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American Morning
Stock Markets Around the World Continue to Tumble; Some Claim Conservative Women Treated Unfairly in Media; Wisconsin Voters Head to Polls; Selloff Continues Across the Globe; Perry Ready to Announce?; Famine in Somalia; Youth Gone Wild; Worldwide Selloff Continues; Fallen SEALs Return Home; Record Swim Try Falls Short; Rioting in Britain; U.S. Booted From AAA Club; World Markets Comeback Fades
Aired August 09, 2011 - 06:59 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEO CLIP)
CHRISTINE ROMANS, CNN ANCHOR (voice-over): OK. So, the first day without a AAA was a rough one on Wall Street after the worst day since the dark days of 2008. Washington asking this morning, who are these people who downgraded America? Who are they?
CAROL COSTELLO, CNN ANCHOR (voice-over): All eyes on her eyes. Why did "Newsweek" pick this photo of Michele Bachmann for its cover? Conservatives say they already know the answer.
ALI VELSHI, CNN ANCHOR (voice-over): And rioters stripping shelves and burning what's left. Every jail cell in London is full this morning. Violence spiraling out of control after a shooting unhinged the youth of a nation.
ROMANS: And a swimmer's quest for history is over. New overnight 61-year-old Diana Nyad forced to end her swim through shark- infested waters from Florida to Cuba on this AMERICAN MORNING.
(END VIDEO CLIP)
COSTELLO: And good morning to you. It is Tuesday, August 9th. Welcome to AMERICAN MORNING. There's a lot going on, so let's get to it.
VELSHI: There are certainly tough times for the millions of you at home who have a financial stake in the markets as we begin this hour. Overseas investors are reacting to yesterday's massive sell-off here in the United States. Markets are trading lower in Europe. They closed lower in Asia.
COSTELLO: The declines coming after the worst day on wall street in more than two years now. Traders dumping stocks for treasury bills, the very same thing Standard & Poor's downgraded on Friday, by the way. Here's the damage. The Dow was down about 635 points. That's more than five percent. The NASDAQ S&P 500 also both losing more than six percent of their total value. On paper that's $1 trillion loss for the day. Every single one of the 500 companies in the S&P 500 closed lower. VELSHI: We have a team of reporters across the globe this morning. Nina Dos Santos is live in London, Andrew Stevens live in Hong Kong, Felicia Taylor is live with us here in New York. Let's start with Nina, where after opening higher, European stocks took a sharp turn south. Where do we stand right now, Nina?
NINA DOS SANTOS, CNN INTERNATIONAL CORRESPONDENT: It's very sharp, isn't it? Well, what we've got at the moment is a number of these indices are down to the tune of about two percent, the FTSE, the DAX and CAC 40. They are however off their inter-day lows. At one point we had the DAX down in excess of four percent, which is interesting to note, because this out of the three markets is the one that has lost the least. It's down by about eight percent to 10 percent so far this year.
What we've got at the moment, Ali, is we had stocks flirted with some gains for about 20 minutes during the session, trying to make some kind of a rebound, but it didn't last long and investors don't really seem to have the appetite for investing in the stock markets here or safe to say anywhere else in the world.
What we've seen is about $5.5 trillion ant counting now wiped off the world stock markets. Just focus on the FTSE 100 for instance, in London, where I am. This is a market since July 26th has lost in excess of 900 points. We haven't seen those kind of losses since back in 2008 in the day to the credit crunch.
One brief bright spot we're seeing on the markets is gold surpassing another record of 1,770 an ounce, and it's still rising.
VELSHI: Nina, thank you for that. Nina Dos Santos in London.
COSTELLO: OK, so let's go to Asia now. No letup in the selloffs that started last week. Andrew Stevens is standing by live in Hong Kong. Good morning.
ANDREW STEVENS, CNN INTERNATIONAL CORRESPONDENT: Good morning to you. Yes, no letup at all. We saw a big, big sell-off right from the open here. It did ease a bit when, as Nina was saying, the European futures turned positive. There was a little buying going on here, but it really wasn't that much.
And by the end of the day the markets were still down, not down as much as they had opened, but still fairly significantly into the red, particularly here in Hong Kong. It's a very liquid market, very easy to get out of. So the market was down by 5.6 percent. Japan down by about two percent or so, was down five percent at one stage. It gives you an idea of the feeling going on here.
And it's really exactly the same story. People are looking for circuit breakers. They're looking for someone or something to happen to change this mindset of the moment of this just get out of this because we don't know what's going on with the two biggest global economies, if you like, the U.S. and the euro zone. The euro zone collectively is bigger than China, still and it's bigger than the U.S. So when you have it like that, people are trying to find some sort of clarity somewhere. They're waiting for statements. They're waiting for some sort of action. And until they do, it's a bit like trying to catch a falling knife -- they don't want to have a part of it.
ROMANS: That's a really good point about the size of the euro zone in relation to the China and U.S. This is a humongous trading partner, a huge economic region. It's problems are very, very important here.
COSTELLO: Talk about Bank of America now, it is waking up this morning with quite the hangover. Shares of America's largest bank fell a whopping 20 percent to their lowest point in two years. The bank was rocked by a $10 billion mortgage fraud lawsuit filed by AIG. Since the beginning of 2011, Bank of America has lost nearly 49 percent of its value.
VELSHI: While that wasn't most of it, it was something that started. It contributed to yesterday's sell-off here in U.S. markets.
Fears growing that nation is slipping into another recession. All eyes will be on the Federal Reserve today because it has a regular meeting. Investors will be paying close attention to see if the Fed says anything about the economy, they're likely to do that, but what they can do about it, whether the nation needs to adopt a new stimulus program right now. Normally the Fed can fiddle with the economy by adjusting interest rates up or down, but they don't have that privilege any more.
COSTELLO: Interest rates are effectively zero.
ROMANS: So would they buy back a bunch of bonds? Would they do another --
VELSHI: Like in Europe or is there a stimulus?
ROMANS: We'll see. Two different big stimulus programs the fed has, will they need a third?
OK, four days after downgrading America's credit rating Standard & Poor's may be the target of a Senate investigation. Senate banking committee already collecting information about S&P and its decision. The committee's chairman, South Dakota Democrat Tim Johnson, calling the downgrade "irresponsible and a game of political punditry." The loss of the government's AAA rating has pitted the administration and the rating agency against each other.
When asked if the Senate might hold a hearing, a committee aide said everything is on the table. I will tell you people in the markets, two seconds after the downgrade said, OK, when does everybody in Congress call for hearings.
COSTELLO: They call for hearings for everything else.
Crippling debt and credit downgrade have the Obama administration backpedalling this morning. And the critics are piling on. The president now sounding a theme we may be hearing through the November election in 2012, insisting he inherited these economic problems and they're being made worse by the debt crisis in Europe. The president making those comments at a Democratic fundraiser yesterday with supporters paying $15,000 each for a photo with him.
This morning's op-ed pages are not holding back either. "The Washington Times" says, quote, "We always have been and always will be a AAA country if only we had a AAA leader." And from "The Washington Post," "The most powerful man in the world seems strangely powerless and irresolute as larger forces bring down the country and the presidency." Ouch. "The Wall Street Journal" was even worse.
ROMANS: I know. But a couple people have said he didn't deserve his Nobel Prize and doesn't deserve the downgrade. Too much praise in one hand and too much criticism on another.
VELSHI: Although you remember back to 2008, beginning of 2008, when things were starting to turn south in the economy, and you'd see President Bush come out, sometimes Ben Bernanke, and Henry Paulson. The same thing would happen. They would come out the markets would tank. Unless they've got something highly specific to say, they might be talking to the American people, but when you're watching the stock market, that's investors, and they don't do well with this generalized conversation.
COSTELLO: If the message isn't inspiring to the American people either, maybe it's best just not to say anything.
VELSHI: Yes.
COSTELLO: I don't know.
ROMANS: Let's ask Felicia Taylor anything inspiring, because I think futures are up. Are they up?
FELICIA TAYLOR, CNN BUSINESS CORRESPONDENT: Yes. Across the board we've got futures up and gold is actually backing off a little bit. That's kind of reassuring. It's now only up $50. But that's clearly still a safe haven play.
Carol, I couldn't agree more. At this point in time don't get in front of a microphone when clearly it's upsetting to the marketplace. There's an interesting op-ed piece in the "Financial Times" comparing the American government to Charlie Brown. When he used to walk up and try to kick the ball and Lucy would put it out from underneath him, so he would stumble. That's not a good comparison. We don't want to see things like that. That's not funny anymore. We need to see the leaders of this country come back to the forefront. It's OK to deal with what is being called a great contraction. What people can't deal with is the loss of credibility on behalf of policymakers.
ROMANS: From our opinion research poll, CNN polls, people feel like in general they want to throw the bums out except for I think, and correct me if I'm wrong, they're less critical of their own Congress people. But seriously, voters may just look at this whole period and say forget it.
TAYLOR: Yes, absolutely. They're fed up. They're tired. They're exhausted. They've seen this going on for a couple years. And, you know, when is -- when are things going to start to change? When will see policymakers actually say something and do something as opposed to just fighting with one another? It's OK to have a difference of opinion whether you're Republican or Democrat, but come together and have some kind of consensus and make a difference in terms of the economy. Create those jobs. We've been talking about this for two years. Where are the jobs coming from?
COSTELLO: Ben Bernanke is going to speak today. We're all hoping he says something.
TAYLOR: It will be a statement. I don't think he's going to --
COSTELLO: The Fed meeting statement. What does that statement need to say to help things?
VELSHI: Well, he often says, points out, as you just pointed out, jobs are the underlying issue here.
COSTELLO: Right.
VELSHI: But the fed can do all sorts of things around the margins. It's the one thing they can't do. They can't create jobs.
TAYLOR: They can't physically create jobs, although that is one of their mandates is to fuel job creation. But what is it they're going to be able to do differently this time that's going to create those jobs? That really has to come from the administration.
VELSHI: Right.
TAYLOR: Capital has to be freed up so corporations will be willing to hire and take a chance again. Corporate America isn't convinced that we're on a road to recovery. So therefore, they're not willing to put themselves on the line and use that cash that way. There's plenty of cash. Do you know how frustrating it is to hear there's plenty of cash but we're not going to hire? That's very depressing.
ROMANS: There's $2 trillion of the cash. But I think you're totally right, the companies that are going to weather the storm right now the best are the ones who are keeping hold of their money.
VELSHI: Who we've been yelling at the last two weeks.
ROMANS: Exactly.
COSTELLO: Let's step back from the economy because I think we need a break right now. And now is your chance to talk back on another big story of the day, if you want to call it big. The question this morning, are Republican women unfairly criticized because they're women? We hear it a lot. There's a double standard when it comes to criticizing politicians who are women. Republican and Tea Party favorite Michele Bachmann, who has had a few missteps with historical facts says, yes, she makes mistake, but she, unlike liberal politicians, doesn't get a pass from the media. Bachmann told CBN's David Brodie it's something she, Sarah Palin, and other conservative women have to deal with.
(BEGIN VIDEO CLIP)
REP. MICHELE BACHMANN, (R-MN) PRESIDENTIAL CANDIDATE: She has been unfairly criticized and I think that we've seen that with other conservative women as well across the country, whether they are political commentators or whether they're in public service.
(END VIDEO CLIP)
COSTELLO: This morning, conservatives are fuming over the latest "Newsweek" cover that shows a startled looking Bachmann with the title "Queen of Rage." One blogger saying can anyone say with a straight face the mainstream media is not biased against conservatives? Bachmann's critics haven't exactly been measured. Commentators like MSNBC's Ed Schulz called Bachmann a "psycho talker." And remember this from Jay Leno? He holds nothing back it when comes to the so-called mama grizzlies.
(BEGIN VIDEO CLIP)
JAY LENO, HOST, "THE TONIGHT SHOW": Republican Congresswoman Michele Bachmann now under fire for claiming the founding fathers eliminated slavery. And Sarah Palin, she is upset. Sure. Another female Republican out there trying to steal the dumbass vote.
(LAUGHTER)
(END VIDEO CLIP)
COSTELLO: Politics is rough for both women and men, but just how rough may depend on your gender. The talk back question today -- are Republican women unfairly criticized because they're women? Facebook.com/AmericanMorning, Facebook.com/AmericanMorning. We'll read your comments later this hour.
ROMANS: Very interesting stuff. Still to come, No Child Left Behind, a lot of states are failing to meet these important requirements. And now they may not have to. We'll tell you about it.
VELSHI: And the heat wave is not letting up in Texas. The record no one wants to see broken is this weekend. We'll tell you what that is ahead.
COSTELLO: And why lawmakers in Washington are nervous about an election in Wisconsin today. You are watching AMERICAN MORNING. It is 11 minutes past the hour.
(COMMERCIAL BREAK)
VELSHI: Welcome back to AMERICAN MORNING. Checking the CNN Political Ticker, Texas Governor Rick Perry may be ready to make a big announcement this weekend. CNN Saturday - on Saturday, the Texas governor plans to make stops in South Carolina and New Hampshire, two early primary states. Why would he be going there? And hoping to steal the spotlight from other GOP candidates in the Ames Straw Poll in Iowa. Perry supporters are hoping to hear an official announcement or at least a strong hint of one that he's running for president.
ROMANS: OK. States can now opt out of the "No Child Left Behind." President Obama agreeing to grant waivers for states that are failing to meet the law standards. Montana, Minnesota, Kentucky, Wisconsin, Virginia and Georgia have already announced plans to apply.
COSTELLO: Big day in Wisconsin. Wisconsin voters are heading to the polls today deciding whether to recall six Republican state senators. If the GOP loses just three of those seats, Democrats regain control of the Senate and that would be a real setback for Republican Governor Scott Walker. It was his decision to strip public workers of their right to collective bargaining and that triggered a big backlash that has deeply divided the state.
Joining us live from Milwaukee this morning, Amy Kremer, who's Chairman of the Tea Party Express. Their bus has been touring Wisconsin, working to keep the Republican majority. And Dian Palmer has been working to kick those Republicans out of office. She's the president of the Service Employees International Union, Healthcare Wisconsin and is also a public health care nurse. Welcome to both of you.
UNIDENTIFIED FEMALE: Thanks for having us.
COSTELLO: Oh, thanks for being here. We appreciate it.
Amy, let's start with you. Governor Walker, the Republican governor who pushed this anti-union legislation, he's not exactly well loved in Wisconsin. Just 37 percent approve of his performance, just 37 percent. And 55 percent oppose his tax and spending plan. Aren't you fighting for something most people in Wisconsin don't even want?
AMY KREMER, CHAIR, TEA PARTY EXPRESS: Actually, Carol, we're fighting for what is good for the State of Wisconsin and what most people in Wisconsin do want, and since Governor Walker has taken office and they have passed this legislation earlier this year, they're turning Wisconsin's economy back around and Wisconsin is now the fifth leading state in the nation for job growth in the month of June. They created 9,500 jobs and I believe there were only 18,000 across the nation created. So, this, you know, they're putting -
(CROSSTALK)
COSTELLO: -- because California just last month created 29,000 jobs. That's really a hard figure to pin down. But just in going back, if -
KREMER: Well -
COSTELLO: -- if public opinion show that they don't like this Republican governor's policies, then aren't you fighting for what most of Wisconsin doesn't want?
KREMER: Well, it's hard to - the media's not telling the story of the job growth and the money that's being saved by school districts across the country. This is about putting the - the government back in the hands of the taxpayers instead of the unions.
The taxpayers want a balanced budget and for - to be represented by their elected officials and right now, I mean, the past has been that they've been beholden to these union bosses and that's simply not right.
COSTELLO: But let me ask Diane this question. Diane, the latest recall polling shows neck and neck races. If the Democrats get back the state Senate, will you feel vindicated?
DIAN PALMER, PRESIDENT, SERVICES EMPLOYEES INTERNATIONAL UNION: Well, we will feel partially vindicated. There's a lot more work that needs to happen in Wisconsin, and I disagree that the Wisconsinite do not want the policies that Governor Scott Walker is putting forward. He's dividing our state and our state is more divisive than it's been since the Vietnam War.
COSTELLO: And Amy, going back to you. It's just amazing the amount of money that's been spent in Wisconsin from out of Wisconsin. Of the total 33 million spent on this recall election, 28 million has been spent by outside groups. That's according to the Wisconsin Democracy Campaign. This is very much a national fight.
You say, Amy, this is ground zero for the 2012 campaign. If this recall is successful for Democrats, is that a blow to the Tea Party?
KREMER: Well, I wouldn't say it's a blow to the Tea Party. I mean, we're working very hard to support these conservatives that did their jobs. The thing is, politicians are usually recalled for not doing their jobs. These Republicans and Governor Walker have done what they were sent to do. There was a - you know, the people spoke loud and clear last November that they wanted to reign in spending, balance the budgets.
Washington should take a lesson from what's going on here in Wisconsin, because Wisconsin is leading the way in turning the economy around and creating jobs again. That's what everybody's focused on, not only here in Wisconsin, but across the country. And so instead of punishing and targeting these Republicans, everybody should be supporting them and actually encouraging President Obama and our leaders in Washington to do the same.
COSTELLO: Well, Dian, does Amy have a point? I mean, Governor Walker was elected and he did what he said he was going to do. So, is this recall election fair?
PALMER: Well, recalls don't just happen. The citizens actually have to step up and say they want a recall. It just doesn't magically happen. And so, if - if what she's saying is right, there will not be a recall. Nobody should take example after Wisconsin. We took a state that was very settled and disrupted it. We caused a lot of havoc in the state because of what the - the Republicans have done. And so, I would disagree. Washington should not take example after Wisconsin. This is a grassroots effort.
Wisconsin folks are saying this is not what they want. Governor Walker is not giving what he told the people he would give. He said he would give 250,000 jobs over the next four years and, in fact, he's disrupted jobs and caused people to lose jobs. He's given tax breaks to the wealthy and basically turned its back on the - on the working folks.
COSTELLO: I wish we could continue this debate. But all eyes will be -
KREMER: So - but simply not the case.
COSTELLO: I'm sorry we have to wrap it up right now, but we'll be watching Wisconsin slowly. And Dian Palmer and Amy Kremer, thank you so much for joining us this morning.
KREMER: Thank you.
PALMER: You're very welcome.
VELSHI: Good discussion, one that's playing out, you know, around the country, in different ways. Wisconsin just happens to be this microcosm where they've got this recall going on. But this challenge between conservatives, in power, doing what they said they were going to do and the frustration that has resulted from it, is a - is a nationwide issue.
COSTELLO: Well, I think it also illustrates the lack of compromise many say in Wisconsin -
VELSHI: Absolutely.
COSTELLO: -- like that's really what did it.
VELSHI: That's right.
COSTELLO: Nobody could come to a compromise and that's where -
VELSHI: Right.
ROMANS: Everyone's passionate in their belief and sticking right to their -
VELSHI: As you point it -
COSTELLO: Somehow I don't think Dian or Amy were going to agree at all.
VELSHI: Right, right. ROMANS: All right. It's 21 - almost 22 minutes after the hour. That means it's time for - for Rob Marciano in the Weather Center. Hi, Rob.
VELSHI: Rob, compromise with us on the weather, will you?
ROMANS: Yes, please. Can you make it a little less rainy this afternoon in New York?
VELSHI: And a little less hot somewhere in -
ROB MARCIANO, AMS METEOROLOGIST: Yes. I think - I think the folks who have been complaining about the heat, they want some compromise, that's for sure. Not getting it much in Texas.
And our numbers are in for the month of July, the fourth warmest on record for the U.S., especially in Texas. Average temperature across the country for 24 hours, 77 degrees, that's a record, and 2.7 degrees above average, Oklahoma and Texas, the warmest months ever in recorded history.
We are beginning to shrink the number of counties and states that are under these heat advisories, but the sore spot is North Central Texas where once again today it will be over 100 degrees easily and probably for the next several days. If we hit 43 days in a row that breaks a record of 100 degree plus days. Unbelievable.
And also, the drought monitor, this dark red that you see here, this is the largest footprint of exceptional drought that we've ever seen since keeping this drought monitor for the past 12 years. So that is (INAUDIBLE) an indication of the drought that certainly the folks in North Central Texas know all too well.
All right. Here are your severe thunderstorms that have the potential for rocking across the eastern third of the country today. We're starting to see a line developing across the Allegheny, across the Great Lakes and this will propagate eastward and that will cause some travel delays I think for the New York Metropolitan Airports come around noon time and then at 3:00 in the afternoon. Boston as well might see some late in the day and in through the evening.
That's the best I can do as far as a compromise. Concern you'll see a little bit of rain, but a lot of folks would take that. So, I wouldn't complain so much.
VELSHI: Thank you, sir.
ROMANS: Thanks, Rob.
VELSHI: You know, you - you talk about the - the farming situation. That drought has been going on for a long time. It's longer than this. You know, so for all of Texas's economy doing well, the farmers and ranchers over there are really having a difficult time.
ROMANS: Yes. That's true. VELSHI: You were saying that they've moved some of the crops - they've moved over to cotton.
ROMANS: Well, cotton is all-time high for cotton prices earlier this year and you have farmers looking at the drought saying, hey, maybe I should be switching from one thing to - to cotton which is also more drought resistant, but this is quite a drought.
VELSHI: Yes.
ROMANS: So, there you go.
VELSHI: All right. Still to come on AMERICAN MORNING, we're "Minding Your Business" after this huge sell-off in U.S. markets yesterday. How much money did investors lose, at least on paper, it's a pretty big number. I'll tell you after the break.
ROMANS: And Britain's worst rioting in recent memories spreading beyond London to three other cities. We're live in London just ahead.
It's 24 minutes after the hour.
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VELSHI: Twenty-seven minutes after the hour. "Minding Your Business" this morning.
U.S. stocks took a beating yesterday, uncertainty took hold of Wall Street and just wouldn't let it go. The Dow lost 5.5 percent, the NASDAQ drop - dropping nearly seven percent, the S&P 500 was down about 6.5 percent to start the week.
Now, on paper, investors lost a trillion dollars in the markets in yesterday's trading according to the Wilshire 500, which is the broadest index of U.S. stocks. Stocks are down about 15 percent in just a couple weeks.
Here's some perspective, though, the S&P 500, which is probably the best indicator of your portfolio and your 401(k), it's up 64 percent since the markets hit its low in March of 2009.
Economic concerns worldwide have pushed oil prices down more than $10 a barrel in the last week. Light sweet crude settled at about $83 a barrel yesterday. Investors saw a big drop in Asian stock markets overnight following the sell-off on Wall Street. European markets are taking a hit so far this morning. Investors are on edge over both debt concerns in Europe as well as the fallout from yesterday's plunge in U.S. markets.
Lots of volatility in pre-market trading of U.S. stock futures this morning. Right now, the Dow, NASDAQ and S&P 500 are up strongly ahead of the opening bell.
Investors are waiting for a decision, however, on interest rates today from the Federal Reserve in Washington. That comes out at 2:15 Eastern. Economists surveyed by Briefing.com expect rates to remain unchanged at zero to a quarter of a percent. Fed Chief Ben Bernanke is not expected to give a press conference after that announcement.
Don't forget, for the very latest news about your money, check out the all new CNNMoney.com.
AMERICAN MORNING back right after this break.
(COMMERCIAL BREAK)
ROMANS: Youth gone wild. London is burning, riots spreading, even police saying chaos has taken over in some areas. We are live in the U.K. on this AMERICAN MORNING.
Good morning. It's Tuesday, August 9th. Welcome to AMERICAN MORNING. This is Tuesday morning.
VELSHI: Yes, it's a busy one. We have a lot going on right now. Here are the top stories.
The worldwide sell-off continues, the gloom over America's S&P downgrade lingering. Stocks in Asia and Europe taking a sharp turn down after Wall Street's worst day in more than 2-1/2 years.
The remains of 30 Americans who died in a chopper crash in Afghanistan will arrive in the U.S. today. It was a single deadliest blow to U.S. forces in the 10-year war. Many of the victims were U.S. navy SEALs who are going in to save Special Forces troops.
She was almost halfway there. Diana Nyad's attempt to swim from Cuba to the Florida Keys is over. The 61-year-old swimmer called it quits this morning after 29 hours in the water. She was trying to become the first person to make the 103-mile swim without a cage.
COSTELLO: But she gave it a go.
VELSHI: Certainly did.
COSTELLO: Happening right now, riots in Britain spreading beyond London to three other cities. Britain's prime minister, David Cameron is condemning the scenes of violence, vowing to bring the rioters to justice.
CNN's Atika Shubert live for us in the London suburb of Ealing and Prime Minister Cameron came back from vacation to attend to this. Some say he should have done that a couple days ago.
ATIKA SHUBERT, CNN INTERNATIONAL CORRESPONDENT: That's what a lot of residents are asking, why did it take three nights of consecutive rioting and looting before both the prime minister, the home secretary, and the mayor of London decided to cancel their holidays and come back.
Now, however, Prime Minister Cameron says, he will be putting more police on to the streets, 16,000 cops will be on the streets tonight and he is promising that any looters will feel the full force of the law. Here's what he said earlier. (BEGIN VIDEO CLIP)
DAVID CAMERON, BRITISH PRIME MINISTER: Let me first of all completely condemn the scenes that we have seen on our television screens and people have witnessed in their communities. These are sickening scenes, scenes of people looting, vandalizing, thieving, robbing, scenes of people attacking police officers and even attacking fire crews as they're trying to put out fires. This is criminality, pure and simple, and it has to be confronted and defeated.
(END VIDEO CLIP)
SHUBERT: Now, he's promising more cops on the street, but people are asking is that enough? Cameron had also said there would be more robust measures taken.
A lot of residents I'm talking to are asking if their curfews should be imposed in some areas, maybe water cannons, tear gas. Even some are saying rubber bullets.
Whatever force it takes to get these looting and rioting under control so it does not go on for a fourth consecutive night.
COSTELLO: So Atika, I know the rioting started with the police incident, but it's grown beyond that now, hasn't it?
SHUBERT: It definitely has. You're right, it did start with the shooting incident of a young man in north London and his family and friends were very upset, but they had a peaceful protest. And in fact, the family has come out to say, they condemn this violence.
They don't want this violence to be associated with their struggle for justice. But it does seem to have triggered some sort of deep, well-spring of anger, particularly among the younger generation here in London, but apparently also other cities.
I'm in Ealing, which is a pretty residential suburb. It's known more for its lovely houses here than it is for violence. Look, we've got smashed in windows here and a fire brigade is up there checking now the integrity of the building up there because a grocery store was set on fire last night.
And again, this is an area right nearby houses. So a lot of houses were put in danger. Several cars were set on fire. I spoke to one woman who had a very narrow escape as she tried to drive away and kids set upon her car. It's a frightening situation for people here and they want it to get under control.
COSTELLO: What are these rioters angry about? Where is the anger coming from?
SHUBERT: You know, I have asked a lot of young kids this. I had the opportunity to interview quite a few teenagers. They say it's a complete breakdown of communications and trust between the police, between the younger generation, but also anger about the fact they feel like they have no opportunities. Unemployment is very high. Their benefits have been slashed and cut. So many of the means they were able to get by aren't there anymore. They feel ignored.
When they vote for a party, they're almost the same thing, whether it's labor or conservative. There's a lot of deep frustration there that's been building for a long time.
COSTELLO: Atika Shubert live near London this morning, thank you.
ROMANS: It's like going from a shade of indigo to navy blue. That's what Standard & Poor's told investors on a conference call trying to explain its downgrade of America's debt to AA-plus for the first time from AAA.
Of the 126 governments that are rated by S&P, 18 are left in the AAA club. The U.S. is the world's largest economy, but it's not in there. It now has the second strongest rating, you can see AA- plus, Belgium is like that, so is the United States, on par at least with those sort of countries.
But an important point, the downgrade has not sent the U.S. falling into the company of European countries with serious debt problems like what are called the PIGS, Portugal, Ireland, Italy, Greece and Spain. You can see those here, the bluer the country the lower its credit rating.
Debt problems in Europe have been plaguing European markets for weeks. Countries can regain AAA status. That's happened before. Five countries have done it. Canada, Australia, Finland, Sweden and Denmark and it has taken nine to 18 years to do so. A long time to stabilize their debt, but it can be done. Ali --
VELSHI: All right, Christine. The downgrade of the United States is overwhelming any optimism that might have remained in these markets and there was some. Joining me now is Jim Awad, he's the managing director of Zephyr Management.
He's so good at making this particularly clear. Jim, first of all, before this happened, before last Thursday when we saw that big leg down in the market because of some things that happened in Europe, what was your sense of the economy and where it was going?
JIM AWAD, MANAGING DIRECTOR, ZEPHYR MANAGEMENT: The evidence was it was slowing rather decisively and decidedly. All the numbers show we are ratcheting down to a 1 percent to 2 percent kind of growth rate. So some of the weakness in stocks is reflective of that fact and lowering of earnings estimates and GNP estimates.
VELSHI: The 1 percent to 2 percent growth rate is not a recession. There's a lot of talk about a double-dip recession. Do you think that's likely?
AWAD: The risk is all the news with the downgrade, the debt ceiling, with the problems in Europe, over the weekend, and continuing into this week, that consumers and businesses retrench and we tip from 1 percent to 2 percent growth into a renewed recession.
We don't know that yet. We'll know in a month or so. But the risk is that all of these headlines make businesses and consumers conserve assets rather than spend and invest.
VELSHI: That's what it makes them do. Is that what they should do? What should somebody be doing right now?
AWAD: OK, as an investor I think you position yourself for a couple of scenarios. The first is there is risk we have further economic deceleration on the downside that's not priced into stocks so you should have some cash.
On the other hand, stocks are down a lot. Large cap stocks have good dividends, are not expensive. The S&P is at about 10 times earnings. So you could gradually buy.
VELSHI: Let me show you, S&P being at 10 times earnings means the value of the collective -- the value of the stocks on the S&P. It's priced at 10 times what these companies are going to make.
AWAD: Right and the long-term average --
VELSHI: That's low historically.
AWAD: The long-term average is somewhat higher than that. Some estimate it should be 13, some estimate it should be 15 based on what time period that you use.
VELSHI: There's one way of looking at this market to say it is under priced. It's a value.
AWAD: Right. There are good dividend yields on many of these large cap dominant companies that have global franchises, good balance sheets and leveraged to the long-term growth in some of the faster growing economies like Asia and Latin America.
So you can gradually buy some of those every day that the market is down. Third, you have to say with all the debt in Europe, with all the debt in the United States, the debasement of the currencies and people like the Chinese and the Indians wanting an alternative to euros and dollars you probably want to continue to own some gold. It can have --
VELSHI: Even at these levels?
AWAD: If you're long term. Not to say it can't have a correction if the fed this afternoon comes out with a bullish statement and the markets rally gold may go down. But you have to say the big picture is gold is assuming its position as a reserve currency along with the dollar and the euro.
VELSHI: Because money goes between these kinds of asset classes, right? I mean, if you feel you don't want to take risk on stock markets, people put their money into treasuries and bonds and gold. Where do bonds come into your -- AWAD: In the short term, they are a safe haven. You have to say in the long term, if a 2.5 percent yield on a 10-year treasury turns out to be a good return, then the world economies are in tough shape.
So when I say keep some cash in case things are bad, I'd rather own some corporate bonds actually than treasuries, but you can put some treasuries in there and hope that that's not your best performing asset over the long term.
VELSHI: Final question, if my viewers are in a diversified portfolio in their 401(k) and really nervous, should they sell anything?
AWAD: No, you should stay put. You should think long term. It never pays to react to a short-term crisis like this. Have your financial goals rebalance at the end of September as you should quarterly.
See what's gone up, what's down, add to what's gone down, take a little bit money off the table of what's gone up and keep your eye on the long-term goal and diversification.
VELSHI: So you're not panicking about this.
AWAD: You should never panic during periods like this.
VELSHI: All right, very good. Jim, it's always great to talk to you. Thanks so much.
AWAD: Thank you.
VELSHI: Jim Awad is the managing director at Zephyr Management.
COSTELLO: Still to come this morning, scenes of utter desperation from the famine in Somalia. Children among the most vulnerable. Dr. Sanjay Gupta just across the border in Kenya with one family's story. You're watching AMERICAN MORNING. It's 40 minutes past the hour.
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COSTELLO: It's 43 minutes past the hour. Welcome back to AMERICAN MORNING. The horn of Africa is in the grip of a historic drought and famine this morning.
The desperate situation in Somalia has driven nearly half a million Somalis across the border into Kenya. It's made the Dadaab refugee camp the largest on the planet. I am not kidding.
How big is it? You could actually see it from space in a satellite image. Children as always are among the most vulnerable here. Dr. Sanjay Gupta is live at that refugee camp with a report you will only see on CNN. Good morning, Sanjay.
DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Good morning, Carol. You know, these children that you're talking about, they're so resilient as well, but still the question remains, how do you take care of so many people in these sorts of conditions?
Four hundred thousand people at least the number expected to go up in the middle of drought, in the middle of war and in the middle of poverty. We're going to show you how, a story of a father's love for his boys.
(BEGIN VIDEOTAPE)
GUPTA (voice-over): What you're looking at may best be described as the most desperate place on earth, vulnerable children thick with misery.
(on camera): The other thing you can tell right away, you know, when you see a baby here, you take a look here, the baby's fontanel so sunken in. This is what happens when -- since the baby has had no food, no water, so dehydrated.
(voice-over): Basic, basic necessities, so hard to come by. Dust and starvation, nearly everywhere you look. This is also what happens when you're at the world's largest refugee camp -- all these folks waiting to see one doctor over here.
(SPEAKING FOREIGN LANGUAGE)
GUPTA: As you look at these images, consider this simple fact: these are the lucky ones -- lucky because they made it here at all. This family of five made it out of Somalia just yesterday.
(on camera): I came out here to the middle of the deserts to give you a real idea of what this family went through. They walked for 30 days and 30 nights, primarily at night because it was cooler, carrying those three kids, sometimes carrying a kid, going back and getting another kid, and just doing this over and over again in the deserts -- 30 nights worth.
They crossed the border and then they get robbed. Bandits take what little possessions they actually have.
(voice-over): But the bandits didn't take this father's dream, and his drive to keep his kids alive. It's not going to be easy.
(on camera): So, this is another thing you see here quite a bit. This child obviously now, Mohammed, 3 months old, looking listless. Just not very active at all.
But look at this breathing specifically -- breathing with his abdomen, not so much with his chest. This is something that's very tiring for a baby. He also has whooping cough, pertussis, that's because this child was never vaccinated either.
(voice-over): He will need a hospital, oxygen, antibiotics, and, yes, food and water. All of it may come too late -- so painful to realize that every single one of his ailments could have been prevented. Unfortunately, though, that hardly ever happens in the most desperate places on earth.
(END VIDEOTAPE)
GUPTA: Two thousand patients, people a day, at least, Carol. They are predicting coming into these refugee camps. Just think about those numbers, I don't think there's a hospital system in the world that can handle that sort of volume. There are some signs of improvement. You're starting to see obviously more structures to the camp. You're getting more resources.
But the key, Carol, talking to people on the ground, is we be able to get the resources, just, you know, the basics -- again, the food, the water -- closer into Somalia where these people live as opposed to them making these incredibly long treks. They come here so incredibly famished, Carol. That's part of the problem.
COSTELLO: So horrifying. Sanjay Gupta live in Kenya this morning, thanks.
You can help. To find out how, go to CNN.com/Impact. Go there. You'll find out how you can help and get food and water to people in need in Somalia.
AMERICAN MORNING will be back after a break. It's 47 minutes past the hour.
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ROMANS: A lot going on this morning. Here's what you need to know to start your day.
U.S. markets set to open in about 90 minutes and we could see a rebound after several days of pain. Futures are way up in all three major indices suggesting a higher open.
After downgrading America's credit rating, Standard & Poor's may now be the target of a Senate investigation. The Senate Banking Committee is already gathering information about S&P decision and may schedule a hearing into it.
A curfew is now in effect in Philadelphia following several flash mob attacks in the city. During the week, kids under 13 will have to stay off streets by 10:00 p.m. And teenagers have a midnight curfew. It's an hour earlier in some areas on the weekend.
The mayor of Philadelphia, Michael Nutter, will join us live the next hour to explain.
According to a recent IRS report, some 1,500 of America's 230,000 millionaires avoided paying any federal income tax in 2009. How is that possible? The report says they were likely donating to charity, investing in local and state government bonds and paying income taxes to foreign governments on profit from overseas investments. That means write-offs and loopholes.
Coconut water has been called Mother Nature's Gatorade. But two leading brands, Vita Coco and One, well, they failed to live up to their health claims. Tests show they had far less sodium and magnesium than advertised. Only one, Zico Natural, delivered on the promised levels of the two ingredients.
And finally this.
(BEGIN VIDEO CLIP)
PATRICK SWAYZE, ACTOR: Nobody gets stuck in a corner.
(END VIDEO CLIP)
ROMANS: Johnny Castle, you rock. Lions Gate remaking "Dirty Dancing," the classic 1987 film with Patrick Swayze's classic line. The original choreographer Kenny Ortega will direct the remake. No word on yet on a possible cast.
You're caught up on today's headlines. AMERICAN MORNING, back in 60 seconds.
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COSTELLO: All righty. Now is your turn to talk back on one of the big stories of the day.
With conservatives fuming over the latest "Newsweek" cover of Michele Bachmann, we ask you this question: are Republican women unfairly criticized because you're women?
The responses are literally pouring in.
This is from John. He said, "Of course, Republican women are unfairly criticized. It's not politically correct for women on this side of the liberal feminist movement to identify with traditional views. Thus, everything they do is scrutinized far more than even their conservative male counterparts."
This from S. Crawford: "No, Republican women are not unfairly discriminated against when they make an error. Women, however, do not get away with what men get away with. Women are more subjected to scrutiny, so they have to be far more careful than men in their statements. Unfortunately, the Republican women you have mentioned aren't very careful or apparently very knowledgeable about our country, the Constitution and history."
And this from Nancy Seymour: "As a woman, if they can't handle the heat, pick up your vitriolic apron and get out of the political kitchen."
Keep those comments coming. Facebook.com/AmericanMorning. And thanks as always.
ROMANS: Speaking of the heat.
VELSHI: Oh, yes. No kidding. A town in Texas turns off the water during the hottest time in the summer. Tempers are fuming, along with temperatures.
ROMANS: Plus, blurring the lines between religion and politics. Are some candidates going too far?
You're watching AMERICAN MORNING. It is 55 minutes after the hour.
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