CNN LOU DOBBS MONEYLINE
Stock Markets Post Gains for Second Straight Day; Floods Wreak Havoc in Europe
Aired August 15, 2002 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JAN HOPKINS, GUEST HOST: Tonight's floods wreak havoc in Europe. In Germany, Dresden is being evacuated on fears a wave of water will wash over the city. All efforts to save the city's historic buildings are being abandoned. We'll have a live report.
A major public health issue in this country: power lines. Tonight one of the strongest warnings yet over their safety.
Steve Young is covering that story.
STEVE YOUNG, CNN CORRESPONDENT: Jan, I'll have the results of an eight-year study on power lines which says the danger may be even greater than we first thought.
TIM O'BRIEN, CNN CORRESPONDENT: The deadline for CEOs to sign off on their books has come and gone, but the effect on investors may be dwarfed by a corporate reform bill already passed by Congress.
JOYA DASS, CNN CORRESPONDENT: After a choppy day of trading, the Dow manages to extend its gains for a second day in a row.
GREG CLARKIN, CNN CORRESPONDENT: And it was a modest gain, but a gain nonetheless. The Nasdaq now up 6 percent in two days.
HOPKINS: Also tonight, relatives of victims murdered on September 11 filed a $1 trillion lawsuit against members of the Saudi royal family and Saudi banks. The suit claims that Saudis have blood on their hands.
And the drought affecting more than half the nation may be worse than expected. We'll take a look at how this drought could affect Americans throughout the country.
ANNOUNCER: This is LOU DOBBS MONEYLINE for Thursday, August 15.
Sitting in for LOU DOBBS: Jan Hopkins.
HOPKINS: Good evening.
We begin tonight with President Bush using one of America's most famous and most patriotic monuments to talk about homeland security and aid for drought-stricken farmers.
Suzanne Malveaux is traveling with the president, and has the report.
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: President Bush is celebrating the 75th anniversary of this American treasure. It was earlier this afternoon that he and Governor Tom Ridge used this magnificent backdrop to actually promote the administration's agenda, including homeland security, fiscal responsibility and free trade.
But the real concern here in South Dakota is drought relief. It was Monday the administration announced $150 million in emergency funds for South Dakota and three other states.
But some are saying it is too little, too late.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I understand what drought means to people who make a living off the land. I know how people suffer when there is no rain. I've seen my fellow Texans, and I heard some of my fellow Americans today talk about the anxieties that come when you're in a business that relies on good weather and good prices. I've talked to ranchers who've been on their family ranch for years, wondering whether they can stay on.
(END VIDEO CLIP)
MALVEAUX: And South Dakota is home to a key Senate race. The White House hand-picked Congressman John Thune is taking on Democratic Senator Johnson. The outcome of that race could tip the balance of power in Washington if Republicans take that seat.
Suzanne Malveaux, CNN, Mount Rushmore.
HOPKINS: The White House today said that relations with Mexico are still solid, despite a snub by Mexican President Vicente Fox. President Fox canceled an invitation to President Bush's Texas ranch. That followed the execution of a convicted Mexican national in Texas on Wednesday. Mr. Fox had appealed to President Bush and Texas' governor to grant clemency for the man.
The White House says the two leaders share a strong friendship, and President Bush looks forward to their next meeting.
Now to Europe and the devastating floods that have washed over half a dozen nations there. Tonight Dresden, Germany is facing its worst flooding in more than a century, and some of Europe's most prized cultural resources are in danger of being destroyed.
Gaven Morris has the story from Dresden.
GAVEN MORRIS, CNN CORRESPONDENT (voice-over): The evacuation of Dresden's hospitals was planned for a worst-case scenario. On Thursday, it's arrived as rising water threatened electricity supplies, a helicopter relay ferrying more than 100 intensive care patients to hospitals across Germany. In all, 2,500 patients relocated.
UNIDENTIFIED MALE: Normally we use ambulances. We also use taxis and buses because not all the patients are so ill that they can't sit. So the biggest part of the patients are to take out with (ph) normally ambulances and buses. And only in really some special cases we need the helicopters to get them out.
MORRIS: Downstream, river level measuring instruments had simply been washed away, officials in Dresden giving up the futile task of predicting just how high the flood would peak and when it might arrive.
So waiting, watching, wondering, the people of Dresden massed along the riverbank, inside the city's famed museums, crowds as well. This time sculptures rescued from the basement's galleries.
UNIDENTIFIED MALE: We have no experience to move in such a short time such a big work of art and all these materials here. It was really very dangerous.
MORRIS: In this, the Albertine Museum, 7,000 sculptures and 4,000 Renaissance masterpieces moved to safe galleries above.
(on camera): The threat is not only coming from above as the river reach its peak, but also from below. The water here is seeping through the walls and, at the moment, they're able to pump it out. But if later on it breaches the defenses of the door, collections like this will be ruined.
(voice-over): Late in the day came more water still. Sandbagging started afresh as it seemed the expected high-water mark, a flood level not seen in 150 years, would be surpassed, the very center of the old town threatened directly.
And what has happened since I filed that report earlier on is that we're told that the situation has worsened. A short time ago the river exceeded its feared peak level of 8.5 meters, and kept rising.
MORRIS: So what has happened now is the area in front of the opera house, the main place in front of the opera house, has been evacuated of emergency personnel, of the public, of the media.
There is some speculation from some officials on the ground, from some military we spoke to, that a dam has broken along the river. We have still to confirm that, but that's the report we're getting from workers on the ground. If that's the case, what they're worried about is that a wave of water may wash back up through the place and towards the old town.
So they've have evacuated many people from central Dresden, and they're now waiting to see if that is the case. One thing they have done to try and alleviate the situation, is they have blown up an old railway bridge downstream in the river, and they're hoping that that will open up a new area, a new plain that the water can escape to.
So very much at the moment here it's an emergency in progress. They're definitely heading into unchartered territory.
HOPKINS: Thank you, Gaven Morris reporting live from Dresden, Germany.
As Germany battles rising floodwaters, the Czech Republic is busy with a massive cleanup. The floodwaters in Prague are receding. The city's historic bridges survived the raging river. But some of Prague's historic buildings were not so lucky. The officials are now concerned with possible leaks from underground chlorine storage tanks.
Actor Sean Connery was in Prague filming a movie when the floodwaters hit.
(BEGIN VIDEO CLIP)
SEAN CONNERY, ACTOR: There were so many people volunteering and young, English-speaking Italians and students and, I think there's people coming from over the borders, which is, I think, remarkable. But I don't know if the world realizes the depth of the disaster.
(END VIDEO CLIP)
HOPKINS: The damage across Europe from the floods is expected to be at least $7 billion.
Rivers across South Asia continue to rise tonight. Monsoon floods from torrential rains have killed more than 900 people already. Another 25 million have been displaced from their homes or stranded, and rising water levels now threaten to trigger fresh floods in India, Nepal and Bangladesh.
In this country, rain is wreaking havoc in Texas. The cities of Houston and Galveston were swamped with rain overnight. They're bracing for more today. Seven inches of rain fell overnight in Galveston. Highways, streets and cemeteries were flooded, businesses closed. Forecasters predict another three inches of rain tonight, and thunderstorms are predicted throughout the weekend.
Specially trained firefighters are being rushed into Oregon tonight. These crews are trained to protect homes and buildings. They are racing toward the western edge of a massive fire that has already destroyed 400,000 acres. More than 7,000 people from around the country are fighting the fire. The blaze has been burning for more than a month, but just 28 percent of it is controlled. The total cost of fighting the fire has now topped $63 million.
Fires, floods, deadly smog and drought. If you think the weather and other disasters have been worse than usual this year, you may be right. Experts recorded four times as many natural catastrophes in the '90s as compared to the 1960s. Seven hundred natural disasters have already been recorded this year, and the cost of dealing with these disasters has been rising. The world economy spent $652 billion in the '90s. It was five times higher than in the '70s, and 15 times higher than in the 1950s.
German climatologist Gerhard Burris (ph) blames global warming and the earth's rising temperature. Burris predicts a century of ever-worsening disasters.
The list of states reporting West Nile virus cases is growing. Missouri and Ohio now reporting that they have found possible cases of human infection. In addition, three new cases have been discovered in Illinois, but they are not yet contained in official figures.
Nine people have died from West Nile virus infection. One hundred and sixty people have been infected this year. The Centers for Disease Control predicts 1,000 people will become ill before the epidemic ends with a frost.
The U.S. government appears to have a knack for losing computers. The IRS says it cannot account for 6,600 laptop and desktop computers. Many of them were loaned to volunteers who helped low-income and disabled Americans with their tax returns. Some of the computers could hold private taxpayer information like Social Security numbers. The Customs Service recently disclosed it had lost track of about 2,000 computers, and the Justice Department is unable to find 400.
The Pentagon has confirmed that four detainees at Guantanamo Bay have attempted to commit suicide since being held there. None succeeded. There were 30 other incidents where detainees attempted to harm themselves, but non were life-threatening. Five hundred ninety- eight detainees are being held at Guantanamo Bay.
It was an emotional day at the office for 22 Pentagon workers. They returned to offices that were destroyed when a jet liner slammed into the Pentagon on September 11.
Barbara Starr joins us now from the Pentagon with more -- Barbara.
BARBARA STARR, CNN PENTAGON CORRESPONDENT: Hello Jan.
Yes it was, indeed, a really bittersweet day here at the Pentagon. The first workers -- the first military and civilian personnel moving back into this ground zero. Offices on the E-ring, the outer ring of the Pentagon that took the direct hit last year on September 11 when American Airlines Flight 77 slammed into this building where 184 people died, people in the building and passengers and crew onboard the plane.
This morning some of us were allowed to take a tour of these new offices, watch some of these workers, 11 months later, move their belongings back in. This has been a year-long process here, almost since the day after the attack.
We visited with Peter Murphy (ph). He's moved back into his office, which literally was ground zero on the day of the attack. It's all been rebuilt. The Pentagon hopes now by this September 11 they will have 600 workers back in these newly rebuilt offices. This has been at a cost of half a billion dollars. They have thousands of more people to move back in.
But today, a big step on the road to recovery as this ground zero reopened -- Jan.
HOPKINS: Thanks, Barbara Starr at the Pentagon.
After a volatile start, stocks closed higher, building on yesterday's solid gains. Broader market rose to the highest level in more than a month. The Dow added 75 points. The Nasdaq and the S&P 500 both up nearly 11. We'll have complete market coverage later in the broadcast.
Our MONEYLINE poll tonight concerns a story that we'll bring you later. We will have a "Special Report" on the controversy surrounding possible health risks for people living near power lines. Our question tonight: Do you think there are health risks associated with living near power lines? The answer: yes or no.
Please cast your vote at cnn.com/MONEYLINE. We'll bring you the results later in the broadcast.
Also still to come, our Enron corporate America criminal charges scoreboard.
Plus, families of September 11 victims are fighting back against terrorism. They have a trillion-dollar lawsuit.
Saudi Arabia says it will not allow the United States to use its bases to attack Iraq. A top adviser to the Saudi prince will be our guest.
And we'll have a "Special Report" on the human and financial cost to farmers of this summer's drought when MONEYLINE returns.
(JOINED IN PROGRESS)
MATT SELLITTO, FATHER OF MATTHEW SELLITTO: ... action have the blood of my son on their hands.
ALLAN DODDS FRANK, CNN CORRESPONDENT CNN CORRESPONDENT: A Pentagon employee who survived with her infant son:
APRIL GALLOP, INJURED IN PENTAGON ATTACK: As proud as I was to receive the purple heart, I will be even prouder when we bankrupt the sponsors of terrorism and bring them to justice.
DODDS FRANK: Ron Motley, a plaintiff's lawyer who has made billions of dollars suing the tobacco and asbestos industries, is leading the case.
His main target: the wealthy elite of Saudi Arabia, birthplace of 15 of the 19 hijackers and, the lawsuit charges, the main source of funds for Osama bin Laden.
Among the nearly 100 defendants, three Saudi princes, including the current defense minister. The Saudi bin Laden Group, eight Islamic banks and nine Islamic charities.
RON MOTLEY, PLAINTIFFS' ATTORNEY: We fully expect the Saudi nationals and the Gulf state banks to fight. But if they fight, they must fight here.
DODDS FRANK: Many of the charities, as well as other individuals named, already have had assets blocked by the U.S. government.
DODDS FRANK: Neither the Saudi nor the U.S. government had any comment on the case. The lawyers say the U.S. government has not given them any assistance, although they claim five other countries already have.
And the families pleaded for the Senate Intelligence Committee to help them get access to classified information about the terrorists' money trail -- Jan..
HOPKINS: Thanks, Allan Dodds Frank reporting from Washington.
Diplomatic relations between the United States and Saudi Arabia have deteriorated since September 11. Fifteen of the 19 hijackers, as Allan reported, were Saudi nationals. And the Saudi government says it will not allow Saudi bases to be used for U.S. strikes on Iraq.
The differences between the United States and Saudi Arabia were highlighted in a briefing given by a private analyst to the Pentagon's defense advisory board.
Joining me now is Adel Al-Jubeir. He is foreign adviser -- foreign affairs adviser to the Saudi crown prince.
Welcome to the program.
ADEL AL-JUBEIR, ADVISER TO SAUDI CROWN PRINCE: Thank you.
HOPKINS: First of all, your response to this lawsuit against the three Saudi princes, the Bin Laden Group, a number of Saudis. What's the government's response?
AL-JUBEIR: Well Jan, we haven't seen the lawsuit yet. I understand it's a 259-page document. I haven't read it. I haven't gone through it. I don't know what the basis of it is, so I really would not be in a good position to comment on it at this time.
HOPKINS: There are a number of members of Congress in this country that have criticized the Saudi government for not doing enough to counter terrorism. And they're concerned about possible funding of al Qaeda, the fact that 15 of the 19 hijackers came from Saudi Arabia.
What's your response to that? Do you think that Saudi Arabia is doing enough to fight terrorism?
AL-JUBEIR: Oh, absolutely we are.
Let me begin with the second part first. The fact that 15 of the 19 hijackers on the plane were Saudis is something that is a source of great shame for us. But the purpose for having the 15 on the planes was an attempt by bin Laden to drive a wedge between us by giving this operating a Saudi face.
He has membership from over 50 countries in al Qaeda. He could have selected any nationality to be on those planes, including Americans, and he did not. He purposely chose Saudis in order to drive a wedge between our two countries, and he almost succeeded.
With regards to the Saudi Arabia's cooperation in the war on terrorism, we are committed to rooting out terrorism. We have been cooperating with the international community on every single issue. We have frozen bank accounts. We have identified evildoers. We have handed their names to the United Nations. We have interrogated thousands of people. We have under detention several hundred people in Saudi Arabia.
We have shared that information with the U.S. We have been able to work with other countries to extradite suspected members of al Qaeda, and we have shared that information, again, with the United States.
So I believe the charges that Saudi Arabia is not fully on board in this effort are really baseless.
HOPKINS: IN fact, Iran has turned over some al Qaeda detainees to Saudi Arabia for questioning just recently. What's the status of that, and what have you found out?
AL-JUBEIR: They were detained -- they were handed over by Saudi Arabia and they are now currently being questioned by our authorities. We are sharing that information with the U.S. We don't have a complete picture yet. But once we know more, we will certainly share it with your government.
HOPKINS: Now, the Saudi Arabian government has said that the U.S. cannot use bases in Saudi Arabia to attack Iraq. What would be the conditions that would allow the U.S. to use Saudi bases for such an attack?
AL-JUBEIR: We have said, as has almost every country in the international community, that Saddam Hussein must be brought into compliance with U.N. resolutions. We have also said -- we live right next to him, remember Jan, and we're the country most threatened by him.
We have also said that there has to be a legal sanction. A case has to be made. We have not seen this case being made. And we have said that diplomacy seems to be working, let's give it a chance.
Has anybody thought through the consequences of war in terms of human suffering? In terms of financial cost? In terms of impact on the region? Has anybody ever thought through what the day after will look like? Is Iraq going to be dismembered? Who is going to take over?
This is not -- we're not playing video games here. This is very serious.
Has anybody thought about the resources that have to be spread thin? You have one war in Afghanistan, you have another between war Israelis and Palestinians. The last thing the region needs is another war, in terms of Iraq.
And so the point we make -- which is the point that the Germans and the French and the British and the Australians and the Spanish and virtually every country in the world makes -- is, let's think this through. Let's make the case, and let's see -- and let's give diplomacy a chance. And if we can allow the inspectors back into Iraq, we will have achieved the objective without firing a single bullet.
And the irony of this is the inspectors on the ground have been able to do more damage to Iraq's weapons of mass destruction program than all of the bombings combined.
Let's try it.
HOPKINS: Thanks very much, Adel Al-Jubeir. He is foreign relations adviser to the Saudi government. Thanks very much.
AL-JUBEIR: Thank you.
HOPKINS: Coming up: our latest Enron corporate America criminal charges scoreboard.
Plus, big corporations have signed off on their financial results. We'll tell you what's next for corporate America.
Markets end higher for the second consecutive day. We'll have live reports from the New York Stock Exchange and the Nasdaq.
And the potential health risks of living near power lines. We'll have a "Special Report" on some new and very disturbing information.
HOPKINS: Controversial telecom analyst Jack Grubman is leaving Salomon Smith Barney. Grubman has come under fire for his recommendations on the telecom sector, even as telecom stocks were sinking. Grubman was called before Congress to explain his support of WorldCom, even as that company was plunging into bankruptcy.
A spokesman for Salomon Smith Barney tonight says that Grubman has resigned and Grubman has made as much as $20 million in a year. The Securities and Exchange Commission has now posted on its Web site the sworn statements of more than 600 top executives attesting to their company's financial reports. Nearly 700 companies were required to file by yesterday's deadline, another 200 reporting later in the year.
But under the recently enacted Sarbanes-Oxley act, the chief executive and chief financial officers of more than 14,000 publicly traded companies will be required to give similar assurances.
Tim O'Brien has more from Washington.
O'BRIEN (voice-over): The Securities and Exchange Commission has been inundated with the sworn statements from corporate brass affirming what most investors had once assumed anyway: that their company's financial reports were reliable.
Despite all the hoopla surrounding the certification requirement, the practical effect may be dwarfed by the sweeping corporate reform legislation that Congress passed last month, the so-called Sarbanes- Oxley Act.
FRANK GOLDSTEIN, CORPORATE SECURITIES ATTORNEY: Sarbanes-Oxley is broader, it covers more territory, it covers -- for example, it covers every public company in the United States, not just 950-or-so of the largest. It has teeth by way of criminal penalties.
O'BRIEN: The law requires the chief executive and chief financial officers of more than 14,000 publicly traded companies to vouch for their company's finances in their periodic reports.
President Bush hailed the legislation again today.
BUSH: Let me summarize it by this way: It says we expect the best from people in positions of responsibility. We want people to be held to account if they break the law.
O'BRIEN: But skeptics remain. William Lerach, who's filed a class-action lawsuit against Enron on behalf of shareholders, says the certification requirements would not have deterred executives at WorldCom from certifying that company's financial statement, which turned out to be several billion dollars off.
WILLIAM LERACH, PLAINTIFFS' ATTORNEY: Well, of course they would have signed. And if -- and we hope it's not true -- similar frauds are ongoing, I think we better resign ourselves to the fact that executives in that deep already, so far over their heads, aren't going to confess. They're going to cross their fingers, sign, and pray for the best.
O'BRIEN: No one can predict with any certainty to what extent these new requirements will make corporate financial reports more reliable, or to what extent they may restore investor confidence. But the new rules will make it a lot more risky for corporations to mislead investors.
And Jan, that can't help but help.
HOPKINS: That's right Tim. Thanks, Tim O'Brien in Washington.
So far there have been no bombshells or major surprises as a result of the new rules. A few companies, however, have failed to meet the SEC's deadline.
Peter Viles explains why some CEOs can't vouch for their numbers.
PETER VILES, CNN FINANCIAL CORRESPONDENT (voice-over): When Harvey Pitt made like Dirty Harry and told CEOs to "go ahead, make my day" by August 14, investors feared the worst, the specter of crooked CEOs smoked out by the vague threat of prison time.
Well, either America's CEOs are not so crooked after all, or they're bluffing Harvey Pitt, because so far there have been very few nasty surprises.
Executives at Enron, WorldCom and Qwest did not certify their past results. No great surprise there, though all three are under SEC investigations.
ROBERT GROSSMAN, FITCH RATINGS: Many of them were in the middle of restating their financials already, and so it was a process that wasn't that surprising because they were already restating them, and they're in the midst of that. And so they can't certify them because they're just not completed.
VILES: McLeodUSA executives said they could not certify everything they're supposed to. But no surprise, the stock was already delisted.
There were some mixed messages. Mirant executives reported they were certifying, but were unable to file second-quarter results. That stock is down 17 percent this month.
At AOL Time Warner, which owns this network, executives did certify, but only after saying they had found $49 million in revenue that may have been misstated and were reviewing other AOL transactions. Investors didn't flinch though. That stock is up eight percent this month.
Bristol-Myers Squibb certified, but also indicated it may restate some results. Investors yawned. The stock is flat this month. Dynegy executives did not certify, listing a handful of reasons that did not amuse investors. The stock is down 53 percent this month.
(on camera): The SEC is still working through these filings at a very deliberate pace, at the speed of government, as we say. So far, you have to say the results are encouraging. In fact, the SEC has only officially identified two companies that failed to certify. One is Enron, the other is TruServ. Neither trades on a major stock exchange -- Jan.
HOPKINS: And basically, investors have been encouraged.
VILES: Yes. Last two days on the market have been solid, no big, nasty surprises.
HOPKINS: Thanks. Peter Viles.
You asked for it, and here it is, the Enron scoreboard. Despite collapsing amid a huge accounting scandal more than eight months ago, not a single Enron executive has been charged with anything. There have been criminal charges elsewhere in corporate America. Sam Waksal at ImClone, Dennis Kozlowski at Tyco, the Rigas family in connection with massive fraud at Adelphia, and even top executives at WorldCom. But not Enron. So the scoreboard remains 18-0. And once again tonight, the only number that we can update for you is the number of days since Enron's bankruptcy, now 256.
The Food and Drug Administration tonight is asking the Justice Department to open a criminal investigation into the leading seller of the controversial dietary supplement Ephedra. The FDA wants to know if Metabolife International lied about the supplement's safety. The FDA criticized Metabolife for offering to hand over 13,000 health complaints from people years after the FDA asked for them. Ephedra has been linked to dozens of deaths.
Just ahead, a midday slump for stocks turns into a late-day rally.
Also, one troubled airline may be getting help from a very unlikely partner. We'll tell you all about the possibility of a very unusual corporate alliance.
And from the farmland to the table, we'll have a report on the effects of the nationwide drought for consumers all over the country.
HOPKINS: Stocks extended yesterday's powerful rally. Another $122 billion in market value was created. The Dow gained 75 points. The Nasdaq and the S&P 500 added nearly 11. Joya Dass is at the New York Stock Exchange, and Greg Clarkin is at the Nasdaq marketsite -- Joya.
JOYA DASS, CNN FINANCIAL CORRESPONDENT: Jan, it looked a little choppy in the early going, but we did manage to finish out with a gain. It was the retailers that helped the blue chips today. For one, Wal-Mart really benefiting from some positive comments from Merrill Lynch. Target also gaining ground after their second quarter results rose the year-ago period.
Hewlett-Packard gaining ground after some positive comments from Dan Niles over at Lehman Brothers today. AOL Time Warner, the parent of this company, gaining some ground after company officials certified their financial results. And then finally, United. United Airlines really shrugging off a warning that they could file for bankruptcy protection as early as the fall. But at one point in the day the stock had actually hit a 30-year low.
We're going to toss it over to Greg at the Nasdaq marketsite right now.
GREG CLARKIN, CNN FINANCIAL CORRESPONDENT: And, Joya, we had those comments from Wall Street analysts this morning hitting some of the big names in technology today. Take a look at shares of Sun Microsystems, down sharply on the day. That after Goldman Sachs had downgraded Sun as the slump continues in the computer hardware business. Sun falling seven percent on that move. But software maker BEA Systems jumped six percent on news it's taking business from IBM.
Satellite dish company EchoStar was up 10 percent on its earnings report. Intel ended up as the best performing big cap, up almost two percent on the session. And watch Dell tomorrow. Now, after the bell, the company reported a solid earnings report and they issued an optimistic outlook. Now, that stock fell slightly in regular trading today, but it is up in after-hours trading. Jan, back to you.
HOPKINS: Thanks, Greg Clarkin at the Nasdaq.
Mortgage rates fell to new record lows this week. The 30-year mortgage rate slipped to an average 6.22 percent. Fifteen-year mortgages dipped to a record low of 5.63 percent. Earlier this week, the Federal Reserve left interest rates unchanged, but signaled that it may cut rates in the future. And the bond market has rallied. That helped mortgages.
One airline desperate for funding is turning to an unlikely place for help, the chairman of the Hooters restaurant chain. Robert Brooks is thinking of buying the bankrupt carrier Vanguard. The new company, called Hooters Air, is giving Vanguard $50,000 a week while Brooks considers buying the airline.
Separately, a federal panel denied loans to two other troubled airlines. Spirit Airlines has applied for $60 million. National Airlines has asked for $50 million. Federal panels said it did not receive assurances that National would be able to repay the money. The board is still weighing applications from 11 other carriers including United. wants a loan guarantee of nearly $2 billion. It's warning it may seek bankruptcy protection in the fall.
Amtrak has sidetracked its high-speed Acela trains again. A closer inspection of a train that was scheduled to return to service uncovered more equipment cracks. Amtrak immediately pulled the entire 18-train fleet from service. Acela is an important moneymaking service for Amtrak. Conventional trains will be used to fill the gap.
Now a reminder to vote in tonight's MONEYLINE poll. If you think there are health risks associated with living near power lines, yes or no. Cast your vote at cnn.com/moneyline. We'll bring you the special report and the results later in the broadcast.
Still to come on MONEYLINE, new research says living near power lines is even more dangerous than you might think. We will have a special report.
And one of our spacecraft is missing. It was launched just six weeks ago. Details of that and lots more when MONEYLINE returns.
Researchers have found the strongest evidence yet of possible health risks from power lines. The California Health Department report -- it was a report. It cost $7 million. It took eight years to complete. It's certain to be strongly opposed by power utility companies in California and the rest of the country. Steve Young has the story.
STEVE YOUNG, CNN CORRESPONDENT (voice-over): Power line radiation has been implicated as a potential health risk before. But the more than 500-page report by the California Department of Health Services issues the strongest warning yet. The three authors say they, quote, "are inclined to believe that power line radiation increases the risk for childhood leukemia, adult brain cancer, Lou Gehrig's disease and miscarriages."
A copy of the eight-year study was obtained by the trade publication "Microwave News."
LOUIS SLESIN, PUBLISHER, "MICROWAVE NEWS": This report opens a Pandora's box for the electric utility industry which has tried over the last 10 years to dismiss this risk. But what this report is saying we have to pay attention because it's more than child leukemia. It's these other diseases and we need to get to the bottom of this.
YOUNG: The report even gives health risk odds; 54 percent to 95 percent greater chance of childhood leukemia; 51 to 80 percent greater risk of adult brain cancer; 51 to 59 percent greater chance of miscarriage; and 52 to 55 percent greater risk of Lou Gehrig's disease. The leading trade association, the Electric Power Research Institute, declined to comment on the report. It referred MONEYLINE to an outside scientist.
PATRICIA BUFFLER, UC-BERKELEY SCHOOL OF PUBLIC HEALTH: I think the association with childhood leukemia is tenuous, but suggestive. I think the evidence with regard to any other cancers in children or adults is insufficient.
YOUNG: Despite the strong health warning, the authors offer no advice on what if anything should be done.
VINCENT DELPIZZO, STUDY CO-AUTHOR: Decision makers can negotiate with interested parties to explore different scenarios, you know, explore different assumptions regarding the severity of the risk.
YOUNG (on camera): The actual number of cases is hard to estimate. In childhood leukemia, for example, it might increase from one in 10,000 children with leukemia, to two in 10,000. A low risk, unless it's your child -- Jan.
HOPKINS: And a lot of these power lines are built over schoolyards, or the other way around. Schools are built under power lines. And that hasn't changed in the last few years or has it?
YOUNG: Not in this country. In Sweden, I believe, it's now against the law and has been for some time.
HOPKINS: Thank you, Steve Young.
My next guest is publisher of "Microwave News," the newsletter that broke the story about the latest research on power lines. Louis Slesin joins me now. And you may have seen him in Steve's report.
Now, Steve was just telling me that the California Department of Health actually tried to stop this story from going on the air. What is the department of health in California concerned about?
SLESIN: I think they are under a lot of pressure from the utility industry. This report was released as a draft last year, and at that time, there was an open comment period. And we monitored the comments. And the electric utility industry and their consultants filed many comments to try and dilute it.
HOPKINS: Because they have a vested interest in keeping these power lines up and not having more restrictions about where they can go, is that it?
SLESIN: Absolutely. And also, there is always the constant threat of litigation. If your child, say, did have leukemia, you might want to bring some kind of litigation to get some kind of compensation.
HOPKINS: But as a publisher of this newsletter, you are convinced that this is an important study?
SLESIN: It is a very large study. It took seven years or eight years, and they spent $7 million on it. They really, you know, they've been in all the meetings, they've been talking to all the experts for years. This is their final conclusion. I might also say it's the only work being done in this country at this time on this problem.
HOPKINS: Is there work being done in other countries on this problem?
SLESIN: In Europe, they're way ahead of us. They are spending a lot of time and a lot of money both on this and the related problems of cell phone radiation. It's day and night. In Europe, they've taken this extremely seriously. In this country, we're trying to ignore it. HOPKINS: And why do you think the difference?
SLESIN: Well, there's a lot of vested interest in both the cell phone and electric utility industry in Europe. The people are saying there's,, you know, much more green activity, that is, environmentalists are much stronger there. They want to know. Listen, there's lots you can do to protect yourself if you know what the risks are. That's what we need to do to get to the bottom of it, to know what needs to be done.
HOPKINS: But the critics say that this study involved only three authors and that maybe it should have been open to more, it should have been a bigger study, maybe an international study. What's your response to that?
SLESIN: In terms of like childhood leukemia, every blue ribbon panel has agreed with these people that there is a possible risk, and some might even go much further than that, of childhood leukemia with magnetic fields. In terms of the other ones, there is a loud discussion -- this is not out of left field. This is really a consensus of the people outside the industry, that is those who are not consultants to the industry. This is what people are saying at meetings. This is not, you know, very much different from the consensus of the community.
HOPKINS: In terms of recommendations of how to lessen the exposure, were there any in this particular study? Are there recommendations that are kind of out there.
SLESIN: There are recommendations out there, but the three authors decided not to include them in this report. And they've decided to let the California Public Utility Commission decide what needs to be done. They've asked the PUC to hold hearings and to engage in a public debate as to what needs to be done. This was a scientific issue. What we do about it becomes an economic and political issue. They are saying we're not going to deal with that. We're going to let the state people deal with it.
HOPKINS: Do you have recommendations? Do you have thoughts?
SLESIN: I think whenever you can, limit -- the buzz phrase in the field is "prudent avoidance" or "using precautionary measures." I think whenever you can avoid exposure, you should. I mean, don't built a power line next to a school. Don't...
HOPKINS: Don't build your house next to a power line.
SLESIN: That, too. We have to take this problem seriously because most of the risks are avoidable.
HOPKINS: Thank you very much. Louis Slesin, the publisher of "Microwave News."
SLESIN: Thank you.
HOPKINS: Thanks for joining us. Still to come on MONEYLINE, your e-mails and "In Their Words."
Plus, farmers count the huge cost of the drought that's covering half of the United States. We'll tell you what it will mean to you.
ANNOUNCER: Tomorrow on LOU DOBBS MONEYLINE, time's up for corporate leaders, now that they've signed on the bottom line. Our editor's circle discusses whether that's enough to restore investor confidence. Tomorrow on LOU DOBBS MONEYLINE.
HOPKINS: Temperatures continue to climb across the northeast. Triple-digit temperatures and high humidity continue to smother much of New England. Temperatures were up to 15 degrees above the average for this time of year. Dozens of record highs were set yesterday. Boston reached 101. New York City set a record at 98. Heat indexes are at dangerous levels. The residents are advised to stay inside air-conditioned homes and avoid strenuous outdoor activities.
Soaring temperatures have prompted energy officials to urge residents to cut back on electricity use. Seems like a paradox here. Parts of New England have already broken power usage records. Customers are asked to conserve electricity and delay using certain appliances during the day to help reduce potential strains on the region's power system. Severe summer heat has brought drought conditions to nearly half of the country. The latest outlook says much of the nation will suffer from drought conditions through November.
The USDA slashed harvest forecasts to levels not seen since the 1980s. Farmers are not the only ones suffering. Consumers also will see an increase in prices. Ceci Rodgers has a report from Grace Lake, Illinois.
CECI RODGERS, CNN CORRESPONDENT (voice-over): This is a typical ear of corn on Peter Tekampe's farm. He's already lost two-thirds of his crop to drought.
PETER TEKAMPE, ILLINOIS FARMER: Every day you come out and look at it and it shrinks. It's not getting any taller. It's shrinking.
RODGERS: As the drought has spread, the federal government has slashed its estimates for this year's corn, soybean and wheat crops.
DAN BASSE, AGRISOURCE: All combined in all field crops, it looks like we've lost somewhere between 1.3 and 1.5 billion bushels of grain production this year.
RODGERS: The massive crop shortfall is sending grain prices up sharply. Futures prices for corn and wheat are up 42 percent since April, while soybeans have risen 50 percent.
(on camera): Soaring grain prices have wreaked havoc on the food industry, which has enjoyed years of plentiful supplies and low prices.
(voice-over): Now with crop reserves dwindling, processors face potential shortages of specialty grains. Imports from other grain producing countries would normally pick up the slack. But this year, those crops are also doing poorly.
STEVE BRUCE, ED&F MAN: We've had the flooding in central Europe right now. Parts of China have been dry. Australia's very dry right now. So, we do have a major weather scare throughout the world.
RODGERS: The livestock industry is one of the hardest hit by drought. Entire corn and soybean prices are also driving up the cost of feed. Consumers might hardly notice the expected three percent rise in overall food prices next year as a result of the drought, except at the meat counter, where analysts predict a double-digit rise in the cost of a steak.
Ceci Rodgers, CNN Financial News, Chicago.
HOPKINS: Now the results of tonight's MONEYLINE poll. Our question: Do you think there are health risks associated with living near power lines? Seventy-one percent said yes, 29 percent said no.
"CROSSFIRE" begins in a few minutes. For a preview, let's go to Bob Novak and Paul Begala in Washington. Paul, you first.
PAUL BEGALA, CO-HOST, "CROSSFIRE": Well, Jan, thanks. On "CROSSFIRE" tonight, security. Our president is talking about homeland security. Many here in Congress are talking Social Security. We'll debate both with two leading members of the House of Representatives.
ROBERT NOVAK, CO-HOST, "CROSSFIRE": And, Jan, we'll talk to the Reverend Jerry Falwell about whether he agrees with his friend Franklin Graham about how evil Islam is. And we'll also talk about what you folks in New York are doing next to restrict freedom, no cell phones in public places.
HOPKINS: Yes, New York is an interesting place. Thank you. We're looking forward to "CROSSFIRE."
NASA has lost contact with its comet-chasing spacecraft. The $158 million comet nuclear tour, or Contour, was to have left earth's orbit early today. Before it went, it was supposed to signal NASA here on earth. It did not. And space officials say that they are still looking for it. Contour was launched on July 3. Its mission was to meet up with and study at least two comets.
Coming up next, a correction of sorts, plus your e-mails and "In Their Words." We'll be right back.
HOPKINS: Now that correction of sorts. On Monday, when MONEYLINE traveled to Texas for the president's economic forum, we showed you the outside of Waco's Texas Ranger Hall of Fame, and the sign, which apparently needed just a little repair job. Well, after seeing that picture on MONEYLINE, the museum promptly sent in a repair team and sent us this photograph. Tonight, we are happy to report that the "G" in Ranger is now fixed. We're glad to set the record straight or, in this case, the sign.
Now, for a look at your thoughts. Lola Mitchell in Texas writes: "I suspect that the reason that the Enron case is taking so long is that one, the government officials want to get as many as they can in the initial sting; and two, it's taking time to research the energy contracts that were traded back and forth."
Paul Geary in Texas says: "Why is it that whenever there's a minor heat wave in New York, network newscasters talk about the weather and global warming? It's been cooler and wetter than normal here in Texas. If that were the case in New York, I suspect we'll be seeing impending ice age stories."
Susie Stevens in Oregon writes: "If personal income has been consistently rising, and as we all know, unemployment is also rising, does that mean that the rich are getting richer and the poor are getting poorer again?"
On CEO certification, Ed Thompson in Alabama writes: "The SEC's new required certification of CEOs of their company's statements is nothing more than a toothless, barking dog because of the words 'to the best of my knowledge.' Who do they think they're fooling?"
On the same subject, Norm Cordon in California writes: "To the best of my knowledge, what a joke. Is the SEC so lame they can't come up with a standard statement for CEOs to sign?"
Finally, James Hart in Nevada writes: "Regarding the show last night, the sabre tooth was a cat, not a tiger. It was a member of the carnivora felidae or true cat family. Just a pet peeve of mine."
As always, thanks for your e-mails. Our address is email@example.com. And when you write, do please include your name and address.
Those are your words. Now, "In Their Words."
(BEGIN VIDEO CLIP)
DONALD RUMSFELD, DEFENSE SECRETARY: I think the fact that this building never shut down and the fact that it is going to be, well along on September 11, back in the shape it was in before September 11 last year is an indication that the Department of Defense is in business and it intends to stay in business.
JAMES GANDOLFINI, ACTOR, "SOPRANOS": I think everybody better support a raise for you gentlemen, because we need you. You think about that. You pick up the phone, you call for help, nobody answers.
ANN COOLEY, RADIO CITY ROCKETTE: We consider this a career. We have the opportunity to enjoy certain benefits. We also have the opportunity to pass along our knowledge, our experience, camaraderie and consistency in order to achieve the excellence it takes to become a Radio City Rockette, to continue to be a Radio City Rockette. We pass this along to the other women. And it's not just about 41 women. It's about women in different markets throughout the country.
(END VIDEO CLIP)
HOPKINS: That's MONEYLINE for this Thursday evening. Join us tomorrow when our guests include Jim Ellis, the editor of "BusinessWeek" magazine, and Steve Forbes, the president and CEO of Forbes. We'll be talking about this week's CEO certification deadline and the markets.
Thanks for joining us. For Lou Dobbs, I'm Jan Hopkins. Good night from New York.
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