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Iran Reportedly Enriching Uranium; Sears, Kmart Merge; Clinton Presidential Library Opens Tomorrow

Aired November 17, 2004 - 13:00   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, CO-HOST: Atomic accusation. New claims about Iran's secret ambitions for nuclear bombs. We're live on the story.
CAROL LIN, CO-HOST: Insurgents on the move. The deadly cat and mouse game moves from Falluja to Mosul. In this hour, a general talks strategy against a slippery enemy.

ALI VELSHI, CNN CORRESPONDENT: I'm Ali Velshi in New York. I'm going try and make sense of why the merger between Kmart and Sears makes your life better.

O'BRIEN: And want to get skinny? Just hit the snooze button. Making the connection between sleep and your weight.

LIN: I like that. From the CNN Center in Atlanta, I'm Carol Lin.

O'BRIEN: And I'm Miles O'Brien. Kyra Phillips is off today. CNN's LIVE FROM starts right now.

A covert nuclear weapons lab, next generation never before seen missiles, black market blueprints, and smuggled secrets and on the record denials. We're on the trail of all of those this hour.

Ominous allegations in Iran, shadowy boasts in Russia, both of serious concern to the U.N. and to the world, for that matter.

The claims and denials in Iran come the very week Tehran agreed to stop enriching uranium, at least temporarily. We get the latest on that from CNN national security correspondent David Ensor -- David.

DAVID ENSOR, CNN CORRESPONDENT: Miles, the group that's making the claim, the National Council of Resistance of Iran, is known for its sources inside the Iranian military and science elite. And it says it's identified another nuclear weapons research facility in Tehran, this one controlled by the Iranian military.

At a Paris news conference Muhammad Mohaddessin told reporters the site is in Tehran's Lavizan district. The group says the regime moved some nuclear related equipment there after its previous facility in the Bagh Sian area of Lavizan was publicized and then visited by inspectors from the International Atomic Energy Agency.

(BEGIN VIDEO CLIP)

ALI SAFAVI, IRANIAN RESISTANCE LIAISON: It demonstrates, I think, before anything else that, despite its claims -- it's claims of cooperation with the IAEA, the Iranian regime is continuing its clandestine nuclear weapons program in defiance of its international obligations.

It also reveals for the first time some information on the extent of the involvement of Iran's minister of defense in nuclear research and nuclear weapons research and development.

(END VIDEO CLIP)

ENSOR: In Tehran, Iran's top nuclear negotiator, Hossein Mousavian, said CNN the opposition group's claim is just plain false and said it has been timed to try to affect the upcoming meeting of the IAEA board of governors in Vienna.

Mousavian said, quote, "Categorically, Iran has no declared nuclear related activity or facility," unquote.

U.S. officials and officials at the IAEA in Vienna say they are looking into the opposition group's latest assertion. The group does not have a perfect track record, according to IAEA officials, and clearly does want to damage Tehran's chances of pulling off an accord on nukes with European governments.

But at the same time, the NCRI is known for its sources inside Iran. It was the group that first revealed Iranian's secret nuclear programs back a couple of years ago -- Miles.

O'BRIEN: David, what are the chances -- a bit speculative, but I'll ask anyway. What are the chances the Iranians will offer some proof to back up their claim?

ENSOR: Well, if the group is wrong, it would be probably wise of the Iranians to very quickly get IAEA inspectors into this site and show them, and show that it's -- that there's nothing nuclear related going on there.

If that doesn't happen fairly quickly, this news is obviously going to royal up the IAEA board of governors meeting later in the month, and it could create problems for the effort of three European governments to forge this agreement with the Iranians that would allow them to have peaceful nuclear power but not nuclear weapons.

O'BRIEN: David Ensor, thank you very much.

Now to Moscow where Russian President Vladimir Putin today announced, and we quote him now, the most up to date nuclear missile systems are on fast track to deployment there. Speaking to his country's top military brass, Putin claimed the new nukes will be unmatched by any other country. We'll get a lot more on this story from CNN's Moscow bureau chief, Jill Dougherty, next hour of LIVE FROM.

LIN: Pretty calm is one commander's take on the Iraqi city of Mosul after days of urban combat seemingly triggered by the war in Falluja. Insurgents bombarded a series of Mosul police stations. And despite the upbeat assessment, another such attack happened today.

CNN's Jane Arraf is in Falluja -- Jane.

JANE ARRAF, CNN CORRESPONDENT: Carol, it is, compared to a week of intense combat, quite calm. That doesn't mean that there isn't sporadic intense violence; there is.

But what's happening now through many sectors of the city is troops going back and clearing these sectors building by building. An Army task force went back into the industrial section that they first swept through at the start of this battle.

But this time they were doing a clean sweep. Going door to door. They literally had to knock down every single door. The buildings had been emptied, the neighborhood abandoned. And as they knocked down the doors shooting off the locks or driving through them or pulling them off with armored vehicles, they were searching for weapons and gunmen.

They didn't find any gunmen. They found some dead bodies. But they did find a huge weapons stash, including anti-aircraft guns and armor piercing rounds for heavy machine gun -- Carol.

LIN: Jane -- Jane quick question about some belongings that were found in a building in Falluja belonging to U.S. Marine Corporal Wassaf Ali Hassoun. He was the man who allegedly was kidnapped by insurgents. Still a lot of questions about where he was and who actually took him.

Do you know anything about his belongings actually having been found in Falluja?

ARRAF: We don't know the details, Carol. What we do know is that, as the Marines and the Army go through these buildings, they're finding an awful lot of things. They're finding documents. They're finding information. They're finding perhaps in some cases evidence related to not just that case but the insurgents, perhaps Abu Musab al-Zarqawi, and all sorts of other things, including the hostage takings.

It's going to take awhile to sift through these documents for the people doing that. They've removed them in most cases from the houses, and they've been sent to other places to be analyzed -- Carol.

LIN: The troops that you've been traveling with, is there a sense among them that anybody is really going to know whether they ever really secured Falluja, that they actually took a home base of operations away from the insurgents, given the violence that's still happening around the country?

ARRAF: You know, I think on the level of the soldiers, they did not believe, on the level of soldiers on the Marines -- if they didn't believe that they had rooted out the insurgency, they would probably not feel there was much reason for fighting.

There have been losses here. Marines have been killed. Soldiers have been killed. These soldiers and Marines went into battle being told that they were getting out the command and control center. That's what they believe they've done.

And they also believe on the top levels of Marine and Army commanders here that what they've done will lessen the insurgency in other parts of the country. I don't think anyone now is saying that it's going to be completely eradicated, given what's happening in other cities, but they do believe that they have made a substantial start in ending this insurgency -- Carol.

LIN: All right. Thanks very much, Jane Arraf, reporting from Falluja by videophone.

I'm going to have much more on this when I talk with one of our generals about what's happening in terms of violence, the search for Ayman al-Zarqawi and other things. What's the big payoff when it comes to securing Falluja? But later on that -- Miles.

O'BRIEN: Now some big news about commerce. That's commerce with a capital "K." Two of the biggest, oldest best-known brands in American consumerism are merging in hopes of surviving in the universe of Wal-Mart.

Sears and Kmart, Kmart and Sears, marrying assets that -- but keeping their own names in a deal worth $11 billion.

CNN's Ali Velshi has scanned the details. I guess you could call it a blue light special deal.

VELSHI: Yes, the blue light special is you trade your Kmart stock in for stock of a company called Sears Holdings.

Look at it this way, Miles. You've got two skinny kids, constantly getting their lunch stolen by the two big kids. So the two skinny kids get together in hopes of saving their lunch some days and getting a little fatter.

But put together they're not even as big as the next biggest kid. We're talking about the skinny kids are Kmart and Sears. Roughly the same size companies, about $10 billion a piece. And then you've got Target bigger than that and Wal-Mart, which is bigger than some countries.

Here's the thing. Let's remind you what happened to Kmart now. Kmart went into bankruptcy in early 2002. Between the time it went into bankruptcy and emerged from bankruptcy a year later, it laid off 57,000 people, closed 600 stores, sold about 50 stores to Sears, sold another 18 to Home Depot and was taken over by a guy named Eddie Lampert.

Not a name familiar to a lot of people outside of the business world, but akin to Warren Buffett. This is a guy who buys companies, turns them around and does -- makes a great deal of money for the people who invest with him.

Eddie Lampert owns 53 percent of Kmart. He's also been snapping up Sears. He owns about 15 percent of Sears, making him the biggest shareholder. So while this deal came as surprise, one could have seen it coming, given that Eddie Lampert is behind both of these companies.

Now here's the thing. You may be wondering why Wall Street loves this deal as much as it does. The stock of both Kmart and Sears are way up. Because for the rest of us, these are still too tired little companies that now combine to make one tired company.

Here's what happens under the deal. Some of the Kmart stores become Sears stores. Others probably close. But they want to take advantage of the brands that these two companies have.

Obviously, at Kmart you've got Martha Stewart, and Martha Stewart stock is soaring today on the hopes that more people will have access to it. And on the Sears size you've got Craftsman. You've got Kenmore. You've got Die-Hard. And you have Land's End.

So the idea being that the average consumer in America sticks with these venerable names, gets access to more products. People will lose their jobs because this company wants to -- the new combined company wants to save some money over the next few years.

Unclear is whether they can do the right thing to keep Americans going to these stores and keep them away, maybe, from Target and from Wal-Mart. Target and Wal-Mart have been eating retailers' lunches for years.

So the stocks are soaring today. The average consumer is wondering, "All right. What's going to be different about this?" -- Miles.

O'BRIEN: I should say so. Ali Velshi, thank you very much. We'll check in with you a little later -- Carol.

LIN: All right, Miles.

Rewriting history. Our CNN crew is on its way back from an archaeological dig that could change what we know about the earliest Americans. We expect to hear from them this hour.

KELLY WALLACE, CNN CORRESPONDENT: I'm Kelly Wallace in Little Rock, Arkansas. Bill Clinton's presidential library won't be formally dedicated until tomorrow, but we've already been inside. We'll tell you what we found; a live report coming up.

LIN: And a penny for your thoughts. This guy has got $10,480.13 worth of them, to be exact. Find out why this penny pincher finally decided to let them go later on LIVE FROM.

ANNOUNCER: You're watching LIVE FROM on CNN, the most trusted name in news.

(COMMERCIAL BREAK)

JACQUI JERAS, CNN METEOROLOGIST: In Texas in the town of LaPorte, where law enforcement reported a tornado touching down. There was some scattered damage across the area, as well as some flooding.

Still awaiting word from the National Weather Service whether or not this was a tornado touch down. Possibly some wind damage across the area.

Still, a threat of tornadoes in the Houston area for this afternoon. We'll take a look at our live Viper Doppler radar. And that is showing you, still, a little bit of action on the northeast side of Houston. But we're more concerned about this line of thunderstorms just off to the west. It is crossing I-10 here.

There is a tornado watch, which will stay in effect until 4 p.m. local time throughout the day today. And it will be a wet go of it from San Antonio all the way up to Dallas.

Flood watches and flood warnings all across central parts of Texas at this hour, including those in Austin down to San Antonio, where some of the rivers here are continuing to rise. Our storm system moving very slowly off to the east will be drenching much of the southeast by the weekend -- Carol.

LIN: All right. Thanks, Jacqui.

It's all hands on deck in Little Rock, as far as friends of Bill are concerned right now. The official opening of the William Jefferson Clinton Presidential Library is tomorrow. But it is open today for media and special guests.

CNN's Kelly Wallace is among those getting a sneak peak today.

Kelly, what did you get a chance to see?

WALLACE: Well, Kyra, you won't be surprised to hear there are just a few journalists here in Little Rock, Arkansas. I believe more than 1,000 television crews from all over the world, "Entertainment Tonight," a sign of how Bill Clinton even as a former president remains a bit of a rock star.

You can hear some music behind me. There are rehearsals underway for the dedication ceremony tomorrow.

As you say, we did get inside earlier this morning. And what we found, a range of features. Bill Clinton apparently wanted to show off the daily life of a president.

And so you have the presidential limo that he used during his 1993 inaugural parade, a replica of the Oval Office. You have throughout the museum 79,000 artifacts, more than two million photographs, and 80 million pages of presidential documents. I believe that's more than any other presidential museum.

There's a lot of attention about how the impeachment matter would be dealt with. And it is dealt with in an exhibit entitled "The Fight for Power." And there you see a mention of former White House intern Monica Lewinsky, a lot of criticism of independent counsel Kenneth Starr. And if you look at the entire exhibit, you do see that the president is trying to convey the message he believed throughout his presidency there were political efforts to try and bring him down.

There's been a lot of attention about the design of this glass and steel structure overlooking the Arkansas River. It was designed by New York architects. And it is modeled after Bill Clinton's mantra, building a bridge to the 21st Century.

Most of the reviews have been very, very positive, but there have been some critics, and the former president joked about some of the criticism yesterday.

(BEGIN VIDEO CLIP)

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: Most people have said it's a beautiful building, a great landmark of 21st Century architecture.

And the London "Economist," in typical snide form, compared it as a glorified house trailer. And I thought, well, that's me. I'm a little red and a little blue. They got me pretty good there. You know, I like that.

(END VIDEO CLIP)

WALLACE: The president showing off his sense of humor.

No controversy, thought, Carol, when it comes to the impact on Little Rock, Arkansas. Since President Clinton decided to build his library here in 1997, $800 million invested in the downtown and riverfront area, pretty much energizing this entire place.

And of course, tomorrow it all takes center stage. President Bush will be here. Former presidents Bush and Carter, as well. So lots of attention on Little Rock -- Carol.

LIN: You bet. And a slice of history. Thanks, Kelly.

Hillary Rodham Clinton is actually going to be Larry's guest tonight. And also, be sure to tune in tomorrow to CNN, because we are going to have live continuing coverage of the dedication ceremonies at the Clinton Presidential Library.

O'BRIEN: All right. Please stand by now for the debut of a new LIVE FROM feature, the $10 word alert. Pay close attention. By the way, this is not a funded $10 word. We don't have the budget to pay for it. But nonetheless, it's a $10 word.

Now to an event involving our nation's current president. Some might call it a sweet tradition and one that enjoys a long history. But cynics might term it the height of sardoodledum.

Sardoodledum, the $10 word of the day. There it is, sardoodledum, drama that is contrived, stagy, or unrealistic. But no matter how you slice it, it's good news for a critter named Biscuits, who escapes murder most fowl, shall we say?

Yes, it sure helps to have a friend in high places. Biscuit can also thank President Harry Truman, who established the annual ritual of the White House turkey pardon back in 1947.

We're told Biscuits spent the past few months getting used to being around people so that there were no embarrassing pecking incidents in the Rose Garden.

President Bush also pardoned Gravy. That's the backup bird, just in case -- well, look, he was actually pretty tame there. Both will live out the balance of their lives at a nearby petting zoo.

Back with more LIVE FROM in just a moment.

(BEGIN VIDEO CLIP)

O'BRIEN (voice-over): Next on LIVE FROM, it's the military version of Whack-a-Mole. Insurgents driven out of one town pop up in another. How can U.S. forces wipe them out?

Later on LIVE FROM...

UNIDENTIFIED MALE: Did you intend for your daughter to die?

UNIDENTIFIED FEMALE: Absolutely not.

O'BRIEN: Imperfect parent or murdering mom? The court is deciding after a woman is charged in the death of her diabetic daughter.

And tomorrow on LIVE FROM, before "Trading Spaces," there was "This Old House." We'll talk to one of the show's master restorers about turning your home into a haven.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Two, one, launch. Launch. Launch.

(END VIDEO CLIP)

O'BRIEN: When NASA says scram, they really mean it. In yesterday's test flight off the California coast, the unmanned scramjet X43-a -- I love saying that stuff -- smashed its own world speed record, flying at nearly ten times the speed of sound.

The big issue here, though, is just proving the concept of a scramjet. The project manager on the experiment says the flight was as good or better than the Red Sox breaking the curse. Clearly debatable, but nevertheless, the technology worn out.

Where it goes from here? Who knows? We'll have a "Mach Minute" for you a little later, tell you a little more about that. From science to poetry or some scientific poetry perhaps. Both sides of the brain going here. A group of Swedish poets gathered at an observatory to broadcast a live reading of their works into the great beyond.

One bard noted, "I can't think of anything more adequate than poetry to communicate what it means to be human." Indeed. There once was a space man named Lars who got all the way to Mars, but once he touched down on Mars, just had to frown. He'd forgotten his lutefisk in jars.

LIN: Just another example of sardoodledum, Miles.

All right. More realistically, let's take a view from Wall Street.

You've heard of the big Sears/Kmart merger. Bigger is not always better when it comes to stocks. Just ask the airline industry.

Rhonda Schaffler joins us from the New York Stock Exchange for the market's reaction.

Rhonda, what are they saying?

(STOCK MARKET REPORT)

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Aired November 17, 2004 - 13:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MILES O'BRIEN, CO-HOST: Atomic accusation. New claims about Iran's secret ambitions for nuclear bombs. We're live on the story.
CAROL LIN, CO-HOST: Insurgents on the move. The deadly cat and mouse game moves from Falluja to Mosul. In this hour, a general talks strategy against a slippery enemy.

ALI VELSHI, CNN CORRESPONDENT: I'm Ali Velshi in New York. I'm going try and make sense of why the merger between Kmart and Sears makes your life better.

O'BRIEN: And want to get skinny? Just hit the snooze button. Making the connection between sleep and your weight.

LIN: I like that. From the CNN Center in Atlanta, I'm Carol Lin.

O'BRIEN: And I'm Miles O'Brien. Kyra Phillips is off today. CNN's LIVE FROM starts right now.

A covert nuclear weapons lab, next generation never before seen missiles, black market blueprints, and smuggled secrets and on the record denials. We're on the trail of all of those this hour.

Ominous allegations in Iran, shadowy boasts in Russia, both of serious concern to the U.N. and to the world, for that matter.

The claims and denials in Iran come the very week Tehran agreed to stop enriching uranium, at least temporarily. We get the latest on that from CNN national security correspondent David Ensor -- David.

DAVID ENSOR, CNN CORRESPONDENT: Miles, the group that's making the claim, the National Council of Resistance of Iran, is known for its sources inside the Iranian military and science elite. And it says it's identified another nuclear weapons research facility in Tehran, this one controlled by the Iranian military.

At a Paris news conference Muhammad Mohaddessin told reporters the site is in Tehran's Lavizan district. The group says the regime moved some nuclear related equipment there after its previous facility in the Bagh Sian area of Lavizan was publicized and then visited by inspectors from the International Atomic Energy Agency.

(BEGIN VIDEO CLIP)

ALI SAFAVI, IRANIAN RESISTANCE LIAISON: It demonstrates, I think, before anything else that, despite its claims -- it's claims of cooperation with the IAEA, the Iranian regime is continuing its clandestine nuclear weapons program in defiance of its international obligations.

It also reveals for the first time some information on the extent of the involvement of Iran's minister of defense in nuclear research and nuclear weapons research and development.

(END VIDEO CLIP)

ENSOR: In Tehran, Iran's top nuclear negotiator, Hossein Mousavian, said CNN the opposition group's claim is just plain false and said it has been timed to try to affect the upcoming meeting of the IAEA board of governors in Vienna.

Mousavian said, quote, "Categorically, Iran has no declared nuclear related activity or facility," unquote.

U.S. officials and officials at the IAEA in Vienna say they are looking into the opposition group's latest assertion. The group does not have a perfect track record, according to IAEA officials, and clearly does want to damage Tehran's chances of pulling off an accord on nukes with European governments.

But at the same time, the NCRI is known for its sources inside Iran. It was the group that first revealed Iranian's secret nuclear programs back a couple of years ago -- Miles.

O'BRIEN: David, what are the chances -- a bit speculative, but I'll ask anyway. What are the chances the Iranians will offer some proof to back up their claim?

ENSOR: Well, if the group is wrong, it would be probably wise of the Iranians to very quickly get IAEA inspectors into this site and show them, and show that it's -- that there's nothing nuclear related going on there.

If that doesn't happen fairly quickly, this news is obviously going to royal up the IAEA board of governors meeting later in the month, and it could create problems for the effort of three European governments to forge this agreement with the Iranians that would allow them to have peaceful nuclear power but not nuclear weapons.

O'BRIEN: David Ensor, thank you very much.

Now to Moscow where Russian President Vladimir Putin today announced, and we quote him now, the most up to date nuclear missile systems are on fast track to deployment there. Speaking to his country's top military brass, Putin claimed the new nukes will be unmatched by any other country. We'll get a lot more on this story from CNN's Moscow bureau chief, Jill Dougherty, next hour of LIVE FROM.

LIN: Pretty calm is one commander's take on the Iraqi city of Mosul after days of urban combat seemingly triggered by the war in Falluja. Insurgents bombarded a series of Mosul police stations. And despite the upbeat assessment, another such attack happened today.

CNN's Jane Arraf is in Falluja -- Jane.

JANE ARRAF, CNN CORRESPONDENT: Carol, it is, compared to a week of intense combat, quite calm. That doesn't mean that there isn't sporadic intense violence; there is.

But what's happening now through many sectors of the city is troops going back and clearing these sectors building by building. An Army task force went back into the industrial section that they first swept through at the start of this battle.

But this time they were doing a clean sweep. Going door to door. They literally had to knock down every single door. The buildings had been emptied, the neighborhood abandoned. And as they knocked down the doors shooting off the locks or driving through them or pulling them off with armored vehicles, they were searching for weapons and gunmen.

They didn't find any gunmen. They found some dead bodies. But they did find a huge weapons stash, including anti-aircraft guns and armor piercing rounds for heavy machine gun -- Carol.

LIN: Jane -- Jane quick question about some belongings that were found in a building in Falluja belonging to U.S. Marine Corporal Wassaf Ali Hassoun. He was the man who allegedly was kidnapped by insurgents. Still a lot of questions about where he was and who actually took him.

Do you know anything about his belongings actually having been found in Falluja?

ARRAF: We don't know the details, Carol. What we do know is that, as the Marines and the Army go through these buildings, they're finding an awful lot of things. They're finding documents. They're finding information. They're finding perhaps in some cases evidence related to not just that case but the insurgents, perhaps Abu Musab al-Zarqawi, and all sorts of other things, including the hostage takings.

It's going to take awhile to sift through these documents for the people doing that. They've removed them in most cases from the houses, and they've been sent to other places to be analyzed -- Carol.

LIN: The troops that you've been traveling with, is there a sense among them that anybody is really going to know whether they ever really secured Falluja, that they actually took a home base of operations away from the insurgents, given the violence that's still happening around the country?

ARRAF: You know, I think on the level of the soldiers, they did not believe, on the level of soldiers on the Marines -- if they didn't believe that they had rooted out the insurgency, they would probably not feel there was much reason for fighting.

There have been losses here. Marines have been killed. Soldiers have been killed. These soldiers and Marines went into battle being told that they were getting out the command and control center. That's what they believe they've done.

And they also believe on the top levels of Marine and Army commanders here that what they've done will lessen the insurgency in other parts of the country. I don't think anyone now is saying that it's going to be completely eradicated, given what's happening in other cities, but they do believe that they have made a substantial start in ending this insurgency -- Carol.

LIN: All right. Thanks very much, Jane Arraf, reporting from Falluja by videophone.

I'm going to have much more on this when I talk with one of our generals about what's happening in terms of violence, the search for Ayman al-Zarqawi and other things. What's the big payoff when it comes to securing Falluja? But later on that -- Miles.

O'BRIEN: Now some big news about commerce. That's commerce with a capital "K." Two of the biggest, oldest best-known brands in American consumerism are merging in hopes of surviving in the universe of Wal-Mart.

Sears and Kmart, Kmart and Sears, marrying assets that -- but keeping their own names in a deal worth $11 billion.

CNN's Ali Velshi has scanned the details. I guess you could call it a blue light special deal.

VELSHI: Yes, the blue light special is you trade your Kmart stock in for stock of a company called Sears Holdings.

Look at it this way, Miles. You've got two skinny kids, constantly getting their lunch stolen by the two big kids. So the two skinny kids get together in hopes of saving their lunch some days and getting a little fatter.

But put together they're not even as big as the next biggest kid. We're talking about the skinny kids are Kmart and Sears. Roughly the same size companies, about $10 billion a piece. And then you've got Target bigger than that and Wal-Mart, which is bigger than some countries.

Here's the thing. Let's remind you what happened to Kmart now. Kmart went into bankruptcy in early 2002. Between the time it went into bankruptcy and emerged from bankruptcy a year later, it laid off 57,000 people, closed 600 stores, sold about 50 stores to Sears, sold another 18 to Home Depot and was taken over by a guy named Eddie Lampert.

Not a name familiar to a lot of people outside of the business world, but akin to Warren Buffett. This is a guy who buys companies, turns them around and does -- makes a great deal of money for the people who invest with him.

Eddie Lampert owns 53 percent of Kmart. He's also been snapping up Sears. He owns about 15 percent of Sears, making him the biggest shareholder. So while this deal came as surprise, one could have seen it coming, given that Eddie Lampert is behind both of these companies.

Now here's the thing. You may be wondering why Wall Street loves this deal as much as it does. The stock of both Kmart and Sears are way up. Because for the rest of us, these are still too tired little companies that now combine to make one tired company.

Here's what happens under the deal. Some of the Kmart stores become Sears stores. Others probably close. But they want to take advantage of the brands that these two companies have.

Obviously, at Kmart you've got Martha Stewart, and Martha Stewart stock is soaring today on the hopes that more people will have access to it. And on the Sears size you've got Craftsman. You've got Kenmore. You've got Die-Hard. And you have Land's End.

So the idea being that the average consumer in America sticks with these venerable names, gets access to more products. People will lose their jobs because this company wants to -- the new combined company wants to save some money over the next few years.

Unclear is whether they can do the right thing to keep Americans going to these stores and keep them away, maybe, from Target and from Wal-Mart. Target and Wal-Mart have been eating retailers' lunches for years.

So the stocks are soaring today. The average consumer is wondering, "All right. What's going to be different about this?" -- Miles.

O'BRIEN: I should say so. Ali Velshi, thank you very much. We'll check in with you a little later -- Carol.

LIN: All right, Miles.

Rewriting history. Our CNN crew is on its way back from an archaeological dig that could change what we know about the earliest Americans. We expect to hear from them this hour.

KELLY WALLACE, CNN CORRESPONDENT: I'm Kelly Wallace in Little Rock, Arkansas. Bill Clinton's presidential library won't be formally dedicated until tomorrow, but we've already been inside. We'll tell you what we found; a live report coming up.

LIN: And a penny for your thoughts. This guy has got $10,480.13 worth of them, to be exact. Find out why this penny pincher finally decided to let them go later on LIVE FROM.

ANNOUNCER: You're watching LIVE FROM on CNN, the most trusted name in news.

(COMMERCIAL BREAK)

JACQUI JERAS, CNN METEOROLOGIST: In Texas in the town of LaPorte, where law enforcement reported a tornado touching down. There was some scattered damage across the area, as well as some flooding.

Still awaiting word from the National Weather Service whether or not this was a tornado touch down. Possibly some wind damage across the area.

Still, a threat of tornadoes in the Houston area for this afternoon. We'll take a look at our live Viper Doppler radar. And that is showing you, still, a little bit of action on the northeast side of Houston. But we're more concerned about this line of thunderstorms just off to the west. It is crossing I-10 here.

There is a tornado watch, which will stay in effect until 4 p.m. local time throughout the day today. And it will be a wet go of it from San Antonio all the way up to Dallas.

Flood watches and flood warnings all across central parts of Texas at this hour, including those in Austin down to San Antonio, where some of the rivers here are continuing to rise. Our storm system moving very slowly off to the east will be drenching much of the southeast by the weekend -- Carol.

LIN: All right. Thanks, Jacqui.

It's all hands on deck in Little Rock, as far as friends of Bill are concerned right now. The official opening of the William Jefferson Clinton Presidential Library is tomorrow. But it is open today for media and special guests.

CNN's Kelly Wallace is among those getting a sneak peak today.

Kelly, what did you get a chance to see?

WALLACE: Well, Kyra, you won't be surprised to hear there are just a few journalists here in Little Rock, Arkansas. I believe more than 1,000 television crews from all over the world, "Entertainment Tonight," a sign of how Bill Clinton even as a former president remains a bit of a rock star.

You can hear some music behind me. There are rehearsals underway for the dedication ceremony tomorrow.

As you say, we did get inside earlier this morning. And what we found, a range of features. Bill Clinton apparently wanted to show off the daily life of a president.

And so you have the presidential limo that he used during his 1993 inaugural parade, a replica of the Oval Office. You have throughout the museum 79,000 artifacts, more than two million photographs, and 80 million pages of presidential documents. I believe that's more than any other presidential museum.

There's a lot of attention about how the impeachment matter would be dealt with. And it is dealt with in an exhibit entitled "The Fight for Power." And there you see a mention of former White House intern Monica Lewinsky, a lot of criticism of independent counsel Kenneth Starr. And if you look at the entire exhibit, you do see that the president is trying to convey the message he believed throughout his presidency there were political efforts to try and bring him down.

There's been a lot of attention about the design of this glass and steel structure overlooking the Arkansas River. It was designed by New York architects. And it is modeled after Bill Clinton's mantra, building a bridge to the 21st Century.

Most of the reviews have been very, very positive, but there have been some critics, and the former president joked about some of the criticism yesterday.

(BEGIN VIDEO CLIP)

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: Most people have said it's a beautiful building, a great landmark of 21st Century architecture.

And the London "Economist," in typical snide form, compared it as a glorified house trailer. And I thought, well, that's me. I'm a little red and a little blue. They got me pretty good there. You know, I like that.

(END VIDEO CLIP)

WALLACE: The president showing off his sense of humor.

No controversy, thought, Carol, when it comes to the impact on Little Rock, Arkansas. Since President Clinton decided to build his library here in 1997, $800 million invested in the downtown and riverfront area, pretty much energizing this entire place.

And of course, tomorrow it all takes center stage. President Bush will be here. Former presidents Bush and Carter, as well. So lots of attention on Little Rock -- Carol.

LIN: You bet. And a slice of history. Thanks, Kelly.

Hillary Rodham Clinton is actually going to be Larry's guest tonight. And also, be sure to tune in tomorrow to CNN, because we are going to have live continuing coverage of the dedication ceremonies at the Clinton Presidential Library.

O'BRIEN: All right. Please stand by now for the debut of a new LIVE FROM feature, the $10 word alert. Pay close attention. By the way, this is not a funded $10 word. We don't have the budget to pay for it. But nonetheless, it's a $10 word.

Now to an event involving our nation's current president. Some might call it a sweet tradition and one that enjoys a long history. But cynics might term it the height of sardoodledum.

Sardoodledum, the $10 word of the day. There it is, sardoodledum, drama that is contrived, stagy, or unrealistic. But no matter how you slice it, it's good news for a critter named Biscuits, who escapes murder most fowl, shall we say?

Yes, it sure helps to have a friend in high places. Biscuit can also thank President Harry Truman, who established the annual ritual of the White House turkey pardon back in 1947.

We're told Biscuits spent the past few months getting used to being around people so that there were no embarrassing pecking incidents in the Rose Garden.

President Bush also pardoned Gravy. That's the backup bird, just in case -- well, look, he was actually pretty tame there. Both will live out the balance of their lives at a nearby petting zoo.

Back with more LIVE FROM in just a moment.

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O'BRIEN (voice-over): Next on LIVE FROM, it's the military version of Whack-a-Mole. Insurgents driven out of one town pop up in another. How can U.S. forces wipe them out?

Later on LIVE FROM...

UNIDENTIFIED MALE: Did you intend for your daughter to die?

UNIDENTIFIED FEMALE: Absolutely not.

O'BRIEN: Imperfect parent or murdering mom? The court is deciding after a woman is charged in the death of her diabetic daughter.

And tomorrow on LIVE FROM, before "Trading Spaces," there was "This Old House." We'll talk to one of the show's master restorers about turning your home into a haven.

(COMMERCIAL BREAK)

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UNIDENTIFIED MALE: Two, one, launch. Launch. Launch.

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O'BRIEN: When NASA says scram, they really mean it. In yesterday's test flight off the California coast, the unmanned scramjet X43-a -- I love saying that stuff -- smashed its own world speed record, flying at nearly ten times the speed of sound.

The big issue here, though, is just proving the concept of a scramjet. The project manager on the experiment says the flight was as good or better than the Red Sox breaking the curse. Clearly debatable, but nevertheless, the technology worn out.

Where it goes from here? Who knows? We'll have a "Mach Minute" for you a little later, tell you a little more about that. From science to poetry or some scientific poetry perhaps. Both sides of the brain going here. A group of Swedish poets gathered at an observatory to broadcast a live reading of their works into the great beyond.

One bard noted, "I can't think of anything more adequate than poetry to communicate what it means to be human." Indeed. There once was a space man named Lars who got all the way to Mars, but once he touched down on Mars, just had to frown. He'd forgotten his lutefisk in jars.

LIN: Just another example of sardoodledum, Miles.

All right. More realistically, let's take a view from Wall Street.

You've heard of the big Sears/Kmart merger. Bigger is not always better when it comes to stocks. Just ask the airline industry.

Rhonda Schaffler joins us from the New York Stock Exchange for the market's reaction.

Rhonda, what are they saying?

(STOCK MARKET REPORT)

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