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New Cyber Threat Against U.S. Electric Company?; Obama Heading to Capitol Hill in Bid to Protect Obamacare; How Trump Transition Team Wrapped Up 2016; Times Square Ready to Welcome 2017; Utilities Concerned About Power Grid Hacking; Vladimir Putin Gives New Year's Address; Decades of Russian Infiltration in America; What 2017 May Bring; Armed Attack at Istanbul Nightclub. Aired 6-7p ET

Aired December 31, 2016 - 18:00   ET


[18:00:44] SUZANNE MALVEAUX, CNN ANCHOR: You're in the CNN NEWSROOM. I'm Suzanne Malveaux, in for Poppy Harlow. You're looking at live pictures now of Berlin. That is where we're going to take you. Fireworks ringing in the new year. There you go. It's the city's Brandenburg Gate which once divided the city between East and West Germany.

Now we begin with the potential new hacking attempt from Russia, this time against an electric company. This is in Vermont. Burlington Electric says that malicious malware has been discovered on one of its laptops and U.S. authorities believe that it is the same malware Russian hackers used to meddle in the presidential election.

Burlington Electric maintains none of its info has been compromised and officials involved in the investigation say they don't think it was an attempt to bring down part of the electric grid.

Well, CNN's Polo Sandoval, he's joining me now with more.

So, Polo, just within the last hour, I talked to the general manager of Burlington Electric and you've been following the story and talking to officials as well. What stood out in your mind in terms of how he described the risk and the danger of what's occurred?

POLO SANDOVAL, CNN CORRESPONDENT: Right, Suzanne. Well, that general manager confirmed much of what we were already hearing from several sources about how we got here, about how this was initially discovered. It was the Department of Homeland Security that initially sent out an advisory to several utility organizations, several entities across the country asking that they be on the lookout for a particular cyber threat. Well, Homeland Security officials initially sent that note and we now know that there's least one utility company, the one that we talked about there, this Burlington Electric in Burlington, Vermont, that did in fact notice something on their system, on one of their laptops, that was not connected to the rest of their system.

These codes that was linked to Grizzly Step which is the name that was used by the Department of Homeland Security to refer to recent Russian hacking campaigns. The text at that Vermont company ran a search for that particular code and sure enough, they noticed a suspicious IP address.

I want you to hear directly from the general manager of that company, that conversation you had with him, Suzanne, as he explains what he and the rest of those technicians at that company did immediately after noticing that suspicious code.


NEALE LUNDERVILLE, GENERAL MANAGER, BURLINGTON ELECTRIC DEPARTMENT: We were able to intercept that traffic as soon as it hit our network, because of our real-time scanning, able to pull the computer off before we believed that it was able to do any other activity on our system, ultimately further investigation, we'll into that. We have no indication that there was any compromise.


SANDOVAL: That's Burlington Electric there, again just confirming that they don't have any reason to believe that none of their customer information and mainly their grid itself was not compromised, and Suzanne, this latest information now that just came in a few moments ago from one of our colleagues, Evan Perez, after he spoke to a law enforcement source close to this investigation now saying that they do not believe that this was an attempt to specifically target or bring down that electric grid that serves up to 20,000 people, Suzanne.

So that's been a key question here. Why was this malicious software found on that computer and according to some of this new reporting from the colleague, it doesn't seem that they were trying to cripple that electric grid -- Suzanne.

MALVEAUX: That is some good news out of this. Polo, thank you so much, appreciate it.

This new threat comes just two days after President Obama announced brand new sanctions against Russia for election hacking. Our own Athena Jones, she's in Honolulu where President Obama is vacationing, it's a working vacation, of course.

Athena, give us a sense of what the president is expected to do. He's got three weeks left in office. Do we think that he has more coming on the cyber hacking?

ATHENA JONES, CNN CORRESPONDENT: Hi, Suzanne. Well, we know from the White House when they announce those actions the other day, they also said that this does not represent the sum total of our response to Russia's aggressive activities. That's how they put it. That means we can expect more covert measures to be taken at a time of their choosing and these are measures that we're not necessarily going to hear about. They're not going to be announced.

[18:05:06] One thing that we do know that is coming that will be made public is this full review that President Obama has asked the intelligence agencies for. A full review not just into Russia's efforts to affect this past election but also malicious cyber activity related to our election cycle in previous elections. That report which will be released to Congress is expected or as the president asked for it to be delivered before he leaves office. So that is the next big public information we expect to get from the White House on this cyber hacking issue -- Suzanne.

MALVEAUX: Sure. And Athena, I understand the president is also going to come back to Washington and really try to sit down with members of the Democratic Party to try to protect what is potentially the biggest item, most significant of his legacy. That is Obamacare. Can you tell us a little bit about what's behind that?

JONES: That's right. He's coming next week. He's going to be meeting with House Democrats and Senate Democrats together on Capitol Hill on Wednesday to try to strategize a way to push back that GOP effort to repeal the Affordable Care Act, this, as you noted, is the president's signature domestic achievement and they have been pushing for people to continue to sign up for Obamacare saying that any changes that are made won't be made immediately and there's also the thinking that, you know, you already have 20 million plus people who are benefitting from this law.

The more people who are benefitting the harder it might be for Republicans to dismantle it but we already know from Republicans that this is at the top of their agenda. Democrats are going to be talking about ways they can fight back. We know there's going to be a day of action, we know that members of Congress, Democratic members of Congress are planning public events features people who have benefitted from this law. So that is one thing that is high on the president's agenda trying to do whatever he can to protect that key legacy item -- Suzanne.

MALVEAUX: All right. Athena, looks absolutely gorgeous out there. Please try to enjoy the last hours that you have out there for the new year. Thank you very much. Happy new year.

JONES: Happy new year. Thanks.

MALVEAUX: And I've been tracking President-elect Trump's transition efforts as we head into the new year. Here's how team Trump wrapped up 2016. Take a look.



MALVEAUX (voice-over): It's just the latest road block to a smooth transition. Donald Trump praising Vladimir Putin tweeting, "Great move on delay by V. Putin. I always knew he was very smart."

Trump applauding Putin's remarkable move to wait for Trump to take office before responding to President Obama's decision to expel Russian diplomats and new sanctions. This comes on the heels of a back and forth week in which Trump has blasted President Obama, tweeting he thought it was going to be a smooth transition, not. To Trump saying it was going smoothly.

TRUMP: I just want to thank everybody. MALVEAUX: Now the president-elect and his team characterizing the

current White House's showdown with Russia as politically motivated.

KELLYANNE CONWAY, TRUMP SENIOR ADVISER: Even those who are sympathetic to President Obama on most issues are saying that part of the reason he did this today was to, quote, "box in President-elect Trump." That would be very unfortunate if that were the -- if politics were the motivating factor here.

MALVEAUX: Trump's team continuing to dismiss the U.S. intelligence assessment on Russian cyber attacks.

CONWAY: We've been talking about this for a while. I think that, you know, all we heard all through the election was Russia, Russia, Russia. Whenever it came to anything Donald Trump said or did it seemed most days and now, you know, since the election, it's just this fever pitch of accusations and insinuations.

TRUMP: These are amazing people.

MALVEAUX: Trump says he'll meet with leaders of the intelligence community next week for a briefing on the hacking matter but Trump supporter, former New York mayor Rudy Giuliani, suggesting the president-elect not bother.

RUDY GIULIANI, TRUMP SUPPORTER: I would urge President Trump when he becomes president Trump have his own intelligence people do their own report, let's find out who did it and then let's bang them back really hard.

MALVEAUX: Trump is now set for a direct confrontation with his own party. As top Senate Republicans John McCain and Lindsey Graham prepare to hold hearings and consider harsher sanctions against Russia when the new Congress returns. But Trump's incoming chief of staff, Reince Priebus, warns the American people may not have the appetite for another conflict.

REINCE PRIEBUS, INCOMING CHIEF OF STAFF: They may be privy to information we don't know but I also know we're not interested in going to war all over the world either.


MALVEAUX: And up next, just six hours until the ball drops in New York Times Square and of course, welcoming in 2017. Live pictures here that we're looking at, Times Square, jammed of course with people excited for the new year coming up. It's going to be an incredible night. One that also has some people, however, on edge. Going to talk about what police are doing to keep everyone safe out there.

[18:10:04] That up next. You're live in the CNN NEWSROOM.


MALVEAUX: More than a million partiers are crowded into Times Square for tonight's countdown to midnight. Police in New York City have stepped up security obviously to keep them safe and say they have some learned lessons from terror attacks in Europe. One example, the NYPD is deploying 65 sand trucks weighing 40 tons each to block moving vehicles. Still, officials stress they have no credible threats tonight.

Joining me live from Tampa is former New York state homeland security adviser Michael Balboni.

Thank you so much. He's a senior fellow at the Homeland Security Policy Institute. So tonight is a big night, probably a little stressful for some folks. Give us a sense of how you keep these huge events like Times Square, the celebration there, how do you make sure that it's OK, that people can breathe easy a little bit?

MICHAEL BALBONI, FORMER NEW YORK STATE HOMELAND SECURITY ADVISER: Well, Suzanne, all these adages of practice makes perfect and certainly New York City has had a lot of practice dealing with all sorts of big events from national convention, Republican National Conventions and Pope visits and of course they do this event every single year and it's all about control. It's all about knowing where the perimeters are. It's all about resources and New York City PD is probably the best in the world in turning out officers who understand the tempo and the dynamic of the event, but as you said, there are lots of lessons to be learned from around the world as to what type of attacks could be thought about for this year.

MALVEAUX: And we noticed as our reporter noticed that people are kind of kept in these separate fenced off areas which we called pens. What does that tell us about the biggest vulnerability of these kinds of events?

BALBONI: Well, you really try to take off the table is, you know, a truck attack, a vehicle born improvised explosive device and that's why you don't have parked cars anywhere near this area itself and you also have a lot of technology that's deployed. You have TV cameras. You also have the old-fashioned undercover officers. The individual standing next to you might not in fact be a New Year's Eve reveler. Might be an officer of the PD and there's tremendous coordination with other assets, and what you also need is intelligence. You need folks from outside looking what's gone on before the event.


BALBONI: And of course, folks inside.

MALVEAUX: And tell us a little bit more about these truck attacks because we have seen them take place in Europe. We see how devastating they can be.

[18:15:05] Explain how dangerous a weapon that is and a very -- it's a very simple form but it can do a lot of damage.

BALBONI: So al Qaeda has been putting out this magazine for years called "Inspire" magazine, and in it they have suggested means of attacks. One of them is the pressure cooker bomb that of course we saw in the Boston marathon bombing and in the Chelsea attacks but also they talked about using a truck to just simply run down people and we've seen that in France and we saw it in Canada. And so this is certainly opportunistic attacks. They need to have control of the vehicle and be in a position to use it against unarmed vulnerable citizens.

That's what you're taking off the table when you put out a perimeter of the sand trucks and controlling any type of vehicular traffic in the area.

MALVEAUX: And police, of course, they only have a limited amount of resources. If they're determined to keep Times Square safe and we see what it entails there, how do we know that other areas aren't more vulnerable to attack, that there might be a cost?

BALBONI: Sure. That is a perfect question in this dynamic threat environment. You know, for the first time, we've had a president- elect who has come to power and is in New York. Normally, not tonight but he is normally, and a lot of assets around the world. So the question becomes how do you protect those assets. In addition to which, there has been a lot of divisiveness, and we know that our enemies want to try to exploit that and moreover, it is the year of the lone wolf, as we've seen.

You talk about the San Bernardino, we talk about Orlando, talk about some of the attacks in Europe, it really is the individuals who become radicalized and then go out and attack. They don't give notice of it. They're not on the radar screens of security forces generally speaking and they have not done something that requires them to be now put in custody. Those are the hardest persons to predict and track.

MALVEAUX: Michael Balboni, we wish you a safe new year, we thank you for your hard work, your effort, and your analysis. Please be safe. Happy new year.

BALBONI: Happy new year.

MALVEAUX: When you hear about a computer hack, it's usually about someone who is stealing information but a hack can also do some serious damage. We're going to take a look at the cyber threat with the potential to knock out power to entire cities or regions.

You're live in the CNN NEWSROOM.


[18:20:04] MALVEAUX: A Vermont power company says none of its systems were hacked, were infected by malware discovered on a company computer. Authorities are saying that the malware, however, is the exact same type believed used by Russia in an attempt to influence the U.S. presidential election. Investigators don't believe it was an attempt to bring down part of the electric grid.

But if it had, how exactly would it work? Well, here is our CNN's Deborah Feyerick.

(BEGIN VIDEOTAPE) DEBORAH FEYERICK, CNN NATIONAL CORRESPONDENT: Russian malware is in hundreds if not thousands of U.S. computers that control critical infrastructure. The threat is not only real, it has happened. And a recent Pew study found that 94 percent of Americans fear a cyber attack second only to an attack by ISIS.

MARTY EDWARDS, DIRECTOR, DHS CYBER EMERGENCY RESPONSE TEAM: So what happened is one of these large breakers or several of these large breakers were operated remotely by the attacker.

FEYERICK (voice-over): It was the first known cyber attack of its kind. Three attacks, 30 minutes apart against three electrical substations serving Ukraine's power grid.

SUZANNE SPAULDING, DHS UNDERSECRETARY, NATIONAL PROTECTION AND PROGRAM DIRECTORATE: This is not theoretical, this has happened. We've now had a cyber attack on critical infrastructure that was destructive.

FEYERICK: Destructive and a real threat to the United States, says Susan Spaulding. She is in charge of protecting the nation's 16 critical infrastructure sectors. A power outage impacts everything from air traffic control to subways and traffic lights, cell phones, computers, water and food supplies. CNN was given rare access to a government test facility in Idaho Falls with a team of cyber experts led by Marty Edwards is busy identifying hackers and trying to stop them.

(On camera): Is it difficult for some sort of a cyber attacker to take down a power grid?

EDWARDS: It's much more simple than we would like it to be.

FEYERICK (voice-over): To show us just how simple it is, the cyber team recreated the Ukraine attack. A hacker using a common e-mail fishing scam steals an employee's credentials, takes full control of the computer operating the power grid and shuts it down.

(On camera): In the Ukraine power was knocked out to several of their substations.

EDWARDS: Correct.

FEYERICK: Could that happen here?

EDWARDS: You know, it could. All of our infrastructures are run by these computerized systems.

FEYERICK (voice-over): Under scoring America's vulnerability. The malicious code identified as having played a role in Ukraine's attack is the same code DHS recently admitted is in hundreds if not thousands of U.S. computer systems that control critical infrastructure. The code known as "Black Energy" has been linked to Russia.

SPAULDING: There are companies across the country, and this is not just with respect to electricity companies, that don't fully appreciate the nature of the threat. FEYERICK: Seventy-five percent to 80 percent of the nation's critical

infrastructure is owned and operated by private sector companies. Despite many warnings, DHS says some companies have failed to take even basic cyber security measures.

EDWARDS: It ultimately comes down to a business decision for the company.

FEYERICK: A business decision that could allow attackers not only to turn off the lights but destroy the machinery as well.

(On camera): I'm standing on the actual testing site of the Aurora generator. It was the first test of its kind to prove that a cyber attacker could gain control of a generator and cause it to self- destruct.

If an attack were to happen on a generator, how long would it take a plant to get back online?

EDWARDS: Oh wow. Some of those generators and some these large electrical equipment literally takes years to manufacture.

FEYERICK: DHS has trained more than 11,000 people both in the private and government sector how to better secure their systems. That includes limiting remote access only to those who need it. And if there is an attack, worst case scenario, the only way to resolve it is to disconnect from the Internet.

Deborah Feyerick, CNN, New York.


MALVEAUX: Up next, they pose as everyday Americans but don't be fooled.


STEVE HALL, FORMER CIA AGENT: What they do is more than just collect. They actually try to influence events to the benefit of Russia all over the world and this is something that they have done for decades.


MALVEAUX: Russian spies hard at work in the United States, but as we'll see, the U.S. also plays the spy game.

You're live in the CNN NEWSROOM.


[18:27:41] MALVEAUX: Thirty-five Russian diplomats have to be out of the country by noon tomorrow. The plane that is going to fly them out is waiting at Dulles International Airport, that's just outside Washington right now.

The expulsion, they're a part of a brand new sanctions that President Obama levied on Russia for hacking during the election. Russian President Vladimir Putin gave his New Year's address today and our CNN's Matthew Chance is in Moscow with more on Putin's message.


MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, Vladimir Putin's New Year address was broadcast across Russia with no mention of Donald Trump, U.S. expulsions of diplomats, the war in Syria or any of the controversies that have gripped global attention over the past couple of days. It was just a brief message of congratulations to the people of Russia at the end of what Putin described as a very challenging 2016. Take a listen.


PRES. VLADIMIR PUTIN, RUSSIA (Through Translator): Respected citizens of Russia, dear friends, 2016 is slipping away. It was difficult but the difficulties that we face united us and prompted us to open huge reserves of our opportunities to move forward.


CHANCE: Well, Putin also called on Russians to be merciful in the New Year which is exactly how the Russian president tried to cast himself as he ended the old one, namely his dramatic refusal to respond in kind to the U.S. expulsion of 35 Russian diplomats over allegations of election hacking.

In a classic political theater, Putin publicly rejected the advice of his Foreign Ministry and said no one would be expelled over the holiday period. Even inviting the children of U.S. diplomats in Moscow to watch New Year's performances at the Kremlin.

Well, earlier Putin also issued a New Year's message congratulating world leaders, one name absent from the greetings, though, President Obama of the United States. Instead the greeting was offered to the President-elect Donald Trump.

The president of Russia side-stepping, even ignoring the Obama administration in his last few weeks and making it clear that the future of U.S.-Russian relations will depend on the policies of the incoming Trump administration.

Matthew Chance, CNN, Moscow.


MALVEAUX: Thank you, Matthew. Appreciate that.

Putin's congratulatory message comes after President-elect Trump praised the Russian leader on Twitter, writing this about the reaction to sanctions, saying, "Great move on delay by V. Putin. I always knew he was very smart."

[18:30:07] It's not the first time that Trump has praised Putin or been dismissive of his role in election hacking. Back in October, Trump dismissed reports from 17 U.S. intelligence agencies claiming that Russian hackers meddled in the election and then this week, the president-elect urged Americans to move on from the issue.

But let's talk with Steven Fish, he is the professor of political science at the University of California-Berkeley. Also the author of "Democracy Derailed in Russia: The Failure of Open Politics."

Professor, thank you so much for joining us.


MALVEAUX: What do you make of this, this relationship between Putin and Trump?

FISH: It's very hard to know what to make of it, Suzanne. This is historically unprecedented of the United States for an incoming president to show more respect for the dictator of a country that regards the United States as its sworn enemy, more respect for that -- for him than he does for his own president and his own country's security agencies.

You know, when the president-elect makes statements month after month, to call into question his loyalty to the United States, we know we're in a very different situation.

MALVEAUX: The editorial board of the "Washington Post" released this -- a blistering piece on Trump's reaction towards Russian hacking and part of it reads, I'm going to read it here now, it says, "Why is Mr. Trump so dismissive of Russia's dangerous behavior? Some say it is his lack of experience in foreign policy or an off-stated admiration for strong men or naivete about Russian intentions. But darker suspicions persists. Are there loans or deal with Russian businesses? Or the stake that were concealed during the campaign? Are there hidden communications with Mr. Putin or his representatives?"

Do you think that any of this could be real possibilities?

FISH: Look, under normal circumstances with normal presidents-elect, I would say no. With Mr. Trump, though, we just don't know. Again, we've never been in a situation like this before. He does seem to have a special affection for President Putin. I think they are both in some ways you could conservative authoritarian populist leaders. They seem to think alike in some ways. Both think they should fly above the law and be immune to the law in their own countries.

Of course, Trump is going to be president of the United States where you can't do that. Putin is a president of country where you can do that. Beyond that it's hard to know why this affinity for Putin. Trump does seem to want to kind of stick it to China over perhaps the trade surplus of the United States and you might think that Putin could be an ally in that or at least perhaps he wants to loosen ties with Russia and China.

I think he also thinks Putin could be a great ally against terror and against ISIS. But really still, you wouldn't expect even, you know, with those kinds of ambitions on Trump's part for him to be so strangely complimentary of the Russian president. Again, a very strange situation indeed to be in.

President Obama finds himself trying to protect the United States by security interests from an incoming president-elect, very strange.

MALVEAUX: Just to be clear, I mean, there are many unanswered questions because we don't know about Trump's tax returns. If we did, then we would be able to answer some of those issues and questions that you do bring up this issue about closer ties with Russia and do you think that in part that Trump is doing this to dissuade Putin from attempting further cyber attacks or other things that would be harmful to the United States?

FISH: I don't think so, because Trump acts like he doesn't even think these cyber attacks happened and sucking up to your foe is not usually an effective way to prevent, you know, bad things from happening in the future. Putin himself knows that. Putin himself is playing Trump like his useful fool and what's amazing is that Trump seems to be going along with it.

Again, this is a very strange approach. Of course, Putin did not answer our sanctions, President Obama's sanctions, with sanctions of his own because he wants to make it easier for Trump when he comes to office to rescind the American sanctions. Trump then can say, well, they didn't sanction us so perhaps we should not sanction them but that would be ignoring this entire system of cyber attacks on American democracy that Russia has been carrying out.

Trump when he comes to office is either going to have to continue to deny that this stuff happens and everybody knows but him seems to know it's happening or he's going to have to say, it's OK. Come and attack our facilities. Both are very dangerous propositions.

MALVEAUX: And having talked to Trump transition officials, I'm sure they would take issue with sucking up and would refer to that more as negotiating but we'll have to see their response in the days.

FISH: This is not --

MALVEAUX: And the weeks to come, certainly.

FISH: That's right.

MALVEAUX: Steve Fish, Professor, thank you so much. Appreciate that.

FISH: Pleasure.

MALVEAUX: For decades, they have been planted all around us.

[18:35:02] We're talking about Russian spies. Their goal, to influence events in order to benefit Russia.

Our CNN Pentagon correspondent Barbara Starr is taking a closer look.

(BEGIN VIDEOTAPE) BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): FBI cameras captured Russian operative, Anna Chapman, and a federal undercover agent meeting in a New York coffee shop in June 2010. 17 days later, Chapman and nine other Russian sleeper agents were arrested in New York, New Jersey and Virginia, charged with conspiracy to act as unlawful agents of Russia. Spies, who had burrowed deep into American society for years trying to steal secrets and recruit agents.

The FBI had watched Chapman and the others for months, recording drop- offs of packages, meetings on staircases, even one meeting just yards from CNN's offices in New York. The U.S. believes the group never got its hands on classified information. But the Russian infiltration into the U.S., a classic Moscow move.

HALL: What they do is more than collect, they actually try to influence events to the benefit of Russia all over the world. And this is something that they have done for decades.

STARR: Within days, at the airport in Vienna, an elaborately choreographed transfer. The 10 Russians traded back for four other Russians charged with being in touch with Western intelligence services.

Now the State Department is expelling 35 Russian officials it says violated their diplomatic status. This, after the U.S. claim of interference in the presidential election and harassment of U.S. diplomats overseas.

Vladimir Putin, of course, a former Russian intelligence officer, well-acquainted with the so-called illegals program, putting agents into U.S. society.

HALL: The fact that they would continue to do that to establish these American, you know, legends and cover story for these people who were trying to pose as Americans in the United States shows how serious they are.

STARR: But the U.S. has also been caught in the act. In 2013, Ryan Fogel, a political secretary at the U.S. embassy in Moscow, was arrested. The Russians claim they caught him with wigs, dark glasses and cash, trying to recruit a Russian agent. Fogel was expelled. It was never clear if he was set up by the Russians.

Earlier this year, a U.S. diplomat was tackled and beaten by a uniformed Russian police officer as he tried to enter the American embassy in Moscow.

JOHN KIRBY, STATE DEPARTMENT SPOKESMAN: The action was unprovoked and it endangered the safety of our employee.

STARR (on camera): And in that latest incident, the U.S. wound up expelling two Russian diplomats. This type of cat-and-mouse spy activity has been immortalized in TV and movies for years, but the reality can be vicious and very dangerous.

Barbara Starr, CNN, the Pentagon. (END VIDEOTAPE)

ANNOUNCER: This is CNN Breaking News.

MALVEAUX: We have breaking news into CNN. There has been an incident at a nightclub in Istanbul. Here are the pictures that we are looking at now. This is from our affiliate at CNN Turk which is showing us what is taking place there. These are emergency responders who are outside of the club and now we have seen people being carried out of the club and people beginning to gather and try to figure out just what kind of damage has been done. We see some of those workers waving off people away to get them away from the scene.

Clearly this is a situation that they are still trying to sort out now. We are going to be following this very closely. As soon as we get more information, we're going to bring this to you as we can.

Again, an incident at a nightclub in Istanbul -- Istanbul, Turkey, and emergency workers, as you see, escorting people away from that nightclub.

We're going to bring you more as soon as we learn more details.


[18:42:28] MALVEAUX: As we get ready to celebrate the new year, one of the biggest worries out there is the economy. Will the stock market hold on to a significant gain of recent weeks? U.S. stocks slumped yesterday on the last trading day of the year and how will Donald Trump's fiscal plans affect your money and your family? And what about the jobs market as well?

These are all good questions for economists, actor, comedian Ben Stein.

Ben, always good to see you.

BEN STEIN, ECONOMIST: Always a pleasure.

MALVEAUX: We're going to do predictions as well but talk about the economic outlook for 2017.

STEIN: Well, barring some terrible thing like war, I think it's quite good. We're seeing an astonishing pick-up in consumer confidence. Stock market is obviously very strong, which is usually has something do with consumer confidence and whether the stock market can continue to grow at this pace as is extremely dubious, no one never knows about the stock market, we already have pretty close to full employment in most parts of the country. The real challenge now is getting people who have voluntarily left the labor force to come back into the labor force and go to work.

I'll tell you, where I am, everywhere I go, and I travel constantly in this country giving speeches.

MALVEAUX: Sure. STEIN: All over the country, there are help wanted signs everywhere.

I've never seen anything like it.

MALVEAUX: It's a tough time for a lot of people going into the new year and Ben, one of the things that you've been really pushing here is that you say every American should own stock. Tell us why that is so important to you.

STEIN: Because the main engine of growth for people's retirement plans is corporate profits and you, any person in America, can grab on to that by buying stock. You don't have to buy a huge amount of stock. Buy a little bit month by month in the indexes which are incredibly inexpensive to buy. You don't have to try anything fancy.

I wouldn't say go to any kind of fancy guru. Just buy the standard portion index on the Dow Jones Industrial Average Indexes. You'll outperform almost all the manage funds by a little bit each month. Keep doing it from the time you start work until the time you retire, you'll be a very comfortable man or woman and your life will be changed.

Having money in your jeans when you're past 65 makes a lot of difference. Stocks are the way to go. Stocks for the long run, don't try to outdo the averages. Just buy the averages, buy stocks.

MALVEAUX: That makes a huge difference if you start off when you're 21 and then you just take off and get a little nest egg and it works.

STEIN: It's incredible.

MALVEAUX: It does work.

STEIN: Suzanne, it's incredible. It's unbelievable. I have so many friends who are smarter than I am, more famous than I am, and I'm better off than they are because my father said to me, when you have my bar mitzvah in 1957 buy a little tiny bit of stock, add a little bit and it's worked quite well for me.

[18:45:12] I mean, I'm not a wealthy person but it's worked incredibly well. That is the main engine of prosperity for America and for the ordinary worker, buy stock.

MALVEAUX: Buy stock. OK. We hear you. And do you think the stock markets is going to break 20,000 in the coming year?

STEIN: I don't know. But I know that over the next many years, it will do very, very well. I know that over a long period of time, it performs every other asset class. You don't have to do any fuss, no muss. A lot of people say, buy rental housing and rent it out. Yes, great if you want somebody calling you at 2:30 in the morning with a stuffed toilet, but I say, no. Just buy stock, read the papers every couple of weeks, see -- read it online, see how your stocks are doing, just set it and forget it and keep doing it over and over and over again. Corporate profits, they don't just belong to the rich they belong to anybody who wants them. MALVEAUX: Yes. I know the chock part is when the stock market goes

down, you feel like you're going to -- you want to sell it, it's OK, you keep it there. I want to ask you about the Trump administration.

STEIN: Don't sell. Don't ever sell.

MALVEAUX: The Trump administration that's coming in here, one of the things that I covered was this Carrier plant and Trump announcing these jobs that had come back to the United States that these manufacturing jobs in Indianapolis here. You have a critique about this because you don't buy it. I mean, you've said before that you think this is somewhat of a scam. Explain how.

STEIN: Because what happened basically was that the taxpayers of Indiana bribed Carrier to either bring the jobs back or keep the jobs there. That can't be done. You can't have the taxpayers bribing every company that is threatening to leave and take its jobs somewhere else. And I don't believe in general that the government should control the movement of capital or the movement of machinery or the movement of factories anywhere. We are a free trade society. It's made us very, very rich.

Obviously, when people lose their jobs, they should be given compensation, they should be given retraining. They should not ever have to suffer or go hungry or be worried about paying their mortgages but we should not have government control over the economy. That way lies Venezuela and catastrophe.

MALVEAUX: Let's talk about some predictions here for 2017. When you look at what we're facing here, what do you make of how the economy is going to behave and perhaps under a Trump administration, where we're going to go in terms of progress?

STEIN: Well, I don't think there's much Mr. Trump can do to lower the unemployment rate very much below what it's at. It's already at an incredibly low level. I think the idea of cutting the corporate profits tax is a good idea. There shouldn't be any corporate profits tax at all. It should all be taxed directly to the owners of the corporation and mainly a stockholder, little ones like me and big ones like Mr. Buffett. But I don't think there's much you can do to accomplish any miraculous returns but there's one thing you can do that will accomplish miraculous returns. Cutting down on the avalanche of regulations that the Obama administration has issued.

Regulations are almost a pure negative except for environmental ones which my old pal Mr. Nixon started out with the Clean Air Act. Let's keep those in place, keep our air clean, but other than that, let's keep regulations to a bare minimum.

MALVEAUX: All right. Ben Stein, good to see you as always, happy new year.

STEIN: Happy new year to you.

MALVEAUX: You're brave enough to go with predictions. Not a lot of people got predictions right this past year. Thank you so much. STEIN: I'm sure mine -- I'm sure mine won't be right either. Thank



STEIN: Thank you.

MALVEAUX: All right. We'll be right back with more on the breaking news story, that is this incident at a nightclub in Istanbul. You can also check it out on for the latest details all evening.


[18:51:37] MALVEAUX: Breaking news, Turkey's state run news agency says that there has been an armed attack at an Istanbul nightclub. Several people are injured. You're looking at these pictures here, images broadcast on local news channels in Turkey. Now showing ambulances, police vehicles responding to this incident.

Now the images also show that there are some wounded that are being loaded into balances and carried to a hospital. CNN Turk foreign editor telling CNN this is a high-end nightclub in a busy part of the town. Our own CNN's Ian Lee, he is on her way to the scene. We're of course going to bring you more as we learn more about this armed incident. You can also check out -- OK. I am being told now we are actually having -- we have Ian Lee live on -- we're still working on Ian Lee live.

We're trying to get him on the phone so he can give us little detail. But let me just walk you through this. This is Istanbul, and a number of the emergency vehicles that were called to the site. And we see a gurney that is being pulled away from the site.

Ian, are you with you now?

IAN LEE, CNN CORRESPONDENT: I do hear you. Yes. I'm with you.

MALVEAUX: Can you tell us what you know, where you are, what you're seeing?

LEE: Right now we are heading to the scene of the incident. We're hearing that there are several people injured, we haven't heard of any confirmed casualties in this incident. We've heard, though, that there has been at least one gunman, there could be multiple. We do not know at this time, who has opened fired at a nightclub.

And just to give you context around this, there has been a heavy security presence here tonight. We have seen police everywhere, a large police presence across the city because of the New Year's Eve celebration. And so this incident is something that the police were preparing for, something like this, but we do not know at this point who is behind it, and more of the details of what is the motivation behind this attack, behind this incident, tonight.

MALVEAUX: And Ian, I just want to tell you what kind of pictures that we have been watching here as you and I talk about this. We've been seeing a lot of people leave the site. They're on their cell phones. They seem rather calm, but they are communicating with others, quite a number of people who were making calls as they were walking away there. Do you know if the gunman is still on the loose? Or do you know if this is something that has been resolved?

LEE: Right now, from the best of our knowledge, we do not know the current status of the gunman. He very much or the person very much could well be still on the loose, and that is something that I'm sure the police are looking into right now. But we have not heard from the authorities whether or not they have neutralized the gunman.

[18:55:05] This is something, though, that the Turks have experienced a number of times over the past year. Tragically there have been a number of attacks across the country. The police have been on high alert. They were prepared tonight for an incident. And so it is likely -- you know, we are not on the scene yet, we are heading there right now. But it's likely from what we're hearing that the police have a heavy presence there. There is, though, a lot of traffic likely backed up from a -- the heavy police presence at the site.

MALVEAUX: Sure, and Ian, just to be clear here, you say that police have been preparing for something like this, an incident perhaps, something like this. As this specific nightclub, this high end nightclub, are you talking about in general, places of entertainment and places where people gather throughout Istanbul because of the previous incidents that have occurred?

LEE: This is more in general. Tonight, Taksim Square, which is the central location in Istanbul, we were experiencing even traveling through it tonight, there were a police cordon. They were searching people, they're searching bags, they were patting people down, they are looking for anything suspicious. And this is something that we have seen across the -- across the capital. A heavy police presence.

Right now I can tell you that there is -- we're approaching the scene and there is quite a heavy police presence right now. They have been prepared for something like this to happen, but again Istanbul is a large city, there's New Year's celebrations all over the town, and something like this, you know, while the police are prepared and while they're looking out for something, it is difficult to prevent something like it.

MALVEAUX: Ian Lee, I want to thank you so much. I know that you're approaching the scene now. And we appreciate your reporting.

The breaking news, an armed incident with one gunman who open fired, and with at least several people who were injured. A heavy security presence there at that high end nightclub in Istanbul, Turkey.

Of course for our viewers, for those who are watching, you can also go to for the latest details as we follow the story all evening.