World News Tonight (ABC) - 1998-09-29

Channel: malgent

Transcript

Language: English (original, YouTube automatic captions)

[0:05] On World News tonight this Tuesday, the

[0:07] Federal Reserve Board cuts interest

[0:08] rates for the first time in almost 3

[0:11] years. What difference will it make to

[0:13] America and to the world economy?

[0:17] What's left of Hurricane Georges lingers

[0:19] over the South. Water, water everywhere.

[0:23] And medical technology on the cutting

[0:25] edge, artificial muscles. They never get

[0:28] tired and they're stronger than the real

[0:31] thing.

[0:38] From ABC News world headquarters in New

[0:41] York.

[0:42] This is World News tonight with Peter

[0:44] Jennings. Good evening. We're going to

[0:46] begin with the economy and that involves

[0:48] everyone. The Federal Reserve Board has

[0:50] tried to give the US economy a little

[0:51] shot in the arm today by reducing

[0:54] short-term interest rates a quarter of a

[0:56] percent to 5.25%.

[0:59] It's the first cut in rates in almost 3

[1:01] years. It gets passed on to everyone in

[1:04] one form or another. It is not a big

[1:06] cut. It is good for some and bad for

[1:09] others. First, here's ABC's Betsy Stark.

[1:13] The Federal Reserve lowered the cost of

[1:15] borrowing money today with two goals in

[1:18] mind. To keep businesses spending and

[1:20] growing and to keep consumers buying.

[1:23] This is a signal that the name of the

[1:25] game at the Federal Reserve has changed

[1:27] from fighting inflation to maintaining

[1:30] American economic health in the view of

[1:32] a gathering worldwide recession. The Fed

[1:35] is trying to improve a difficult

[1:37] situation for American businesses before

[1:40] it gets any worse. Corporate earnings

[1:42] are expected to be down this quarter for

[1:44] the first time since the 1991 recession.

[1:47] That makes companies less willing to

[1:49] invest in new plants and technologies.

[1:52] Motorola, Cirrus Logic, Arco, Texaco are

[1:56] among the companies that have already

[1:58] scaled back. Today's rate cut could

[2:00] help. Milwaukee factory owner Michael

[2:03] Koss, whose company makes stereo

[2:05] headphones, says lower interest rates

[2:07] are good for him. It saves our company

[2:09] money because we have to borrow money

[2:11] like most other businesses. Lower rates

[2:13] also help his customers. Our retailers,

[2:16] the people that buy our products, feel

[2:18] confident enough to continue stocking

[2:20] enough products and having them on the

[2:22] shelves and available through the key

[2:25] selling season. The Fed is hoping

[2:27] today's move will also be a boon to

[2:29] consumer spending, which has faltered a

[2:31] bit along with the stock market. Today's

[2:34] rate cut should push bank loan and

[2:36] credit card rates down slightly, but

[2:38] that might not be enough to get

[2:40] consumers spending freely again. Because

[2:43] of the stock market and all that's going

[2:44] on, I kind of feel like I want to sit

[2:46] tight for a while. The question now

[2:48] becomes will one rate cut be enough to

[2:50] keep the economy on track or will there

[2:52] need to be another?

[2:55] Betsy Stark, ABC News, New York. We'll

[2:58] come back to that on Wall Street today.

[2:59] Some investors were disappointed that

[3:01] the Fed's rate cut wasn't bigger. The

[3:03] Dow Jones Industrials lost more than 28

[3:05] points to close at 8080.

[3:08] On the Nasdaq market, stocks were down

[3:11] more than five points. There was a lot

[3:13] of debate about the value of this cut in

[3:15] the interest rates even before it was

[3:17] made. Would it be bold enough? Does it

[3:20] safeguard the US economy at all from

[3:23] some of the disasters elsewhere? A

[3:25] little later in the broadcast, we will

[3:26] take a closer look. But for the moment,

[3:28] we turn to the downside of this and

[3:30] there is one. Here's ABC's Bob Jamieson.

[3:34] At Florida's Epworth Retirement Village,

[3:37] the Fed's action was like a pay cut. The

[3:39] only income many elderly have to

[3:41] supplement Social Security is the

[3:43] interest paid on their bank savings.

[3:45] Even at this time, the savings account

[3:47] doesn't pay very much at all. And if it

[3:50] pays less, it'll be worse. About half of

[3:52] American households rely on bank

[3:54] interest, not the stock market, for

[3:56] their savings to grow.

[3:58] They include not only the elderly, but

[4:00] also lower-income families, parents

[4:02] starting savings for young children, and

[4:04] those saving for a single purpose like

[4:06] Christmas or vacation clubs. 20, 46.

[4:10] Today's cut by the Fed means the

[4:11] interest rate these people earn, which

[4:13] has fallen steadily for a decade, is

[4:15] likely to fall further.

[4:17] In the last 10 years, interest paid on

[4:19] regular savings accounts has fallen by

[4:21] 3/5. It is a little more than 2% today.

[4:25] You really don't make anything on that

[4:27] at all. I think it's horrible. I think

[4:29] they should be cut. I think they should

[4:31] leave them the way they are. Oh, you

[4:33] paid. I did not. Today's quarter-point

[4:36] rate cut may mean the difference of only

[4:38] 50 or 100 dollars to those women in

[4:40] Florida.

[4:41] But that means much more to them than

[4:43] any worries about the economy in the

[4:44] rest of the country and around the

[4:46] world.

[4:47] Bob Jamieson, ABC News, New York.

[4:50] For the moment, one other item, no

[4:51] connection to the Fed, but there was

[4:52] another cut in interest rates today

[4:54] which will appeal to parents and

[4:56] students planning to go to college. The

[4:58] Senate has approved a bill to cut

[5:00] interest rates on college loans by

[5:02] almost a full percent. The new rate,

[5:04] 7.46%,

[5:06] is the lowest it has been in 17 years.

[5:09] Now, President Clinton needs to make it

[5:12] law.

[5:13] When we come back, some of the other

[5:14] news today. Oversaturated, the last of

[5:17] George still pouring it on.

[5:20] And is the military stretched too thin?

[5:22] Too many commitments or does it want too

[5:25] much?

[5:29] This is World News tonight with Peter

[5:31] Jennings.

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[6:52] After an extraordinary rampage,

[6:54] Hurricane Georges is finally tropical

[6:57] depression Georges. There's still a lot

[6:59] of rain in it. Alabama and Florida know

[7:01] that today. Georgia and South Carolina

[7:03] will feel it soon.

[7:05] On Dauphin Island, Alabama, just south

[7:07] of Mobile, the storm surge wrecked

[7:09] dozens of homes right on the water. In

[7:12] Gulf Shores, Alabama, the storm poured

[7:13] sand from the beach hundreds of yards up

[7:16] into town.

[7:18] In Gulfport, Mississippi, rebuilding and

[7:21] restocking were the priorities today.

[7:24] And for the town of Orange Grove,

[7:26] Mississippi, the hurricane wasn't even

[7:28] the worst of it. Here's ABC's Aaron

[7:30] Hayes.

[7:34] No one here had expected this. The

[7:37] river's about a mile and a half down

[7:39] here.

[7:41] The river this morning began overtaking

[7:43] the town. Everybody's all right?

[7:45] And the people were scrambling to get

[7:47] out. Probably about five, six homes in

[7:50] there. It's not in yet, you know. They

[7:52] might survive it.

[7:55] Anything handy, they used it to leave

[7:57] and there was no help

[8:00] until the National Guard finally arrived

[8:02] late this afternoon. And I don't know if

[8:04] they're down here and don't don't have a

[8:06] way out. Compounding their worry, the

[8:08] river had washed open a local alligator

[8:10] farm. The gators were swept into the

[8:13] water rising into town. And there was no

[8:16] way, a local fireman said, of getting

[8:18] them out now. I ain't about to get in

[8:20] there and do nothing with them.

[8:21] You know, let people that owns this

[8:23] place handle it, you know. When the

[8:24] water goes down, they'll come back in

[8:26] here and catch them and round them all

[8:28] back up. What makes it especially

[8:30] frustrating is the fact that this flash

[8:32] flood probably would not have been

[8:33] nearly this bad were it not for the

[8:35] water released from an upriver dam. That

[8:38] dam holds the water supply for the city

[8:40] of Mobile, 18 billion gallons held in

[8:43] place by an earthen dam. The hurricane's

[8:46] rains officials feared would be too much

[8:48] for the dam to hold, so they had to open

[8:50] the floodgates, dumping water into the

[8:52] river.

[8:55] We notified that the two EMAs, our

[8:57] Mobile County and Jackson County,

[8:59] Mississippi, and that is our standard

[9:00] procedure. But the people of Orange

[9:02] Grove said there was no warning this was

[9:05] coming. In my 25 years I've been living,

[9:07] I ain't never seen nothing like that.

[9:09] Many made the precarious trip several

[9:11] times back and forth desperate to save

[9:13] what they could. You see that sign right

[9:16] over yonder? If I can make it to that

[9:18] sign, I'll be on my way home. This

[9:20] night, home here is a rather scary place

[9:23] to be.

[9:24] Aaron Hayes, ABC News, Mobile, Alabama.

[9:28] One item today about the global weather.

[9:29] Scientists at the space agency say today

[9:32] that the ozone hole over the Antarctic

[9:34] is now bigger than ever, covering an

[9:36] area twice the size of the United

[9:38] States. Ozone, as we know, helps block

[9:40] the sun's harmful ultraviolet rays, and

[9:43] scientists say the fact that the hole is

[9:44] getting bigger means that

[9:45] ozone-depleting chemicals, which were

[9:47] banned in 1996, are still doing too much

[9:50] damage.

[9:51] One of America's best-known urban

[9:53] politicians has died. Tom Bradley was

[9:55] mayor of Los Angeles from 1973 to 1993.

[9:59] Not an easy city to run.

[10:01] Mayor Bradley managed to build a

[10:03] multi-racial political coalition that

[10:05] sustained him for two decades.

[10:07] He said his greatest achievement was

[10:08] bringing the Summer Olympics to the city

[10:10] in 1984,

[10:12] but the LA riots in 1992 were also on

[10:15] his watch. Mr. Bradley died of a heart

[10:17] attack

[10:18] and he was 80.

[10:21] When we come back, choice and

[10:22] consequences. Is the military as

[10:24] prepared

[10:26] as it should be?

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[12:32] On Capitol Hill today, the Senate Armed

[12:33] Services Committee heard the leadership

[12:35] of the armed forces complain that they

[12:37] were in trouble. Not enough money, they

[12:39] said, to do the job that they're

[12:41] assigned. Here's ABC's John McWethy.

[12:44] America's most senior general said in

[12:46] public for the first time that readiness

[12:49] is slipping and the long-term health of

[12:51] the force is in jeopardy. In the Air

[12:53] Force, pilots are leaving in record

[12:55] numbers for better paying civilian jobs

[12:57] while airplanes sit idle for lack of

[13:00] spare parts.

[13:01] >> If we continue on the on the

[13:03] mode that we're on right now of just

[13:06] balancing shortfalls and losing our

[13:07] quality people, it will we will be in a

[13:09] hollow force. In the Navy, ships now go

[13:12] to sea without full crews. Airplanes are

[13:15] crashing at twice the rate of the past

[13:17] several years. Again, lack of spare

[13:19] parts is blamed along with reduced

[13:20] training. Thousands of skilled

[13:22] technicians are getting out. They're

[13:24] frankly tired of being asked to do more

[13:26] with less.

[13:27] These things are on their minds

[13:30] as they make career decisions. In the

[13:32] Army, spending for new weapons is the

[13:35] lowest it has been since before Vietnam.

[13:37] Training is now being cut to save money.

[13:40] I would tell you that's the most

[13:41] difficult thing that I've been involved

[13:42] with in my 36 years of service. But some

[13:45] on the Senate Committee were furious

[13:47] that the generals waited so long to

[13:49] admit their problems saying expensive

[13:51] commitments overseas should not be a

[13:53] surprise. You say

[13:56] first US military has been far busier

[13:58] than we had anticipated. General

[14:00] Shelton, did you think that

[14:02] uh Saddam Hussein was going to join the

[14:03] Boy Scouts? Did you think we were going

[14:05] to leave Bosnia? The generals say they

[14:07] just follow orders. If the military is

[14:09] stretched too thin, it's up to the

[14:11] president and Congress to either spend

[14:13] billions more or to scale back the

[14:16] orders.

[14:17] John McWethy, ABC News, the Pentagon.

[14:20] The Palestinian leader Yasser Arafat met

[14:22] with President Clinton today. Mr. Arafat

[14:24] said he accepted Israel's latest plan to

[14:26] turn over more land on the West Bank to

[14:29] the Palestinian Authority. Mr. Arafat

[14:31] also promised to work at stopping

[14:33] terrorism against Israel.

[14:35] On the West Bank today, a Palestinian

[14:37] man was killed when a bomb exploded in

[14:39] his car. Palestinian police believe the

[14:41] dead man and two others who were hurt

[14:44] were with the militant group Hamas. They

[14:46] got the bomb from an arms dealer

[14:48] apparently just before it went off.

[14:52] Here in New York today at the United

[14:53] Nations, the Libyan government has put

[14:55] up another roadblock to a trial of the

[14:57] two Libyans accused in the 1988 Pan Am

[15:00] 103 bombing over Scotland.

[15:03] The Libyan government has now said that

[15:04] if it were to send the two men to be

[15:06] tried in the Netherlands by a Scottish

[15:09] court as planned and they were

[15:11] convicted, the government would not

[15:12] allow them to serve time in a Scottish

[15:15] jail.

[15:16] When we come back, we'll take a closer

[15:19] look at what happens when so much of the

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[17:48] As we said at the beginning tonight, now

[17:50] that the Federal Reserve has reduced the

[17:52] interest rates and the effect of that

[17:53] has gone rippling out into the US

[17:55] economy, we're going to take a closer

[17:57] look at the bigger picture, namely the

[17:59] global economy. It is nigh on impossible

[18:02] to quarantine the US from the rest of

[18:05] the world. For example, Goodyear said

[18:07] today that its profits have been

[18:09] affected by lagging overseas sales.

[18:12] Goodyear's going to cut 800 jobs. Levi

[18:14] Strauss is cutting nearly 1,000 jobs in

[18:17] the US in addition to closing some

[18:18] plants overseas. Gillette is cutting

[18:22] 4,700 jobs. The global economy.

[18:25] It is both fairly simple and complicated

[18:28] at the same time. The US and the rest of

[18:31] the world are so interdependent.

[18:34] Here's ABC's Bob Krolwich.

[18:38] No question that what we make here in

[18:41] America,

[18:44] our music, our movies and weapons and

[18:46] cherries and apples, our medicines, our

[18:49] software, our most sophisticated

[18:51] machines, so many things that we make

[18:53] here, people everywhere want to buy.

[18:57] US exports account for almost 1/3 of US

[18:59] economic growth. And who do we sell all

[19:02] these things to?

[19:04] Well, our biggest customers in the world

[19:06] are the Western Europeans. They buy 25%

[19:09] of what we sell.

[19:10] Next come the Canadians at 22%,

[19:14] then the Mexicans at 10%,

[19:17] and the Japanese, also 10%.

[19:20] All the other Asians together buy

[19:22] another 20%,

[19:24] and everybody else, 13%.

[19:27] However, as we all know, some of our

[19:29] customers have not had a very good year.

[19:32] All over Asia, it's middle class

[19:34] families now who are in trouble, who

[19:36] fear for their jobs, and this is new.

[19:38] The stories are heartbreaking.

[19:40] Doctors and nurses forced to live in the

[19:42] lobby of a closed hospital.

[19:44] Middle class families who own their own

[19:46] homes now living by selling their

[19:48] possessions. And needless to say, people

[19:51] in this kind of trouble buy less of

[19:54] everything.

[19:55] And so our customers across Asia,

[19:58] including Japan, have drastically

[20:00] reduced their purchase of US goods. But

[20:03] now, what we are calling the Asian

[20:05] crisis is spreading. Banks and investors

[20:08] who lost money in Asia are now pulling

[20:10] money out of any place that looks risky.

[20:13] Out of Russia, out of Venezuela, out of

[20:16] Brazil. So customers there are cutting

[20:18] back and buying less. And they're

[20:21] sending their savings here to America

[20:23] where it's safe. Which means there is so

[20:26] much money coming here, banks are

[20:27] practically giving it away. 7%

[20:30] mortgages. That's cheap, but that's

[20:32] here. Over there, it's the opposite.

[20:35] Next door in Mexico, money is so tight

[20:38] that borrowing is outrageously

[20:40] expensive. A typical credit card charges

[20:43] see here 4% a month. That's 48% a year.

[20:48] So Mexicans are now buying less from us.

[20:51] And Canadians, they too have seen their

[20:53] interest rates rise, their dollar drop

[20:56] sharply. You see what's happening here?

[20:58] Western Europe is still very rich and

[21:01] very solid. But if anything should

[21:03] happen to Europe, that, says Treasury

[21:05] Secretary Robert Rubin, may well be in

[21:07] many respects the most serious situation

[21:09] the world economy has

[21:11] faced in the last 50 years. Even if we

[21:13] lose millions of customers all over the

[21:15] world, it's possible there enough left

[21:18] in Europe to keep us healthy and

[21:20] growing.

[21:21] But if not, we're in trouble.

[21:24] Robert Krulwich, ABC News.

[21:27] Well, let's take this one step further.

[21:29] Is this really trouble of that

[21:31] magnitude? A little while ago we talked

[21:32] to Fred Bergsten, who's the director of

[21:35] the Institute for International

[21:37] Economics in Washington.

[21:40] Mr. Bergsten, how difficult is the

[21:42] situation for America and the rest of

[21:44] the world really?

[21:45] It's very serious. There are a number of

[21:48] countries around the world in deep

[21:50] recession and even depression.

[21:51] Financial instability could break out at

[21:54] almost any point. The Japanese yen could

[21:56] plummet, the Chinese could devalue, Hong

[21:58] Kong could be forced off their exchange

[22:00] rate peg. It's a very perilous

[22:02] situation, and I think the Fed moved

[22:04] properly in that context.

[22:05] >> Properly enough, do you believe, for the

[22:07] United States to have an impact on the

[22:08] rest of the world?

[22:10] It'll be a modest help, but I think this

[22:12] is only the first of a number of steps.

[22:14] US interest rates are still very high

[22:16] when you adjust for inflation. The

[22:18] short-term Fed rates are still very high

[22:21] compared with our long-term interest

[22:22] rates. I think this is the first in a

[22:24] series of steps that will probably take

[22:26] the Fed rates down by a full percentage

[22:28] point over the next few months. How much

[22:30] impact, in very general terms, can the

[22:32] United States have on the global

[22:34] economy? The US can have a big effect.

[22:37] If we reduce interest rates

[22:38] substantially, it could have a big

[22:40] positive impact on the rest of the

[22:42] world, reduce the risk of global crisis.

[22:45] We thank you for that. When we come

[22:47] back, a muscle made from silk in the

[22:49] laboratory right now, but maybe before

[22:51] long in us. Medical technology on the

[22:54] cutting edge.

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[24:31] He adores children and loves chocolate.

[24:34] It's very good, and it helps. But if

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[24:43] Vengeance Unlimited special preview

[24:45] tonight 10:00 9:00 Central.

[24:48] Brief review of the main story. The

[24:50] Federal Reserve voted today to make it

[24:51] cheaper to borrow money, cutting

[24:52] short-term interest rates a quarter of a

[24:54] percent to 5.25%.

[24:57] Not a big cut, but enough, the Fed

[24:58] hopes, to give the American economy a

[25:00] shot in the arm while other economies

[25:02] around the world are in a slump. Finally

[25:06] from us this evening, medicine or

[25:08] medical technology on the cutting edge,

[25:10] our series this week. Tonight, muscles

[25:13] made by hand. Human muscles naturally

[25:16] get tired, get injured,

[25:18] wear out. Now a scientist has discovered

[25:20] how to make muscles from a kind of

[25:22] plastic just as strong or stronger than

[25:25] the real thing.

[25:27] Imagine the possibilities. Here is ABC's

[25:30] Judd Miller.

[25:33] This, as anyone can see, is a muscle.

[25:36] This is also a muscle, an artificial

[25:38] one. I do believe it is a revolution in

[25:41] in materials because we really bring

[25:43] materials to life. Dr. Mo Shoaei Pour

[25:46] and his colleagues have found a way to

[25:47] make chemical compounds respond to

[25:49] electricity much the same way human

[25:51] muscles do. Only these muscles are twice

[25:53] as strong and never get tired. One type

[25:56] of artificial muscle is made of

[25:58] synthetic silk or Orlon. First, it's

[26:01] baked to make it stronger. Then it's

[26:03] boiled in a chemical solution to make it

[26:06] elastic and to give it an electric

[26:08] charge.

[26:09] The result, materials that can expand

[26:12] and contract just like real muscles.

[26:15] Researchers envision numerous medical

[26:17] uses for all types of artificial

[26:18] muscles, such as giving a boost to an

[26:21] ailing heart muscle. The first

[26:23] application would be in connection with

[26:24] the assisting a weak heart because it

[26:27] may completely eliminate the need for

[26:29] heart transplant.

[26:31] Other potential uses, so-called muscle

[26:33] suits, which could give new strength to

[26:35] astronauts, to the disabled, to fatigued

[26:37] troops in battle. They also act as

[26:40] sensors, which could prove invaluable

[26:42] for diagnosing spinal injuries. The

[26:44] eventual goal will be to implant these

[26:46] into humans, into a living system, and

[26:49] you can monitor motion constantly uh as

[26:52] opposed to MRI and CT where you just get

[26:54] films. There are still plenty of

[26:56] glitches to work out, such as making the

[26:58] artificial muscles safe for human

[26:59] implantation. But Shoaei Pour is

[27:01] optimistic. They've been very lucky, he

[27:03] says, in the advances they've made so

[27:05] far. So we've been lucky.

[27:08] Very lucky.

[27:10] Are a lot of your discoveries like that?

[27:12] Just luck?

[27:12] >> I think luck is very important in in

[27:15] discoveries. No doubt about it. Lucky

[27:17] for him, lucky perhaps for a lot of

[27:20] people. Judd Miller, ABC News,

[27:22] Albuquerque, New Mexico.

[27:24] Tomorrow night we're going to look at a

[27:25] stretcher with all the capabilities, or

[27:27] almost all the capabilities, of the

[27:29] emergency room. Once again, technology,

[27:32] medical technology, on the cutting edge.

[27:34] That is our report on World News

[27:35] Tonight.

[27:36] Later this evening on Nightline, a

[27:38] former member of the Ku Klux Klan who

[27:39] murdered a civil rights activist 30

[27:41] years ago

[27:43] seeking redemption. I'm Peter Jennings.

[27:45] Good night.

[28:07] Tomorrow, kids abusing alcohol. Alarming

[28:11] new information every parent should

[28:12] know. Watch ABC's World News Tonight

[28:15] with Peter Jennings.

[28:17] This has been a presentation of ABC

[28:19] News. More Americans get their news from

[28:22] ABC News than from any other source. ABC

[28:24] News.