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ANDERSON COOPER 360 DEGREES

Displace New Orleans Police To Move Off Of Cruise Ships; Six Months Six Hurricane Katrina; One Terrifying Night Inside A New Orleans Police Station During Hurricane Katrina; Doctor Sees Worst Of Storm; Survivors Share Their Stories Six Months Later; How Much Has Been Spent On Relief, And How Much More Will It Take?; Children Form New Friendships In Katrina Aftermath;

Aired March 1, 2006 - 23:00   ET

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


ANDERSON COOPER, CNN ANCHOR: It is like a jigsaw puzzle, a terrible, terrible jigsaw puzzle and it is impossible right now to put the pieces back together. And when you look at that car, it is just such a strange sight, seeing is sitting there underneath that house.
There's a number of deadlines that we want to tell you about tonight, a number of people facing deadlines here today. Victims of the storm. And the deadlines are complicating everything.

CNN's Susan Roesgen reports.

(BEGIN VIDEOTAPE)

SUSAN ROESGEN, CNN CORRESPONDENT (voice-over): These are the few possessions New Orleans Police Officer Ed Perkins has left. He lost his home in the hurricane, and he spent the last five months on one of the two cruise ships docked on the Mississippi river.

FEMA has forced Perkins and other Katrina evacuees to leave those ships, saying it has provided them with other housing. Yet, Officer Perkins got stuck with a FEMA trailer that doesn't have electricity.

Now, he has a FEMA-paid hotel room until march 16. After that, he doesn't know where he'll go.

ED PERKINS, OFFICER, NEW ORLEANS POLICE: Some stability. Give me some idea of where I'm going to be a year from now, 10 years from now, 20 years from now. That's what I want. I don't need to be moving from pillar to post.

ROESGEN: Early on, more than 4,000 Katrina evacuees, including most of the New Orleans Police Department, were housed on the ships. Now, FEMA says its contract with the ships has expired and the ships will set sail on regular cruises in a few weeks.

But CNN has learned that the ships don't have to leave so soon.

(on camera): FEMA says that it's ending its emergency housing program and these ships will sail away. But that is not the whole story. It turns out that FEMA had the option of letting these ships stay three more months, but chose not to. And I talked to the owner of the third ship in this area, the one in St. Bernard Parish, where people are desperate for housing. He tells me that he would be happy to let that ship stay there, but FEMA has ordered him to move it out.

David Passey has been coordinating FEMA's emergency housing response in the New Orleans area.

Couldn't FEMA let this ship stay for three more months since it isn't going to sail for three months?

DAVID PASSEY, FEMA: The emergency housing mission is transitioning and we will continue to work to provide housing solutions to every resident at St. Bernard Parish who is still in need.

ROESGEN: Why doesn't FEMA just let this ship stay, David?

PASSEY: You know what, I -- the ship is again contracted through the Military Sealift Command, and at this time we believe that it's a time to move toward interim housing solutions, not to continue this emergency housing mission.

ROESGEN, (voice-over): A federal judge is considering a request by 23 evacuees to stop the ship from leaving. They say it has become a life boat for St. Bernard Parish, providing not only housing, but also meals and medical care.

Parish leaders are backing that request, saying they want to put hundreds of people back on the boat because 9,000 Parish evacuees still don't have FEMA trailers.

Susan Roesgen, CNN, New Orleans.

(END VIDEOTAPE)

COOPER: Well, that is just one of the today stories that have been playing out for the last six months. To the people here, six long months that began on a day neither they nor we will ever forget.

Take a look back.

(BEGIN VIDEOTAPE)

COOPER (voice-over): Katrina slams into coastal Louisiana and Mississippi at dawn on August 29. Winds, 140 miles an hour. Storm surges as high as thee-story buildings. The storm rips up beach side communities, working-class neighborhoods miles inland for hours.

(on camera): It's amazing when you (UNINTELLIGIBLE) 12 hours ago and still it is (UNINTELLIGIBLE) it's in the north part of the (UNINTELLIGIBLE). I keep looking over my shoulder because as you can see, it's coming apart as we speak.

(voice-over): In New Orleans, a city built below sea level, officials pray the levees will hold. Most do, but most is not enough. A few levees erode, some are overtopped. A churn of debris filled water pours in, rises fast, up to the rafters of two-story houses. 80 percent of the city is flooded. Thousands are stranded.

In the first five days after the storm, almost 2,000 people are rescued by boats, more than 5,000 brought to safety by Coast Guard helicopters.

We were videotaping a helicopter rescue, two people plucked from their home by this massive machine. The helicopter's rotors churned up filthy water, spraying it on our cameras, getting it into our mouths.

The standing water is foul by chemicals, gasoline and the bodies of the dead, floating in the open, entombed in flooded houses, ungathered, uncounted.

All week I've been referring to the dead I've seen as bodies and corpses. I should be ashamed of myself. These are human beings, Americans, our neighbors. They had families, they had friends, and now they have nothing. No life, no future, not even dignity in death.

Despite 24-hour television coverage of the flooding in New Orleans, chaos at city hospitals, looting by both the greedy and the desperate. Top federal officials are slow to mobilize large-scale emergency aid to the city.

Forty-eight hours after the storm, I talked to FEMA Director Michael Brown.

(on camera): What about air drops of food or air drops of water? I mean, is that feasible? What about bringing things in on boats or bringing in the Army? Is that possible?

MICHAEL BROWN, FEMA DIRECTOR: Anderson, it is possible. And in fact, the president today said whatever I need, I have available. So what you're seeing is unacceptable. I'm -- we're going to speed that up and we're going to help those people.

COOPER (voice-over): Top officials don't seem to grasp the scale of the disaster.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: In our judgment, we view this storm as a temporary disruption that is being addressed by the government and by the private sector.

COOPER: But conditions are appalling in the sweltering mass shelters in New Orleans. More than 20,000 people in the storm-damaged Superdome; 15,000 people stuck in the New Orleans Convention Center.

There's almost no food, water, medical care or sanitary facilities.

UNIDENTIFIED FEMALE: We're going to need some help. We got babies. Oh yes, I got three kids. They need water, milk, bottles. They don't have nothing. Newborn babies, premature babies. Everything. UNIDENTIFIED MALE: You got bodies in there. You got two old ladies that just passed -- just had died. People dragging the bodies into a little corner.

COOPER: It takes four days -- four long days before major government relief efforts are underway.

12,000 evacuees are bussed from the Superdome to the Astrodome in Houston. Thousands more are air-lifted to other cities offering help.

40,000 National Guard Troops are finally mobilized to restore order, distribute relief supplies to the suddenly homeless.

Everywhere we go, people ask us, where is the help? When is it coming? Tent cities and emergency funds for the living, identification and burial of the dead. Where is FEMA, they ask?

BUSH: And Brownie, now you're doing a heck of a job.

COOPER: Government officials at the White House and in Congress at times seem oblivious, unaware of the failed, slow federal disaster response.

UNIDENTIFIED FEMALE: Congress is going to an unprecedented session to pass a $10 billion supplemental bill tonight to keep FEMA...

COOPER: Excuse me, Senator?

UNIDENTIFIED FEMALE: ... and the Red Cross up and operating.

COOPER (on camera): Sorry for interrupting. I haven't heard that because for the last four days I've been seeing dead bodies in the streets here in Mississippi. And to listen to politicians thanking each other and complimenting each other, you know, I got to tell you there are a lot of people here who are very upset and very angry and very frustrated.

Truth is, people aren't frustrated here, people are dying here. They've died here in Waveland. They're dying still in New Orleans. So it's not just frustration. It goes much deeper than that.

(voice-over): It becomes the largest migration of Americans forced from homes since the dustbowl days of the 1930s. In New Orleans, a city of half a million, fewer that 10,000 remain one week after the storm.

(on camera): You drive down streets and don't recognize a thing. The water, the waste, New Orleans is buried. You clear trees and debris. You feel on your own. It's a flooded frontier, the edge of the world.

(voice-over): People are scattered, most to nearby cities -- Houston, Baton Rouge, Atlanta. Others are farther flung -- Utah, Ohio, Massachusetts. Parents are separated from their children. Most of the missing are found in other shelters, taken into private homes. Others are not found until the levees are patched, until workers begin pumping water out of the city, until recovery teams can finally get into the most damaged neighborhoods.

The bodies of 34 elderly and disabled patients are found at St. Rita's Nursing Home. More bodies are recovered. A total of 400, then 800. As the death toll rises, so does outrage over the city's poor evacuation plan, over FEMA's weak, slow response.

FEMA Director Michael Brown is relieved of his duties and resigns.

The great city of New Orleans is a shell of what it was.

(on camera): But the houses remain untouched. They've been searched, the bodies have been removed, but all the debris remains.

(voice-over): Whole swaths of the city are empty, ruined. But the guidebook parts of the city, the French Quarter, Bourbon Street, are alive again, restaurants serving a etouffee and gumbo. Jazz playing.

There are people on the streets, people coming back vowing to rebuild.

RAY NAGIN, MAYOR, NEW ORLEANS: Read my lips. We will rebuild New Orleans and the lower Ninth Ward.

COOPER: For those of us who were in Katrina's path, who saw firsthand what this storm did, there are so many questions still to be answered. So many memories, vivid and often conflicting. Terrible human suffering and thousands of acts of human kindness. Memories of what the forces of nature can destroy and what human nature can withstand. So many examples of that.

But one stands out. A woman we met in the hell that was New Orleans a week after the hurricane. An old, legally blind lady -- they call her Ms. Connie -- waits with her companion, a lab named Abu.

CONNIE, LEGALLY BLIND KATRINA VICTIM: I'm not sure I -- where I'll end up, but I'm very sure that God knows where I'll end up.

COOPER (on camera): God is still watching over New Orleans?

CONNIE: Absolutely. Absolutely. Will she rise again? Yes, indeed. Absolutely.

(END VIDEOTAPE)

COOPER: We had been trying to find Ms. Connie, we haven't been able to. We're not sure if she is still in New Orleans or where she may be. We certainly wish her well.

It is truly remarkable to hear Ms. Connie talk about this city rising again, especially with all that was going on at that time, six months ago. It was so bad, some local police had to defend their station from gunmen outside. Ahead, on this special edition of 360, in which we look back and look forward. A night of hell for those on the force. We were right there in the middle of it. We will take you there.

And we'll go inside the New Orleans Convention Center for a very personal tour from a doctor who was there, one of the only doctors there as people were suffering and dying. His story when 360 continues.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ROESGEN: For 30 years, Kennard Jackley was a merchant marine, sailing through storms on oceans all over the world. And here he was in his own house, watching a hurricane wrap itself around him. But he kept the camera rolling and his commentary is a conversation between an old man and the sea.

KENNARD JACKLEY, KATRINA SURVIVOR: Enough out of you, there, whatever your name -- Katrina, or whatever the hell your name is.

ROESGEN: Eventually, Jackley realizes the situation is much worse than he thought. It isn't just the wind anymore.

JACKLEY: Uh oh. The ground floor is buckling up underneath me.

ROESGEN: It's the water from the lake swallowing his property.

JACKLEY: Uh oh. There it goes. It's in. Here it comes. It's in the house. Broke the door lock. There it is. Oh man, I can't stop it now.

ROESGEN: Now, surrounded by water, Jackley watched his neighbor's home start to float away.

JACKLEY: There goes Charlie's boat house. It's taken off now.

ROESGEN: Jackley begins to question his decision to stay.

JACKLEY: When's this thing supposed to stop?

(END VIDEOTAPE)

COOPER: Well, that was six months ago. Hard to believe. That was just the beginning. After Katrina hit New Orleans, as more than 35,000 people sat in hard conditions in the Superdome and the Convention Center, outside the city fell into a hostile chaos with widespread looting and violence. At times it was too much of a struggle for police to regain control.

CNN's Chris Lawrence was there during one terrifying night inside a police station. Here is his report.

(BEGIN VIDEOTAPE) CHRIS LAWRENCE, CNN CORRESPONDENT (voice-over): Police officers under siege in New Orleans, prepared to defend their station.

UNIDENTIFIED MALE: I don't know too much about the resident district. I only know what goes on here and it's been hell.

UNIDENTIFIED FEMALE: Officers being shot at continuously. Same thing every day. People want help, we try to help them, we don't get there fast enough, so they shoot.

LAWRENCE: With the city in chaos, an officer delivers this message home.

UNIDENTIFIED MALE: I just want to tell my wife, I love her. Her name is Rachel Weatherly (ph). Rachel Weatherly. I love her. I love you.

LAWRENCE: The police are undermanned and often overwhelmed.

UNIDENTIFIED MALE: I want to have something to say. And if you all could get it out, I want you to get it out to them. All the cowards that are here on the New Orleans Police Department have fled the city in a time of need, and when you raised your right hand, you were sworn to protect these citizens.

LAWRENCE: Police say a third of the force deserted after the hurricane.

UNIDENTIFIED MALE: For all you cowards that's supposed to wear the badge, are you truly -- can you truly wear the badge like our motto say? Evidently, you can't.

UNIDENTIFIED MALE: Anybody up on the roof, on me.

LAWRENCE: It's pitch black when they take their posts.

UNIDENTIFIED MALE: We've got guys out here, you know, shooting at the police. Like I say, raping kids and women.

LAWRENCE: One officer compares the catastrophe to September 11.

UNIDENTIFIED MALE: I think just the number of people, that it is going to be worse. And we're not going to...

(SHOTS FIRED)

LAWRENCE (on camera): We just heard a gunshot. We were just talking to one of the officers and just like that, you heard a gunshot just go off, aim somewhere near us. It's hard to even tell where he was aiming.

(voice-over): That was early on. This came later.

(SHOTS FIRED)

UNIDENTIFIED MALE: We had three people shooting at us from a project. I picked up the flash from the last shot. About five shots over there and quieted down.

LAWRENCE: Just as the night winds down, a chemical fire explodes off in the distance.

UNIDENTIFIED MALE: I'm getting everybody off the roof, getting them downstairs and that's about all we can do right now until we get further orders.

LAWRENCE: Finally, the sun rises through the smoke, and police offer some perspective on Hurricane Katrina.

UNIDENTIFIED FEMALE: I don't think the real story is finished yet. This is only part one. Part two is where we are right now, dealing with all of this. The aftermath in the city with the flooding, with the looting, with the killing, with the raping. Part three, that's the story that isn't finished yet. What's going to happen to the city? Are we going to rebuild?

LAWRENCE: Questions right now, with no answers.

UNIDENTIFIED FEMALE: We will survive. I know that. But we need to do more than that. We need to go back to living with faith and with hope and even with compassion for some of the people who didn't have any for us.

LAWRENCE: Chris Lawrence, CNN, New Orleans.

(END VIDEOTAPE)

COOPER: Six months ago, fear ruled the streets, suffering and death took charge of the New Orleans Convention Center as thousands of people waited for any sign of help day after day after day.

Just ahead, we take you back inside for a personal tour with one of the heroes of the storm who saw it all.

And something good that came out of Katrina, how the storm broke down a longstanding racial barrier that had separated these school kids. That story and more when this special edition of 360 continues.

(COMMERCIAL BREAK)

COOPER: And we are in the lower Ninth Ward. That scene which so shocked us as we drove by. We decided to do the show from here tonight. A house on top of a car that has flipped over.

Behind me you can see how much New Orleans has not changed since Katrina struck six months ago. Ruins like this one are really everywhere.

But in small doses, there are some signs of very big change. Take for instance the Convention Center. Just this past Saturday, it was the sight of a Mardi Gras ball. Floats rolled through as crowds of black tie partygoers danced to upbeat music.

It was a far different place six months ago. Remember then? At that time a different crowd gathered under far different circumstances and faced days of sweltering heat and horrid conditions.

Right after the center was empty, I went back with one of the heroes of the storm, a doctor who was there during the worst of it.

(BEGIN VIDEOTAPE)

DR. GREG HENDERSON, PATHOLOGIST: Down in here the smell is -- you can probably get a little bit of it right now.

COOPER: Yes.

HENDERSON: And you multiply it by about 10.

COOPER (voice-over): In the days after the hurricane, the scene here was desperate -- 15,000 to 20,000 evacuees, young and old, frail and infirmed, stuck, no medicine, no help, no way to get out.

HENDERSON: That's where the real hell was. You know, this is where hell opened its mouth.

COOPER: Dr. Greg Henderson, a pathologist, came to the Convention Center two days after the storm. He'll never forget what he saw inside.

So they were sleeping everywhere, I mean...

HENDERSON: Everywhere. They were packed. Everywhere and there and then all the way out into the street, all the way on the neutral ground right there. And, you know, pretty much all beyond the other side of the street. It was just one big mass of humanity.

COOPER (on camera): People -- I mean, no air conditioning, it's hot, people crying.

HENDERSON: Crying -- crying and dying. Crying and dying.

COOPER (voice-over): Dr. Henderson came to the Convention Center, thinking he'd find other doctors who might need help. He discovered there weren't any other doctors, only a man with some IV bags.

HENDERSON: He had collected like two or three IV bags, but he didn't have any needles or tubing to give them the IV. So he was opening up the IVs and trying to make them drink the IV fluid.

COOPER (on camera): Are you kidding?

HENDERSON: It's all he could do. It's all he could do. He didn't have a needle.

COOPER: I just don't understand why they would tell people, I mean, city officials, state officials, federal officials, whoever, why would they tell people to come here, that there was going to be help here and then not have anything here. And I mean, IVs, you know, we're not talking luxuries. We're not talking, you know... HENDERSON: Oh, man, you're preaching to the choir. It was with me walking through this crowd with a stethoscope, and that's why I told you, I don't -- I'm not sure if I was really being more of a doctor or a priest, you know, because there's not a hell of a lot you can do, you know, for people this sick with just a stethoscope. The best you can do is for the ones who are not that bad or are going to make it, you can put the stethoscope on their heart and hold their hand and say, you're going to be OK, just hang on. And just hang on. I promise something's coming.

COOPER: And was that always true? I mean, when you said that, did you believe it?

HENDERSON: I believed it somewhere in my heart. I just didn't know when and when it was going to happen. I mean, I knew they weren't going to leave us forever.

COOPER (voice-over): It's not known how many died at the Convention Center. The doctor believes he saw about 50 bodies.

HENDERSON: And I heard, you know, some pretty harrowing stories of how they would go and get young women and come back here and rape them. And I think a lot of those stories got a lot of press and maybe contributed to not this area getting the help because I think maybe there was a collective attitude of everybody's just murdering each other down there. Just stay away from that area or you're going to die.

COOPER (on camera): So there wasn't -- there wasn't a law enforcement presence inside this building?

HENDERSON: Absolutely not.

COOPER (voice-over): Wandering through this empty hall of horrors, Dr. Henderson can still hear the cries of those in need.

HENDERSON: And have thousands of voices saying, is there any help coming? Doctor, I need you. Doctor, doctor, doctor, doctor, doctor, doctor, over here, over here.

COOPER: He can still see the faces of those he couldn't help.

HENDERSON: But nowhere in this country should that ever have to happen again. Nowhere. Now, learn from this. Whoever is listening to this, whoever else is in power, whoever wants to do something, learn from this. Because if you don't learn from this, it's going to be very ugly because it's going to happen again.

(END VIDEOTAPE)

COOPER (on camera): Well, that story, of course, was shot just about a week after Katrina hit. Not that many bodies were found in the Convention Center. Less than a dozen bodies were found there. So there was a lot of rumor floating around in those days.

And Dr. Henderson says, he was probably influenced by some of the things other people said to him at the Convention Center, about what they saw. And those rumors got amplified day after day as those people waited until Friday. That's when help finally came for the people at the Convention Center.

You know, one of the special qualities of being here is that when you're surrounded by endless devastation, any triumph of the spirit packs a punch. It's true of the people in the Mississippi hamlet. We're going to take you there to see for yourself.

And what will become of all these pets? Despite many people's best efforts, there are still countless animals who may be facing the worst. That and more when this special edition of 360 continues.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

COOPER: It's so strange being back in New Orleans, nearly six months after Katrina because just about any street you go down has some association with the storm. Some memory comes flooding back.

We're in the Ninth Ward right now and I remember being on this exact spot nearly six months ago. At first I couldn't tell because it was all flooded with water and we were traveling in a boat. But then I remembered this stop sign.

(voice-over): Charlie, my producer had to hang on to that stop sign to keep our boat from tipping over. A Coast Guard helicopter was overhead, trying to rescue some people stranded in their home.

(on camera): I don't know if you can see that, but right there, look up there on the porch. There they go. He's going down again. The rescuer is going down. We believe there may be at least two more people in the house. He reenters the water and then washes the house, wraps a protective binding around the people and then hoists them up. It is remarkable to see.

(voice-over): Around the corner there was a man's body, badly decomposed on the roof of a car. It was a shocking sight. He had been left out, abandoned for more than a week.

(on camera): This is the exact where nearly six months ago we saw that man's body sprawled out on top of the car. It's so strange. It's -- there's no memorial of it. There's no mark -- or there's nothing to indicate the horror that happened here. People just drive by. They weren't here then, they would never know what happened here.

And that's the concern of a lot of people in New Orleans. They don't want the memories, the images to just be forgotten, to be swept up and cleaned up and bulldozed away. If it's forgotten, some people here will tell you, it very easily could happen again.

(END VIDEOTAPE)

COOPER: Well, some who survived Katrina count their losses. Others count their blessings. But probably most people are counting both.

CNN's John King found some of them in the once and future hamlet of Pearlington, Mississippi.

(BEGIN VIDEOTAPE)

SAMUEL BURTON (ph), REVEREND, KATRINA SURVIVOR: Oh she is gone, you know, I had a pretty vulnerable spot, but I just wanted to see.

JOHN KING, CNN CORRESPONDENT (voice-over): Eight hours, clinging to a tree and praying your grandson doesn't lose his grip, is a memory that doesn't fade with time.

BURTON: I said now, son, still hold my hand. I said, don't fight the water. I said, that water is going to rise.

All right.

KING: Over the years, many hurricanes, and Reverend Samuel Burton had stayed for all. But as Katrina approached it felt different, dangerous. He left his house, made for the safety of the trees.

BURTON: And you're running and that water and is jumping (UNINTELLIGIBLE). The lord heard my prayers.

KING: Now, six months later, there's new life here in tiny Pearlington. Nine new precocious puppies for the reverend's dog. And yet, Pearlington also seems a forgotten place as if it were frozen in the days after Katrina.

Rebuilding remains a distant dream. Just 40 percent of the debris cleared, compared to 90 percent statewide. Electricity and other basics only now coming back on line. The one grocery store still closed. And what was once a school, still serves as Pearlington's lifeline for food, clothing, the bleach vital to fight the toxic molds, the spray to fight the swarming gnats.

UNIDENTIFIED FEMALE: Oh, yes, we've always been left out in this town. We were called the twilight zone.

KING: A place forgotten, the locals say, even after a storm whose mark was so unforgettable.

UNIDENTIFIED MALE: A lot of concentration, I personally feel, is going to the larger areas. And Pearlington is a small town of about 1,400 people. It's 15 miles from everywhere. It's actually 30 miles when you go round trip to get a tank of gas.

KING: Deputy State Emergency Management Director Mike Womack concedes bigger communities tend to get help faster than hamlets like Pearlington, but says it's not all the government's fault.

MIKE WOMACK, DIRECTOR, DEPUTY, STATE EMERGENCY MANAGEMENT: It just has to do with where the storm came in. As we know, this was pretty much ground zero. KING: Everyone here is mindful the calendar is working against them. Federal housing grants at least two months from arriving. The next hurricane season just three months away.

WOMACK: 18 to 24 months is going to be the earliest that we can expect to get any type of large number of houses built down here.

KING: As for the 78-year-old Burton, he won't leave because this is home. Won't wait for the bureaucracy to decide whether or when he can rebuild it.

BURTON: Put that board over there.

UNIDENTIFIED MALE: Over there?

KING: So, like so many around here, he relies on volunteers, like these high school seniors from New Jersey. Their work is grimy, with the occasional breaks to enjoy the puppies...

(SINGING)

KING: ... and the stories and songs of a man who nearly lost everything he owned...

(SINGING)

KING: ... but not his faith or his voice.

John King, CNN, Pearlington, Mississippi

(END VIDEOTAPE)

COOPER: I love the way, how he carries around a puppy in each hand and sort of points with the puppies. Quite a unique character.

As you've watched Katrina coverage these many months, you've probably wondered, where is all the money going? We certainly have. How much has been spent and how much more will it take to get things back to a so-called normal, if that's ever even possible.

All of those are good questions and one we put to those in the know. Here's CNN's Tom Foreman, keeping them honest.

(BEGIN VIDEOTAPE)

TOM FOREMAN, CNN CORRESPONDENT (voice-over): In the outpouring of donations after Katrina, charities took in $3,600,000,000. But more than half has been spent on just meeting the basic needs of a population set adrift.

Not even starting the rebuilding. That, according to Indiana University Center on Philanthropy. Gene Tempel is the executive director.

EUGENE TEMPEL, EXECUTIVE DIRECTOR, INDIANA UNIVERSITY CENTER ON PHILANTHROPY: Food, shelter, clothing, medical care, those kinds of things, that will be consumed by the family and there's nothing left to show for it except a family that might be better off than it were if that money hadn't been there.

FOREMAN: So far, about $25 billion federal tax dollars have been spent. Again, largely on immediate concerns. Housing, medical care, debris removal, disaster loans and payouts under the National Flood Insurance Program.

All that spending has given some in the Gulf reason to celebrate. Property values in many areas are soaring above pre-storm levels as residents return much faster than anticipated.

AMY LIU, BROOKINGS INSTITUTION: Well, I think at the six-month anniversary, there are some promising signs that families are really eager to come back to this region. But there are also troubling signs that rebuilding is really stalled.

FOREMAN: That's the catch. Analysts say for long-term success, many billions more are needed to move along levee rebuilding, to complete the cleanup and encourage housing reconstruction. Only some schools, hospitals and shops are open. The tax base is a shambles, that's one reason Mardi Gras matters.

UNIDENTIFIED MALE: The city's been losing since the Katrina about $15 million a day in the tourist industry and they needed to show that this is still a big tourist town.

FOREMAN: Simply put, a new phase of fundraising and tax spending is starting, focused on long-term commitments, especially for the hardest hit places.

UNIDENTIFIED MALE: It may be 10 years, it may be 20 years before we fully get these communities back to the state that they were in formally.

FOREMAN: For six months, though it may not seem that way for storm victims, the money has been flowing like water on the Gulf. And if there appears to be little to show for it, that is a measure of how many more years the money may have to flow.

Tom Foreman, CNN, Washington.

(END VIDEOTAPE)

COOPER: Tom Foreman, keeping them honest tonight.

Also tonight, how Katrina changed some children's lives in a very unexpected way. What happened when two schools in Mississippi became one. That story coming up on 360.

(COMMERCIAL BREAK)

COOPER: We'll continue with our special on Katrina in a moment, but we have some breaking news to tell you about. It is unfolding in Karachi, Pakistan, not far from the U.S. consulate there. An explosion with injuries. These are the first images we are seeing. CNN's Mike Chinoy is in Pakistan and joins us by phone.

Mike, what do you know?

MIKE CHINOY, CNN CORRESPONDENT (on the phone): The latest information is that there were two blasts within the last half hour in the parking lot of the Marriott Hotel in Karachi, which is just next to the U.S. Consulate there. Details still sketchy, but the initial reports say at least five people were injured, eight to 10 cars damaged. We expect to get more information coming in shortly.

There has been a lot of speculation that there might be a terrorist attack in the run up to President Bush's visits to Pakistan. That's scheduled to take place on Saturday. Al Qaeda and its Jihadi supporters here in Pakistan, widely expected to try and send some kind of a signal to President Bush. Well, this appears to be a signal and it's no surprise it's in Karachi. That's been a hotbed of al Qaeda activity. There have been bombings at hotels and outside the U.S. Consulate there in the past. It's all coming amid very tight security here in Islamabad as Pakistan prepares for the president's visit.

COOPER: Mike, you said that there were two blasts. Is that correct? Do you know what time in Karachi they occurred?

CHINOY: My understanding is that there were two blasts and they occurred just about a half an hour ago in Karachi. It's early Thursday morning here. People would be just going to work and out on the streets, about 9:15 in the morning, local time.

The car bomb outside the hotel is a tactic that al Qaeda has used in Karachi before. There was a very deadly bombing attack outside the Sheraton Hotel a few years ago, which left nearly a dozen people dead. And there have been other attacks, including (UNINTELLIGIBLE) the U.S. Consulate, that have also caused considerable casualties there. So this is a pattern that we've seen before.

COOPER: I would imagine the security at these hotels has got to be pretty extensive. I was in the Intercon in Amman, Jordan, a couple months ago and even getting anywhere near to the entrance of the hotel in a vehicle in Jordan is very difficult. I'm assuming that is the case in Karachi. Do you know?

CHINOY: Yes. Normally, there's very, very tight security. There are people who check the cars when they come in to the driveway. But the checking is not as completely thorough. There are an awful lot of cars and awful lot of people.

You have the same situation here in Islamabad where a lot of American officials who will be traveling with President Bush's party will be staying at the main hotels in Islamabad and they are too -- there are barricades in the streets. There are people with these devices that you can look underneath the chassis of a car for explosives. But a well-concealed bomb and somebody ruthless enough to get close, it's pretty hard to stop.

COOPER: Mike Chinoy, reporting for us live from Pakistan. We'll continue to monitor this situation, bring you updates as we learn more information.

Just to reiterate, there has been an explosion, perhaps even two, in Karachi.

That, now is a picture of President Bush in New Delhi. These are the first pictures we're seeing of the president. He has just arrived in New Delhi. He is there, being greeted by honor guards. The band, obviously playing there. The president, on his way -- he's supposed to get to Pakistan in several days.

We're going to come back here to the Gulf next. And more hope in the aftermath of Katrina. A tale of two schools that combined forces and built new friendships, when this special edition of 360 continues.

(COMMERCIAL BREAK)

COOPER: When you see devastation like that, it's hard to say that there was anything good that came out of Hurricane Katrina. I certainly hesitate to ever say that anything good came out of it.

We did find perhaps one small sliver of a silver lining in a town in Pascagoula, Mississippi, where the students at two schools which really didn't have much to do with each other before the storm. Both are Catholic. One was black and the other white. Katrina has changed all that in this school.

CNN's Randi Kaye reports.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: In the name of the Father and of the Son and of the Holy Spirit.

RANDI KAYE, CNN CORRESPONDENT (voice-over): If there was ever a bright spot in the darkness delivered Katrina, this may be it.

KERED GRAVES, STUDENT: Hey. I love you (UNINTELLIGIBLE).

KAYE: Anna, Kered, and Christina, 9-year-olds from Pascagoula, Mississippi, this is their story.

(on camera): But do you think there is a chance that, if Katrina hadn't happened, any of you would have become friends with Kered?

ANNA DOMBROWSKI, STUDENT: No, not really.

KAYE: Never would have met.

DOMBROWSKI: No.

KAYE (voice-over): Not if Katrina hadn't so boldly introduced them. You see, six months ago, when the storm hit, Anna and Christina were third-graders at Resurrection School, a Roman Catholic school. Nearly all its students were white.

DOMBROWSKI: I didn't think it was very fair, because that's why Martin Luther King was here. But I kept hoping that other -- other colored kids were going to come here.

KAYE: Kered was a third-grader, too, a few miles away at Saint Peter the Apostle, an all-black school.

GRAVES: I didn't have much white -- white friends there at all. And I only had a white principal. That's all I had. Now, there's a couple of white teachers. But there were, like, all white teachers and principals. There are a couple of black teachers, but that's all. And there's a whole black school. And I was like, that can't be right. I mean, I loved Saint Peters with my whole heart. It's just that, I want white friends. I couldn't take it.

KAYE: Katrina destroyed her school. Saint Peter the Apostle crumbled and, along with it, a century of racial separation.

(on camera): This pile of debris, including some old textbook pages, it's all that's left of Saint Peter the Apostle. The school stood on this ground for 100 years. It was designed initially to educate the children and grandchildren of freed slaves. That was back when blacks weren't welcome in most Mississippi schools. But, even when public schools and most Catholic schools desegregated, Saint Peter chose to remain all black to preserve the students' culture.

(voice-over): But, after Katrina, with nowhere for its students to turn, Saint Peter looked to Resurrection School.

Even though the massive tidal surge broke windows and blew down doors at Resurrection, two months later, it managed to reopen. So, the decision was made. The children would all go to school together.

And now, today, with two Catholic schools and two races in one place, some are thinking, this part of Katrina, anyway, is worth celebrating.

UNIDENTIFIED CHILDREN (singing): Hey, Kered, are you ready?

GRAVES (singing): For what?

UNIDENTIFIED CHILDREN (singing): To jig.

GRAVES (singing): Jig what?

UNIDENTIFIED CHILDREN (singing): To jigalo.

GRAVES (singing): I got my hands up high, my feet down low, and this the way I jigalo.

UNIDENTIFIED CHILDREN (singing): Our hands up high, our feet down low, and this the way she jigalo.

KAYE: In the classroom, the lesson plan is the same.

UNIDENTIFIED CHILDREN: Forty.

UNIDENTIFIED FEMALE: Fives times three equals?

UNIDENTIFIED CHILDREN: Fifteen.

UNIDENTIFIED FEMALE: Five times seven equals?

UNIDENTIFIED CHILDREN: Thirty-five.

UNIDENTIFIED FEMALE: Five...

KAYE: But the faces have changed. Of the more than 300 students now at Resurrection, 55 are black.

CHRISTINA CARDENAS, STUDENT: I have new friends. Like, when only white people were here, I only had like five friends. And now I have more friends.

UNIDENTIFIED CHILDREN: (Singing).

KAYE (on camera): There's so much talk about how much people lost in this storm. What would you say your students have gained?

ELIZABETH BENFIELD, PRINCIPAL, RESURRECTION CATHOLIC SCHOOL: Saint Peter's children were not any different than we were. They have a different skin color, but they share the same faith tradition, and their families have the same values. And the children have learned that -- that it doesn't make a difference, that we're all children of God.

UNIDENTIFIED FEMALE: Good heart.

KAYE: Did the storm teach you anything about each other?

DOMBROWSKI: Like, taught us how to come together and just deal with what color you are. It doesn't matter. Just be friends.

CARDENAS: Because I used to think black people were with really mean, and it taught me that they were really nice and kind.

KAYE (voice-over): When it was decided Saint Peter would not reopen again, it brought Sister Bernadette McNamara to tears.

(on camera): What will you miss about your students?

SISTER BERNADETTE MCNAMARA, TEACHER, SAINT PETER THE APOSTLE CATHOLIC SCHOOL: I miss them. I just love them. And I'm sorry about the tears. I just can't help it.

KAYE: It's OK.

(voice-over): At Resurrection, Sister McNamara prays, her students will rise up again after this terrible storm.

(END VIDEOTAPE)

COOPER: Great kids. This story is truly "On the Radar." People by the dozens writing into our blog tonight and the first time it aired. Kristi in Irving, Texas, says, "Of all the negative stories about Katrina, finally a truly remarkable report on the issues faced by children who've had to endure Katrina's aftermath."

Mark in Nashville sees the glass half empty. "Its sad," he writes, "that we are not beyond some getting giddy over the white/black children wiser than adults thing. Enough of those movies were made in the 70's and 80's."

But Tina in Las Vegas, counters with this, "Very touching...as I recently told my mother...children learn RACISM from their parents...children have open minds until adults teach them how to close them...leave it to a child to teach us all."

And Victoria in Arlington, Texas, puts it all in a nutshell, "Adults should learn the lesson from these children."

And as always, we welcome your opinion. Just go to cnn.com/360. Click the link to the blog. Let us know what you think.

We'll be right back.

(COMMERCIAL BREAK)

COOPER: Erica Hill, from "HEADLINE NEWS," joins us with some of the business stories we're following right now -- Erica.

ERICA HILL, CNN CORRESPONDENT: Hi Anderson.

The city of brotherly love is about to become the city of Wi-Fi. Philadelphia, teaming with Earthlink to construct a citywide high speed wireless network. The 135 square mile network should be finished next spring. And under terms of the deal, Earthlink will pay for computers and internet access for low-income households there.

Energy companies will not be paying billions of dollars for royalties on oil and natural gas leases. That, because of a mistake with a lease contract. Congress was told today that as a result of the error, which ends fee waivers when prices are high, the government has already lost several hundred million dollars in royalties and could stand to lose billions more.

Three people have been charged tonight with the $93 million heist in southern England. That's the biggest cash robbery in British history. Last week, you may recall a gang posing as police officers seized the Security Depot's manager, took his wife and son hostage. Two men and a woman, as we said, have been charged tonight. At least 11 people have now been arrested in connection with that robbery -- Anderson.

COOPER: Amazing story. Erica, thanks.

"LARRY KING" is next. Andy Griffith and Ron Howard say goodbye to Don Knox in their first interview together since his death.

Thanks for watching this special edition of 360. TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com

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