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Riding Out Hurricane Katrina; Power Shift in Palestinian Territories; Chinese Cars Coming to America?

Aired January 27, 2006 - 15:00   ET

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

BETTY NGUYEN, CNN ANCHOR: We have some developments into CNN.
Tony Harris is in the newsroom, on top of all of it.

Tony, what do you have?

TONY HARRIS, CNN CORRESPONDENT: Betty, got some tape I want to show you of Savanna Johnson. Police in New York have arrested Ms. Johnson, who they believe is behind a rash of fires to cover up shoplifting.

Now, take a look at these pictures from a surveillance tape from inside one of the stores that was torched. The fires were set primarily in Harlem clothing stores. You see her there in the brown Jacket. And on the tape, you see her not only loading some clothes in to a bag, but -- there it is.

There's the moment there where police say she is using a cigarette lighter to set fire to a rack of clothing. Now, in just a moment, as we go forward here, you will see -- there it is again -- that shiny object there police and fire tell us is the lighter that Savanna Johnson used to set that rack right in front of her on fire.

And, moments later, there you go, flames to the left of the screen -- the sprinklers going off, and smoke everywhere on the top of that clothing store -- the fire commissioner telling us that the fire was a diversion that allowed her to get out of the store undetected.

And when you're talking about Savanna Johnson, this is a woman with a lot of police contacts, 59 previous arrests from throughout the country, Betty, for everything from shoplifting to prostitution. And there she is there, loading up the bag.

And, then, moments later, you see what appears to be the lighter, and then the rack of clothing goes up in smoke.

There you go, Betty -- more to come.

NGUYEN: In the -- in the lingerie department, no less, Tony.

(CROSSTALK)

HARRIS: Is that what it was?

NGUYEN: That's -- you know what that was.

HARRIS: Well...

(LAUGHTER)

NGUYEN: You saw that very clearly.

HARRIS: I wasn't -- I wasn't paying that...

NGUYEN: Uh-huh.

HARRIS: I was looking for the criminality that is being alleged here, not...

NGUYEN: Very interesting, nonetheless.

HARRIS: Yes.

NGUYEN: I think we should move on before we get into trouble.

HARRIS: Thank you, Betty.

NGUYEN: OK.

(LAUGHTER)

NGUYEN: Well, Republicans are all but dancing in the aisles, absolutely certain they have enough votes to send Samuel Alito to the Supreme Court on Tuesday.

Dance all they want, it's not stopping the Democratic duo of John Kerry and Edward Kennedy from mounting a spirited last-ditch effort for a filibuster.

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D), MASSACHUSETTS: Confirming Judge Alito to a lifetime appointment on the Supreme Court would have irreversible consequences that are already defined, if senators will take the time to really measure them.

And, in my judgment, it will take the country backwards on critical issues.

SEN. JEFF SESSIONS (R), ALABAMA: It was apparently hatched in Davos, Switzerland, where Senator Kerry now is, with those masters of the universe that are out there trying to -- storm figure our world economy out. Maybe they ought to spend more time trying to get the oil prices, gasoline prices down, than worrying about conjuring up a filibuster of a judge as able as Judge Alito.

(END VIDEO CLIP)

NGUYEN: Republicans plan to vote on ending debate on Alito Monday and vote to confirm on Tuesday, the same day President Bush gives his State of the Union speech.

Well, they don't want to stay -- we presume -- and the U.S. doesn't want to hold them. So, what is keeping nine Chinese Muslims at the U.S. prison camp at Guantanamo Bay? They were captured in Afghanistan and Pakistan in 2001. Ten months ago, the military decided they didn't pose a threat to the U.S. and should be released.

But U.S. law prevents sending them back to China, because they could be persecuted. The Bush administration doesn't want to grant them asylum and hasn't been able to find another country to take them. The State Department says it's still trying.

A different kind of paper chase in Bogota, Colombia, dozens of raids, 19 arrests, all in a bid to bust a bogus passport ring. Colombians claim the ring has links to al Qaeda and Hamas, fabricating Spanish, Colombian, Portuguese, and German passports for use in entering America.

But the U.S. Justice Department is looking no farther than a Colombian rebel group. A jury, a grand jury, in Miami has indicted some of those arrested on charges of aiding the group known as FARC.

Well, if you think you have seen Hurricane Katrina from every conceivable angle. A shrimp boat captain and his crew not only rode out Katrina's 120-mile-an-hour winds off the coast of Louisiana. They captured the ordeal on video.

CNN's Sean Callebs reports.

(BEGIN VIDEOTAPE)

SEAN CALLEBS, CNN CORRESPONDENT (voice-over): Never before seen pictures of Hurricane Katrina's fury, it's the way Kent Frelich and his crew of three saw it, riding out the hurricane aboard a shrimp boat in Southeast Louisiana, near the town of Empire.

The full fury of Katrina hit in the wee hours, about the time the 39-year-old remembered he had a video camera on board.

KENT FRELICH, BOAT CAPTAIN: And this is debris coming down the canal. It's kind of hard to see in the dark, but you can see big pieces of debris coming down the canal, as the -- as the water is coming in.

CALLEBS (on camera): At this point, you knew people were losing their homes?

FRELICH: Oh, yes.

CALLEBS (voice-over): Others that night were moored, near Frelich, including a small boat that he saw sink. He thought the two men on board had surely drowned, until daylight.

FRELICH: This is when we realized they were alive. Right here. There -- that's them. They were on that boat and they made their way up to the top of the ice machine and that's where they spent the storm.

CALLEBS: Then, exhausted and covered in diesel fuel, the two slammed and crawled toward Frelich's boat.

FRELICH: These are the guys making their way back to the boat. They were on that ice machine. And he's -- this and debris. That's debris that's piled up against the boat.

CALLEBS: Both men survived. Later, a different rescue operation.

(on camera): Is that a dog?

FRELICH: And this is -- that's a dog on top of my forklift.

CALLEBS: I don't want to know what happened to that dog.

FRELICH: Well, he made it.

CALLEBS (voice-over): The dog is now called Empire.

About an hour later, calm from the eye of the storm gave way to strong westerly winds.

FRELICH: You can hear the ropes cracking actually in the background. See the waves coming in?

CALLEBS: But the crew knew they had weathered the storm.

FRELICH: We then had been through the worst and we knew we had it made at this point.

CALLEBS: Hours later, when the rain stopped, the crew couldn't believe the widespread devastation. At this point, they were running on adrenaline. Awake for nearly 40 hours. Frelich knew he had a great story, a videotape, but most importantly, he was still alive.

Sean Callebs, CNN, in Plaquemines Parish, Louisiana.

(END VIDEOTAPE)

NGUYEN: Now to the Palestinian power shift. This is happening as we speak. And it's not sitting well with Israel, the West, or even with a vocal and impassioned segment of Palestinians.

On the line now from Gaza City, CNN's Ben Wedeman.

Ben, this power shift sparked protests earlier today. Tell us what happened. We see you up now.

BEN WEDEMAN, CNN CAIRO BUREAU CHIEF: What we saw is thousands of members of the Fatah movement, which is now suddenly out of power, converging upon the home of the Palestinian president, Mahmoud Abbas, who is also the leader of the Fatah movement.

They are angry because they lost the elections. And they are blaming the Palestinian leadership of the Fatah movement for this. They say, because of their inept rule, their corruption, their nepotism, they ruled this area for 12 years, with very little to show for it. And that's one of the reasons why Hamas was so popular.

So, we saw, as these thousands of Fatah members, mostly young men, first went to the president's house. Then, they went to the Palestinian parliament. There, they shot many hundreds, possibly thousands, of rounds of gunfire in the air. They tried to break into the building. They vandalized parts of it. And, then, they lit several cars on the grounds of the parliament on fire.

Now, they eventually did, after a -- one of the Fatah leaders came and called on them to go home, to disperse, to be calm, some of them left and went to other parts of town, where, apparently, they caused more trouble, burning tires. We're still hearing occasional gunfire in the air.

And, also, in the Gaza -- in the elsewhere in the Gaza Strip, in the town Khan Younis, there were clashes between Fatah members and Hamas, which left three people wounded. So, the situation here in Gaza this evening is very tense -- Betty.

NGUYEN: Ben, besides the unrest, what does this group of protesters hope to accomplish?

WEDEMAN: Well, what they want is to see the leaders of Fatah to resign.

They want to see a new Fatah reborn out of these elections. And they are basically holding responsible their leaders for this victory by Hamas, which basically is a revolution. The same group that has run the Palestinian movement for 40 years suddenly finds itself on the outs. It's out of power. Hamas is in. They are unhappy about that.

And, on a more practical level, many of these young men dependent on Fatah and the Palestinian Authority for jobs. They may be out of those jobs. So, that's one of the reasons why they are so unhappy -- Betty.

NGUYEN: Well, with Hamas winning in these elections, do you have any idea, just a better vision, of how they are going to set up this government?

WEDEMAN: Well, it's not -- it's still fairly early. I spoke to one of the leaders of Hamas here in -- in Gaza City, Mahmoud Zahar, who said that he has all sorts of ideas, in terms of just cutting off the entire relationship with Israel.

They want to open the border with Egypt and increase trade with, as he said, the Arab and the Islamic world. He says they no longer want to deal with Israel, the way the old Palestinian Authority did, which was to receive tax revenues that were collected by Israel from Palestinian workers. They really want to cut it off altogether.

But it's going to be very difficult, because there's still thousands of Palestinians who go every day, under good conditions, from Gaza into Israel to work. So, it's going to be a very difficult equation for Hamas to work out -- no sign that they have really come up with a hard-and-fast solution to all these problems -- Betty. NGUYEN: CNN's Ben Wedeman in Gaza City -- Ben, we thank you.

Well, the big victory for Hamas puts the Bush administration in a tough spot. It has vowed to support democracy, no matter where. On the other hand, a group considered a terror organization was overwhelmingly and democratically brought to power.

CNN's Brent Sadler is in Beirut, where that point is definitely not lost.

(BEGIN VIDEOTAPE)

BRENT SADLER, CNN BEIRUT BUREAU CHIEF (voice-over): A stunning electoral triumph for Hamas, redrawing the Palestinian political landscape.

ASMA ANDRAOS, PRO-DEMOCRACY ACTIVIST: You can no longer talk about terrorist groups when 75 percent of a nation votes for that group. Ultimately, you have to think of it as a political party, representing its people.

SADLER: At the American University of Beirut, Professor Nabil Dajani has lectured students on Mideast affairs for 35 years. Hamas, he claims, has used the bomb and now the ballot box to confront Israel and challenge its closest allies.

NABIL DAJANI, POLITICAL ANALYST, AMERICAN UNIVERSITY OF BEIRUT: This is not a vote for an Islamic movement. It's a vote against the West. It's a vote for a group that has -- was able to defy the West.

SADLER: And, say many Arabs, a possible blow to U.S.-led Western policy that's supposed to spread democracy in their region.

DAJANI: The results of the election is a slap on the face of world politicians. It tells them that what -- the way -- the way you are running things is wrong. Reconsider.

SADLER (on camera): Here, in Lebanon, recent parliamentary elections saw the armed anti-Israeli militant group Hezbollah win seats and government ministries. Islamists in Egypt have gained ground, too -- democracy turning out to be a double-edged sword for regional leaders.

SARKIS NAOUM, "AN-NAHAR": They will not be happy with this kind of democracy which brought to -- to power the Islamists.

SADLER: In Washington, President George Bush hopes to reassure Lebanese they can build a stable democracy by meeting Friday with Saad Hariri, the son and political heir of Rafik Hariri, assassinated nearly a year ago.

Hariri won a landslide electoral victory at home, a victory that's still at risk from political violence and factional infighting. His rival, Hezbollah, hopes to build yet more electoral support in Lebanon, a strategy Hamas seems to have copied, alarming some.

ANDRAOS: If I look at it from my perspective of what a democracy should be, I find it quite terrifying.

SADLER: But it is a result, say observers, whether in Lebanon or the West Bank and Gaza, of democracy at work, like it or not.

Brent Sadler, CNN, Beirut.

(END VIDEOTAPE)

NGUYEN: The Holocaust remembered -- a solemn ceremony at the United Nations marks the 61st anniversary of the liberation of Nazi death camps. Holocaust Remembrance Day comes at a time when the president of Iran, among others, is publicly doubting the mass killings ever took place.

U.N. Secretary-General Kofi Annan said the Holocaust should remind the world to be vigilant against racism and also keep in check what he called bigots who deny the extermination of Jews.

A question for car buyers: Where will your next car come from? The U.S., Japan, maybe China? Another foreign invasion coming to a showroom near you, we will tell you all about it when CNN LIVE FROM continues.

(COMMERCIAL BREAK)

NGUYEN: American highways used to be filled with American cars, Fords, Chevys, Chryslers, tailpipe to fender, as far as the eye could see. Well, things began to change with imports from Europe and Japan. Now another player is gearing up. That's China. If you don't think you would be interested in a Chinese car, remember, people laughed when they started selling Toyotas here, too.

With Detroit's big three already struggling, how serious is this latest threat?

Csaba Csere is editor of -- and -- in chief -- of "Car & Driver." And he joins us from Ann Arbor, Michigan.

We appreciate your time with us.

First of all, Chinese cars, tell us about the cars. What can we expect?

CSABA CSERE, EDITOR IN CHIEF, "CAR & DRIVER": Well, Chinese cars are very primitive at this point.

The Chinese auto industry is its in infancy. And cars are an extraordinarily complex product. So, getting into the car business is not like getting into the T-shirt business or even into the transistor radio business. So, it's very early, but the Chinese have shown a lot of ability to get into a lot of other market segments. And they are going after this one, too.

NGUYEN: You know, just looking at the price tag, it makes people step back and go, hmm, scratching their head, thinking, can you really get away with putting a car out there for this amount, $10,000 for the Geely?

(CROSSTALK)

NGUYEN: That's really cheap.

CSERE: It sure is cheap. And it will probably be less than that. And it has to be cheap for people to take a chance on it.

But there's a track record for doing this. You know, when the Yugo showed up here 15 years ago, it was -- it was about $5,000, which, in that environment, was similarly cheap. Hyundai, when they first showed up, in 1987, also undercut everyone else. And that's a way to get a toe-hold in the market.

NGUYEN: But is this a case you get what you pay for?

CSERE: Well, that remains to be seen, because the early Geely that was shown to the press at the Detroit Auto Show was a pretty primitive car. It was an old-fashioned design. The interior was very, very basic. The engine technology wasn't modern.

And we have no idea what the quality is. And we won't know that until we actually get to drive the car. But you're not going to get the most sophisticated car on the planet for that kind of money. That's for sure.

NGUYEN: Yes, that's true.

We talked about the Geely? What about the Chery, because that's another Chinese car that will hit the market? What do they offer?

CSERE: Well -- well, Chery showed up with big fanfare about a year ago, and they hooked up with an American entrepreneur named Malcolm Bricklin, who helped found Subaru. And he was going to set up a whole new franchise and have a bunch of dealers out there.

But, boy, that has been slow-going. That program has not gotten as far along as expected. And, so we don't really know what Chery is going to do. They had talked about showing up here with a small Sedan, an SUV and a sporty car all at once. But we haven't seen any of that.

And, you know, this is a long lead-time business. You don't just show a car in six months and then get in the marketplace immediately afterwards. So, it's -- it's taking a while for the Chinese to get here.

NGUYEN: So, if these Chinese cars hit the market with a really low price tag, is that going to drive down prices as a whole?

CSERE: Well, it depends on how good the cars are. If they show up with a car that may be primitive, but is actually reliable and runs for a long time at a low price, you know, they are going to take a piece of business from other people.

And when people start losing business, it may put downward pressure on pricing. But what it will probably do is affect used cars first, because when you look at below $10,000, the question will be, is a new Chinese car as good as a used Honda civic or a Ford Focus. And, again, that remains to be seen.

NGUYEN: You know, when we talk about domestic cars, obviously, we want to know how this is going to affect the industry as a whole.

We saw GM and Ford recently say that they are going to cut jobs, they're close plants. How is this going to affect the industry as a whole, when you introduce a whole new carmaker?

CSERE: Well, in the short term, it actually probably won't do too much to the domestics, because I think the Chinese are going to approach the market from the small car end of it, because, that way, they will build a small car that they can also sell in the home market and elsewhere in Asia. And the domestics, they make a lot of their money in bigger cars and in trucks and SUVs.

So, it will be a while before they start competing there. But if the Chinese makers get established in the small car segment, eventually, they are going to move up.

NGUYEN: All right. Here is last question, quickly. Would you buy one?

CSERE: Not until I have seen it.

(LAUGHTER)

NGUYEN: I knew you were going to say that. You got to make sure they work out the kinks, that it's -- it's all good with the price.

CSERE: And not just see it. I want to drive it, too.

NGUYEN: Yes. All right.

Csaba Csere, we appreciate your time today.

CSERE: Thank you.

NGUYEN: Highways are one thing, but, you know, something is wrong when a U.S. truck plant's own employee parking lot is a polyglot of vehicles, such as the Ford lot in Dearborn, Michigan. And the company is tired of its own products taking a back seat.

So, starting next Wednesday, only Ford products will be allowed. Workers driving other makes will have to park all the way across the street.

A new mother's decision to nurse or not is a highly personal one, and often traumatic, if nursing isn't an option. But formula is no longer the only alternative. We will show you the thriving black market in breast milk -- yes, breast milk.

We're LIVE FROM, and we have the latest on this when we come back. (COMMERCIAL BREAK)

NGUYEN: Here's question: Did Jesus exist? Don't e-mail us, please. I'm only reporting the key issue at a court hearing in Italy, where a judge will determine whether a small town parish priest should stand trial for affirming the existence of his boss. The priest's accuser is an atheist, who says the Catholic Church has been deceiving people for 2,000 years. The case could end up in the European Court of Human Rights.

Well, American brands may be well known across the world, but that doesn't necessarily mean they are the most popular.

CNN's Susan Lisovicz joins us now with that story New York Stock Exchange.

Hi, Susan.

SUSAN LISOVICZ, CNN CORRESPONDENT: Hi, Betty.

Two distinctly different findings -- this new study looks at one particular consumer age group, an important one to advertisers, teenagers. Ad agency Energy BBDO says American powerhouses, like Coca-Cola, Disney and McDonald's, are in the top 10, as far as global name recognition is concerned, but that doesn't make them the most popular.

Among teens, Coke ranks eighth. Disney is 23rd. And McDonald's is 32nd. So, what do global teens like? The study found Sony, Nokia and Adidas were the companies that drew the most positive responses. The agency says the new favorites seem more in tune with what teens want, connecting to other people and empowerment.

Turning to the markets, well, some investors are feeling empowered right now. Stocks are sharply higher on strong earnings reports from Microsoft and Procter & Gamble, both of those Dow components. And, right now, the Dow is in triple-digit territory, up 112 points, 10921. We could actually talk about Dow 11000 again -- the Nasdaq, meanwhile, up 20 points, or 1 percent.

CBS is in focus. It's shedding it Paramount theme parks business. The parks, including Great America in California, Kings Dominion in Virginia, and Kings Island in Ohio drew more than 12 million visitors last year, just the latest example in a recent trend of entertainment giants looking to slim down to improve the bottom line.

CBS also operates its TV network, radio stations and a publishing group. And it says a lot of parties are interested in those parks.

And that's the latest from Wall Street. Join me at the end of the hour for the closing bell and a complete wrap-up of the trading day.

LIVE FROM continues after this.

(BEGIN VIDEOTAPE)

JENNIFER WESTHOVEN, CNN CORRESPONDENT (voice-over): Pam Salogi (ph) was well into her 40s when her first scuba diving trip changed her life.

UNIDENTIFIED FEMALE: I was a manufacturer's rep for 25 years with my husband. And to say, you know what, I want to do something totally unique, totally different, work in a scuba shop.

(LAUGHTER)

UNIDENTIFIED FEMALE: I didn't look at it as a career change. I didn't look at it as semi-retirement. I looked at it as an objective I wanted to reach.

WESTHOVEN: Hooked from her first dive, Salogi (ph) went home to Sarasota, Florida, trading in her day job to become a scuba instructor.

UNIDENTIFIED FEMALE: I love it, because I can take somebody who, at any age, whether they are 12 years old, or whether my oldest student, being 80 years old, and offer them something they never seen before in their entire life, a totally new experience.

WESTHOVEN: Salogi (ph) remembers the first time she breathed under water.

UNIDENTIFIED FEMALE: Terrifying. When I took my lessons right at this very pool, and I had to put my face in the water and breathe, I thought that was the end of the world.

WESTHOVEN: But her confidence grew. And Salogi (ph) says her early fears help her calm students when she takes them under water for the first time. Now 58, Salogi (ph) wants to share her passion.

UNIDENTIFIED FEMALE: I have a 4-year-old and a 1-year-old grandson. And I hope I get the privilege of teaching them how to scuba dive, that first, and, then, maybe doing adventures with them. Now, even though we're older, there's a whole world out there for us.

WESTHOVEN: Jennifer Westhoven, CNN.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

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