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LOU DOBBS MONEYLINE

Dow, Nasdaq Low on Week

Aired April 5, 2002 - 18:00   ET

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


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LOU DOBBS, HOST: Israel has ignored the United Nations resolution to withdraw from the West Bank. Israel has ignored President Bush's demand to pull Israeli troops out of the Palestinian- controlled area for more than 24 hours. And today, U.S. special envoy Anthony Zinni ignored Israeli soldiers and tanks and met with the Palestinian President Yasser Arafat at the epicenter of this crisis.

Britain's prime minister arrived in Texas to meet with the president on the Middle East conflict. We'll have a live report from Crawford, Texas.

On the Middle East as well, I'll be joined by Jordanian Foreign Minister Marwan Muasher.

Andersen and the Justice Department, they met today to discuss a settlement in the criminal indictment against the firm. We'll have the latest for you.

And if you're filing for bankruptcy or running from creditors, you'll want to run to one of five states in this country. We'll tell you why in our special report tonight.

And we'll be telling you about what has been a volatile week on Wall Street. Michael Holland, Christopher Dixon, Jan Hopkins will be here for perspective on the direction of this volatile market.

ANNOUNCER: This is LOU DOBBS MONEYLINE for Friday, April 5. Here now, Lou Dobbs.

DOBBS: Good evening. Tonight, fear grips much of the West Bank territories as Israeli troops and tanks patrol mostly empty streets. At least 20 Palestinians were killed in fighting today, and Israel announced it had killed the mastermind behind the Passover bombing in Netanya. But the push for a cease-fire continued, with U.S. special envoy Anthony Zinni meeting with Yasser Arafat at his bombed out headquarters. Bill Hemmer joins me now from Jerusalem -- Bill.

BILL HEMMER, CNN CORRESPONDENT: Lou, good evening from Jerusalem. First up, we know Secretary of State Colin Powell will leave the United States on Sunday evening. He'll arrive in the region on Monday, and again the diplomacy will kick back in then.

In the meantime, though, another form of diplomacy today. As you mentioned, Anthony Zinni, the Middle East envoy from the U.S. did travel to that besieged compound of Yasser Arafat earlier today. He sat down with the Palestinian leader for about 90 minutes' time. Sources inside that meeting indicate to CNN at one time that meeting is said to be quite difficult. Another one described it as Yasser Arafat telling Zinni that he welcomed the speech yesterday by President Bush calling for an end to the military operation now being carried out in the West Bank.

Meanwhile, late tonight Israel has made a claim that it has killed the person they believe is responsible for the suicide bombing back when Passover began a week ago this past Wednesday. This in the town of Netanya, where 26 people were killed. They say a man by the name of Keyof Edwin (ph), tied to Hamas, was killed by the Israeli military in the West Bank town of Tubus (ph). Apparently, they say, Israeli troops cornered him and five others inside a home. They barraged that home, killing all six men inside. Again, the claim earlier tonight by the Israelis.

Meanwhile, the incursions do continue, Lou. We've heard about stepped up activity in fighting earlier today quite heavy in towns like Jenin and Nablus. Meanwhile, in the town of Bethlehem, that standoff, no end just yet. Two hundred Palestinian gunmen are said to be still inside the Church of the Nativity. We've talked throughout the week about the possibility of mediation coming there. But at this point, once again, that situation does continue, as it has now for the past four days' time.

Once again, two headlines this hour from the Middle East -- more than 30 hours after President Bush's call to the Israelis to wind down the operation and end it, no letup at this point. And also, Colin Powell will be in the region, somewhere in the region, starting on Monday -- Lou.

DOBBS: Bill, thank you. Bill Hemmer from Jerusalem.

Tonight, British Prime Minister Tony Blair is in Crawford, Texas. He arrived there about an hour ago. The prime minister will spend the weekend with President Bush. The two leaders supposed to have discussed how to handle Iraq. But unfolding events in the Middle East have apparently changed that agenda. White House correspondent Kelly Wallace joins us now from Crawford with the story -- Kelly.

KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT: Hello to you, Lou. Well, now, the Middle East, in particular Secretary Powell's upcoming trip to the region, will dominate the agenda for that meeting. The meeting, Lou, really getting under way at this very moment. Prime Minister Blair, we understand, just about arrived at the president's ranch not too far from here.

It was about a half hour ago when we saw him arrive in nearby Waco, Texas. You see the prime minister there. National Security Adviser Condoleezza Rice on hand greeting the prime minister. A visit to the ranch really becoming one of the hottest tickets when it comes to international leaders. Russian President Vladimir Putin was here in the fall, and Crown Prince Abdullah of Saudi Arabia expected to come here later this month. Of course, the Middle East a big focus. Also those Israeli incursions, which continue, just as you and Bill were discussing, they continue even as President Bush called for a halt and a withdrawal from the Palestinian areas yesterday.

But the Bush administration is not criticizing the Israelis. The message is that this administration believes that major events in that region don't necessarily happen overnight. Secretary Powell speaking to reporters a little bit earlier this afternoon. He said that he understands this, but he is calling for a withdrawal, quote, "as soon as possible."

(BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: The president's statement yesterday was rather clear, and the interpretation is further reinforced by the U.N. resolution last night that the president's expectation is that the incursions will stop and the withdrawal process will begin as soon as possible, or without delay.

(END VIDEO CLIP)

WALLACE: And there is also increasing pressure from the White House on Palestinian leader Yasser Arafat. The president's spokesman, Ari Fleischer, saying that there are no plans at this moment for Secretary Powell to meet with Mr. Arafat when he goes to the region. Secretary Powell, though, saying later he's leaving open the possibility of a meeting, but clearly the indication could be that if Mr. Arafat does not deliver, he might not get a meeting with the secretary of state.

Also, the president expressing his concerns about whether the Palestinian leader is even capable of cracking down on the violence. Take a look at what the president said in an interview that was done yesterday with a British journalist. The president says, quote: "My worry is that Yasser Arafat can't perform. He's been given plenty of opportunities." The president goes on to say: "It starts with him proving that he can lead. He has let his people down, and there are others in the region who can lead, and those who have called upon those others in the region to lead."

And, Lou, we certainly know that Secretary Powell, when he make a trip to the Middle East, he'll be visiting with the leaders of Egypt, Saudi Arabia and Jordan, and one strategy here is for the administration to encourage these Arab leaders to reach out to other leaders of the Palestinian Authority. Secretary Powell also expected to meet with other leaders of the Palestinian community.

Again, the message really is if Yasser Arafat is not going to deliver for the Palestinian people, this administration might encourage Arab leaders to work with other people within the Palestinian leadership -- Lou.

DOBBS: Kelly, thank you very much. Kelly Wallace, reporting from Crawford, Texas tonight. The president's intervention in the Middle East conflict also winning praise from many leaders in the Arab world today. Jordan's foreign minister Marwan Muasher met with the Secretary of State Colin Powell in Washington today. The foreign minister gave Secretary of State Powell a letter from King Abdullah of Jordan.

Jordan is, of course, a neighbor of Israel. It is one of the few countries in the Arab world to have full diplomatic relations with the Jewish state. It also has a huge number of people of Palestinian descent. By some estimates, Palestinians account for two-thirds of the population of Jordan. Foreign Minister Muasher joins me now from our studios in Washington. Good to have you with us, Mr. Minister.

MARWAN MUASHER, FOREIGN MINISTER OF JORDAN: Thank you.

DOBBS: How would you describe your talks with the secretary of state?

MUASHER: We've had a very productive meeting with the secretary this afternoon, and I pointed out the fact that we believe the recent Israeli action has really threatened the life not only of Mr. Arafat but of the whole peace process. We've been very diligent in pushing forward the peace process, we're a culture of peace, and we don't want to lose the work of 10 years by these recent Israeli actions. We believe the time has come for for -- to stop the incursion, to withdraw Israeli forces, and to start a political process that would finally bring about an end to the conflict, where both Arabs and Israelis know the end game, know what they're getting out of and can live in peace and security.

DOBBS: Well, Mr. Minister, if all of that were achieved, it would be quite a departure from the history of the region, would it not? The letter you carried from King Abdullah today asking for a greater, an escalation, if you will, of the president's involvement in the conflict between Israelis and Palestinians, are you satisfied that enough is being done now, given the secretary of state's imminent departure this weekend to the region?

MUASHER: We're very heartened by what the president said yesterday, and we hope that it signals the beginning of a process where the United States would be re-engaged in the peace process at very high levels. The secretary's trip to the region is an extremely important one, not only in what it might result in in terms of a withdrawal of Israeli forces, but I think more importantly also in putting the peace process back on track and in convincing everybody in the region that the United States is committed to a process that would bring about an end to the occupation, and peace and security for all.

DOBBS: We have been reporting here on CNN about the widespread demonstrations of Palestinian support in Arab nations over the last several days. Those demonstrations are becoming more virulent, larger, and in point of fact, in Jordan, some of the angriest, some have reported them to be the worst demonstrations by pro-Palestinians since the 1950s. How concerned are you about those demonstrations?

MUASHER: We are very concerned. We feel that the Arab world is being radicalized, as I said, by the recent Israeli actions. We feel that people are frustrated, are angry. Do not see any hope as to what the future will bring. This is why, for example, we in the Arab world have put forward a very forthcoming plan, the Arab initiative that was approved in Beirut last week, where we have offered Israel a commitment, a collective commitment, to end the conflict. A collective commitment to a peace treaty with Israel that would guarantee its security, have normal relations with each Arab state and have an agreed solution to the refugee problem. And I think we have been able to put forward something that meets the needs of every Israeli citizen.

DOBBS: But what is not -- excuse me, Mr. Minister. But what has not been accomplished, of course, is a cease-fire or security in the conflict, and the ability to create a cease-fire. What in your judgment, will be required to achieve that?

MUASHER: You're absolutely true. I think the peace initiative we have put forward is not an alternative to the immediate steps that have to be taken on the ground, which is the implementation of Tenet and Mitchell and to implement a cease-fire and a withdrawal of Israeli forces. But we have to link the two processes together. A security process, can not be talked about in the absence of a political component. And it is that political component that has been linked so far from the process, and is one that we are putting forward, and frankly, one that the president himself talked about yesterday in his vision about two states living side by side. An Israeli state and a Palestinian one.

DOBBS: Mr. minister, are you satisfied that Yasser Arafat is the appropriate leader for the Palestinian interests here?

MUASHER: Absolutely. Yasser Arafat is the elected leader of the Palestinians. He's a symbol of their aspiration for nationhood and is the person to talk to. Any talk about an alternative to Yasser Arafat at this stage would be an attempt to introduce a puppet of the Israelis or of anybody else. We can not be talking about alternative to Mr. Arafat, but have to work with him in order that we all do the right thing and bring about an end to this conflict.

DOBBS: Well, Minister Muasher, as you know, the president today did just that. He talked about an alternative to Yasser Arafat. He talked about others who could lead in the region. Are you suggesting that the president is utterly wrong in his view?

MUASHER: That is not our understanding. We have not seen anything that suggests from the U.S. administration that it intends to talk with anybody else. I think every indication is that the United States intends to continue talking to Mr. Arafat, continues to recognize Mr. Arafat as the leader of the Palestinians. I have not seen any indication to the contrary.

DOBBS: In your judgment, if -- if there are others who could lead in the region, who might they be?

MUASHER: There are no alternatives to Mr. Arafat at this stage, and I think it would be a mistake, a grave mistake, if we are to talk of such alternatives. Mr. Arafat alone has the credibility of delivering the Palestinians, and he is the address to go to.

DOBBS: Obviously, the framework for what shall transpire, this administration being fully supportive of a Palestinian state. That state, it would be inconceivable that it not be formed and the architecture of it really with the imprinter of the United Nations. Of course, Ariel Sharon, the prime minister has talked long that he believes a Palestinian state should it exist, comprise much of Jordan. How concerned are you about Jordan's sovereignty in the creation of a Palestinian state?

MUASHER: This is, you know, an old notion by the Likud Party in Israel. And by Mr. Sharon himself. But this is a notion that has been dispelled through the Jordanian-Israeli peace treaty which explicitly forbids any transfer, any involuntary transfer of citizens across each country to the other. We are not concerned about this. We believe the Palestinians want to establish a state on their own soil, which is the West Bank and Gaza. Palestinians themselves are not interested in establishing a state anywhere else. And I think that any talk about this really sidesteps the real issue, which is the occupation that exists in the West Bank and Gaza and the need to end that occupation.

DOBBS: And that occupation, of course, that withdrawal of Israeli forces has been called upon now by both the president and the United Nations Security Council. In terms of the stability of Jordan, these demonstrations that are going on, as you say, they are concerning you. The ability to control them, would it also be necessary, in your judgment, for stability, for Jordan to scale down its diplomatic contacts with Israel, as has been the case with Egypt?

MUASHER: Well, we have made it clear that cutting relations with Israel is not on the table, because, one, we are committed to our international commitments. And, two, because any cutting of relations with Israel would signal that Israel in the future can do the same if it does not like the circumstances, under which it signed the peace treaty with Arabs.

But I have to tell you there are increasing pressures in Jordan because of the recent Israeli actions to take certain measures against diplomatic -- the Israeli diplomatic mission in Jordan. We do not want to do that, unless the Israeli government does not withdraw from the West Bank, does not indicate that it is serious about peace, and that it is serious about joining hands in those who want to see peace in the area.

DOBBS: Foreign Minister Marwan Muasher. We thank you very much for being with us here.

MUASHER: Thank you.

DOBBS: As the war in the Middle East intensifies, these developments in America's war against terror, Yasser Hamdi, the second American Taliban sits tonight in a military prison at Norfolk Naval Station in Virginia.

And General Tommy Franks called the war in Afghanistan a success, while acknowledging the area is still a very dangerous place. Bob Franken is at the Pentagon and has the story for us -- Bob.

BOB FRANKEN, CNN CORRESPONDENT: Well, the inspiration, Lou, for calling it a dangerous place had to do with the news there is some new leaflets being passed out in parts of Afghanistan. Leaflets that put a bounty on U.S. military personnel. Leaflets that have been displayed by members of the American military there. Of course, the leaflets have gotten quite a bit of circulation. They call for bounties of $50,000 on any dead U.S. military man or woman and $100,000 for one captured alive. Of course, there is absolutely nothing suggests how the money would be collected or anything like that.

But necessarily it has raised alarm in the region, although it is being taken fairly much in stride by the head of the CNC (ph) -- he is the commander-in-chief of the command that oversees the war. He is General Tommy Franks, who says as dangerous as it is there, this is not really a surprise.

(BEGIN VIDEO CLIP)

GEN. TOMMY FRANKS, U.S. CENTRAL COMMAND: As we all recognize, there are groups of enemy troops still in that country, and that's why I think we've all been a little reluctant to predict how long our operations to kill or capture those enemy troops are going to go on.

So concern about the leaflets? Awareness is probably a better word. We're going to pay attention to what we're doing in there, but we're also going to remember that Afghanistan is a dangerous place for us to be operating.

FRANKEN: And, Lou, of course you talked earlier about what people are calling the second American Taliban. His citizenship is a bit in doubt. The Pentagon and the Justice Department are each trying to have a turf battle over who has jurisdiction. What's different about this turf battle, Lou, is neither really wants it -- Lou.

DOBBS: Bob, thank you very much. Bob Franken reporting from the Pentagon.

Still ahead here, the Department of Justice and Andersen hold preliminary talks in Washington about settlement of that criminal indictment. But any deal on the criminal indictment against the firm will be too late to save thousands of jobs. Later in the broadcast, I will have a few thoughts on what has been an extraordinary week of developments in the Justice Department-Andersen case.

Federal Reserve Chairman Alan Greenspan says it's a good idea that corporate leaders like FedEx chairman think it is not. Fred Smith in the debate over how to account for stocks options.

And how your home can be used to shield your assets from shareholders, employees, creditors, but only if you live in a very certain part of the country. Find out more in our "Special Report," later in the broadcast.

(COMMERCIAL BREAK) DOBBS: Andersen today held preliminary talks with the Justice Department in Washington, trying to strike a deal for settlement of that criminal indictment against the firm. But those efforts to settle the criminal case and save thousands of jobs may be far too late. Kitty Pilgrim has the report.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): Sources tell CNN the U.S. Justice Department met with representatives of Andersen Friday to talk about settling obstruction of justice charges. Arthur Andersen is said to have requested the meeting, but industry watchers say Justice may be ready to make a deal.

ARTHUR BOWMAN, BOWMAN'S ACCOUNTING REPORT: I think Justice would like to do something, because its case is probably weaker than it would like to admit. Andersen won an early trial, May 6, and Justice wasn't prepared for that, and is looking for information that will help it prosecute the firm.

PILGRIM: A source close to the company confirms Andersen will announce 6,000 job cuts on Monday, saying most of the layoffs will come from rank and file. Andersen is trying to preserve its cash by laying off workers. Clients have been defecting by the dozens. By most recent count, 133 companies took their business elsewhere.

An insider at Andersen also confirms more than 400 tax partners and staff on the West Coast have signed on to work at rival audit firm KPMG. As Andersen unravels, plaintiffs in a suit against Enron and Andersen are trying to stop Andersen from selling assets to foreign operations, saying it lessens the value of the company.

CHARLES PARKER, PLAINTIFF'S ATTORNEY: The contractual relationships that Andersen worldwide has between its various country affiliates is relatively loose. So it does leave some very unanswered questions, and there will be suits to try to prevent them. And unfortunately, they may not lead to a significant source of money coming from those foreign affiliates.

(END VIDEOTAPE)

PILGRIM: Now, Andersen settlement with the Justice Department is not assured. There is no word on whether the sides plan to meet again, but sources informal talks will continue. And also, hard- liners inside the firm are telling us they're adamant, even defiant, about not admitting wrongdoing. And Lou, we're hearing that about 8,000 layoffs may be announced as soon as Monday.

DOBBS: OK, Kitty, thank you very much.

Well, among the many lessons in the Enron scandal is that stock options don't always match the same interests as those of shareholders. Enron executives walked away with tens of millions of dollars. Enron shareholders have nothing. All of this has put new urgency into the debate about whether companies should have to declare options as an expense. Peter Viles has the story. (BEGIN VIDEOTAPE)

PETER VILES, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): The collapse of Enron is turning into a black eye for stock options. It was through options that people like Jeff Skilling made millions while shareholders lost everything.

HARVEY PITT, CHAIRMAN, SEC: For years, conventional wisdom was that granting corporate managers stock options would align their interests with those of their shareholders. We now know that that is not necessarily the case.

VILES: It has set off a heated debate on one side. Senators Carl Levin and John McCain and Fed Chairman Alan Greenspan pressuring companies to declare the cost of stock options as a compensation expense.

ALAN GREENSPAN, FEDERAL RESERVE CHAIRMAN: Regrettably, the current accounting for options has created some perverse effects on the quality of corporate disclosures.

VILES: Warren Buffett says the same thing, but of course, he says it more clearly. Quote: "If options aren't a form of compensation, what are they? If compensation isn't an expense, what is it? And if expenses shouldn't go into the calculation of earnings, where in the world should they go?"

A clear sign the debate is heating up, op-ed pieces this week in the "Wall Street Journal" and "The New York Times" defending the status quo. In the "Times," venture capitalist John Dohr and FedEx CEO Fred Smith argue, quote, "leave options alone," saying they already dilute earnings per share so they're already being counted.

But that's misleading, say critics like Whitney Tilson.

WHITNEY TILSON, TILSON CAPITAL PARTNERS: The value of the stock options the companies are issuing to employees is enormously large, billions of dollars in the cases of large companies like Microsoft or Cisco, and the amount of earnings are diluted because of those option grants is very small.

(END VIDEOTAPE)

VILES: Last night in Chicago, SEC Chairman Harvey Pitt said shareholders should have the power to approve or reject options packages for executives, but he did not touch this issue of whether or not those options should be declared as compensation expenses -- Lou.

DOBBS: Fed Chairman Greenspan, very clear on this issue. The best argument against not having it declared as an expense?

VILES: Keeping the status quo. That it would deprive younger firms of an access to raising money and capital. They can give a portion of their company away easier than give money away. They don't have the money. Doesn't really hold water if you're talking about a mature firm like Microsoft. DOBBS: I was thinking of all of the people in companies, in managements of these companies all around the country, and indeed to some degree the world, that we could defend by saying if it's compensation, why shouldn't it be expense?

VILES: Well, that certainly is the argument.

DOBBS: Well, I think it's an irresistible argument, in point of fact.

VILES: There is a wrinkle here, though. Alan Greenspan doesn't think Congress should do it.

DOBBS: Well, who should do it? Congress does everything!

VILES: He'd like to see (UNINTELLIGIBLE) accounting standards board do it. Of course, they tried to do it five years ago, and they were shut down.

DOBBS: And they're coming off such marked success in the wake of the Enron scandal. Thanks very much.

A reminder to join us next Monday. Our guests will include Henry Kissinger and Walter Cronkite. The former secretary of state will be here to assess Secretary of State Colin Powell's Mideast peace mission and to decide whether a solution here is even possible, and share his thoughts. Walter Cronkite will be here to assess news coverage of the war against terrorism, and media access in this war against terrorism. All of that coming up Monday. Please join us.

Coming up next in this broadcast, the Dow Jones Industrials rise today. Stocks, however, lower for the week. Michael Holland, Chris Dixon, Jan Hopkins all will join us to tell us what investors should be prepared for in the coming week.

And we'll take a look at the exclusive homes that help some former Enron executives protect their assets from angry shareholders, and it's a very interesting tale in our special report tonight.

And the billion-dollar gamble. Sony is taking on "Spider-Man" and some other new movies. We'll have the story from "Variety's" editor-in-chief Peter Bart. All of that and more still ahead. Stay with us.

(COMMERCIAL BREAK)

DOBBS: New evidence today that shows the job market improving. Even though the overall unemployment rate rose slightly. 58,000 new jobs created in March, a little more than had been expected. The unemployment rate now at 5.7 percent.

That employment report lifted stock prices early in the day, although the rally lost momentum by the close. A nearly 8-point surge in the price of 3M stock, the only reason the Dow closed higher today.

The markets, lower on the week. A quarter of a trillion dollars of market cap erased this week. The Dow down 1 percent, its third losing week in a row. The Nasdaq fell 4 percent this week. The S&P 500, down 2 percent.

Joining me now are Michael Holland and Chris Dixon of UBS Warburg, and of course, Jan Hopkins. Good to have you all here.

Let me start, if I may, with you, Michael. This market is starting to look a little treacherous here to some.

MICHAEL HOLLAND, HOLLAND & COMPANY: Thank you very much! It also hurts.

DOBBS: Well, you did all right in 3M. Isn't that one of your major holdings?

HOLLAND: It's the one that went up.

DOBBS: The one today that went up. What is your sense of this market, and what we can expect?

HOLLAND: Very short term, we have such a nervous group of activists, and there are very few of them. Today volume was so low, you had people were talking about bad things happening, and taking down IBM stock at the close. It never happened. The stock couldn't retrace. So there were rumors out there which were not fulfilled.

DOBBS: Not an unfounded market rumor, surely?

HOLLAND: And the stock recovered a little bit. But we have very nervous -- and the Middle East is the prime factor right now.

DOBBS: Chris, do you see it the same way?

CHRIS DIXON, UBS WARBURG: What I think what we're seeing, we're going into earnings season. And this is really Enron-itis. Anything that's been complicated, has just filed, say, a very deep 10K. Investors are just boding with their feet.

And obviously the one thing this week that really hit the media center, was AOL. Everybody now knows, I hope, we have a $54 billion write-down. There's a very complicated partnership interest going back and forth between advance...

DOBBS: You're making me sorry I brought this up, you know that?

DIXON: But that said, if you're willing to kind of step back and look through the forest for the trees, and not get caught in trying to find a bush, step back. I think there are some great opportunities, once we get through this earnings period.

DOBBS: You mentioned AOL-Time Warner, which I should point out, is, of course, to those who don't know, the parent of this network, parent company of this network. It has been battered. It has, as you say, a huge write-off coming with this report. We're seeing a lot of issues.

You're the media maven. Of all of the media stocks, it's the worst performing of the majors. What's required to make it go higher?

DIXON: Well, it's not just been AOL. If you look at anything that's been complicated. If you take a look at AOL. You take a look at Liberty Media, NewsCorps, Vivendi -- these are very complicated, capital structures, and investors have voted with their feet.

Very simple stories, whether it was a newspaper company, a broadcasting company. Viacom continues to do very well because of exposure. And that's really the story. It's a bifurcated market. Something that's very simple, that investors can understand. That's where investors are going.

DOBBS: Jan, your thoughts about where we're headed next week?

JAN HOPKINS, NEW YORK: Well, I think earnings season is beginning next week, and we had positive news for the Dow today, with earnings. 3M guided upwards yesterday, and the stock was a big winner today. Alcoa was pretty good today. There were lots of upgrades for the stocks. The earnings may be better. That may, at least, provide a cushion to the market.

But I think that people will be watching what's going on in the Middle East. And as Mike was saying, this is a very nervous market. And as things get worse, the market will probably react negatively. But as things get better -- and hopefully that will be true -- then the market could respond positively.

DOBBS: Let's talk about whether that's true, because the pre- announcements, the warnings. Your sense of those this week?

HOLLAND: We had fewer. The good news, if you want to take good news out of this week -- everything was down, except for 3M. The good news of this week, Lou, was that we had fewer warnings. Expectations are so low at this point that you really have not a great deal of difficulty outperforming.

3M, as Jan was just pointing out, the stock was up 7 percent today. And their revenues weren't very good. They just cut their costs.

DIXON: The interesting thing we're seeing is the consumer is still pretty healthy. We've seen in the motion picture industry, you've see the box office is up about 15 percent. We're still getting indications that the ad market has turned, because advertising is starting to come to work.

The big issue for the market really continues to be capital spending. When do we see capital starting to be spent back in the market? And that's something that many of us are watching very carefully.

DOBBS: Some early indications of a little better cap ex, in terms of semiconductors, at least in the early stage. Let's go back to something you raised, Chris, which is, again, Enron. The Enron effect. We also this week learned the SEC has broadened widely its investigation of accounting practices. What's the affect on the market? Jan, I'll start with you.

HOPKINS: Well, technology. And as Chris was saying, anything that's complicated, I think, is affected by that. The things that are simple, like 3M with its Post-It notes, benefit from the fact that the economy is getting better. And people are saying, well, if it's this good now, then it's going to be that much better six months from now.

DOBBS: Do you think we're going to see an improvement in earnings?

HOLLAND: Yeah. But let me go back to the SEC question you just asked, because I feel pretty strongly about it. This is not helpful. Harvey Pitt came in, head of the SEC, gave an initial impression that he was not going to be tough on the industry. All of a sudden we have Arthur Andersen kinds of things happening.

We have, I think, a head of the SEC who's trying to show how tough he is. And these informal announcements about leaks, and so on. These are not helpful, in a very tentative market.

DOBBS: Chris, you're nodding your head?

DIXON: Yes, I think we really have to see the analyst community, myself involved, has been really kind of beat up. Because the notion is that we haven't done the work, haven't taken a hard look at some of these 10Ks. And for us, these issues are, gee, why is everybody talking about them?

Yes, there are discrepancies. Yes, there are problems. Yes, accountants have been aggressive. But most of us that really understand these are, quite frankly, somewhat surprised that the market is suddenly focusing on things that we, as analysts and portfolio managers, look at very carefully and assessed the risks associated.

(CROSSTALK)

DOBBS: Well, I'd much prefer there be a lot of focus on very fallible Wall Street analysts, than infallible television news anchors!

(LAUGHTER)

DIXON: Speak for yourself.

HOLLAND: "The Wall Street Journal," "The New York Times," where are you?

DOBBS: I can't even imagine what you're talking about! All right. Mike Holland, Chris Dixon, Jan Hopkins, as always, thank you very much.

Still ahead here, several states have rules that allow you to use your home to shelter your assets against all sorts of bad things. We'll have a special report for you next on that. A forest fire is burning out of control tonight in New Mexico. Thirty-seven thousand acres, burned so far. We'll have that story as well.

And Oprah Winfrey decides to end her monthly book club. Publishers fear that move could cost them sales. We'll tell you why, next.

(COMMERCIAL BREAK)

DOBBS: A loophole in Texas and Florida law permits former executives of Enron to shield millions dollars from shareholders and employees. The law allows debtors to retain the full value of their primary residence. Translation: as thousands of former Enron employees struggle to pay their rents, the very executives who are under government scrutiny will be able to retain their very expensive homes. Fred Katayama has our report.

(BEGIN VIDEOTAPE)

FRED KATAYAMA, CNN CORRESPONDENT (voice-over): This rich Houston enclave is home to some senior ex-Enron executives who oversaw the company's collapse. Some lawmakers and former employees are upset over a Texas-sized loophole -- a rule that allows executives to protect their homes, regardless of how pricey they are, from creditors.

SEN. HERB KOHL (D), WISCONSIN: This would be a scandal of -- and it would violate every American's sense of fair play. The unlimited exemption, it seems to me, is outrageous and should be done away with.

KATAYAMA (on camera): Most states cap home state exemptions. In New York, for example, it's just $20,000. But no limits apply in Texas, Florida, Iowa, South Dakota and Kansas. Some Washington lawmakers are moving now to place caps on every state.

(voice-over): But for now, the exemption would protect former Enron chairman Ken Lay's Texas home, should he declare bankruptcy. He sold several homes in Aspen, But he's keeping his $7 million condo in Houston. His spokesperson said the homestead exemption has nothing to do with that decision, adding, "That's where their family lives and they're selling other properties in Texas."

Former Enron chief financial officer Andrew Fastow lives nearby in a $700,000 home. And he's building another one in the neighborhood worth more than $1 million.

Army secretary Thomas White, who left Enron in May, is putting up a $4 million mansion in Naples, Florida.

RAYMOND NIMMER, UNIVERSITY OF HOUSTON: A bankruptcy this large that affects this many people, is going to give fuel to those who would like to change the law. I personally think that a cap may not be the best thing to do. Some form of an exemption is really rather important to make sure that people don't wind up losing their home and their basic possessions, no matter what problems they could run into with debt.

KATAYAMA: Texas does not cap homestead exemptions, but does cap personal property as $60,000. That's not much for a rich person who might drive, say, a $50,000 sports car. The irony, a fat cat will keep the mansion, but the home may have very little in it once you account for the car. Fred Katayama, CNN financial news, New York.

(END VIDEOTAPE)

DOBBS: Firefighters struggling tonight to control a blazing wildfire in southwestern New Mexico. This fire has burned 37,000 acres of Gila national forest. Lightning sparked the blaze Sunday, but it wasn't until yesterday that the fire roared out of control. It has closed roads, threatening homes tonight as well as forcing residents, some of them, to evacuate. New Mexico's fire season arrived several weeks early this year because of the especially dry conditions and light snow over the winter.

Coming up next, the "Dobbs Report." I'll have more thoughts on the Department of Justice, and Andersen.

Also, a blow to the publishing industry. Oprah Winfrey cancels her monthly book club. We'll take a look at the impact on the publishing industry.

And CBS is searching for a new strategy after the departure of morning star Bryant Gumbel. "Variety's" editor-in-chief will be here to tell us what the network needs to do. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Oprah Winfrey is ending her monthly book club. In a statement she said, "It has become harder and harder to find books on a monthly basis that I feel absolutely compelled to share." So she is ending the Oprah Book Club. Vowing to boost national reading, Oprah founded that club back in 1996.

An Oprah recommendation, by the way, virtually guaranteed a boost in sales, reaching hundreds of thousands of additional readers. However, some did criticize Winfrey for choosing sentimental literature. Well, after all, it was her recommendation.

And one of the most anticipated new films will be released this summer. It's "Spider-Man." That film is scheduled to open May 3rd. The movie's distributor is Sony. It's betting on a blockbuster. But for a studio that only turned a profit, its summer movie strategy could be risky.

Joining me to talk about that, including Bryant Gumbel's departure for CBS, is "Variety's" editor in chief, Peter Bart. Peter, good to see you. Sony hits the black and starts to feel a little frisky here with the money right?

PETER BART, EDITOR IN CHIEF, "VARIETY": They sure do. They're betting about $1 billion, that the several blockbusters, like "Spider- Man" "Men in Black II," "Stuart Little II," can own the summer. That's about half a billion dollars alone just in marketing expenditures.

DOBBS: I'm sorry, Peter. A billion dollars. That's a pretty good gamble.

BART: Well, it is a good gamble. But more and more each summer, it's the pictures with Roman numerals at the end that really dominate the theaters. And I think the bet here is that if they can line up three or four major blockbusters in a row, they can pretty well dictate the terms and the dates.

The problem is that many people in the industry feel that there's a chance that they can step on their own toes, because the pictures are opening so close to one another.

DOBBS: Let's turn to the media companies themselves. I mean, the media companies, the big ones, are struggling in this marketplace. What's your best judgment as to why?

BART: They are, too, and they're about to take another quiet hit. Because you know, the implosion of the giant media company in Germany, Kirsh, which will probably go into insolvency early next week. Kirsh owes about $2 billion to the American media companies, many of which -- much of that is advances against delivery of future films. So I think this will intensify the problems.

DOBBS: Let's talk about another major development this week. Bryant Gumbel, calling it quits. Astounding. How do you see it?

BART: Well, it's especially astounding when you consider the fact that the "Today" show, for 15 years, worked pretty well under his aegis. And that shows, I guess -- the strength of these franchise. The "Today" show, even "Good Morning America." The last time CBS owned the morning was 20 years ago, with "Captain Kangaroo." And maybe that's a clue as to what they need in the future.

(LAUGHTER)

DOBBS: Well, in terms of Bryant Gumbel, where do you think he will go?

BART: Well, Bryant Gumbel is not exactly a warm and cuddly character to wake up in the morning. And I think that we're going to see Bryant, who is, I think, an excellent interviewer, and has a really sharp mind, I think we're going to see him on some extremely interesting nighttime interview program.

DOBBS: It's interesting you'd say that, Peter. I've always thought that of Bryant Gumbel. In the morning, he can be acerbic and razor-edged. I've always felt that he belonged in a prime-time role. So it will be interesting to see what happens. And of course, he has a wonderful program in "Real Sports" on HBO.

BART: Sure does.

DOBBS: As always, Peter Bart, it's good to talk with you.

BART: Thank you.

DOBBS: Thanks for being with us. "CROSSFIRE" begins in a few moments. Let's go to Paul Begala and Tucker Carlson in Washington. Gentlemen, what do you have for us tonight?

PAUL BEGALA, "CROSSFIRE": Well, Lou, we're going to debate American Taliban II. Unfortunately, not a movie sequel, but another American, apparently, who has been found to have been fighting against us and with the Taliban. They brought him over from Guantanamo to northern Virginia. And I'm just going to ask why in the world it took four months? Why it took Bush four months to catch him?

TUCKER CARLSON, "CROSSFIRE": If there's a man on this set who will defend the American Taliban, I think you know who it is. But from that grim note, we move on to Kitty Kelley, who will be talking to us about the royals in England. Should they be exiled to Monaco or Belgium? That's our question. We may get into Arthur Andersen. Do you have an opinion on that, Lou?

DOBBS: One or two. I'll share it a little later. Paul, when you said that about not being a movie, was that a dig at us and our frivolous content?

BEGALA: No, no, no! Actually, let me get back to Andersen. I'm with you on the Andersen thing. This is scapegoating in the worst sort. Even from the left, I don't like to see the alleged Bush Justice Department...

(CROSSTALK)

CARLSON: You'll have to reconsider your opinion. Are you listening to this? This guy's on your team!

DOBBS: Tucker, I want you to listen even more. This man is ratcheting up in a hurry, in my estimation. Paul, thank you very much. Tucker, thank you. We look forward to it.

CARLSON: Thank you.

DOBBS: Well, a few weeks ago we told you about a service mission to the Hubble space telescope. Well, tonight we can report to you that those upgrades are working, and working well. NASA says the Hubble's new solar rays are providing the telescope with about a third more power. The telescope's new camera is also capturing better quality images of the cosmos. NASA says the new pictures are excellent and we can't wait to see them.

Well, there could be many more asteroids in our solar system than had been originally thought. Astronomers have doubled their estimates, in fact, to about 1.5 million asteroids. Each of those asteroids has a diameter of more than half a mile. But scientists say the fact there are so many more asteroids does not increase the chances that one would ever strike the earth.

Coming up next in "The Dobbs Report," some commentary.

Also, "In Their Words," which will include an impromptu birthday tribute to the secretary of state. Stay with us.

(COMMERCIAL BREAK)

DOBBS: In corporate news tonight, two of Wall Street's smaller brokerages are merging. Ladenburg Thalmann is buying privately-held Gruntal Financial for $20 million in cash plus 5 million shares of Ladenburg stock. The deal doubles Ladenburg's brokerage force to more than 1,100. It also adds $19 billion in customer assets.

Brown and Williamson agreed to pay $204 million it owes to 52 U.S. states and territories. Brown and Williamson withheld that money in a dispute over how much it actually did owe as part of a historic 1998 settlement. The deal requires cigarette companies to pay the states to cover smoking-related costs.

The car rental companies are following the lead of airlines. Avis today said it will no longer pay certain base commissions to travel agents. Over the past few weeks, several airlines have stopped paying commissions as well. Avis, like the airline, said the move will cut its expenses.

Well, we learned today that the Justice Department and executives of Andersen talked in Washington about the possibility of settling the criminal indictment against the firm. We don't know how close they are to settlement, nor do we know the terms. But we know a settlement should be reached.

The Justice Department indictment has already destroyed Andersen as a firm. And we know that settlement, in whatever form, will come too late for many thousands of innocent Andersen employees, who will lose their jobs next week. A number of top officials of this Justice Department have much to answer for, as do a number of top executives at Andersen.

Well, they can't now salvage all of the jobs that have been so unnecessarily obliterated by this utterly wrongful indictment of the firm. They can salvage some of the jobs that remain. I hope that's enough incentive for both sides in these talks to reach agreement, and to reach it quickly. And hopefully they can salvage as much faith in the capacity of this government to care about the little guy, or as much -- limit as much damage to this firm as possible.

The Justice Department's criminal resource manual, by the way, defines damage to the little guy as "collateral consequences." A firm of 85,000 people has been destroyed in three weeks. Not one person at Enron, not one person at Andersen, has been charged or arrested in three months. That we have overwhelming collateral consequences for the innocent before we have justice for the wrongdoers is simply a travesty.

Well, not surprisingly, the travesty in the Middle East was dissected by newsmakers today, and almost no one, of course, agrees on a solution. But there was also, in the day. a light moment for Secretary of State Colin Powell. Now, "In Their Words."

(BEGIN VIDEO CLIP) HANAN ASHRAWI, PALESTINIAN LEGISLATOR: It depends on whether Colin Powell comes with a clear mandate and with an operative will. Is he really going to intervene in the course of this? Is he going to present a concrete position? Does he have the will and the political will to stand up to Sharon for a change? For once in their history, they have to tell Sharon that he's gone too far. That this is unacceptable.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

HENRY KISSINGER, FMR. SECY OF STATE: Now the president has made a clear and strong statement of what America expects from both sides. Now the secretary of state has an agenda of his own, in the name of which he can operate in the Middle East.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

MAJ. GEN. GIROA EILAND, ISRAELI DEFENSE FORCE: There's no way that we can simply, unilaterally withdraw from these areas, and let the Palestinians continue with their terrorist activities. I guess that something should be done on both sides. And if it is done in an effective way, then their conditions for our withdrawal would be met.

(END VIDEO CLIP)

REPORTERS (singing): Happy birthday, Mr. Secretary, happy birthday to you...

COLIN POWELL, SECRETARY OF STATE: Thank you very much!

(END VIDEO CLIP)

DOBBS: That's MONEYLINE for this Friday evening. Thanks for being with us. I'm Lou Dobbs. For all of us here, good night from New York. Have a great weekend. "CROSSFIRE" is coming up next.

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