. And often it rains continuously for 24 hours, and then the sun comes out. In a tropical country like this, every disease under the sun, this is the perfect breeding ground for it. Everything from cholera to measles to malaria.
We understand children are malnourished in those camps. This assessment team literally has their work cut out for them. They're going to have to hit the ground running, because there's a lot of work to do in the coming days. Once they assess that, they'll find out in terms of quantity, what kind of water, what kind of shelter, what kind of food is required, and most importantly what kind of help in terms of numbers of troops or peacekeepers or help that they will need to bring on the ground.
In the meantime, Kitty, President Taylor, a day after he announced that he had accepted a deal for a soft landing or safe haven in Nigeria, he spent most of the day with his ruling party, the National Patriotic Party. There they were assessing who is going to be the next person in line, the flag bearer for the country to be used in a transitional government along with other opposition members and rebel groups who will form the next government. So he is indeed preparing for his departure to his new home away from home, Kitty.
PILGRIM: All right. Thanks very much, Jeff Koinange, reporting from Monrovia, Liberia. Thank you, Jeff.
President Bush travels to Africa tonight. He will be only the fourth president to visit Africa that's south of the Sahara Desert, by the way. He'll focus on AIDS, terrorism, the fight against poverty. President Bush will visit five countries in five days. He'll begin in Senegal and in Nigeria. And there's a map of his route.
Charlayne Hunter-Gault reports on the likely reception for President Bush, compared to his predecessor, President Clinton.
(BEGIN VIDEOTAPE)
CHARLAYNE HUNTER-GAULT, CNN CORRESPONDENT (voice-over): President Bill Clinton brought more charisma than cash, but charisma counted for something on a continent starved for attention as well as assistance. Also, Clinton didn't have any demons to lay to rest here. George W. Bush does, starting with the Iraq war.
NELSON MANDELA, FORMER SOUTH AFRICAN PRESIDENT: What I am condemning is that one power with a president who has no foresight, who cannot think properly, is now wanting to plunge the world into a holocaust.
HUNTER-GAULT: Condemnation echoed in the streets.
JOHN STREMLAU, WITWATERSRAND UNIVERSITY: But the perception of Bush in Africa is of a cowboy, that he is a unilateralist, that he is a militarist, that he doesn't listen to what other people say.
HUNTER-GAULT (voice-over): Especially grating, his failure to come to South Africa for the World Racism Conference and later the Earth Summit, leaving it to his secretary of state to take the heat.
UNIDENTIFIED MALE: So I did this cartoon where his aides are asking him to speak to them and he essentially just gives insults to the camera and then laughs his head off. That's how people feel that George Bush views the developing world.
MOELETSI MBEKI, SOUTH AFRICAN INSTITUTE FOR INTERNATIONAL AFFAIRS: I think Bush will do very well coming to South Africa and in Africa generally. The United States' policies have been fairly sympathetic to Africa in terms of its economic plight, in terms of its HIV-AIDS crisis. The United States is making huge investments in developing the oil industry in West Africa.
HUNTER-GAULT: Mbeki's brother, President Thabo Mbeki, will be hosting George W. Bush hours before going to the largest gathering of African leaders on the continent, the African Union in Moputu, Mozambique.
(on camera): Questions are being raised about why the American president would travel this far and not take the one hour flight next door to Mozambique, one of the many questions Africans are asking about a leader who made many of them nervous calling Africa a country instead of a continent.
Charlayne Hunter-Gault, CNN, Johannesburg, South Africa.
(END VIDEOTAPE)
PILGRIM: From Africa to the Persian Gulf.
Iran today said it has completed tests of a long-range surface- to-surface missile. Independent experts believe the missile could hit Israel. The United States says Iran is developing nuclear weapons and the means to deliver them, and Iran says its nuclear program is for peaceful purposes and the missiles are only a deterrent.
Coming up, the Los Angeles Lakers star Kobe Bryant could face a criminal indictment.
Frank Buckley will have the details from Eagle, Colorado.
And broke in America. We'll have the first in a series of special reports on the epidemic of bankruptcies in this country. Senator Chuck Grassley will tell us why it's time to reform the bankruptcy code.
(COMMERCIAL BREAK)
PILGRIM: A settlement today between WorldCom, now known as MCI, and the Securities and Exchange Commission. It is the latest development in a massive accounting scandal that rocked Wall Street and also shattered investor confidence. Shareholders will receive $750 million in compensation. That's 50 percent more than originally proposed. The company filed for bankruptcy last July, after inflating its financial results by more than $11 billion.
Let's return to our top story tonight, the running of the bulls today on Wall Street, and stocks rocketed higher, a surge in technology shares lifted the Nasdaq to its highest level in more than a year. Now, the Dow soared more than 146 points. The Nasdaq gained nearly 58 points. And the S&P 500 rose really 19 points and did pass the key 1,000 mark.
Christine Romans is here again with some of the day's top performers -- Christine.
ROMANS: Well, Kitty, the market started higher and never looked back, and tech stocks soared today in particular. IBM rose 2 1/2 percent. Intel and the semiconductors were sharply higher on hopes there for a better second half. And Microsoft rallied on a "Financial Times" report that the company may consider paying out a special $10 billion dividend to its shareholders.
But mostly traders talked about the momentum of this market. The S&P 500 is now up more than 14 percent this year, and it's coming off a string of five monthly gains, something that hasn't happen since late 1998. Back then, of course, that stretch ushered in more than year long winning streak for stocks.
Internet stocks rallied today. Amazon, eBay, Yahoo!, all at two or three-year highs. Tech investors are optimistic about the group's earnings reports. Yahoo! will report on Wednesday. And kitty, other earnings this week include Alcoa tomorrow and general electric later this week. More than two stocks rose for every one that fell, but it wasn't all good news on Wall Street. It hardly ever is. In the Dow three stocks closed lower, Johnson & Johnson, Exxon Mobil, and Coke. And Schering-Plough fell 4 percent after it warned on earnings again -- Kitty.
PILGRIM: Christine, what about summertime volume? Sometimes it's really deadly, it could shoot a cannon across the floor of that exchange. What's it like these days.
ROMANS: You would think it would be a slow and lazy startup again after the holiday weekend, but it really wasn't. Almost 1.4 billion shares changing hands here today. Last week was also a pretty decent week, even considering a shortened day and a holiday. So traders are saying that there still is interest in this market. A lot of folks keep using the m word, momentum. They're talking about the momentum of this market. They don't want to miss anything.
PILGRIM: All right. We'll take that. Thanks very much. Christine Romans.
Still to come, we have police, they stop a murderous plot by three heavily armed teenagers.
Jason Carroll will have that report.
Basketball star Kobe Bryant under arrest. Could face criminal charges.
Frank Buckley will have that latest.
And editors from this country's top business magazines will join us to discuss the market, the president's trip to Africa, a lot more.
Stay with us. (COMMERCIAL BREAK)
PILGRIM: Tonight Colorado police are deciding whether to file criminal charges against basketball star Kobe Bryant. A woman in Colorado says the L.A. Lakers guard sexually assaulted her last week.
Frank Buckley is in Eagle, Colorado, with the very latest -- Frank.
FRANK BUCKLEY, CNN NATIONAL CORRESPONDENT: Yes, Kitty. The allegation involves alleged sexual misconduct involving Kobe Bryant, the great basketball player for the Los Angeles Lakers. According to the complaint from the alleged victim, this took place on June 30, that is, last week into July 1 at some point when the investigators became involved in hearing of the complaint. At some point during last week, we believe it was July 2, investigators made contact with Kobe Bryant himself.
They say Kobe Bryant has been completely cooperative throughout the course of this investigation. At some point a judge decided that there was enough there, enough probable cause in the affidavit put forward by sheriff's investigators here in Eagle County to issue an arrest warrant, and on July 4 Kobe Bryant turned himself in and posted bond. But at this point Kobe Bryant is not formally charged with sexual assault.
(BEGIN VIDEO CLIP)
MARK HURLBERT, DISTRICT ATTORNEY: As of this time no charges have been filed on Mr. Bryant. I got the police reports from the sheriff's department today, and after I get done here I will start reviewing those police reports and the evidence there to make a filing decision.
(END VIDEO CLIP)
BUCKLEY: So at this point the district attorney in this county is still reviewing this case. We can tell you that the attorneys for Kobe Bryant and one of his agents issued a statement earlier today, this from Harold Hadden (ph), Pamela Robelard Macky (ph) and Robert Polincca (ph). They say that, quote, "Mr. Bryant is innocent and expects to be completely exonerated."
They say the actions of the sheriff's office are biased and unfair. They believe that they had an agreement with the district attorney's office that no actions would be taken against Kobe Bryant until at least Monday. They say the fact that the sheriff's department went ahead, sought an affidavit, sought an arrest warrant and tried to get Kobe Bryant arrested suggests some bias. The sheriff's department denies that.
So the bottom line at this point, Kitty, is that yes, Kobe Bryant has been arrested, yes, he has posted bond. He is not in custody now. But there could be a charge of sexual assault pending, depending on the outcome of the investigation by the district attorney -- Kitty.
PILGRIM: All right. Thanks very much. Frank Buckley.
Let's take a look at some of your thoughts. And Molly Baxter from Houston, she wrote about illegal workers and the rise in U.S. unemployment. Here's what she wrote: "Our jobs will never come back until the government fines these companies that are constantly hiring illegals instead of Americans."
Peter Lambrecht of Kings Park, New York said: "Foreign guest workers should not be allowed to work in this country. It takes away jobs from U.S. workers who need it most."
Barbara Heilmann of Holbrook, New York, echoed the words of our president: "Now that unemployment has shot up to 6.4 percent in spite of the passage of the tax cut, I say to President Bush in regards to new jobs, 'bring'em on.'"
Philip Hagler of Bristol, Virginia, wrote about our latest series, the special reports "Going Broke in America." And he writes: "Bankruptcy is as American as apple pie. If bankruptcy is good enough for UAL and Enron, then it's good enough for the rest of us too."
Don Danley of Garden Grove, California, wrote -- about the government's do not call list. And he says: "The recent ruling that allows telephone customers to opt out of telemarketing junk calls is wonderful and appreciated by all. Now, how about a follow-up and allow postal customers to opt out of receiving 3rd class junk mail?"
Well, that sounds pretty good to us. And we do love hearing from you. Send us your thoughts. Loudobbs@cnn.com.
Still ahead tonight -- a teenage murder plot in New Jersey. Police arrest three teenagers planning a killing spree. We're going to have a live report.
And also, editors from "Forbes," "Fortune" and "BusinessWeek" will join me to talk about the stock market and a lot more in our weekly "Editor's Circle."
(COMMERCIAL BREAK)
PILGRIM: A chilling story out of suburban Philadelphia tonight. Three teenagers are under arrest for planning a killing spree in their own town. Now, police say the scenario could have been catastrophic. Jason Carroll has the very latest story from Oaklyn, New Jersey -- Jason.
JASON CARROLL, CNN CORRESPONDENT: And Kitty, prosecutors say that the three teenagers had been planning this plot for months. The apparent motive -- retaliation for being made fun of while at school.
(BEGIN VIDEOTAPE)
CARROLL (voice-over): Matthew Lovett's father says his son has always been a quiet, good kid, until now.
Police say the 18-year-old was the mastermind of a murder plot to kill three students and then randomly kill as many people in town as possible.
VINCENT SARUBBI, CAMDEN COUNTY PROSECUTOR: Whether you want to call it Columbine, whether you want to say it's similar to situations like this that have happened in Virginia, in Florida, in other parts of the United States -- they're sad situations. They're disturbing. They -- you know, they strike at everything that I think our communities and our neighborhoods stand for.
CARROLL: Police say they discovered the plot early Sunday, when Lovett and two other teenagers, one 14, the other 15, tried to carjack a motorist.
MATTHEW RICH, CARJACKING VICTIM: They had the intent to kill. I mean, I've seen that look before. They had the intent to kill. And that's when I knew -- my sixth sense told me it's time to move on. Don't stand. Don't play around with these guys. Just get out of there.
CARROLL: Police say the three teenagers had rifles strapped to their backs. At the Lovett home, police also found a mini arsenal of weapons, including several handguns, a shotgun, swords and 2,000 rounds of ammunition. Police say Lovett's father had permits for the weapons. Lovett's father spoke to CNN by phone saying his son was not the kind to look for trouble.
RON LOVETT, FATHER OF SUSPECT: He's never been in trouble with the law. I had no complaints all throughout high school about his behavior. And he's never been interested in guns, never fired one, never loaded one. Doesn't know how to drive a car.
CARROLL: Lovett's former classmates paint a different picture, saying he drew violent cartoons and that he and his younger brother, who had a cleft palette, were constantly picked on. Paul Phillips has known Lovett since kindergarten.
PAUL PHILLIP, CLASSMATE OF LOVETT: This is a shame because everyone would always pick on him because of the way he dressed or just because.
CARROLL (on camera): What was it about the way that he dressed?
PHILLIP: He used to wear, like, raggedy clothes, like sweatpants, and just, like, -- sometime she'd wear torn shirts and everything.
CARROLL (voice-over): Paul Phillip got Lovett to sign his yearbook. He says Lovett became more withdrawn after his mother's death several years ago. But, he says, nothing led him to believe Lovett would become violent.
PHILLIPS: I'm a little surprised but, I mean, you can only push somebody so far, you know? I mean, people have been making fun of him for the longest time.
(END VIDEOTAPE) CARROLL: Lovett left a note behind, but prosecutors aren't commenting on the contents of that note. Nor are they commenting on why they confiscated the teenager's computer. The names of the 14- and 15-year-olds not being released because they're minors, but prosecutors are saying, Kitty, that they are going to be seeking to try the 14- and 15-year-olds as adults.
Lovett has not entered a plea at this point. That's because his family is still in the process of trying to find him an attorney -- Kitty.
PILGRIM: All right, Jason. Not a good story, and a tough one. A tough one to report. Thanks very much, Jason Carroll.
Well, let's get on to some other news of the day. A member of the Columbia accident investigation board says a panel may have found a smoking gun. Scott Hubbard (ph) made his comments today after another test that involved insulating foam. And once again, a chunk of foam was fired at a shuttle wing, and today dramatic results.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Three, two, one. Zero.
(END VIDEO CLIP)
PILGRIM: The impact of the foam left a gaping hole nearly two feet wide in the wing. Now, the working theory is that chunks of foam broke away from Columbia's external tanks, damaging the shuttle wing and leading to Columbia's eventual disintegration.
Another story. The FBI investigating a series of suspicious fires in and around Washington, D.C. Now, five of the 29 fires that have occurred since late March have been linked, and many of the rest have been ruled similar in nature.
The Aspen wildfire in Arizona has now grown to 76,000 acres. The three-week-old fire is within a half mile of some homes near Tucson. Cooler weather, though, has helped keep the fire away from those homes.
And flood warnings remain in effect tonight for many rivers across Indiana. Several days of heavy thunderstorms have killed at least three people. Fifteen thousand people remain without power tonight, and forecasters warn that the area may experience more severe weather over the next several days.
As we reported today, it was a very strong day for the stock market on the first day back from a holiday weekend, which I'm sure you're aware of. Now, on the way back, on Thursday, markets sold off because investors worried about a nine-year high in the unemployment rate.
Well, tonight we have a panel of leading business editors with us to talk about the market and short-term memory loss and other topics. And the latest edition of "BusinessWeek" focuses on Hollywood, whether it can avoid the piracy that crippled the music industry. "Fortune" looks at the phenomenon of Krispy Kreme doughnuts, and we don't want to go there too much, and "Forbes" examines millionaire mullahs running Iran.
So joining us now is Steve Shepard, the editor-in-chief of "BusinessWeek." Rik Kirkland is the managing editor of "Fortune," and Tim Ferguson is the executive editor of "Forbes" global.
And thank you for joining us. And what a way to come back, a nice week in the markets. Was this a total surprise? I have to say, I don't remember coming back from a long holiday weekend and coming into a blast like this in a long time.
STEPHEN SHEPARD, BUSINESSWEEK: Well, I think both the stock and the bond markets are anticipating a stronger recovery. I think the really interesting news is in the bond market rather than the stock market. Bonds are going down, long-term interest rates are starting to rise, and most people are worrying that that will hurt the recovery. I would take the opposite view and say that the bond market is telling us that interest rates are rising because there is going to be a recovery. And that's the most significant news to me today.
RIK KIRKLAND, FORTUNE: The question is how much of a recovery. I mean, I found it kind of interesting today that part of why the market was up was people were excited about Microsoft maybe paying a $10 billion special dividend. We don't know for sure what they're going to do. But the notion of Microsoft paying a dividend -- well, that's because they don't have anything to do with their money. They're not growing very fast. So that shouldn't necessarily feed into a huge tech rally.
So yes, things are better, but are we really -- are happy days really here again to the extent the market thinks they are? That's the big question.
PILGRIM: A dose of cold realism on some of this news. And Tim, are you as skeptical as...
TIM FERGUSON, FORBES: I tend also to regard this as kind of a trading rally as opposed to an investor's rally. No doubt that the dividend tax reduction is having a real effect in the market. But I don't think that's what's driving up most of these tech stocks, aside from the Microsoft play.
PILGRIM: What do you think? Do you think it's taxes? It hardly seems that taxes...
SHEPARD: I think the market has been repriced somewhat to take account of the lower capital gains rate and the lower dividends rate. But I don't think that was what was going on today or in the last few days because that -- we've known that for some time now. I think we are anticipating a recovery. I also think the other good news is that all of the talk about deflation is dead because the bond market wouldn't be doing what it was doing if we were really worried about deflation.
PILGRIM: So you buried the deflation scenario?
SHEPARD: I really do. I thought it was exaggerated to begin with, an now I'm prepared to bury it, yes.
PILGRIM: OK. All right. What about -- what about....
KIRKLAND: We're writing a memo to Alan Greenspan. Relax, Alan. It's OK. Take it easy.
PILGRIM: I'm sure he would really appreciate that.
But let's talk about the unemployment rate, 6.4 percent. That's serious. A ripple effect certainly in terms of spending when you're at this level. Any worries about there? I mean, it seems that it is not ever going to improve. It just keeps climbing.
SHEPARD: Well, I mean, there are a lot of things to say. But one is that the economy has to grow at least 3, 3.5 percent before you see unemployment starting to come down. And that's because productivity continues to be strong. Business is able to do more with less. And we're not going to see unemployment coming down until we get those higher growth rates, which means the end of the year at best.
KIRKLAND: And the politics are interesting because this president would like to avoid the fate of his father. And the truth is, even if we have a decent second half, and by decent I think we will get the 3.5 to 4 percent growth, that probably means you're waiting until '04 before you really see hiring because business wants to see the whites of the eyes of this demand out there. So it's going to be well into the political season before you see unemployment coming down. It may even go up a tiny bit more.
PILGRIM: Yes, unemployment does lag, and so it may not help President Bush as we move towards the political season.
FERGUSON: It might not, and in some cases even if the economy has an uptick, employment, adding new people to the work force is still a very expensive proposition. And I think in a state like California, for example, you're going to see that number lag for a long time.
PILGRIM: What about the summer, though? I mean, when we have such a weird abberant start -- I mean, normally the summer is very, very quiet. Do you expect the whole summer to be as volatile? Tim, what do you think?
FERGUSON: Oh, I think it will depend on events, the way it always does, and if we continue to have a quiet, balmy summer, perhaps we'll have nothing to watch but the stock and bond market. But you never know what lies ahead tomorrow.
KIRKLAND: Everything about this recovery, this period we've been in since the bubble popped, has been the inverse of the usual rule. So the usual rule is sell in May and go away. Maybe this summer you have to hang around and sell in September. I don't know. PILGRIM: It seems to me, though, this is one of the more calm summers we've been through in recent days. Certainly last summer was a bit jittery. We had terrorist threats that were, you know, very worrisome.
KIRKLAND: WorldCom blew up.
PILGRIM: Yes, a lot of corporate scandal. It seems like a reasonably calm summer.
SHEPARD: Kitty, it's very early. It's only July 7.
KIRKLAND: We're pulling for calm, though, Kitty. We're pro- calm.
PILGRIM: All right. No, I'm not complaining at all.
All right. We're going to take a break. We will come back with Tim Ferguson of "Forbes," Steve Shepard of "BusinessWeek," and Rik Kirkland of "Fortune." Stay right with us.
We'll have more with our weekly "Editors' Circle." First let's take a look at tonight's poll. The question is: "When it comes to the stock market are you a bull, a bear or a chicken?" Cast your vote at cnn.com/lou, and we will bring preliminary results later in the show.
Coming up next, we'll have more with our weekly "Editors' Circle" about the major news of the week.
Plus, going broke in America. The number of companies and individuals filing for bankruptcy is approaching record levels. We'll have a special report on that.
Stay with us.
(COMMERCIAL BREAK)
PILGRIM: In the news "Around the World" tonight, a landslide has killed at least four people in Peru. Dozens more were injured when mud completely covered a northern town.
Torrential rains have washed over eastern China this weekend. More than 200,000 people have been evacuated, and at least one person has died as a result of the floods.
Painstaking work in Singapore. Doctors there are trying to separate conjoined adult twins. The brains of the Iranian twins have been separated, but it is not clear right now if either will survive.
In Pamplona, Spain today, the first running of the bulls. Now thousands joined in the traditional running. No one was gored, we're happy to report, but minor injuries were reported from people who were stepped on by the animals.
And speaking of running of the bulls, that brings us back to our weekly "Editors' Circle," and no one was stepped on here, and try not to step on each other.
But, you know, we just talked about the markets. Let's move a little bit to the foreign policy arena. We do have President Bush going to Africa. Is that a what for for you or do you think that this really has real meaning and is a really important trip?
SHEPARD: Well, I think it's great that he's going to Africa. I think it's great that he's trying to get $15 billion in money for aid.
You know, you sort of have to wonder a little bit why he's doing this. He's doing all of the things that he was very critical of early on: nation building, troops for humanitarian purposes in Liberia. So you sort of -- it gets a little hard to understand exactly the motivation.
PILGRIM: Yet isn't it a damned if you do, damned if you don't because...
KIRKLAND: Well, one cynical answer, this is not me, but some of my cynical friends suggest that you remember in the election, the president got about 10 percent of the vote of black Americans. Now, I don't think this is a play for votes. I think he is doing it for real reasons. But it doesn't hurt, if you're Karl Rove, that you are showing that compassionate conservatism that he keeps trying to associate himself with by going off and talking about AIDS and talking about something other than wielding a big stick in terms of a military sense.
So I think that's part of -- there's a little bit of an eye somewhere to the 2004 election here.
PILGRIM: Yes, and also...
KIRKLAND: The suburban voter, by the way, not winning back the African-American, but winning that swing voter that he wants to make sure.
PILGRIM: Right, and also not being tarred with the brush of being completely subservient to our interests, having the world -- but yet, it is a weird digression in the middle of what we're dealing with, and yet Liberia comes up right at this moment. Certainly a coincidence, but certainly a timely event. Tim?
FERGUSON: Yes, it's the conflict du jour, I guess. And certainly, there's a lot of hemming and hawing and tussling over whether the U.S. is going to make a commitment there.
I want to jump ahead a couple of stops to Botswana, where Bush will also be landing, which is actually one of the most profound economic success stories by African standards across the whole continent, a government that is functionally relatively honest. Unfortunately, the country also has the worst HIV infection rate in the world, a tragic coincidence.
PILGRIM: The issue of AIDS will certainly be a big topic. It's certainly been a big topic in Washington and President Bush is... KIRKLAND: It's really important. I think if I remember right, President Clinton, when he went did not talk very explicitly about the AIDS problem. I think this is something the president can get awareness raised. I mean, the South African leadership is resisting this to some extent, and Africa has got such a huge AIDS problem. It's not just Africa, India, China, Russia. These are even more economically significant countries, which have been in denial about this. And we've really got to start raising awareness or we're going done in bad shape.
SHEPARD: He's got to get the $15 billion from Congress, and there are signs he won't get the $15 billion he's asked for over five years. So that's an issue, too. He's going to have a battle when he gets back, I'm afraid.
PILGRIM: Certainly he'll have to produce some results after this very high profile trip. We have just a minute or so left. But we can't leave off without discussing Iraq. I mean, we see this attrition on U.S. troops. It's appalling. Every day you read one more thing has happened. Your views on this as editors.
How do you cover this?
How do you not get eroded in your interest as the same sort of thing happens over and over again?
And how do you keep your viewers really fresh on this?
SHEPARD: Well, the war was what galvanized everybody. And people tend to forget that there's still a war going on and we're losing people. I think we have to make an issue out of it. I think we have to raise questions over whether more forces are needed not so much from the U.S. but other countries, whether we have to engage NATO is going to be a big issue, and I think the president has to stand up and say something about it.
KIRKLAND: We have a long -- Senator Lugar, a Republican, said this week that we're going to be in Iraq five years. I mean, I think we need to start talking now about how big a problem, what kind of commitment, how we can get help, and it's a pretty interesting story. It's not going away.
PILGRIM: As a news story how much does it dominate your editorial discussions?
FERGUSON: It's there probably every other cycle, I guess, while we, you know, toggle back and forth to the issues of the day. In our latest issue we actually have a story make the point that the Iraqis themselves are surprisingly enough, getting their oil industry back on its feet.
PILGRIM: Well, let's end on that note because it certainly is a positive one. And thank you gentleman, for joining me today.
Tim Ferguson of "Forbes."
Steve Shepard of "Business Week."
And Rik Kirkland of "Fortune."
Thank you.
Let's give you a reminder to vote in tonight's poll.
When it comes to the stock market, are you a bull, a bear, or a chicken?
Cast your vote, cnn.com/lou. We'll bring you the preliminary results in just a few minutes.
"Tonight's Quote" comes from Tampa, Florida, where a transfer of CENTCOM leadership took place earlier today. And the outgoing CENTCOM leader had this to say about the coalition's attitude going forward.
"We'll still stand and we'll still say it, rough road behind, rough road head. Bring it on."
And that's from the outgoing CENTCOM commander, General Tommy Franks.
Coming up next, an explosion of bankruptcy in this country.
We'll talk with the Senate Finance Committee chairman, Senator Charles Grassley, about what Congress is doing to stop that.
Plus, spam. It's not just junk on your computer. In fact, the maker of the original spam is going to court to try to probe that point. We'll have an explanation on that and a good deal more, so stay with us.
(COMMERCIAL BREAK)
PILGRIM: Tonight we begin a special series of reports, "Going Broke in America." Bankruptcies have hit epidemic proportions in this country, and it looks like the situation is getting worse. Well, tonight we look at the debt trap that many Americans have signed up for.
(BEGIN VIDEOTAPE)
CHARLIE LINCOLN, UNITED AIRLINES MECHANIC: My dream is to go live on a lake, working on boats and motorcycles up on a lake, and that was my vision. That vision has been put off.
PILGRIM, (voice-over): Meet Charlie Lincoln. He's worked for United Airlines for nearly 20 years. He put his nest egg in the company and is now a victim of one of the largest corporate bankruptcies in U.S. history. Charlie lost more than $100,000 in UAL stock, which he had invested as part of the company's employee ownership program. He's put off hopes for a comfortable retirement for a long time. Though he's grateful to still have a job. Charlie is angry about his financial reversal. LINCOLN: I'm bitter about it. But I'm angry at the mismanagement of the company that has allowed the -- you know what I say the billions of profits that they've made that has disappeared.
PILGRIM: Seven of the nation's ten largest bankruptcies have occurred during the last two years, some due to greed, some to accounting flimflam, and some just a bad business climate. But the bigger they are and the harder they fall, the more damage they do.
SAM GERDANO, AMERICAN BANKRUPTCY INSTITUTE: They are extraordinary because of the size of the case and the amount of time it's going to take to rescue those companies if they can be rescued and the fact of the collateral damage that they do to other businesses.
PILGRIM: 2001 was the worst year for corporate bankruptcies. Add in personal bankruptcies, and the rate is still climbing. Last year a record 1 1/2 million individuals and businesses filed for bankruptcy protection. 97 percent of those were personal bankruptcies. American households are carrying more debt than ever. Lured by zero interest car loans, low-interest credit card deals, and low mortgage rates.
CHARLES BROWN, NATL. FOUNDATION FOR CONSUMER CREDIT: They are living from paycheck to paycheck in terms of making their payments. It doesn't take much to push them over the edge. Employers have reduced hours. Overtime is not where it was. And a lot of people use overtime to really make their budget.
PILGRIM: But filing for bankruptcy is not an easy out.
THERESA SULLIVAN, UNIVERSITY OF TEXAS: The bankruptcy goes on your credit record for 10 years. And so for some lenders they just won't touch you for 10 years afterwards. It's not that they can't get credit, but they can't get credit at a reasonable rate.
PILGRIM: Congress is outraged over the bankruptcy as a solution mentality. Legislation to crack down on frivolous bankruptcies has hit snags on Capitol Hill since 1997. Critics have held up the bill because they believe it punishes innocent victims who have no other choice. The House passed the latest version in March, and the Senate may take up the issue this summer.
(END VIDEOTAPE)
PILGRIM: Now, even if economists are telling us that the economy's improving, don't look for bankruptcies to drop off. Bankruptcy, personal or business often lags behind what's happening in the economy. And with debt levels this high, it shows no sign of improving for a very long time.
Well, Senator Chuck Grassley's been trying to overhaul the nation's bankruptcy code for the past six years, and now it appears he may be close to passing the legislation he wants.
Chuck Grassley is the chairman of the Senate Finance Committee, and he joins me now from Capitol Hill.
And thanks for joining us, senator.
SEN. CHUCK GRASSLEY (R-IA), SENATE FINANCE COMMITTEE: Glad to be with you, Kitty.
PILGRIM: It's been a tough struggle to pass bankruptcy legislation, why?
We were looking back, and there's been attempt after attempt where it passes both the House and the Senate and yet there's always some snag.
GRASSLEY: Well, two times it was relatively new. You know, it's been 20 years since we've dealt with bankruptcy as a major overhaul. Then one time we got it to President Clinton, and he didn't like it, and he vetoed it. And now it's been through the House four times, the Senate three times. And if we get it through the Senate this time, the president will sign it.
PILGRIM: Now, you've been in for the long haul.
What is the worst, egregious abuse of this, and what would you like to see fixed?
GRASSLEY: OK. The basic principle behind it is this -- that people are gaming the system, and with some ability to repay still going into chapter 7 bankruptcy. My goal is to make sure that people who have the ability to repay some of their debt do not get off scot- free.
There's a special case for farmers, and they have real issues where if they give up all their assets, then they sort of give up the farm literally, and they can't come out. You're trying to make special consideration for farmers. What are the...
GRASSLEY: Well, those special considerations are the fact that farming has never had a permanent chapter in the bankruptcy bill. In fact, 50 years from the 1930s until 1980s, there wasn't any chapter just for farming. And farming's a little bit different than corporate bankruptcy. So farmers that would have to go into corporate bankruptcy, the corporate chapter, Chapter 11, did not have a very fair shake. So what we're trying to do is write a chapter for farming that deals with the special needs of farming, and we want to make it a permanent chapter of the bankruptcy code as well.
PILGRIM: You know what really struck me is also your efforts with nursing homes, protecting patients in a nursing home that goes bankrupt. What measures do you think are important there?
GRASSLEY: Well, we set up ombudsmen to take care of hospitals or nursing homes that are in bankruptcy, because we had a situation in California a few years ago where people were put right out on the street, when an institution went into bankruptcy. And those people don't have any place to turn. And so we would make sure that the bankruptcy court sets up an ombudsman to make sure that their needs are taken care of, either keeping the nursing home open, to take care of them there, or find another place for them to be housed.
PILGRIM: Let's talk about protecting the person's home who's filing for bankruptcy. Now, there's a double whammy here because some people really need their home protected, and others are using that home to shelter assets. How do you walk a fine line between those two sets of people and differentiate? What measures have you put in?
GRASSLEY: Well, in previous legislation -- or I mean in previous law, there's been a kind of a state rights that the state could set the amount of the bankruptcy that the home would be worth and how much could be protected. But seven states have some constitutional protections that give extraordinary rights to homeowners and the home itself. And consequently, you can find a lot of people that anticipate going into bankruptcy just pouring a lot of money into very costly homes and protecting millions of dollars from bankruptcy.
So basically, what we do is two things -- we set a minimum standard around the country and only let a higher amount to be protected, unless there was a fraud involved in the filing of the bankruptcy. In other words, somebody anticipating that maybe within the next two years they're going to go into bankruptcy, so we'd call that a fraudulent approach, and you would not protect the massive amount of money at that point.
PILGRIM: Well, you've clearly taken a very thorough approach to this very complicated issue, and we wish you the best of success getting it through the Senate. Senator Chuck Grassley, thanks for joining us.
GRASSLEY: Thank you.
PILGRIM: Tomorrow we will continue our series of reports on going broke in America with a look at state and local governments. Many of them are in the red, and we'll tell you why, and also what that means to you. And we'll also tell you which states are doing well and why they're doing well.
Now, tonight's thought on debt. And here we go. "The human species, according to the best theory I can form of it, is composed of two distinct races, the men who borrow and the men who lend." And that is from the British author Charles Lamb.
Still ahead -- the preliminary results of tonight's poll. Plus, fighting to protect the good name of spam. That's right. We'll tell you why and what there is to fight about. The computer junk mail and meat in the can, headed to court. Stay with us.
(COMMERCIAL BREAK)
PILGRIM: Arnold Schwarzenegger back at the box office. "Terminator 3: Rise of the Machines" took the top spot this weekend. It grossed $44 million over the weekend, $72 million since its Wednesday opening. And that five-day gross makes it the second highest debut for an R-rated film. That's behind "The Matrix: Reloaded." "Legally Blonde 2: Red, White and Blonde" opened at no. 2. "Charlie's Angels: Full Throttle" slipped to no. 3. "Finding Nemo" and "The Hulk" rounded out the top five.
Let's have a preliminary results of tonight's poll. And the question is, when it comes to the stock market, are you a bull, a bear, or a chicken? And 25 percent of you said bull, 16 percent said bear, and 60 percent said chicken. Sixty percent?
OK. Finally tonight, the word "spam" has become synonymous with junk, junk e-mail, that is. And Hormel Foods is not happy about that. Hormel says spam is spam when it's in a can and it's rolling off the factory line. And the company has filed suit to protect its good name. Bill Tucker has the report.
(BEGIN VIDEOTAPE)
BILL TUCKER, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): A funny thing happens in the marketplace. Facial tissues, regardless of brand, become known as Kleenex. Cuts are covered with a Band-Aid. And spam?
(BEGIN VIDEO CLIP, "MONTY PYTHON'S FLYING CIRCUS")
UNIDENTIFIED ACTOR: Could I have egg, bacon, spam and sausage without the spam?
UNIDENTIFIED MALE: Ewww.
UNIDENTIFIED MALE: What do you mean, ewww? I don't like spam.
(END VIDEO CLIP)
TUCKER: Becomes spam. Thanks to that Monty Python moment, which is widely credited with giving unsolicited e-mail its name. Hormel is not amused. It doesn't want its spam confused with just any spam.
Spam Arrest is learning that firsthand. Hormel is suing the company to stop it from using the name. Spam Arrest makes a product to block spam.
DEREK NEWMAN, ATTORNEY FOR SPAM ARREST: It's my understanding that Hormel is going after any company that incorporates the word "spam" into its trademark, even if the use of the word "spam" is being used in connection with computer services or filtering unsolicited commercial e-mail.
TUCKER: As far-fetched as the suit might sound, Spike Lee and Viacom are headed to court in August over a network that Viacom wants to call Spike TV. Consumer confusion and brand dilution are at the heart of both suits. In Hormel's case, the company has to prove that consumers are confused about spam the meat, and spam the mail.
UNIDENTIFIED MALE: I think it's a very difficult case for Hormel. To win a trademark infringement case, you have to show that there's a likelihood of consumer confusion. And here I think it's very unlikely that Hormel's going to be able to prove that consumers think that this junk e-mail product is sponsored by or somehow affiliated with Hormel. TUCKER (on camera): Ironically, as ubiquitous as the phrase spam is for unsolicited commercial e-mail, if you go to the Web site www.spam.com, it isn't at all about e-mail. It's about spam the meat. And the spammobile.
Bill Tucker, CNN, New York.
(END VIDEOTAPE)
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Files Suit to Protect Brand Name Spam>
