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President Obama Talks Economy; America's Worst Day in Afghanistan; Drop in the Dow
Aired August 08, 2011 - 14:08 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
WOLF BLITZER, CNN ANCHOR: All right. So there it is, the president of the United States speaking on the two subjects that the White House said he would address, the state of the U.S. economy and the deaths of those 30 American troops in Afghanistan, plus seven Afghan troops aboard that U.S. Army Chinook helicopter.
Ali Velshi, I want to get right to you.
When the president started speaking, the Dow Jones was down around 400. When he stopped speaking, it's now down, what, about 437 points?
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Yes.
BLITZER: So it didn't really move all that much, but I guess we're going to have to wait and see how much he reassures -- has reassured investors, traders out there, that the U.S. economy is, in his words -- the United states is a AAA country.
VELSHI: Yes. We were at 11,037 when he started speaking. It dipped below 11,000 for the first time since November of last year.
Now, look, I don't put a whole lot of stock in exactly -- as I've been saying for a few days, this is an irrational market. So I don't know how much stock we put in the fact that it happened while he was speaking, but the bottom line is it did go down to 10,984.
And we're looking at the Dow. You can see the percentage drop there, 3.6 percent. The S&P 500, which, as you know, Wolf, is more reflective of people's holdings in their IRAs and 401(k)s, it's actually down substantially more than that. It's down more than 4 percent
So this is definitely a major, major sell-off. There's no sugarcoating that.
I thought it was interesting what the president said, that -- he was quoting somebody saying that if you can have a AAAA rating, America would have that. While there's a lot of criticism of S&P for its downgrade and for its behavior back during the financial crisis, when it had A ratings on Lehman Brothers and AIG, right before they both collapsed, the reality is there is a judgment out there that something is wrong with what's going on in America.
I will reiterate one more time, this is a serious sell-off, and we should take it seriously. And by the way, it's recovering, some of what was lost while the president was speaking. In fact, it's higher now than before he started. The bond market, which is where you would see a reaction, the ability for the United States to borrow money on international markets, which you would think would be affected by a downgrade, is now easier and cheaper than it was on Friday.
BLITZER: Remind me, Ali. I don't think we're going to get anywhere near that point, but at what point do they stop trading on Wall Street if there's a continued steep decline?
VELSHI: Yes. It would have to be about 1,200 points, and it would have had to have happened before 2:00. If there's a drop -- it gets reset every few months, but in this case, a drop of 1,200 points before 2:00 would have stopped the market, because what happens, Wolf -- and it's good you bring this up -- these days, with these kinds of markets, because so much of the trading is computerized, there's a momentum thing. Right?
When you get to a certain point, then it triggers more selling. And that triggers more selling. And these computers can sometimes sort of overtake things.
So it's called a circuit breaker. Basically like a fuse in your house. If the selling gets too heavy at some point, it just stops the market for a little while and makes humans come in basically and intervene. That's not going to happen today.
And we're not in that range yet, but it's good to keep in mind. Obviously, we're very clear on this. But it is important to note that the Dow did drop below the 11,000 level for the first time since last November.
BLITZER: Yes. And I think he was quoting Warren Buffett, the investor --
VELSHI: That's right. It was Warren Buffett.
BLITZER: -- when he said the United States is really a AAAA country, as opposed to AAA. Not just a AA-plus.
John King is watching.
You know, it's tough for a president, any president, on a critical day like this to go out there to both reassure, but to also stay on top of what's going on.
JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: And he wants to convince the American people he's on top of this. He's speaking not only to investors on Wall Street, but he's speaking to investors globally, because as we have all learned, like it or not, the global economy, we're connected now. So what happens in Asia, it moves to Europe, then moves to the United States.
Trying to say that we will get about this. So it's interesting.
The president had no new proposals there, Wolf. He said this super committee had to get about the business. The super committee, created as part of this deficit reduction deal, has to do its job.
The only thing new he said was that there would be recommendations from the administration to get them going. Then he repeated his call for a payroll tax cut, unemployment insurance extension, infrastructure bank. Those last two, infrastructure bank, a lot of Republicans in Congress have said no. Unemployment insurance, they said only if you offset the cost of it with spending cuts elsewhere. The payroll tax cut has a pretty good chance.
But it was interesting. The president said he would have his own recommendations.
What a lot of people are waiting for now is, how big will this super committee try to do? It is charged with coming up with at least $1.5 trillion in additional deficit reduction, spending cuts and/or revenue increases. That's its mission.
There's no reason it can't, say, shoot for $3 trillion or $4 trillion. And some are saying that's the reassurance to send to the markets in terms of the downgrade.
Will that be enough to get Standard & Poor's to say AAA again? Probably not. These things take years. But that would be a reassuring signal.
The problem is, when you're worried about a double-dip recession, the political emphasis is on spending cuts. A lot of people say that could actually hurt the economy even though it helps the politics.
BLITZER: And David Gergen is watching this as well.
And David, the president specifically said -- and some on the left won't like it -- he said whatever recommendations this super committee, 12 members of Congress, Senate and House, six Democrats, six Republicans, come up with should include, in his words, "modest adjustments to Medicare, as well as tax increases for those who could afford it, the wealthy."
So, the president, he's always wanted tax increases on the wealthy and the big corporations, some removal of loopholes and adjustments. But here he's now saying specifically he also would like to see, in hi words, modest adjustments in Medicare.
That's not going to necessarily ring all that well with some on his left.
DAVID GERGEN, CNN SR. POLITICAL ANALYST: Not at all, Wolf. But the president clearly now wants to put the grand bargain back on the table.
He came very close with John Boehner. He thought the Gang of Six, as he said today, was on the right track. Simpson-Bowles, on the right track. Whether he can get it or not, I'm not sure.
What surprised me today about the statement today, Wolf, that he just made is it did not seem aimed at investors. It seemed aimed more at the general public.
I thought there was very little in there to tell investors what he would do to staunch this rout, to stop this rout on Wall Street. Rather, it was a way to talk to the general public about how he saw, how he framed the arguments about how we got here.
And, you know, Republicans will read into that -- whether he meant it or not, they're going to read into it he's trying to blame us for the rout we're seeing on Wall Street, because he said it was basically those people who wanted to engage in a long, prolonged battle over the debt ceiling. They got us in this trouble.
They don't see it that way. They'll see this as a partisan statement.
But I think the critical thing is, I'm not sure he spoke to the investors. And as you said, the market seemed to go down a little bit as he was speaking. I did notice that the markets went back up when Ali Velshi was speaking.
BLITZER: Yes. Well, now they're back down again while you're speaking, David.
(LAUGHTER)
BLITZER: So maybe -- down 430 points, the Dow Jones industrials right now. I wouldn't read too much into any of that.
The traders and the investors, they do what they're doing. And I'm not sure they pay all that much attention to what those of in Washington are saying, those of -- even what the president of the United States necessarily is saying. They've got other issues that they're dealing with, specifically in Asia, in Europe, and here in the United States.
Our coverage will continue. This is an important day, an historic day, the first day of trading in the aftermath of the downgrading of America's AAA credit rating, down to AA-plus.
Take a look at this. The Dow Jones now down 414 points.
Our special coverage here in the NEWSROOM will continue right after this.
(COMMERCIAL BREAK)
BLITZER: Take a look at these pictures. This is Eric Carson Vaughn (ph), Matt Mills (ph), John Brown (ph), Kevin Houston (ph), Michael Strange (ph), Patrick Hamburger (ph) Craig Vickers, just seven of the 22 Navy SEALs killed in Saturday's chopper crash in the Wardak Province of Afghanistan. A total of 30 U.S. service members were killed in the attack, which is the single largest loss of life for the U.S. military since the Afghan War began nearly 10 years ago.
Afghan officials say the CH-47 Chinook helicopter went down after it came under heavy fire and a rocket-propelled grenade attack from the Taliban. The Navy SEALs who were going to help troops on the ground were fighting insurgents. The crash site has been cordoned off. Seven Afghan troops were aboard that Chinook helicopter as well, and they died.
Our Pentagon correspondent Barbara Starr is joining us now from the Pentagon.
I understand, Barbara, the Pentagon has just released some information about coverage at Dover Air Force Base in Delaware, where the bodies will return to the United States. What have they told us?
BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, that's right, Wolf. And this is the most unsettling news. We are going to tell people very precisely what the Pentagon has said. It will be unsettling, perhaps, to the families.
But the Pentagon has just given the news media a statement. And I want to read it.
It says, "Due to the catastrophic nature of the crash, the remains of our fallen service members will be returned to the U.S. via Dover Air Force Base in an unidentified status.
Wolf, what this means is, due to the catastrophic nature of the explosion, the crash of this helicopter, the remains that are being returned to Dover simply are in a shape that they cannot be positively identified with any reasonable certainty as to who these men are. They cannot sort out the remains at this point.
That is what the Pentagon is telling us. That means, under Pentagon policy, technically, there will be no news media coverage.
The media will not be allowed to be there and see the return of the fallen to Dover because it is only allowed under very strict Pentagon- issued policy when the remains are at least fairly certain. They call it reasonable to be identified as being a particular person.
So this is really tough to explain, but that's what we're talking about. The remains are in such poor shape, they cannot be certain who they are. Therefore, there will be no media coverage.
We still have reason to believe that some very high-level administration officials will be going to Dover, that they will render honors to the fallen. But at this point, we will not even be allowed as members of the news media to record that rendering of honors and show it to the world.
So very tough news, very unsettling. We presume the families have been told, but we are also told that the Pentagon will not ask the families if, even with this development, they would wish to have coverage in order to have it shown that their members are coming home and that honors are being rendered to them -- Wolf.
BLITZER: Barbara, just to be precise on this point, as heartbreaking as it is, we know that that Chinook helicopter was brought down, we believe, by rocket-propelled grenades, if you will, and that it crashed and burned. That's probably why the remains have not been identified. But the remains will be taken to forensic labs, to highly-sophisticated facilities that the U.S. military has, and eventually they will be identified, I assume, through DNA tests and other forensic evidence.
STARR: Yes. Absolutely, Wolf, if it is at all possible. That will happen.
Service members give a DNA sample, of course, especially before they're assigned to a unit that will go into heavy combat. There are dental records, there's DNA. There's all sorts of ways that this will take place.
And remains are returned to Dover for that very precise DNA formal identification for legal and forensic reasons. But when someone is -- we're allowed to cover it when they at least have a fair, reasonable certainty of who it is, and they can match up a name and a set of remains.
Tough business to talk about here, but that's the way it goes. If they have a reasonable certainty of a set of remains, and a name that goes with those remains, then they will ask the family if they wish to have coverage to have their service member remembered and honored by the news media.
In this case, by all accounts, from what the Pentagon is telling us just in the last few minutes, the remains are in such poor shape, they cannot even go that far. We are asking, though, very strongly if there's any accommodation that can be made, if there's any picture that can be recorded, any image that can be shown in any way, shape, or form so Americans can see these people coming home for their final journey -- Wolf.
BLITZER: All right, Barbara. Thanks very much. We'll stay on top of this part of the story.
I want to take a quick break. But before we go to break, take a look at this. Dow Jones industrials now dropping further, getting close to 500 points. In fact, right now 500 points.
It's below 11,000, 10,944, a drop of 4.5 percent on this day. And if you add up the drop over the past two weeks, well over 1,500, 1,600, 1,700 points over these past two, three weeks. So, the Dow Jones industrials were going down even before the S&P decision to go ahead and lower America's creditworthiness from a AAA to a AA-plus.
We'll stay on top of this part of the story as well. Much more coverage from the CNN NEWSROOM right after this.
(COMMERCIAL BREAK)
BLITZER: Just a few seconds ago, the Dow had gone down more than 500 points. Now it's rallied a tiny little bit, 468 points down. But it's below the 11,000.
Ali Velshi is watching this very, very carefully.
Nervous investors out there. A lot of nervous traders. And this market, this downslide, Ali, it keeps on going.
VELSHI: Yes. I mean, we're sort of past nervous, into panic. We're below 11,000 for the first time on the Dow since November. And as you said, moments ago the Dow dropped 513 points.
You'll remember, last Thursday, it was a 512-point drop. A little more than 512 points. So we've surpassed that from a point perspective.
Now, what's more important is the effect on the percentage. On Thursday, the major drop was 4.3 percent. At this point, we're at 4.12 percent. So it's a bigger drop on a percentage level than it was on Thursday.
I want to give you one other statistic, and that is that, as you know, Wolf, the S&P 500, again, we don't have a board for it, it's not sexy to look at, but it is more influential and more represents your 401(k)s and your IRAs. On Thursday, the loss was 4.8 percent on the S&P 500. That exchange is now trading almost 5.25 percent lower.
These are dramatic drops. So, as much as I've been emphasizing to you that there does not seem to be a calculable rationale behind why we're having this drop, it is a serious drop from a percentage and a point basis right now.
So we're down, as you can see very clearly, below 11,000, and we surpassed the drop that we saw on Thursday. All in all, Wolf, let's just hope that the next 90 minutes or so goes better than the rest of the day did.
BLITZER: Yes. There's still a lot of time out there and a lot of nervous -- as you say, panicky investors worried about what's going on.
Lets bring in John King. He's watching what's going on as well.
So, if the president had hoped -- and I don't think he did. It's unfair to the president to think that 10 minutes of his remarks saying the United States remains a AAA country and Warren Buffett thinks it should be a AAAA country, I don't think anyone thought it was going to turn the market around, but it certainly didn't reassure a lot of those investors out there.
KING: I'm sure the president hopes he starts speaking and the numbers go in the other direction, but that's not his goal coming in. His goal is not to so much drive the numbers today, it's to drive the psychology, the mood of investors and the American people, because they're connected as well, too. Consumer confidence has a lot to do with the economy.
And what the president is trying to do -- and if you look around the world, European officials, the Central Bank over the weekend, European leaders are trying to say we understand, we're going to deal with our debt crisis in Europe. The president is trying to say we get the message. If you listen to him talking about the political dysfunction -- and David Gergen made a good point about this earlier -- Republicans will say he's trying to blame us. The president was essentially saying I disagree with what S&P did, but I agree with its reason for doing it, meaning political dysfunction, gridlock in Washington.
The president was trying to make the point that we get the message, and this super committee will do more, and that he will kick it and make it a priority, and that he will actually give it some recommendations. So, are you going to drive the numbers in the market today? Probably not. We're seeing evidence of that. Look at the Dow down below 500, down more than 500 points again at the moment as we watch this play out.
But he's trying to send a signal that we get our problem here at home, we will keep at it, trying to connect that with what's happening around in Europe. But this is an inexplicable -- Ali called it irrational.
It comes -- Wolf, weak manufacturing, high unemployment. Add in the political dysfunction in Washington, there are some serious policy and financial questions here.
And, again, it's our job to connect these dots. We are at 456 days to the 2012 presidential election. So, if you are the president of the United Sates, who happens also to be a candidate for reelection, you're saying things as president to the country. As the leader, you're also as a candidate thinking, if this continues, I'm in trouble.
BLITZER: Yes.
And David Gergen is watching what's been going on. He's been watching presidents for a long time.
David, as we see these numbers, 533-point drop so far on this day, coming on the heels of significant drops over the past couple of weeks, the president, he's got a tough assignment right now in not only dealing with this, but with what's going on in Afghanistan. This was a very, very sensitive moment in his presidency.
GERGEN: So sensitive, so tough. And John King made the point, you know, he's just come off a terrible week as president. I feel sympathetic for him.
But I continue to sense, Wolf, that I thought the statement that they didn't quite hit the mark in terms of what was needed for investors and on the economic outlook, what people are deeply worried about on the economic side is not just the debt. And, you know, that's a fight that's down the road right now. It is, how do you shore up this economy to --
(CROSSTALK)
BLITZER: David, hold on one second.
It's now dropped 600 points. It's now below 600 -- 604-point drop.
Sorry I interrupted. I just wanted to let our viewers know that the Dow Jones, now at 10,854.
All right. Go ahead, David.
GERGEN: Well, here's the point. Look, we've got Larry Summers saying there's a one in three chance that we're going to have a recession. Marty Feldstein, a noted economist on the Republican side, saying one in two. Nouriel Roubini came out in "The Financial Times" today saying we're heading toward a global recession and we can't stop it. Let's just head off a depression.
There is genuine fear out there that we're heading down on the economy and our political leaders are ineffectual. And what the president needs to do is act, especially on the jobs front.
I think he needs to cut a deal with Republicans. Go get his payroll tax, go get his unemployment insurance, in exchange for -- and you were pointing toward this earlier -- in exchange for the president saying OK, Republicans, I'll hold off on some new regulations, I'll do some things on immigration with the talented citizens coming in, I'll do some other things you want to do.
He needs to act. Words at a moment like this just don't help very much. And look at the rout we're having. It's gone down a lot just since he spoke.
BLITZER: Very quickly, David, should the president have done what Donald Trump and others recommended that he do, call Congress back to Washington -- they're in recess right now, the Senate and the House, until September 7th -- and said, you know what, Gentlemen, Ladies? You've got to get back here, we have got issues we can deal with right away. The country is ailing, this is no time to be in recess.
Should the president have done that?
GERGEN: I thought Donald Trump was on the right track, from my point of view, Wolf. I would say he ought to call the leadership back and see if he can get a deal on jobs.
Not the long-term on the deficit. Get the jobs picture front and center and give Americans reassurance that somebody is in charge here.
There is such a widespread feeling in this country that nobody is in charge, that we don't have a game plan, that this is all rhetoric coming out of Washington, this is all finger-pointing and posturing. And what people want is action.
And to do that, the president needs to bring the top leaders in. And frankly, I think he needs to bring the best -- the most respected people in the country together, like Paul Volcker and others, to find an action plan to put this country on a better path.
That's what's going to give people some reassurance. That's what's needed. People need to feel that there is somebody who has got a hold of this thing and we're going to find our way out of it.
BLITZER: The market rallying just a little bit, 550. I hate to say the word "rallying." It was down below 600 just a few minutes ago. Now it's at about 552 points down, the Dow Jones industrials.
David, thanks very much.
We'll continue the breaking news coverage right after this.
(COMMERCIAL BREAK)
BLITZER: Dow Jones industrials, you can see, down 521 points.
That's relatively good, considering, five minutes ago, it was below 600. It was down more than 600 points only a few minutes ago. It's rallied a little bit.
Alison Kosik is over at the New York Stock Exchange for us.
It must be a pretty brutal day for traders, investors out there, Alison. Give us a little flavor.
ALISON KOSIK, CNN CORRESPONDENT: It is very brutal.
You walk downstairs and you see all the long faces. You know what this concern is about, Wolf? It's about what the long-term implications are for this S&P downgrade. The fact is, no one knows because this is so historic. It's never been done before.
But the fact also remains that the downgrade is what sparked this tumble initially. But it's not the only reason for the sell-off. The fact of the matter is, the U.S., it has a debt problem. And the U.S. economy is extremely weak.
So what you're seeing investors do right now when you see these stocks plunge is investors are moving to the sidelines. They're reassessing what they should do. And they're -- they're just essentially taking any risk off the table.
You know, it's all about confidence at this point, especially when you watch these movements on Wall Street and the ebb and flow of things here on Wall Street. It really all depends on confidence. And what many analysts and traders have told me over the past few days is this S&P downgrade has more to do with really chipping away at the confidence than rising -- the confidence of the American people than raising interest rates -- Wolf.
BLITZER: All right. Alison, stand by.
Ali, the S&P downgrade, I think if you read that statement that they put out and listen to all the interviews their top leaders have been giving over the past few days, it was mostly a vote of no confidence in the political system in Washington, as opposed to the U.S. economy.
Wouldn't you agree?
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: I would say at least a vote of no confidence in the political system.
Certainly there's an amount of an algorithm that goes into their calculation, and that is that we needed -- they wanted to see a greater number of dollars cut from the budgets over the course of the next 10 years.
Moody's said the same thing, that they didn't think this went far enough. They thought the president's initial plan actually of $4 trillion in cuts was -- was more meaningful. And they did say that that would be one way to try and get the AAA credit rating back if they were to somehow get back on the road toward a plan that cuts the deficits further.
But you're absolutely right, Wolf. They were very clear about the fact that the inability for Washington to get it together and the fact in their words that the budgeting process was separate from the debt authorization or payment process, that they linked those two together was very disturbing.
And whether or not you agree with S&P or -- and, boy, we have certainly seen people on both sides of the political spectrum who don't agree with what S&P did, the reality is, I think we all see that part, right? We all say that we don't -- nobody in America thinks -- well, nobody save a few people think that what happened in the last three months in Washington was an example of functional government.
And I think what you have got is you have got growth problems in the United States, economic growth problems. You have got economic growth problems in Europe. You have got a bit of a slowdown in China. You have got the whole world slowing down again and it's that same problem.
I don't want to equate this to 2008 too much, Wolf. But it's that issue about who pulls us out of this mess. There was always somebody who was doing better. At this point, if Europe and the U.S. are both having these problems and we don't have the political leadership here in the United States to deal with it, this is where you're seeing it play out.
Again, the movie -- Alison makes a very good point. As people get worried about what stocks are going to do, they pull their money out of there and it goes into other things. In this case, it is still going into bonds and it is still going into U.S. bonds. So the net effect of lowering the credit rating on the United States has not had the obvious effect of increasing credit -- increasing interest rates in the United States.
Interest rates are as low today for the U.S. government as they were on Friday. So it's a very interesting juxtaposition. You're seeing panic playing out on this board that you're not seeing everywhere else in the financial system here in the United States or globally.
BLITZER: And you're seeing some massive fluctuations. Only a few minutes ago, the Dow Jones was below 600, went down 600 points. And now it's rebounded a little bit, 456-point decline so far.
All right, guys, stand by. We're watching what's going on. We're getting more reaction coming in.
Our coverage will continue in a minute.
(COMMERCIAL BREAK)
BLITZER: The Dow Jones industrials flirting once again with a 500- point drop. It's down 485 right now.
But about 10 or 15 minutes ago, it was below -- it had dropped more than 600 points, 490-point drop as of right now, 4.28 percent drop, the Dow, for the first time since last November, down below 11000, 10955.
We heard from the president about a half-an-hour ago. He tried to reassure the country that the United States, in his words, remains a AAA country, despite the decision by Standard & Poor's to downgrade the U.S. credit rating from AAA to AA-plus.
Let's go to the White House.
Brianna Keilar, our White House correspondent, is standing by.
Brianna, what are they saying behind the scenes right now? The president, obviously, he has got some specific ideas. He announced -- he repeated three of them, a continuation of the payroll tax cut, unemployment insurance, continuation of that, an infrastructure development fund, if you will. He says he's going to be coming up with some more ideas for this so-called super committee to consider.
Any more information we're getting about tangible steps the White House is putting forward right now to deal with this economic crisis?
BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: You know, quite frankly, Wolf, no. And this has been one of the questions that we asked and I asked Austan Goolsbee on Friday, the president's outgoing chief of Council of Economic Advisers, what there is beyond sort of this arsenal that the president has laid out.
And the point that you will hear White House officials make is that there would be plenty of jobs in these proposals that they have put forward, be it extending unemployment insurance, the payroll tax extension and infrastructure bank.
Some of these things, of course, having problems that you heard earlier delineated by John King. The idea of patent reform was something we have heard recently coming out. And so free trade agreements before Congress, these are really the five things that the White House has been talking about, and so if you talk to White House officials, they say, well, these are important things that we can move on and that Congress can move on as soon as they come back from vacation.
And so we should be dealing with the things that are within our power. And they have said recently a lot, Wolf, not focusing too much on the things that are not, and when they're talking about that, they're talking about ratings agencies, they're talking about the markets, but of course, as we have seen from today, both of those things very much concerning the administration, even though we hear them say that those are things they can't control.
BLITZER: Really a bad day on Wall Street today, almost 500 points down right now. But a few minutes ago, it was down almost 600. It was a more than 600-point drop.
Let me bring Peter Morici in. He's a professor of business at the University of Maryland, someone who helps us better appreciate what's going on from time to time.
Peter, what do you make of what's happening today?
PETER MORICI, FORMER DIRECTOR OF ECONOMICS, U.S. INTERNATIONAL TRADE COMMISSION: Well, first of all, I don't think it had anything to do with the S&P downgrade -- or very little. I mean, this has been going on for about a week now. It's really a continuation of what was going on, on Friday.
The bond market responded, much as I expected, as this is really not an issue. There's really no place for money to go other than into U.S. securities. The Europeans don't provide a viable alternative. The Japanese don't have many bonds out there internationally. So I don't this downgrade means a lot to credit markets.
But what was troubling to me today, I have to say, was the president really didn't say anything new. And a lot of the things that he's talking about would have long-term consequences, but not in the next year or two, whether it's an infrastructure bank. It would take at least a year to get that up and going. Free trade agreements are wonderful contraptions. I got tenure writing about them, but they take years to implement.
The patent reform -- there are things he could do right now. For example, he could streamline the approval process for drilling in the Gulf. That provides a private infrastructure project. The stuff you to do to develop domestic oil and gas -- and I don't work for those people. I have nothing to do with them, OK? It's concrete, steel pipes. It's the very same stuff that goes into roads.
But it would be private money. He wouldn't have to pay for it. Likewise, there's the trade issue with China, you know, finally resolving that. They're chastising us right now. But the reality is, their currency policy and the fact that they buy all those dollars is part of our problem.
And he knows that and he's talked about doing things about it directly. But he hasn't acted. I need to see from this guy a new game plan. And that's what the market is saying today.
BLITZER: Well, I guess there's a limit. There's a restrictions to what he can do. But you have some creative ideas out there.
MORICI: Yes.
BLITZER: And I'm sure a lot of others are going to be coming in. Peter, hold your thought for a moment. We're going to take another quick break, continue our coverage on the other side.
(COMMERCIAL BREAK)
BLITZER: We're taking a look at the Dow Jones industrials, down 479 points. They were down more than 600 points not that long ago, a horrendous day on Wall Street, the first trading day since the Standard & Poor's credit rating of the United States was reduced from AAA to AA-plus.
We will get back to what is happening on Wall Street in just a few moments.
But CNN's Anderson Cooper is joining us on the phone right now. Anderson is reporting tonight, all this week, in fact, from Kenya and later in Somalia.
Anderson, it's a horrendous situation, a human tragedy unfolding where you are right now, literally millions of people potentially on the verge of starvation, a human crisis. Set the scene for us. Tell us what's going on.
ANDERSON COOPER, CNN ANCHOR: Well, as you know, Wolf, as you say, I mean, some 3.2 million people are at the risk of starvation, having a food crisis, and need lifesaving intervention immediately.
And, frankly, just because of the conflict in Somalia, because of this group Al-Shabab, which controls parts of southern Somalia, aid workers haven't been able to get food to those who need it. So a lot of Somalis are fleeing the country. They're going to Ethiopia and especially they're coming here in Kenya.
I'm in what is now the world's largest refugee camp. It was built for 90,000 Somali refugees 20 years ago. It's got more than 400,000 in the camp, about another 65,000 on the outskirts of the camp waiting to get in.
And there's simply just not enough money in the pipeline that's been sent to care for all these people and to deal with this. And they're in the worst drought they have seen in 60 years. And that, on top of the conflict, they're concerned that over the next two months, before the rains come, the famine is going to just spread and more people are going to die.
BLITZER: A horrendous situation, and you're seeing it up close.
Anderson, I know you're going to be reporting tonight, tomorrow from the scene there. You're getting ready to move into Somalia, too. Is that right?
COOPER: Yes. We will be going there tomorrow and broadcasting for the next two days from there. Right now, we're on the border, where all these refugees have poured across in a camp run by the UNHCR.
BLITZER: Well, be very, very careful, Anderson. I know Sanjay Gupta is with you, our whole team of correspondents and producers. They're watching what's going on, an important, a critically important story for the world.
And I want to let our viewers know Anderson's "A.C. 360" moves to a new time, 8:00 p.m. Eastern, tonight, as well as 10:00 Eastern p.m. But at 8:00 p.m. Eastern, you will be able to see Anderson tonight live from Kenya, tomorrow and Wednesday from Somalia -- a horrific story unfolding with enormous, enormous consequences, millions of people potentially on the verge of starvation.
Want to applaud Anderson, Sanjay Gupta, our entire team for going there and bringing this news to our viewers here in the United States and around the world.
We will get back to the other big story we're watching, Wall Street -- right now, the Dow Jones down more than 500 points, 517 points right now. It was down more than 600 about half-an-hour or so ago, a loss of 4.5 percent on this day, well below 11000 right now.
We will stay on top of this story and much more news when we come back.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: There are plenty of good ideas about how to achieve long-term deficit reduction that doesn't hamper economic growth right now. Republicans and Democrats on the bipartisan fiscal commission that I set up put forth good proposals. Republicans and Democrats in the Senate's gang of six came up with some good proposals. John Boehner and I came up with some good proposals when we came close to agreeing on a grand bargain.
So it's not a lack of plans or policies that is the problem here. It's a lack of political will in Washington.
(END VIDEO CLIP)
BLITZER: That was the president exactly one hour ago, 1:52 p.m. Eastern -- it's now 2:52 p.m. Eastern -- trying to reassure the country about what is going on.
The Dow Jones, by the way, at that point was around 400 points down. It's now 496 points down. But it was down more than 600 points about a half-an-hour or so ago. So there's been a little bit of a rebound, but not much.
John King is watching what's going on.
The president did say he's going to come up with some new ideas for this super committee, these six Democrats, six Republicans, to be announced, we think, in the coming days to come up with some more significant deficit reduction plans.
JOHN KING, HOST, "JOHN KING, USA": And if you listen to what the president just said there coming into this segment, Wolf, whether you're a Democrat or Republican, whether you're an independent, whether you're far left or far right, you can't argue with what the president said right there.
There are a lot of ideas out there. The problem is trying to put those ideas on a piece of paper and then getting the political votes. It's not just political will. It's political votes to get them passed.
The president did say he would make recommendations to this super committee. And in a reflection of the atmosphere we're in, already, if you picked this up, you have e-mails from Republicans saying, well, will they be specific recommendations or will they just be speeches again? They're saying the president better put forward very specific plans.
His team over the weekend called this a Tea Party downgrade. That's the Democratic Party line. So we're in a fiercely partisan, polarized environment, in which the president is now saying we have to try again because this debt compromise deal, not only our poll shows a majority of the American people don't like it. The markets don't necessarily like it. It's not viewed as doing enough.
So, as they try now, Wolf, to do more, the question is, can they all get along? Can you have a bipartisan big agreement, find some of those tax proposals out there? Liberals again from the left, don't touch Medicare or Social Security, Mr. President.
We're right back into the political debate about this, which is one of the reasons this deal was late coming, deadline, and a lot of people didn't like it to begin with. The question is, can the president and the Republicans find some way to break that political model that we're stuck in and do a bigger deal? But every day that passes, we're closes to what? An even-numbered year, an election year.
BLITZER: The president -- and the president did say he wants some tax increases, but he also did say he wants some modest adjustments in Medicare spending.
Let's bring in Ryan Mack. He's a financial analyst. He's the president of Optimum Capital Management.
What do you make of what's going on, 500-point drop so far on the Dow Jones, Ryan? Is this rational or irrational?
RYAN MACK, PRESIDENT, OPTIMUM CAPITAL MANAGEMENT: Essentially, we have been irrational from the ride from Dow Jones 6700 all the way up to 12750, when the entire market essentially forgot exactly why this economy was weak.
We had weak housing market. We had a credit crisis. And we had high unemployment. None of those issues were fixed. And then we had the smokescreen of the debt ceiling debate was finally un-railed after August 2. We realized, wait a minute, we have a weak market. And now with this downgrade, essentially, what's happening is, it's adding another insult to injury. So, I don't necessarily think it's a big issue. But when you couple it with the fact that we are realizing this is an extremely weak economy and we have a lot of fixing we have to do that. We have never really deserved to be up as high as 12750 on the Dow in the first place.
I think, again, individuals are realizing that it's a lot of work and a hard row to hoe ahead. And we really have to buckle down and do some things ourselves.
BLITZER: All right, Ryan, hold on for a moment.
Alison Kosik is over there at the New York Stock Exchange.
Alison, with basically another hour to go, a little bit more than an hour to go, and a lot of nervous traders, this could be a wild ride this next hour. Is that what you sense?
KOSIK: As it usually is, when -- especially when you see the kind of volatility that we're seeing today, Wolf, yes, the Dow now down 534 points.
You know, what analysts are telling us is that part of what you're seeing here is what's known as program selling. That's where the big institutional traders, like mutual funds and hedge funds, they automatically sell when the major averages and the individual stocks, they drop to certain levels.
And when they reach those levels, you see more and more selling. It's that momentum. This is something different today that we're seeing that we didn't see last week, because, last week, most of the selling came from individual investors known as retail investors. Today, what you're seeing is those institutional investors, and you're seeing those levels kind of kick in -- Wolf.
BLITZER: And, Ali, give me one final thought before we go to another break.
VELSHI: Yes, I think Alison's point makes a lot of sense.
I have to underscore the fact that the one thing you should have seen from a downgrade of the United States would be an increase in interest rates, the cost of the U.S. borrowing money. The 10-year note, which is sort of the benchmark for that, is not showing any move.
It is actually still down. So this is something else that's happening. It is a growth issue. But it's a momentum -- momentum trades that are being executed. You're absolutely right in saying it's a very strange time, Wolf when you can look at a market that's down 527 points and say it's up from where it was.
BLITZER: John King will have more on at 7:00 p.m. Eastern on "JOHN KING, USA."
I will be back at 5:00 p.m. for "THE SITUATION ROOM." Thanks very much for joining us. Brooke Baldwin continues our coverage in the NEWSROOM after this.
