updated 10/25/2007 5:55:20 PM ET 2007-10-25T21:55:20

Guests: Lt. Gov. John Garamendi, Rep. Duncan Hunter, David Obey, Garry

Kasparov, Howard Fineman, Chrystia Freeland, Donnie Deutsch

CHRIS MATTHEWS, HOST:  Tonight, the wildfires are blazing in California.  President Bush is on the way.  Did he learn something from Katrina?

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  Welcome to HARDBALL from Boston, at the start of the World Series.  But the World Series is only the good big story tonight.  The bad big story is the devastating wildfires out in California.

Today, President Bush stepped up the federal response to the disaster, signing a disaster declaration that will help people whose property isn‘t covered by insurance.  Bush will go to California tomorrow to check out the damage.  Are these signs of lessons learned from Katrina?  We‘ll get a frank assessment—I mean a frank one—from the ground from California‘s lieutenant governor, John Garamendi, and U.S. Congressman Duncan Hunter, who‘s also running for president.

In the second story tonight, “USA Today‘s” headline says it all.  The wars in Iraq and Afghanistan could end up costing us $2.4 trillion through the next 10 years.  That‘s almost $8,000 for every man, woman and child in this country.  Why are Americans footing the bill for a war most people seem to oppose?  Can America afford all these wars?  And where‘s Bush borrowing all these trillions of dollars from?  More on that in a moment.

And President Bush once said he could see the soul of Russian president Putin just by looking into his eyes.  Tonight, one of Putin‘s strongest opponents, a brilliant man, Garry Kasparov, the author of “How Life Imitates Chess,” tells us how the Iraq war is holding President Bush in check.

Plus: Everyone was buzzing about Obama getting Oprah‘s endorsement, but did it help?  Apparently not.  It‘s a wash.

We begin tonight with HARDBALL‘s David Shuster on the California wildfires.


DAVID SHUSTER, HARDBALL CORRESPONDENT (voice-over):  Today in southern California, officials said the damage has reached above $1 billion.  And with 1,500 homes destroyed, 70,000 others still in danger and over half a million people displaced, politicians from California to Washington today were scrambling.  President Bush invited cameras into a cabinet meeting where he announced having signed a declaration that will speed up the flow of federal disaster funds.

GEORGE WALKER BUSH, PRESIDENT OF THE UNITED STATES:  I want the people in southern California to know that Americans all across this land care deeply about them.

SHUSTER:  In California, Governor Schwarzenegger continued his tour of the ravaged communities and said the state is doing everything possible to take control of the fires and help people whose lives have been ruined.

GOV. ARNOLD SCHWARZENEGGER ®, CALIFORNIA:  We see here a great coordination between the state and the federal government, and also the locals.  Unlike previous disasters like that, there has been an immediate response amongst all of those agencies and a great working relationship.

SHUSTER:  But on this, the fourth day of the crisis, more stories began to emerge about crews being shortchanged and undermanned over the weekend, when the fires began to spread.  The fire chief in Orange County said a blaze near Irvine went out of control because not enough aircraft and equipment were available to put it out.

Some of the equipment belongs to the California National Guard and is in Iraq.  And last night on HARDBALL, California‘s lieutenant governor made that point.

LT. GOV. JOHN GARAMENDI (D), CALIFORNIA:  OK, President Bush comes out, we‘ll be polite.  But frankly, that‘s not the solution.  How about sending our National Guard back from Iraq so that we have those people available here to help us?

SHUSTER:  And as far as the White House promises to help communities destroyed by the fires...

GARAMENDI:  How many times did he go to New Orleans and still made promises but hasn‘t delivered?

SHUSTER:  Ever since Hurricane Katrina, the Bush administration has been dealing with perceptions of incompetence and detachment.

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

SHUSTER:  Two years ago, President Bush only discovered the depths of despair when aides urged him to look at DVD of news coverage.  This week, the president has gone out of his way to show his engagement.

The president may also benefit now because of stark differences in survivor stories.  At the New Orleans Convention Center, thousands of Katrina victims were ignored for several days without food, while at Qualcomm Field in San Diego, there‘s everything an evacuee could possibly need, from cots to coffee.  Still, plenty of people are starting to return home to inspect the damage.


SHUSTER:  And thousands of families, like the Oldbergs (ph) in northern San Diego County, are discovering there‘s nothing left of the house they once called home.

UNIDENTIFIED FEMALE:  It hurts to see it this way!

SHUSTER:  In many communities, the devastation has been hit and miss, homes completely destroyed on one side of the street, seemingly fine nearby.  And so the emotions are raw as Californians remain glued to the latest fire updates and hang on every word from leaders who are trying to project competence and control.

(on camera):  Tomorrow, President Bush will meet with Governor Schwarzenegger in California and tour the fire damage for himself.  Administration officials insist the federal government is helping now and will help with the recovery.

I‘m David Shuster for HARDBALL in Washington.


MATTHEWS:  Thank you, David.  Far more now on the California fires, we‘re joined right now by the California lieutenant governor, John Garamendi.  Governor, thank you for joining us right now.  Give us the perspective you have right now on President Bush‘s arrival there tomorrow.

GARAMENDI:  Well, let‘s say I‘m hopeful.  I‘m hopeful that it‘ll be a lot different than what happened in New Orleans.  This is an opportunity for the president and the federal government and the Homeland Security organization to prove itself.  They were utterly failures in New Orleans.  Let‘s see them prove themselves here in California.

We need that help.  We need that federal money.  Sign the documents, Mr. President, as you have done, and let the money and let the resources flow into California because we‘re going to need the help.

We know that—at least, we hope we‘re going to have a winter.  When that comes, the U.S. Forest Service land that is above most of these communities has the potential of sliding down in another devastating flood into the communities.  That requires immediate efforts to stabilize those lands.  That‘s a federal issue.  That‘s federal money that‘s going to be necessary.

So yes, there‘s a lot of things to do, Mr. President.  You‘re coming out.  Let‘s show us your stuff.  Show us the money.  Show us the work.  Show us the improvement in the federal government‘s response.

MATTHEWS:  Is the president going to bring National Guards troops home from Iraq, as you suggested last night, to deal with this problem?

GARAMENDI:  No, he‘s not.  The National Guard here in California is one of the outfits that‘s been on the front lines in Iraq now for more than three years.  They‘ve done a terrific job there.  They‘re actually doing a good job here.  We had to pull those troops off of the border to help immediately.  They‘re doing the job, and we‘ll do the best we can.

But that Guard unit also needs support.  The equipment, the men, the personnel have been stressed for three years as a result of the war.  They need to be replenished.  They need to replenish their supplies, their materiel, their equipment.  Those are responsibilities of the federal government.  We need that help here, too, not specifically for the fire but for the Guard, so that it can perform the services that this state needs now and into the future.

MATTHEWS:  Well, this looks like triage you‘re describing here, triage, whereby you‘re pulling your resources away from the border to meet an immediate need here.  Is that going to cost you in border protection?

GARAMENDI:  I guess it did not.  We don‘t really know.  They were gone for two or three days from the border.  They‘ve gone back.  New men and women have joined, been called up, and they‘re filling in behind that.  So we‘re able to get along here.  And fortunately, we‘re on the—hopefully, on the downside of this emergency, and we will not be needing that long-term service.  But clearly—clearly—the entire nation is stressed as a result of this war.

You used the word a moment ago, $2.4 trillion for a war that should never have happened in the first place.  So you know, here we are, faced with a situation where we‘re going to have to go out at the federal level, borrow more money to provide the services that are going to be necessary to rebuild southern California.

Fortunately, yes, the insurance industry is there.  And my word for the insurance industry is, You better perform this time, folks.  We know that in 1991, you failed.  There were miserable failures by some insurance companies, not all, in the 2003 fires.  Now‘s your chance, insurance industry, to prove that you can finally get it right here in southern California.  I know.  I know their business.  I‘ve watched them.  I‘ve been their regulator twice over a period of 16 years.  They better not backslide this time as they have in the past.

MATTHEWS:  Well, you said you‘re hopeful about the president, although you were much tougher last night, Governor.  How would you rate the governor‘s performance out there, Governor Schwarzenegger?

GARAMENDI:  Excellent.  Governor Schwarzenegger and his Office of Emergency Services, through the Emergency Council, of which I‘m a member, planned.  We knew for three years, from 2003 to this moment, that this was going to happen again.  Resources were put in place.  Budgets were increased.  Additional personnel were added to the Cal Fire team.

And we watched the weather out here.  We knew that these Santa Ana winds were coming.  The equipment was pre-positioned in southern California.  Fifteen of the sixteen helicopters that the state owns were put into southern California.  Men and material and engines were beginning to move to southern California even before the fires broke out.

My assessment of Governor Schwarzenegger and his operation, very well done.  That‘s a piece of it.  Similarly, the U.S. Forest Service here in California did a good job.  Much of this fire has occurred on U.S. Forest Service land.  When these fires happen, we don‘t—we take the badges off.  We sit down around the table, implementing the prearranged mutual aid programs, the prearranged command structures, everybody working together, move the resources to the most dangerous, the most necessary areas.  And that means that when you‘re short, some areas are going to have to wait.  That happened, unfortunately, in a few places.  But the system really worked here, worked very well in California.

MATTHEWS:  Let me just ask you one last question, Governor.  What will happen to those people—look at their houses all today and yesterday, and looking at houses that are burnt to the ground.  You can hardly tell the appliances, what they are anymore.  What will happen to those people?  Do they get insurance that covers this or not?

GARAMENDI:  Well, this is the insurance question that I was speaking to a few moments ago.  In 2003, there was a—the same thing happened in 2003.  Actually, more than 2,300 homes were burned in that particular firestorm.  The insurance industry, under rules and regulations that have been in place—actually, I wrote them more than a decade ago—is required to respond to a request for assistance within a few hours.  They do that.  Most times, they written an immediate check, and some of the people here in Qualcomm Stadium probably have already received that immediate check so that they can arrange for living accommodations and for food and to buy additional clothing.

The problem occurs down the road a couple of days or a couple of weeks from now, as you begin to work on those claims and the insurance company begins to do what it inevitably will do every time.  They begin to follow their first commandment, and that commandment is, Thou shalt pay as little as late as possible.  That‘s not acceptable behavior.  There are rules, there are fines, there are procedures in place to hold those insurance companies to a far better standard.

And while I‘m not insurance commissioner anymore, I can assure you and the insurance companies, as did with the representative of Farmer‘s Insurance Company, I‘m not leaving town.  I‘m watching.  And if you guys screw up as you have in the past, you‘re going to get hammered.

MATTHEWS:  OK, thank you very much, Lieutenant Governor John Garamendi of California.

For more on the president‘s visit to California tomorrow, we turn to U.S. Congressman Duncan Hunter, who lost his own home in that 2003 fire.  Good evening, Congressman.  Thank you very much.  Do you think the president of the United States is going to be a distraction when he comes out there?  That‘s what the lieutenant governor said yesterday.  He said he‘ll be polite to him, but he doesn‘t think it‘s more than public relations, the president coming out there.  What do you make of that?

REP. DUNCAN HUNTER (R-CA), PRESIDENTIAL CANDIDATE:  Well, I think you‘ve got Democrat leadership who won‘t take yes for an answer.  When he doesn‘t come, he‘s ignoring the state.  If he does come, it‘s a ceremonial visit.

But Chris, let‘s go over what the administration did do because that‘s the basic essence of your—your question, what have they done?

You know, as soon as I found out about this fire, I sent a memo immediately to the secretary of defense.  The head of the National Guard, General Steven Blum, even before he got a request from the state of California, took all the assets, all the aerial assets that we‘ve got, these big C-130s that are great firefighters, and he took them from Colorado, from Wyoming, from North Carolina and he sent them—in fact, he said, I‘m going to call this a training mission because I‘m sending them out before they‘re even requested—sent them out to California.

They‘re at California now.  We‘ve got them loaded with fire retardant, and right now, they‘re sitting on the runway at Point Mugu in California, a little north of LA, ready to come into the firefight in San Diego or Los Angeles County.  And right now, there‘s no request for them.

So the president‘s people have actually gotten assets into California, ready to go, sitting on the ramp right now, with their crews ready to drop this retardant and take a big hit on these major fires that are still out of control in southern California.  So they‘ve worked early.  They‘ve worked late.  And I think they‘ve done a good job in the federal government.

MATTHEWS:  You know, a lot of people have commented on the difference in the way people are getting treated out there, compared to how people were treated down in New Orleans during the flood.  We have a split screen up there right now, I believe—we‘re putting it up now—that shows the comparison between the people at the stadium out there right now and the people that were in that big stadium, the Superdome, back in New Orleans.

How do you account for the fact that it‘s so much nicer, the accommodations, this time, to put it lightly?  Some people say they‘ve got Starbucks coffee available, all kinds of accommodation that wasn‘t available to the people who were starving and out of water down in New Orleans.

HUNTER:  Well, Chris, I went in with rescue task force into New Orleans almost immediately after the hurricane, and when we went to, for example, to the refugee shelters in Houma, Louisiana, which is right next to New Orleans, you had mountains of clothes.  They had hot meals.  They had good medical care being given right there.  And people were—in fact, they had a big sign that said, Don‘t donate any more clothes, we‘re full up.

So sure, you had the downtown disaster scenes that have been played over and over again, but as I went around to the rescue centers and as I was inside the city helping out there, I saw lots of neighbors helping neighbors.

But I‘ll just tell you, in San Diego, we‘re used to taking hits like this.  We‘re optimistic folks.  One of the amazing statistics coming out of this major fire is this.  There have been almost no incidents of looting.  You have places that have been left open, a lot of them unlocked, and you‘ve got neighbors taking care of neighbors.  And you know, San Diegans are optimistic.  We‘re going to rebuild.  That‘s the spirit of this community.

MATTHEWS:  Are you concerned that they had to pull some National Guard forces off the border for this?

HUNTER:  Well, first, I funded (ph) those National Guard forces.  They‘re putting up border fence.  There‘s nothing wrong with having those National Guard forces being pulled from the border.  And Chris, as you know, as a former chairman of the Armed Services Committee, I can tell you there‘s two-and-a-half million Americans under—in a uniform right now, less than 10 percent of those folks in Iraq and Afghanistan.

This is a real stretch for the left wing to reach out every time we have a disaster and say, You know, if we didn‘t have Iraq and Afghanistan, somehow this wouldn‘t happen.  And in San Diego, we‘ve got the 1st Marine Division here at Camp Pendleton.  We‘ve got thousands of Marines who would be available, if just putting warm bodies up in a line could stop these walls of flame.

When you have these fires coming off the—out of these sagebrush flats and canyons, pushed by winds up to 60 miles an hour, you don‘t put a bunch of bodies in front of them.  You try to choke them off at chokepoints, and you try to get your planes and your choppers into the air.  So this idea that somehow Afghanistan and Iraq are keeping us—keeping us in forest fires is nuts.

MATTHEWS:  OK, thank you very much.  Nuts?  OK.  I like that way of talking.  Anyway, thank you, U.S. Congressman Duncan Hunter...

HUNTER:  Thank you, Chris.

MATTHEWS:  ... who lost—you lost your home four years ago.

Coming up: Turns out that the war in Iraq, which the administration told us would be paid by Iraqi oil, could wind up costing us—these numbers are beyond belief -- $2.4 trillion before it‘s over.  That‘s $8,000 for every man, woman and child in this country.  So why do the Democrats keep saying yes to a war they say they don‘t believe in?  What‘s this about?  We‘re going to ask the chairman of the House Appropriations Committee, the guy with the purse strings, Dave Obey of Wisconsin.

And later: Sacrilege?  Die-hard Yankee fans are upset with Rudy Giuliani because he‘s rooting for Boston tonight.  These people—unbelievable.  Let‘s watch what he had to say.


RUDOLPH GIULIANI ®, FMR NYC MAYOR, PRESIDENTIAL CANDIDATE:  I‘m rooting for the Red Sox in the World Series and—OK!  All right.


MATTHEWS:  Well, so am I.  Anyway, we‘ll be right back to talk about politics, but first of all, the cost of this war with Dave Obey, the man with the purse strings.

Back in a minute on MSNBC.


MATTHEWS:  Welcome back to HARDBALL. 

The cost of the wars in Iraq and Afghanistan could total $2.4 trillion, according to a Congressional Budget Office estimate released today.  The estimates assume that between 30,000 to 70,000 troops will stay in the region for the next 10 years.  The two wars have already cost over $600 billion. 

U.S. Congressman David Obey is chairman of the House Appropriations Committee. 

Sir, thank you very much for joining us. 

Tell us a sense, if you can, as an experienced budget guy, how big this cost is. 


Well, it‘s incredible. 

I mean, $2.4 trillion is equivalent to half of the Social Security shortfall over the next 75 years.  It could pay for health care for every American for a year, every American who doesn‘t have it.  It‘s an astounding cost.  And, I mean, the president is asking for 200 additional billion dollars this year.

To put that in perspective, the most expensive year of the Vietnam War was 1968.  It only cost us, in today‘s dollars, about $123 billion. 

MATTHEWS:  Well, where does this—I mean, this is a financing question, not just a budget question, sir.  But is this all borrowed money?  Aren‘t we running a big deficit now?  And isn‘t all this money basically being financed by selling U.S. paper overseas at this point? 

OBEY:  Well, sure.  Without this war, we would be in surplus.  We would have a significant surplus. 

But, I mean, the—the money is being borrowed from—from American citizens.  It is being borrowed from the Social Security fund, and it‘s being borrowed from China. 

MATTHEWS:  And what are the risks in all that, in terms of the economy?  What does that do, to have all this debt piling up, up to, what, $9 trillion we‘re getting up to now, as national debt? 

OBEY:  Well, I mean, the—the problem is that every president, from FDR through Jimmy Carter, brought the national debt down as a share of our total national income over all those years, regardless of party. 

That—under Ronald Reagan, when he passed out all the tax cuts on borrowed money, the debt almost doubled as a percentage of our national income.  It went down under Clinton.  It‘s now going up again rapidly.  That‘s going to put us in exactly the wrong position as the baby boomers retire.  And we need to have the debt run down, rather than built up, so that we can pay the cost of their retirement. 

MATTHEWS:  When the president‘s people, the budget people, come to you and ask for appropriations, for spending, do they ever bring up these concerns, the opportunity costs that could—where the money could be spent, the impact on our debt situation, and potentially endangering this country‘s security to owe so much abroad?  Do they ever talk about those concerns? 

OBEY:  Well, I mean, frankly, it has been very hard to get them to talk period. 

We have been trying right now to get the administration to sit down and work out compromises on all of the appropriations bills.  And I guess they would prefer to go through a veto Kabuki dance...


OBEY:  ... which is unfortunate. 

MATTHEWS:  What do you think about the problem?  A lot of people who are opposed to this war voted Democrat last time, because they really thought, if they changed the Congress, they could change and end the war. 

And, yet, it seems so hard for Congress to end this war.  Why don‘t you just—I will ask you the obvious question, although I guess I know the answer.  Why don‘t you cut off the money and say, we‘re not—we‘re not going to finance this war anymore?  You have got 50 percent of the House and the Senate.  Just don‘t give them a majority anymore. 

OBEY:  Well, the problem we have in the Senate—I mean, we have control of the House by a narrow vote.  In the Senate, people think that we have control of the Senate.  We merely have custody of it, because you have to get 60 votes in order to pass something, and we only have 50. 

But I have made quite clear—since the president has made clear he‘s sending down a $200 billion supplemental request for Iraq, I have made quite clear that, as chairman of the committee, I have no intention whatsoever of reporting one dime of that supplemental for the remainder of this year. 

The president just sent down his proposal two days ago.  And he—he took over five months to send it down.  I think the Congress has an obligation to scrub it.  And what I have said is, I would be happy to give him every dollar he‘s asking for if he would change his policy, so that—so that we would have as a national policy a target of getting out of combat in Iraq by January of 2009. 

MATTHEWS:  All right.  OK.  We‘re going to have a fight.

OBEY:  This war has already screwed up one administration.  I don‘t want it to screw up a second one. 


Thank you very much, U.S. Congressman David Obey, chairman of the House Appropriations Committee.  He‘s from Wisconsin. 

Up next, the New York tabloids have fun at Rudy‘s expense today, after Rudy said he‘s rooting for the Red Sox in tonight‘s World Series opener. 

And Fred Thompson gets tough on illegal immigration.  It could be his winning issue.  Watch Fred on this one.  He could win this with this one. 

You‘re watching HARDBALL, only on MSNBC.  


MATTHEWS:  Welcome back to HARDBALL.  Time now for some exciting politics. 

Nobody here us but wives.  Jeri Thompson—that is Fred‘s wife—says she‘s too busy with diapers.  Elizabeth Edwards says she‘s only being a spouse out there.  Cindy McCain says, the last thing she does is talk campaign issues with her husband.  Well, that‘s the way it is this autumn, according to the campaign wives club. 

They all told Maria Shriver yesterday that they‘re really not all that big in the operations of their husband‘s campaigns. 

So, what is this all about?  I wonder why they‘re all denying this.

Anyway, big bad John, visiting the Smith & Wesson, Senator McCain declaring Tuesday—quote—“I will follow Osama bin Laden to the gates of hell, and I will shoot him with your products.”


Rudy Giuliani is a Yankee fan, as we all know, but he‘s got a heart. 

He says he‘s rooting for the Red Sox in the World Series opener tonight. 



I‘m rooting for the Red Sox in the World Series.  And OK?  All right. 


GIULIANI:  And I‘m not saying that—and I‘m not saying that—I‘m not saying that just because I‘m—I‘m here in—in Massachusetts.  I‘m rooting for the Red Sox because I‘m an American League fan. 


GIULIANI:  And I go with the American League team. 


MATTHEWS:  Well, it sounds reasonable to me.  Is he supposed to be voting for the team from the other league? 

Anyway, it‘s apparently stirring up the New York tabs.  “The Post” went to the wood—went to wood, as they say, to the front page with “Redcoat” right there on the front page, and “Rudy the Yankee Flipper.”

Of course, the Yankee Clipper was DiMaggio. 

Anyway, speaking of trouble, Fred Thompson may be fishing in troubled waters.  He‘s getting tough on illegal immigration, saying, if he gets elected president, he‘s going to cut off all federal money to any city that offers services to illegal immigrants. 

He may have something here.  People are tired of the politicians in both parties refusing to enforce the law, refusing to actually do anything to stop the flow, night after night, night after night, of illegal immigrants across the border.  Just watch the pictures on NBC every night. 

Anyway, corruption watch: “The Washington Post” reports today that underage campaign contributions are on the rise.  How does it work?  Well, a wealthy guy maxes out his giving, gives all he can legally, and then uses his children‘s names to give even more.  Looks like cheating from here. 

Tomorrow, CIA official Valerie Wilson comes here to HARDBALL to play hardball with us.  I‘m going to ask her about how the president manages to cover over the criminality in the vice president‘s office by simply commuting his chief of staff‘s multi-count prison sentence and telling his people who work at the White House to just act like nothing ever happened. 


VALERIE PLAME WILSON, FORMER CIA OPERATIVE:  But I am, you know, finally, after four-and-a-half years of everyone else talking about me, I get to tell my story.  And it‘s an important one, because it is a story of the consequences of speaking truth to power and the importance of holding your government to account for its words and deeds. 


MATTHEWS:  Tell me about it.

Anyway, finally, take a look at what Joe Biden had to say about being denied access to a military base in his home state of Delaware.  Here‘s what he said about the Bush administration‘s refusal to let anyone see the coffins coming home from Iraq. 


SEN. JOSEPH BIDEN (D-DE), PRESIDENTIAL CANDIDATE:  They tried to keep me off the base.  I‘m chairman of the Foreign Relations Committee, the fifth most senior member of the Senate.  And how dare the president tell me I can‘t walk on to a military base?


MATTHEWS:  Up next, what does Russian President Vladimir Putin want for his country?  Is he outmaneuvering, checkmating, perhaps, President Bush to get what he wants?  And can we trust Putin? 

Chess grand master and Putin critic, the brilliant Garry Kasparov joins us here next on HARDBALL. 

You‘re watching HARDBALL, only on MSNBC.  


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  My leadership style has been to try to be in a position where I actually can influence people.  And one way to do that is to have personal relationships that—that enable me to sit down and tell people what‘s on my mind, without fear of rupturing relations. 

And that‘s how I have tried to conduct my business with Vladimir Putin. 



MARY THOMPSON, CNBC CORRESPONDENT:  I‘m Mary Thompson with your CNBC “Market Wrap.” 

On Wall Street, stocks recovered from heavy losses earlier in the day, with the Dow Jones industrial average finishing down a fracture, the S&P 500 down three points, and the Nasdaq off 24.

Hurting stocks today, Merrill Lynch.  It reported the biggest quarterly loss in its 93-year history, more than $2 billion.  That‘s after Merrill took an $8 billion in write-downs blamed on the credit crunch. 

Also hurting stocks, sales of existing homes fell 8 percent in September from the previous month.  In the meantime, the median price of homes sold fell more than 4 percent from a year ago.

Oil prices took a big jump on a sharp drop in oil and gasoline inventories.  Crude gained $1.83 in New York, closing at $87.10 a barrel. 

And Microsoft beat out rival Google for a stake in the social networking site Facebook.  Microsoft will pay $240 million for a 1.6 percent stake.

That‘s it from CNBC, America‘s business channel—back to HARDBALL. 

MATTHEWS:  Welcome back to HARDBALL. 

President Bush said in 2001 that he looked into Russian Vladimir Putin‘s soul.  Now tension between the two leaders has reached an all-time high, in light of Putin‘s rollbacks on democratic reform in his country, and most recently his meeting with Ahmadinejad in Iran. 

Chess grand master Garry Kasparov has been an outspoken critic of Putin.  He is also the author of a new book, “How Life Imitates Chess.” 

Mr. Kasparov, thank you very much.

Is Russia a free country today?


MATTHEWS:  Can you speak out against the president when you want to? 

KASPAROV:  Yes, on U.S. television. 

MATTHEWS:  But you can‘t do it at home? 

KASPAROV:  We have very few opportunities left.  There‘s one remaining free radio station, a couple of newspapers, and, of course, Internet.  But TV under is very tight Kremlin control. 

They—they even accepted the fact that there is a stop list for people that cannot be shown on Russian television at any circumstances. 

MATTHEWS:  Are you afraid of what you say over in America on your book tour? 

KASPAROV:  No.  I‘m used to being outspoken.  I‘m used to saying what I think about Vladimir Putin.  And I‘m consistent. 

Everything I‘m saying here and I‘m saying in Russia, when I have these little chance to be on the radio station or on my tours in Russia, where I‘m meeting people in the streets, or in some audiences where we still have access. 

MATTHEWS:  Are you a politician? 

KASPAROV:  I‘m afraid to use the word politician for applying for Russia, because we‘re not fighting to win elections.  We‘re fighting to have elections. 

And it is more about fighting for democracy and human rights, rather than about impressing public with a few sound bites. 

MATTHEWS:  Well, you‘re a very smart guy. 

I was watching you on “Bill Maher” Friday night.  And I want to ask you your estimate.

You—you have grown up in Soviet Russia.  You‘re living in Russia post-Soviet Russia.  What do you think of America these days?  Are we changing as a country, from your view? 

KASPAROV:  Yes, for many Soviets, America was a stronghold of democracy and a beacon of hope. 

But since Russian public didn‘t see the results from this democratic, or so-called democratic, and market reforms in mid-‘90s, America is partially paying the price for this dissatisfaction, disillusionment. 

Also, America has been steadily losing credibility, because, unlike in ‘70s or ‘80s, American leadership is applying double standards to the very important issue of democracy. 

And, when Russian people watching America invading Iraq and building -

quote, unquote—“democracy” there, and, at the same time, closing eyes about gross violation of human rights, not only in Russia, but in—in former republics of the Soviet Union, it creates the wrong image.  Of course America‘s image is much worse today than 20 years ago. 

MATTHEWS:  Why so? 

KASPAROV:  Because Putin succeeded in presenting America‘s concept of spreading democracy worldwide as a tool to promote American geopolitical interests.  Unfortunately, when we see Dick Cheney making a big speech in Vilnius—it‘s not in Washington, not in Moscow, but in Vilnius criticizing Russian record on democracy, and then he moves to Kazakhstan and embraces Kazakh strong leader Nazarbayev, ignoring the fact that Kazakhstan is even way behind Russia in promoting human rights and democracy—it‘s easy for Putin and his cronies and for the Kremlin propaganda to say look, democracy is an American geopolitical tool. 

MATTHEWS:  Let me ask you, Garry Kasparov, do you believe that Bush is sincere in fighting for democracy or does he have another motive? 

KASPAROV:  I don‘t know.  I wish he is sincere.  But from what I‘m seeing, definitely his efforts are pointing in the opposite directions.  Russians could have different opinions about Kennedy or Reagan, but at least they saw the consistency in defending certain values.  And if you want to talk about promoting democracy—if you make speeches like “Ich Bein ein Berliner” or “tear down this wall,” you must be on the spot.  You cannot mix it with other interests like oil. 

MATTHEWS:  Let me take a look.  Let‘s take a look at this statement by President Bush on Iran, Putin, and Ahmadinejad. 


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  I have told people that if you‘re interested in avoiding World War III, it seems like you ought to be interested in preventing them from having the knowledge necessary to make a nuclear weapon.  I take the threat of Iran with a nuclear weapon very seriously. 


MATTHEWS:  World War III; what do you think of that language by President Bush? 

KASPAROV:  I think it‘s not—it‘s not addressing the issue, and the issue is that Putin is trying to create or to inflate the spread, because I believe Putin would be delighted to see America striking on Iran, because that will push oil prices even higher.  Putin‘s only item in his agenda is high oil prices.  That‘s how his regime survives in Russia.  That‘s why he‘s always playing a game of keeping the tension high, especially on the Middle East. 

And unfortunately, Bush lost this game in the geopolitical casino, because Putin always succeeded in throwing new bargaining chips.  And right now, I think he‘s taking the commanding lead. 

MATTHEWS:  OK, here‘s the biggest question in the world; when the president of the United States talks about World War III, what he‘s talking about, apparently, is Israel attacks Iran to knock out its nuclear facility, Iran strikes back, somehow Russia gets involved in that fight.  Can you imagine Putin joining that battle between Iran and Israel? 

KASPAROV:  No way.  Putin could be everything, but he‘s not a imperialist.  He is a man of capitalist.  He is running not the country, but the corporation.  I would call it KGB Incorporated.  He doesn‘t care less about Kosovo, Iran, missile defense.  It is about out-playing America and western Europe in this big game, where the profits—personal profits and the interest of the corporation he runs far more important than anything else. 

Putin doesn‘t want an out-right conflict.  He wants some slow motion action.  Hezbollah attacking Israel, maybe America striking Iran, the great war in Iraq, problems with North Korea, problems in Pakistan; small problems, but all over the place, which makes sure that the tension remains high and the oil price also remains very high. 

MATTHEWS:  OK, thank you very much, Garry Kasparov.  Your book is called “How Life Imitates Chess.”  Up next, the HARDBALL round table analyzes the latest batch of campaign ads from Mitt Romney, Chris Dodd and Barack Obama.  Lots of polls coming up, by the way, interesting poll data.  We have the report in just a minute.  This is HARDBALL, only on MSNBC.


MATTHEWS:  Welcome back to HARDBALL.  The Round Table is here.  Howard Fineman is “Newsweek‘s” chief political correspondent and an MSNBC political analyst.  Donnie Deutsch is the host of CNBC‘s “The Big Idea,” and chairman of Deutsche Incorporated.  Chrystia Freeland is the US managing editor for “The Financial Times.”  Bloomberg News and the “Los Angeles Times” have a new national poll out showing Hillary so far ahead it is unbelievable; 31 points ahead of Obama nationally.  And up in New Hampshire, look at this, two to one over Obama.  Hillary, she‘s crushing the guy, Howard. 

What is go on in this race?  It‘s not just that Obama is losing.  He‘s really fallen off the pace here. 

HOWARD FINEMAN, “NEWSWEEK”:  I think it has a lot to do with Hillary.  I think she‘s showed by the way she‘s run the campaign and the numbers she‘s getting—they have an accumulating affect of answering the question of whether she‘s electable.  It doesn‘t answer it completely because some of the test match ups against Republicans are still close.  But in terms of being an effective candidate who seems to have the ability to overcome her own negatives, she‘s kind of won the war with herself so far.  She‘s beating her own negative perceptions as a winner in these numbers, and that helps her heading into the actual voting. 

MATTHEWS:  Chrystia, do you see it that way, as Hillary winning more than Obama losing? 

CHRYSTIA FREELAND, “THE FINANCIAL TIMES”:  Yes, I do and think Howard puts it really well, because I think one of the points that a lot of the people had raised about Hillary from the start was, sure, she might be a great president, but is she electable?  That‘s something a lot of Democrats were asking.  And the Hillary machine right now has just been so relentlessly efficient and Hillary has been such a good performer that people, at least Democrats, are starting to say, well, maybe she is. 

The big question though is going to be what primary voters actually do, and what happens when she faces off against a Republican? 

MATTHEWS:  Let‘s take a look at this ad.  It‘s an Obama ad.  It‘s running in New Hampshire.  Will this help him catch her in New Hampshire? 


SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE:  I‘m Barack Obama and I approve this message. 

We are a beacon of light around the world.  At least that‘s what we can be again.  That‘s what we should be again. 

When we break out of the conventional thinking and we start reaching out to friend and foe alike, then I am absolutely confident that we can restore America‘s leadership in the world.  We‘re going to lead with our values and our ideals, by deed and by example.  I want to go before the world and say, America‘s back.  America is back. 


MATTHEWS:  Donnie, you‘re the ad man.  Is he winning with that one? 

DONNIE DEUTSCH, “THE BIG IDEA”:  No, he needs to be a fighter at this point.  He‘s done the hope thing.  The sizzle thing has been there.  The only thing that‘s going to help him right now—and I think this ship has sailed—he goes after Hillary strong.  He kind of takes the gloves off, start pounding her.  I think we know people want to see a fight.  If nothing else, it will put them in a discussion together. 

I think, going back to your earlier premise, obviously, Hillary is winning.  But he has been losing at the same time, because he has shown nobody—he hasn‘t shown anybody anything beyond the kind of the real glossy stuff.  He has to get in there and start pounding. 

MATTHEWS:  Making that point, Howard and Chrystia, here‘s the Gallup poll; it shows what impact Oprah Winfrey‘s endorsement of him has had, zip.  Four out of five say it doesn‘t matter, and the rest, the one out of five, are a wash.  Howard?

FINEMAN:  The point there is everyone already liked Obama.  You didn‘t need Oprah to say, he‘s a great guy you‘d like to have a lunch time conversation with.  That‘s not the issue.  That ad I think is entirely symbolic of what‘s wrong with this campaign.  That sounded like he was running for the Nobel Peace Prize, not for president.  And if he says—he‘s—

He‘s got to get specific.  If he says we need to talk to our adversaries, who he‘s talking about?  If he says that he wants to get away from old thinking, who is he accusing of old thinking?  There‘s no time now to read between the lines.  I don‘t understand his reluctance.  If he‘s going to have a chance, he‘s got to take on the Clintons by name, not just Hillary, but I must say Bill by name.  Say that we have had 28 years of Bushes and Clintons on presidential tickets, and we‘ve got to turn the page, and I‘m the guy to do it. 

And I don‘t see it.  It‘s entirely too vague and too nice.  He‘s got to stop being nice to everybody. 

FREELAND:  -- and what‘s really interesting for me in looking at the international reaction to the U.S. presidential race and the American one, is outside the United States, people are a lot more concerned about this idea that America is being governed by two dynasties.  And yet, that notion doesn‘t seem to have captured the public attention or really to be being used by Clinton‘s opponents. 

MATTHEWS:  Here‘s the brand new number, Chrystia—here‘s the new number, the “L.A. Times”/Bloomberg poll just out—it was asking people, what do they think about Bill Clinton.  Would it be a good idea or a bad idea for the country to have Bill Clinton in a position to basically be Hillary‘s consigliere on foreign issues, et cetera.  Well, this is such an interesting answer, Chrystia, 49 percent said yes.  Now, that‘s mostly Democrats obviously. 

But if only half the country think it would be great to have Bill around the house, I don‘t know if that answers the question you raised very well. 

FREELAND:  Well, what I think was interesting about that poll is that it was very partisan, wasn‘t it?  And the Democrats thought it was a great idea, i.e. people who like Bill, and the Republicans, people who didn‘t like Bill and don‘t want him back in the White House, didn‘t think it was a good idea to have him as the consigliere. 

But the central point about family command and celebrity command of the presidency, I think even goes beyond Bill Clinton himself.  And I think it‘s, you know, a bigger structural weakness in how you get to be president of America.  But Americans don‘t seem really worried about it right now. 

MATTHEWS:  You know, it‘s hard for the Bush Republicans to say, let‘s get rid of a dynasty after they benefited from all these years.  It‘s very hard to say, let‘s stop this dynastic thing right now that we have all these presidencies behind us.  We‘ll be right back with the round table to talk with the latest poll data.  Lots more coming in on this election in the polls.  You‘re watching HARDBALL, only on MSNBC. 



MITT ROMNEY ®, PRESIDENTIAL CANDIDATE:  In business, you only spend what you have.  In Washington, government always spends more.  It shouldn‘t be that way.  I‘m Mitt Romney.  I come from the business world, where turning around companies taught me how to manage budgets.  That‘s what I did at the Olympics and as governor.  As president, I‘ll audit Washington, top to bottom and cut spending, because our next president has to be an agent of change.  And as Republicans, change begins with us. 

I‘m Mitt Romney, and I approve this message. 


MATTHEWS:  That‘s a Willie Nelson line.  It‘s not supposed to be that way.  Anyway, that was an ad from Mitt Romney.  We‘re back with the round table.  Let‘s take a look at the poll numbers as they‘re moving right now.  Mitt Romney is leading in Iowa still, but look at Mike Huckabee.  He‘s coming up into the race here.  He can pull an upset.  Romney is leading in New Hampshire, but there again an upset possibility; McCain is moving up strong. 

And Romney‘s trailing both Giuliani and Fred Thompson down in South Carolina with the immigration issue.  Could Fred Thompson win there.  Let‘s go right now to Howard, could we have chaos?  Could we have a situation where Huckabee wins in Iowa, McCain wins in New Hampshire, and Fred Thompson wins in South Carolina, creating a perfect storm of insanity for the Republicans. 

FINEMAN:  Yes, you could have it.  It‘s called competition.  I think what Mitt Romney is trying to do is close out those big three.  He‘s ahead slightly in Iowa.  He‘s ahead in New Hampshire.  But he‘s behind in South Carolina, where this ad was just went up.  And he‘s trying to shore himself up there.  That‘s his big weakness. 

He‘s following the classical how to get media coverage strategy, Iowa, New Hampshire and the big bounce in South Carolina, which is especially important for Republicans.  That‘s his weakest spot.  That‘s why he went for the Bob Jones endorsement down there.  And that‘s why he went up with this ad, trying to lead with something that‘s not cultural, not religion, you know, stressing business and that kind of thing, which is smart in South Carolina. 

MATTHEWS:  Say Bob Jones again one more time, will you? 

FINEMAN:  Bob Jones University. 

MATTHEWS:  Thank you.  Let‘s go to Chrystia, what do you think?  Is he going to run this all three?  It looks to me like he could lose all three. 

FREELAND:  He could.  But I think that is absolutely the strategy he‘s pursuing.  I‘ll tell you one thing, real constituency is Wall Street.  When I talk to people there, including the Democrats, they have a lot of respect for Mitt Romney as a strategic effective business guy.  And what they are saying is do not under rate his ability to be effective and roll out a machine. 

MATTHEWS:  Chrystia, every rich guy I know is for him. 

FREELAND:  Even the ones who aren‘t supporting him say he‘s really good. 

MATTHEWS:  Thank you, Howard.  Thank you, Donnie.  Please come back, Donnie.  Thank you, Chrystia.  Tonight our guests include Valerie Wilson, the person at the heart of the CIA leak case.  Right now it‘s time for “TUCKER.”



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