Return to Transcripts main page

CNN Larry King Live

Suze Orman's Survival Guide; UFOs in Texas

Aired January 27, 2008 - 21:00   ET

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

(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: A close encounter for the third kind.

(END VIDEO CLIP)

LARRY KING, HOST: Tonight, the UFO controversy.

Did a spaceship visit Texas two weeks ago?

First denial. Now official acknowledgement that something lit up the sky.

What was it?

But before we go out of this world we get down to earth with Suze Orman. She'll help you stay grounded in these rocky economic sometimes. Suze Orman -- she's money and she's taking your calls and she's next on LARRY KING LIVE.

Good evening.

The financial seas seem a little less stormy. Wall Street was up for the second day in a row, with the Dow gaining more than 100 points.

Meantime, the White House and Congressional leaders have agreed on an economic stimulus package that could put some extra money in your pocket. Butt there are a lot of anxious questions.

Will the market calm last or is there worse to come?

And will the stimulus package end up being too little too late, too much too soon or just right?

Suze Orman is our special guest, the personal finance expert, number one "New York Times" best-selling author, Emmy-winning TV host for her own "Suze Orman Show." She has another best-seller out called "Women and Money: Owning the Power To Control Your Destiny," now available in the United States in Spanish, as well as English. Here's its Spanish cover in trade paperback, pounced, I think, "Las mujeres y el dinero."

Is that right, Suze?

SUZE ORMAN: Oh, you are impressive tonight, Mr. King. Impressive.

KING: Yes?

I'm good at this.

(LAUGHTER)

KING: All right, $300 going out, if they approve this, to everybody.

What do you make of that?

ORMAN: Well, here is what I really hope. Regardless of what they settle on, I hope when all of you -- when all of you get that check, I hope that you take that check and you save it. I hope you don't do what they're hoping you're going to do, which is go out and spend money on things that you don't even need. I hope that you really look at this as a gift they're giving to you, but that you keep it in case something goes wrong -- in case you can't make a car payment, in case you can't make a mortgage payment.

Can you just all hold onto this money or pay off debt with it?

But don't go out and spend it. That's what I hope they don't do. Of course, everybody else is hoping they do.

KING: Why do they want you to spend it?

ORMAN: Because they are hoping that if they give you this money, you're going to go out and spend it. If you go out and spend it, you will stimulate the economy. If you stimulate the economy by giving all the retailers and restaurants and all these people your money, that will help save the economy.

As I've always said on your show, Larry, I don't really care about what's happening out there. I care about what's happening with your life. And the truth of the matter is we don't need anymore stuff. We don't need anymore junk. What you do need is money in the bank account. You need to get out of credit card debt.

So I am hoping and I'm wishing and praying that when you get these rebate checks, everybody, that you really do what you should do with it -- and that's save it or pay off your debt. Anything else you shouldn't be doing.

KING: Robert Reich, the economic expert, former Harvard professor and former labor secretary said on CNN today that he thinks this stimulus should be more than $300.

Do you?

ORMAN: Well, the truth of the matter is, again -- I -- did the rebates work back in 2001?

Have they ever really done anything?

I don't think so. Do I really wish today that we -- that I would -- we would have seen them do things like expand the unemployment, do things that would have really helped people that were out of work?

I don't know. I just don't see how these checks are going to do it.

KING: All right.

ORMAN: That's just my personal opinion.

KING: Should we be feeling better over the jump yesterday and today?

ORMAN: You should be feeling better about the jump. And you should be feeling better because the markets have started to calm down. They've been going up down, they've been going down.

Do I think the worst is over?

We're closer to it. We're not over it yet. I think you could see us go up. I think tomorrow will go up. But I think you'll see pull backs again and it will be a roller coaster ride, truthfully, for some time.

But what really will stimulate things more than anything is the fact that they've recategorized what a jumbo loan is when it comes to real estate. That was the main thing that they really did today.

KING: Recategorized meaning?

ORMAN: Meaning that prior to this, Larry, a jumbo loan -- when you borrowed money to buy a house, if you took out a loan for more than $417,000, the interest rate that you paid on that loan could be as far as a -- you know, one or so more percent than if it was what's called a conventional loan -- anything under $417,000. As of today, a conventional loan -- depending on your state and where you are -- but could be as high as $730,000, or up to a maximum of 125 percent of the minimum, you know, median weight -- you know, home price in your area. But $735,000, in some areas, that's a big deal, a big difference.

KING: In a crisis like this, Suze, what's the biggest mistake people make?

ORMAN: People right now, in my opinion, are making a few mistakes. Number one, they are refinancing their homes in order to lower their monthly morning mortgage payment. But the problem is that let's say they have a 30-year fixed rate mortgage. They've been paying on it for five years. They have 25 years left and it's all paid off. And let's say they're going to stay in that house. And now they're going to refinance to get a lower mortgage rate -- a lower interest rate, but they refinance again for 30 years. So, even though the interest rate is lower, they're going to pay a little bit less for five years more and, really, in the end, they end up paying more for that house and they end up in worst case than if they had just left it the way that it is. They're taking money out of their 401(k) plans. They're doing things like that. So those are big mistakes that people are making.

KING: E-mail from Vic in Nachez, Mississippi: "My current 401 (k) balance is $57,000, down from $64,000 just two months ago. It's diversified over five different investment areas -- one fund in global markets, one fund in energy and oil, etc. Should I consolidate into a safer haven during this volatile time?"

ORMAN: A saver haven being what? And how old -- did they say how old they were on that e-mail?

KING: No.

ORMAN: No. So here -- so that would be a big mistake. Now that the markets are down now, now you're all reacting. Now is when you want to sell. No, no, no. If you had wanted to sell, you should have done it last year sometime.

But when the markets are down, now is where you just stay the course as long as you know that you are in good stocks, mutual funds or exchange traded funds, if they are good. And they're going down with everything, like the market is. It's all right. Just keep putting your money in every month. When it all turns around -- and eventually it will -- you'll be fine. But, please, now is not the time to sell unless you're in bad quality investments or you really don't have time on your side, you're going to retire in five months, a year. Then you shouldn't have been in the market to begin with.

KING: Suze, when the Fed cuts interest rates, as it did a couple of days ago, what does that mean for the average guy?

ORMAN: What it means for the average guy is this -- we get afraid. Listen, we just saw that e-mail there. He is -- that person is afraid. They want to consolidate and put their money in something safer.

What's safer?

Certificates of deposit, money market accounts, savings accounts. When the Fed cut the interest rate, what you will also see happen is that the interest rate that your banks are paying you on CDs, savings account, money market accounts, are also going down. So for a lot of people right now who are afraid, they don't know what to do. They don't want to put their money in the stock market because they're afraid of the stock market. The problem is they're keeping their money in savings amounts and things like that and they're going to see their interest rate go from 5-1/2 to 5 to 4-1/2 to 4. Before you know it, when they take these fund Fed rates down even more, you could be back at 1-1/2, 2 percent again in interest in your account. That's what it means to you. You're going to earn less on your safe money.

KING: We'll be back with more of Suze Orman.

Do you think we're in a recession, by the way?

That's the quick vote on our Web site, CNN.com/larryking. Head there and vote now.

Do you think we're in a recession?

We'll look at the results with Suze.

Stay tuned.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: This is a remarkable package because it is about putting money in the hands of America's working families.

REP. JOHN BOEHNER (R-OH), MINORITY LEADER: The beauty of this package is that it is simple, it is clean, it is neat. And it will get the money back out into the American economy as quickly as possible.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KING: We're back with Suze Orman.

An e-mail from Stuart, Dana Point California: "What's the best, most trustworthy place online to get all my credit reports and scores?"

ORMAN: Well, the only ones that really matter, if you ask me, is at myFICO.com. There are credit scores and then there are FICO scores. Approximately 80 percent of all the lenders out there only look at what's called a FICO score. Fico stands for Fair Isaac Corporation, the company that essentially created all this many, many years ago.

So, look at your FICO score. And the way that you do it is you go to myFICO.com. And with your fico score comes your credit report.

KING: Good tip.

We have a King Cam question from someone out on the street for Suze Orman.

Let's watch.

UNIDENTIFIED MALE: Should you get out of the stock market or do you stay in?

And if you stay, in how long do you stay in before you get out?

KING: OK.

Suze?

ORMAN: Oh, poor little baby. You got a feeling he's a little scared there. If you're in the stock market -- and I'm going to say this until I'm blue in the face -- and you're in good quality investments and you have time on your side until you need this money -- 10 years, 20 years, 30 years -- you stay in right now.

In fact, not only do you stay in, but you buy. There are many great things out there now that you can buy. There are many stocks that are giving you great dividends of 6 percent, 7 percent, 8-1/2 percent. So you can actually make more in the stock market in dividends that are taxed at 15 percent versus keeping your money in a money market account or savings account, as I said a second ago, where the interest rating are going down, down, down. And that's taxed to you as ordinary income.

So there are many things out there in the stock market that are wonderful opportunities right now. So please don't be afraid of the stock market. Just make sure that time is on your side and you're in the right areas.

KING: Rule of thumb, Suze, is refinancing a good idea?

ORMAN: I don't -- you know, it depends how long you're going to keep the house, because here's the thing. When you refinance your home, there obviously are closing costs. So if you're refinancing to go down in an interest rate -- and let's say it saves you $100 a month in a payment. However, your closing costs $3,000, $4,000, $5,000 to refinance it and you're not going to live in that house long enough at $100 a month to recapture those closing costs, then it's not a good idea.

So you always have to make sure that it makes sense financially to do it. And if it does, then of course it's a great idea. If it doesn't, just stay where you are. And remember, don't ever, when you refinance, go out longer in the amount of years you pay. You want to go littler. You want to consolidate that.

KING: Indianapolis, hello.

UNIDENTIFIED FEMALE: Hi, Suze.

I am a 42-year-old woman and I'm already in serious debt. I don't have credit card debt, but I have a lot of medical debt. I have a very low FICO score. I have a car loan with a 21 percent interest rate and I'm scared to death. I don't know what to do and I'm worried about the recession. I don't know how to get out of the hole I'm already in, let alone how to survive the recession.

ORMAN: Yes.

And are you in a situation where, in essence, you are making, you know, you owe more than what you're making?

UNIDENTIFIED FEMALE: Absolutely. Yes, absolutely.

ORMAN: And is that -- so, listen, there comes a time where all of us have to look at our situations and you have choices here. You either have to go out and get one, two, three more jobs than what you have so that you can make these payments, because if you have a low FICO score -- which I'm so sorry to say you already said that you do have -- then creditors, especially in this credit environment, they are not going to lend to you at good interest rates. They're going to lend to you at 21, 25, 30 percent interest.

So the only way to do this is to get your fico score up there so you can get lower interest rates. And the only way to do that is to pay down your debt. The only way to pay down your debt is to make more money.

So you have -- it's just something you're going to have to do -- or, I'm sorry to say, you put yourself in the situation, if you qualify for it and you claim either Chapter Seven or Chapter 13 bankruptcy.

That's reality today and you might have to look at that.

KING: And it's also a solution, isn't it?

ORMAN: It's a solution and it's a legal solution, if you qualify for it. So sometimes we get ourselves into such horrific trouble when it comes to our money that that is the last ditch effort. But if your fico score has already been ruined, it's already down there and you qualify for it, you might want to look into it.

KING: Yes.

Back with more of Suze Orman, more calls, e-mails, etc.

Don't go away.

(BEGIN VIDEO CLIP)

GEORGE BUSH, PRESIDENT OF THE UNITED STATES: Our economy is structurally sound, but it is dealing with short-term disruptions in the housing market and the impact of higher energy prices. These challenges are slowing growth. And Americans can also be confident about our long-term outlook. Our economy is strong and it is dynamic and it is resilient.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KING: We're back.

Do you think we're in a recession?

That's the quick vote on our Web site, CNN.com/larryking.

Right now, 79 percent believe yes. Seventy-nine percent. There's still time to vote.

Suze, are you surprised at that?

ORMAN: No. Everybody thinks we're in a recession. But I mean -- I don't know if you remember this, but when were on your show, I think it was like January 2nd, you asked that and I said no. And I still kind of think we aren't. So it's -- I look at things today, like the earnings of Microsoft and little things that are happening and there really are good signs out there that some places are making money. So we'll have to see what happens.

KING: All right...

ORMAN: But here's the bottom line.

Who cares if we are or we aren't?

The fact of the matter is do you have money or do you not have money?

KING: How are you doing?

ORMAN: And right now the economy is hard.

KING: E-mail from Diana in Placentia, California: "Recently, our economy went private and each employee got a check for stocks purchased. It's over $40,000. Should I use it to pay off debt or would it be better to invest?"

ORMAN: At this point, I would be paying off debt, because chances are your debt could be at a very high interest rate. Now if I were to look at all of you and I were to say I can guarantee you an 18 percent return of your money without any risk whatsoever, wouldn't you look at me go, how do you do that Suze -- of course, I want to do that.

Then I would say to you, well, pay off your credit card debt, because the average person today has $9,000 in credit card debt at an average interest rate of 18 percent. Pay off your debt at a high interest rate. It's not tax deductible.

What are you doing?

Just get rid of that debt.

KING: Another e-mail from Susan in Terryville, Connecticut: "I need advice on financing my daughter's college education. My husband and I are 50-years-old. Currently, we save the maximum in our 401 (k). Should we decrease to help pay for her schooling? What about taking a home equity loan for the remainder?"

ORMAN: You should not take a home equity loan or a home equity line of credit to finance your daughter's college education. If something happens to you -- you can't work, you lose your job, we are in recession -- who knows what happens out there -- and you don't have any income coming in, you're going to lose your home or you're going to join the millions of people now that are about to be foreclosed upon.

Don't do that to yourself.

As far as your daughter goes, I'm very hard core when it comes to this, everybody. You already know this about me. I really think a child -- if you don't have a lot of retirement put away, if you're not really secure on your own right, a child needs to pay for their own college education. And if they don't want to go into a loan to do so, send them to a community college. Send them some place that they can afford. You don't have to go to these schools that are $100,000 a year or whatever it is and get yourself and your kid in trouble. There are other alternatives besides just giving a child money when you don't have the money to do so yourself.

KING: An e-mail from Celeste, Norwalk, Connecticut: "I am 65. I'm getting a reverse mortgage on my condo to increase my retirement income. Should I take the payout in a lump sum to be handled by my financial planner or have it doled out monthly?"

And, by the way, what is a reverse mortgage?

ORMAN: A reverse mortgage is a -- like a mortgage, but it's in reverse. Rather than you paying a mortgage company every single month an amount of money to pay down on a mortgage, the bank or the mortgage company will look at how hold you are. You have to be at least 62 or older to do so. Chances are you have to own your home outright. Otherwise you get the money from them and pay off your mortgage. So the house really has to be owned outright to do it.

And they usually will either -- based on your age, the going interest rates right now and the value of your home, they will determine how much they can pay you every single month on the value of that.

KING: OK...

ORMAN: That's what it is.

KING: The question is should you take the payout in a lump sum?

You can take the payout in a lump sum?

ORMAN: You can pay it in -- take it a lump sum. However, if you are doing a reverse mortgage to increase your income so you can live, what are you talking about?

You should take it monthly.

Do not give it to a financial adviser to invest.

If they lose it, now what are you going to do?

Monthly, monthly, monthly.

KING: OK.

A phone call from Phoenix.

Hello.

UNIDENTIFIED MALE: Yes. I have a question for Suze concerning the proposed credit of $600 and $1,200 that the Congress -- the government is proposing.

ORMAN: Yes.

KING: I think it's $300.

But anyway, wait a minute...

ORMAN: Three hundred.

KING: Yes. Go ahead.

UNIDENTIFIED MALE: OK...

ORMAN: They're changing it all over the place. So we'll see what the Senate votes on when they do it.

KING: All right.

ORMAN: But go on.

UNIDENTIFIED MALE: All right. Here's the question. The last time they did this, back in 2000...

ORMAN: Yes?

UNIDENTIFIED MALE: ...those individuals who paid in estimated tax in the previous calendar year, retired people and people who weren't having enough withheld from their paycheck, the IRS did not issue those extra refunds. They credited that money toward the people's estimated tax payments the next calendar year. And I was wondering whether they're going to do it again, because it's misleading if they do that...

ORMAN: Yes, I...

UNIDENTIFIED MALE: ...because a lot of people won't get it.

ORMAN: Yes, I have to tell you, I don't know what they're going to do yet. And remember, this still has to go to the Senate and everything. So all I know is that we heard today that once they pass it, everybody should have checks within 60 to 90 days. So, again, there aren't enough details on this to know how they're going to do it, who, whatever. So I can't answer that for you. I'm so sorry.

KING: Suze, nobody knows everything.

So what in the world of finance puzzles you?

What don't you know about?

ORMAN: Oh, my goodness. I'll have to think about this. It's -- I don't know. I have to -- I don't know. In the area of...

KING: Well, in any profession you have a thing -- like I don't know anything technical about broadcasting. I couldn't tell you how we're on the air.

ORMAN: When it comes...

KING: I have no idea. ORMAN: When it -- I'm very honest when I say this. When it comes to personal finance, which is what my expertise is, I have to tell you, there's nothing I don't know. I mean I've done this show with you now for how many times. We don't prep for it. I don't know what the questions are. I have no idea. And, you know, we fire them off because this is my life, Larry. I breathe, read, live this 24 hours a day.

So when it comes to personal finance, nothing puzzles me.

Do I get puzzled about the stock market and what they're doing in the economy?

That puzzles me all the time. I don't understand like why on Monday were we down so much and then what made us come back yesterday at the last -- that puzzles me. Those are things that I don't know, why those things really happen in the stock market.

KING: How about the world of commercial finance or high finance or real estate finance? ORMAN: Real estate finance is very easy. That -- real estate prices sometimes confuse me, as to what really makes them go up, why are they coming down. But in terms of the economics of things, how things work, actually it's not that hard.

KING: OK.

Fair.

Do you have a financial hero?

ORMAN: Do I have a financial hero?

My financial hero...

KING: Like Warren Buffett?

ORMAN: Of course.

KING: Is he a hero?

ORMAN: I mean of course he's my hero. But the true heroes that I have -- and I learned this a long time ago -- are people who are making $30,000 a year for a long time. And when I would do -- when I used to see clients, they would have $400,000 in savings, they would have their house paid off, they had raised four kids. They -- and they were fine for the rest of their lives.

And I'd go, and you did this on $30,000 a year?

Those were my heroes.

KING: How the hell did they do that?

Anyway...

ORMAN: That's the question.

KING: Are you optimistic in spite of all going on?

ORMAN: For the first time in a long time I feel much, much better about things. I'm not sure why. It's just an internal feeling that I'm liking it. I feel that there are certain things with the stimulus package -- the tax breaks to the -- you know, to the businesses, the expansion of the jumbo loans. I don't really care about the rebates so much. But I think that will help the economy and I think we're all -- we're on the right track.

Do we have a lot longer to go?

We do. But I think we're closer than we have ever been since this started.

KING: As per usual, Suze, we'll be calling on you again real soon. Thanks so much.

ORMAN: Mr. King, it was a pleasure.

KING: Suze Orman.

And don't forget the book, "Women and Money: Owning the Power To Control Your Destiny." Also out in Spanish.

Our new pod cast is ready for downloading at CNN.com/larryking or on iTunes. It's Elisabeth Hasselbeck from "The View." She'll tell us about being a new mom and life on "The View."

That's at CNN.com/larryking or iTunes.

Was there a UFO sighting in Texas or not?

People saw something, but what?

Lots of controversy, lots of talking a cover-up next on LARRY KING LIVE.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: There was no even trail of any kind of flare behind it. It was a solid object with lights.

UNIDENTIFIED MALE: All of a sudden, at one time, they all just shot off in this direction over here.

UNIDENTIFIED MALE: I can't explain it. We couldn't explain it. But it was real.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KING: We're back. Earlier this month, several people witnessed mysterious lights in the Texas skies, and we sent our cameras to Stephenville, Texas to check out their claims. This is what we learned. (BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Look off this way, we have some lights approaching us at a high rate of speed. Came within probably a mile of us, about 3,000 foot over the ground, very unusual lights, not from around here. It went past us towards Stephenville.

The lights reconfigured, turned into flames, and then it disappeared.

It came back by this way, and it had two military jets in pursuit.

UNIDENTIFIED MALE: I looked back to the Southwest and there was a very bright light. A couple of seconds later, the second light came on. The next day, a friend of mine calls, and tells me about a UFO sighting that had come over my house. I'm not saying I saw a UFO, but with all the reports from everybody else, apparently that's what I saw.

UNIDENTIFIED MALE: They came right across the sky, across the northern edge of Stephenville, Texas, which I'm two blocks from the courthouse right here. They were quite large, and moved quite slowly. They were at low altitude and made absolutely no noise at all.

They were glowing red. The lights were moving together as though they were in formation, or attached together in some way, invisibly or something, I don't know. We don't know what they were.

(END VIDEO CLIP)

KING: Originally, the Air Force said nothing was going on in the area, but now they claim they were training that night. Is that true or is this a cover up? Let's meet our panel to see what they make of this information.

Here in Los Angeles, Captain Robert Salas, the United States Air Force, retired. Back in 1967, Bob was a missile launch officer at Maelstrom Air Force Base in Montana. He says a UFO hovered over his nuclear missile sight and disabled all the missiles. He wrote a book about it called "Faded Giant." In Washington, James Fox, the documentary filmmaker of "Out of the Blue." and in San Francisco, Michael Shermer, the publisher of "Skeptic Magazine," author of a new book titled "The Mind of the Market."

I know you weren't involved in this, captain, but does this story surprise you?

CAPT. ROBERT SALAS (RET), UNITED STATES AIR FORCE: It does not surprise me at all. Seems like every time there's a credible UFO story out there that involves the Air Force, the Air Force has some kind of reason to discredit it. Certainly, that was the case in my story, also.

KING: We're now also joined by Sergeant Jim Penniston, United States Air Force, retired, as is Captain Salas. He was a Woodbridge security supervisor at the Brentwaters Woodbridge Base. He said he sat with a UFO on the ground for 45 minutes before it hovered over him and shot into the air. Why weren't you taken seriously, sergeant?

SGT. JIM PENNISTON (RET), UNITED STATES AIR FORCE: Well, I believe that at the time, we were taken very seriously, just that I think the Air Force wanted to go ahead and make sure that they had a handle on the situation.

KING: James Fox, I know you have been probing this for a long time. We have never got an answer to this. Why do you think the Air Force doesn't want this out?

JAMES FOX, AUTHOR, "OUT OF THE BLUE": What are they going to say? We don't know what's flying around with impunity?

KING: Why can't they say that?

FOX: I wish they would. If the Air Force is listening tonight, why don't you tell us the truth?

KING: Why do you think they don't?

FOX: I think to admit that there are objects of unknown origin flying around in our airspace with impunity, that can fly rings around our fastest jets, they probably are fearful of releasing that information. I want to say something --

KING: Hold on, Jim. Michael, now that they have said that there were objects flying in the sky, do you think this is a cover up here or this is a cop out? What do you make of it?

MICHAEL SHERMER, "SKEPTIC MAGAZINE": I think before we assume that there's some sort of conspiratorial cover up, we have to remember that, you know, bureaucratic agencies are not always going to be swift to give a proper answer until they check with channels on what can be given to the American public in the interest of national security.

Remember, we're at war, so we are not likely going to be told about top secret aircraft and so on. Somebody has to check with somebody, has to check with somebody up top before they leak it to the press what was actually going on. We should expect that kind of thing, not a cover up, just national security interest.

KING: Do you think Captain Salas is lying? Do you think --

SHERMER: No, not at all. I think we're not always reliable observers. It's hard to say. We misunderstand, honestly misunderstand or misperceive things. I think before we say something is out of this world, let's first make sure that it's not in it. And just because we can't explain something doesn't mean it's, you know, extraterrestrial.

KING: I have to get a break, let me pick up with that and more on the comments of Michael right after this.

(BEGIN VIDEO CLIP) UNIDENTIFIED MALE: Bunch of BS. If you all want to believe it, that's fine with me.

UNIDENTIFIED FEMALE: There was something that just came straight across our house and then just zoomed right on off. And I don't know what it was, so --

UNIDENTIFIED MALE: I think it was just low flying airplane.

UNIDENTIFIED FEMALE: Do you think your wife's crazy --

UNIDENTIFIED FEMALE: No, it was not. I guarantee you it was not.

UNIDENTIFIED MALE: OK.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KING: Captain Salas, Michael is saying that you're not corrupt or anything, you just didn't see what you saw.

SALAS: I said I didn't even see a UFO. I was in a capsule, 60 feet under ground, and the UFO was reported by my topside guard. A bright red oval object hovering outside the front gate.

KING: He told you?

SALAS: He told me in very -- he was very agitated, frightened when he told me this over the phone. Now, the reason I believe that what he told me was true is because they had no access to our missile system. They had no way to control it. While this object was up there, my missiles shut down. And, these Minuteman Missiles are very reliable, as you might imagine. Nuclear weapons we're talking about here.

KING: Shut down.

SALAS: They shut down one after the other. I remember losing all of them. And not only that, but ten more missiles were shut down under similar circumstances; UFOs were observed at another launch control facility. So, this is 20 missiles in 1967 were shut down with UFOs.

KING: And sergeant, you sat with a UFO on the ground?

PENNISTON: Yes, I fully investigated it, myself and my team. We went around and checked the parameter of the craft out. We measured it. We took temperature readings. We took photographs. We did a complete examination, thorough examination of the craft on the ground.

FOX: Penniston, talk about the symbols that you saw on the craft. I find that remarkable.

PENNISTON: Well, the symbols -- if it wasn't astonishing enough just to have a craft like that in front of you, then, looking for crew compartments and things like that, and intakes, we find -- measuring about three feet, we find symbols that were etched into the side of the craft, that to this day, I have no idea what they are, but it's amazing.

KING: Where did the craft go?

PENNISTON: Well, after the 45 minutes, Larry, it went up -- it lifted off. It started emulating a very bright light. And it started to raise to tree top level, and then it momentarily sat there above the tree line and then took off at incredible rate of speed.

KING: Did it make a lot of sound?

FOX: No sound.

KING: No sound. James, you weren't there. Let him tell me.

FOX: Sorry.

KING: It made no sound, Jim?

PENNISTON: No sound, Larry. And the most interesting part that I found about it is that there was no air displacement. I mean, something leaving that fast has to have sonic booms. It was literally gone in a blink of an eye. It had to have air disturbance.

KING: James, we have asked you this before; why wasn't the Sergeant Penniston and the Captain Salas story front page news?

FOX: I don't know. You are forcing me to speculate, Larry.

KING: That's all we can do.

FOX: I think the lack of an explanation -- clearly, the Air Force feels compelled to come up with a conventional explanation, when clearly there just isn't one. We were in Stephenville for the last three with a whole camera crew, interviewing witnesses, and whatever it was, it certainly wasn't military jets, because, you know, a silent flight, 90 degree angle turns.

KING: I will go back to this. So, the -- let's forget the Air Force. The "New York Times" doesn't believe you? They don't believe Captain Salas. They don't believe Sergeant Penniston. They don't believe you. Right? Is that what our guess is? They don't believe you?

FOX: I think the tables are turning, don't you, Jim?

SALAS: Well, you know what, here is what I find. Let's talk about Texas, if you don't mind, about the Air Force in Texas. Here is a public relations officers, right, they release a statement from the 301st, saying that they made an error. I'm going to tell you right now, 21 years in the service, the Air Force don't release statements that say they made an error.

What they are doing is covering their tracks. If they said there were ten aircraft out there, out there in the area --

KING: Jim, I got to get a break. We'll come back to you. I want to get Michael's response to this. We are close on time.

Anderson Cooper will host "AC 360" at the top of the hour. What's up, Anderson?

ANDERSON COOPER, CNN ANCHOR: We have breaking news from the campaign trail. A major endorsement that could have a major impact on two Republican -- one Republican and one Democratic candidate.

Also, Senator Hillary Clinton and Barack Obama in South Carolina today with the important primary less than 48 hours today. Senator Clinton returning to the state with a revised strategy, one her husband, President Clinton, talked about today. We will examine that closely.

We'll also take a closer look at accusations about Senator Obama, charges that he worked for a slum lord in Chicago. There's, of course, much more to it. We will keep them honest.

And searching for the Fountain of Youth some people think they found it. It's called Human Growth Hormone, HGH. A lot of celebrities in Hollywood are using it. How it can help and how it can hurt, tonight on 360.

KING: That's Anderson Cooper, "AC 360," 10:00, 7:00 Pacific. Tomorrow night, Ringo Starr is our special guest. We'll be right back.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Moved through the forest, bobbing and avoiding trees. Something broke into other objects. I definitely saw something under intelligent control that could do things that I don't think any human can do. I went out to disprove what I had heard had taken place, and was thinking at the time, why did I ever get involved in this? Nobody's going to believe me.

UNIDENTIFIED MALE: You can't deny it. It did happen. It's proven that it did happen. I can't explain it. We couldn't explain it. But it was real.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KING: Michael Shermer, do these accounts seem ill-founded to you?

SHERMER: Well, not ill-founded. We're not perfect observers, and I think it's important to remember that the general public, all of us, and most people in government are way behind the curve of whatever experimental technologies the Air Force may be working on. And, you know, we didn't find out about the U-2 Spy Plane until one was shot down. We didn't find out about the Stealth Bomber until many years after it had been flying over the Mojave desert.

In fact, it flies over my house in Pasadena every January 1st over the New Years Rose Parade. And it's really spooky looking. It's quiet. It's black like a hole in the sky. You don't hear it. Imagine that it was dusk and we didn't know about it, it would easily be interpreted as a UFO.

KING: Why do you disbelieve it, though?

SHERMER: I don't. I need to make a distinction between are there extraterrestrial out there somewhere and have they come here. Science, by nature, is skeptical. I publish "Skeptic Magazine," that's what we do. Because there are so many strange ideas out there, usually that don't turn out to be true, it's -- the default option is skepticism until you prove otherwise.

KING: Michael, would you have laughed, for example, at the Wright Brothers?

SHERMER: But we actually have the plane, and --

FOX: I want to say something really quickly.

SHERMER: -- Actual physical evidence.

FOX: We need to make the distinction. We're not talking about extraterrestrial. We're not talking about aliens. A UFO is a exactly that. It's an unidentified flying object. A lot of these citings defy conventional explanations. Why can't we just say we don't know what it was?

SHERMER: Of course we can.

FOX: We're not talking about aliens. You are the only one talking about aliens. We're not talking about aliens.

SHERMER: Your film is based on aliens.

(CROSS TALK)

KING: Captain?

SALAS: The point I want to make is, my incident happened in 1967. We have an object that hovered over our launch control facility, not only ours, but another launch control facility, disabled ten nuclear missiles. So, if the question is, was that a U.S. experimental aircraft 40 years ago, why haven't we seen that aircraft today.

SHERMER: Well, there were hover aircraft in the late '50s.

SALAS: This was not an aircraft, sir.

SHERMER: It's hard to say. You are the only eye witness to that. The difference between constructing an entire new world view based on fragments of evidence, you can't really do that. FOX: Fragments of evidence? There's not fragments of evidence. Go to the archives, Mr Shermer, and look into it, and you can easily establish beyond a shadow of a doubt that flying saucers have been whizzing around our air space since the '40s.

(CROSSTALK)

FOX: You agree with me that 95 percent of those are explained.

(CROSSTALK)

KING: We are going to take a break and be right back with some more moments. Don't go away.

(COMMERCIAL BREAK)

KING: We're back. James Fox, why not a Congressional hearing into all of this?

FOX: we had congressional hearings back in '66, I believe in '68. It's time we had more Congressional hearings. People have to get together and put pressure from their constituents to your representative, and we need to get this thing over with. This is ridiculous.

KING: Sergeant Penniston, does it bug you that while the polls say 80 percent of the public believes there have been Unidentified Flying Objects, you tend -- people like you are not believed.

PENNISTON: You know, I -- it doesn't really bother me if they don't believe. I think the evidence is overwhelming. And, it's also compelling to believe that if these are unexplainable events, which the military clearly has demonstrated, then I would think that there would be higher numbers than that, as far as people believing in some type of the extraterrestrial craft. I would believe that.

KING: You think, Captain Salas, we're ever going to get the whole story?

SALAS: That's a good question, but I think we need to have the hearings. We need -- there's a preponderance of good witnesses out there that are ready, willing, able to testify. All my witnesses that I outline in my book, most of them are still alive, and would be more than willing to testify.

KING: In all honesty, I just recently ran into someone who, very logical person, who saw the Texas incident. He said, they were moving fast. They were making no sound. They were not airplanes. He wasn't crazy, Michael.

FOX: Can I say one thing really quickly?

KING: Hold it, James. Go ahead, Michael.

SHERMER: In science, there is the residue problem. In any given field, there's a residue of unexplained anomalies that no theory can account for every single one. So, James and I, for example, agree that 90 to 95 percent of all these thousands of sightings are explainable.

FOX: I agree.

SHERMER: What we're talking about is just that extra five or ten percent we can't explain. So, why not investigate, sure. But let's not construct a whole new world view around that.

FOX: We're not constructing a whole new world view. But I want to say really quickly, I met with a gentleman in Stephenville who unfortunately is not willing to go on the record right now because he's being harassed by the military. He's asked the military to stop harassing him. Their response is, stop talking about what you saw. And it's the most unambiguous -- he didn't see lights. He saw the craft.

SHERMER: Well --

FOX: And it was huge.

KING: They don't want him to talk about it?

FOX: He said, stop harassing me. They said, you stop talking about what you saw. I believe this guy. From the core of his being, he was being honest with me. There are being people harassed right now by the military, telling them to shut up.

SHERMER: What if it is a top secret military aircraft we don't want --

FOX: We should know about that technology. If they have technology that can fly around without making any sound without disturbing the wind, talking off in the flash of an eye -- it's obviously not getting here on Jet A fuel. With climate change and all these other issues, we should know about this technology. We paid for it.

SHERMER: In part, that's true. Except, on a need to know basis, there are certain national security reasons that people --

FOX: Then they've been hiding these craft for 60 years now. And I don't believe that.

KING: What are they afraid of, Michael?

SHERMER: Well, because if we have technologies, we don't want our enemies to know about. Naturally, we're not going to share it.

KING: Wait a minute. Iran is going to say, you -- we're going to do more on this. You never run out of stuff. Thanks for coming. Captain Salas' book is "Faded Giant."

Before we go, Fran Lewin, a pioneering journalist and CNN veteran was laid to rest yesterday. She died Saturday, one day short of her 87th birthday. Fran spent nearly three decades working for this network as an assignment editor, and producing. Before that, she covered the White House for AP during six presidential administrations. She was a trail blazer, a role model. She loved to work and said it gave her a front row seat to history. Fran will be deeply missed by her friends and colleagues at CNN and by anybody who cares about journalism.

To get the latest on what's happening with our show, check out CNN.com/LarryKing. You can email upcoming guests, or download our new podcasts. That's Elisabeth Hasselbeck. It's all CNN.com/LarryKing. Tomorrow night, Ringo Starr. And now, another star, Anderson Cooper. Like that segue? Anderson Cooper and "AC 360."

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.voxantshop.com