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CNN LOU DOBBS MONEYLINE

Dow Rises 347 to 7,939; Nasdaq Hops 42, Lands at 1,214

Aired October 1, 2002 - 18:00   ET

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

LOU DOBBS, HOST: Wolf, thank you very much. As we just heard, Secretary of State Colin Powell says the United Nations must still pass a new, strong resolution against Iraq before U.N. weapons inspectors return return to Iraq. The secretary of state said such a resolution is required to keep pressure on Saddam Hussein.
For more on this developing story, we're joined now by Andrea Koppel at the State Department -- Andrea.

ANDREA KOPPEL, CNN STATE DEPARTMENT CORRESPONDENT: Lou, we should tell our viewers that it's highly unusual for the secretary of state to make an impromptu appearance like this in the State Department briefing room. The last time he did so was just after the September 11 attacks. Aides I've spoken with say that Secretary Powell didn't even tell them why he was going to come downstairs to speak to reporters. He just felt that it was important to come down and set the record straight -- if you will.

As you know, today Hans Blix, the chief U.N. weapons inspector, reached an agreement with the Iraqi government for U.N. weapons inspectors to go back to Iraq. This is not what the Bush administration wants to happen. At least not until there is a new U.N. resolution in place. The negotiations are on going, right now.

Hans Blix was talking about perhaps sending them back in two weeks. Secretary Powell wants to make very clear that the U.N. believes -- and the U.S. believes -- it is extremely important to have a tough new resolution in place with consequences spelled out. Something, Lou, that the old resolutions did not have.

DOBBS: Andrea, thank you very much. Andrea Koppel from the State Department where the secretary of state, Colin Powell, had just made an usual appearance to make a statement suggesting the United States policy is to require U.N. -- a new United Nation's resolution before U.N. weapons inspectors return to Iraq. However, the United Nations inspectors, lead by Hans Blix, did win agreement with the Iraqis today. But that agreement does not allow inspectors the unconditional right to visit eight presidential palaces.

Christiane Amanpour has more now on the weapons inspections agreement from Vienna, Austria -- Christiane.

CHRISTIANE AMANPOUR, CNN INTERNATIONAL CORRESPONDENT: Well, Lou, let's try to sort thought exactly what has happened. What happened here, after two days of talks in Vienna, was definitely progress if you take what's been going on for the last several years. And that is that the Iraqis have been categorically intransigent -- under what Secretary Powell calls the old resolutions, but are, in fact, existing resolutions. These were the basis for the talks here.

The Iraqis have said, No, no, no, all along. And today the said yes, clearly because of the heightened political tensions that surround these talks. In effect today, they did make a 180 degree reversal of their position and they did move on most of the areas that were under discussion.

What was not under discussion were those eight presidential sites because the restrictions governing those presidential sites -- which amount to the need for 24 hour notice, to have to be accompanied by diplomats and things like that. Those restrictions were agreed to with the Iraqi government by the secretary general of the United Nations four years ago. And Hans Blix said, It's only the Security Council that can actually annul those restrictions. And the U.S. if it wants to do so, needs to muster a majority in the Security Council.

So what Hans Blix got out of the Iraqis today was agreement to access to all other sites in Iraq in accordance with existing Security Council resolutions.

(BEGIN VIDEO CLIP)

HANS BLIX, CHIEF U.N. WEAPONS INSPECTOR: On the question of access, it was clarified that all sites are subject to immediate, unconditional and unrestricted access. However, the Memorandum of Understanding of 1998 establishes special procedures for access to eight presidential sites.

(END VIDEO CLIP)

AMANPOUR: Now that Memorandum of Understanding that Blix referred to is the deal struck by Kofi Annan four years ago. But in the other sensitive sites that have been restricted unilaterally by the Iraqis -- things like ministry buildings -- the Ministry of Defense, the Ministry of Intelligence -- all sorts of buildings that they have said are sensitive, they today agreed to lift those restrictions. And this what the chief Iraqi delegate had to say about that.

(BEGIN VIDEO CLIP)

GEN. AMR AL-SADI, IRAQI DELEGATION: We have come to a very practical arrangement that we would from our side anticipate every inspection to go to sensitive sites and we will take the measures that will cancel the need for waiting period and getting approvals.

(END VIDEO CLIP)

AMANPOUR: Now although both sides said that they were prepared and expected to be able to send back weapons inspectors with in the next couple of weeks. Clearly both sides understood that they are operating under existing resolutions and that they know very well that there are political maneuvers going on in the Security Council to change those resolutions and to make them stiffer and tougher.

What's not clear, of course, is how today's agreement will affected by any kind of new resolution and if the Iraqis in fact will accept a new resolution which is -- if it does come down, is bound to be a compromise between what America wants and what France and Russia say they will accept -- Lou.

DOBBS: Christiane, thank you very much. Christiane Amanpour from Vienna.

White House Spokesman Ari Fleischer had some very strong words about Iraq today. Fleischer suggested the Iraqi people should assassinate Saddam Hussein. But he later toned down those comments.

White House correspondent Suzanne Malveaux has more on the story -- Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Lou, the White House call for regime change really took a strange twist today when White House Spokesman Ari Fleischer was asked what did he think the cost of a possible war with Iraq would be and here's how he responded.

(BEGIN VIDEO CLIP)

ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: The president has not made any decisions about military action or what military option he might pursue. And so I think it's impossible to speculate. I can only say that the cost of a one-way ticket is substantially less than that. The cost of one bullet, if the Iraqi people take it on themselves is substantially less than that. The cost of war is more than that.

(END VIDEO CLIP)

MALVEAUX: Now the question that many reporters had after those comments was, What did he mean? Was he trying to signal that the Bush administration supported the Iraqi people trying to assassinate Saddam Hussein?

He was asked repeatedly to clarify his statements. And here's how he did that.

(BEGIN VIDEO CLIP)

QUESTION: I'm asking you if you intend to advocate from that podium that some Iraqis, you know, person put a bullet in his head?

FLEISCHER: Regime change is welcome in whatever form that it takes.

(END VIDEO CLIP)

MALVEAUX: Now, Fleischer, after the briefing, saying very quickly to reporters that he was making a rhetorical point, that U.S. policy barring assassinations of foreign leaders by U.S. officials, of course, has not changed. He said point of his statement was that no one would cry over the loss of Saddam Hussein. In the meantime, President Bush pressing lawmakers for a tough congressional resolution giving him broad power for military force against Saddam Hussein. There is a bipartisan proposal that is floated by the Senate. He really felt that that was quite limited, rather too limited in scope.

But there is some good news for the administration. Just about an hour ago, he met with House lawmakers. These are really lawmakers who've been much more in step with the president's idea of a resolution. They say it's simply a matter of changing a few words. They believe that they'll have a resolution, they're confident by tomorrow at the president's breakfast meeting with congressional leaders -- Lou.

DOBBS: Suzanne, thank you very much.

Suzanne Malveaux from the White House.

After the announcement that the Iraqis had agreed in principle, at the very least, to weapons inspections by the U.N. weapons inspection team in Vienna, a rally on Wall Street followed. An explosive rally, in fact.

The Dow posted the biggest gain since July, $325 billion of market cap created. Nearly $1 billion each minute. Today's rally follows the worst September performance for the Dow since 1937. The Dow scored a 347-point gain on the day.

The Nasdaq up almost 42 points. The S&P 500 up nearly 33 points.

Coming up here on MONEYLINE, President Bush says both parties on the West Coast port lockout should get back to work. We'll have a report on the worsening impact of that lockout.

Hurricane Lili is battering Cuba tonight. And Hurricane Lili is heading for the Gulf coast of this country. Max Mayfield, the director of the National Hurricane Center, will be here and have the very latest for us on the path of Hurricane Lili.

That storm is also causing complications for the space shuttle Atlantis launch. We'll have that story and a special report on concerns about the advanced age of the entire space shuttle fleet.

And a surprise move by Global Crossing Chairman Gary Winnick today, as he testified before Congress. We'll have that and we'll also be talking with the Congressman leading that hearing, Congressman James Greenwood, still ahead.

Stay with us.

(BEGIN VIDEO CLIP)

GARY WINNICK, GLOBAL CROSSING CHAIRMAN: So today I make a commitment to every employee of Global Crossing who committed and contributed to the 401(k), which the number I'm told is just a little bit shy of $25 million. I am personally, along with my family, going to write a check to the administrator of that plan, so the Mrs. Crumplers and the others of the world who worked hard for this company do not go unnoticed.

REP. DIANA DEGETTE (D), COLORADO: Mr. Winnick, I don't think there's much more that needs to be said. And I can tell you're speaking from the heart. I can tell Miss Crumpler and her colleagues will appreciate this and I yield back my time.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

DOBBS: The courts will play a critical role in the race for New Jersey's U.S. Senate seat. The State Supreme Court of New Jersey has agreed to hear a Democratic petition to name a new candidate for U.S. Senate.

Incumbent Senator Bob Torricelli announced his decision to withdraw from the race yesterday. That decision followed a lingering controversy over personal gifts Torricelli received from a campaign donor and an ethics committee admonishment of his ethical practices.

So far, no new Democratic candidate has been named. Republicans are trying to block the change, saying that Torricelli withdrew after the 51-day deadline to name a new candidate.

A surprise move from Global Crossing's Chairman Gary Winnick today. Testifying before a House subcommittee, Winnick personally pledged $25 million to help offset employees' losses in their 401(k)s.

At the same time, Winnick repeatedly denied engaging in fraud or insider trading. Tim O'Brien reports from Washington.

(BEGIN VIDEOTAPE)

TIM O'BRIEN, CNN CORRESPONDENT (voice-over): It was a bombshell that Gary Winnick said he had no immediate plans to make. But after listening to an earlier witness, Lynette Crumpler, testify how her Global Crossing 401(k) had evaporated, and being asked the right question, he couldn't resist.

UNIDENTIFIED FEMALE: Aside from feeling sorry, what is it that you intend to do to make them whole?

WINNICK: Fourteen thousand men and women around the world contributed $25 million to the 401(k) plan of the company. I discussed this with my wife. She is in complete support. I am personally, along with my family, going to guarantee $25 million to the people who have lost their money in their 401(k) plan.

O'BRIEN: Winnick called on the CEOs of other fallen companies to do the same for their employees. Representative Degette put the squeeze on the next witness, Joseph Nacchio, former CEO of Qwest Communications.

JOSEPH NACCHIO, FORMER CEO OF QWEST COMMUNICATIONS: Now in terms of Mr. Winnick's proposal, as I understand it from what you just told me, I have not heard about it. I have no reflection on it.

DEGETTE: That's because he just came up with it today.

NACCHIO: Mr. Winnick's company also went bankrupt. Qwest is not a bankrupt company.

O'BRIEN: In other words, no.

Winnick can afford to be generous. He cashed in $123 million in company stock just before it began to tank. Lawmakers said it smacked of insider trading.

WINNICK: The suggestion that I sold stock based on information that was not readily available is not -- not correct, sir.

O'BRIEN: When Winnick said he thought the company was prospering at the time of the sale, Representative Billy Tauzin produced an internal report showing the company was facing a billion dollar short fall.

(END VIDEOTAPE)

O'BRIEN: Lawmakers appeared skeptical of Winnick's claim that the timing of his stock sale was purely fortuitous. And while they were surprised and impressed by his offer to help employees recoup $25 million in 401(k) losses, they reminded Winnick that the employees losses pale when compared with what investors lost in the collapse of his company: an estimated $54 billion -- Lou.

DOBBS: Tim, as a veteran of these hearings and one who's observed them for many times, I was rather taken by the question from the Colorado representative, asking Mr. Winnick what he would do is rather fluid and, I must say, spontaneous response that he would deliver $25 million.

Did that seem just a bit less than spontaneous to you?

O'BRIEN: No, at first I thought he was waiting for the right question. But he did say, before he made the statement and again later, that this was something he'd been talking about with his wife for some time. He had planned to announce it at some later date. But given the nature of the hearing, the way it was going, he felt this was the time.

I believe him. Amazing.

DOBBS: Terrific. Tim, thank you very much.

Tim O'Brien from Washington.

Well, we're going to find out more about the spontaneity of today's hearings. I'm joined by Congressman James Greenwood. He is chairman of the House subcommittee on commerce oversight and investigation.

Congressman, good to have you with us. REP. JAMES GREENWOOD (R-PA), CHAIRMAN, HOUSE SUBCOMMITTEE ON COMMERCE OVERSIGHT AND INVESTIGATION: Good to be with you, Lou.

Were you surprised and taken by Mr. Winnick's offer to put $25 million into the hands of those who lost money in the 401(k)?

GREENWOOD: It was a total surprise to me. We had no advanced knowledge of that. And one has to say that everything else, as it may be, it is a generous thing to do. One could be cynical, and one could argue that these -- he may have been trying to anticipate ill-gotten gains being taken away from him. But, in fact, one could wait to see if that happens.

So I think one has to applaud his decision.

DOBBS: And Congressman, let me be clear, I'm not in any way being cynical. But I am, if you will, a paid skeptic, and I have to look at this with something of a critical eye, I'm sure you appreciate.

You're leading the investigation into the collapse of Global Crossing. What is your best assessment today from what you heard before you?

GREENWOOD: Well, my analysis has been, and that of the researchers that have been on this case for many, many months, that what you had here was a situation in which a lot of companies, a number of companies invested in the business of laying fiberoptic cable around the world.

A great opportunity, except that so many people invested in it, there became a glut. And then companies like Global Crossing and others, it is apparent, began to involve themselves in transactions where they didn't really need to buy additional fiberoptic cable capacity but, in fact, in order to get somebody to buy excess capacity from them, they swapped capacity. And that was done to boost revenues so that the stock price was artificially inflated.

And I think that eventually defrauded investors and the employees of the company.

DOBBS: You're talking about what are commonly called swaps.

GREENWOOD: Right.

DOBBS: But did you get -- were you able to assess, in any way, that Gary Winnick, the chairman of Global Crossing, knew about these swaps and supported them?

GREENWOOD: Well, he denies that they were swaps. The documents that we've uncovered, I think, clearly demonstrate otherwise; as did our hearing last week, where the sales department was -- and the engineers building these, the operational guys building these networks were, in their internal communications, memos and e-mails were screaming bloody murder that these transactions didn't make me sense. We had an e-mail from one of the operatives at Global Crossing who said, why are we dumping $100 million into the Scandinavian market? We've already dumped $80 million plus in there, and we have not a single customer.

So it -- all of the internal documents and all of the theories about motivation seem to conclude pretty obviously that that's what was going on.

These were swaps, and they were swaps for the purpose of booking revenue alone.

DOBBS: And your colleague Congressman Tauzin pointing out, in his judgment, at least, that there is every indication that Gary Winnick sold stock with the understanding and knowledge that the company was in very dire straits. What is your assessment?

GREENWOOD: Well, it was my assessment completely. If you look at the fact that the internal -- the minutes of the management meetings were relatively desperate; they're talking about being $1 billion underbudgeted. They're talking about hemorrhaging capital expenditures; talking about the fact that they didn't have -- that these were crazy deals, ridiculous deals done in the ends of quarters in order to make Wall Street happy with the numbers.

It was clear that all of that was going on.

And in the midst of that Mr. Winnick went ahead and sold $123 million worth of stock. And I think that that's taking advantage of a situation that was unknown to the rest of the investment community.

DOBBS: Congressman, let's turn, if we may, quickly to Qwest Communications, the Former CEO Joseph Nacchio testified before you. Also, Qwest accused of conducting the same sorts of sham transactions. What is your best judgment there?

GREENWOOD: Well, I think the strongest evidence -- although the company executives denied this -- the strongest evidence is that the new management came in and just recently made a restatement of $950 million. And, under questioning today by our committee, acknowledged that the reason they did that is because these transactions were not dissimilar, as the regulations require, in order to book the revenues but, in fact, were similar.

That means they were taking capacity from one company and swapping it for capacity from another company without any clearly defined business purpose for that.

And I think that's the clearest evidence to date of what was going on inside Qwest.

DOBBS: Congressman, you've concluded the day's hearings on Qwest and Global Crossing. What is next for your committee?

GREENWOOD: Well, we probably will hold one more hearing before the Congress is over on the ImClone company. As you well know, that's an investigation that we started some time ago. It went off on a tangent toward Martha Stewart, but we want to get back into the FDA's relationship with this company and some of the internal operations of this company that had to do with the executives of the company.

DOBBS: Congressman Greenwood, Congressman James Greenwood, thank you very much for being with us. Appreciate it.

GREENWOOD: Always a pleasure Lou. Thank you.

DOBBS: Tonight, ports all along the West Coast remain shut down; talks between shippers and the longshoremen union all but dead in the water. Meanwhile, hundreds of ships are anchored offshore, their holds full of car parts, produce and other goods that won't be unloaded anytime soon.

Casey Wian has the report.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN FINANCIAL CORRESPONDENT (voice-over): The fourth day of the West Coast port shutdown began with hope because leaders of the 10,500 member International Longshore and Warehouse Union agreed to meet with a federal mediator and the Pacific Maritime Association, which represents shippers.

But union leaders stormed out of the meeting before the it began, angry that PMA President Joe Miniace was accompanied by armed guards.

That latest setback came as the number of ships stranded by the dispute exceeded 150, with dozens more arriving every day. Produce is spoiling in warehouses, toy importers can't get products for the Christmas season and some factories are going without parts.

Shippers say the union can end the lockout at any time by agreeing to a temporary extension of their expired contract.

TIM KENNEDY, PACIFIC MARITIME ASSOCIATION: The importance of that is that you have a grievance machinery to handle work stoppages and slowdowns and any other disputes that might arise under the agreement.

WIAN: The union operated under temporary contract extensions from July until early September. Shippers say after the union stopped accepting extensions, work slowdowns started, followed by the lockout.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Any strike's a tough situation. But this one happens to come at a -- a lockout is a tough situation -- or no work is a tough situation. It's coming at a bad time.

And so we're watching it very closely. There's a federal mediator on the ground. I urge both parties to utilize the mediator.

WIAN: The union has rejected all offers of outside mediation.

GREG TARPINIAN, LABOR RESEARCH ASSOCIATION: This lockout is unprecedented. These shippers have never done this, and I suspect that they've done it knowing that they have, at least, a friend in the White House.

WIAN: Some shippers in Asia are now holding their container vessels in ports, not wanting to risk hundreds of millions of dollars in merchandise stranded at sea.

(END VIDEOTAPE)

WIAN: President Bush can order both sides back to work, but only if a federal judge agrees that a national emergency exists. The longer this dispute lingers and the more entrenched both sides become, the more likely it is, Lou, that the White House will have to get involved.

DOBBS: Casey, thank you very much; Casey Wian.

America's largest farm organization called for a quick end to this West Coast labor dispute. The American Farm Bureau Federation said the Pacific Rim is the top market for U.S. agricultural exports, and it is concerned about lost sales of crops such as almonds, grapes, raisins, cotton, lettuce, citrus fruits. There are also concerns about fertilizer imports, particularly from Russia. This is the season that fruit trees in California and other crops throughout the West require fertilizer.

And the port shutdown is the topic of our poll tonight -- our poll question tonight.

But first we want to update you on last night's poll, and a reminder that you have a full 24 hours to vote and to see the final results of our question each evening.

Last night the question was: Should CEOs who are aware of corporate problems be personally liable for losses in their employee retirement plans? An overwhelming 91 percent of you voted yes, 9 percent said no.

Now to tonight's question: Should the Bush administration step in to impose a settlement on West Coast shippers and longshoremen?

Cast your vote at cnn.com/moneyline. Again, you have a full 24 hours to vote, and we will bring you the preliminary results later in this broadcast.

Coming up next on this broadcast, we'll take a look at whether today's agreement with Iraq is sufficient to avoid war. We'll be joined by former Defense Secretary William Cohen.

Hurricane Lili is heading toward the U.S. Gulf Coast, and NASA has postponed the launch of the shuttle Atlantis.

Rosie O'Donnell faces a $100 million lawsuit.

We'll have that story and a great deal more still ahead here on MONEYLINE. Stay with us. (COMMERCIAL BREAK)

DOBBS: This just in. We have just learned here at CNN that Andrew Fastow, the former chief financial officer of Enron, will be charged tomorrow by the Justice Department, charged in a criminal complaint. He will be charged at that time with the activities that led to the collapse of Enron on December 2 of last year. It's a collapse.

He will be the second person at Enron to be charged. The first, Michael Coppers, who worked for Andrew Fastow, has already pleaded guilty in that case. Again, Andrew Fastow, the former CFO of Enron, to be charged by the Justice Department tomorrow.

And as we reported to you earlier, Secretary of State Colin Powell says that United Nations weapons inspectors should not return to Iraq until the U.N. Security Council adopts a tough, new resolution.

Earlier, Iraqi and U.N. officials had reached an agreement in Vienna, Austria, on the return of weapons inspectors.

I'm joined now by former Defense Secretary William Cohen and MONEYLINE regular contributor.

So good to have you back with us.

WILLIAM COHEN, FORMER DEFENSE SECRETARY: Good evening, Lou.

DOBBS: First, the development, Hans Blix, the head of the U.N. weapons inspection team, meeting in Vienna with the Iraqis, winning an agreement, apparently, to support the resolutions.

Let's start there. How important a development was that, in your judgment?

COHEN: Well, I think it's a mixed bag, so to speak.

On the one hand, it does represent a reversal on the part of the Iraqi position. On the other, it is not exactly what the United States needs and wants. And so, they've given us two-thirds of what we need: the full 100 percent unfettered inspections.

So, I think this is a tactical move by the Iraqis to then shift the burden back to the United States to object to it so that we lose influence in the Security Council.

DOBBS: Is this, in your judgment, Bill, part of a pattern? Because this agreement approximates that won by Kofi Annan, the secretary-general, four years ago with the Iraqis, which was not followed up with.

COHEN: As I understand it, it goes a bit further, but not far enough.

This is a situation, the old lyrics, first you say you will, then you won't. First you say you do, then you don't. You're driving us out of our mind. Well, that's what happened during those inspections from '92 all the way through '98 when they were finally thrown out.

I think what Secretary Powell is saying is we can't have the situation again in the future. There can be no restrictions on the inspectors.

And to the extent they start carving out presidential palaces, these are not the personal homes of Saddam Hussein. These are vast complexes in which there could be, in fact, weapons hidden. So, I think that Secretary Powell has laid it out very clearly. No restrictions, no half measures, not even two third measures.

DOBBS: To what degree would you say the United Nations is acting in complicity in these negotiations because -- putting Hans Blix in the position of trying to negotiate on the basis of old resolutions rather than the tougher, new resolutions that the United States wants that's decidedly to the advantage of Iraq should it want to continue stalling on this issue?

COHEN: Well, I think it does reflect there is still division within the Security Council in terms of the scope and depth of these inspections. And that's why I think Secretary Powell came out on this impromptu basis to send a very strong signal: this will not be acceptable to the United States and it may, again, put the U.N. in a position of not standing behind the existing resolutions and the enforcement of those existing resolutions, which the Iraqis have violated historically.

So, it does put us in a more difficult position and I think Secretary Powell is trying to send a very strong signal, this is not good enough.

DOBBS: Not good enough, and at the same time British Prime Minister Tony Blair saying that the -- in point of fact, the fate of the United Nations itself is on the line, should it fail to act here.

How would you assess that? The prime minister engaging in hyperbole or could it possibly be that critical an issue?

COHEN: I think it is that critical an issue. I think that President Bush spelled it out in his address to the United Nations, saying that the U.N. runs the risk of being irrelevant if it won't stand behind the rule of law and insist upon the full compliance with existing resolutions.

Those inspection regimes that were carved out before were completely inadequate. So, if they want to remain relevant, they've got to back up the resolutions with full inspections, not half measures.

DOBBS: Bill Cohen, thank you for being with us.

COHEN: My pleasure.

DOBBS: Coming up next, Hurricane Lili is pounding Cuba tonight. The U.S. Gulf coast is next. We'll have the very latest for you tonight from the National Hurricane Center.

Japan has been hit by a huge storm. One of the most powerful typhoons, in fact, to hit Japan in half a century. We'll have that story for you.

And the space shuttle Atlantis, due to blast off later this week, weather permitting, using technology dating back to the 1970s. The aging shuttle fleet is in danger. We'll have a special report for you.

All of that and more still ahead here.

(COMMERCIAL BREAK)

And our MONEYLINE question tonight: Should the Bush administration step in and impose a settlement on West Coast shippers and longshoremen? you can vote at cnn.com/moneyline. We'll have the results.

The preliminary results for you in just a few moments, and we will be, of course, voting throughout the next 24 hours.

Tonight, Japan is threatened by one of the most powerful storms in 50 years. Typhoon Higos struck Tokyo earlier with winds of more than 100 miles an hour.

At least two people have been killed in that storm. Ports and highways have been closed while train service and air travel were halted. One thousand people have had to be evacuated. Typhoon Higos is now bearing down on the northern most island of Hokaido.

There's also a powerful storm pounding Cuba tonight. Hurricane Lili has crossed over Cuba. It's carrying winds of more 100 miles an hour and torrential rains. Lili is now a category two hurricane, capable of causing considerable damage.

The concern now is that the storm will intensify as it heads toward the Gulf coast of this country.

Max Mayfield is the director of the National Hurricane Center in Miami and joins us now.

Max, good to talk with you again.

MAX MAYFIELD, DIRECTOR OF THE NATIONAL HURRICANE CENTER: Good evening, Lou.

DOBBS: Is this storm -- it looks to me as if it's behaving pretty much as you suggested it would here last night. Is that correct?

MAYFIELD: It is so far and it's on this northwest track, you know, toward the northwestern Gulf of Mexico.

We really won't be able to pay very close attention to this. In fact, on the satellite loop behind me, we're just about to see the eye pop out here, looks like. And the next Air Force reconnaissance plane will be in there sometime around 8:00 or 9:00 tonight. And I suspect they'll find a little stronger hurricane.

DOBBS: And I know that last night you said that it would be some time before we could get a very precise indication of where it will land on the Gulf Coast.

What is your best judgment, generally, tonight?

MAYFIELD: Well, we make a three-day forecast every six hours. And the most likely scenario at this time is for it to continue northwestward and then start turning up more towards the north, and then eventually north/northeast.

The entire Louisiana coast and the upper Texas coast is at most risk. And we've just issued a hurricane watch from San Luis pass, which is really the west end of Galveston Island, all the way across the Louisiana coast to the mouth of the Mississippi River.

And then we have a tropical storm watch in effect from the mouth of the Mississippi to Pascagoula, Mississippi, including New Orleans and Lake Pontchartrain. A portion of the watch area will likely be upgraded to a hurricane warning sometime early tomorrow morning.

DOBBS: Two quick questions, if I may, Max. One is: Given Tropical Storm Isidore hitting New Orleans and environs last week, does that complicate things with the hurricane, should it come into that area, because there is already so much moisture and rainfall there?

MAYFIELD: It does in some aspects, because some of that storm surge water, this dome of water that was piled up from the Gulf of Mexico is having a hard time coming out in the southeastern Louisiana area.

But this is -- if it stays a little bit to the west of there, the greatest concern will be shift a little bit away from where Isidore hit.

But this is really, really important that people understand what this dome of water is that we call a storm surge. With a Category 3 hurricane we could very easily have 10 to 14 feet of storm surge near and just to the east of where the center crosses the coast.

DOBBS: So the storm surge right now is concerning you.

And while this is now a Category 2, is it -- would it be your expectation that this would rise to a category -- rather than lead the witness, if you will, Max, I'll ask you: What is your sense of how strong this hurricane might be, should it -- when it does strike land?

MAYFIELD: Lou, I don't have any doubt that it will become a major hurricane. And that means a Category 3 or above on the Saffir- Simpson Hurricane Scale.

We have real limitations in forecasting intensity. We've asked the research community for help in that. But the main message here is that we want residents in that hurricane watch area to start preparing for a Category 3 hurricane.

DOBBS: OK, Max, thank you very much.

MAYFIELD: Thank you.

DOBBS: Max Mayfield, the director of the National Hurricane Center; and we thank you.

NASA today delayed the launch of the Space Shuttle Atlantis for at least 24 hours because of this hurricane. The shuttle is now scheduled to liftoff Thursday at the earliest.

But that's not the only problem facing NASA these days. There are also concerns about the advanced age of this shuttle fleet.

Miles O'Brien has the story.

(BEGIN VIDEOTAPE)

MILES O'BRIEN, CNN CORRESPONDENT (voice-over): Something old is nothing new for NASA's manned spaceflight effort.

And as Atlantis sits on the pad, poised for the first space shuttle flight in four months, engineers are wondering: How old is too old?

RON DITTEMORE, DIRECTOR, SPACE SHUTTLE PROGRAM: Just because it's a little old, doesn't make it to the point that we should throw it out. It's just reaching the prime of its life.

The older I get, the more I appreciate it.

NASA's man in charge of the $3 billion shuttle program, Ron Dittemore earned some more gray hair this summer dealing with a spacecraft designed in '70s and launch facilities built during the moon race.

The first sign of trouble came here, deep in the tangle of wires and pipes inside the aft compartment of Atlantis in June. An eagle- eyed inspector saw this: a crack no bigger than a third of an inch; a small thing, but in a critical spot, the 12-inch pipe that carries liquid hydrogen rocket fuel from the shuttle's big external tank to its main engines.

JAMES WILDER, ASSOCIATE PROGRAM MANAGER: The worst case scenario is that you can continue to crack, break off a piece of the material. But if that material breaks off and gets ingested by the main engine, it could be a bad day. It could be a catastrophic event for us.

O'BRIEN: More inspections ordered, more cracks found; about a dozen in all. The fleet was grounded. And Dittemore called for the aerospace equivalent of a full-court press led by Chief Engineer Ralph Roe. He has the briefing charts to prove it. RALPH ROE JR., MANAGER, SHUTTLE ENGINEERING: We were working 300 actions in parallel. So we had a team structured to handle a work force of 200 and 300 action items, and we were meeting on a daily basis until we got a decent handle on what the problem was.

O'BRIEN: They now believe it was a flaw in the way the pipes were made a quarter century ago. But simply ordering new parts from the manufacturer was not a viable option.

WILDER: The jigs and the tooling and even some of the people are now gone away. We have now been in contact with them, and they are pulling the tooling out to go manufacture some additional items. And they are also pulling back what we call some of the graybeards that understand how you go build those lines.

O'BRIEN: So instead, the cracks were welded over and polished smooth by the steadiest hands in the hangar.

DITTEMORE: We're not going to fly with something we don't understand, so we are going to take a time-out.

O'BRIEN (on camera): NASA designed its space shuttles to fly 100 missions each, originally over a 10-year period. But 21 years after the first space shuttle launch, the fleet has logged 110 missions total. At that rate, the fleet of four could fly for another 60 years.

That may sound far-fetched, but NASA managers are now asking the shuttle program to see what it would take to fly until the year 2020.

(voice-over): The report is still in work, as they say in the space business, but the shuttle team will likely push for continued improvements to the avionics, heartier wheels and tires, replacement of old tape data recorders with digital technology, even replacing clunky old circuitboards.

Beneath the skin, not your father's space mobile.

DITTEMORE: You cannot replace this vehicle with the exact capabilities that we have and be cost effective at it.

O'BRIEN: But in the space business, even the first step can be daunting. While engineers burn the midnight oil to fix the fuel line cracks, another team found some badly cracked bearings in the 37-year- old crawler that takes a stacked shuttle out to the pad.

Time to trade it in? Not a chance. It, too, will be repaired. NASA is inching toward the future on the backs of some vintage gear that, for all its quirks, remains state of the art.

Miles O'Brien, CNN, Houston.

(END VIDEOTAPE)

DOBBS: Coming up next here, the results of our question of the night on the West Coast port dispute. Also, Rosie O'Donnell face a $100 million lawsuit. We'll tell you why next.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Now the results so far of out poll question tonight. Should the Bush administration step in and impose a settlement on West Coast shippers and longshoremen? Forty-two percent of you said yes and 58 percent said no. And of course you still have time to vote. These are the preliminary results. We'll have the final results -- 23 hours of opportunity to weigh in on this question on cnn.com/moneyline.

Time now to update the "Corporate America Criminal Scoreboard." As we reported tonight, MONEYLINE has learned that former Enron Chief Financial Officer Andrew Fastow is expected to be charged tomorrow in a federal criminal complaint. But tonight the number of charges against all of corporate America remains at 24. One Enron executive still charged. And the one update, of course, the number of days since Enron filed for bankruptcy 303.

Stocks today powered higher after the worst quarter since the crash of '87. The Dow scored its third biggest rally in what has been a tough and volatile year.

Christine Romans is here. The market loved the news on Iraq.

CHRISTINE ROMANS, CNN FINANCIAL CORRESPONDENT: It really did. But there's plenty of skepticism as well because, as you pointed out, there's still fine print in all of this and it's a one-day advance. There was some positive comments about Dell and Sun Microsystems, That helps the techs. That was early in the morning.

DOBBS: And that drives us over 300 points?

ROMANS: Well, that the morning that got it off on the right foot. Forrest Labs raised targets. They were actually folks on Wall Street that were telling me that raising earnings targets was enough to sort of inspire buying here and Fannie May narrowed durations, so that was...

DOBBS: So all the negatives are gone? All is well.

ROMANS: Well, no. There's a list three times as long of the negatives, including -- as Lou pointed out -- what will happen next with Iraq.

Also that ISM manufacturing number dipped below 50 for the first time in seven months. So contraction in manufacturing, weak September car sales, retailer earnings -- or warnings continue. So some nervousness on that front. And the ports lockout, folks on Wall Street talking about that as well.

DOBBS: That's just what we needed, a little more -- something new to be concerned about.

ROMANS: Right.

DOBBS: So as we look at earnings, basically, flat. Perhaps we'll see some uptick here in the quarter. What does that suggest to us in terms of price levels and evaluations?

ROMANS: Well it's interesting because the S&P 500 -- according to Sam Stovall (ph), the way he's looking at as-reported earnings -- still double historical price to earnings ratios. So that's tough. And interesting tonight, still talking a lot about...

DOBBS: Twice the historical average on the S&P 500?

ROMANS: About twice, yes. Also tonight, we're watching Citigroup. Sandy Weill quitting two boards he serves on -- AT&T and United Technologies. Quitting AT&T, he will not stand for reelection on United Technologies. This so he can avert any interlocking board issues.

DOBBS: Corporate -- cleaning up the governance issue.

ROMANS: Corporate governance issues. So that goes all the way to the top man at Citigroup today.

DOBBS: OK, Christine, thank you very much.

ROMANS: Sure.

DOBBS: "CROSSFIRE" begins in a few minutes. Let's go to James Carville and Bob Novak in Washington to find out what they have for us -- Bob.

ROBERT NOVAK, CO-HOST, "CROSSFIRE": Lou, the question is still are they going to get Bob Torricelli off the ballot? And if so, who is going to replace him? Lots of maneuvering, back room dealing, the kind of stuff that Carville used to do.

JAMES CARVILLE, CO-HOST, "CROSSFIRE": Well, Lou, I see that market was smoking today and I know the reason, and you do too. It was that interview you gave to "Playboy" that caused the bulls to come out of hiding and romp and stomp here.

But we're going on, we got a heck of a show. We're going to be talking about Iraq and some comments that Ari Fleischer made and then we're going to go back to one of my favorite subjects, Augusta National Country Club and should women be allowed. So we're going to have a lot of fun tonight and we'll be roaring like the bulls in the stock market today.

DOBBS: All right. Well we're looking forward to it as always, James. And what's your position on Augusta?

CARVILLE: What's my position on Augusta? I wouldn't join a country club that wouldn't have my daughter. But then again, no country club would have me. So it doesn't matter. DOBBS: Well I feel the same way you do. Thank you very much.

CARVILLE: Thank you.

DOBBS: We look forward to it.

Rosie O'Donnell has been slapped with a $100 million lawsuit. The publisher of "Rosie" magazine sued O'Donnell for abruptly pulling out of the venture last month. The court filing claims that O'Donnell breached her contract and publicly discredited the magazine. This is serious trouble. The two had been fighting for months over the direction of the magazine. The magazine "Rosie" debuted in April 2001 as part of a partnership to revive the old magazine "McCall's."

Coming up next, I'll have a few thoughts on the mid-term elections and why incumbents should be somewhat concerned about their political future. Stay with us.

(COMMERCIAL BREAK)

DOBBS: The Senator Torricelli withdrawing from the election. It appears the Democrats control of the Senate is every bit as much as risk as that of the Republicans in the House. And every poll shows voters thinking more about the possibility of war with Iraq than the health of the economy.

Political strategists tell us no matter which issue dominates the mind of the voters, there's a strong anti-incumbent sentiment among voters. It's not pro-Republican or pro-Democrat, it's just plain anti-incumbent. And as usual voters may be showing far more intelligence than they're generally given credit for by either party. As if voters never notice when Congress does nothing.

One public interest group did notice -- Citizens Against Government Waste pointed out today -- the first day of the government's new fiscal year -- that Congress has not passed a single appropriations bill to fund the government for this year and that the Senate hasn't pass a budget.

Now I don't want to be too critical of the Republicans and the Democrats and the House and the Senate because there are lots of important issues to distract them from minor items like funding the government. There's the war on terror, Middle East tensions, economic uncertainty -- but wait, they haven't acted on homeland security either or the energy independence bill, bankruptcy or prescription drug legislation either.

So perhaps it's something else, perhaps it has something more to do with mid-term elections? If so, I hope that voter sentiment stays strong right through election day.

Let's take a look at your thoughts. Deborah Callis in California writes to say, "Thanks for your `Enron/Corporate Scoreboard.' Dark humor aside, it gives me hope that justice will be done."

As it does us. Gene Ray from Tulsa writes: "One category to add to the `Enron Scoreboard' is one for the prosecution of government officials who enabled the corporate executives and accountants to side step the law and generally accepted accounting practices guidelines."

And Regina Hovet of Yakima Washington wrote to say, "...why on Earth are (federal prosecutors) leaning on all these people to implicate or tell on Martha Stewart? Are they jilted lovers or something? I just can't see that going after Martha is an effective use of my taxpayer dollars."

E-mail us at moneyline@cnn.com with your thoughts. That's MONEYLINE for this Tuesday evening. We thank you for being with us. For all of us here, good night from New York.

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