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Mixed Reaction On Capitol Hill To Goss Announcement; Amber Frey Takes The Stand; Fed Will Raise Interest Rates A Quarter Point; Sudan Crisis

Aired August 10, 2004 - 14:00   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.


MILES O'BRIEN, CNN ANCHOR: In just a few moments, a decision affecting your money. Wall Street waiting as the Fed gets set to announce its decision on interest rates. We're watching that board for you.
BETTY NGUYEN, CNN ANCHOR: Praise and disappointment for the president's pick to head the CIA. In a politically charged Washington, will he eve be able to take the job?

O'BRIEN: Roll-over risk: For the first time, you can find out what the odds are of your car or your rather substantial SUV from flipping over in an accident.

From the CNN Center in Atlanta, I'm Miles O'Brien.

NGUYEN: And I'm Betty Nguyen in for Kyra Phillips; she's off today. This hour of CNN's LIVE FROM starts right now.

President Bush has turned to a company man to reform the CIA -- Congressman Porter Goss. The former Army intelligence officer and one-time CIA operative now chairs the House Intelligence Committee, all of which, the president says, makes him the ideal man for these critical times.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The work of the CIA is vital to our security. America faces determined enemies who plan in many nations, send trained killers to live among us, and attack without warning. This threat is unprecedented, and to stop them from killing our citizens, we must have the best intelligence possible.

(END VIDEO CLIP)

NGUYEN: Now, despite his inside knowledge of the CIA, there are those who say he is too political for the job. He's been in Congress since 1988. Among his current duties -- serving on the Select Committee for Homeland Security. So, what are those who have worked with Goss saying? What about those who have to approve his nomination?

Our Congressional correspondent Ed Henry is busy gathering a reaction on Capitol Hill. And so far, Ed, it's very mixed. ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: That's right. Good afternoon, Betty. You can hear from a lot of Congressional Republican leaders like Tom DeLay -- they're applauding this pick.

They believe that it's a fine pick because of that experience you mentioned, that not only has Porter Goss been the chairman of the House Intelligence Committee for several years, but also, he's a former CIA official.

They feel like he has the experience to help lead the war on terror. But what you're hearing from some Democrats is they feel that maybe Goss is not independent enough of the intelligence community in order to shake it up, as the 9/11 Commission has recommended with those 41 recommendations that just came out last month.

The bottom line, though, is that Senator Jay Rockefeller, the top Democrat on the Senate Intelligence Committee, is keeping an open mind. He is saying he's disappointed by this pick, but he is going to give Mr. Goss a fair hearing.

Obviously, the Senate still has to confirm him. And Mr. Rockefeller is saying he wishes there was not a political pick -- as you mentioned, that it was not a Republican Congressman picked. But in fact, Mr. Rockefeller saying he will keep an open mind; he will make sure that the process goes forward.

We're also hearing kind of a vote of confidence for Mr. Goss from Tom Kean, the chairman of the 9/11 Commission. Mr. Kean said earlier today that he believes this is a fine appointment that President Bush made. He thinks it was a good choice.

Mr. Kean is testifying today with Lee Hamilton, his co-chair on the 9/11 Commission. They're testifying before the House Armed Services Committee about that package of reform that the commission is pushing.

Just a short while ago, in fact, Mr. Hamilton, the Democratic vice-chair of the 9/11 Commission, was telling a story about why he thinks the community needs to be shaken up. He was saying that the bottom line is that one senator recently told the commissioners that senators only spend about 10 minutes reviewing the intelligence budget, which is about $40 billion. Here's what Hamilton had to say.

(BEGIN VIDEO CLIP)

LEE HAMILTON, 9/11 COMMISSION VICE CHAIRMAN: A day or two later, I was meeting with another group of senators, and I used that illustration. And another senator got up and said, "Hamilton, you were wrong. You were too generous. We spend five minutes on it."

(END VIDEO CLIP)

HENRY: Hamilton said the situation here is that Congress needs to get its act together. They obviously need to spend more time on intelligence oversight. And in fact, Kean and Hamilton will be back on Capitol Hill tomorrow testifying before the House Intelligence Committee, which, of course, is chaired by Porter Goss -- Betty.

NGUYEN: Ed Henry on Capitol Hill, thank you -- Miles.

O'BRIEN: Minutes after introducing Porter Goss as his CIA pick, the president packed up and headed to the battleground state of Florida. He's touring parts of the Panhandle today, Republican country -- lot of military veterans in that part of the world. So, it should come as no surprise that former Vietnam P.O.W. and current Arizona Senator John McCain is with the president as he travels today.

Meanwhile, John Kerry still west of the Mississippi, trying to woo western voters. Today, Las Vegas his destination, the heart of yet another battleground state. Kerry has already visited Nevada twice this year.

We expect to hear from him shortly, and we should bring that to you right here on LIVE FROM.

NGUYEN: Now, we want to take you to California, where sex, lies, and audiotapes are expected to be part of the star witness's testimony in the Scott Peterson murder trial. Prosecutors are questioning Amber Frey, Peterson's former mistress, in Redwood City today.

Our Rusty Dornin is there, and she has the latest on what Amber Frey is saying on the stand today. Hi, Rusty.

RUSTY DORNIN, CNN CORRESPONDENT: Hi, Betty. Amber Frey has been on the stand for about an hour-and-a-half. Of course, her arrival much heralded. No one was able to get a picture of her. She was brought in by detectives, brought through the underground garage here at the courthouse and taken straight up to the courtroom.

There was a closed door session very shortly, and then Amber Frey took the stand to a hushed courtroom. She began describing her first dates with Scott Peterson, the first one taking place on November 20th. They went to a Japanese restaurant where he apparently had gotten them a private room to have dinner, already outlining the lies that he did tell her that very first night.

He told her that he owned a warehouse in Modesto -- that he lived in Sacramento, and he had a condo in San Diego, and that he was going fishing in Alaska for Thanksgiving and visit his parents for Christmas in Kennebunkport. All of those things, of course, were not true.

She also described how they went back to his hotel. She did have sex with him that first night and spent the night there. She described their next few dates in intimate detail and really did say how charming he was to her -- that even that first night, he gave her strawberries and champagne, that he came to the house with groceries and made dinner and gave her daughter a book as a gift, and that sort of thing.

So, the relationship seemed to be progressing very quickly, very early on. She's back on the stand now after a short break and, of course, is expected to be on the stand for at least the next week-and- a-half to two weeks -- Betty. NGUYEN: Rusty, lies or no lies, a lot of this rests on whether Amber Frey can prove that in these tapes there was a motive. Are you hearing any of that?

DORNIN: I haven't heard the tapes yet. As a matter of fact, we were given this in court. It's 42 pages of transcripts of their telephone conversations. And one of them, you know, six days after Laci Peterson disappeared, he claims he's in Europe, and he has a very long telephone conversation with her, telling all sorts of lies in that.

It's more implication. If a jury's going to believe that he became very seriously involved in this woman and that it wasn't enough of a motive for murder -- it all depends on how the jury is going to hear this. In the meantime, she's been very nervous on the stand and stumbling a lot and asking to repeat the question, that sort of thing, losing her train of thought.

The judge has had to ask her to speak up. So, you know, it's been tough for her. This has been a big buildup, of course, to come to this trial and having to describe in very intimate detail her relationship with Scott Peterson.

NGUYEN: Rusty Dornin in California, thank you -- Miles.

O'BRIEN: In other news across America, a Utah man charged with murdering his still missing wife made his first court appearance today. Mark Hacking appeared, as you see, via video feed from the county jail, as a judge read the charges against him. Prosecutors say Hacking shot his wife Lori in the head as she slept, and then dumped her body in a trash bin.

Voters in Denver casting ballots on whether to ban circus animal acts. A 15-year-old girl got the ball rolling on this one after she saw how animals are treated behind the scenes at the circus.

And in Houston, a man desperate for a new liver is advertising for one on a billboard. Todd Krampitz has liver cancer; a transplant is the only hope for survival.

Suddenly, it seems, we have awakened to a busy tropical storm season, and just as suddenly...

(WEATHER REPORT)

NGUYEN: Well, will a change in interest rates help the economy? The Federal Reserve has been crunching the numbers and will announce a decision in just moments. We'll bring that to you when it happens.

Plus, defensive diplomacy: diplomats hitting the firing range before their next assignment in Iraq.

And what happens in Vegas apparently doesn't even get talked about in Vegas: questions raised about whether city officials kept quiet about al Qaeda tapes of local landmarks.

(COMMERCIAL BREAK)

O'BRIEN: Any minute now, the Federal Reserve expected to announce its decision on interest rates.

NGUYEN: CNN's Ceci Rodgers checked out how the economy is affecting one town literally in the middle of America.

(BEGIN VIDEOTAPE)

CECI RODGERS, CNN CORRESPONDENT (voice-over): Woodstock, Illinois, bills itself as the kind of town people fall in love with, a quaint town of simple pleasures.

DICK CRONE, PRES. MCHENRY COUNTY FAIR: Woodstock is very much hometown USA.

RODGERS: Where neighbor meets neighbor over funnel cakes at the county fair. This year, the talk turned to politics, the economy, and big changes in Woodstock.

CHRIS DAHM, WOODSTOCK RESIDENT: I own a trucking company, so things have been pretty good. We've grown substantially in the last few years.

RODGERS: Low interest rates and cheap land are attracting a new population, much of it from Chicago two hours to the south. After years of little or no growth, the population of Woodstock is expected to nearly double in the coming decades.

(on-camera): Not surprisingly, how people here feel about the economy depends in large part how they're being impacted personally by rapid changes in the local landscape.

(voice-over): City Manager Tim Clifton is dealing with the problems change can bring. Woodstock has at least a dozen new subdivisions and commercial developments on the drawing board.

TIM CLIFTON, WOODSTOCK CITY MANAGER: I think that the community will change, but again, our goal is to try to retain as many of the elements of the past and the history that we have.

RODGERS: So far, growth has been good for the town, providing a new tax base to pay for sprucing up Woodstock with a new library and a new police station. The building boom is providing new jobs. The local unemployment rate is 5.1 percent, below the national jobless rate of 5.5. But as local industries are replaced by retailing and services, some are suffering.

SHAWN MCCLEAVY, WOODSTOCK RESIDENT: We keep hearing that the economy's getting stronger and there's more jobs. But you know what? I don't see it.

RODGERS: A nearby Motorola plant shutdown, throwing Shawn McCleavy out of a job. He took a new job that pays $20,000 a year less than he was making. So, like the nation's economy, Woodstock's economy is also changing, in a place that is not accustomed to change. Ceci Rodgers for CNN financial news, Woodstock, Illinois.

(END VIDEOTAPE)

NGUYEN: And this just in: The Fed has announced it will raise interest rates a quarter point. For more on this, we want to go straight to New York where our Allan Chernoff joins us live with the latest on this.

As we saw in that piece, interest rates going up not exactly a good thing for folks in middle America. Really struggling at this point with loss of jobs.

ALLAN CHERNOFF, CNN FINANCIAL NEWS CORRESPONDENT: Certainly. Let's keep in mind, this interest rate rise really is affecting banks. They're the ones who have to pay more to borrow money overnight. That's what the Federal Reserve is doing here.

But clearly, the Fed is trying to slow things down a little bit. Of course, we have already seen a little bit after slowdown in the economy, but the Fed indicating here they're not that worried about the recent data, particularly that employment data that we saw only last week -- the small rise in employment. So, this is pretty much exactly what the markets had been anticipating.

NGUYEN: It's what the market expected. And today, let's talk about the oil prices and how this affects all of this.

CHERNOFF: Oil certainly has been a very important factor here. As you know, the price of oil has skyrocketed to about $45 a barrel. It hasn't fully filtered through the economy just yet, but this is something that could definitely, seriously slow down the economy. Not just in terms of what we pay at the gas pump, but also what all kind of industries are paying to run their factories, higher energy expenses -- really the major concern right now among economists.

And if oil stays at such a high price, it's certainly possible that the Federal Reserve will not keep on raising interest rates as it has now for two policy meetings in a row.

NGUYEN: I guess it kind of takes care of itself?

CHERNOFF: Well, Wall Street certainly has been anticipating a rise in those rates. As you see, the stock market not having that much of an impact here, simply because it's been anticipated. It would have been a shock to Wall Street if the Federal Reserve had not raised interest rates. It was all baked into the cake already.

NGUYEN: Because if the Federal Reserve had not raised interest rates, it would have been a sign, possibly, that, whoa, hold up, the economy is not doing as well as we thought it was?

CHERNOFF: Yes, Wall Street these days really likes to know well in advance -- figure out well in advance exactly what the Federal Reserve is going to do. And if the Fed were to give a big shock, all of a sudden you would have people throwing around Federal Reserve conspiracy theories.

What does the Fed know that we don't know? Does the Fed really think the economy is dramatically slowing down? Nothing like that today at all. It's just exactly as planned.

NGUYEN: So, you don't think the Fed is going to continue to raise rates in the following months? Does it have anything to do with the presidential election?

CHERNOFF: Well, I think it most likely is going to be the case that the Federal Reserve will continue to gradually raise interest rates. They certainly have been indicating that.

The Fed, as you know, is supposed to act independently of politics, not supposed to at all meddle in the political arena. But there are, of course, people who feel otherwise about it.

NGUYEN: No meddling, says Allan Chernoff. OK, thank you, Allan -- Miles?

O'BRIEN: Well, it's a powerful reminder that not even solid ground is really that solid.

NGUYEN: Check it out. A land slide -- there it is -- caught on tape. We've got details on exactly what happened just ahead, right here on LIVE FROM.

And from billionaire boss to bankrupt casino owner, maybe Donald Trump should tell the accountants, "You're fired."

(COMMERCIAL BREAK)

NGUYEN: News around the world now. A retrial in Germany for Mounir el Motassadeq, the only person convicted in the 9/11 attacks. He is accused of helping the hijackers who were part of a terror cell in Hamburg. The U.S. is providing evidence in that case, but not access to a terror suspect. The defense is challenging the evidence.

Bomb blasts in Turkey. A militant group with ties to al Qaeda is claiming responsibility for attacks at two hotels and a gas depot in Istanbul. Two people were killed in those explosions, seven others wounded. On an Islamic Web site, the group warns of more attacks.

Now, we want to checkout these amazing pictures -- tons of earth slip sliding away. This massive landslide was caught on tape as it happened in central Japan. It blocked a major mountain roadway, but no injuries were reported.

O'BRIEN: In Sudan, the worst humanitarian crisis in the world continues with no solution in sight. Thousands of starving refugees who have fled their homes because of violence once again finding themselves in the crossfire between the government and a rebel militia.

Government helicopter gun ships firing on rebel groups, hampering relief efforts; the rebels, in turn, attacking the refugees. Christiane Amanpour is there with a look at the innocents caught in the midst of this tragedy.

(BEGIN VIDEOTAPE)

CHRISTIANE AMANPOUR, CNN CHIEF INTL. CORRESPONDENT: We're in what's called an ambulatory therapeutic feeding center. This is setup by Medicins Sans Frontieres, the French relief group, and it's something that they've done exceptionally here to treat the most severely malnourished children.

First, they put them in these scales to determine their weight compared to how old they are. Then they measure them. And then, to determine the malnutrition, they use this bracelet on the upper arm, and basically, it goes like this. If the measurement is in the green zone, it's normal. If it's yellow, it's at risk. If it's orange, it's moderate malnutrition. And if it's red, this is severe.

It's basically the size of a couple of my fingers. And those children who are severely malnourished don't have very long to live, maybe a matter of days, and we've seen at least one such case here today. This is Hamdi Ibraheem Ismael. He's 18 months old, if you can believe it. He looks and certainly weighs as if he was only three months old.

He is severely malnourished. He's already been for a week at the hospital, but he's not really getting any better. They're trying to see here whether he will take this special formula to help fatten him up, whether he'll take liquids, whether he'll eat. And if he doesn't, then he'll have to be referred to the hospital again.

The problem is, these parents -- this is, in fact, the grandmother -- are reluctant to send him to the hospital in town because it means having to leave their other children who are here in the camp. They're worried about who will look after them. They're worried about their safety. And this is all complicating the issue of trying to save lives.

The problem is, say the doctors here, they're seeing more, not fewer, cases of malnutrition.

Christiane Amanpour, CNN, Al-Junaynah, West Darfur.

(END VIDEOTAPE)

O'BRIEN: Violence, meanwhile, increasing in Iraq, not only in Najaf, but in Baghdad as well. Our Baghdad bureau chief is here in the house today. Jane Arraf will talk with us about what it's like in both of those cities.

NGUYEN: Plus, casing the casinos -- videotapes surface indicating al Qaeda has been there. We have those details just ahead.

(COMMERCIAL BREAK)

O'BRIEN: Welcome back. From the CNN Center in Atlanta, this is LIVE FROM. I'm Miles O'Brien. NGUYEN: And I'm Betty Nguyen in for Kyra Phillips. Here's what's all new this half hour. Firing a gun -- knowing how to deal with a car bomb. These lessons learned not for soldiers, but for American diplomats.

O'BRIEN: Also in the line of fire, CNN's Baghdad Bureau Chief Jane Arraf is here with some stories from the frontlines. She'll tell us a little bit about what we're seeing unfold in Najaf.

And new information for SUV car and truck owners about the likelihood of your vehicle rolling over. First, here's what's happening now in the news.

NGUYEN: Just a few minutes ago, the Federal Reserve raised interest rates by a quarter of a percentage point. The decision was widely expected -- the second hike in two months, and it was driven by inflation concerns.

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


Aired August 10, 2004 - 14:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MILES O'BRIEN, CNN ANCHOR: In just a few moments, a decision affecting your money. Wall Street waiting as the Fed gets set to announce its decision on interest rates. We're watching that board for you.
BETTY NGUYEN, CNN ANCHOR: Praise and disappointment for the president's pick to head the CIA. In a politically charged Washington, will he eve be able to take the job?

O'BRIEN: Roll-over risk: For the first time, you can find out what the odds are of your car or your rather substantial SUV from flipping over in an accident.

From the CNN Center in Atlanta, I'm Miles O'Brien.

NGUYEN: And I'm Betty Nguyen in for Kyra Phillips; she's off today. This hour of CNN's LIVE FROM starts right now.

President Bush has turned to a company man to reform the CIA -- Congressman Porter Goss. The former Army intelligence officer and one-time CIA operative now chairs the House Intelligence Committee, all of which, the president says, makes him the ideal man for these critical times.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The work of the CIA is vital to our security. America faces determined enemies who plan in many nations, send trained killers to live among us, and attack without warning. This threat is unprecedented, and to stop them from killing our citizens, we must have the best intelligence possible.

(END VIDEO CLIP)

NGUYEN: Now, despite his inside knowledge of the CIA, there are those who say he is too political for the job. He's been in Congress since 1988. Among his current duties -- serving on the Select Committee for Homeland Security. So, what are those who have worked with Goss saying? What about those who have to approve his nomination?

Our Congressional correspondent Ed Henry is busy gathering a reaction on Capitol Hill. And so far, Ed, it's very mixed. ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: That's right. Good afternoon, Betty. You can hear from a lot of Congressional Republican leaders like Tom DeLay -- they're applauding this pick.

They believe that it's a fine pick because of that experience you mentioned, that not only has Porter Goss been the chairman of the House Intelligence Committee for several years, but also, he's a former CIA official.

They feel like he has the experience to help lead the war on terror. But what you're hearing from some Democrats is they feel that maybe Goss is not independent enough of the intelligence community in order to shake it up, as the 9/11 Commission has recommended with those 41 recommendations that just came out last month.

The bottom line, though, is that Senator Jay Rockefeller, the top Democrat on the Senate Intelligence Committee, is keeping an open mind. He is saying he's disappointed by this pick, but he is going to give Mr. Goss a fair hearing.

Obviously, the Senate still has to confirm him. And Mr. Rockefeller is saying he wishes there was not a political pick -- as you mentioned, that it was not a Republican Congressman picked. But in fact, Mr. Rockefeller saying he will keep an open mind; he will make sure that the process goes forward.

We're also hearing kind of a vote of confidence for Mr. Goss from Tom Kean, the chairman of the 9/11 Commission. Mr. Kean said earlier today that he believes this is a fine appointment that President Bush made. He thinks it was a good choice.

Mr. Kean is testifying today with Lee Hamilton, his co-chair on the 9/11 Commission. They're testifying before the House Armed Services Committee about that package of reform that the commission is pushing.

Just a short while ago, in fact, Mr. Hamilton, the Democratic vice-chair of the 9/11 Commission, was telling a story about why he thinks the community needs to be shaken up. He was saying that the bottom line is that one senator recently told the commissioners that senators only spend about 10 minutes reviewing the intelligence budget, which is about $40 billion. Here's what Hamilton had to say.

(BEGIN VIDEO CLIP)

LEE HAMILTON, 9/11 COMMISSION VICE CHAIRMAN: A day or two later, I was meeting with another group of senators, and I used that illustration. And another senator got up and said, "Hamilton, you were wrong. You were too generous. We spend five minutes on it."

(END VIDEO CLIP)

HENRY: Hamilton said the situation here is that Congress needs to get its act together. They obviously need to spend more time on intelligence oversight. And in fact, Kean and Hamilton will be back on Capitol Hill tomorrow testifying before the House Intelligence Committee, which, of course, is chaired by Porter Goss -- Betty.

NGUYEN: Ed Henry on Capitol Hill, thank you -- Miles.

O'BRIEN: Minutes after introducing Porter Goss as his CIA pick, the president packed up and headed to the battleground state of Florida. He's touring parts of the Panhandle today, Republican country -- lot of military veterans in that part of the world. So, it should come as no surprise that former Vietnam P.O.W. and current Arizona Senator John McCain is with the president as he travels today.

Meanwhile, John Kerry still west of the Mississippi, trying to woo western voters. Today, Las Vegas his destination, the heart of yet another battleground state. Kerry has already visited Nevada twice this year.

We expect to hear from him shortly, and we should bring that to you right here on LIVE FROM.

NGUYEN: Now, we want to take you to California, where sex, lies, and audiotapes are expected to be part of the star witness's testimony in the Scott Peterson murder trial. Prosecutors are questioning Amber Frey, Peterson's former mistress, in Redwood City today.

Our Rusty Dornin is there, and she has the latest on what Amber Frey is saying on the stand today. Hi, Rusty.

RUSTY DORNIN, CNN CORRESPONDENT: Hi, Betty. Amber Frey has been on the stand for about an hour-and-a-half. Of course, her arrival much heralded. No one was able to get a picture of her. She was brought in by detectives, brought through the underground garage here at the courthouse and taken straight up to the courtroom.

There was a closed door session very shortly, and then Amber Frey took the stand to a hushed courtroom. She began describing her first dates with Scott Peterson, the first one taking place on November 20th. They went to a Japanese restaurant where he apparently had gotten them a private room to have dinner, already outlining the lies that he did tell her that very first night.

He told her that he owned a warehouse in Modesto -- that he lived in Sacramento, and he had a condo in San Diego, and that he was going fishing in Alaska for Thanksgiving and visit his parents for Christmas in Kennebunkport. All of those things, of course, were not true.

She also described how they went back to his hotel. She did have sex with him that first night and spent the night there. She described their next few dates in intimate detail and really did say how charming he was to her -- that even that first night, he gave her strawberries and champagne, that he came to the house with groceries and made dinner and gave her daughter a book as a gift, and that sort of thing.

So, the relationship seemed to be progressing very quickly, very early on. She's back on the stand now after a short break and, of course, is expected to be on the stand for at least the next week-and- a-half to two weeks -- Betty. NGUYEN: Rusty, lies or no lies, a lot of this rests on whether Amber Frey can prove that in these tapes there was a motive. Are you hearing any of that?

DORNIN: I haven't heard the tapes yet. As a matter of fact, we were given this in court. It's 42 pages of transcripts of their telephone conversations. And one of them, you know, six days after Laci Peterson disappeared, he claims he's in Europe, and he has a very long telephone conversation with her, telling all sorts of lies in that.

It's more implication. If a jury's going to believe that he became very seriously involved in this woman and that it wasn't enough of a motive for murder -- it all depends on how the jury is going to hear this. In the meantime, she's been very nervous on the stand and stumbling a lot and asking to repeat the question, that sort of thing, losing her train of thought.

The judge has had to ask her to speak up. So, you know, it's been tough for her. This has been a big buildup, of course, to come to this trial and having to describe in very intimate detail her relationship with Scott Peterson.

NGUYEN: Rusty Dornin in California, thank you -- Miles.

O'BRIEN: In other news across America, a Utah man charged with murdering his still missing wife made his first court appearance today. Mark Hacking appeared, as you see, via video feed from the county jail, as a judge read the charges against him. Prosecutors say Hacking shot his wife Lori in the head as she slept, and then dumped her body in a trash bin.

Voters in Denver casting ballots on whether to ban circus animal acts. A 15-year-old girl got the ball rolling on this one after she saw how animals are treated behind the scenes at the circus.

And in Houston, a man desperate for a new liver is advertising for one on a billboard. Todd Krampitz has liver cancer; a transplant is the only hope for survival.

Suddenly, it seems, we have awakened to a busy tropical storm season, and just as suddenly...

(WEATHER REPORT)

NGUYEN: Well, will a change in interest rates help the economy? The Federal Reserve has been crunching the numbers and will announce a decision in just moments. We'll bring that to you when it happens.

Plus, defensive diplomacy: diplomats hitting the firing range before their next assignment in Iraq.

And what happens in Vegas apparently doesn't even get talked about in Vegas: questions raised about whether city officials kept quiet about al Qaeda tapes of local landmarks.

(COMMERCIAL BREAK)

O'BRIEN: Any minute now, the Federal Reserve expected to announce its decision on interest rates.

NGUYEN: CNN's Ceci Rodgers checked out how the economy is affecting one town literally in the middle of America.

(BEGIN VIDEOTAPE)

CECI RODGERS, CNN CORRESPONDENT (voice-over): Woodstock, Illinois, bills itself as the kind of town people fall in love with, a quaint town of simple pleasures.

DICK CRONE, PRES. MCHENRY COUNTY FAIR: Woodstock is very much hometown USA.

RODGERS: Where neighbor meets neighbor over funnel cakes at the county fair. This year, the talk turned to politics, the economy, and big changes in Woodstock.

CHRIS DAHM, WOODSTOCK RESIDENT: I own a trucking company, so things have been pretty good. We've grown substantially in the last few years.

RODGERS: Low interest rates and cheap land are attracting a new population, much of it from Chicago two hours to the south. After years of little or no growth, the population of Woodstock is expected to nearly double in the coming decades.

(on-camera): Not surprisingly, how people here feel about the economy depends in large part how they're being impacted personally by rapid changes in the local landscape.

(voice-over): City Manager Tim Clifton is dealing with the problems change can bring. Woodstock has at least a dozen new subdivisions and commercial developments on the drawing board.

TIM CLIFTON, WOODSTOCK CITY MANAGER: I think that the community will change, but again, our goal is to try to retain as many of the elements of the past and the history that we have.

RODGERS: So far, growth has been good for the town, providing a new tax base to pay for sprucing up Woodstock with a new library and a new police station. The building boom is providing new jobs. The local unemployment rate is 5.1 percent, below the national jobless rate of 5.5. But as local industries are replaced by retailing and services, some are suffering.

SHAWN MCCLEAVY, WOODSTOCK RESIDENT: We keep hearing that the economy's getting stronger and there's more jobs. But you know what? I don't see it.

RODGERS: A nearby Motorola plant shutdown, throwing Shawn McCleavy out of a job. He took a new job that pays $20,000 a year less than he was making. So, like the nation's economy, Woodstock's economy is also changing, in a place that is not accustomed to change. Ceci Rodgers for CNN financial news, Woodstock, Illinois.

(END VIDEOTAPE)

NGUYEN: And this just in: The Fed has announced it will raise interest rates a quarter point. For more on this, we want to go straight to New York where our Allan Chernoff joins us live with the latest on this.

As we saw in that piece, interest rates going up not exactly a good thing for folks in middle America. Really struggling at this point with loss of jobs.

ALLAN CHERNOFF, CNN FINANCIAL NEWS CORRESPONDENT: Certainly. Let's keep in mind, this interest rate rise really is affecting banks. They're the ones who have to pay more to borrow money overnight. That's what the Federal Reserve is doing here.

But clearly, the Fed is trying to slow things down a little bit. Of course, we have already seen a little bit after slowdown in the economy, but the Fed indicating here they're not that worried about the recent data, particularly that employment data that we saw only last week -- the small rise in employment. So, this is pretty much exactly what the markets had been anticipating.

NGUYEN: It's what the market expected. And today, let's talk about the oil prices and how this affects all of this.

CHERNOFF: Oil certainly has been a very important factor here. As you know, the price of oil has skyrocketed to about $45 a barrel. It hasn't fully filtered through the economy just yet, but this is something that could definitely, seriously slow down the economy. Not just in terms of what we pay at the gas pump, but also what all kind of industries are paying to run their factories, higher energy expenses -- really the major concern right now among economists.

And if oil stays at such a high price, it's certainly possible that the Federal Reserve will not keep on raising interest rates as it has now for two policy meetings in a row.

NGUYEN: I guess it kind of takes care of itself?

CHERNOFF: Well, Wall Street certainly has been anticipating a rise in those rates. As you see, the stock market not having that much of an impact here, simply because it's been anticipated. It would have been a shock to Wall Street if the Federal Reserve had not raised interest rates. It was all baked into the cake already.

NGUYEN: Because if the Federal Reserve had not raised interest rates, it would have been a sign, possibly, that, whoa, hold up, the economy is not doing as well as we thought it was?

CHERNOFF: Yes, Wall Street these days really likes to know well in advance -- figure out well in advance exactly what the Federal Reserve is going to do. And if the Fed were to give a big shock, all of a sudden you would have people throwing around Federal Reserve conspiracy theories.

What does the Fed know that we don't know? Does the Fed really think the economy is dramatically slowing down? Nothing like that today at all. It's just exactly as planned.

NGUYEN: So, you don't think the Fed is going to continue to raise rates in the following months? Does it have anything to do with the presidential election?

CHERNOFF: Well, I think it most likely is going to be the case that the Federal Reserve will continue to gradually raise interest rates. They certainly have been indicating that.

The Fed, as you know, is supposed to act independently of politics, not supposed to at all meddle in the political arena. But there are, of course, people who feel otherwise about it.

NGUYEN: No meddling, says Allan Chernoff. OK, thank you, Allan -- Miles?

O'BRIEN: Well, it's a powerful reminder that not even solid ground is really that solid.

NGUYEN: Check it out. A land slide -- there it is -- caught on tape. We've got details on exactly what happened just ahead, right here on LIVE FROM.

And from billionaire boss to bankrupt casino owner, maybe Donald Trump should tell the accountants, "You're fired."

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NGUYEN: News around the world now. A retrial in Germany for Mounir el Motassadeq, the only person convicted in the 9/11 attacks. He is accused of helping the hijackers who were part of a terror cell in Hamburg. The U.S. is providing evidence in that case, but not access to a terror suspect. The defense is challenging the evidence.

Bomb blasts in Turkey. A militant group with ties to al Qaeda is claiming responsibility for attacks at two hotels and a gas depot in Istanbul. Two people were killed in those explosions, seven others wounded. On an Islamic Web site, the group warns of more attacks.

Now, we want to checkout these amazing pictures -- tons of earth slip sliding away. This massive landslide was caught on tape as it happened in central Japan. It blocked a major mountain roadway, but no injuries were reported.

O'BRIEN: In Sudan, the worst humanitarian crisis in the world continues with no solution in sight. Thousands of starving refugees who have fled their homes because of violence once again finding themselves in the crossfire between the government and a rebel militia.

Government helicopter gun ships firing on rebel groups, hampering relief efforts; the rebels, in turn, attacking the refugees. Christiane Amanpour is there with a look at the innocents caught in the midst of this tragedy.

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CHRISTIANE AMANPOUR, CNN CHIEF INTL. CORRESPONDENT: We're in what's called an ambulatory therapeutic feeding center. This is setup by Medicins Sans Frontieres, the French relief group, and it's something that they've done exceptionally here to treat the most severely malnourished children.

First, they put them in these scales to determine their weight compared to how old they are. Then they measure them. And then, to determine the malnutrition, they use this bracelet on the upper arm, and basically, it goes like this. If the measurement is in the green zone, it's normal. If it's yellow, it's at risk. If it's orange, it's moderate malnutrition. And if it's red, this is severe.

It's basically the size of a couple of my fingers. And those children who are severely malnourished don't have very long to live, maybe a matter of days, and we've seen at least one such case here today. This is Hamdi Ibraheem Ismael. He's 18 months old, if you can believe it. He looks and certainly weighs as if he was only three months old.

He is severely malnourished. He's already been for a week at the hospital, but he's not really getting any better. They're trying to see here whether he will take this special formula to help fatten him up, whether he'll take liquids, whether he'll eat. And if he doesn't, then he'll have to be referred to the hospital again.

The problem is, these parents -- this is, in fact, the grandmother -- are reluctant to send him to the hospital in town because it means having to leave their other children who are here in the camp. They're worried about who will look after them. They're worried about their safety. And this is all complicating the issue of trying to save lives.

The problem is, say the doctors here, they're seeing more, not fewer, cases of malnutrition.

Christiane Amanpour, CNN, Al-Junaynah, West Darfur.

(END VIDEOTAPE)

O'BRIEN: Violence, meanwhile, increasing in Iraq, not only in Najaf, but in Baghdad as well. Our Baghdad bureau chief is here in the house today. Jane Arraf will talk with us about what it's like in both of those cities.

NGUYEN: Plus, casing the casinos -- videotapes surface indicating al Qaeda has been there. We have those details just ahead.

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O'BRIEN: Welcome back. From the CNN Center in Atlanta, this is LIVE FROM. I'm Miles O'Brien. NGUYEN: And I'm Betty Nguyen in for Kyra Phillips. Here's what's all new this half hour. Firing a gun -- knowing how to deal with a car bomb. These lessons learned not for soldiers, but for American diplomats.

O'BRIEN: Also in the line of fire, CNN's Baghdad Bureau Chief Jane Arraf is here with some stories from the frontlines. She'll tell us a little bit about what we're seeing unfold in Najaf.

And new information for SUV car and truck owners about the likelihood of your vehicle rolling over. First, here's what's happening now in the news.

NGUYEN: Just a few minutes ago, the Federal Reserve raised interest rates by a quarter of a percentage point. The decision was widely expected -- the second hike in two months, and it was driven by inflation concerns.

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