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Lou Dobbs Moneyline
Summit of the Americas Kicks Off With Protests
Aired April 20, 2001 - 18:30 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.
TERRY KEENAN, CNN ANCHOR: Protesters bust their way into the Summit of the Americas.
This is MONEYLINE for April 20, 2001.
Hello, everyone, and welcome to MONEYLINE. I'm Terry Keenan sitting in for Willow Bay. We begin with fierce protests at the Summit of the Americas in Quebec City. You are looking at live pictures of protesters who have engaged in dramatic confrontations with police even before the three-day meeting gets under way.
Demonstrators today dismantled part of a fence erected to keep them away from dignitaries. Protesters tossed rocks, bottles and other debris at officers who responded with tear gas. A police spokeswoman said arrests have been made during the disturbance, but the number of people arrested was not immediately available. A police officer directing traffic was injured and taken to hospital after a small group of protesters beat him in the head and the face and then disappeared into the crowd.
The opening ceremonies for the summit are set to begin in just under an hour, and President Bush is scheduled to speak. CNN will bring that to you live. Let's go not to John King, who is traveling with the president in Quebec -- John.
JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: Well, Terry, those opening ceremonies delayed an hour because of the sometimes chaotic situation on the street here, security concerns for the leaders. The Summit of the Americas getting under way, and the reason these protesters on the streets today, they, of course, oppose efforts to negotiate the Free Trade Area of the Americas. That would be an open market of 800 million people stretching from the Arctic to Argentina. In the view of the most of these protesters, such free trade deals exploit workers, especially in the poorer nations, and also damage the environment.
Now, the police here thought they had the situation under control, a very large perimeter around the summit site. But several breaches today in that security; several times the police using tear gas, sometimes quite aggressively, to disperse the protesters. Relative calm here now, but we should note, the summit to begin an hour from now.
The actual working sessions not until tomorrow, and the police perhaps caught off guard because the major protests are planned heading into the weekend. We saw here where I am, near the edge of the perimeter, a short time ago three bus loads of reinforcements brought in, and they police here say they are getting advice from the police in Seattle, Washington. You might remember back in 1999, very violent protests there during the meeting of the World Trade Organization.
So, this summit certainly off to a contentious start. Excuse the sirens here. An ambulance making its way through the streets here. The summit off to a very rock start already. We know several leaders, several presidents unable to make it to getting acquainted sessions with President Bush because they were confined to their hotels because of security concerns -- Terry.
KEENAN: And John, this, of course, is the president's first big international meeting. What is he hoping to accomplish here and how are the protests thwarting him at this point?
KING: Well, the president, when asked about the protests earlier, says he understands some people oppose free trade and he simply disagrees with them. The president trying to make the case here that he is willing to be a leader for the free trade movement, not just in this hemisphere, but around the world.
But his credibility at issue somewhat here because he promised during the presidential campaign, you might remember, or he said during the campaign that the next U.S. president should go to the Summit of the Americas with the power, the broad powers to negotiate a trade agreement. Mr. Bush has yet to even submit that legislation to the U.S, Congress because, his aides acknowledge, it is unclear right now whether he could win that negotiating power from the Congress.
One of reason that is in question is because of the opposition of environmental groups and labor unions in the United States. Those groups well represented in the protests here this weekend at the summit -- Terry.
KEENAN: John, what's on the agenda for the rest of the weekend, and any guess in whether we'll see a dampening of the protests going forward?
KING: Well, the protests are supposed to escalate, at least in numbers. Whether the police tactics change as of tonight, we will see when day breaks tomorrow. A much larger protest planned tomorrow. Most of the discussions here about trade. There will also be discussions of anti-drug trafficking efforts and efforts to encourage more democracy throughout the region.
Mr. Bush having some pull aside meetings with leaders he has yet to meet. Of course, he has yet to hit the 100 day mark in his administration. But it is that Free Trade Area of Americans that is the number one priority here. Mr. Bush had even hoped to rush up the deadline.
Right now, the goal is to negotiate the trade agreement by sometime in 2005. It would then, of course, have to be ratified by the countries involved. Mr. Bush wanted to pull that deadline back to 2003, but oppositions to countries such as Brazil forced the leaders and forced Mr. Bush to concede, stick to the 2005 deadline and again, many of the leaders here very skeptical, very unwilling to make the concessions they would have to make in their countries until they are convinced that the leader of the biggest economy here, the United States of America, can get this trade deal, once it is negotiated, through the U.S. Congress.
KEENAN: John, once they can physically all be in the same room and talk, who are the most important players there to the administration? Who does President Bush need to ally with in order to promote his hemispheric goals?
KING: Well, he believes his best allies in this debate are the prime minister of Canada, Jean Chretien, and the new president of Mexico, Vicente Fox because they will make the case that the North American Free Trade Agreement that Canada, the United States and Mexico entered into seven years ago now has been a great boon for those countries. The protesters obviously disagree. NAFTA is one of the examples they cite in opposing this broader agreement.
But Mr. Bush hoping that with the help of Mr. Chretien and Mr. Fox, he can promote this hemisphere-wide free trade zone. But because there is resistance from countries like Brazil, there are also efforts under way to negotiate bilateral trade deals, and the government of Chile certainly one are where President Bush has said just recently he hopes to conclude a free trade agreement with Chile and perhaps some other nations represented here by the end of the year in advance of the negotiations for the hemisphere-wide free trade zone.
KEENAN: All right, certainly plenty on the agenda. Thanks so much, John. John King traveling with the president in Quebec.
We want to go to the phones now and bring in our Kelly Wallace. She is in the thick of all the protests in Quebec City. Kelly, have things quieted down considerable in the last hour or so?
It appears we can't seem to get the connection with our Kelly Wallace in Quebec City. We will try to reestablish the connection on the phone. Kelly, of course, hit with some tear gas in the last 60 minutes or so, the last time we spoke with her. She did indicate that the tensions were cooling considerably.
Well, this, of course, is only the latest high=profile protest against free trade. The model was set over a year ago. That was at the World Trade Organization meetings in Seattle, Washington. Then, some 30,000 demonstrators took to the streets in what was dubbed "the Battle in Seattle." Most of those protesters were peaceful, but violent demonstrators did break windows at icons of consumer culture including Starbucks, Nike and McDonald's, bringing that city to a virtual halt.
And demonstrations took place at the World Bank, IMF meetings last September. That's when protesters again took aim at globalization policies. All right, we want to go back to Kelly Wallace, is that correct? No, we want to go back to John King -- John.
KING: Hello, Terry. Kelly, on the other side of the perimeter. As you mentioned, the most recent tear gas over on that side. This side here, relative calm right now, and I think throughout the area you sense relative calm. I did want to note, though, we're awaiting the opening ceremonies. We know that President Bush and Prime Minister Chretien on hand already at the conference center for those ceremonies, now a little under an hour away.
But even though the summit hasn't begun, these protests have disrupted things somewhat. We know the presidents of Bolivia and Brazil were scheduled to be in a group meeting with President Bush. They could not make it. At least five other leaders from the Caribbean region did not make a meeting there, and apparently at least one leader missed a meeting with Central American leaders as well.
Now, President Bush, as well as the other leaders here, coming here knowing full well there would be protests. Twice, at least, they have broke through the barriers here today. It appeared the local police caught a bit off guard by that and as you see in these pictures now, the police have moved outside, and they're moving in formation, essentially to reestablish a broader perimeter outside a summit site that is already fenced off.
And these breaches took place a several locations around the perimeter. It appeared as though the protesters were testing to just see where they might have the most impact, and where they come through and test the police. And heavy use of tear gas in the area to push them back and again, larger protests planned for tomorrow when the summit is actually under way and those negotiating sessions happening in Quebec City.
KEENAN: John, help with us the geography of the city. Anyone who has visited Quebec knows it's a beautiful, walled city. Are the protesters outside of that wall?
KING: They are outside the wall of what would be known as the old city. A few did make it through at some point today. That is why this was walled off. It's a city based on hills, and this area, they thought -- the organizers and the police, obviously, thought they could wall off and they learned lessons from those pictures you showed just a few moments ago in Seattle, from the IMF World Bank meeting in Washington, D.C. that followed that, and the police studied those meetings and it appears the protesters have as well.
But the police had hoped with concrete barriers and then those fences several feet high into the air that they could keep the protesters back. There was no question there would be protesters here. No question that there would be boisterous crowds as the leaders tried to have their meetings, but the police had voiced confidence that they could keep the protesters away from the site.
And again, no reason to believe that the leaders were at all at risk, but we do know there have been some disruptions in their travel because of security concerns, because of the number of protesters in the streets and because of the police presence and the tear gas used, that some presidents decided to stay in their hotels this afternoon and not make it about to their meetings.
KEENAN: OK, John, we'll continue to check in with you throughout the hour. John King in Quebec as nightfall approaches there.
Well, for more background on the clashes over globalization, we're joined now by Josh Ramo. He is the assistant managing editor with "Time" magazine and Josh, I know that you have been working on a piece about the goals that the president had hoped to accomplish in Quebec. Can you outline them for us?
JOSH RAMO, "TIME" MAGAZINE: Sure, Terry. Yesterday afternoon, I sat with the U.S. trade representative, Bob Zoellick, just a couple of hours after he left the White House and finished briefing the president and getting their plans into alignment. And a lot of what they're talking about is trying to figure out how they need to go about eliminating the various sources of opposition to these free trade agreements.
The Bush administration is 100 percent committed to free trade. There is no question in their mind that they want as much trade liberalization as they can accomplish over the next four years. In fact, some people inside the White House are saying that this is really going be their big economic legacy, just as the big economic legacy of the Clinton administration was the incredibly liberalization of markets that happened, the Bushies are hoping that they can bring trade liberalization to the table.
In order to make that happen, they are going to have to go to a diverse group of interests and really persuade them that this is in their best interests to sign on to these agreements, and what you're seeing on TV, even though this is only 50 or 75 people who seem to be causing this problem, this is an example of the intractability of the problems that the Bush administration is now going to face. These are the kind of people they're going to have to sit down with convince that free trade is in their interest, and that's going to be very difficult.
KEENAN: Was the administration ready for this sort of protest? Were they expecting it?
RAMO: Yes, Zoellick and the folks around him yesterday said, look, we're going to expect to see some of this. One of the key things to recognize is that the police have taken lessons from these earlier protests, the protesters seem to have taken lessons from them as well, but so has the administration and so have the politicians, and they are getting a little cannier about exactly how to approach these things.
It turns out in Seattle, for instance, that probably 60 or 70 percent of the folks who were there were labor demonstrators and they weren't the ones that were violent. So, if you want to attack this as a political problem, you say, all right, well, what is it that that constituency cares about? How do I get at them and deal with those particular problem? So, the violence that you see is probably something that's intractable, but the problems that are motivating may be something that a real trade agreement could address.
KEENAN: Who do you think these protesters are in Quebec, the same folks that we saw in Seattle and in Washington...
RAMO: Yes, you know, the folks who are there and are clearly prepared for it are obviously the same renegade group. If you talk to the FBI, they puts their number at anywhere from 100 to 450, 500 who kind of rotate around North America doing stuff like this. There's a larger group internationally which, as you may know, gathered in Brazil in early January.
There's a difficult problem in managing these folks, which is it's very easy to move across border, it's very easy to set up protests, and they have an outsized impact. I mean, if you and I were on the ground in Quebec, we would see the relative importance of this, which is very small. But on television, 50, 75 folks standing up to guys in masks is a tremendously powerful image.
KEENAN: They're not allied with any official organization. How, then, does the administration address their protests?
RAMO: Well, I think, again, the challenge is to recognize that there are some people you can just never deal with, and that these protests are always going to continue. What they can do is hopefully rob them of their ideological credibility that they bring to the table, which is there are a lot of folks who look at free trade and see some of the downsides of it.
It is, to some extent, a problem. Brazil is a great example of this. Brazil -- a lot of Brazilians are worried that if they get an American free trade agreement, in order to sign up for that, they would have to stop producing the kinds of AIDS medications which they're producing in violation of international patent law.
So, that's something people constantly bring up as a health risk. If you sign on to a free trade agreement, you're going to have hundreds of thousands of Brazilians dying of HIV-related diseases. In fact, one of the lessons we've seen from South Africa this week is that it's possible to reach negotiated settlements in a free trade agreement, and that the patent laws can continue to stand and those things aren't threats.
And so if you tackle those on a case-by-case basis, the administration's hope is they kind of knock out the intellectual underpinnings that guide those folks. You'll be left with a few violent anarchist, a few violent radicals but hopefully people will see them in the larger context of the benefits of free trade.
KEENAN: All right, thanks so much, Josh, for your insights. We appreciate it, and we'll look for your reporting in next week's "Time" magazine, Josh Ramo.
And we will continue our coverage of the protest in Quebec City at the Summit of the Americas when MONEYLINE continues. (COMMERCIAL BREAK)
KEENAN: We will continue our coverage of the violent protests in Quebec City at the Summit of the Americas in just a moment, but first let's bring you up to speed on what happened on Wall Street today. It was a disappointing end to what was otherwise a very stellar week. Stocks retreated across-the-board, but the sell-off wasn't enough to dispel the renewed enthusiasm among many investors.
The Dow fell 113 point to close at 10579, a loss of just over 1 percent. More than 1.3 billion shares traded on the Big Board. The Nasdaq lost 18 points, ending the week at 2163. Volume there continues to be extremely heavy, over 2 1/2 billion shares traded.
Investors may want to forget the day, but they certainly don't want to forget this week, especially for the Nasdaq. It rocket 10 percent; in the top five best weeks ever for the index. The Dow not as impressive, but respectable nonetheless. That average gained 4 1/2 percent over five sessions.
Those statistics fail to convey just how dramatic a week it was on Wall Street, when Alan Greenspan, taking the markets by storm with a surprise cut in interest rates.
Our Peter Viles traces the twists and turns of this wild week.
PETER VILES, CNN CORRESPONDENT (voice-over): The rate cut relief rally ran out of gas, but the selling was modest, leaving intact most of the week's gains and most of the optimism that came with those gains.
LARRY WACHTEL, PRUDENTIAL SECURITIES: That's understandable. In fact, it's desirable. The last thing I want to see is some kind of blow off back to mania, which brought us into the soup in the first place. So, this is good action.
VILES: The gains have been most dramatic on the Nasdaq. Since tumbling to 1638 on April 4th, the Nasdaq has bounced more than 500 points or 32 percent. Among the biggest gainers in that move: Cisco up 39 percent, despite an ominous profit warning this week; Intel up 42 percent; Yahoo! 59 percent; Amazon 87 percent and JDS Uniphase more than doubled. All of those gains in just 11 trading days, and all helped by the Fed's surprise move Wednesday.
BRUCE STEINBERG, MERRILL LYNCH: They've eased by 200 basis points in less than four months; that's the most aggressive action out of the Fed in 20 years. So, they're moving very rapidly, and I think appropriately so.
VILES: The Fed's move and the market's reaction to it emboldened those who believe this rally has legs.
TOM GALVIN, CREDIT SUISSE FIRST BOSTON: We are returning out of a classic bear market, and I think that would suggest a move of 30 percent over a 12-month period is not out of the question. That's pretty classic stuff, and I think that's what we have looking forward.
VILES: Skeptics, however, argue that this has been a bear market rally because even more rate cuts will not revive some parts of the economy.
JAMES GRANT, "GRANT'S INTEREST RATE OBSERVER": I have no doubt Mr. Greenspan will do more of what he did Wednesday. That alone will not turn around either the economy or the fortunes of companies that are trapped industries characterized now by massive overcapacity.
VILES: A good bellwether for that debate going forward will be Cisco and the other networking stocks. These are companies that have been hammered by the economic slowdown, and have not yet been able to predict when they think their businesses will recover -- Terry.
KEENAN: OK, thanks, Pete. Pete Viles reporting for us live from the New York Stock Exchange.
Well, we will continue our live coverage of the trade protests in Quebec City when MONEYLINE rurns.
KEENAN: In tonight's "Tech Watch," Carl Icahn is back in the headlines, today offering $32 a share, or just under $2 billion for the laser eye firm, VISX. Icahn already owns 10 percent of the company, and has recently been trying to gain control of its board. According to VISX executives, though, that is all part of Icahn's master plan to get the company for less than it's worth.
As CEO Elizabeth Davila said earlier today, quote, "VISX is skeptical of Mr. Icahn's proposals, and is concerned that this is just another ploy by Carl Icahn to garner board votes," end quote. But while the company may fear Icahn isn't playing fair, investors seemed easier to please and the stock gained almost $3 to $23.75.
More MONEYLINE right after this. We will continue to monitor the events in Quebec City where trade protests are underway.
KEENAN: Well, the Nasdaq, as we've been telling you, capping off a stellar week. It was one of the best ever for the index. Some optimists saw promising signs this week that we may have hit a turning point the technology stocks. But others fear that this is just another bear market trap, as we've seen repeatedly over what has been a disastrous 12 months.
For more on the market outlook, I'm joined now by Scott Black of Delphi Management in Boston. Scott, welcome. Good to have you with us.
SCOTT BLACK, DELPHI MANAGEMENT: Thanks, Terry.
KEENAN: Is this a bear market rally or the start of a new bull market.
BLACK: Well, I'm not had a technician, but many of these stocks are still very expensive. If you look at the Cienas, the Dells, Oracles, Microsoft, they're all selling at 40 times expected earnings or more. These are not value plays, and the fact that we've cut interest rates, the Fed funds rate down to 4 1/2 percent, it's going to take six to nine months to work through the system.
Corporate earnings are terrible. All you have to do is look at the "Earnings Digest," every day, and companies are rolling over. And I think it's a leap of faith to think that we've reached the bottom. I've listened to several calls this week: Kullicke and Soffa, Lamb, Intel, most of these companies have very little visibility, business is bad and as I'd say, hope springs eternal at this point.
KEENAN: Let's take Cisco, for example. Sequential revenue decline of 30 percent in this quarter, says its next quarter could be as much as 10 percent lower than the current quarter. How will interest rate cuts help a company like Cisco, if at all?
BLACK: Well, it helps expand the multiple because the capitalization rate is lower. But other than that, as a business ,it's not doing that well. The mean estimate is about 31 cents for calendar 2001, and that puts it at a 61 multiple, which I think is still very expensive.
KEENAN: How, then, would you play this market? A lot of people rushed into the so-called early cycle stocks this week, the ones that will recover quickly when the economy starts to improve. Is that how you would be playing this market?
BLACK: Well, to some degree, it's fine to buy some of the home builders like a D.R. Horton or a K.B. Homes. These stocks are six and seven multiples. I still like the energy stocks. Oil prices are north than $20 a barrel and $5 per mcf for gas, and many of these companies have been hit hard since the beginning of the year in their giveaways, companies like Louis Dreyfus, Global Marine, Rowan Drilling. I think you'll do exceedingly well, and I do think that energy prices are fairly sticky here at these levels.
KEENAN: OK, a long shopping list that you have. Thanks so much, Scott. Good to have you with us.
BLACK: Thank you, Terry.
KEENAN: Scott Black of Delphi Management. More MONEYLINE right after this break, and we will also go back to Quebec City, where violent protests are under way as the Summit of the Americas is about to begin.
KEENAN: Hello, everyone, and welcome to MONEYLINE. Violent protests have erupted on the streets of Quebec City as the Summit of the Americas gets set to begin. Our John King is traveling with the president. Let's join him now. John, what's the latest?
KING: Well, Terry, relative calm here at the moment. I want to bring in a guest. We are lucky to have with us with Staff Sergeant Mike Gaudet. He is a spokesman for the Royal Canadian Mounted Police.
And, sir, let me just start asking you, were you caught off guard today? There were at least two or three times protesters tried to break through the perimeter. Obviously, you had months to prepare for this meeting. Was it a surprise that they tried to break through, and describe for us the police reaction when that happened.
SGT. MIKE GAUDET, ROYAL CANADIAN MOUNTED POLICE: Well, for us you can understand, yes, preparation has been a big part of this and for us we did monitor the crowd as it grew this afternoon, and as you can understand, yes, there is a large police presence here, but it's only part of the police operation. We have the fence that's part of it, and unfortunately part of that was pulled down this afternoon.
Nevertheless, as the next approach in the police response, our tactical units were able to respond in a timely fashion and allow for no one to get past the, or to get inside the perimeter.
KING: Now the summit hasn't even officially begun yet, and the larger protests are planned throughout the weekend. Based on the experience of today are additional officers being added, or any additional steps being taken? One thing our people out on the scene have noticed is that people have gone beyond the fence now, and they seem to be pushing the perimeter out to even a greater distance away from the summit site.
GAUDET: Well, I think what you're seeing is a number of police strategies basically being put into a place. The planning process has, as I said earlier, has been in place for some months and we want to use a measured approach in how we are going to deliver police services here.
We have full intentions of allowing the larger number of peaceful demonstrators to do just that. It's their right to do so, but we have an obligation to provide a safe venue for all the delegates, journalists, local citizens in this very beautiful city. Our plans are to react to the crowd in terms of their behavior and if we see violent acts we will respond accordingly.
KING: And what is your estimate, sir of the ratio police to protesters here?
GAUDET: Well, we have about 6,000 police officers and there are estimates are ranging from 25-30,000. So, those are the numbers we have.
KING: Just a few moments ago, we was at least two dozen officers back behind us here at the fence, stepped back from their position in a formation, put on their gas masks and then go back to the perimeter. Is that a sign that you're expecting more tonight, or do you believe relative calm is in place until the summit actually is under way tomorrow?
GAUDET: Well, we have threat assessment processes in place and, as you indicate, there is a tactical unit just down the street from us and if there's a possibility of an intervention and our officers have to be it we will wear the protective gear that's necessary.
KING: And how many arrests today so far, sir.
GAUDET: So far we've had three arrests as a result of the altercations this afternoon. There was an arrest earlier today with a suspect who came into Quebec, was in possession of a large number of weapons.
KING: A large number of weapons. Was he viewed as a specific threat to leaders? The weapons of a destructive nature?
GAUDET: No, earlier this week what we had is -- following a several month investigation -- we seized a number of items like thunder flashes, smoke grenades, sling shots, steel ball bearings. These are similar items that were seized this afternoon.
KING: And, sir, any new steps being taken for tomorrow? It seemed a bit that there was a surprise today, that they did indeed try to break through the perimeter. I asked earlier about the numbers. Do you toughen up the tactics or will you push indeed push the perimeter back?
GAUDET: Well, I repeat. We've been preparing for a long time. We have a number of strategies in place, and we did see a physical part of the security come down. But I repeat, no one entered the perimeter.
KING: All right, Staff Sergeant Michael Gaudet, we thank you very much for your time. As you can see, Terry, the police reacting and learning from what they had happen today. Police still manning the perimeters all around us, but relative calm at this point. Quite a chaotic scene through much of the afternoon.
Staff Sergeant making the case though, at no point did those protesters get inside. At no point were any of the leaders at risk, but certainly as they get into the meat of those negotiations they are well aware that a crowd of several thousand today, and expected to grow by many thousands more tomorrow outside their meeting, protesting those negotiations about the free trade area of the America's -- Terry.
KEENAN: OK, thanks, John, for that update and that interview. John King, our man on the scene in Quebec City.
Well protesters took to the streets this afternoon as hemispheric leaders were getting ready to address major trade issues. Kitty Pilgrim takes a look at how the protests may affect their agenda.
KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Hundreds of protesters stormed the chain link fences surrounding the security zone in Quebec City, tearing down a portion, forcing police to march on the protesters. The protesters hurled bottles and stones at the police, and the police responded by hurling tear gas back.
More than two miles of 10 foot high fences are protecting the main activity of the summit. Here, the leaders of 34 American countries are planning three days of talks on trade and development. International trade talks have been marred in recent years by such demonstrations begun in Seattle in 1999, repeated in the World Bank IMF meeting in Prague last year. Special interest groups, environmentalists, and labor organizations object to globalization, fearing a loss of jobs and an influx of cheaper produced goods from other countries.
CAROL GRAHAM, BROOKINGS INSTITUTION: They're almost protesting the system. It's almost an anti-system movement, a very catch all movement that has everything that ranges from human rights to labor standards to the environment to poverty in theory. A lot of things that free trade in and of itself is neither responsible for, nor can really solve.
PILGRIM: Yet the leaders inside the summit are fully aware free trade promotes growth. The one trade agreement that is in effect in this hemisphere, NAFTA, has tripled trade with Mexico in the last five years. This summit hopes to begin to link 800 billion consumers in a free trade zone trading $11.5 trillion worth of goods, from American cars, Brazilian oranges, Argentine leather goods, Peruvian fish and Chilean wine. All being sold without significant tariffs or quotas making everything much more affordable, boosting trade.
ROBERT HORMATS, GOLDMAN SACHS: I thinks the protesters will have almost zero influence over the final communicate. At Seattle, where the protests were of course very lively on all the television shows, the real failure in Seattle was not on the streets. The real failure was that there was not agreement within the halls of the WTO.
PILGRIM: For that reason many are hoping the real breakthrough will not be the fences, but the barriers to trade. Now the demonstrations are expected to continue through the weekend. There's a very large rally planned for Saturday -- Terry.
KEENAN: OK, a lot at stake on the trade front. Thanks Kitty -- Kitty Pilgrim. We want to go back to Quebec City and our Kelly Wallace. She is in the thick of the protests throughout the day. She's on the telephone. We can establish contact with her.
Kelly, John King says that the tensions have calmed considerably. Is that what you're seeing?
KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT: Yes. I'm not actually on the street at the moment. We just came back from where we were and it did seem to -- some sort of calm was achieved -- it appears to be. We are on the western side of the perimeter, a place where the protesters did, in fact, manage to break down part of that chain link fence and then, following that, there was a stand off between dozens of police in riot gear and protesters.
And what we saw is throughout the afternoon the police would basically move forward and go away from the fence and push the protesters further and further away from that fence. Once we were leaving the scene it looked like they pushed the protesters as far away as three city blocks from that chain link fence. Throughout the afternoon we obviously saw the police firing tear gas canisters at the protesters. I did see a couple throw bottles also at the police, but it was really sort of a sense of a standoff and then police would push the protesters back as they tried to push forward as well.
KEENAN: Any sense, Kelly, that you could get that perhaps the protesters were going to call it a day and then regroup and be back on the streets early tomorrow?
WALLACE: It certainly seemed as if things were quieting down as of 6:30 p.m., when unfortunately we lost contact. And so it did appear that they were being pushed back, and that things were in fact quieting down.
I did try to ask some of the police officers if they were going ahead and declaring this the new perimeter, because again it's about three city blocks from the original perimeter point, and they basically said they didn't know, that they just sort of were pushing the protesters away from that vantage point and when we left there were still a handful of protesters on various points who were chanting and waiving flags, but it did not seem to be a situation where a lot of tear gas was being fired. It did seem to calm down a bit.
KEENAN: All right, that's good news. Thank you, Kelly. Kelly Wallace reporting for us on the phone from Quebec City.
Well, we'll have MONEYLINE in the just a moment as night fall approaches in Quebec City. The Summit of the Americas is about to begin within the hour.
KEENAN: There you see pictures from this afternoon, violent protests that erupted in Quebec City as the Summit of the Americas, a major trade conference gets set to begin within the hour.
We want to go back to Joshua Ramo of "Time" magazine. He penned an article on the trade summit for next week's "Time" magazine. And Josh, putting these protests aside, explain if you would, what are the real trade issues here and how it will impact various countries within the hemisphere?
JOSH RAMO, "TIME" MAGAZINE: Sure, Terry. The key issue here is this belief by the Bush administration that the ultimate goal is going to be a free trade pact that extends over the whole hemisphere. And viewers can think about this in terms of what they've managed to accomplish in Europe over the last decade, integrated monetary system, basically moved goods from place to place with no problem whatsoever. That's what Bush has in mind for the United States. It's actually taking what's happened with NAFTA, which has included the United States, Mexico and Canada, that's the very large trade agreement that came into place at the beginning of the Clinton administration, and extending it throughout the hemisphere.
Now, in order to make that happen, they've got to do a number of complicated things. The most difficult thing is getting all the nations that are involved in that up to the level where they can really be competitive trade partners with the United States. That means all sorts of things, not only economically but also politically. So one of the big issues, for instance, on the agenda this weekend is whether or not you have to be a democracy to participate in that, and that's something the Bush administration is going to have to deal with.
But perhaps the most difficult problem for them is going to be solving the problems of environmentalism and labor laws, which are very different in all of these countries, and really are at that heart of the protest you're seeing on TV. People who are worried that letting multinational companies run the world means no accountability when it comes to labor laws and environmentalism.
KEENAN: As these leaders meet in Canada, what is the state of the hemispheric economy? We know that we are in this very big slowdown here in the U.S., if not a recession.
RAMO: Well, the hemispheric economy is not healthy, and I think one of the reasons that there has been some resistance from some of these regional leaders about jumping right onto a free trade agreement, is they're very worried about what's going on in their own backyard.
Argentina is a great case in point. That is a country which is suffering tremendous fiscal problems, largely as a result of washback from the 1997-1998 Asian economic crisis. They never fully recovered from the impacts of that. And what the Argentines want right now is support from the United States as they try and reform their economy. That's far more important to them than free trade.
And so, one of the tests that these Latin Americans leaders are going to be applying to the Bush administration this week isn't how can you help us with free trade in five years or 10 years, but what can you do for us in the next two to three years, in places like Argentina, Peru, even Columbia, to help advance those economies. And if the answers to those questions sound good, than these people are going to be more interested in free trade.
KEENAN: OK. Thanks, Josh, for making us all smarter about trade and the trade issues facing the leaders at the Summit of the Americas. Josh Ramo of "Time" magazine.
We want to go back to the phone right now and bring in an official of Greenpeace, an organization that held its own peaceful protest in Quebec City. The environmental group piloted a hot air balloon over the site of the summit emblazon with messages calling for actions to stop global warming. We are joined on the phone right now by one of the people aboard that Greenpeace balloon earlier today, Jo DuFay. And Jo, welcome. Nice to have you with us.
JOE DUFAY, GREENPEACE, CANADA: Thank you very much.
KEENAN: You planned your own peaceful protest. What do you make of what happened this afternoon?
DUFAY: Well, I think there's a whole variety of voices out there in the streets, and the thing that unites them is they're saying, "not in my name, you don't." Not in my name, you don't negotiate a deal that jeopardizes environmental safety, that does not further democracy, and may even harm it, that worsens economic inequalities. Basically, a deal that advances corporate pollution over and above the needs of citizens, human health and the environment.
That's what you're seeing in the streets today. Tomorrow, you'll see an even bigger protest. You'll see tens of thousands of people out there.
KEENAN: And will those protests again be violent in your estimation?
DUFAY: I think -- well, first of all, I believe that tomorrow's protests will be entirely non-violent. Secondly, what I've seen today in Quebec City has been a very small amount of anything that you would describe as violent by protesters, and a large amount of overreaction and provocative action by the police force.
You saw people push down the perimeter fence that has been erected around these talks. And you have to say, if free trade is so popular, how come they're having to put up a fence like that to try to keep the people out?
KEENAN: All right. Thanks, Jo, for giving us your perspective on the events in Quebec City today. Joe DuFay of Greenpeace.
When we return, we are going to talk about interest rates in this economy. Wayne Angell, chief economist of Bear Stearns will be my guest. Don't go away.
KEENAN: Welcome back. In our "Sector Focus" this evening: the bond market long-term interest rates rose sharply this past week even as the Federal Reserve surprised the markets with a cut in short-term interest rates. Joining me now, a man who has been calling on the Central Bank to be more aggressive in its rate-cutting program throughout this year, Wayne Angell. He is the chief economist with Bear Stearns, and Wayne, welcome back. Good to have you with us.
WAYNE ANGELL, BEAR STEARNS: Thank you.
KEENAN: You have been calling on the Fed to act, and act aggressively. And you also said that the Fed would cut in-between meetings after its last meeting in March. Yet you pulled that prediction off the table, only to have the Fed follow through the following day. To what extent do you think that the Federal Reserve is playing with your head and trying to fake out you and some of your colleagues?
ANGELL: The Federal Reserve isn't playing with anyone's head. The Federal Reserve has a significant responsibility in regard to holding short rates higher than market rates have been going. And the Fed has been running a decidedly deflation risk by holding short-term rates up above long-term rates. So it's good news to see the short rates come down.
KEENAN: Why do you think the Fed acted this week? And do you think they timed the cut on Wednesday morning to get the maximum upward momentum in the stock market?
ANGELL: No, not at all. After the March 20th meeting, I suggested that the Federal Reserve really had a two-week window to lower rates between meeting. And what the Fed did is they waited for all the data to come in, and then they weighed that evidence, and they then came up with exactly the right answer, and that is capital spending. And our economy is plunging into negative territory.
KEENAN: The Fed addressed that in its statement, also talked about the potential impact of the reverse-wealth effect. Does that mean we get another half-point cut on May 15th?
ANGELL: Yes, I believe it does, and that's why I feel so much better. Because if the Fed had skipped another intermeeting move, then they would have had only been able to move the rate down to 450 by the May 15 meeting. This way we have a very, very good chance that the Fed will lower the funds rate to 4 percent at the May 15 meeting.
KEENAN: Can the Fed keep us out of a recession?
ANGELL: That -- the Fed can keep us out of a recession if we're not already in a recession. The Fed can't roll the clock back with monetary policy. But monetary policy works almost immediately. Whenever the Fed lowers the funds rate more than the market expects, then the prices of everything tend to move up, including prices of equities.
KEENAN: All right. We have to leave it there. Thanks, Wayne. Always good to have you with us.
ANGELL: Thank you.
KEENAN: Wayne Angell, chief economist at Bear Stearns, joining us from Washington.
Coming up next: Myron Kandel will be here with his thoughts on this winning week on Wall Street.
KEENAN: Out Myron Kandel joins me now with a look at events north of the border that marred a good week for the economy here in the U.S. -- Myron.
MYRON KANDEL, CNN FINANCIAL EDITOR: Well, Terry, it was a very good week on Wall Street, but a bad day in Canada. You know, this was not a popular protest, but a group of professional agitators, many of them acting as hoodlums, that really got the spotlight. And what bothers me, I'm worried that too much television coverage, including, by the way, right here, is giving them just the worldwide exposure that they want. The protest leaders who care about the issues should make sure there's no violence. The people that do engage in violence really diminish their own cause.
KEENAN: A good point. We just had a woman on from Greenpeace. They had a non-violent protest this morning with balloons. They got no air time.
KANDEL: And they're expecting a big protest tomorrow, right? That would be a peaceful protest, hopefully. That's a legitimate group. But the legitimate leaders have to make sure, it's partly their responsibility to make sure that the hoodlum element doesn't get the spotlight. And I hope we're not giving them too much of it.
KEENAN: OK. It might be a little late for that, but thanks, Myron. Myron Kandel.
And just ahead: "Ahead of the Curve." What you need to know tonight, before the markets open again on Monday. Stay with us.
KEENAN: Taking a look at some of what could make headlines on Wall Street next week: The earnings parade marches on. Expect results from JDS Uniphase, Qualcomm, Compaq, and Amazon.com. Among others, including Dow components AT&T, SBC, Disney, DuPont, 3M, and Exxon Mobile, all expected to report next week.
On the economic front, watch for the first-quarter GDP report, the employment cost index, new and existing home sales for March, durable goods and consumer confidence numbers for April. And be sure to tune into the MONEYLINE weekend edition. We'll wrap up this week on Wall Street and give you a look ahead to next week.
And stay with CNN for complete coverage of the events going on. The Summit of Americas in Quebec City, President Bush is slated to address that meeting. There you see him right now, live pictures as the Summit of Americas convenes in Quebec City, after a day of violent protests in that city.
And that is MONEYLINE for this Friday. Stay with CNN for all of the latest in the events from Quebec, "WOLF BLITZER REPORTS" will have a complete wrap-up at the top of the hour at 8:00 p.m.
I'm Terry Keenan, sitting in for Willow Bay. Good night from New York. "CROSSFIRE" is next.
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