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THE SITUATION ROOM

Volatile Day on Wall Street; Violence in Syria

Aired August 5, 2011 - 17:57   ET

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


WOLF BLITZER, HOST: On one side, one of the more powerful figures in Arizona politics. On the other, grassroots organizers demanding Senator Russell Pearce's recall. They will square off in court on Monday.

Here's CNN's Thelma Gutierrez.

(BEGIN VIDEOTAPE)

THELMA GUTIERREZ, CNN CORRESPONDENT (voice-over): He was once the most powerful man in Arizona, president of the state Senate, controlling the agenda with an iron fist --

RUSSELL PEARCE (R), ARIZONA STATE SENATE: -- the politicians who continue to talk tough but never do anything. In Arizona, we're going to do something.

GUTIERREZ: -- a men who pushed the toughest immigration laws Arizonans and the nation had ever seen.

Arizona state senator Russell Pearce had spawned a movement and copycat laws across the country, laws that would ignite a firestorm of controversy and massive protests in the streets.

Senator Pearce seemed unstoppable, until now.

UNIDENTIFIED FEMALE: We are the group recalling Russell Pearce.

UNIDENTIFIED FEMALE: Would you like to volunteer with us? UNIDENTIFIED FEMALE: I mean, you seem really enthusiastic.

GUTIERREZ: They started as a small unorganized group with a common goal -- to oust Senator Pearce from office.

(on camera): You guys turned to a little known statute in the law to make the change.

LILIA ALVAREZ, CITIZENS FOR A BETTER ARIZONA: Something like a recall statute that has been covered in dust. Look at the power of it. This recall effort has been a very strategic attack. It hasn't been just based on emotion.

GUTIERREZ: And not just based on immigration. Some constituents in his district turned against him over cuts to education, cuts to the state's organ transplant program for the poor, and policies that many say drove business out of Arizona.

Boasting a volunteer force of 500, Citizens for a Better Arizona, a nonpartisan group, launched an offensive against the powerful Republican senator.

MARY LOU BOETTCHER, CITIZENS FOR A BETTER ARIZONA: My name is Mary Lou Boettcher, and I'm a Republican. And I have been working with the recall of Russell Pearce.

MIKE WRIGHT, CITIZENS FOR A BETTER ARIZONA: We thought that by removing him from office, it would have a chilling effect on the rest of the legislators.

GUTIERREZ: They needed 7,756 signatures within a 120-day deadline. More than 10,000 signatures were verified.

UNIDENTIFIED MALE: Part of the conflict, the more glorious the triumph. And we are here today to announce a very glorious triumph for the state of Arizona.

PEARCE: The recall was an effort to remove me because I had done what I said I'm going to do.

GUTIERREZ (on camera): Are you disappointed? Is Senator Pearce disappointed?

UNIDENTIFIED MALE: I'm not sure I would use the word disappointed. He has won 16 elections. And he is 16-0. So, he's -- he is ready to go if there happens to be an election in November.

THELMA GUTIERREZ, CNN CORRESPONDENT: Governor Jan Brewer has called a special election in the senator's district come November 8. Senator Pearce is challenging the validity of many of the signatures on the recall petitions. And he's not going down without a fight.

UNIDENTIFIED FEMALE: We're moving into the next phase of our campaign.

GUTIERREZ: These volunteers say, bring it on.

Thelma Gutierrez, CNN, Phoenix, Arizona.

(END VIDEOTAPE)

WOLF BLITZER, CNN ANCHOR: And you are in THE SITUATION ROOM.

Happening now: Wall Street whipsaw. Despite a positive jobs report, there are wild gyrations on the stock market. Driving all that volatility, fears of a double-dip recession at home and a big meltdown in Europe.

Civilians under fire in Syria. Tanks seal off a city and pound away at residential areas. In Libya, we are on the scene as relatives mourn family members apparently, killed in a NATO airstrike.

And a few thousand dollars and some technical know-how, that is all you need for a homemade spy plane that could easily steal your personal information.

We want to welcome our viewers in the United States and around the world. Breaking news, political headlines and Jeanne Moos all straight ahead. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

A day after one of the worst point drops on record, the market takes investors on a wild roller-coaster ride. A better than expected jobs report sent stocks shooting up at the start amid fears about Europe. The bottom then dropped out. But later a positive report from Europe sent stocks climbing again. In the end the Dow gained back 60 points.

Let's go live to CNN's Alison Kosik. She is in New York working the story for us.

A mixed day today, but a horrible week all together, Alison.

ALISON KOSIK, CNN CORRESPONDENT: Oh, yes, you said it.

And just today really leaves you with an interesting memory. Because volatility was the word of the day. This was a market today that really moved and changed as the headlines change. When that better than expected jobs report came out showing 117,000 jobs were added last month, we saw the Dow surge 172 points and then everyone kind of took a breath thinking everything is going to be OK for the day.

But then if you blinked, you missed it. We saw the Dow plunge another 244 points on unsubstantiated worries that Standard & Poor's -- that's one of the big credit ratings agencies -- that it would downgrade the U.S. credit rating after the closing bell.

That was kind of flying around the floor of the New York Stock Exchange. That made stocks tank that 244 points. And then we saw stocks shoot up again 118 points on good news out of Europe. The ECB -- that is our version of the Fed -- the ECB saying, you know what, we will go ahead and buy up Italian and Spanish bonds.

There were big worries that this debt would not have been bought up. This put Wall Street in a better mood and you saw us end to the upside with the Dow. But I'll tell you what. This is clearly a market on edge. There is clearly fear on Wall Street still about the state of the economy -- Wolf.

BLITZER: And the big fear, Alison, is what, that there could be a double-dip recession because of what is happening in Europe.

KOSIK: There are still fears about that. They're not off the table yet.

I think what you saw today with the good jobs report is it kind of pulled people kind of away from the ledge a little bit. But you know what? But it's still on the table. The worries about a possible new global recession that is still a big worry. Because you see the debt problems happening in Europe and we have our own debt problems. And we did get a good jobs market number, a good jobs number, but it's just not enough to really make a dent in the 14 million people who are out of work. It will take years to make up for that.

And that is just talking about the job market, not to mention our weak economic growth. Remember that GDP figure of 0.4 percent in the first quarter -- Wolf.

BLITZER: Yes, anemic indeed. All right, thanks very much, Alison.

President Obama seized on the jobs report as a bit of good news for the faltering U.S. economy. While urging Congress to do more to spur employment, he offered some optimism. Listen to this from a speech to U.S. military personnel.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: This may be one of the oldest shipyards in the United States -- cycle where people are spending and companies are -- lifting their wages, rebuilding that sense of security.

(END VIDEO CLIP)

BLITZER: All right, we didn't have that right sound bite. We will fix that. We will get back to it.

But let's bring in our own Gloria Borger. She's here. She's working the story for us.

It's not that easy to turn this economy around and start creating jobs and no one appreciates that better than the president of the United States.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Wolf, this is a president who has now signed on to a restraint agenda, which is the deficit-cutting agenda.

It will be very difficult for him to take this pivot to a growth agenda. He started that in the State of the Union and he talked about winning the future and he talked about growing the economy through innovation and investment. But when you don't have a lot of money to invest, it's very difficult to talk about that agenda.

Now, he can talk about extending the payroll tax cut holiday for people, which I think he is going to do. He will talk about extending unemployment insurance and of course he will talk about this infrastructure bank. The question is whether he can make that revenue neutral or whether he can ask private sector to participate in it so it doesn't look like it's just more spending. Stimulus has become a dirty word here in Washington.

BLITZER: Some members, some folks out there are saying this is a crisis right now. Congress should not be in recess for five weeks until September 7. The president should said simply say get back to Washington and get something done.

BORGER: And do what, though? BLITZER: Well, he's got three proposals you just named right there, extend the payroll tax cut, have this infrastructure development, all of these proposals that are not necessarily all that controversial. He's got another involving extending some patent benefits to try to create some jobs.

(CROSSTALK)

BORGER: Which they say could create a couple hundred thousand jobs. It sounds like a small-bore thing, but it's actually larger.

The question is with the backdrop of deficit reduction, the whole problem we had with raising the debt ceiling. How are Democrats and Republicans going to agree on anything that talks about spending money? That's going to be quite difficult. Now, maybe you can talk about some tax incentives for businesses, tax breaks for businesses who hire new employees. You have to figure out ways to get corporate America to start spending some of the trillions of dollars they're sitting on.

BLITZER: Yes. And I think what -- a lot of these huge corporations who are sitting on trillions, they got the cash. They don't want to invest it. They don't want to spend it to hire people because they don't know what the future holds. They are nervous about bringing people on board. So, Washington, that means the White House and the House and the Senate, they have to do something to reassure all those huge corporations.

BORGER: And they thought they had done that with the debt ceiling, when in fact when we look at Wall Street, what Wall Street was looking at was what was going on in the rest of the world.

And there's still a big question mark, Wolf, on the question of deficit reduction, because as you know and I know, nobody really knows what that special super committee is going to come up with. And if they come up with nothing, then the cuts will go into effect and lots of people think that will shrink the economy, and not grow it.

BLITZER: That 12-member super committee is supposed to come up with their recommendations by Thanksgiving. They don't have a lot of time, but that's a little time.

BORGER: Not a lot.

BLITZER: Thank you.

The jobless numbers only tell part of the story of the serious problems facing the United States right now. Perhaps even more telling, the skyrocketing number of Americans who rely on U.S.- government provided food stamps to keep them from going hungry.

CNN's Brian Todd has more.

(BEGIN VIDEOTAPE)

BRIAN TODD, CNN CORRESPONDENT: Wolf, you want a sign of the economic times? Here's a sign. It's a food stamp card. More Americans than ever are in this program right now, nearly 46 million.

Experts say that half of America's kids will have been in the food stamp program between birth and age 18. You want to know how tough it is? Well, you are about to meet a gentleman who lives that life every day.

(voice-over): On a short walk to the grocery store with Frederick Mack in the shadow of the Capitol, a bracing window into how tough life has been in recent years.

FREDERICK MACK, FOOD STAMP RECIPIENT: See right here? One of my daughters, my oldest child, died. Yes, sir. They gave her a bus stop.

TODD: A memorial to his eldest daughter, a community aid worker who died of childbirth complications. Frederick now lives in a transitional home for people struggling to get back on their feet.

Unemployed, he tells me, for about eight months, on food stamps for a year-and-a-half, he symbolizes the staggering rise of Americans in the food stamp program since 2007, a climb of about 70 percent to nearly 46 million people. Advocates who fight hunger say it's a perfect storm of hardship.

JAMES WEILL, FOOD RESEARCH AND ACTION CENTER: Unemployment went way up and has stayed high. Wages are flat or down for really the bottom half of the population.

TODD: Frederick Mack is trying desperately to get back to his calling. He's got 35-plus years experience as a cook.

In the meantime, he gets $200 a month in food stamps.

(on camera): Is that enough?

MACK: No, it's not enough. I have just found out ways how to stretch it.

TODD (voice-over): We duck into a grocery store where he shops. There is a lot in here that is off-limits on your food stamp card.

(on camera): Can't do it?

MACK: Can't buy.

TODD: But why?

MACK: Because it's hot. It's already cooked.

TODD: Hot and prepared.

MACK: Prepared.

TODD: What do you buy most of the time, salad?

MACK: Salad and fruits. TODD: Fruit?

MACK: That's the cheapest thing you can buy.

TODD (voice-over): We comb through aisle after aisle. Frederick doesn't buy anything that's not on sale.

(on camera): Basic stuff here. Toothpaste. What about that?

MACK: Can't do it?

(CROSSTALK)

TODD: Wait. You can't buy toothpaste?

MACK: Can't buy toothpaste. You can't buy soap. You can't buy deodorant.

TODD: Why not?

MACK: Because if it's not edible, you cannot buy it.

TODD (voice-over): For those items, you have to use your own money, if you have it.

Frederick says, at 53, first time unemployed, his pride has taken a big hit from this.

MACK: I don't want to be on it. If I didn't have to eat, I shouldn't wouldn't. But I have to eat to live. And that's the only way I can -- only way I can do it these days. I can't go around. You know how low it would make me feel to go on the street begging or if I had a sign on my chest saying I need something to eat, help me, I haven't ate today or help me, I need something to eat?

TODD (on camera): So, this at least prevents you from having to do that.

MACK: Prevents from begging and panhandling. This prevents me from doing that, because I do have a pride. I am a human being.

TODD: As eager as he is to get out of the food stamp program, Frederick says he has got other priorities. He has got to first get out of the transitional home where he is living. And to do that, like so many others, he has got to find a job first. So like tens of millions of other Americans, he will probably be on the food stamp program for a little while longer -- Wolf.

(END VIDEOTAPE)

BLITZER: Brian Todd, thank you.

I spoke about the skyrocketing number of Americans on food stamps with the outgoing chairman of the Council of Economic Advisers, Austan Goolsbee.

(BEGIN VIDEOTAPE)

BLITZER: One statistic that really worries me and the jobless numbers are bad enough, but as far as people in America who need food stamps simply to eat and survive and not starve, back in October 2008, 31 million Americans relied on food stamps. Most recently, the USDA came out with its number -- 46 million Americans, Austan, 46 million Americans, one out of seven, needs food stamps to survive. That's a very depressing figure as far as hunger in America is concerned.

AUSTAN GOOLSBEE, CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS: Look, I agree with that.

But beyond just hunger, that is indicative of how deep this hole was. When you pick October 2008, that's around when the big financial crisis begins. There is no question we were in freefall for a substantial period. And it was and remains a tough struggle for a lot of people around the country. There's no doubt about that.

I think our only alternative, the only option that makes any sense is let's put to the side those things we disagree on, of which there are many, and instead of fighting about stuff where we can't agree, let's go pick some things that are big things that we can agree on. Let's pass free trade agreements that are just sitting there. Let's pass patent reform. They are just sitting there. Let's do the bipartisan infrastructure bank to try to finance more of the infrastructure in our country using some private moneys, not just public moneys.

Let's extend the payroll tax cut for 150 million workers. All of those have bipartisan support and they have just been stalled as we got in this debate where literally government -- leading figures of government were standing up saying maybe it would be OK if the U.S. government defaulted on some of its obligations. That was a deeply unsettling moment and we have got to put that behind us.

(END VIDEOTAPE)

BLITZER: You can read more about this amazing story, one out of seven Americans on food stamps right now. Go to my blog at CNN.com at CNN.com/situationroom. I write about it, lots of comments, lots of reaction.

Troubling signs the U.S. could be heading toward a double-dip recession. Is there anything that could be done to prevent a new economic nightmare?

Also, a city under bloody siege by its own government, disturbing new reports of more than a dozen people dead. We are getting new details coming in from Syria.

And a mother and two young children allegedly killed by a NATO airstrike. We are live in Libya. Stay with us. You are in THE SITUATION ROOM.

(COMMERCIAL BREAK) BLITZER: Five months after anti-regime protests began in Libya, Moammar Gadhafi is still holding on to power as a bloody war grinds on. As usual, civilians are caught in the middle.

CNN's Ivan Watson got a firsthand look at the fallout from this conflict.

(BEGIN VIDEOTAPE)

IVAN WATSON, CNN CORRESPONDENT (voice-over): A husband and father weeps and a young man sobs over coffins holding the bodies of two little boys, Mohammed (ph) and Motez of, age 5 and 3, and their mother, Itisam (ph), killed early Thursday morning, crushed while they were sleeping, neighbors say, when an airstrike demolished their house.

Government officials brought us to the town of Zliten to see the funeral.

(on camera): With two little boys and their mother killed this morning, what does it say about the United Nations Security Council resolution which is calling on NATO to protect civilian lives in Libya?

(voice-over): NATO spokesmen say at 6:30 a.m. local time on Thursday, warplanes bombed a suspected command-and-controlled facility in Zliten. A NATO spokesman told CNN -- quote -- "We have no reason to believe there were any civilian casualties, but we take these reports very seriously and we're looking into the matter."

For weeks, Zliten has been the target of an intense NATO bombing campaign. Moammar Gadhafi's government accuses NATO of hitting warehouses, health clinics and schools.

(on camera): We are on the compound of a law school that was hit a couple of days ago again by airstrikes. But there is compelling evidence that this has been a location for some military. These appear to be uniforms over here, these olive green pants. And then we have got boxes here that look an awful lot like they could have been holding ammunition.

(voice-over): Rockets rumble in the distance. Rebels and regime loyalists fight an artillery duel just a few miles away. Despite rebel and NATO demands that Gadhafi step down, he is clinging to power and threatening a war of attrition.

MUSA IBRAHIM, LIBYAN GOVERNMENT SPOKESMAN: From the very beginning, we decided that this war is very, very long. For us, this war, this honorable confrontation could go on for years.

WATSON: As always in war, civilians pay the highest price. "This is our country and we are staying," says this grieving relative. "Screw NATO and the rebels and to hell with those who gave the coordinates for the attack."

A round of bullets fired in grief and rage by a young man who says he will now give his last drop of blood to defend Moammar Gadhafi.

Ivan Watson, CNN, Zliten, Libya.

(END VIDEOTAPE)

BLITZER: And Ivan is joining us now live from Tripoli.

Ivan, is this becoming increasingly a stalemate or is one side moving to have an advantage over the other?

WATSON: Well, if you take the Gadhafi government at its word, they have had straight months of victory on the ground, Wolf.

From our month on the ground here, it does appear to be a stalemate or you could describe it as a long, slow siege. The rebels have been inching forward on three ground fronts backed it seems up quite closely by the NATO military alliance, by warplanes and it does seem sometimes artillery being fired from ships.

The Gadhafi government has proved to be much more tenacious I think than Western governments had originally anticipated. It's distributed weapons and it's talking tough, as you Justice Department heard, promising a war of attrition.

Another factor that does seem to be hurting increasingly is the economic blockade on Gadhafi-controlled territory. For instance, we are hearing that much of Tripoli, the capital, is suffering from blackouts lasting even days at times, and that is making the natives restless, shortages of medicine and of cash as well. And that is a variable. We don't know how long that make take until it really pushes the population to some kind of breaking point here -- Wolf.

BLITZER: Be careful over there, Ivan. We will stay in close touch, Ivan Watson on the scene for us in Tripoli.

Meanwhile, activists report another 15 people killed today in clashes through Syria where the death toll is now said to top 2,000. A city which has been at the center of the uprising is now isolated and under siege. Residents of Hama say they are taking a relentless pounding from tanks and artillery.

CNN's Arwa Damon is tracking developments for us from nearby in Beirut -- Arwa.

(BEGIN VIDEOTAPE)

ARWA DAMON, CNN CORRESPONDENT: Wolf, the bloody military crackdown in Syria began on Sunday. The full-scale assault began early Wednesday morning and by Friday it showed absolutely no sign of letting up.

UNIDENTIFIED MALE: I think you can hear the shooting.

DAMON (voice-over): A voice from a city besieged. Almost all communications between Hama and the outside world have been cut since a military assault began on Wednesday. UNIDENTIFIED MALE: They shoot right and left, right and left.

DAMON: This man among a handful of activists who managed to obtain satellite phones and others who take videos like these posted to YouTube. CNN cannot independently verify their authenticity, but all the evidence points to a massive show of force by the regime to retake Syria's fourth largest city.

These activist remain in Hama determined to record what some of them describe as a massacre.

A few hours later, we reached the same resident again. He had fled to another neighborhood.

UNIDENTIFIED MALE: The shelling and shooting was above my head and the (INAUDIBLE) may break into the houses. I have a communication (INAUDIBLE) It is a crime. I can't let them take me with them. I would be executed if they (INAUDIBLE)

DAMON: And he's terrified of what may have happened to his parents, who live in another area.

UNIDENTIFIED MALE: Nobody can communicate in the city with the other person. I don't know what (INAUDIBLE) to my family, to my father and mother.

DAMON: Syrian state TV aired its own images from Hama, providing a glimpse of the level of destruction. But it says the army is in pursuit of armed terrorist gangs that took over the city, the operation to -- quote -- "restore peace of mind to the people of Hama."

State-run Syrian Arab News Agency reported that 50 days of negotiations with these terrorist gangs had failed. In early June, Syrian security forces withdrew from the city following deadly demonstrations. Protests there grew bigger and bigger, turning Hama into the beacon of the Syrian uprising. But now its streets are deserted.

Despite the crackdown in Hama, demonstrators elsewhere were not silence, across the country chanting their support for the besieged city, this video purportedly from a suburb of Damascus Friday. Smoke rises from a mosque, but so does the chant that is echoed across Syria since March: The people want the downfall of the regime.

(on camera): But at this point, Wolf, it seems despite the defiance in the streets, despite the international condemnation, this is a regime that is intent on staying in power. And on the one hand, it does appear to be making some political concessions, an indication analysts will say that it has been truly shaken by the power of the demonstrations.

But on the other hand, it continues down an incredibly harsh and violent military path, hoping to a certain degree that it can use brute force to clear the streets of those voices of dissent -- Wolf.

(END VIDEOTAPE)

BLITZER: Arwa Damon in Beirut watching the story in Syria. It's going from bad to worse.

An ailing U.S. economy, some experts have warned that it is in danger of a relapse. What are the odds of a double-dip recession?

And an elderly woman dies in record heat here in the United States after thieves steal her air conditioner.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: They need to be put away. That's what needs to happen. They need to be -- they need life in prison for doing some stuff like that, because they caused her to die. So they need to be in prison.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: A steady stream of data gives a picture of where the U.S. economy has been and where it may be going, that picture not all that pretty right now, a key concern, job growth.

Just yesterday, former Clinton Labor Secretary Robert Reich tweeted that if today's employment report showed a gain of fewer than 125,000 jobs, there would be an even chance of a double-dip recession.

Today's jobs report fell short of his goal, so will we see a double-dip recession.

Lisa Sylvester is working the story for us.

Lisa, what are you finding out?

LISA SYLVESTER, CNN CORRESPONDENT: Well, several notable economists have actually put the odds between 30 to 50 percent chance that we will enter into a second recession.

Now, we got some relatively good news, although we have to emphasize the word relatively, because while we added 117,000 jobs -- and that was better than economists were -- expected -- it is still way off from where we need to be.

(BEGIN VIDEOTAPE)

SYLVESTER (voice-over): The economy is just limping along. The U.S. is not adding jobs at a fast enough pace. Consumer spending was down in June. And U.S. GDP last quarter increased at an unimpressive 1.3 percent. That means the economy technically is growing, and the U.S. is producing more goods and services, but not at a robust pace.

Larry Summers, treasury secretary under President Clinton, says the economy is at stall speed, adding, quote, "the odds of the economy going back into recession are at least one in three if nothing new is done to raise demand and spur growth."

If U.S. growth did another U-turn, that would be a double-dip recession.

(on camera) I'm here with Larry Mishel with the Economic Policy Institute, and right now, we're taking a look at what GDP has done. First of all, what is the definition of a double-dip recession?

LARRY MISHEL, ECONOMIC POLICY INSTITUTE: Well, a recession is when you have the economy shrinking for six months. And a double dip would be when it starts growing and then starts shrinking again for six months.

SYLVESTER: Have we seen or are we in a double-dip recession?

MISHEL: We are in a very weak recovery that feels like a recession to all human beings, but economists call it recovery because the economy is actually growing. A double dip would be if we actually see the shrinking economy again.

SYLVESTER (voice-over): It's been 30 years since the United States last had an official double-dip recession. Some of the underlying drivers that could tip the economy into negative growth, those familiar culprits: the housing market, which has been a drag on the U.S. economy. Consumer spending, which has been lackluster, and persistent unemployment. Many people are looking for work for months and finding no open doors.

KEITH HALL, COMMISSIONER, BUREAU OF LABOR STATISTICS: The number of long-term unemployed, the share of the unemployed that are long- term unemployed were at easily record levels. It's never been nearly this high in the history that we've been collecting this data.

SYLVESTER: Workers who are worried they may be laid off tend not to spend. Businesses facing a weak economy tend not to hire. Put the pieces together, and you have an economy teetering on the edge of another recession.

(END VIDEOTAPE)

SYLVESTER: So we are not officially in a double-dip recession, but with unemployment staying above 9 percent and growth looking pretty anemic, a lot of people will say that it feels like we really never got out of the first recession in the first place -- Wolf.

BLITZER: For a lot of those millions who were unemployed or underemployed, it doesn't only feel like a recession. It feels like a depression if you're in that situation.

Thanks, Lisa. Thanks very much.

Let's dig a little bit deeper right there. Joining us from Chicago, Diane Swonk. She's the chief economist from Mesirow Financial. She's been named one of the top forecasters in the country. Diane, are we moving or are we in a double-dip recession? I know technically, two success -- two consecutive quarters of negative growth for six months, that's the -- that's the technical definition. A lot of people say, "You know what? We're there."

DIANE SWONK, CHIEF ECONOMIST, MESIROW FINANCIAL: I don't think we're there yet, but certainly, the risk has gone up quite substantially. In fact, I was relieved to see the 100,000, 117,000 jobs generated. Not nearly enough for all of those ranks of the unemployed, especially long-term unemployed, as you already mentioned.

But I think one of the important issues is it's very similar to the environment we had in 1989, where people, they started calling it a growth recession growth, but not enough. That's what this whole recovery has felt like and particularly in the last -- over the spring we saw a growth and a rising unemployment rate. So not only not enough, a deteriorating labor market. And that's what really hurts, is that you actually are seeing more people unemployed than we did at the beginning of the year.

These are things that, in the long-term unemployed, there are some places, some states now that are trying to deal with the fact that you can't even get an interview if you've been unemployed more than six months. They won't even look at you. And they're trying to make that illegal, because it's job discrimination. You've got people who have been unemployed more than 99 weeks now and running out of unemployment insurance.

BLITZER: Well, the president did have some ideas that he spoke about today. Here's President Obama speaking earlier in the day. Listen to this, and then we'll discuss.

All right. We don't have that, but let me read it to you, and then we'll talk about it.

"When Congress gets back in September, I want to move quickly on things that will help the economy create jobs right now. Extending the payroll tax credit to put $1,000 in the pocket of the average American -- the average worker; extending unemployment insurance to help people get back on their feet; putting construction workers back to work rebuilding America. Those are all steps we can take right now that will make a difference."

Will that really make much of a difference? Those steps he just spoke about?

SWONK: Well, the important issue is that without them, it will be a bigger difference on the downside. So they work on the margin, but the payroll tax cut expires at the end of 2011. Extending it, it's low hanging fruit, not a lot of additional costs to a deficit that is already large. And it is important, especially in offsetting higher energy prices.

Of course, the only silver lining out of this weakness is that energy prices have fallen a bit recently, but let's face it. When you talk about relative, they're still really high. So that will help a little bit on the margin. I think more importantly, there's threats to the credit rating of the U.S. economy. We really need to see long- term fiscal responsibility: tax reforms and things that companies can plan on over the next 10 to 15 years so they know where we're going longer term.

And if we get a credit downgrade, that's another risk of recession. Because we -- there's a lot of unintended consequences that are likely to come from that.

So all of those things together make it really critical that Congress and the president work together. I know that seems almost oxymoron at this time, some consensus and cooperation in Washington?

BLITZER: A lot of our viewers are wondering what they should do with their money, their mutual funds or their 401(k)s, whatever savings they have. Do you have any little pieces of advice for them?

SWONK: Well, I'm not a financial adviser. I can say that, you know, my own strategy has been to buy on the dips and hold long. I do believe in the long-term growth of the U.S. economy. The only doubts I have is the faith in the U.S. government and their ability to do what needs to be done. Their just -- indecision is really undermining our long-term potential. And that's something that I worry about very much.

I do think we can avert a double-dip recession if we get some of these things that are so uncertain out of the way. And it even means tough decisions. Anyone can deal with tough decisions as long as they know what it is. It's the unknown that keeps us all in hesitation mode. Hesitation is not something you can take when the economy is already close to stall-growth speed.

BLITZER: One final question. Is this the new reality that we're living through right now?

SWONK: Actually, we knew that this was going to be a reality. We knew we had subpar recovery. Knowing it and actually living it are two different things. And it is, unfortunately, likely to persist for some time to come.

This is what happens in the wake of financial crises. And as you mentioned before, it feels like a depression to many, and it is quite depressing. The alternative was further hemorrhaging. We could be in a full-blown depression. I grew up in Detroit. I've seen 25 percent unemployment rates, and as hard as this is, it could be worse.

BLITZER: Diane Swonk, thanks very much for joining us. Appreciate it.

Desperate thieves leave an elderly woman exposed to deadly heat.

(BEGIN VIDEO CLIP)

LUCY HARRIS, DALLAS RESIDENT: She had no idea. She said her house was hot. I said, "That's why your house is hot." I said, "Your air-conditioning system is down." (END VIDEO CLIP)

BLITZER: Details of an extreme case sparked by extreme heat. Stay with us.

(COMMERCIAL BREAK)

BLITZER: The weekend weather forecast calls for more record- breaking heat in the south central United States. Temperatures well into the triple digits will be the norm, especially in Texas, which has just experienced the hottest July on record with deadly consequences. CNN's Ed Lavandera has the latest from Dallas -- Ed.

ED LAVANDERA, CNN CORRESPONDENT: Wolf, today is the 35th straight day in the Dallas-Fort Worth area that we've seen temperatures go over 100 degrees. And the last few days have been the hottest of all. This heat is affecting people and things in many different ways.

(BEGIN VIDEOTAPE)

LAVANDERA (voice-over): These days when the sun breaks through the horizon, it comes with a sense of dread. It doesn't take long for triple-digit temperatures to lock a suffocating grip on the southern plains.

UNIDENTIFIED FEMALE: The system was gone. (UNINTELLIGIBLE) in there.

LAVANDERA: That dread struck the heart of Lucy Harris's Dallas neighborhood. Her 79-year-old neighbor, Delores Grissom (ph), died in her home. The medical examiner says the heat caused her death, but Lucy says her friend didn't have to die. Someone stole the elderly woman's air conditioning unit.

HARRIS: She had no idea. She said her house was hot. I said, "That's why your house is hot. Your air conditioning system is down."

LAVANDERA: The unit was ripped out of this cage. The family has put in a new one. Grissom reported it stolen. Two days later, she died.

(on camera) What do you think should happen to the people who stole this air-conditioning unit?

HARRIS: They need to be put away. That's what needs to happen. They need to be -- they need life in prison for doing some stuff like this. Because, I mean, they caused her to die, so they need to be in prison.

LAVANDERA (voice-over): Protecting the most vulnerable is an urgent concern for social service agencies like the Salvation Army. It's opened cooling stations targeting the homeless. They give out free water and are keeping emergency shelters open 24 hours.

MICHAEL ALLEN, SHELTER DIRECTOR: And this is every year. LAVANDERA: Shelter director Michael Allen says it's a matter of life and death.

(on camera) Have you seen people who have come in here with heat exhaustion, just to come on the verge of passing out?

ALLEN: Uh-huh. Sometimes we have some guys at the front gate that passed out at the front gate. We've got to bring them in.

LAVANDERA: Passed out from the heat?

ALLEN: Uh-huh.

LAVANDERA (voice-over): Some of the hottest spots in major urban areas are on the roadways. Inside the command center at the North Texas Tollway Authority, they're on the lookout for stranded drivers. They can use heat sensors to monitor roadway temperatures in real time.

MARTY LEGE, NORTH TEXAS TOLLWAY AUTHORITY: When someone breaks down and they're out in these kind of temperatures on a roadway system, it's very dangerous.

LAVANDERA: The numbers are staggering. Workers are recording temperatures of 105 degrees 18 inches below the toll roads. That can cause roadways to buckle and crack.

But this is the most stunning number of all. If you're standing on a paved bridge in this urban jungle, temperatures are reaching almost 142 degrees.

LEGE: The actual temperatures are going beyond what we've experienced in the past, and we've not really seen roadway temperatures like this probably ever.

LAVANDERA (on camera): Wolf, but one of the towns that has seen the most relentless heat this summer is the town of Wichita Falls, Texas. Today they've gone 45 straight days with temperatures over 100. Had it been for only one day, where they dipped down to a chilly 98 degrees, that record right now would stand at 65. Simply relentless -- Wolf.

(END VIDEOTAPE)

BLITZER: Hot and getting hotter. Thanks very much, Ed.

It's a model plane that could hack your e-mail, your phone calls and a lot more. Details of the homemade spy plane capable of tracking every move you make.

(COMMERCIAL BREAK)

BLITZER: With a few thousand dollars, some tools and some technical know-how, you could create a cyber spy plane. As well as some evil intentions, you could even create a security nightmare for lots and lots of people. A pair of computer professionals are showing just how damaging a little ingenuity could be. Let's go to Los Angeles. CNN's Sandra Endo has the story for us.

Sandra, this is amazing. Tell our viewers what's going on.

SANDRA ENDO, CNN CORRESPONDENT: Absolutely, Wolf. These computer security experts have found a way to hack into your computer, your cell phone, track your whereabouts. And they can do all that from up in the sky.

(BEGIN VIDEOTAPE)

ENDO (voice-over): It looks like a toy plane, but it in the arm, it could be a dangerous weapon. And you could be the weapon. It's capable of hacking your personal information: your private phone calls and your e-mails, spoofing cell-phone towers and breaking down firewalls, all from the air.

MICHAEL TASSEY, CYBER SECURITY CONSULTANT: Because we have an airplane and we can get very close to the target. We can be the strongest signal. It's a fight that the cellular tower can't -- can't win. And so thusly, we can capture that phone. You can do other things, like jam the 3G cellular frequencies, causing a denial of service on the 3G network.

ENDO: Computer experts Richard Perkins and Michael Tassey built this model plane with parts ordered online for around $6,000 and put it together at home. But they're not using it to steal information. Instead, they're showing it off at a hackers' convention in Las Vegas.

Computers outfitted on the plane can disrupt and manipulate open Wi-Fi signals and relay that information to someone controlling the plane on the ground. Video of their test flight showed it could go pretty much undetected to the average person on the street. But it could be tracking your every move.

(on camera) It's like you're being watched. I could go to my local coffee shop, use credit card and check e-mails. As I walk to my car, I could make a phone call. I would never know hackers could be taking my credit-card information, reading my e-mails, listening to my phone call, and follow me all the way home.

TASSEY: It's just an object. It's how you use it that depends on whether or not it's an evil thing or a good thing.

ENDO (voice-over): The inventors say they want to warn the public how much damage can be done with relative ease. Knowing the possibilities should raise public awareness.

RICHARD PERKINS, SECURITY ENGINEERING CONSULTANT: If you want to control your personal information, you need to take charge of it. You need to take responsibility for your own personal information, and I don't think people have really done that.

ENDO (on camera): Now cyber security -- cyber security experts say the best way to protect yourself from any possible attack is to always use secure closed networks any time you go online -- Wolf.

(END VIDEOTAPE)

BLITZER: All right, Sandra. Thanks. Good advice, Sandra Endo. Amazing story.

If you drive a Honda or if you know someone who does, you're going to want to hear about this recall. Millions of people will be affected.

And the start of five-year 400-mile -- 400-million-mile journey. Details of where this rocket is heading right now.

(COMMERCIAL BREAK)

BLITZER: United States has another major car recall. Lisa Sylvester is monitoring that and some of the other top stories in THE SITUATION ROOM right now.

What's going on, Lisa?

SYLVESTER: Hi there, Wolf.

Well, Honda is recalling 1.5 million cars in the United States specific to transmission problems. It can cause the engine to stall and the parking gear mechanism to jam. The Japanese automaker will update transmission software in the cars. Affected models are 2000 through 2010 CRVs, 2005-2008 Honda Elements and 2004-2010 Honda Accords. No injuries or deaths have been reported.

NASA launched the Mission Juno satellite into orbit today. It will take the spacecraft five years to travel 400 million miles to Jupiter. NASA says Juno will offer a unique look at how the solar system came to be. It's believed Jupiter was the first planet to exist after the sun was formed. Jupiter is about 1,300 times larger than the Earth, Wolf.

BLITZER: Lisa, thank you.

It's one of the last places you'd expect to find a snake. CNN's Jeanne Moos shows us a slithering surprise. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: Hard to keep your eyes on the road when there's a snake on your windshield! Here's CNN's Jeanne Moos.

(BEGIN VIDEOTAPE)

TONY FISHER, DRIVER: A huge...

JEANNE MOOS, CNN CORRESPONDENT: When suddenly there's a snake on your windshield, it sort of makes bugs and bird droppings pale.

T. FISHER: Snake got up, out of the engine and was coming at us, and I'm, like, what in the world?

MOOS: A Memphis couple, Tony and Rachel Fisher, and their three kids were going about 65 miles an hour when the snake apparently slithered out of the engine.

T. FISHER: I don't like snakes. I'm more scared of snakes probably than my wife is.

I want that thing to fall off.

MOOS: Which eventually it did.

RACHEL FISHER, TONY'S WIFE: Oh, my gosh! Oh, my gosh, oh, my gosh!

T. FISHER: OK, hold on. It just fell.

MOOS (on camera): Snake experts identified the stowaway as a rat snake, not harmful to humans.

(voice-over) But the Fishers were treated like rats by animal lovers after they posted their video to YouTube. "Are you stupid? Pull over and let the snake go." "What an ass." "Isn't it fun to torture animals, stupid people?"

R. FISHER: We didn't think about pulling over. Yes. We didn't know -- you know, we didn't know what kind of snake it was.

T. FISHER: I just want the thing off the car. I don't want to have to try to get out of the car and deal with it.

MOOS (on camera): But what the couple in Tennessee did was tender loving care compared to the way some Bulgarian motorists handled the same situation.

(voice-over) After lots of swearing in Bulgarian...

UNIDENTIFIED MALE: (SPEAKING FOREIGN LANGUAGE)

MOOS ... the driver turned on the wipers, which led to accusations of reptile abuse. The snake eventually flew off.

But some creatures sit tight. When this driver tried to gently dislodge a bird from his wiper, the bird couldn't be bothered. Meanwhile, the owner of this parrot got fined by Australian authorities.

UNIDENTIFIED MALE: I'm just giving him some wind in the feathers, mate.

MOOS: Maybe a little too much wind. Though Angus the parrot seems to enjoy hanging out on the wipers.

UNIDENTIFIED MALE: Yay, go, Angus!

MOOS: His owner was charged with animal cruelty for this.

UNIDENTIFIED MALE: On the bloody freeway doing nearly 100 kilometers an hour.

MOOS: Of course, there are worse things that can end up on your windshield than birds or snakes. As for our fake snake...

(on camera) No, don't, don't touch it.

(voice-over) .... only in New York would a panhandler offer to clean this snake off the windshield. A windshield viper!

(on camera) No, sorry. Eh.

(voice-over) Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

BLITZER: And this final note. I'm sad to report that David Bohrman, our former Washington bureau chief, is leaving CNN. Today is his last day.

David is one of the most creative and brilliant broadcast journalists in the business. He was responsible for our coverage of elections, presidential debates, and so many other special events. He brought amazing new technology to our business. He helped us win Emmys and Peabodys and so many other awards. He was the prime mover in creating THE SITUATION ROOM, by the way, which will celebrate its sixth anniversary on Monday. He helped make me a better journalist, and I will always be grateful.

We wish David only the best as he embarks on his next new challenge. Good luck, David. We thank you. All of us here at CNN will miss you.

And that's it for me. I'm Wolf Blitzer in THE SITUATION ROOM. For our international viewers, "WORLD REPORT" is next. In North America, "JOHN KING USA" starts right now.