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NEWSROOM for April 11, 2001

Aired April 11, 2001 - 04:30   ET


ANNOUNCER: Seen in classrooms the world over, this is CNN NEWSROOM.

RUDI BAKHTIAR, CO-HOST: From the CNN Center in Atlanta, this is CNN NEWSROOM. Thanks for joining us. I'm Rudi Bakhtiar.

Let's get right to it with a look at the rundown.

California's power crunch tops today's show, as a U.S. congressional committee tries to get to the bottom of the crisis. Next in "Business Desk," more flights to fly the friendly skies? The FAA says yes, with an alarming forecast. Then it's on to Africa and "World View" to a planned city which falls very short of the plan. And finally in "Chronicle," the pitfalls of credit card debt and how to avoid them.

U.S. federal energy regulators hear from western state officials who fear California's power crisis could increase the bills of their own consumers this summer. Officials in the northwest say electricity rates will likely triple unless demand is cut sharply.

Tuesday's meeting between the Federal Energy Regulatory Commission and officials from 11 western states came as California's second biggest utility announced plans to sell its transmission lines to the state. Southern California Edison says it will sell the lines for $2.76 billion in an effort to raise money and avert bankruptcy.

The plan still requires approval from the California Public Utilities Commission. The state's largest utility, Pacific Gas & Electric, filed for federal bankruptcy Friday.

The utilities say they've lost billions of dollars this past year because of skyrocketing wholesale power prices. California's deregulation law prevents them from passing their costs to consumers. Wholesale power suppliers have refused to sell electricity to the utilities because of their poor credit. To fill the gap, the state has spent more than $45 million a day to buy power for the utilities' customers. California's power grid managers have had to order rotating blackouts four times since January, all this before the summer heat sets in.

Many California residents, farmers and business owners worry the power crisis could make the upcoming summer very difficult and hot. If rolling blackouts don't turn off the state's air conditioners, the cost of running them might.

As Rusty Dornin reports, that's just the beginning of concerns now that the Pacific Gas & Electric utility has filed for bankruptcy.


RUSTY DORNIN, CNN CORRESPONDENT (voice-over): Destined for dinner tables worldwide, 16 million tons of California fruits and vegetables processed annually. Come harvest, it's an industry dependent on consistent power. A congressional subcommittee held a special hearing in Sacramento this week to hear from the state's farmers and food processors about what happens when the lights go out.

ED YATES, CALIFORNIA LEAGUE OF FOOD PROCESSORS: It may take, due to a one or two hour outage, 24 to 36 hours to bring the plant back online. That represents as high as 24,000 tons of food that either gets thrown away or does not get processed.

DORNIN: Some dairy farmers had to dump milk during a recent blackout. Others have seen their energy costs go up 300 percent in an industry that can't raise prices.

PETER VERBOOM, DAIRYMAN: There's no way that we can pass on those costs with our milk prices being controlled.

DORNIN: It was the first of three field hearings to be held throughout California by the House Subcommittee On Energy Policy. State and federal regulators were questioned extensively on the complexities of the market and the big question of why, why did power costs skyrocket?

LORETTA LYNCH, CALIFORNIA PUBLIC UTILITIES COMMISSION: In 2000, we paid over $27 billion for electricity. That's $20 billion more in just one year for a two percent increase in demand. Even a blind pig can figure out that there's price gouging in that kind of market.

DORNIN: But the finger pointing continues about who is really responsible. No consumer groups were asked to speak, nor environmentalists. Invited, no Democratic subcommittee members appeared at the hearings. Subcommittee Chairman Doug Ose of California claims he wants to hear from all sides in deciding how to help California get out of this mess.

REP. DOUG OSE (R), CALIFORNIA: Clearly, high energy prices will have a large negative effect on the California economy and could possibly drag the rest of the nation into a recession.

DORNIN: Representatives from the utilities will tell their side of the story in San Jose on Wednesday and energy producers in San Diego on Thursday.

Rusty Dornin, CNN, Sacramento, California.


BAKHTIAR: U.S. President Bush and military officials are standing strong on their diplomatic strategy to win the release of the U.S. military personnel being held in China. One side issue looming over the stand-off is China's effort to bring the 2008 Summer Olympics to Beijing. China's ambassador to the United States has written a letter to members of Congress asking them not to oppose the Olympic bid. But lawmakers in the House and Senate had introduced resolutions before the spy plane incident opposing Beijing's Olympic efforts.

Major Garrett has more on the stand-off from Washington.


MAJOR GARRETT, CNN WHITE HOUSE CORRESPONDENT (voice-over): With negotiations at a standstill, President Bush again urged a swift release of the U.S. crew.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I am making it clear to the Chinese that it's in their nation's interests to end this situation as quickly as possible.

GARRETT: Mr. Bush met with Jordan's King Abdullah, but continued strife in the Middle East took a back seat to the surveillance plane standoff, now 10 days old.

BUSH: Diplomacy sometimes takes a longer than people would like.

GARRETT: Senior administration officials say the U.S. has done all it can do, both in words and gestures, to address Chinese concerns. Meanwhile, a fifth meeting with 24-member crew. Brigadier General Neal Sealock brought news of Cowboy quarterback Troy Aikman's retirement and e-mails from family members.

BRIG. GEN. NEAL SEALOCK, U.S. EMBASSY MILITARY ATTACHE: They realize that it's a political situation. They realize that their treatment is quite good in comparison to what it might be.

GARRETT: The Reverend Jesse Jackson offered to travel to China as an intermediary to help win the crew's release.

REV. JESSE JACKSON, RAINBOW/PUSH COALITION: I have done this before. I kind of know how to do it.

GARRETT: He discussed his plans with the Secretary of State Colin Powell, the administration left the offer on the table and did little to publicly stop Jackson.

RICHARD BOUCHER, STATE DEPARTMENT SPOKESMAN: You know, so far as people traveling to China, it is really a matter for individuals to decide whether they want to do that or not.

GARRETT: U.S. officials said they are not discouraged that talks, at least for now, have stopped, viewing it as a sign the Chinese may be debating the terms of an agreement. Analysts say both nations may have finally moved beyond diplomatic bluster.

JAMES LILLEY, FORMER U.S. AMBASSADOR TO CHINA: We have gone through the commercials. Now, let's get down to what do you want that I've got and what do I got that you want.

GARRETT (on camera): Some in Congress are calling on the president to recall his ambassador from China. But the White House is sticking with diplomacy and the hope that patience will pay off sooner rather than later.

Major Garrett, CNN, the White House.


BAKHTIAR: In 1930, for the first time travelers could get on a commercial plane and fly across the United States. Quite a novelty back then. If you've done any flying lately, you probably realize how far the industry has come in less than 100 years. As a matter of fact, the U.S. air transport industry is now an $80 billion a year business employing half a million Americans and while many parts of the industry have seen rapid growth, others haven't quite kept up.

Fred Katayama explains how increasing air traffic could make some of the growing pains even tougher.


FRED KATAYAMA, CNN CORRESPONDENT (voice-over): More flights to fill the already crowded skies, more passengers to fill them. The Federal Aviation Administration projects the number of flyers will exceed one billion in 10 years.

Assuming economic growth averaging 3.1 percent a year, the FAA forecasts the number of passengers will increase more than 60 percent from over 730 million in 2000 to 1.2 billion in 2012. What's more, air traffic is expected to grow more than a third over that period. All this could mean more work for an air traffic control system already bursting at the seams, and for passengers, more delays and cancellations.

DAVID STEMPLER, AIR TRAVELERS ASSOCIATION: What this report means for passengers is that traffic is going to continue to grow. And unless we make some major changes, we're looking at gridlock.

KATAYAMA: Some experts say the nation needs 15 more runways. But building them is difficult because residents object to noise. They're costly, and approval takes time.

Other options: increase fees for landing at congested hours, build bigger planes to accommodate more passengers, or boost the efficiency of the outdated air traffic control system.

JOHN RODGERS, FEDERAL AVIATION ADMINISTRATION: With the existing number of runways, we in fact, maybe through the use of increased technology, improved air traffic control technology, handle a fractional increase in operations.

KATAYAMA: Expanding beyond the existing runways at New York's La Guardia Airport is nearly impossible. More than 61,000 flights were delayed last year at La Guardia, the nation's most congested airport. The FAA forecasts takeoffs and landings there will jump 32 percent over the next decade.

(on camera): Whatever the solution, experts say, passengers will wind up paying for the fixes, by paying higher airfares, costs passed on by the airlines, and in some cases, higher taxes on air tickets for airport improvements.

Fred Katayama, CNN Financial News, New York.


BAKHTIAR: Britain's foot-and-mouth epidemic is devastating to its tourist industry. The government said last week tourism revenues were down by as much as 80 percent in areas worst affected by the disease. Some hotels have reported 100 percent cancellations. Tourism, however, is not the only industry being affected.

As Susan Lisovicz reports, the leather industry has been battered by the foot-and-mouth and mad cow epidemics.


SUSAN LISOVICZ, CNN CORRESPONDENT (voice-over): The 74-year-old Hermes Leather Corporation says it's never seen such a big increase in the price of English lambskins, a direct result of the mad cow and hoof-and-mouth epidemics that have led to the widespread slaughter of livestock in England and elsewhere.

ROBERT KATZ, HERMES LEATHER CORPORATION: The lambskin price of 11 percent is a very steep increase, because I can tell you it translates to 35 cents a square foot.

LISOVICZ: And leather prices are already higher due to a huge increase in demand. Last year, retail sales of leather apparel goods skyrocketed more than 70 percent to $4.2 billion from $2 1/2 billion the year before. Leather products account for 85 percent of Andrew Marc's business, and he says all suppliers are rising their prices.

ANDREW MARC SCHWARTZ, CEO ANDREW MARC: The mad cow, even though it's a very -- like an isolated problem, it has affected the worldwide amount of supply, and so what happened is now everybody is jumping on the bandwagon: Whether it's furniture leather, whether it's garment leather or whether it's like leather like for cars, everything is moving up.

LISOVICZ: The impact can be felt at Sofa So Good, where a leather couch can run as high as $11,000. The owner says her supplier has already pushed through a double-digit increase. She was fearful it would be even higher.

CRISTINA REVILLA, SOFA SO GOOD: He did a 10 percent increase. It's very good because I only have one supplier.

LISOVICZ: But consumers for the most part won't feel the full impact of the price hikes until next year.

PETER BRAUNSTEIN, "WOMEN'S WEAR DAILY": The demand boost in prices, demand-based boost, combined with the scarcity problem caused by the epidemics could impact leather prices. It already is, but a lot of consumers won't be feeling that until 2002.

LISOVICZ: Leather goods makers are hoping the mad cow and hoof and mouth epidemics will be over long before then.

Susan Lisovicz, CNN Financial News, New York.


SHELLEY WALCOTT, CO-HOST: Today, "Worldview" makes stops in Africa and Alabama. We'll travel to the southeastern United States to check out an unusual architectural project where students build dreams. And we'll find out how the best laid plans don't always turn out as envisioned when we visit Nigeria's capital city. Plus, an odyssey into Africa's wild kingdom.

Christopher Columbus, John Cabot, Jacques Cartier -- know what all these men have in common? They were famous explorers, adventurers who packed up their boats and set sail only to wind up in previously uncharted territory. Columbus, Cabot and Cartier are all known for their expeditions to North America. But one modern day explorer is making a name for himself by shedding new light on the dark continent.

Michael Fay is an American conservationist who has walked 1,200 miles through forests in Africa. It's to learn more about the condition of the land and wildlife. Denise Dillon reports on his discoveries so far.


DENISE DILLON, CNN CORRESPONDENT (voice-over): This is one of many elephants explorer Michael Fay and his team encountered as they made their way through Africa's jungle. They walked 1,200 miles studying plants and animals. During the 15 month expedition, they faced wildlife and armed poachers. They also ran up against huge swamps and jungles so thick Fay wasn't sure they'd survive.

MICHAEL FAY, EXPLORER: Now in several of the blocks, we got four or five days out and I thought, you know, we're just not going to make it. We're not going to have enough time, enough food to get us to the other side.

DILLON: Speaking to a group at the National Geographic Society in Washington, Fay said the wilderness is seriously threatened by loggers and bush meat traders. He warned that large parts of the African jungle will be lost if people don't change the way they live.

FAY: I think that there are six and a half billion people on earth and we're all still kind of going toward that Western model of success and of resource utilization and if we don't change that M.O., if we don't change that way of life, we're all going to be in deep, deep trouble.

DILLON: Using a video camera and tape recorder, Fay noted everything he saw, from animals to footprints to plant life, including more than 35,000 trees.

FAY: I think that we succeeded in a very big way to kind of look at man's impact on the forest but from the forest outward.

DILLON: Fay plans to spend the next year compiling all the information he collected on his journey, hoping the data will help support the campaign to protect the African jungle.

Denise Dillon, CNN.


TOM HAYNES, CO-HOST: We continue our look inside Africa. Our next stop takes us to the continent's most populous country, Nigeria. Nigeria's climate and topography vary from one region to the next. Climates range from dry in the southwest to humid along the country's equatorial region. Perhaps its most diverse feature, however, is its people. About 250 ethnic groups call Nigeria home, with more than 400 languages spoken.

Abuja, a planned city in the center of the country, has been the official Nigerian capital since 1991. Before that, Nigeria was broken up into several states and so a handful of cities were known as the country's capital. In the mid-1970s, the Nigerian government took action and named one city the nation's capital. Construction began in Abuja in the mid-1980s.

Abuja was chosen for its central location so that no ethnic group would be favored over another. But controversy has surrounded what was supposed to be Nigeria's cultural and political center since its inception.

Susanna Anderson has our report.


SUSANNA ANDERSON, CNN CORRESPONDENT (voice over): Controversy without conclusion -- that perhaps sums up best the sentiment about the Nigerian capital. While planners succeeded in erasing the chaos and crumbling infrastructure, some say they brought Abuja into the world as a city without a soul.

Not an easy feat in a country whose very heartbeat pounds with the rhythms of its ethnic richness. Abuja got Nigeria's elite political class; the results some argue is that it's too expensive for ordinary budget and bankrupt the country's cultural riches.

JOHN GOODWIN: Yeah, OK, they made a mess. They made a mess.

ANDERSON: Designed by world-renown architect Kenzo Tange in 1976, Abuja was to replace the overcrowded commercial capital Lagos as the government center. Abuja, unlike Lagos, sits in the center of the country. It balances the strong cultural forces of north and south in a cooler, drier climate. It was a good plan. But good plans do not necessarily make good cities.

Ask someone who lives there.

GOODWIN: This is one of the problems of new cities. You know, the creation of place is one of the most difficult thing and creating a place out of Abuja will take time.

ANDERSON: Abuja was Nigeria's first planned city. As the seat of government, it was designed along three radials representing the three arms of government. The city had a national assembly, an airport, schools, a university and several five-star hotels. But then, money ran out, leaving empty lots where grand structures ought to be and raising questions about what went wrong.

KAYODE ANIBABA: What we have in Abuja today is a far cry from the dream, from the vision, from the design, from the concepts of planning that Kenzo Tange put in place.

ANDERSON: A random teaming other Nigeria raising its head on the fringes and even within the well-planned city. It is unwritten Nigerian law that the clever and ambitious will appear wherever the wealthy and powerful take up residence.

If the shanty towns amidst the high rises weren't planned, some contend it's because the planners weren't really paying attention to the people's needs.

ANIBABA: We found that, with the movement, the flow, and the future of government in Abuja, Abuja just got busy. And as it got busy, there was too much pressure on the facilities there.

ANDERSON: If Abuja is to be Nigeria's capital city, it must earn it.

Susanna Anderson, CNN.


BAKHTIAR: We turn from a planned city to planned housing and it just might surprise you. Our story takes us to Alabama, a southern state nicknamed the heart of Dixie. We'll head out into the countryside to check out the results of an architectural program called The Rural Studio.

College students provide the inspiration and manpower and their building materials are often unusual, as Bruce Burkhardt explains.


BRUCE BURKHARDT, CNN CORRESPONDENT (voice-over): Shepherd Bryant of Hale County, Alabama lives in one of the poorest regions in the country. Seems like it always has been. More than 60 years ago, the photographer Walker Evans and the writer James Agee came to Hale County to chronicle the depression in their book, "Let Us Now Praise Famous Men." Today the faces are more black than white, but still the face of poverty.

UNIDENTIFIED MALE: That was the house I built by myself BURKHARDT (on camera): You built that yourself? You lived in that?

UNIDENTIFIED MALE: Yes, sir. All my children born in that over there.

BURKHARDT: All your children born right there.


BURKHARDT (voice-over): If ever a man and a woman needed a new house, it was Shepherd and Alberta Bryant (ph). But one made from hay?


BURKHARDT (on camera): You were worried about cows eating your house?


SAMUEL MOCKBEE, PROFESSOR, AUBURN UNIVERSITY: Hay bales. Those are hay bales behind that stucco wall right there.

BURKHARDT (voice-over): Professor Samuel Mockbee -- everybody around here calls him Sambo -- is Alberta and Shepherd's architect -- or rather, his students are. And part of their lesson is working with what's available, whether it's the rammed earth walls at this house or old road signs for a roof -- or better yet, how about these side windows from a bunch of junked '89 Chevy Caprices?

They form the roof of this community center -- and all of it designed and built by architecture students at Auburn University, putting in a semester out here in the country.

UNIDENTIFIED STUDENT: You have to know how materials work so you can be a really good architect.

It's called the Rural Studio, part of Auburn's architecture school and founded by Professor Mockbee about eight years ago. The students are the architects. And their clients live in places like this. Here you learn more than just how to draw up some blueprints.

MOCKBEE: In architecture, all art should be -- should have a social base to it. Architecture is a social art. And these students need to learn what those principles are. They need to address injustices -- not just social inequalities, but environmental inequalities.

BURKHARDT: An experiment in social activism, but also an experiment in design.

MOCKBEE: We call it the butterfly house because of the roof, the shape of the roof looks like its fixing to fly off.

Hey, Anderson (ph). UNIDENTIFIED MALE: All right, how you doing?

MOCKBEE: Doing fine.

The whole house is designed to be ventilated so the hot air can rise and get out, which is a principle that we always use down here in the South.

BURKHARDT: The houses, which the new owners get for free, cost, on average, $25,000 to $30,000 to build. That's materials. The labor comes courtesy of the students, who have also help out in fund- raising, mainly from grants and foundations.

(on camera): Who ever heard of college students building their own dormitories? Well, that's kind of what happened here. Each of these pods is home to a couple of students who've built them themselves.

But this is more than just housing. It's also an R&D center where students experiment with new ways of building and new building materials, like these cardboard bales, 1,000 pounds each. They're a post-industrial byproduct of making cardboard boxes, and otherwise would end up in a landfill.

UNIDENTIFIED STUDENT: Fifty of these bales at one factory in a day, which is 50,000 pounds of corrugated waste.

BURKHARDT: Buildings that keep one warm and dry. For many of the rural studio's clients that, in itself, is a step up.

MOCKBEE: We also build a house that has a spirit to it, or a community building that speaks not only aesthetically, but is noble and has a moral sense to what it's about, and that is what elevates the work of the rural studio students.

BURKHARDT: Warm and dry, and noble.

In Hale County, Alabama, Bruce Burkhardt, CNN.


BAKHTIAR: OK, remember those leather goods we told you about in "Business Desk?" Ever gone to buy something like that, or anything, for that matter, but lacked the cash to close the deal? What'd you do? Beg the parents to pull out the plastic? Or maybe you have your own.

Well, whether or not you have your own credit card, pay close attention to what's coming up, because Heather Dorf is about to give you a much needed lesson in financial life skills.


HEATHER DORF, CNN CORRESPONDENT (voice-over): When you want to buy stuff at the store and don't have the cash, you can charge it. Credit cards are fairly easy to get, but you have to be disciplined and responsible to use them wisely.

In order to get a card on your own, you have to be 18 and the bank has to think you'll be a responsible customer. For first time credit card holders, that should mean you have a clean bill of financial health and a steady income. But many card companies will offer it to most college freshmen.

The bank that gives you the credit card is basically loaning you a certain amount of money to do as you like. This is where the discipline comes in. For example, if your credit card line, which is what the bank loans you, is $2,000, you can spend all that money or just some of it. It's up to you. But here's the trick. You do have to pay it back and in order to stay in good standing with the company, you should know how much you can afford to pay back at a time.

ANDREA WALKER, CO-AUTHOR, TEENVESTOR.COM: The rule of thumb is 10 percent. So what if all you have in income for the month is $100? That's $10. That's all you should put on that credit card. If you keep that 10 percent figure in mind, you're not going to get in a lot of trouble.

DORF: The trouble starts if you can't afford to make the entire payment. The credit card companies will start to charge you interest if you pay only part of the loan. Interest, which is a percentage of the money you still owe, is added to your total bill. The rate of that interest can vary from card to card. Some are very stiff.

DOUG FLYNN, CERTIFIED FINANCIAL PLANNER, FLYNN ZITO CAPITAL MANAGEMENT: The first month that you don't make the full payment you're now going to start paying interest and that becomes a compounding effect in the reverse direction because the interest rates that are charged on credit cards are quite high.

DORF (on camera): Well, there is a bright side, in case you didn't know it. Agencies are tracking you as you make purchases and handle that loan. And as you spend money and then pay off that debt, you're establishing good credit with those agencies. Good habits like good credit, well, that can really help you when you're older. But bad habits like late payments or missing payments, that can cause you years of trouble.

FLYNN: If at some point you just walk away from your debts, you're going to have black marks on your credit report. And where it's really going to come back to haunt you is not right away, but one day when you want to buy a house or you want to lease a car or perhaps even in a job interview when they do a background search on you, they do a credit report to see how fiscally responsible you are.

DORF (voice-over): Glen Greenstein's (ph) financial problems began about 12 years ago.

GLEN GREENSTEIN: When I turned 18 and I started college, one of the rites of passages along with registering for classes, getting my checking account and moving into the dorm was getting a credit card. And I got that credit card and it had a $2,000 limit and I jumped on that $2,000 and I went for nice meals and I traveled across the country and I took my girlfriend on weekend trips. And really I'm still, 12 years later, kind of stuck in that, the trap that I dug myself into back then.

DORF: And getting out of that debt trap is not easy.

GREENSTEIN: The best advice I can give someone just starting college is to spend responsibly and not to spend beyond your means. If you need to use a credit card, have a plan for how you're going to pay off that credit.

DORF: Remember, credit cards are a convenience for when you don't have money on you. But you do have money somewhere. They are not a substitute for not having money at all. The sooner you realize that, experts say, the better off you'll be down the road.

Heather Dorf, CNN NEWSROOM, New York.


BAKHTIAR: Oh, those credit cards. When considering a credit card, be sure to find out the cost and terms. The average interest rate is 18.9 percent and late fees run around $30. For more on getting a credit card, go to and for more financial know how, tune in Friday to learn about the U.S. tax system.

And that's it for today. Have a good one. Bye.



4:30pm ET, 4/16

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