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Markets Jump; Public Sector Unions under Fire; Facebook Snafu; FBI Launches Probe of Intel Leaks

Aired June 6, 2012 - 19:00   ET


ERIN BURNETT, HOST: OUTFRONT next, breaking news, the biggest day of the year. Why -- a 300-point surge. What the heck for?

And the FBI now involved in finding out how high in the American government classified information is being leaked and later ripped from the headlines, a story about spies, Iran and Billy Baldwin.

Good evening, everyone. I'm Erin Burnett and OUTFRONT tonight we have breaking news, a surge of the day. Stocks just jumped to the moon. Dow and S&P had their single best day for the entire year. The Dow jumping 287 points, so you can say why, the sheer excitement, the ebullience (ph). Have we suddenly solved all of our economic problems? Have we stumbled upon a machine gun of silver bullets? Have we found our terminator?




BURNETT: Not so fast, Arnold. Today we got shot up with rubber bullets. It was an arsenal of talk but no concrete action. In Europe, the Central Bank chief said that officials stand ready to act and there were reports of talks of a possible deal to bail out banks in countries in crisis like Spain. That's a lot of talk. Being ready to stand by is different than standing by.

Here at home, the fed said it may be ready to take further action to help spur the economy, extending unprecedented efforts to ease credit. Now, that's still talk and not action. Is this what we have come to, so desperate, hanging on to the economic precipice that a little sweet talk sends stocks to the moon?

OUTFRONT tonight, Doug Holtz-Eakin, former director of the Congressional Budget Office and American Action Forum president and Robert Reich, former labor secretary under President Clinton, author of the new e-book, "Beyond Outrage" -- great to have both of you with us.


BURNETT: Robert Reich, let me start with you. Look, we want to be happy and hope this is for real, but you know this really was a whole lot of talk. I was kind of amazed. You could look through it, there was very -- there was very little specifics. It was all hope that maybe, if needed, talk will become action.

ROBERT REICH, FORMER LABOR SECRETARY: Well, Erin, I think the explanation is that the market had fallen so far and so deep, particularly after Friday's very dismal jobs report, that the market and traders were looking for any silver lining, any good news. Bond prices are very, very high. The yields are very low. A lot of global savings are just looking for where to put their money. And stocks are looking relatively good.

So everybody was just sort of waiting for the first little bit of good news and they would surge into stocks. There's another factor, and that is also there are traders on Wall Street. There are speculators. They tend to exaggerate the volatility. On the way down they sell short, on the way up, they speculate.

BURNETT: And so Doug, what do you -- I mean what do you make of this? And I guess also because yes, you don't want the guys who run these Central Banks, Ben Bernanke here in the United States, to go ahead and do things because the markets think that they should or will. That's, frankly, the last thing you want in terms of driving them to action, isn't it?

DOUGLAS HOLTZ-EAKIN, PRESIDENT, AMERICAN ACTION FORUM: Well I agree with that completely. I think this is mostly a Europe story in the substance. There, if the Central Bank were to lower interest rates and continue to provide liquidity, it could actually benefit real growth in the eurozone and so traders seeing that have good reason to be slightly more optimistic. Europe's capacity to disappoint, however, is enormous.

I don't think there's much going on at the fed end. They stand ready to counteract any shocks that come out of Europe. There is some hint they might do some more easing and, yes, that could help stock markets but it couldn't do what the Europeans could do which is push more U.S. growth there. The ball is really in the congressional and the White House court and this is just talk and it's not going to help our economy.

BURNETT: All right, so let's talk about where we are, because tomorrow Ben Bernanke is going to be talking and answering some tough questions on capitol hill and we want to be out front of it, so Robert here -- this really is the key, many, many trillion dollar question. Does the United States need to do more right now? Does Ben Bernanke need to do more for the economy?

REICH: I think he does, Erin. You know, the president of the Atlanta Federal Reserve Board Branch said that he thought that we're getting to the point where we may need more so-called quantitative easing. And that's basically fed speak for buying up long-term interest -- getting long-term interest rates down and making sure that the economy over the long term, those long-term interest rates, will spur additional growth.

And I think that a lot of people have come around to the view that particularly after Friday's very dismal jobs numbers, the fed is far closer to embracing quantitative easing, a third round of quantitative easing than it was prepared to do before. There are still some inflation hawks --


REICH: -- on the fed that are worried about doing that, but not many. I mean I think they're just about ready to do it and I think it's the right thing to do.

BURNETT: OK, but could you say, Doug, that it's like a drug. You know I inject it the first time and I get this great high and then I become addicted. That would be quantitative easing one. Second time the high is not as good. Now we're at the third time, I mean interest rates can't get any cheaper. It can't be any cheaper to get a mortgage for all intents and purposes and still that hasn't been enough.


BURNETT: So why would QE-3 do what one and two haven't done?


BURNETT: Go ahead Doug and --

HOLTZ-EAKIN: Well I mean I don't think the fed should move, quite frankly. We did quantitative easing one in the midst of the major crisis that made some sense. They tried quantitative easing two. Yes, it caused people to buy riskier stocks and things, but didn't help real growth at all. They did something called operation twist. No one has noticed. If they were to go ahead with QE-3, yes it would give the stock market a temporary boost but it would do nothing for our real economic problems and they should simply resist the temptation.

BURNETT: All right, final word to you, Robert, fight for why the fed should act --

REICH: Let me -- let me -- let me actually side with Doug a little bit on this. If you don't have any fiscal stimulus at all, then if it's all up to the Federal Reserve Board, and I am in favor of QE-3. I think we ought to do -- the fed ought to do what it can do. We shouldn't close any doors. But it's not going to have a huge impact because without any fiscal stimulus, you know a lot of people, a lot of businesses are still not going to borrow. They don't have an incentive to borrow. They don't have an incentive to expand because there's not enough demand out there in the economy right now.

BURNETT: You're a glutton, you want Ben Bernanke, you want Congress, you want all of it so I guess that's the way you guys go.

REICH: I want all of it. I want to get jobs back.


REICH: I mean we've got to do everything we possibly can do, Erin. BURNETT: All right, thanks to both of you. And of course we're going to be watching Ben Bernanke tomorrow. It's going to be crucial testimony to see whether this economy is in recession or not right now.

And OUTFRONT next, a huge story in the election involving unions that could have implications for every state and it happened hundreds and hundreds of miles away from Wisconsin.

And later, the Facebook debacle at the Nasdaq and how much it will cost and later, we've got new video in the case of the man accused of murdering a student, obliterating his body and sending the parts through the mail.


BURNETT: All right our second story OUTFRONT, all the Wisconsin talk overshadowed a crucial vote last night that dealt a serious blow to public unions. Voters slashed pension benefits for government workers in two of America's biggest cities, San Jose and San Diego, California. The fight against unions is going on from coast to coast. It's those cities and of course it's Wisconsin. We all know about that place.

But now the anti-tax crusader, who Harry Reid once called the most powerful man in Washington, says it's a free day. States need to follow the example set by Wisconsin Governor Scott Walker. After Tuesday's results there came this tweet from the one and only Grover Norquist saying, quote, "there are 23 other states with GOP governors, House and Senate now able to pass Scott Walker's reforms. They know it works and is safe."

Grover Norquist is OUTFRONT tonight, good to see you, sir, appreciate it. So let's get straight to it. You said Governor walker's reforms are quote, unquote "safe". I mean I have to say this one. I read that and I went wait a minute. Safe is going through a recall and you know wasting 70 to $80 million on a whole recall because you didn't go about it the right way.

GROVER NORQUIST, AMERICANS FOR TAX REFORM: Well I think for a long time American elected officials wondered whether they could take on the power of public sector unions. What Chris Christie did in New Jersey was show that you could talk about disagreeing with the teachers union without appearing to be anti-teacher or anti-education. And what Scott Walker pointed out was that you could actually pass reforms which reform public sector unions, which save a lot of money for state and local government.

Barrett, the mayor who ran against him, had implemented many of his reforms and saved tens of millions of dollars for the taxpayers that he represented. So it works. It saves money. Public sector jobs and public sector work gets done. And even though the entire public sector union leadership through money and resources into one state, they still couldn't take one guy and his lieutenant governor out. So it says to other governors, Wisconsin has a history of being very strong for public sector unions. It's a union state in many ways. It's a Democrat, liberal state in many ways.

BURNETT: For sure.

NORQUIST: So if you're from some other state that's not as left of center as Wisconsin traditionally has been it's -- the ice is thick enough, go on out.

BURNETT: All right, so let's talk about one of those states, Ohio.


BURNETT: Republican Governor John Kasich, GOP legislature, tried to push through reforms and cuts to pensions and roll back collective bargaining.


BURNETT: There was a rule in Ohio, went to voters for referendum, and they said no way and it didn't pass. So it's not quite that easy.

NORQUIST: Well two things, nobody has lost an election over it in Ohio. What did happen to have (ph), of course, they had a referred question. The campaign on that was insufficiently focused on what Wisconsin did, which is making local government work. So, yes, you can still bollix (ph) this issue and Ohio didn't present it well and didn't raise the resources compared to what the unions did.

BURNETT: But what about the overall point here, Grover. I mean you look at exit polls in Wisconsin and you were talking about it yourself. This is a state that goes Democratic. If it goes Republican, that would be -- that would shock almost everybody, no matter who wants to call it purple today, it's still a Democratic state. Right now voters according to the exit polls, which I know have their issues, prefer President Obama to Mitt Romney 51 to 44 percent. So do you think some of these hard line tactics, you know this kind of my way or the highway, if you don't like it, go jump off a cliff, is not the way to do it?

NORQUIST: Well of course four years ago when Obama ran he won by twice that margin, so his margin in the state has fallen in half. The state also passed a voter ID law, which a liberal judge said won't apply to this election. So this is the last election you could show up on Election Day, tell them you're Mickey Mouse and vote. That can't happen in future elections. So the vote is going to get closer for Obama running at the national level. But I'm actually more interested in what San Jose and San Diego did --


NORQUIST: -- reforming the overspending on pensions and benefits, the teacher tenure laws which allow teachers who have been there three years to keep their job forever regardless of whether they're doing a good job or a bad job. Those are reforms that are moving state by state. And as I pointed out, there are 23 other states that have a Republican governor and legislature, meaning if they sit in a room and say let's do what Wisconsin did, Texas and Florida, Georgia, big states.

BURNETT: All right, well let's bring in John Avlon and Roland Martin into the conversation, Grover, and I want on that issue of you've got 23 states that would do it, John, let me go straight to you on this, because a lot of people are saying that the vote in Wisconsin maybe wasn't so much about the collective bargaining but people really saying a recall is supposed to be about did the guy break the law.


BURNETT: Did a guy -- right, so maybe the vote is not this mandate on collective bargaining or anti-union and more straight down the middle --

AVLON: Well Erin --

BURNETT: -- about did the guy do something illegal?

AVLON: To that point, I mean we've had recall fever in this country. In 2011 there were 155 instances of recalls on local races. So I do think that there's generally a rejection of this and I think it's probably healthy. Recalls ultimately (INAUDIBLE) expensive they're destabilizing our democracy. It's constantly re-litigating elections you don't like the results of, so that clearly was a part of this.


AVLON: But the fact that Walker won with more votes than he did in 2010 also speaks to a certain strength and then, of course, there was the money differential, you can't discount that.

BURNETT: Roland, what did the Democrats take away from this though? I mean I just want to bring San Jose and San Diego because I've been watching those over the past few weeks. San Jose cut its workforce by 25 percent. They had done all sorts of things that you know at a human level hurt a lot of people's lives because they didn't want to mess with pension promises but they voted yesterday to go ahead and cut those promises. I mean this seems to be something that is bipartisan, isn't it?

ROLAND MARTIN, CNN POLITICAL ANALYST: Well first of all, when you have a difficult economic time, the public is going to look to anybody to want to be able to blame or to make any kind of adjustments. Keep in mind, when we talk about public workers, people act as if we're talking about only Democrats. There are people who are actually Republican who are teachers and who are firefighters who are police officers. And I think one of the things that we have to keep in mind also, especially when you talk about teachers, I have three siblings who are teachers is that typically the payoff for a teacher is going to be that particular pension.

Here we are trying to get higher quality folks in the classroom. If you begin to say we're going to cut pensions and we're not going to pay you more on the front end, then we're likely going to lose quality people in the classroom. So we might want to be very careful in terms of how we attack this whole notion of a pension for public workers, because they are sacrificing on the front end to get something on the back end.

BURNETT: But what if you paid them for their performance all the way through? Pay them on the front end if they're good --


BURNETT: Fire them if they're not.

MARTIN: First of all, I absolutely believe that if you are not a quality person, you should get fired. But keep in mind the same people who voted yesterday are the same folks who don't want to pay more right now. And so at some point they're going to have to figure out where do I stand on this and the rubber is going to meet the road somewhere.

AVLON: But I mean really the votes in San Jose and San Diego are in some ways even more significant than Wisconsin, because it happens in California. It's not a narrow margin. It's a 70 percent margin.


AVLON: People say -- Democratic mayor of San Jose saying, look, our pension costs have tripled in the last decade. We're spending a quarter of a billion dollars and a quarter of our budget on pensions. We can't afford that and people across the political aisle spectrum say you know what that's right. This is unreasonable. These are deals made decades ago and they kicked the can to us and now we can't afford it. We need the freedom to make fiscally responsible justice.

BURNETT: And Grover, would you say when you hear that though this is (INAUDIBLE) you think look I don't want to be the standard bearer for the Republican Party. I admire what a lot of these Democrats are doing. Do you admire the Democrats?

NORQUIST: Well I think you've got some Democrats who are put in a very difficult position, which is one of the most important funding bases for the Democratic Party is organized labor. And they take union dues particularly public sector unions they take union dues out of the paychecks of teachers. In Wisconsin it was $1,000 per teacher taken by the union and then spent on various things. One of the things that was --

BURNETT: Right, so all I'm saying is wouldn't you say then that these Democratic mayors, governors who are taking on this issue are all the more courageous? The Republican guys aren't getting these donations. That's not that hard to take them on.

NORQUIST: No, they are being courageous. They have been put in a situation where the public sector unions and their demands are bankrupting whole cities. They have to do this. You're even seeing Rahm Emanuel in Chicago begin to have some of these efforts. This has to happen. It's bankrupting cities, states. Government can't work with these sorts of costs that are being imposed on it and this is happening, but slowly. It should have happened 10 years ago.

BURNETT: All right, Grover, thanks very much --


BURNETT: Got to leave it there, I'm sorry, Roland. John and Roland will be back tomorrow. Thanks to both of you -- John too.

Ahead OUTFRONT a report from Miguel Marquez. A man terrorizing Americans by planting bombs in every day household items in this country and the Nasdaq forced to pay millions over Facebook to whom, to you? And is it even the right number?


BURNETT: All right the fallout from the Facebook IPO continues. Although it's fair to say as part of the bounce today in the market the stock did go up a little bit. But part of the problem lies with, well, where Facebook went public. It went public on the Nasdaq and you may be aware that serious problems in Nasdaq systems on the IPO day caused big losses for a lot of people. It was so bad, in fact, that the CEO of the Nasdaq said had he known these problems would happen, he would have stopped the entire IPO.

So how much money is he going to have to pay? Well today Nasdaq said they're going to pay something. They're going to provide some compensation to well people who lost money in a few different ways. This is a little complicated, but basically when the stock opened at $42 a share that was a problem for a lot of people. A lot of people tried to buy stock and they didn't know if they were actually able to buy it or they tried to sell stock and they weren't sure if they were able to sell it.

Well, as you all know the stock fell sharply from that level, so if you were in at 42, you lost a heck of a lot of money. So how much is the Nasdaq on the hook for? Well that's our number tonight, $40 million, so they hope. Now they put this out with their board. They said hey guys you lost (INAUDIBLE) $40 million. They're going to give 13.7 million in dollars in cash and then they're going to say, you know what, we'll give you a discount if you trade with us and that's how you'll make up the rest of the 40 million over the next few months.

We'll see if that will actually work. There's a problem with it because a lot of firms are really upset with the Nasdaq. A trader told me today that the losses for the firms were actually nowhere near $40 million, it was $120 million. And those firms, those firms are actually, you know, regular people, your pension, your 401(k). They represent them. That's going to be a problem. As one trader told me, the Nasdaq has egg on its electronic face.

All right ahead on OUTFRONT are intelligence leaks happening at the highest levels of the American government? And the bizarre case of the body parts murder in Canada. The suspect released videos while he was on the run, and we have them.


BURNETT: We start the second half of our show with stories we care about, where we focus on our own reporting from the front lines. Well the social networking site Linkedin is acknowledging that at least some of the 6.5 million passwords have been hacked, possibly by Russians. The company hasn't said how the passwords were stolen but says it's investigating. Linkedin says customers' passwords won't work when they try to log into the site that people if you were hacked will be getting an e-mail with instructions on how to change it.

Well regulators testified before the Senate Banking Committee today on JPMorgan's $3 billion trading loss. We are monitoring the hearing all day and the comptroller of the currency, Tom Curry, was someone we focused on. He says he believes the issue at JPMorgan was inadequate risk management within the office of the Chief Investment Office. That office, of course controlled the portfolio that had the $3 billion loss and directly reported to CEO Jamie Dimon.

The jury in the trial of former Penn State assistant coach Jerry Sandusky has been picked. We've got five men on the jury, seven women and there are four alternates. Ten have ties to either Penn State or key figures in the case.

CNN contributor, Sara Ganim, is reporting on those who didn't make the cut. Among them a middle-aged man who goes to church with the Sanduskys and a former teacher of one of their adopted children.

The trial will begin Monday. He has pleaded not guilty to charges he sexually abused 10 boys.

Well, the wife of Pedro Hernandez, the man accused of killing Etan Patz 30 years ago, says her husband's confession is unreliable. Rosemary Hernandez's attorney told CNN that she has seen her husband's delusions and hallucinations and other mental illnesses for a long period of time.

Pedro Hernandez is being held without bond at New York's Bellevue Hospital tonight.

Well, it has been 307 days since the U.S. lost its top credit rating. What are we doing to get it back? Maybe the stock market rally will help. The Dow did jump 287 points. That is the best day of 2012.

Now, our third story OUTFRONT -- it required, you know, a little bit of -- a little bit of a setup here. Top secret intelligence leaking out of Washington like a sieve, compromising our national security. And what is the motive behind all this leaking?

The FBI has launched an investigation to find out how classified information leaked to the media, specifically classified details revealed by David Sanger, the reporter you saw OUTFRONT earlier this week, talking about America's top-secret cyber war and programs that were targeting Iran's nuclear program.

That's the latest, though, in a series of leaks that have people like John McCain calling for a special counsel to investigate.


SEN. JOHN MCCAIN (R), ARIZONA: Such disclosures can only undermine similar ongoing or future operations, and in this sense, it compromises our national security. For this reason, regardless of how politically useful these leaks may have been to the president, they have to stop. These leaks have to stop.


BURNETT: Speaking to reporters on Air Force One, White House press secretary Jay Carney responded, telling reporters that any suggestion that this administration has authorized intentional leaks of classified information for political gain is grossly irresponsible.

Intelligence leaks in Washington are not a new phenomenon but in the past two months the dam seems to have broken. There's been details of a secret shipment of F-22s to the United Arab Emirates. Sources there told me that was incredibly damaging and frankly said, hey, look, why does the U.S. have such loose lips?

There was also the discovery of the Saudi Arabian double agent in the foiled bomb plot in Yemen. His life is now at risk.

Last week, we heard about President Obama's secret kill list and many are questioning the release of secret information surrounding the killing of Osama bin Laden himself.

Are these leaks politically motivated? It's a crucial question. And if they are, whoever it is, no question should be held responsible.

Representative Peter King is the chairman of the House Committee on Homeland Security and he is OUTFRONT tonight.

Good to se you, chairman. Let me just ask you the key question here.

John Kerry has just come out a few moments ago saying the allegation that the White House could have been involved in these leaks or authorized these leaks is not close to reality -- incredibly strong words. He said there is not a single Democrat in government, in the White House, who would have done such a thing or did such a thing.

Do you think it's political motivated?

REP. PETER KING (R), NEW YORK: Erin, certainly, politically motivated or not, it has to be coming from the White House, coming from the administration. This goes back two years ago, the Times Square bomber, when they leaked out the identity of the bomber before the police had a chance to go after them. He heard about it and took off for the airport, and -- took heavily armed guns with him which could have put the NYPD at risk.

Then we have the bin Laden raid last year where they were spilling out information which Secretary Gates was furious about.

Then we find the Stuxnet arrangement, which I'm not even at liberty to talk about. The drone attacks, the bomb plot out of Yemen several weeks ago.

This stuff is pouring out. There's always some leaks either accidentally or intentionally and usually one item or two items. But this is coming -- I mean, these are verbatim quotes from the Oval Office. It talks about Joe Biden saying the Israelis are the ones responsible for the mistakes with Stuxnet. It talks about how the president sits there going over the list and thinking about St. Thomas Moore and St. Augustine when he's going to authorize drone attacks.

The Yemen bomb plot which no one knew about -- no one in the Congress knew about it and yet somehow the media found out, the "Associated Press" found out about it. And this puts us at risk not just so far as the people involved in these plots, but also our allies who are very reluctant to deal with us and work with us.

BURNETT: The allegations that you're making are -- it sounds like from what you're saying, I don't want to put words in your mouth, but what I'm hearing is if someone knows what's going on in the president's mind or Joe Biden's mind, that means it came from them. That's an incredibly serious charge to make.

KING: Well, it is. I mean, you're talking about conversations among very small numbers of people in the Oval Office or in the -- in the National Security Council and the Situation Room. We're talking about the people closest to the president.

This isn't a big political gathering. We're talking about people with top secret clearances and it should be easy enough to find out who was at these meetings. When it comes out verbatim what's being said, who authorized what, how the program was begun, why it was continued, why it was discontinued -- I mean, that has to come from people close to the president.

And if the reporters are to be believed at all, this has to come from the people at the very highest levels. Nobody else could this come from, especially when things and quotes are exact and direct.

BURNETT: OK. But sometimes people use quotes of what they hear may have been direct. They're reporting but it's not perfect. It could be a CIA agent leaking a lot of this. It could be someone with a beef to pick and combined with other conversations where people say, look, the president takes this so seriously and to heart when he thinks about national security and what to do with drones he thinks of St. Thomas Moore, right? I mean, that wouldn't be the president doing something treasonous like leaking the information at all.

KING: Well, I'm not saying treasonous. I'm saying being irresponsible and being careless, whether it's the president or the people closest to him. Again, when you have discussions about what went on in the Situation Room, which is such a limited number of people who were there, that has to come from people close to the president. They have to know who it was. And similarly with the drones, with the Stuxnet, all of that is so highly classified and the way the information was delivered in "The New York Times," in the books, it's clearly come from people right around the president.

For instance, in the Stuxnet story when Joe Biden says it's the Israelis, they're the ones who had to do that. This was an Oval Office conversation discussing the compromise of one of the most sensitive programs, if we have it. I'm not even at liberty to talk about if we have it or not. But if we have it, you have the vice president of the United States being quoted directly. Who else could have been in the room? You're talking about a handful of people.

BURNETT: Well, thank you very much, Representative Peter King, we appreciate it. It's going to be an issue that's going to get a lot more conversation, trying to figure what was leaked down by whom.

And now our fourth story OUTFRONT: police today linking a severed human hand and foot mailed to separate schools in Vancouver to the same college student who was allegedly killed and dismembered by a Canadian porn star.

Now, police are also looking into videos that they say Luka Magnotta may have posted while he was on the run for more than a week, including one just before his arrest where he appears to be relaxing and listening to Madonna's "La Isla Bonita".


LUKA MAGNOTTA: What's up? And hi to all my fans.


BURNETT: Ioanna Roumeliotis has been covering the story for CBC, Canadian Broadcasting Corporation.

Thanks very much. I know you have been covering this sort of day in and day out, one of the most bizarre and gruesome stories.

What can you tell us in terms of how confident police are that these latest body parts that have come to the school are linked to the case?

IOANNA ROUMELIOTIS, REPORTER, CBC: Well, they're almost certain, Erin, that they are indeed parts that belong to Jun Lin, the victim that you mentioned earlier. They haven't completed DNA testing. The parts were shipped from Vancouver to Montreal for that testing today. And while there's no 100 percent confirmation at this point, police say because they are the right hand and the right foot, parts that were still missing, or that were still missing, they strongly believe that they are Jun Lin's.

The other fact that it links it to Luka Magnotta is that they were posted from a Montreal postal outlet. They don't know yet the exact location that is, but they are fairly certain it is the work of Luka Magnotta. BURNETT: And Ioanna, I know this is just an awful question, but I'm sure some people out there are thinking. We talk about all these body parts that have been showing up. Do they know where the head is? Do they expect that there will be more?

ROUMELIOTIS: The head is the body part that is still missing, and believe me, Erin, police are very careful when they bring up these gruesome details, they are so graphic and they obviously thinking about the family when they do so.

But the fact remains, the head is still missing. Whether or not it's in the mail, police say it's not clear. At this point, it takes about 10 days maximum for any body part to be mailed from Montreal to any other part in Canada. So, the timeline in terms of where the parts showed up in Vancouver fits that timeline.

So we're reaching the maximum. If it doesn't show up in a couple of days in the mail, they're not sure where it is. But they have looked at dump sites and they are looking into whether or not it may have been shipped outside of Canada, maybe to the U.S., maybe overseas. They're still not clear.

While they have said they don't need the head in terms of physical evidence, they do have quite a bit. They do want to obtain everything for the sake of his family.

BURNETT: And I know the victim's family did just arrive in Canada last night. What do you know about them?

ROUMELIOTIS: They're devastated. They come from a province in China that is relatively poor. They arrived in Montreal last night with the help of the Chinese consulate in Montreal.

We spoke to a student representative who was at the airport to greet them. He said the mother was beside herself, could barely walk, they had to carry her and she was rambling and basically they could make out was that she had come to find her son and to bring him home.

So, they are very devastated. Anybody could imagine, this is such an incredibly awful story to find out about your own child. And the community in Montreal, the Chinese community, especially at the university where Lin was studying have set up two donation drives that we know of at this point to help them in their trip here and to help them go back home.

BURNETT: All right. Thanks very much, Ioanna.

And still ahead, what's it like to have two brothers, one an outspoken, that's an understatement, voice for the left, and one an evangelical Republican, equally as outspoken. Billy Baldwin, the same one, comes OUTFRONT.

And we show you the most anticipated shoe in the history of footwear. People have been lined up at stores for eight days waiting for this shoe. This is no joke, seriously.


BURNETT: We've heard a lot about the deadly consequences of improvised explosive devices, IEDs in war zones like Iraq and Afghanistan. But now IEDs are showing up in Phoenix, Arizona.

Police say there's a serial bomber that's been working in the city, planting bombs in everyday household items like flashlights. So far, three victims have been injured from these IED attacks. Police say this could be just the beginning.

Miguel Marquez has been OUTFRONT on the all-out manhunt for a serial bomber.


MIGUEZ MARQUEZ, CNN CORRESPONDENT (voice-over): Everywhere you look here, reminders of serial improvised explosive devices, IEDs disguised as flashlights blowing up in their victims' hands. Phoenix is a city on edge.

FEMALE TV ANCHOR: I want to get to some breaking news right now. Tammy Rose overhead in the chopper where a possible flashlight has been found.

MARQUEZ: Dozens of false alarms after three bombs in three different areas. Two in Glendale just west of Phoenix.

JENNELLE MCKEE, FLASHLIGHT BOMB VICTIM: Pick it up, look at it, it looks normal. Push the button, hey, wonder if it works. Boom.

MARQUEZ: Jennelle McKee was the bomber's first victim.

(on camera): And how big was that boom, like a shotgun blast?

MCKEE: Yes. That's exactly what it sounded like.

MARQUEZ: It's a big boom.

MCKEE: Yes, it was loud.

MARQUEZ: Then you smell sulfur?


MARQUEZ: So like gun powder basically?

MCKEE: Yes, exactly.

MARQUEZ (voice-over): The third bomb discovered in a Salvation Army sorting facility in south Phoenix.

CAPT. JOHN DESPLANCKE, SALVATION ARMY: Literally blew up right there.

MARQUEZ (on camera): This must scare the hell out of you and people here. DESPLANCKE: It does, it does. We don't process flashlights right now.

MARQUEZ: This flashlight is very similar to the one that exploded here at the Salvation Army. It has that plunger-like switch so when the employee pulled it out of the box, he looks at the front of the light to see if it would go on. Press the switch and it exploded.

(voice-over): So far only minor injuries. Federal investigators say the bombs are sophisticated, the maker's unique signature on every device. Each bomb identical in components, construction and design. A standard 6-volt flashlight.

Into it, the explosive, a small 9-volt battery wired to the flashlight's switch is then filled with BB pellets, and other metal and all of it packed tight with kitchen sponges and other packing material.

Other similarities, the bomb placements and victims are random.

Dr. Steven Pitt profiles criminals. He says the bomber is possibly an angry male loner who is likely to strike again.

DR. STEVEN PITT, FORENSIC PSYCHIATRIST: If an individual is doing this for excitement, to be sure, the corollary of that is that, hey, I know a way to get even more excitement. I'll keep doing this but I'm going to do it at a little higher level. I'm going to take things to the next level.

MARQUEZ: Investigators fear this bomber will strike again, maybe next time with a deadlier bomb. It's an all-out manhunt in a city gripped by a serial bomber.


BURNETT: Miguel is in Phoenix tonight.

Miguel, I mean, do they have any suspects? I guess I'm just curious, we're talking about IEDs. Is it possible there is a military connection just because of the way they're choosing to attack?

MARQUEZ: Yes, it is possible and certainly investigators aren't discounting any possibility of these attacks. What they do believe is that somebody has information out there that would lead them to arrest this person.

So they don't have any specific suspects. There's no specific profile at the moment about who this could be. But they are certainly opening up the flood gates of investigation right now trying to catch this person before it gets deadly -- Erin.

BURNETT: And how sophisticated do you think the bombs are, Miguel?

MARQUEZ: ATF is calling them sophisticated. This is a person who understands circuitry. The bomb that ended up here at the Salvation Army sorting center, that may have been in a sorting box and been moved around for several weeks perhaps.

So these are robust bombs. He's stuffing them with metal, clearly meant to harm. They could easily get much, much worse -- Erin.

BURNETT: All right, thanks very much to you, Miguel. Very strange story.

And now our fifth story OUTFRONT. Actor Billy Baldwin is going all in on the story of an Iranian CIA agent who goes by the name Reza Kahalil. Kahalil risked his life to spy and tell his story in a book, "A Time to Betray," and he told me he's still afraid for his life.


REZA KAHALIL, FMR. DOUBLE AGENT FOR CIA: Absolutely, I have no doubt that should my identity be revealed, they're going to take me out. They're going to take out a lot of people who are in contact with me, within the Revolutionary Guards, as I still reveal their secrets.


BURNETT: Now, Kahalil's real-life spy novel is being made into -- well, it could be a Hollywood blockbuster. Actor Billy Baldwin optioned the rights to the book and he comes OUTFRONT tonight.

And, Billy, I was so excited when I saw this.

I mean, what made you connect with Reza's story?

BILLY BALDWIN, ACTOR: Well, I connected to it on many levels. I was a political science major with sort of an emphasis on the Arab- Israeli conflict during the first Reagan term. If you close your eyes and you listen, you know, it sounds very similar to the themes that are going on today with, you know, with Arab Spring going on in Iran, going on in Syria, in Egypt, in Iraq, obviously in Libya.

And I think that it's very timely. I think it's very topical. And I think it's of great interest not only from a political standpoint or from an intelligence standpoint, but also from the human interest standpoint. It's a great, beautiful human story.

BURNETT: What are you thinking -- how are you going to tell the story? Will it be a mini series, a movie? Or are you going to -- are you going to play Reza?

BALDWIN: No, no. Of course not. Of course not. I probably would play his CIA contact person, his point, if possible.


BALDWIN: But, again, this is not only an intelligence thriller and a military political thriller, what it's rooted in, it's going to be told to the prism of this relationship between these three young boys, think of perhaps kite runner -- these three young boys that grew up on both sides of this argument.

BURNETT: And when do you expect this will be ready?

BALDWIN: This is a very dense story. And I think it might be better served if we tell the story as a limited series or as a mini- series, much like HBO did with John Adams, to be able to tell this in three, four, five hours in a cable mini-series. I think they delve into the material and get into a lot of the intricacies and the subtleties of their culture and of their way of life.


BALDWIN: So, we'll see. We've got some hurdles ahead of us.

BURNETT: Yes, I was going to be -- I'm personally very excited for it. One thing before we go that I have to ask you -- it's funny. I look at you, look at your history. I see all kinds of things.

And I go look up your brothers and I see things I don't see with you. They're both very active politically in passionate ways. I was wondering when you have one brother who is Wikipedia talks about being an evangelical, you have another brother that could run for mayor of New York, who is big into Occupy Wall Street -- do they ever fight when you guys are around? Are you like stuck as the guy in the middle?

BALDWIN: I'm certainly not in the middle, but, you know, no, we tend to -- we treat it as if Steven was dropped on his head at birth in the delivery room or something. We can't quite figure out what went wrong. Yes.

You know, Steven was very apolitical. I studied political science and I interned on the Hill. I worked and served on the boards of many political organizations, run a few of them, nonprofit political organizations. And I have great interest in politics. Steven was never really involved heavily in politics until he had this evangelical calling after 9/11 and then the Bush White House started calling on occasion and he sort of got wrapped up and intoxicated by -- and sort of swept away in that type of attention.

I don't know, I think my brother and I have to sort of ideologically work him over and bring him back to his senses, because he's toned it down quite a bit, actually. I've had many, many political conversations. And by the time the conversation was over, he realized that he agreed with me. I said, why do you go on FOX and Farron (ph), whatever they call it, and Farron screw it up?


BALDWIN: Farron twisted.

BURNETT: Do you think Alec is going to run for mayor? I mean, obviously, as a New Yorker I ask for that question, but there's a lot of speculation. Does he have it in his heart, do you think? BALDWIN: I think that -- politically I think he would be -- he already is very valuable and I think he would be very valuable. I'm not quite sure if he should pursue elected office. I think he's the kind of guy that, I don't know if he has the ego for this, but I think he's the kind of guy behind the scenes that would make an excellent chief of staff. I worry about someone with his temperament, you know. I endorse him but I'm not making an announcement that he would be running. I would certainly back him.

BURNETT: Billy, thanks so much. Appreciate your taking the time.

BALDWIN: All right.

BURNETT: All right. OUTFRONT next, there's no real jewels, no real gold. On Saturday, you can buy it at a shoe store. If you want it today, it could cost you $90,000. We'll show it to you.


BURNETT: Three years, you've probably heard the stereotype, that women love shoes. It might be time to give that idea the boot because this week across the country it has been young men camping out at shoe stores. Why? The Yeezy 2. That's right. Designed by hip-hop star Kanye West, Nike's shoe includes the Anaconda textured leather, a reptile inspired heel and a bird design on the tongue. It is available in platinum and black, and the sole glows in the dark. It sells for $245. And it's going to go on sale on Saturday.

Now, the Yeezy 2 is a very strange name, I have to admit. But it's been called the most anticipated shoe ever. And we got a chance to look at the thing today, and to be honest, I think it looks a little more like a moon boot than a sneaker.

You know, flashback to all those who grew up in the '70s and the '80s, moon boots are one of those trends like shoulder pads that maybe shouldn't come back. Maybe that's what Kanye and sneaker fans like. Who knows? You know, everybody has their own thing.

But if in case you haven't noticed, modern shoe fans have some unusual tastes, not just in footwear but also in birthday cakes. More and more boys have been requesting shoe cakes for their birthdays. And not just any old shoe cakes, very detailed -- I mean, that's a cake.

Detailed shoe cakes featuring their favorite brand, size and style of shoe. Now based on the photos I saw, most people's tastes leans towards Nike.

But edible footwear isn't the craziest thing I saw today. That put a whole lot of disturbing images in my head, edible footwear. No, that would be this -- a pair of Yeezy 2s are currently already for sale. And not for 245 bucks, for $90,000 on eBay. They were originally 99 cents, and they've received 82 bids, bringing them to their current total.

Breaking news, the shoe has just been sold, 84 bids. It went for $90,300.

Holy cow! That is insane. That's a lot of money to spend on a shoe. We checked. Maybe it was this that made it palatable. The shipping was free. Yes, the shipping was free for your moon boots.

Thanks so much for joining us. We're back tomorrow at 7:00. Thanks as always for watching.

"ANDERSON COOPER 360" starts right now.