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Kim Jong-Il Visits China; How Farmers Keep Eggs Safe; Waveland's Rise from Ruins; Rick Scott's $50 Million Primary; Craigslist Under Fire for Selling Sex Online

Aired August 26, 2010 - 7:59   ET

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


JOHN ROBERTS, CNN ANCHOR: Good morning. Thanks for joining us on this Thursday, the 26th of August. I'm John Roberts.

CAROL COSTELLO, CNN GUEST ANCHOR: It's actually Friday eve. I like to refer to it that way.

ROBERTS: Yes. For some people who are taking a three-day weekend, not to mention any names, Brian Bell, one of our line producers, it's actually Friday, today.

COSTELLO: Good for him. I'm Carol Costello, in for Kiran, this morning.

Lots to talk about so let's get to it, shall we?

North Korea's leader Kim Jong-Il reportedly in China. The exact purpose for this trip is unclear. John Vause is seconds away with the latest report on Kim's trip, what his son and his health might have to do with it.

ROBERTS: The $50 million primary. The surprise of Tuesday. Rick Scott, now the GOP's candidate for governor in the state of Florida. He's got deep pockets and the drive. Does he have the answers? He's going to join us live this hour.

COSTELLO: Craigslist under fire. Attorneys general from 17 states say the web site's become haven for prostitution. CNN showed you the problem. And this morning, find out what these top cops are demanding the web site do to crack down on sex for sale.

ROBERTS: And, of course, the amFIX blog is up and running this morning. Join the live conversation going on right now. Just go to CNN.com/amFIX.

COSTELLO: Happening now: North Korea leader Kim Jong-Il reportedly visiting China today. It is his second visit in three months.

ROBERTS: Could the trip be about his son's rise to power?

Senior international correspondent John Vause is live in Beijing to try to shed some light on the enigmatic leader.

And, John, I guess, full disclosure: we don't really know what this trip is about, right?

JOHN VAUSE, CNN CORRESPONDENT: Yes, exactly, John. Let's assume for a moment that Kim Jong-Il is in China and he is here with his son. Well, the reason for that is this is all part of the successive plan.

This is the theory: that Kim Jong-Il has brought his third and youngest son, Kim Jung-un, here to China to meet with the leadership somehow in Beijing, to ensure that that they're OK with this succession plan because without China, North Korea collapses. So, this is a mark of respect, to make sure that the leadership here in Beijing is OK with this transition.

And that goes to the question of why now? Well, Kim Jong-Il had a stroke two years ago. He's not in good health. The pictures that we saw just a few months ago on his last trip here to China, he didn't look good. He was dragging his left leg. So, there's a lot of question about his health. That shorten time frame for a successful handover of power.

And then, of course, there are these reports coming out of North Korea that they are planning a very big political meeting next month, the meeting of the Workers Party of Korea. They have only done this twice before. And the expectation is, when they have that meeting on the 6th of September, that Kim Jung-un, the son, will be named number two of the party and essentially paving the way for him to take over from his dad -- John.

ROBERTS: All right.

COSTELLO: John, Carol, just a question about Kim Jong-Il's son. I mean, what do we know about him? Is he less rigid than his father? Some Americans might ask, is he less scary than his father?

VAUSE: Yes. This is the thing we don't know a lot about him. Maybe he's like 20s, maybe 27 years of age.

He went to a Suisse boarding school for a few years. He speaks English, French and German. So, that's very different to his father. He likes skiing and basketball. He likes Jean Claude Van Damme.

Western intelligence agencies don't have a good read on him. The best information, believe it or not, seems to be coming from a Japanese sushi chef who worked for the Kim family. Jung-un is about 13 years.

He describes Kim Jung-un as being a chip off the old block. He looks like his dad. He acts like his dad. He has a bad temper like his dad. He may be every bit as ruthless as his dad.

More recent reports say he's even overweight now like his dad, has diabetes -- just like his dad. Maybe even a heart condition like his dad -- Carol.

COSTELLO: So, he's a mini me. You know, you have to believe the sushi chef, they know everything.

ROBERTS: Exactly. If you want to the real data (ph), just go to the sushi chef.

John, thanks.

Also new this morning, rescue crews in Chile calling NASA and the Navy for advice on how to keep 33 miners trapped underground safe and sane in such close quarters. The rescue mission likely going to take months. They're sending everything from playing cards to religious statuettes down to them. And they still don't know they might not see daylight until December.

COSTELLO: Unbelievable. The most ironic thing in the story is they're having so little food may actually save their lives. Medical records show that there are at least nine miners who would be too overweight to squeeze through the planned escape tunnel. But the miners are believed to have already lost about 17 pounds each so far.

ROBERTS: Wow.

COSTELLO: Officials expect the overweight miners will be thin enough by the time they break through to fit through that opening.

ROBERTS: Because they are drilling a hole that's only 24 inches across, send a little cage down to pick them up. So --

COSTELLO: It's just an unbelievable story.

ROBERTS: Some of the eggs being shipped to your local supermarket shelf right now were produced during the height of the salmonella outbreak. But the FDA says there's no reason to worry. All those eggs were sent to government-approved facilities to be pasteurized before they could be sold.

So far, the outbreak has hit 18 states and more than a half a billion eggs were recalled.

COSTELLO: With that said, the question still remains: what should farmers be doing to make sure the eggs are safe to buy and safe to eat? And who better to ask than a chicken farmer.

ROBERTS: Only on CNN this morning, our Casey Wian is in a small family farm in a town of Waukon, Iowa. He's there to give us a firsthand look.

And, Casey, we still find you inside the hen house this morning. Good morning to you.

CASEY WIAN, CNN CORRESPONDENT: Good morning. I don't know if you, too, have had breakfast yet, but the hens inside this hen house are starting to lay their eggs. Here's one freshly laid. It's still warm. The chickens have eaten. And they are now laying eggs.

One of the things that a lot of consumers think is that when you see a brown egg like this, people think that it's more organic. Well, the owners of this chicken farm tell me that that's not true. That's a misconception. Brown eggs and white eggs are simply produced by different types of chickens. Now, as we can show you here, there's a 700 chickens in this operation. And it's much different than those big factory farms that are at the center of the salmonella scare. You can see that the chickens have room to move around. That's the area we were just in where they lay their eggs.

This is where their roosts are, it's where they spend the night. And they even got a lot of room to roam around outside.

The owners of this farm say that they could be certified as free range if they wanted to be. But they decided not to go through all of that expense.

This is truly a family-run operation. We've got some video we can show you that we took yesterday of their two children, 7 and 8- year-old little boy and girl. And every afternoon they come home from school, their job is to gather the eggs, to pick them up, and they -- these chickens here produce about 25 dozen eggs every day.

It's a fairly small operation. And it's also part of a much larger 15-acre farm that grows vegetables and they have other livestock here.

So, when you talk about the issue of food safety, you have to really worry about cross-contamination and that's something the owner of this farm spend a lot of time worrying about and taking extra precautions to make sure that these chickens that you're seeing here aren't contaminating the vegetables; and anything that may be on the vegetables isn't contaminating the eggs that these chickens are producing.

Now, we will talk to you -- Kyle Holthaus who's the owner of this farm. And Kyle's wife, Marie (ph), also helps run the farm. And she today is going to a food safety course, you were telling me, that's put on by the USDA to make sure that the food and the eggs you are producing here are safe. Tell me about that process.

KYLE HOLTHAUS, FARMER: Well, what she's going to work on today is, you know, starting a business or farm safety plan and that is traceability. So, when these eggs leave our place, we can tell you if something were to happen where they ended up, where they came from so we can trace down. Just so we don't cross-contaminate and we wash our hands and use certain tubs for certain things.

And so, it's a well-orchestrated effort to try to, you know, make sure that our stuff is safe.

WIAN: You told me you've already got 43 pages of a food safety plan. I mean, for a small farmer like you, where your wife works here, your kids help out, you've got relatives that help out. That's got to be a big endeavor to try do that. Is that a big hassle for you?

HOLTHAUS: It's -- one could say that. But we want to make sure that what we send from our farm is good when it reaches your table. And so, we do, you know, what is necessary. A lot of it is common sense but you got to have it in writing. So, if something were to happen, we have record that we try to follow good practices on our farm.

WIAN: OK. Thanks very much. Appreciate it.

That's the story from here. Back to you guys in the studio.

ROBERTS: OK. Quick question to you, Casey. Twenty-five dozen eggs a day, how much do they get for a dozen eggs?

WIAN: You know, I don't know if you're asking me a question, but I'm having a really difficult time hearing you. I'm sorry. Just got a little bit of a --

ROBERTS: No problem. All right.

WIAN: How much -- how much do you get for a dozen eggs?

ROBERTS: Yes.

HOLTHAUS: Two dollars.

WIAN: Two dollars, and that's just about break even for you, right?

HOLTHAUS: Right around there. Yes. Yes.

ROBERTS: All right.

HOLTHAUS: That's what our area will support right now. And, you know, we preferably like to get more, but yet, people would like to see them less.

ROBERTS: Yes. All right.

WIAN: And as we said earlier, the -- all the eggs and all the produce that is produced here go to consumers within 90 miles of this farm. They like it that way. They believe that makes things safer and better tasting.

COSTELLO: See, that's the lesson. Don't buy your eggs from the grocery store. Buy them from a farmer's market or a local farm.

ROBERTS: Casey Wian for us this morning in Waukon, Iowa.

So, they get $2 a dozen. They get 25 dozen. So, 50 bucks a day. That's -- not much.

COSTELLO: He looks pretty happy doing so, John.

ROBERTS: They do. And the chickens, too.

Jacqui Jeras is happy this morning. She's here to talk about the weather forecast.

Good morning, Jacqui. JACQUI JERAS, AMS METEOROLOGIST: Hey, good morning.

I see lots of happy faces all around, because much of the country is seeing some nice weather.

There are a couple of hotspots that we have to talk about. And Florida is really getting hit with heavy showers and thundershowers. Right now, south Florida and then also into the Big Bend area where you can see the downpours are heavy. Up to an inch of rain can be expected there.

Now, it doesn't look like much on the radar but we'll zoom in to Atlanta there. This rain came through early this morning and put down as much as four inches. And so, it's going to be a tough commute, flash flood warnings are in effect here. And if you do see any water over the roadways, make sure you find an alternate route.

That cold front is trying to make its way off the seaboard by late today and that's going to bring in beautiful weather. Well, it's great in the Midwest. We will see some changes in the upcoming week.

We'll talk more about that and tell you about Hurricane Danielle and Tropical Storm Earl, what you can expect from them -- coming up in the next half hour.

John and Carol, back to you.

ROBERTS: Looking forward to that. Thanks so much, Jacqui.

Well, it takes a real pro to call a horse race because the horses, very often, have very weird names.

COSTELLO: But sometime, the way horses place in a race can make things really, really funny. Check it out.

(BEGIN VIDEO CLIP)

ANNOUNCER: Into final furlong. My Wife Knows Everything, the Wife Doesn't Know. They're one-two. Of course, they are.

My Wife Knows Everything in front. To the outside, the Wife Doesn't Know. My Wife Knows Everything.

The Wife Doesn't Know. My Wife Knows Everything more than the Wife Doesn't Know. Whoo!

(END VIDEO CLIP)

COSTELLO: I have heard that at least 25 times. But it's funny every time I hear it. So, final result, My Wife Knows Everything beats my Wife Doesn't Know -- as it should be.

ROBERTS: There you go.

Well, an interesting race this week in Florida in the GOP gubernatorial primary. Rick Scott beat out longtime politician Bill McCollum. Some people say he bought the election. Well, we'll find out if he did. We are talking to him coming up next.

It's 11 minutes after the hour.

(COMMERCIAL BREAK)

(MUSIC)

ROBERTS: Fourteen minutes now after the hour. We're back with the most politics in the morning.

He's being called the $50 million candidate. Rick Scott, a millionaire, former health care CEO, who is now the Republican pick to be Florida's next governor. He ran as the outsider.

So, will Republicans embrace him come November?

Let's welcome in Rick Scott. He's live in Davy, Florida.

Rick, great to see you this morning. Thanks for joining us.

RICK SCOTT (R), FLORIDA GOVERNOR CANDIDATE: Nice seeing you. Good morning.

ROBERTS: So, you got this race back in April, a virtual unknown. You drop anywhere between $40 million to $50 million of your own money on this campaign. Have you proven that yes, it is indeed possible to buy an election?

SCOTT: Well, you know, you can't buy an election. You know, ideas win elections. And the voters went to the polls and said my background, from starting out in public housing to buying my -- starting my first business at 21, to focusing on jobs.

I mean, I have a specific plan, seven steps to 700,000 jobs over seven years. And that's what won the election. They believe my background is a background that's going to build jobs in the state.

ROBERTS: No question though because of your wealth you were able to saturate the market with advertisements and really get your face out there and basically obliterate your opponent.

SCOTT: Well you know, you know I think the reason we won is -- from the day I got into the race, I traveled the state. I met with people all across the state. And just talked to people answered their questions. Talked about my plan. And the issue in the state is its jobs. We need jobs. We have the highest unemployment on record.

We have got the -- we have almost 50 percent of our underwater mortgages. We are walking into a five-plus billion dollar deficit. You know people don't want career politicians. They want somebody to know they can balance the budgets and get the economy growing again.

ROBERTS: Yes, I mean no question, a huge problems there in Florida. But you know it seems that the Republican party did want a career politician. So many establishment Republicans had thrown their support behind Bill McCollum. And your candidacy really split the party. The Republican Governor's Association had this to say about your win on Tuesday night.

Right after your acceptance speech the RGA say quote "Intraparty struggles are often difficult to watch, and contest in Florida has been a good example of that. That said, the primary is over, Rick Scott is the nominee. The general election has begun and our party looks forward." Didn't seem to me to be exact unbridled enthusiasm about your win.

SCOTT: We have -- the Republican party is rallying around my principles, their principles. You know we believe in the American dream. I have lived the American dream. We want, -- the Republican party wants everybody in Florida to live their dream. They believe in limited government, fiscal responsibility, personal freedom. That's what I believe in.

ROBERTS: Yes, not every Republican is getting onboard. Bill McCollum, who was your opponent in the race, said this, quote after your win, "No one could have anticipated the entrance of a multimillionaire with a questionable past who shattered spending records and spent more in four months than has ever been spent in a primary race here in Florida."

Are you going to have a difficult time winning over some of the party establishment?

SCOTT: No, no, it's -- they are very supportive. Bill McCollum called me last night and told me, wished me good luck. The party is rallying around. I have lived the American dream. That's what the Republican Party believes in. No. We are going to do very well in November.

ROBERTS: Now, on the subject of that questionable past that Bill McCollum pointed out, you were the CEO of Columbia HCA health care which paid a record $1.7 billion to settle charges of Medicare fraud. You ran a company that is accused of ripping off the government and you now want to be the government. But many people might be wondering, well, how can we trust you?

SCOTT: Well, the voters decide. If they looked at my background. I started that company with my life savings of $125,000. Over 9 years to built the company up to 343 hospitals, 135 surgery centers. Took care of over 100,000 patients a day, and had 285,000 employees.

We build a great company, health care inflation, which is what consumers care about, dropped from 18 percent a year to less than 1 percent. We have better outcome, better patient satisfaction. So, the voters have said, look, this guy really did something on health care. They know about my focus on health care debate last year with patient rights. They know that I'm going to reduce health care costs.

ROBERTS: But, you also ran a company that was accused of defrauding the government. Yet, you are kind of avoiding that this morning.

SCOTT: No. I told people all along from the day I got into the race, said look, you know, when you run a company, you build a company, anything that happens in that company you take responsibility. I do. People made mistakes. What I say is when I'm governor, which you know, is I will take responsibility. If anything goes wrong, I will fix it.

Now in contrast, let's think about what politicians do. We have the highest unemployment on record. Has there been a politician to take responsibility? We have almost 50 percent of the homeowners under water on their mortgages. Anybody take responsibility? We are walking into a five-plus billion dollar debt. What they know from me is I built a great company. I take responsibility for anything that goes wrong. And I will make sure that when I'm governor I will do the same thing.

ROBERTS: You talked about your plan for jobs. The "Miami Herald" in an editorial suggested that your plans are long on rhetoric and short on substance. Here is what the editorial said. Quote, it said, "A look at Mr. Scott's campaign website suggests much of his platform consists of promises to create jobs without any clear indication of how he plans to do it." Then they went on to say "elected officers should go to candidates with best solutions, not to the highest bidder."

What do you say about your plans being fairly vague?

SCOTT: You get on our web site. It is very detailed. It is seven steps. We need to run the state like you run a business or run your household. First thing you do is prioritize all the spending, you look at how you spend things. Think about how many times do you have somebody walk in from government and say you know, we started that program 20 years ago. It never worked, so we will quit funding. Now they say, we funded it last year, we are going to fund it a little bit more next year. And hopefully something will happen.

You know, you cross the state, and this is 45th out 50 states in regulation. We have paperwork, regulations, delays, too many agencies. We have to look at how we spend the money. We need a governor in the state that knows business and knows how business works. And goes out and says how can I help business people build their businesses here and move their businesses here. We need to reduce taxes, we are going to reduce property tax rates by 19 percent and we are going to phase out the business tax. My goal, into my first 4 years will be, if you do business with the United States, you will say, the number one place to do business is going to be Florida.

ROBERTS: Now that you are in the general election campaign, you kind of got a look at how the numbers are adding up, and you seem to be at a bit of a disadvantage against your Democratic challenger, Alex Sink. Let's take a look at the latest public opinion poll, this is from Public Policy Polling. Sink at 41 percent and you at 34 percent. When you look at your favorability ratings, you have a 28 percent favorability rating. 49 percent unfavorable, and then when we look at enthusiasm, 72 percent of Democrats say they will vote for Sink. While only 57 percent of Republicans say that they are going to vote for you.

Looks like you have got some work to do.

SCOTT: The race two days ago is about jobs, the race in November will be about jobs. You know, my background as building private sector job, when we get to November 2nd, when you go to the polls, you will say, who do you think can build jobs? Somebody that put their own money at risk? Somebody that start out in public housing? Somebody who has been in business all their life, somebody that doesn't believe in taxes. Somebody that believes in limited government, that's what is going to win.

ROBERTS: Rick Scott, good to talk to you this morning. We'll be watching as the campaign unfolds.

SCOTT: Same here. All right. Thank you very much.

ROBERTS: As election season heats up on air or online, cnn.com/politics, we have the best political team to break down the issues, races and analysis, cnn.com/politics.

COSTELLO: Sex is still for sale on craigslist, despite the promises that those kinds of ads would go away. But a special CNN investigation, well has discovered they haven't gone away and has forced a new crackdown. An exclusive report for you next.

(COMMERCIAL BREAK)

ROBERTS: A CNN exclusive now, sex for sale on craigslist. The website promised to police itself. Earlier this month CNN's in depth reporting uncovered the illegal trade is still posted for everyone to see and avail themselves of.

COSTELLO: And it is more than one ad, too, hundreds of ads. Now several states citing CNN's investigation are demanding craigslist crack down on these ads and immediately. Joining us now is Amber Lyon who has been reporting on the story from the beginning. Amber, the attorneys general mentioned your reporting in their letter to craigslist. What did it say?

AMBER LYON, CNN CORRESPONDENT: Good morning, John and Carol. The 17 attorneys general from all across the nation sent this letter out to craigslist and in several paragraphs they cite specific examples from our investigation. They are calling on craigslist to completely shut down the adult services section. Now, victims advocates and law enforcement for years have been complaining that women and children are being sold for sex, against their will, under that section of craigslist. Based on our investigation we found that to be true. The prosecutors also say they have given craigslist two years to clean up this part of their site. That hasn't happened. The AG's also say they are ticked off because they feel craigslist keeps placing the blame for the sex trafficking on others, law enforcement, at one point victims for not providing the site with proof that this is even happening. I even have the finger pointed at me during this investigation. Take a look.

(BEGIN VIDEO CLIP) LYON (on camera): Look at this ad. It says young, sexy, sweet, and bubbly. Clearly here she writes $250 an hour. I mean, what do you think she is selling in her bra and underwear, a dinner dated? And she is in her bra and underwear.

CRAIG NEWMARK, FOUNDER CRAIGSLIST: Have you reported this to us?

LYON: What are you guys doing? But, you guys say you screen all these ads manually in your blog.

NEWMARK: I never said -- I don't know what this is. Have you reported this to us?

LYON: Why do I have the responsibility to report this to you when it is your web site? You are the one posting this online.

(END VIDEO CLIP)

LYON: We contacted craigslist. They released this response. They say, we hope to work closely with them as the attorneys general, as we are with experts at nonprofits and in law enforcement to prevent misuse of our site and facilitation of trafficking and to combine such crimes wherever they appear online or offline. Now craigslist does not mention any intentions of shutting down this adult services section in its response to CNN. John and Carol.

ROBERTS: Amber, we should point out that was Craig Newmark, the founder and namesake of craigslist who you were talking to. You see an ad posted on the site or at least I should say you posted an ad on the site to see the response that you would get. Tell us about how that went.

LYON: Well, craigslist continually is saying to everyone that they are manually screening these ads. They say they will reject any that appear someone might be selling sex or someone might be a minor. So, we created an ad that violated all of craigslist rules, it was posted online anyway. And I mean, I'm going to tell you, we created a g-rated version of some of the calls that started coming in. Here they are.

(BEGIN VIDEO CLIP)

LYON (on camera): We put some words in here, sweet, innocent, new girl. We are going to see what happens, we'll see if craigslist is going to let our ad post and see what kind of calls we get.

UNIDENTIFIED MALE: I saw your ad on craigslist.

LYON: Hello.

UNIDENTIFIED MALE: Yes. What's your donation for an hour in- call?

(END VIDEO CLIP)

LYON: And we had about 15 calls within three hours. For the next several days the phone kept ringing off the hook. At one point I was feeling like I was going to throw it against the wall. John and Carol.

ROBERTS: That one fellow said what's your donation rate? I mean, he sounds like a pro. This guy had experience.

LYON: Yes, they all have these code words. A donation is code for how much do you charge. Sometimes, they also say how many roses do you charge. Just ways to prevent them from getting into legal trouble in case, there could be maybe a police officer posing as a prostitute on the other line.

COSTELLO: You need to name a sex act and an amount of money, and that means that you are guilty of soliciting a prostitute. So, that is why they use those code names.

ROBERTS: You know, it is rather amazing, though. That Craig Newmark said to you have you reported this to us? When it is craigslist that is supposed to do the monitoring and inform the police if they find something untoward.

LYON: That's why, John, these attorneys general are so upset. They say craigslist keeps asking everyone else to be doing the screening when they feel really in the end that the only entity that can stop all of this child sex trafficking that is going on on craigslist site is craigslist.

ROBERTS: He didn't quite look like a deer caught in the headlight as much as the deer that was hit by the truck.

LYON: Yes, yes, it was an interesting interview, to say the least John.

ROBERTS: Good job, Amber. Way to go.

LYON: Thank you.

ROBERTS: Five years after Hurricane Katrina is FEMA more prepared now for a massive storm? What has changed and what hasn't? Jeanne Meserve live in New Orleans. Coming right up.

(COMMERCIAL BREAK)

ROBERTS: Half past the hour and time for this morning's top stories.

North Korea's leader Kim Jong-Il is in China today where he's headed. It is still a mystery at this point. China is North Korea's strongest ally. There are reports he will introduce his third son, the heir apparent to China's leader. The trip is his second since May.

COSTELLO: Rescue crews in Chile calling NASA and the Navy for advice on how to take the 33 miners trapped underground sane in such close quarters. They have been trapped almost a half Miami underground for 21 days now. The rescue mission is likely going to take months. They are sending everything from playing cards to religious statuettes down to them. And the miners still don't know that they may not see daylight until December.

ROBERTS: It turns out state and federal health agencies knew that an Iowa egg company was a likely source of salmonella two weeks before any of us found out about it. That admission coming from an interview that health officials gave to "USA Today."

The CDC even considered reminding the public it is dangerous to eat undercooked eggs in late July, but they decided to wait until the FDA completed its investigation.

COSTELLO: Now to the five-year anniversary of hurricane Katrina. The images of the destruction are still so vivid as are harsh criticism of FEMA's response to the disaster.

ROBERTS: What has the Federal Emergency Management Agency done to fix its failures in the wake of hurricane Katrina. Jeanne Meserve joins us live from New Orleans to show us how they've reevaluated, and if they are ready to be tested by another disaster. Good morning, Jeanne.

JEANNE MESERVE, CNN CORRESPONDENT: Good morning, John and Carol. Every single expert I spoke to said if there was major disaster today, FEMA would be better able to respond. But have they improved enough? The answer to that is a little less clear.

(BEGIN VIDEOTAPE)

CROWD: We want help!

MESERVE: FEMA was the symbol of the inept and inadequate response to hurricane Katrina.

GEORGE BUSH, PRESIDENT OF THE UNITED STATES OF AMERICA: And Brownie, you're doing a heck of a job.

MESERVE: FEMA Director Michael Brown became a punch line, the agency, a punching bag. On this anniversary, the new FEMA administrator has come to New Orleans to visit recovery projects.

MESERVE (on camera): Are hoping to refurbish FEMA's image to a certain degree?

CRAIG FUGATE, FEMA ADMINISTRATOR: A lot of people worry about that. I will worry about if we are ready for the next disaster.

MESERVE: Craig Fugate, Florida's former emergency manager, has attracted other seasoned professionals to his team reversing the brain drain that left a quarter of FEMA jobs vacant when Katrina hit.

JAMES CARAFANO, HERITAGE FOUNDATION: They are nonpartisan, they want to get the job done. They have a sense of business practice reform, organizational reform. MESERVE: Then FEMA fumbled supply distribution. Now government investigators say that logistics planning has significantly improved. Then toxic trailers and shelter snafus turned evacuees into nomads. Now governments can share and update shelter information online.

Then many elderly and disabled were left in harm's way. Now special plans are in place for their evacuation. Then FEMA waited for state and local officials to ask for help. Now the agency is leaning forward anticipating what will be needed.

CRAIG FUGATE, FEMA ADMINISTRATOR: If we wait until we have a request it will be too late.

MESERVE: FEMA got high marks for its response to the Tennessee floods and other recent disasters. But a Homeland Security expert still has concerns.

STEVEN FLYNN, CENTER FOR NATIONAL POLICY: While FEMA has been improved, still a lot of keystone cops. There isn't clarity across the federal government who is responsible for what once you get beyond the initial evacuation.

(END VIDEOTAPE)

MESERVE: Even Craig Fugate says the agency hasn't had a big test, another Katrina or something even larger, that would really show whether the agency is ready or not. John, Carol, back to you.

COSTELLO: Jeanne Meserve reporting live this morning. Thanks.

New home sales fall to a record low. I'm sure you have heard that. So is the American dream dead? Should you rent a home rather than buy it? "TIME" magazine's Michael Elliott is here to tell us what the best course of action might be. It's 35 minutes past the hour.

(COMMERCIAL BREAK)

COSTELLO: You can drive through just about any neighborhood in America and see how bad the real estate market is. Sales of existing homes and new homes fell off a cliff last month.

ROBERTS: The drumbeat of pessimistic housing news raises the question, is owning a home all it is cracked up to be? "TIME" magazine tackles the issue. Joining us now to talk about it is Michael Elliot "TIME" magazine's deputy managing director. Great to see.

MICHAEL ELLIOT, DEPUTY MANAGING EDITOR, TIME MAGAZINE: Great to be here.

ROBERTS: So the numbers we have seen over the past couple of days, existing home sales down 27 percent, new home sales down 12 percent, very, very worrying. What's going on?

ELLIOT: Yesterday's number was a real killer. I think what we try to do in this cover story is not just concentrate on what's happened this week when we see these extraordinary numbers with the end of the tax credit, but look at the bigger picture and ask ourselves whether homeownership has been oversold to us, whether it makes sense for everyone in all circumstances.

There are plainly enormous benefits that come to people and their families from owning a home, I owned home for 30 years. Probably all of us have. But it isn't for everyone. And it comes with some downsides and tradeoffs that we try to explain in our cover story.

COSTELLO: It isn't for everyone. Let's face it. We are in an economic pit of doom right now. And hopefully that's not going to last forever. So why wouldn't it be smart to buy a home now when interest rates are so incredibly low?

ELLIOT: Here is the reason, because although it is a great moment to buy a homing interest rates are historically -- at a historic low, at the same time people need to be incredibly flexible and nimble in a tough economic time to take the advantage of any opportunities that are out there. And that may mean being able to move.

Other things being equal, it is easier to move if you are a renter. So you don't have the millstone of a house or mortgage and everything around your neck than it is if you are owning a house in a down market.

So one of the things that our writer pointed out in the piece is that in tough economic times you need people to be flexible and mobile, and massive homeownership doesn't always go along with that.

ROBERTS: Michael, you talked about this idea that we are sold on the benefits of homeownership. In the article you quote Herbert Hoover who said homeownership could, quote, "change the very physical, mental, and moral fiber of one's own children." It feels good to own a home.

And homes traditionally have been something a guaranteed investment. You buy the home at a certain price and 15, 20 years later you sell it for a lot more money. Are those days over?

ELLIOT: I don't think one can say that those days are over forever. What economists say, you know, give a number or give a date, but you can never give both. I don't think one can say those days are over forever. If you look at the last ten years, for many people in many markets it has been a particularly very good investment.

I'm sure home prices will come back. But in a way that's not really the point. The question is when you have a situation where there are would goods, the goods that come with being nimble and flexible and being able to move around the country, and the good that comes from having a home that enables you to put down roots in a community, the policy should be mutual between the two. At the moment, policy isn't. COSTELLO: I was just going to say, you know, we always think of people buying homes for investments. But is that overstating it? Because some people buy a home because they like owning their own home and living there for a good long time. Why not buy a home --

ELLIOT: I'm so glad you made that point. The very first time I bought a house more than 30 years ago, my real estate agent said to me one of the wisest things anyone has ever said. She said, buy the house you and your wife want to live in. All this business about investment --

COSTELLO: Making a bunch of money.

ELLIOT: Buy the house you and your wife, now my family, want to live in. And that's what we did.

ROBERTS: You said that policy should be neutral. Obviously earlier this year policy was weighted in favor of homeownership with tax breaks. Did the government get too involved here? Was this one of the reasons why things went off a cliff?

ELLIOT: I think this -- I think this isn't just a one-year or six-month development. This is a 70-year, if you like, set of policy choices that tilted the playing field in favor of homeownership and against renting.

You can have highly successful, highly rooted, highly coming together communities in a prosperous time without massive homeownership. Switzerland has something like only 30 percent, 34 percent of homeownership. We don't think of Switzerland place as a hot bed of urban decay.

I think what we have done for 70 years is assume that all of the good things that have come out, communities, can only come if people own their home. What Barbara tries to do in this piece is to say maybe we should look at that argument with a little bit of skepticism and see if we can have a level playing field.

COSTELLO: Kind of like change the American dream, because let's face it, that is a big part of the American dream. And to think that you can't attain that dream is a very painful thing for Americans.

ELLIOT: That's absolutely right. That's absolutely right. You know -- it must be sad.

ROBERTS: Every young person is hard wired to buy a home.

ELLIOT: Perhaps not in New York City, you know, where lots and lots of kids assume they will rent houses, apartments. But you are absolutely right. We are sort of hardwired. You haven't made it unless you have a home.

COSTELLO: You don't have anything you can call your own except maybe your car. But that's not the same.

ROBERTS: The way young people live in apartments in New York City is something to behold, inflatable walls, three feet of space.

Michael, it's great to see you this morning.

ELLIOT: Thank you.

COSTELLO: Thank you very much.

The magazine, "TIME" magazine, tackles these questions in its current issue. If you want to read the article, it's called "Rethinking Homeownership." You can buy it on the newsstands now.

ROBERTS: It is all kind of depressing a little bit, isn't it, the whole thing?

COSTELLO: I know.

ROBERTS: All right, on to a storm of a different sort. We're watching the tropics, couple of things going on there. Also stormy in the south. But finally, after five days almost, gorgeous sunshine in the northeast. Jacqui Jeras has the forecast coming up next.

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JACQUI JERAS, AMS METEOROLOGIST: And welcome back to The Most News in the Morning. I'm meteorologist Jacqui Jeras.

We are tracking two storms in the Atlantic at this hour. We've been watching Danielle for a couple of days now. It's a Category 2 storm with winds over 100 miles per hour. The forecast tracks storm system (AUDIO GAP) watching Bermuda. But at this time we don't think it will be a threat to the U.S.

There's also tropical storm Earl which developed yesterday. Wind here at 45 miles per hour; it is expected to intensify. And will likely become a hurricane in the next couple of days, the path of Earl much more southerly than Danielle.

So it bears watching even though it's not expected to hit land in next five days. We'll have to wait and see what happens there down the line.

Now, back here at home, we are dealing with for the most part some really nice weather across the U.S. The worst of it, though, is down here across parts of South Florida where we're getting some heavy showers and thundershowers. Nothing severe expected but it could hold up your travel plans for today.

Cold front sweeping across the northeast, which means beautiful conditions are moving in. It's going to be great across the Midwest as well. Windy conditions with red flag warnings out west especially the inner mountain west. We've got a number of record highs here yesterday. Today we'll likely see a few more. But the heat does get suppressed in the west by tomorrow.

That's the latest on the nation's forecast. AMERICAN MORNING is back right after this break. (COMMERCIAL BREAK)

ROBERTS: Coming up now on eight minutes to the top of the hour. Some amazing video that you've just got to see this morning; this in Brazil where a terrifying combination of strong winds, brush fires, and a three-month long drought created -- let's see it again -- this fire tornado.

COSTELLO: Wow.

ROBERTS: Have a look at that, sky-high flames racing across a highway in southern Sao Palo bringing traffic to a standstill. And just about as quickly as it formed, the fire tornado simply disappear.

COSTELLO: That is freaky.

ROBERTS: Isn't that wild?

COSTELLO: I would say it brought traffic to a standstill.

And instead of -- I wish I could say goal like the announcers just say goal in soccer games but I can't.

ROBERTS: Give it a roll. Come on give it a try. Let loose that inner enthusiasm for the game of soccer.

COSTELLO: No. Look at this. This poor German sports reporter was absolutely clocked. Gosh. She was clocked in the head by a soccer ball.

ROBERTS: Wow, that's a shock.

COSTELLO: It came in like a missile from across the field. No one saw it coming, especially her. And of course the fine folks at the Internet looped it for our enjoyment. And then, she'll be famous for that for the rest of her life.

ROBERTS: Poor thing.

Waveland, Mississippi on the road to recovery after Hurricane Katrina destroyed nearly all of the businesses and homes.

Tom Foreman up next with an inspiring "Building up America" report. Stay with us.

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COSTELLO: Twenty-eight foot high wall of water leveled the town of Waveland, Mississippi when hurricane Katrina slammed into the Gulf. And when some people came back they couldn't even find where they once lived.

ROBERTS: The people did come back and they completely started from scratch.

Our Tom Foreman has got the bus out this morning and has got a true "Building Up America" story for us. This is a good one, Tom. Good morning to you.

TOM FOREMAN, CNN CORRESPONDENT: Hey, good morning John. It really is. It's unbelievable what happened. And we talk so much about the destruction here in New Orleans. But you can't forget the Gulf Coast because that was really ground zero; and where it was absolutely the worst they are coming back.

(BEGIN VIDEOTAPE)

FOREMAN (voice-over): Of all the towns ripped by Katrina, none suffered more than Waveland. And no one knows it better than the Mayor Tommy Longo.

TOMMY LONGO, MAYOR, WAVELAND MISSISSIPPI: Lost our residential structures, lost our commercial structures, lost our governmental structures. And every city building was gone. Our town was obliterated. We were wiped off the face of the earth.

FOREMAN: And yet, ever since Waveland has been steadily building up. A $100 million in federal disaster aid has rebuilt community centers, libraries, roads, schools, parks. Churches have reopened, 65 percent of the businesses have returned. Not as much as the city wants but good enough to bring two-thirds of the people back too.

CNN's Anderson Cooper first met the Kearney family right after the storm.

ANDERSON COOPER, CNN HOST, "AC360" (on camera): You vacuumed your house.

UNIDENTIFIED FEMALE: I vacuumed my house to the moon.

FOREMAN: They lost the homes for three generations of Kearneys. It was overwhelming.

GERMAIN KEARNEY, WAVELAND, MISSISSIPPI: This has blown me away, it really is. Yes but I mean, this happens to other people and they come back from it. So -- we're going to come back from it, too.

FOREMAN: And they did. Rebuilding and resettling, not far from the empty lot where they used to live.

UNIDENTIFIED MALE: This was our tree house here which actually made it through the storm.

FOREMAN: Reclaiming their town has not been easy.

UNIDENTIFIED FEMALE: I'm not complaining but it is harder to do what we have to do.

UNIDENTIFIED MALE: Yes on the --

UNIDENTIFIED FEMALE: The school is not around the block. The school is ten miles away.

ANN KEARNEY, WAVELAND, MISSISSIPPI: There is no shopping as women know shopping. There's nothing like that. But that is so immaterial. We're coming back as a community.

UNIDENTIFIED FEMALE: Hey, I found something.

FOREMAN: And sometimes the children still dig reminders out of the weeding. But day by day, the past grows dimmer; the future, brighter.

UNIDENTIFIED MALE: Slow, very slow but it's happening.

FOREMAN: And for so many here that is enough to keep battling on, building up.

LONGO: Never -- never did it cross my mind that we're finished. That it's done.

FOREMAN: And indeed, they are not.

(END VIDEOTAPE)

FOREMAN: So for all we say about people building up in the many places that were hurt so badly, Waveland really was taken off of the map and yet, they are finding a way to crawl back. It's just an amazing inspiring story from the Mississippi coast.

ROBERTS: It really is, Tom. When you think that if you got hit that hard and you would say -- forget it. I'm moving inland. But they didn't. They are coming back.

FOREMAN: I don't know how they did it. I truly don't. You go out on the streets today, it's like, I don't know how you people did it. But they still are. They still have a long way to go. But they still keep pushing on ahead.

COSTELLO: That's awesome. Thank you, Tom Foreman.

FOREMAN: Good seeing you all.

ROBERTS: All right, you too. Good seeing you too.

AMERICAN MORNING will be live in New Orleans, by the way, tomorrow morning starting at 6:00 a.m. Eastern. We'll be taking a look at how the city has come back from Hurricane Katrina and the work still yet to be done.

COSTELLO: You're getting on a plane later this afternoon to head down there?

ROBERTS: This afternoon.

COSTELLO: You'll be down in New Orleans. I'll be here.

ROBERTS: Should be good.

COSTELLO: So continue the conversation -- we want you to continue the conversation on today's stories; go to our blog at CNN.com/amfix. That does it for us. ROBERTS: The news continues here on CNN with Kyra Phillips in the "CNN NEWSROOM."

Good morning Kyra.