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Retail Prices Surge; Some Top Democrats Calling for Another Stimulus Package; Preventing Catastrophic Explosions in Jumbo Jets; U.S. Army Deserter Back Home Ready to Face the Consequences

Aired July 16, 2008 - 09:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

TONY HARRIS, CNN ANCHOR: And good morning, everyone. You are in the CNN NEWSROOM. I'm Tony Harris.
HEIDI COLLINS, CNN ANCHOR: Hi there, everybody. I'm Heidi Collins.

You'll see events come into the NEWSROOM live on this Wednesday morning, July 16th.

Here's what's on the rundown.

A new economic hangover this morning. Consumer prices make their biggest jumps in a quarter century.

HARRIS: Was a missile test a motivation? The U.S. agrees to join talks on Iran's nuclear program.

COLLINS: And (INAUDIBLE) kidding? Those jib-jab guys are back at it again in the NEWSROOM.

HARRIS: And this just in just moments ago, retail prices surge yet again. The biggest one-month spike since the early '80s. Let's talk about the annual inflation rate with CNN's senior business correspondent Ali Velshi.

Ali, explain it away, if you would, please.

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: All right. Two things you got to think about -- one is the monthly inflation rate, the jump from May to June. That was much higher than analysts had expected. It came in at the highest rate in 26 years, the highest monthly jump in 26 years.

Now we don't generally calculate things on a monthly basis in your own life. So let me give it you annually. The annual consumer inflation rate as calculated by the government is 5 percent.

Now compare that to whether you got a 5 percent raise, whether you got 5 percent in your investments, whether you got 5 percent in a bank account. You probably haven't so far. So in other words, your inflation is out-pacing your ability to grow your income.

Five percent is the highest annual rate in 17 years. Now the bottom line, Tony, is that we know that the economy is "ISSUE #1" and we know within "ISSUE #1," the economy, inflation is the biggest concern to people.

Sometimes people talk about it in terms of energy costs or gas costs, but it's the cost of your food, it's the cost of everything you buy. Inflation is the number one cost to our viewers -- number one concern to our viewers and it is high right now.

That is a bit of a problem.

HARRIS: Wow.

VELSHI: That's the thing that we have to get a handle on. The problem, of course, that we have is we also have no growth in the economy or very little growth. So typically when inflation is high the Federal Reserve moves in, they raise interest rates, but you can't raise interest rates when the economy is not moving very quickly so now you've got a conundrum.

How do you get out of this? It's all that oil and food prices that we've been talking about.

HARRIS: Well, thank goodness the last stimulus package was passed. I think we have an idea of where a lot of the money went from the rebate checks.

VELSHI: Absolutely. Right. And between...

HARRIS: Yes.

VELSHI: Between the debt people had, the increase -- and increased prices, there is no money left over to go buy a TV set for most people.

HARRIS: Yes.

VELSHI: That's the issue.

HARRIS: All right, Ali Velshi for us this morning.

Ali, appreciate it. Thank you, sir.

VELSHI: OK.

COLLINS: Talking nukes with Iran. The White House sending a senior diplomat to Switzerland to meet with Iran's chief nuclear negotiator. It is a big shift in Bush administration policy.

Live now to White House correspondent Elaine Quijano.

Elaine, at the very least, is this a turn or a u-turn in policy? I mean they are still saying that we're not actually going to negotiate unless the nuclear enrichment program is abandoned.

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Yes, and you know, I think it is fair to say this is certainly a shift because we have heard, Heidi, as you know, the Bush administration say time and time again, no direct nuclear talks with Iran unless Iran verifiably suspends its uranium enrichment program.

Well, now, officials are confirming that Undersecretary of State William Burns this weekend will be heading to Geneva to sit in on a previously scheduled meeting, they tell us, between Iran's top nuclear negotiator and a foreign policy chief of the European Union.

Now officials are really pushing back against the notion that this is somehow negotiation, saying that he is going to be attending as a, quote/unquote, "observer." Now they emphasize that Burns will be there to listen to what the Iranians have to say and to reiterate the White House's position that Iran must suspend its uranium enrichment program in order for there to be more direct talks with Washington -- Heidi.

COLLINS: How about the timing in all of this? Interesting, of course, in light of Iran's recent missile test.

QUIJANO: Yes, it is interesting. It was just last week, as you know, that Iran test fired those ballistic missiles that certainly got Washington's attention. But a U.S. official this morning is denying that that missile test had anything to do with the decision to send this diplomat to Geneva.

But at the same time, there's also a package of economic incentives that's been on the table. It was delivered by the Europeans back in May. The U.S. is very interested in hearing in person what the Iranians have to say about that.

But again, the push back from the White House today, a senior administration official saying, look, let's be very clear here. What we are talking about is attending this meeting, reiterating where the U.S. stands, but not -- this is not, this official is saying, a negotiation -- Heidi?

COLLINS: All right, understood. CNN's Elaine Quijano at the White House this morning.

Thanks, Elaine.

HARRIS: John McCain reaching out to African-American voters. He speaks before the nation's oldest civil rights organization this morning.

Dana Bash, live from the NAACP convention in Cincinnati with a preview.

And, Dana, if you would, what kind of reception is John McCain likely to receive from the NAACP convention this morning?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, that is going to be interesting to watch, because, you know, if you look at the historical trend, as you know, Tony, Republicans simply have not done well with NAAC members, in fact, the black vote in general.

President Bush, for example, only got 11 percent of the black votes the last time around against John Kerry, so some might be wondering since John McCain is running against Barack Obama, the first-ever presidential candidate who is African-American, why bother trying to court votes at the NAACP?

Well, McCain advisors insist they do have opportunity.

(BEGIN VIDEOTAPE)

BASH (voice over): Alveda King looks forward to voting for a black presidential candidate, but it won't be Barack Obama.

ALVEDA KING, CONSERVATIVE ACTIVIST: I simply cannot vote for Senator Obama because he's not pro-life.

BASH: Saying no to Obama is especially hard since King is the niece of Martin Luther King. But she says her opposition to abortion trumps all.

KING: Because I really do have a dream, and it is in my genes. And as I said, if Senator Obama becomes pro-life then I'll consider giving him my vote. It's just that simple.

BASH: King is part after small, but increasingly vocal, group of conservative black activists who call Obama too liberal. It's one reason John McCain decided to speak to one of the largest black audiences of the campaign season -- the NAACP conference.

CNN is told several prominent black Republicans, including former congressman J.C. Watts and former gubernatorial candidate Michael Steele met privately with McCain last week and urged him to fight for the black vote despite the odds, and they are steep.

One recent poll shows 90 percent of African-Americans plan to vote for Obama, only 4 percent say McCain.

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: I know I have to compete hard for the African-American vote. I have no illusions about that.

BASH: McCain's relationship with the black community has been rocky. He initially voted against the Martin Luther King holiday and was booed in Memphis this spring when he tried to apologize.

MCCAIN: I was wrong. I was wrong.

BASH: But he was the first Republican candidate to visit the site of the famous civil rights march in Selma, Alabama. Aides say that is, like addressing the NAACP, is part of McCain's broader, different kind of Republican pitch.

(END VIDEOTAPE)

BASH: And to that end, it's important to note that after President Bush was elected, he did not attend the NAACP conference until his sixth year in office. He considered it a partisan organization that worked against him. Well, McCain -- later this morning he is going to say that even if NAACP members don't vote for him he will say that he wants their, quote, "goodwill and good counsel."

And Tony, advisors say they hope that that will appeal to voters of all ethnic backgrounds because it will show them, they hope, that John McCain is willing to reach out even in places where he might not have a chance of getting many votes.

HARRIS: All right, Dana Bash for us in Cincinnati.

BASH: Tony?

HARRIS: Dana, appreciate it. Thank you.

COLLINS: Barack Obama says he'll listen to military commanders about Iraq and Afghanistan, but if he's elected president, the buck stops with him.

On CNN's "LARRY KING LIVE" Obama said the current Iraq strategy is hurting African-Afghanistan.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: The situation where the central front against terrorism should be taking place in Afghanistan, the situation has deteriorated and we had this brazen attack on a U.S. base where nine servicemen were killed, and we've got to recognize that perpetuating the strategy that we have in Iraq is costing us elsewhere.

(END VIDEO CLIP)

COLLINS: Obama also talked about the government's response to the turmoil surrounding mortgage giant Fannie Mae and Freddie Mac.

(BEGIN VIDEO CLIP)

OBAMA: I think some of the ideas that were offered with respect to Fannie Mae and Freddie Mac are good ones. I just want to make sure we're good ones. I just want to make sure we're not bailing out shareholders and CEOs but that we're focused on maintaining liquidity in the housing market.

(END VIDEO CLIP)

COLLINS: The Fed and the Treasury Department have a propose -- have proposed a financial lifeline for those companies.

Here's a look now at how the presidential race is shaping up. The latest Poll of Polls shows Barack Obama leading John McCain, 47 percent to 41 percent. Twelve percent of respondents are still undecided.

The Poll of Polls is an average of five different surveys.

HARRIS: Let's travel over to the Severe Weather Center.

There he is, Rob Marciano.

Rob, what are you talking about this morning? You've got a northeast heat wave.

ROB MARCIANO, CNN METEOROLOGIST: Yes.

HARRIS: We need an update on Bertha.

MARCIANO: OK.

HARRIS: Then there's another tropical disturbance. That probably eats up all your time, right?

MARCIANO: That's it.

HARRIS: Yes, yes.

MARCIANO: And you know, as long as you took to get to me, I think -- I'm kidding. Hi, Tony. Hi, Heidi.

(WEATHER REPORT)

COLLINS: I think you handled your short time there very well.

HARRIS: How about that, huh? That was terrific, man.

COLLINS: Yes. Covered all the bases.

MARCIANO: I'm just dropping in (INAUDIBLE) tomorrow.

COLLINS: There you go.

All right, Rob, check back later.

MARCIANO: (INAUDIBLE)

COLLINS: Their capture was later followed by a war. Now the remains of two Israeli soldiers are finally home.

(COMMERCIAL BREAK)

BETTY NGUYEN, CNN CORRESPONDENT: I'm Betty Nguyen. Coming up, how farmers along Myanmar's cyclone ravaged Delta are still struggling to survive.

(COMMERCIAL BREAK)

ANNOUNCER: Live in the CNN NEWSROOM, Tony Harris and Heidi Collins.

COLLINS: A dramatic exchange at the Israeli-Lebanese border. Israel and Hezbollah agreeing to hand over prisoners. So far both sides handing over only remains.

CNN's Ben Wedeman is live now at that border.

So, Ben, what exactly led up to today's event?

BEN WEDEMAN, CNN CORRESPONDENT: Well, basically it was this deal between Hezbollah and Israel worked out by German mediators whereby Israel would hand over to Lebanon five Lebanese being held in Israeli jails, as well as the remains of 199 Palestinians and Lebanese killed in clashes with Israel over the years.

In exchange, Hezbollah would give Israel the two soldiers it abducted in the summer of July -- rather, in July 2006. Their abduction, of course, is what sparked the bloody war between Hezbollah and Lebanon.

Now what is a weird twist in all of this, Heidi, is that until this morning nobody really knew whether those two Israelis were alive or dead. For two years and four days, Hezbollah did not provide any proof of life and up to the very last moment they left it in doubt whether they would be handing over live prisoners or coffins.

Today it was coffins. And for Israelis it's been a lopsided deal in many respects but one they felt had to be done because the philosophy of the Israeli army is anyone caught behind enemy lines has to be brought back at any price. And the Israelis said they've paid a high price -- Heidi?

COLLINS: Well, how does that change things, Ben, now that we're talking about the remains of these two soldiers versus the people themselves?

WEDEMAN: Well, I've spoken with the families of the soldiers, as well as others who's -- the parents of soldiers still missing in Lebanon. The important thing for them, they say, is closure. To be able to give them a proper Jewish burial and to essentially know where their sons are buried, because there is still a case of an Israeli airman who went down over Lebanon in 1986.

They still don't know where he is. And they -- the Israeli government doesn't want to repeat that situation. They want closure -- Heidi?

COLLINS: Sure. Sure. All right, CNN's Ben Wedeman for us, thanks so much, Ben.

HARRIS: And getting back to developments on the nuclear talks with Iran. Washington sending a high-level diplomat to sit in on discussions with Iran this weekend in Switzerland. It is considered a major shift in Bush administration policy.

Joining me now from New York, Vali Nasr, author of "The Shia Revival," and adjunct senior fellow for Middle Eastern studies at the Council on Foreign Relations.

Polly, good to see you as always.

VALI NASR, AUTHOR, "THE SHIA REVIVAL": Thank you. HARRIS: Do you buy the notion that we just heard from our reporter -- from Elaine Quijano, from the administration that Undersecretary Burns is going all the way to Geneva to watch the talks? I mean he can certainly do that from Washington.

Isn't he taking something with him? A letter? Something?

NASR: Well, his presence alone is very important. It is a symbolic shift in U.S. policy going from taking no part in discussions between Europeans and Iranians to actually appearing at the talks and sending the very signal that the U.S. is interested in exploring diplomatic options if Iranians would come also half way and meet them there.

HARRIS: Aren't these really talks about -- centrally the proposal from the EU's Javier Solana calling for a six-week freeze on the part of Iran and its enrichment efforts, in exchange for a discussion about further talks?

NASR: Well, you're correct, but it still is important because the previous strategy was not working. Each side had dug its heels. The U.S. said suspension all together before talks begin and Iranians would not today do that.

Talk of war began happening which created jitters in oil and financial markets. Now everybody is trying to find a way to go back to the table and move the talks further along.

HARRIS: So you mentioned that the symbolism of the talks and the Undersecretary being there in Geneva for the talks. What do you think will ultimately come of this meeting?

NASR: It depends on what the Iranians come back with. If the question here is whether goodwill will get goodwill and good step by the U.S. will be reciprocated by the Iranians. If the Iranians reciprocate then the next meeting will have a greater deal of U.S. involvement.

HARRIS: Got to ask you, understanding that the president will likely get some praise and some criticism for this decision, on balance, do you think this is a positive development of sending the undersecretary to Geneva for the talks?

NASR: I think it is because it means the administration is taking the diplomatic side of this much more seriously and is willing to try something new.

HARRIS: Vali Nasr with us this morning. Vali, as always, great to see you. Thanks for your time.

NASR: Thank you.

COLLINS: Fresh or frozen embryo. Which is better? New info on in-vitro fertilization.

(COMMERCIAL BREAK) COLLINS: If you are considering in-vitro fertilization, listen to this. New findings that the chances of having a healthy baby are better if using a frozen embryo instead of a fresh one.

Our chief medical correspondent Dr. Sanjay Gupta is here now with more.

This does sound kind of surprising. I'm not sure that most people realize that.

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Right. I think that's probably not going to be the headline that people should take away from this. What they are looking at was birth weights of babies that were born after between fresh and frozen embryos.

And what they found was there was a difference, overall, between the birth weights. Take a look at the numbers here, 7 pounds 14 ounces for babies that had been used -- frozen embryos versus 7 pounds 7 ounces. Not a huge difference there, Heidi.

I think the real important message here and the point that the researchers are trying to make is that there really is hardly any difference. People thought would there be a decrease in quality overall of frozen embryos versus fresh, and they found, in fact, no.

There are really three things that they looked at -- the overall cost, efficiency and, of course, the safety. What they find is that if you use frozen embryos, the cost and efficiency actually go down so that -- I mean the cost goes down, the efficiency goes up, because in the past what would happen is they'd fertilize a lot of eggs and they would implant a lot of those eggs in a woman's uterus.

Sometimes they would take, sometimes they wouldn't. If they all took it could become dangerous, multiple births.

COLLINS: Yes.

GUPTA: And that could be a problem. If it didn't work then they'd have to go back to the drawing board and start the whole in- vitro fertilization process again so the costs really spiraled. The freezing process seems to work.

COLLINS: Yes, well, what about the cost differential? What exactly are we talking about?

GUPTA: So think about it. If a woman goes into the doctor's office and says they're going to try this with her partner, the cost of the medications to stimulate egg production, the overall taking of the eggs from the ovary. That's another cost.

COLLINS: Right.

GUPTA: The fertilization of that egg -- that's another cost -- and then obviously the implantation.

The first three costs are gone with the freezing process because those frozen embryos are stored. They cost about $700 to $800 a year to store that but you're saving probably $10,000 to $15,000 by not doing those first three steps.

COLLINS: Yes, it sounds like, you know, just another option for people who are, you know, sort of going this route and certainly one that is a little bit more economical.

How common, though, is it really to be using frozen embryos? I mean a lot of people still think this is, you know, wacky science and cryogenics and all of that.

GUPTA: Well, it's funny, you know, we talked about the numbers, 125,000 in-vitro fertilizations expected this year. Just 30 years ago is when it started. You get a sense of just how much this has grown over the last three decades.

COLLINS: Yes.

GUPTA: It's about one to five roughly if you look at the numbers...

COLLINS: Really?

GUPTA: ... in terms of frozen to fresh embryos that are being used. So, you know, 20 percent is a pretty large number.

COLLINS: Yes.

GUPTA: My guess is that number is going to grow. I think there was still a lot of concerns just how safe, how -- what kind of quality embryos will these be. I think the study shows -- at least as far as studies show -- that they seem perfectly safe.

COLLINS: Well, it's fascinating.

GUPTA: Yes.

COLLINS: All right.

GUPTA: It's quite a process.

COLLINS: Dr. Sanjay Gupta, thank you.

GUPTA: Thank you.

HARRIS: You know I know a lot of you are probably like me, ready to stuff money under the mattress. Fear not -- expert advice straight ahead.

Terry Savage -- we love her -- has what you need to know about the risk of bank failures.

(COMMERCIAL BREAK)

ANNOUNCER: The "Opening Bell" brought to you by... HARRIS: All right. Quickly now to the New York Stock Exchange. We're going to take a look at the numbers on the big board in just a second as we got the business day started.

The DOW starting the day below 11,000 -- 10,962 after closing down 92 points. But that's yesterday's news. This could be another, another rocky day for U.S. stocks as you heard at the top of the newscast, inflation just surging right now. The biggest one-month spike since the early '80s. We're going to be following the markets. Stock futures indicating another down day for U.S. stocks. Hang on. It could be a bumpy ride.

Stephanie Elam guiding us through the markets throughout the morning right here in the CNN NEWSROOM.

COLLINS: New measures of our misery this morning. Retail prices surged the highest one-month spike in 26 years. The consumer price index jumped 1.1 percent last month. And next hour, a view of the economy from one of its biggest policymakers. Federal Reserve Chairman Ben Bernanke opens his second day of testimony now on Capitol Hill. Yesterday, he conceded the economy faces, quote, "numerous difficulties."

And the politics of money. Some top Democrats are calling for another stimulus package. President Bush says it's just too early to gauge the success of the last round of tax rebates.

Your home's value is also eroding in all of this. Stocks are plunging and now new concerns over what has always seemed like a safe bet -- your bank savings.

Terry Savage is a syndicated financial columnist for "The Chicago Sun-Times" joins us.

Terry, we asked you to come back again today and maybe for several days to come. We hope you're not too busy with the other jobs, because there is so much to talk about here. Let's begin with the CPI. What do you make of the number?

TERRY SAVAGE, FINANCIAL COLUMNIST, "THE CHICAGO SUN-TIMES": Well, I think what it's telling you is that your biggest worry, even though we're going to talk about money in the bank or money in a brokerage firm, your biggest worry should be the fact that your money is disappearing bit by bit because of inflation.

We now have 5 percent year over year inflation. At that rate, the value of your savings will be cut in half in 14 years. So the biggest thief to your money is not the failure of a bank or a brokerage firm, but inflation itself. That's the real worry.

COLLINS: Well, maybe we should just be talking about that today. I mean, when we hear those numbers, obviously they were higher than everybody thought they were going to be. And you mentioned the 5 percent inflation yearly number. That's the highest in 17 years.

SAVAGE: Exactly. And you have to go back to the early '70s. You know, when President Nixon long, long ago put on wage and price controls, a terrible idea. It caused a lot of problems. But what worried them back then, inflation was 4 percent. So, now we're getting up to these numbers which, if they continue, are really start to make an impact quickly on your money.

COLLINS: Yes. Well, we will of course be watching all of that. Unfortunately, some of the e-mails that we got came to us before this latest number so we'll be taking more of the e-mails on the CPI and people's reaction to that at a later time.

But for now let's talk about the credit unions. This people are wanting to fine somewhere safe to put their money. And the first e- mail is that exact question -- are credit unions safe?

SAVAGE: Yes, absolutely. You should look for the logo on your credit union, National Credit Union Administration, NCUA, that's their insurance arm of the government. And so you don't have to worry. But I should point, and they have the same limits as the FDIC. And by the way, if you go to terrysavage.com, there is a direct link to the page on the FDCI Web site that explains those limits for joint accounts or individual accounts.

One thing with credit unions, they are not all insured by NCUA, the federal organization. Some have bought private insurance. That's not where I'd keep my money but a credit union that has NCUA is just as safe as a bank.

COLLINS: OK, very good point.

The next one, 401Ks, other brokerage accounts -- they safe?

SAVAGE: Well, brokerage accounts are insured by SIPC, Securities Investor Protector Corporation. Your money in those accounts is insured up to $500,000. And big difference now.

You know, banks take your money and lend it out. They made some dumb loans. But securities firms must keep your securities segregated so you really don't need as much insurance. They don't insure you against loss because you made a bad decision about buying stocks. They insure you against fraud up to $500,000. So don't worry about that.

COLLINS: OK. All right. Yes, that's a big figure. What about this one -- if you have a mortgage with a troubled bank, are you protected?

SAVAGE: Well, your loan will still continue to be a valid loan. And no matter, whether your bank is troubled or sold or taken over, you must keep making those monthly payments.

COLLINS: They're still going to want your money.

(CROSSTALK)

SAVAGE: Yes. They want your money. Don't worry about that.

COLLINS: Yes. Unfortunately, it doesn't work in the reverse, does it? What about money market accounts? Are they safe?

SAVAGE: Very interesting. There are two kinds of money markets that we talk about. There are money market deposit accounts at banks and those give you liquidity and they are insured up to that $100,000 limit for single account, et cetera. Again, the FDIC rules apply.

COLLINS: Right.

SAVAGE: Money market mutual funds offered by the big mutual fund companies are actually securities. They're insured up to that $500,000 limit. A distinction. When you are buying a money market mutual fund, some of them buy short-term commercial papers, some of them stick to only U.S. Treasury securities. They're in a real crisis, there might be some fine distinction but no money market mutual fund has ever what they called broken the buck or lost any money.

So, this is we're at the real far end of what I called chicken money, ultimate safety when you're in either money market deposit account or a money market mutual fund.

COLLINS: I like that, chicken money. That's my money, for sure.

SAVAGE: That's my term.

COLLINS: Yes. So if you do decide to withdraw your money, get it our of the bank, regardless if that's an emotional move or if there is true trouble with the bank, what is the process exactly?

Yesterday, you mentioned, you know, you do not go to the bank and get a bag and put all your money in there and run out of the bank and go home.

SAVAGE: You know, this is very dangerous. First of all, you have two choices. If you really were to take it in cash, then where would you put it? You are exposed to a lot more risk walking home or taking the bus home or the train, whatever, with a bag full of money than you are by leaving it in an insured deposit account at the bank.

COLLINS: Sure.

SAVAGE: Your other choice is to wire it to another bank. But if you're under the insured limit, that's the same risk in either bank. And finally, I pointed out yesterday that you could go to the government's Web site whether you have $100 or $100,000 or $200,000 and buy IOUs direct from the government treasury bills. And that Web site is treasurydirect.gov. You'll find that at my site, too.

And you can buy online Treasury securities that are the safest, most secure investments in the world. That's what the world thinks. The yields are low because they are perceived as the safest investment. You do not need to go stand in line to get your money out of the bank.

COLLINS: All right. Thank goodness.

SAVAGE: Makes for good TV, but not for good finance.

COLLINS: Yes. Now, we really don't want to see much of that actually. Terry Savage, syndicated financial columnist for "The Chicago Sun-Times." Thanks again, Terry. Appreciate you being here.

SAVAGE: Thanks, Heidi.

HARRIS: And next hour, federal officials are expected to announce new safety standards for airline fuel tanks. It comes almost 12 years after the explosion of TWA flight 800. Our Deborah Feyerick is in New York.

And Deb, any advanced word on what's coming?

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, Tony, this is really likely going to affect most large passenger jets. Airlines will be required to install a device that neutralizes oxygen in the center fuel tank. What that does is lower the risk that some kind of spark might ignite the fumes and trigger an explosion like TWA Flight 800.

And this new rule would apply to some 3,000 jets used by U.S. airlines. The Department of Transportation, as you mentioned, and National Transportation Safety Board set to announce the new rules shortly.

There has been a lot of back-and-forth with the airlines arguing it is too expensive to retro fit all the planes. The price tag four years ago was estimated at between $300 and $700 million. Clearly, it's not a good time for the airline.

Now, that's going to be an additional cause. They might not be able to handle. This won't happen overnight. It could take roughly ten years, in fact, before every plane is actually outfitted with this device.

Tony?

HARRIS: OK, Deborah, we'll wait for the announcement scheduled for 10:00 a.m. or so -- at least, in the 10:00 hour this morning.

Deb, thank you.

COLLINS: Rob Marciano standing by now in the weather center to talk a little bit more about this tropical disturbance, if you will, in Florida -- is it, Rob?

(WEATHER REPORT)

HARRIS: He ran the candidate to avoid the Iraq war. Now, a U.S. Army deserter is back home ready to face the consequences.

(BEGIN VIDEO CLIP)

BETTY NGUYEN, CNN ANCHOR: I'm Betty Nguyen. Coming up, how farmers along Myanmar's cyclone-ravaged delta are struggling to survive. (END VIDEO CLIP)

(COMMERCIAL BREAK)

HARRIS: A rare glimpse of life inside cyclone-devastated Myanmar. Once fertile farmland, decimated in the storm leaving farmers scraping by, if that. Myanmar's government doesn't allow Western journalists in to the country, but our Betty Nguyen and her crew snuck in to bring us these amazing reports.

(BEGIN VIDEOTAPE)

NGUYEN (voice-over): The Irrawaddy Delta is Myanmar's rice belt. Before the storm, farmers here grew enough to feed the country and exported the rest. Not anymore. Cyclone Nargis ruined rich soil and killed tens of thousands. Farmers fortunate enough to survive are scratching out a living haunted by what they've lost.

This man says he was trying to hold his baby above the tidal surge, but the swift current swept the child right out of his hands. The boy's body was never found. Yet, life goes on in these poor farming villages. But it's a hard row to hoe when their crops are being choked by salt water from the cyclone.

NGUYEN (on camera): Just two months ago, dead bodies were floating in these rice fields. Now, farmers are trying their best just to salvage what they can.

NGUYEN (voice-over): The trick now is trying to plow these fields with just a few water buffalo. Most of them died in the storm. Aid agencies and the government have donated one power tiller per every 100 acres. Since most farmers don't own that much land, they have to share.

This man says as many as 30 farmers will take turn using one tiller. No one here expects the season will produce quality crops. In fact, it's already having a trickle-down effect.

Monks who rely on donations are eating bad rice that was battered in the storm, though it's hard to complain when this monastery is one of few still standing.

This monk says reconstruction may take two years. That might as well be an eternity in villages where surviving from day-to-day is a constant struggle. But the people here have always lived a hard life and they will tell you, there's no time to dwell on the past.

Betty Nguyen, CNN, Myanmar.

(END VIDEOTAPE)

COLLINS: An American soldier who fled to Canada to avoid the Iraq war heads back home to face the consequences of his actions. CNN's Brian Todd reports.

(BEGIN VIDEOTAPE) BRIAN TODD, CNN CORRESPONDENT (voice-over): It's the kind of history Robin Long probably wishes he wasn't making. He's is believed to be the first American deserter during the Iraq war handed back to the U.S. military by the Canadian government. During the Vietnam War, Canada was a haven for U.S. draft-dodgers and deserters. In this case, a Canadian judge ruled that Long didn't adequately prove he would suffer irreparable harm if he returned to the United States.

The leader of a Canadian war resistors group that had supported Long is frustrated.

BOB AGES, VANCOUVER WAR RESISTERS: I don't think there's any doubt that someone who has been up in Canada and a vocal opponent of the war will be treated harshly by the American military.

TODD: Long, who had trained as a tank commander, took off from Fort Carson, Colorado, to avoid serving in Iraq. Even though he had volunteered for the Army, his attorney told the court that Long became disillusioned over the mistreatment of Iraqi detainees and by the fact that no weapons of mass destruction had been found.

In nearly three years in Canada, he fathered a child, was turned down for refugee status last year, and was arrested recently for not checking in as required with border officials. Commanders at Fort Carson will now decide his fate. They can court-martial him, give him a less-than-honorable discharge, or even reassign him.

A former military lawyer who has defended and prosecuted deserters says the first option is the most likely.

BRENT HARVEY, MILITARY LAW ATTORNEY: I do believe that he is going to be most likely court-martialed in this instance. The fact that he has been vocal, not to say that they would infringe on his First Amendment right to state his case or his objections, but rather his stated reason for leaving, to avoid service in Iraq, is going to be sort of the threshold issue for the legal authorities.

TODD (on camera): But experts say U.S. military officials may also be thinking about deterrence, sending a signal to others who are thinking about deserting that Canada may not be so receptive to harboring them in the future and prison time could await them. If he's court-martialed and convicted, Robin Long could get up to five years in prison.

Brian Todd, CNN, Washington.

(END VIDEOTAPE)

HARRIS: Troops pull out of a base in Afghanistan days after nine U.S. soldiers were killed by insurgents. Live to the Pentagon.

(COMMERCIAL BREAK)

COLLINS: You already know to catch us weekday mornings from 9:00 to noon Eastern, but did you know you can take us with you anywhere on your iPod? The CNN NEWSROOM podcast available 24/7 right on your iPod.

HARRIS: The JibJab guys are at it again, releasing their latest political video starring the candidates and some other famous faces in Washington.

Veronica De La Cruz with details. A little show and tell for us this morning. Good morning to you, Veronica.

VERONICA DE LA CRUZ, CNN INTERNET CORRESPONDENT: And good morning to you, Tony. You know, you probably remember them best from this video that they did back then. It was called "This Land is Your Land." Do you remember that one, Tony?

HARRIS: That was good, yes. Absolutely.

DE LA CRUZ: There it is right there. In it, they put -- who do we just see -- George Bush, John Kerry, side by side right in time for the 2004 election. Tony, that video got more than 80 million views. 80 million views. It became this viral video sensation. It made its way around the world. It was bouncing from one e-mail inbox to the next.

So, you know, the brother Spiridellis, they're back again, and they're the ones who make up this team JibJab. They've created another video. They hope that it will go viral as well. This time in time for the '08 election.

(BEGIN VIDEO CLIP)

MUSIC PLAYING: Gosh, I'm so tired of divisive exchange and I've got one or two things to say about change. Like the change we must change to the change we hold dear. I really like change. Have I made myself clear? So, he'll talk about change until you're deaf in the ear. Oh, it's time for some campaigning.

(END VIDEO CLIP)

DE LA CRUZ: All right. So this is the new video, Tony. It set to the tune of Bob Dylan's "The Times They Are A-Changing." And there you just saw Barack Obama talking about how much he likes change. Hillary Clinton swearing that she will be back in another four years in 2012. John McCain makes an appearance. He talks about his experience as a prisoner of war. And President Bush, Vice President Dick Cheney, they make their way out of the White House and leave behind a war, a recession and some bad mortgage loans.

That's what kicks off the video. And of course it is all in good fun. You can find it online, Tony, at jibjab.com.

And you can also -- this is what I think is really cool, you can put yourself in the video, you can e-mail it to your closest friends.

HARRIS: OK.

DE LA CRUZ: And I think we've done that a couple of times on CNN. I've done it -- have I done that with you before? HARRIS: No, no. I want to see it the next time you decide you're going to do that, though.

DE LA CRUZ: Well, well, watch out.

HARRIS: OK, OK.

DE LA CRUZ: Watch out. But I also wanted to let people know if they wanted to sound off on this video, let us know what you think. Do you think it is as good as the last?

HARRIS: No.

DE LA CRUZ: Do you think it might be better.

HARRIS: Oops, you didn't ask me. I'm sorry.

DE LA CRUZ: You don't think it's as good as the last?

HARRIS: I'm sorry, you didn't ask me. I'll go to I-report and give my review.

DE LA CRUZ: Send me an I-report, Tony.

HARRIS: OK, I'll send you an I-report.

See, it's like the sequels. They get bigger, flashier, splashier and never quite as good. All right.

DE LA CRUZ: Yes. Yes. I'm going to have to agree with you on that one. But yes, there are a couple of funny moments. It's definitely worth taking a look at. So jibjab.com and then drop us an I-report at ireport.com.

HARRIS: We'll do. Thanks, Veronica.

DE LA CRUZ: Of course.

COLLINS: These fish are fresh. So fresh that they can walk right through your door. We won't flip-flop on this story.

Plus, a break-in in electronics store. The suspect caught on tape red pod. The bare facts, straight ahead.

(COMMERCIAL BREAK)

COLLINS: Shopping day for one young black bear. You can see the bear headed for the front door of a Circuit City store in Colorado Springs, Colorado. He got as far at the customer waiting area but apparently could only look through the windows at the rest of the store. One store employee thought the bear was probably looking for a deal on a big screen.

HARRIS: Nice.

COLLINS: Probably to play his new "Escape to Grizzly Mountain" DVD.

HARRIS: That's good. Surfing among the sharks with pictures to prove it. We just had to share these. Pretty amazing shots here taken at New Smyrna Beach in Florida. You can see one of the sharks jumping out of the water there. But don't worry. It's not aiming for the surfers here. Here is another look. Let me go Nat-Geo on you for a second here.

These were black-tipped sharks, experts say they often come out of the water when they are catching fish.

It came from the sewer. Not your typical fish story. These fish making their way through the streets of one Florida neighborhoods, washed out of storm drains by heavy rain.

(BEGIN VIDEO CLIP)

DIANNA FERNANDEZ, MAINTENANCE WORKER: And I was like, -- no way, there's fish in the street. I kept going further and further and seeing fish everywhere, in driveways. I've never seen anything like it

(END VIDEO CLIP)

HARRIS: No way, how about way. People in Pinellas Park counted about 30 of the fish. They're called the walking catfish and can survive for a while out of the water, as long as they remain moist.

COLLINS: Not bad. Good morning, everybody. I'm Heidi Collins.

HARRIS: And I'm Tony Harris. Stay informed all day in the CNN NEWSROOM. Here's what's on the rundown -- inflation rising. It's ugly. We had new numbers just out say what we're earning can't keep pace with prices.

COLLINS: Enemy threats raid. Now, U.S. commanders on the ground and Afghanistan are calling for more call-ups. A CNN exclusive this hour.

HARRIS: And a file so filled with names even a reporter can be trapped. The terror watch list keeps growing and growing and growing. It is Wednesday, July 16th, and you are in the CNN NEWSROOM.

COLLINS: The economy, sagging numbers, rising tensions. Americans at all levels are feeling the squeeze. This morning new measures of our misery. Retail prices surge. The highest one-month spike in 26 years. The consumer price index jumped 1.1 percent last month. And when you look at the past year, that increase is the highest in 17 years. Inflation now running at 5 percent.

Worried on Wall Street. Last hour, the Dow Jones Industrial average opened below 11,000 for the first time in two years. Here is a live look now at the big board. As you can see, we are to the positive at least. About half hour into the trading day, above that 11,000. So, we, of course, will watch that for you throughout the day right here. And a view of the economy from one of it's biggest policy makers.