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Aired January 31, 2002 - 18:00   ET


ANNOUNCER: This is LOU DOBBS MONEYLINE, for Thursday, January 31. Here now, Lou Dobbs.

LOU DOBBS, HOST: Good evening, everyone. Tonight, a new threat against the United States. MONEYLINE has learned through a Nuclear Regulatory Commission document that Islamic terrorists may be planning yet another attack against America. The target: One of the nation's nuclear power plants, or an Energy Department nuclear facility.

Steve Young is here and has the story for us -- Steve.

STEVE YOUNG, CNN CORRESPONDENT: Lou, the warning went just a week ago from the Nuclear Regulatory Commission in Washington. It was sent to the 65 licensed power plant operators which run 103 nuclear power plants across the nation. The FBI paid a visit to at least one of those plants, the Columbia generating station, the only nuclear power plant in Washington state, and possibly other plants we don't know.

But we do know that the limited distribution not for public disclosure contained a chilling possible scenario from FBI headquarters to all field offices. Here's what it said, quote: "During the briefings of an al Qaeda senior operative he stated that there will be a second airliner attack in the U.S. The attack was already planned and three individuals were on the ground in the States recruiting non-Arabs to take part in the attack. The plan is to fly a commercial aircraft into a nuclear power plant to be chosen by a team on the ground. The plan included diverting the mission to any tall building if a military aircraft intercepts the plan. No specific timeline or location was given for the attack."

The NRC document also says the FBI can't assess the credibility of the information.

Some who worry that security at nuclear power plants is inadequate are disturbed, but the advisory says no additional actions are requested at this time. That's because while the FAA has asked commercial airliners and private planes operating on visual flight rules to stay away from nuclear plants, it hasn't made that an order.

Some other facilities, such as independent fuel storage facilities, but not what would normally be considered weapons facilities, also received the government warning. The main thrust of the threat, if it's real, is to those nuclear power plants. They provide 20 percent of the nation's electricity. And if any one was hit by a fully fueled jumbo jet and the reactor fuel widely dispersed, the result could be eventual fatalities from radiation far worse than the terrorist attacks on the World Trade Center in New York and the Pentagon back in September -- Lou.

DOBBS: Steve, thank you very much. We're going to be talking with two experts here in just minutes on these -- on the credibility of this threat and also on the security of the nation's nuclear power plants, and to also assess overall the potential harm that could be created. Steve, thank you very much.

Well, President Bush today took more opportunities to warn terrorist nations. The president told them to "get their house in order" or to face the consequences. White House correspondent Kelly Wallace joins us from Washington with the story -- Kelly.


Well, we also saw the president conveying to the American people that the threats still exists, that there are still threats to Americans and possibility of terrorist attacks in the United States. You know, the president talking about how thousands of were trained in Afghanistan, camps, and he said today, these are thousands of ticking time bombs ready to go off.

We saw the president, a two-day road trip wrapping up in Atlanta, Georgia this afternoon. Part of the president's message, encouraging Americans to volunteer, to mentor, to teach, to do some type of community service, a call to action, really, after the September 11 attacks, but then the president once again sending a message to countries around the world, to those countries he singled out Tuesday night -- Iran, Iraq, North Korea -- President Bush saying today some people may have questioned exactly what he meant. Well, he said he would explain just what he meant today. He said if countries that are trying to obtain weapons of mass destruction don't change their ways, there could be potential consequences.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We've also sent another message, that if you're one of these nations that develops weapons of mass destruction and you're likely to team up with a terrorist group, or you're now sponsoring terror, or you don't hold the values we hold dear true to your heart, then you too are on our watch list. People say, what does that mean? It means they better get their house in order is what it means. It means they better respect the rule of law. It means they better not try to terrorize America and our friends and allies, or the justice of this nation will be served on them as well.



WALLACE: Now, Lou, aides continue to say the president is not signaling that any military action is imminent. Senior administration officials say they're not necessarily going to take the Afghanistan example around the world, that this is not a one-size-fits-all approach, but they are saying the president is very serious, if these countries believe the countries is signaling the worst, then so be it. They say he will use every ounce of American power -- economic, diplomatic, even possibly military -- to protect the United States from weapons of mass destruction -- Lou.

DOBBS: Kelly, thank you very much. And I understand that German Chancellor Gerhard Schroeder is still meeting with the president at this hour in the Oval Office? Is that correct?

WALLACE: That is correct. We are actually expecting the German chancellor and President Bush to come out and talk to reporters just moments from now.

DOBBS: And when that occurs, we will be returning to you, Kelly, and joining the president and the chancellor for those remarks. Thank you very much, Kelly Wallace.

Joining me now, as we reported to you, two of the country's foremost experts on nuclear energy and the nuclear industry. Paul Leventhal is with the Nuclear Control Institute; Ralph Beedle of the Nuclear Energy Institute.

Gentlemen, let me begin first with this memorandum from the NRC. How concerned are you about it, Paul?

PAUL LEVENTHAL, NUCLEAR CONTROL INSTITUTE: Well, I'm quite concerned, because nuclear power plants today are not defended against an attack from the air. We have proposed that ground-to-missile batteries be in place at each nuclear power station in the United States. That's some 63 stations, having 103 power plants. And we think this is feasible, because we know of at least one country that's done this, South Korea. They have a special situation. They regard themselves in a state of war, and we think right now, with the kind of threat that this -- that this advisory describes, that these plants could well be vulnerable to attack.

DOBBS: Ralph, your view?

RALPH BEEDLE, NUCLEAR ENERGY INSTITUTE: I think that the nuclear power plants are safe today. I thought that they were safe on September the 10th. We have increased our level of security at the nuclear facilities as a result of September 11. We've increased the number of patrols, we've increased the number of security officers, we got increased cooperation and coordination with the local law enforcement, the FBI, the other national sources of defense.

I think the aircraft scenario that's described in this threat warning that -- that the NRC issued is one in which the United States has taken a great deal of -- a number of steps in order to preclude something of that sort through increased protection on our airlines, the airport security as well as airline -- aircraft security in itself. DOBBS: Yet the threat, as represented by the NRC memorandum -- and there is, as they point out, no complete assessment of the credibility of the information gained by the FBI. But the idea that there would not be ground-to-air, as Paul has suggested, ground-to-air missiles and protection, because the potential for devastation here is so extraordinary. You would be against that?

BEEDLE: Well, it's not a matter of being against any sort of a defensive mechanism for these nuclear facilities. I think we also need to take a look at the potential for disaster for commercial aircraft in the event of something like this. I think that we need to take a look at the seamless security for the nation as a whole, and look at the aircraft threat to the rest of the critical infrastructure here in the United States.

And that's -- and that's provided by our Defense Department. I think that's the effort that our Homeland Defense organization is being tasked to deal with, and one in which we need to look to the future to provide that seamless protection for these facilities, as well as the rest of the nation.

DOBBS: Paul, you're shaking your head?

LEVENTHAL: Well, I just think that that's not an appropriate response at this point in time. These plants, in fact, are vulnerable to an air attacks, if in fact a fighter interceptor couldn't catch up with an airliner that had been hijacked and coming in at full cruising speed. There is that possibility, and all that we're proposing are that these ground-air missile batteries, under strict military command and control and rules of engagement, be a last resort measure that could be brought into play, if in fact there was a jumbo jet on its way for an impact on a nuclear power plant with no possibility of it being intercepted.

And I don't see how any reasonable person could be opposed to that defensive measure since it's already in place at least one country, South Korea, to protect their plants against just such an attack.

DOBBS: Is there an implication here, Ralph, that the Nuclear Energy Institute, the nuclear industry doesn't believe that these threats are real?

BEEDLE: We don't believe that this threat is real. This is not a credible threat. It's certainly some information that was provided through our national collection effort, and obviously came from somebody in the al Qaeda organization. But it hasn't been judged to be a credible threat by the FBI or the NRC. It's an advisory. We get a lot of information, and in this case it was another piece of information that the NRC thought that we ought to be aware of.

DOBBS: You said this, it says here that they had not assessed the credibility, that's quite different from saying it's not a credible threat.

BEEDLE: No. This says that the FBI had not completely assessed it.

DOBBS: I want to return to this discussion, gentlemen, because obviously, this is an issue of paramount importance to the security of the nation and your views are helpful to those who will make a determination.

There is President George W. Bush, Chancellor Gerhard Schroeder. They just completed a meeting in the Oval Office. Let's listen in.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: ... so pleased with Germany's cooperation. They've provide troops in Afghanistan, troops that have performed really well, according to our military, and I want to congratulate you for that.

I also thank the chancellor for hosting the Bonn convention, and which made a substantial stride toward an Afghanistan that will be able to survive after we have rid it of the Taliban. I appreciate it so very much the chancellor's willingness to help Afghanistan help herself, in terms of training a police force. I told him we're in the process of setting up a plan to help Afghanistan develop her own military. So we're linked up well in our mutual desires to leave the world more peaceful.

And so, Mr. Chancellor, I'm so honored you're here. I want to welcome you.

GERHARD SCHROEDER, CHANCELLOR, GERMANY (through translator): Well, ladies and gentlemen, I can only absolutely confirm what his excellency the president has just said regarding our discussions, particularly focusing, obviously, on the fight against terrorism but also about the fight that has happened in Afghanistan, and that the support that has been rendered by us too.

We, as you all know, are very committed to the participation in the peace corps in Afghanistan under the umbrella of the United Nations, obviously, and as the president has just pointed out, we are very interested in committing ourselves to training police forces -- law enforcement forces within Afghanistan because we find it crucially important that such intra-Afghanistan, proper home-grown police forces, can be built up in the process and in the more long-term, obviously, a military structure will be needed here too.

I obviously wouldn't like to forget the fact that I have congratulated the president on the economic performance that the country has obviously been able to show. We do see some positive signs here. Things are being fueled again, which obviously is not just positive and good for the American economy but also for the global economy, too. I'm very pleased indeed that, obviously, there are now some hopeful signs here, because, obviously, as soon as the economy runs smoothly again here, that is going to be good for the global economy and therefore good for Europe, and certainly for Germany too.

BUSH: Thank you, Gerhardt. DOBBS: Chancellor Gerhard Schroeder of Germany, President Bush concluding their remarks outside the White House after spending about 40 minutes in the Oval Office in discussion.

I want to bring back, if I may, Kelly Wallace, our White House correspondent. Kelly, the two men have a lot to talk about, given the coalition, the important role of Germany and also the economy of Germany, which is every bit as challenged as that of the United States.

WALLACE: Absolutely, lots to discuss. The two men will be having dinner here at the White House. Certainly discussing the future of Afghanistan, the role of any peacekeeping force, building any military force in Afghanistan, trying to pledge money to help rebuild the country.

Likely to be some discussion, Lou, no doubt, to President Bush's comments during his State of the Union address, comments he's been talking about on the road over the past couple of days, putting countries, as we mentioned earlier, such as Iran, Iraq, North Korea on notice. There has been some concern around the world, some concern about what the president means, concerns about whether the president's comments and his plans from here on out will continue to hold the international coalition against terrorism together.

And, Lou, one other thing I wanted to mention to you. We were working the phones a little bit since we left you a short time ago, and White House officials want to stress a little bit about what we're reporting, the concerns of threats to nuclear power plants around the country. Talking to a White House official just a short time ago, he is stressing that this information is uncorroborated and not specific to any target, not specific to any date or time. So obviously, an ongoing concern. The president himself talking about how diagrams of nuclear power plants and public water facilities were found in caves in Afghanistan. So the message is the threat is out there, but officials want to say that the information so far, uncorroborated and nonspecific. Lou, back to you.

DOBBS: And I think we could go further, your colleague at the White House, John King, talking with a nuclear energy source, suggesting that the information was passed along even though their determination was that it was, quote/unquote, "not credible."

But erring on the side of prudence, just as did the FBI, we felt compelled, and responsibly so, to tell the public about this threat and until it can be properly assessed because the damages that could ensue are extraordinary.

WALLACE: Absolutely.

DOBBS: Kelly Wallace, thank you very much.


DOBBS: We have been talking with Paul Leventhal of the Nuclear Control Institute and Ralph Beedle of the Nuclear Energy Institute representing the industry. The issue here is the public safety. It was unthinkable what happened on September 11. Certainly, no one could have imagined such a thing. And having experienced now the unthinkable, is it not prudent, is it not in the interest of the nuclear energy itself as well as public safety to take every precaution with nuclear power plants?

BEEDLE: I think it is prudent. And I think we have increased our level of security. We have continued to work with local law enforcement, state and federal agencies in order to provide the kind of security that we think is necessary for these plants. We've increased our security in the airline industry to preclude the kind of hijacking evolution that took place on September 11. I think all those measures and the readiness of our department of defense is providing the kind of security that the nation needs for these facilities and the other critical infrastructure within this country.

DOBBS: Paul, your analysis?

BEEDLE: And I would add that that the -- that the fact that the aircraft collided into the World Trade Center and brought that Trade Center down does not suggest that same kind of a collision would cause a catastrophe that some people have postulated on the part of these nuclear plants. They're extremely robust. I'm confident that they would survive to protect the public health and safety even in the event of one of these collisions.

DOBBS: Are you satisfied with that?

LEVENTHAL: Well, the industry continues to point to the World Trade Center as an example of an easy target, but they always forget to mention the Pentagon, which is a low-lying target, probably as hard to hit as a nuclear power plant. And yet, the devastation on the Pentagon was there for all to see.

And what concerns me most is that the industry somehow resists the obvious remedies that are necessary. By law and regulation, they're not required to protect against an enemy of the United States, which means that the federal government has to provide that protection. And yet, because the industry is loathe to acknowledge the vulnerabilities of these plants, the government is not being fully informed, in my view, of the vulnerabilities in these plants, which could be essentially eliminated or at least reduced to an acceptable level by means of military protection. And we do not have military protection of these plants today. We're relying upon guard forces. In some case guards are hired at $8 an hour. A number of plants have rent-a-cop guards hired at $8 an hour -- less than janitors are paid -- at some of these plants.

It is not a uniform, elite, highly paid, paramilitary force, as the nuclear energy is to -- often states, as we've seen in their full- page advertisements.

Our point is is that these plants today are vulnerable. A number of them are very close to major cities like New York, Philadelphia, Cleveland, Chicago, Los Angeles. And it is incumbent upon the public to realize that these plants are not adequately protected against an air attack, much less an assault from the ground or the water.

And the only way you're going to get that protection is if the public is heard. And at this point, the public has not been heard from.

DOBBS: Your response?

BEEDLE: My response to that is that it's unfortunate that Mr. Leventhal is so ill-informed. I do think that he is misrepresenting the nature of the security forces at our facilities. These are highly qualified, well-paid officers. Very...

LEVENTHAL: Can you say there are no rent-a-cops at $8 an hour?

BEEDLE: They are very well paid. They are -- we do have some contract-provided individuals. But they are trained to our standards; we control them.

I just think that Mr. Leventhal is making an obvious attempt to try and disturb the public in this matter.

LEVENTHAL: Well, on the subject of misrepresentation, I might ask Mr. Beedle if he is prepared to disavow the video of the Sandia test of a jet crashing into a wall where the industry, when asked about the test, says, well, it speaks for itself. And yet that wall was not anchored in the ground; that wall was on a cushion of air. It was a frictionless test to test the impact of a plane, not the survivability of a wall.

Are you prepared to say that that test, as represented by the industry, is a phony?

BEEDLE: No, that's an actual test. It was done by Sandia National Lab. It does, in fact, speak for itself.

LEVENTHAL: With a jet plane that was 5 percent the weight of a jumbo jet that had water in its fuel tanks, not gasoline, and the wall was 12 feet thick, compared with 3 1/2 to five feet thick of the containment.

I think the problem of misrepresentation lies with the industry, not with the Nuclear Control Institute.

DOBBS: Could I inquire, unless you would like to respond directly?

BEEDLE: Lou, I didn't come here tonight to have a debate with somebody that's -- that has a clearly anti-nuclear agenda, as does Mr. Leventhal. I'm here to tell you that the information that you got in your advisory was provided by the nuclear energy -- Nuclear Regulatory Commission. It was information provided by the FBI. It was not credible. But as they have in many cases provided information because they thought it was necessary for the general protection of our facilities, the fact that it's in the public domain is a matter of record at this point.

And we're not disputing that. We are ready and prepared to deal with the threats that are posed by that and others in this industry.

DOBBS: I have a break that I have to do. I'd like to come back -- if you gentlemen could stay just for a few more moments to round out the issue and the discussion, if that's all right with you gentlemen.

We will continue with this discussion and, obviously, the rest of the day's news in just a moment. Stay with us.


DOBBS: We're back with Paul Leventhal and Ralph Beedle.

And I want to get to one issue because -- and you really raised it, Ralph -- the issue of your organization being anti-nuclear. Is it, in point of fact?

LEVENTHAL: We're not am anti-nuclear organization, we're a nuclear nonproliferation organization. Our objectives are to help prevent the spread of nuclear weapons to additional nations or to groups, and to protect nuclear facilities from attack and other means of nuclear terrorism.

And I think Mr. Beedle knows that. We're not an anti-nuclear organization. Have no agenda to shut down the industry. But we feel that if these plants cannot be operated as safely and as securely as humanly possible, they should be shut down until they can be.

DOBBS: And let me ask you, if I may, Ralph: As Paul points out, the federal government is responsible for the security and the safety of these plants. It doesn't cost the nuclear power industry anything to go to the most maximum extent in terms of protecting them. Why would you not be in favor of such a thing?

BEEDLE: We are at the maximum protection level that we are capable of providing. If, as Mr. Leventhal suggests, we put in anti- aircraft guns around these plants or anti-aircraft devices of some sort, we're talking about something that the federal government needs to do through its military forces. It's not a matter of the utilities providing that kind of protection.

DOBBS: But you would not be against that, or opposed to it?

BEEDLE: If the president and Governor Ridge decide that the national defense, homeland defense requires a -- that this country be loaded and equipped with anti-missile, anti-aircraft batteries, then I suspect that that's exactly where this nation will end up.

LEVENTHAL: It's incumbent upon the...

BEEDLE: It's not a matter of the utilities making that determination.

LEVENTHAL: It's incumbent upon the utilities and the industry to make that recommendation to the president, to acknowledge the vulnerabilities if these plants are not adequately protected. And that has not been forthcoming.

BEEDLE: And it probably never will, Paul. We are not in the business of telling the president how to deploy his military forces.

DOBBS: OK. Gentlemen, we thank you very much for taking your time to examine this. Again, this discussion arising out of a Nuclear Regulatory Commission memo which Steve Young reported at the outset of the broadcast suggesting a threat -- not assessed as credible, but certainly sufficiently alarming -- that nuclear power plants, the targets of al Qaeda terrorists in this country.

Turning to other news. Enron not cooperating with the United States Senate. That charge coming from Senator Byron Dorgan, one of the lawmakers leading a congressional investigation into Enron.

Tim O'Brien reports from Washington -- Tim.

TIM O'BRIEN, CNN CORRESPONDENT: Lou, it may be a sign of things to come: Not only have presumably important records been destroyed, but determining who now possess the relevant records that remain and getting them each to the appropriate congressional committees could be a logistical nightmare, even in the best of circumstances.

Enron had an estimated 3,000 partnerships, some of them with names out of Star Wars, like Jedi.

Well today, as you said, Senator Byron Dorgan, the chairman of a Senate commerce subcommittee on consumer affairs, said Enron officials, quote, "just simply have not cooperated."


SEN. BYRON DORGAN (D), NORTH DAKOTA: These off-the-books partnerships with strange sounding names are very important in terms of us understanding what has happened. We have not, at this point, received cooperation from the corporation in getting this information. We, again, renew our request.



UNIDENTIFIED MALE: This corporation resorted to a variety of legal, regulatory and accounting contortions to keep investors and the American public in the dark. It is now high time for the Congress to flip on the light and get to the bottom of the situation.


O'BRIEN: Enron's Washington lawyer, Bob Bennett, says the company doesn't have the documents sought. Bennett says the company has been fully cooperating with the committee. He suggested that the documents may be with some of the partnerships. If so, locating them could be problematic, to say the least.

Unraveling all of this is clearly going to take some time. You may recall one of the top auditors on the Enron account, David Duncan, last week refused testify, invoking his Fifth Amendment right against self-incrimination.

That apparently will not happen next Monday when Ken Lay, a star witness, if not the star witness, is scheduled to testify before Dorgan's subcommittee. Dorgan says Lay, the former CEO of Enron, has agreed to testify fully, and will not be seeking any immunity deal.

And Lou, many of the executives who ran Enron will also be testifying before various committees here next week, including another former CEO, Jeff Skilling, who resigned unexpected only six months after assuming the top job.

DOBBS: And whose departure seems to be the incipient point of the unraveling of Enron.

Tim, thank you very much; Tim O'Brien.

Well, new evidence shows landmark structures in Washington State could be prime targets for terrorists as well. This information coming to light as drawings and photographs are now being uncovered in searches of al Qaeda caves and safehouses in Afghanistan.

A photo of the Space Needle in Seattle was found. The Pentagon says al Qaeda operatives have scoured the United States looking for targets. Other documents found recently, mainly pictures or maps will circled locations. No indication of the timing of any potential terrorist attack.

Israel's prime minister Ariel Sharon says Prime Minister Yasser Arafat should have been killed 20 years ago. In an interview today published in a Jerusalem newspaper, Sharon said he is sorry the Palestinian leader was not killed when Israel invaded Lebanon in 1982. Sharon's remarks were condemned by Palestinian officials. However Sharon said Arafat can still be a partner for peace if he cracks on Palestinian militants.

The group which claims to have kidnapped "Wall Street Journal" reporter Daniel Pearl is extending the deadline to kill him by one day. Officials in the Bush Administration say the latest e-mail is authentic. The group again warns that this kidnapping is only the beginning. This afternoon the "Wall Street Journal" again pleaded for Pearl's release, saying killing him will not achieve any political goals. The State Department says it's doing everything it can to locate and free the journalist.


COLIN POWELL, SECRETARY OF STATE: I have spoken to President Musharraf in Pakistan about the situation and I know that he's doing everything he can. The demands that the kidnappers have placed are not demand that we can meet or deal with or get into a negotiation about.


Daniel Pearl disappeared last Wednesday.

We will continue here in a moment. Stay with us.


DOBBS: Finding money to produce television shows is becoming increasingly difficult. It is forcing networks to look for other ways to finance production and one alternative is to allow major corporations to develop TV programs that advertise their products. Critics however wonder if viewers will watch these marketing messages.

Casey Wian with the story.


CASEY WIAN, CNN CORRESPONDENT (voice-over): NBC's December program "Lost" wasn't just another reality adventure show. It was also a prime-time example of how advertisers are getting involved in TV program content like never before. During one ten-second stretch, the show included product placements from five separate companies.


UNIDENTIFIED MALE: Each contest was given $100 from VISA to purchase an item for the trip.


WIAN: Advertisers helped pay for the program's production cost.


UNIDENTIFIED MALE: Winning team members get new mercury mountaineer.


WIAN: It's part of a growing trend designed to help networks cover rising programming costs. And for advertisers to counter technology allowing viewers to tune out traditional commercial.

Talent agencies are now brokering deals between advertisers and networks, such as a recent episode of UPN's "The Hughleys." The story had the family visiting the mountains. Two advertisers paid to have their products written in.

MARK STROMAN, ENDEAVOR TALENT AGENCY: It turns out when they get to the mountains driving their new GMC Yukon, they had a slight problem because a big black bear ends up jumping in the back of the car, so who are you going to call? State Farm Insurance.

WIAN: Ford has gone a step further, actually taking an ownership interest in an upcoming show on the WB, which is owned by the same company as CNN. It's called "No Boundaries" after Ford's own ad slogan and it will feature Ford SUV's. ROB DONNELL, J. WALTER THOMPSON: We have been trying to find different ways to engage consumers in our brand and break through the clutter of what's normal advertising and we came up with this as an option to get back into programming.

WIAN: In TV's early days advertisers were intimately involved in programming. That changed after the quiz show scandals prompted tighter government regulations.

(on camera): But in recent years federal regulators and others have eased restrictions on television commercials, from allowing public TV stations to sell ads to accepting commercials for hard liquor.

KATHRYN MONTGOMERY, PRES. CENTER FOR MEDIA EDU.: I think we're looking at new era where we could see those kinds of abuses reemerge and it is also an era where news and entertainment and fiction and nonfiction and advertising and editorial are all kind of mixed in there together. I think for the public, it creates a media culture where you don't know who to trust.

WIAN: Advertisers say they're being careful not to alienate viewers by turning programs into virtual informercials, but when we asked this agent if there was anywhere he wouldn't put an ad...

STROMAN: That remains to be seen. I was wondering if anybody was maybe thirsty. Casey Wian, CNN, Financial News, Los Angeles.


DOBBS: Well, it's not only television networks looking for cost- effective programming. Movie studios moving production out of Los Angeles and New York trying to save money. A lot of that going to Canada as a matter of fact. For more on the entertainment industry Peter Bart, the editor-in-chief of "Variety."

Good to see you.


DOBBS: Runaway productions, what do you think the future is? I know Governor Gray Davis in California is very exercised about it.

BART: Yes and the Screen Actors' Guild put a very abstruse proposal before Congress, proposing tariffs, in effect. We're all very conscious of this now because suddenly there is a tremendous uptick in production in Hollywood. Everyone suddenly realizes -- where's the movies?

They are in Toronto, they are in Australia, they are in Eastern Europe. Even Chicago is shooting in Toronto. And "Terminator 3," which is probably the most expensive picture that will be made in Hollywood this year, is shooting in Vancouver. So everybody is saying, bye-bye.

DOBBS: Bye-bye and tariffs, and that sort of talk. The Canadians, are our friends out brothers and sisters to the north, is it really that big a deal?

BART: Well, it is. In the sense that it probably means a couple of billion dollars a year in jobs and other support for New York and Los Angeles as well. Canada, of course is happy. Their piece of the pie keeps growing. The reasons are very obvious. There's currency, the weak Canadian dollar. There's subsidies. And you know something? There's the cost of labor. All unions in the country, they may complain a lot, Lou, but they're not really bending to help meet this problem.

DOBBS: Well, the markets are a self-correcting mechanism, unless that abstruse legislation in Washington should become law.

Peter, let's turn to this remarkable rumor that is running around about Viacom being interested in buying Disney. Anything to it?

BART: This was a week of many rumors. First of course, there was -- the king of Viacom, Senator Redstone was going to fire his No. 2., Mel Carmis (ph). That was terrific rumor, just happened not to be true. Sumner, even if he wanted to, doesn't have the votes on the board. Then there was the rumor that Sony and MGM were somehow coming together, which again was a fascinating rumor. There was deal that was discussed and was shot down in Tokyo. So that...

DOBBS: I kind of like that deal, though, because Sony has a tradition of being a buyer of everything.

BART: That's right.

DOBBS: To not particularly great result. MGM and Kerkorian has a reputation of selling everything over and over and over. So maybe there is possibility there.

BART: Kirk sort of runs a swap meet. Every five or six years he sells the Leo the lion yet again. The one rumor that is still up in the air of course, is that Disney may be the subject of a hostile takeover by Comcast. And that of course is moving the markets. Who knows where that will end up.

DOBBS: Well, Peter Bart, I know you'll be among the very first to find out. Hope you share that with us. Good to have you here.

Still ahead, a new commitment from the Red Cross regarding the money raised for victims of September 11. Former Senator George Mitchell will be here to talk about how that money is being moved to the families of the victims, next.


DOBBS: The American Red Cross today promised 90 percent of the money raised for victims of September 11 will be given out by the first anniversary of those attacks. Senator George Mitchell was appointed to oversee the distribution of those funds after the Red Cross came under intense, heavy criticism. The Red Cross initially said it might spend some of the money for purposes other than those related directly to the attacks. Senator Mitchell joins me now. Senator, thanks for being here.


DOBBS: This is great news for, first, the families of the victims, and secondly, for those who donated so much money and felt that they had not been dealt with forthrightly. How soon? How much money?

MITCHELL: The total will be about $850 million; $490 million has been distributed; 360 will be distributed out of the development of this plan. And about 90 percent of it will have been distributed by September 11 of this year. That is the first anniversary.

DOBBS: And what percentage of that money will go directly to the families and of the victims and the victims of the September 11 tragedies.

MITCHELL: Oh, the overwhelming majority. Much of it in direct cash assistance, direct grants, and others in reimbursement based on need for living expenses. So the vast majority will.

The part that's been held back is about $80 million, which will be combined with funding by other charities to provide long-term, particularly mental health needs and other unmet health care needs. The experience of Oklahoma City demonstrated that mental health concerns sometimes arise at some point in the future. And that's what this is being held back for.

DOBBS: Senator, the Red Cross addressing the issue, fixing the problem, turning to you for obviously your stature, your integrity and your ability to solve problems. At the same time, this is a massive amount of money. What will the average family of victims receive in this? Have you worked that out?

MITCHELL: Yes. First, you have to understand there are several categories of people. In all, about 55,000 people were directly affected. There are about 3,000 who lost loved ones or seriously injured. Those families on average will receive about $109,000 in direct financial assistance. Then you have a much larger number of people who've lost their homes, displaced residents. Still a very much larger number of people who lost their jobs or some income. Those will be based on need.

DOBBS: Well, Senator, I know the Red Cross is extraordinarily grateful to you for dealing with the problem, solving it and I know those victims and the families of the victims who died on September 11 are very grateful. And we thank you for taking your time.

MITCHELL: Well, thank you very much, Lou. It's been a pleasure to be with you.

DOBBS: Senator George Mitchell.

Just ahead, we will have some good news for you. We will be telling you about another powerful rally on Wall Street. We'll tell you what drove the Dow today, what drove the Nasdaq and what just might drive it in which direction tomorrow. Stay with us.


DOBBS: On Wall Street today, stock prices moving higher, second day in a row for a rally. The Dow, back-to-back triple-digit gains, despite economic signs showing some signs of weakness. A solid profit report from Procter & Gamble, however, sent the Dow up 157. The Nasdaq gained 20 points. The S&P 500 rose 16. And Christine Romans, who covers the markets, is here to tell us what is going on.

CHRISTINE ROMANS, CNN FINANCIAL NEWS CORRESPONDENT: And after the bell, Disney came out and beat the Street's expectations. It is trading higher as well. So maybe that will help the Dow tomorrow, like Procter & Gamble helped it today. Procter & Gamble shares up four percent, almost a two-year high for P&G.

And also, you had United Technologies and the defense stocks rallying sharply. Donald Rumsfeld out there saying major military spending upgrades are going to be needed. PNC Financial Services also up, erasing some of its recent losses earlier this week. That company said it was restating some financial results and it rallied two points today after losing some ground before. Now Tyco also, the most actively traded stock again here today, up about 30 cents. Talks that Honeywell may be interested in Tyco's assets helping there.

But Elan Pharmaceuticals, at the bottom of your screen there, very choppy behavior today. It closed down about a point after see- sawing. Its investors still questioning how it books its licensing fees as revenue.

Now, they say on Wall Street, as goes January, so goes the rest of the year. January was down, Lou, down about one percent for the Dow; worse for the S&P 500. We've got to wait another 11 months to find that out.

DOBBS: Well, since we didn't get the January effect, how about February?

ROMANS: Well, the last three Februarys, Lou, have been down. And they have been painfully down, a couple of those. So, we'll have to see if we can break that streak, perhaps.

DOBBS: OK. Well, we get to start the process (UNINTELLIGIBLE).

ROMANS: Right.

DOBBS: Christine, thank you very much.

Coming up next, I'll be talking with Joe McAlinden of Morgan Stanley Investment Management about the direction of this market. Stay with us.

(COMMERCIAL BREAK) DOBBS: Turning now to Joseph McAlinden of Morgan Stanley investment management to talk about these markets and where we're headed. Joe, good to have you here.


DOBBS: We began this week with a crisis of confidence, now we got two triple-digit rallies. What's going on?

MCALINDEN: Well, every day is a new day, as you know. I think that this crisis of confidence in the accounting system and the quality of the earnings is a real thing, but it's not something that is going to stop the tremendous momentum of what I think is a new bull market that began in that low we hit in the first week of trading after September 11.

DOBBS: You just startled me. You used the word "momentum." And I get very skittish when I hear someone, including someone I respect and like as much as you, say momentum at this market, especially with these valuations.

MCALINDEN: Valuations are not cheap by historic standards, but you have cyclical forces in play here that are going to, in my opinion, push the market up for another year, year and a half, notwithstanding high valuations.

The principle force is the Fed. You have a huge monetary easing, money supplies exploding. Historically, the market always goes up, whether it's overvalued to begin with or not, when you have those conditions.

DOBBS: Absolutely. But we have some slightly different conditions in terms of this economy, the reasons for its slowdown, and perhaps the structure, the architecture of its recovery, i.e. business investment, the consumer is still here, those lower interest rates -- how strong and how potent can they be, given the nature of this recession?

MCALINDEN: The linkage, I think, Lou, is that the lower interest rates are not going to make consumer spending soar from here, because consumer spending never really went down in this recession. This recession, as you point out, was driven by lower business investment, initially lower inventories, and then a collapse in capital spending.

But inventories we're running out of in the pipeline, and so just a steady level of consumption will now begin to pull up production, because inventories are just too low. And that effect will then spill over into the stock market, as I think we're beginning to see.

DOBBS: That aggressive easing of last year by the Fed at least will lighten the burden of that heavy debt for both consumers and business, as you say. But what sector, what areas should we look to for the strength that you're talking about? Where are we going to see this momentum?

MCALINDEN: Well, partly because of the valuation issue, which is most extreme among growth stocks. I tilt at this point toward the value side of the market, particularly the areas that would benefit from what we just talked about, which is a big inventory rebuilding cycle. And that gets you to the really boring basic industries -- the paper stocks, the metal stocks, aluminums, chemicals, that type of thing.

But with one exception that may surprise you. I think technology now has proven itself to not really be -- it is a long-term growth industry. But in the short run, it's as cyclical as you get. And I think technology is going to benefit. So it sounds a little eclectic, I guess, if not contradictory, but I like the value side of the market and technology. I'd stay away from the rest of what we typically consider growth stocks.

DOBBS: And over what period of time should we expect what kind of performance in this market?

MCALINDEN: I think, Lou, I think we're going to get a massive earnings recovery that's not fully anticipated yet. Maybe close to 20 percent this year, and 20 to 25 percent next year. With that, I think that the market could go up, even with some P/E compression, roughly 20 percent by this time next year, 12,000 on the Dow.

DOBBS: That's -- now that is a bullish forecast, Joe. Good for you, and I appreciate you sharing it with all of us. Joe McAlinden, as always, thanks.

MCALINDEN: Thanks for having me.

DOBBS: "WOLF BLITZER REPORTS" begins in just a few minutes. Let's go to Wolf now in Washington -- Wolf.

WOLF BLITZER, HOST, "WOLF BLITZER REPORTS": Thank you very much, Lou. We'll have a special report. CNN has obtained the never before released Al Jazeera interview with Osama bin Laden. That interview took place late last October. We'll have excerpts and get analysis.

And we'll have details of the latest terror threats involving planes and this time nuclear power plants.

Also, we'll go live to Karachi for the latest on the kidnapped American journalist. It's all at the top of the hour -- Lou.

DOBBS: Looking forward to it, Wolf, thanks.

MONEYLINE will continue in just a moment. Stay with us.


DOBBS: Just days after record warmth, the Midwest has been hit by its first major storm of the season. A wintry mix of snow, sleet, ice causing cancellation and delays at airports throughout the region. Lisa Leiter with the story from Chicago.

(BEGIN VIDEOTAPE) LISA LEITER, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): The first big winter blast dumped a foot of snow on Chicago, interrupting one of the warmest and driest winters on record.

TOM SKILLING, CHIEF METEOROLOGIST, WGN NEWS: Virtually the entire area east of the Rockies has had, except for the northern plains like the Dakotas, has had what can be described as an unusually mild winter. And snowfall has been a fraction of what's been normal in many of those areas.

LEITER: In Kansas City, heavy ice weighed on tree branches, snapping power lines and leaving 100,000 people without electricity. One official said it's the worst storm the city has ever seen.

The snow even took Detroit by surprise, causing dozens of car accidents there. And the snow frustrated thousands of air travelers. United Airlines canceled more than a third of its flight out of O'Hare Airport, and delayed most others an hour or two.

(on camera): It's not so unusual that a foot of snow would blanket Chicago at the end of January. What's strange is that just four days ago it was a near record 61 degrees, and people were in this park in short sleeves.

(voice-over): So exactly what's behind this weird weather?

JOSEPH D'ALEO, CHIEF METEOROLOGIST, INTELLICAST.COM: The Sun is one of the key factors so far this winter. The Sun has resurged to a new peak in this current 11-year solar cycle, and at these high levels of solar activity, the Sun is a little brighter, a little warmer, and the result is, of course, much of the country's temperatures are above normal.

LEITER: For farmers, warm winter are more productive ones. They can work in the fields, and the livestock can stay outdoors.

But they may be inside before too long. Meteorologists are not ruling a frigid and snowy end to this mild winter.

Lisa Leiter, CNN Financial News, Chicago.


DOBBS: Well, tomorrow the employment report for January will be released. Economists expect the unemployment rate to hold steady at 5.9 percent. The estimate is that 50,000 jobs were lost in the month.

United Airlines will report its quarterly earnings results, and President Bush meets with Prince Abdullah Abdullah of Jordan at the White House.

That's MONEYLINE for this Thursday evening. Thanks for being with us. I'm Lou Dobbs. Good night from New York. "WOLF BLITZER REPORTS" begins right now.

ANNOUNCER: Tomorrow on LOU DOBBS MONEYLINE, Super Bowl ad revenues intercepted. Advertisers hoping to score with high-priced spots during the most watched event of the year have more than a slumping ad market to contend with. Tomorrow on LOU DOBBS MONEYLINE.




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