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THE SITUATION ROOM

Stock Prices Collapse Again; Super Panel's Super Challenge; Sarah Palin's Presidential Plans; 'Fightback' Against Britain Riots; GOP Claims Victory in Wisconsin Recall; Famine's Sickest of the Sick Come Here; Investors Buying Gold; 'Strategy Session'

Aired August 10, 2011 - 17:00   ET

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


WOLF BLITZER, HOST: Thanks, Brooke.

Happening now, breaking news -- stock prices collapse again. The Dow losing another 500 plus points in one of the wildest, scariest up and down weeks in recent memory. We'll try to make some sense out of the market mood swings and what it all means for your investments.

Also, America's debt and the financial future are on their shoulders. New picks for a so-called super committee in Congress are generating buzz and some backlash. This hour, the politics behind the choices.

And they're some of the youngest and sickest victims of famine -- our own Dr. Sanjay Gupta and CNN are showing the world how Africans are clinging to life and why time may be running out.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

The sinking feeling is back on Wall Street. The breaking news this hour -- all major stack indices taking more huge hits today, with the Dow plunging more than 519 points. Prices have been swinging between massive gains and losses. In recent days, hundreds of points up or down at the closing bell. And once again, we saw dramatic fluctuations in the Dow over the course of the trading day.

One analyst says -- and I'm quoting -- "Fear and greed are driving this frantic cycle of buying and selling." And that's costing investors trillions of dollars on paper.

And joining us now, our own Richard Quest.

Richard is back in London -- Richard, an almost 520 point drop, a lot of it happening within the last few minutes. So of it -- so much of it apparently related to what's happening in Europe, where you are.

What is going on in Europe right now that could drive down Wall Street so quickly, so dramatically?

RICHARD QUEST, HOST, "QUEST MEANS BUSINESS": What is happening is that the markets are feeding on themselves, Wolf. Europe had been down for most of the session. And then New York opened sharply lower and Europe fell even further. And the problem in Europe concerned France this time and fears that, first, France may lose its own AAA rating. That has been denied by the rating agencies. And secondly, that some French banks may be in trouble, particularly Societe Generale. Now, SocGen came out and said market rumors were unfounded and there was absolutely no truth to them.

But it doesn't really matter in this market. The rumors were there. The toll was taken. Europe fed into the US. The U.S. fed back to Europe. And this vicious downward spiral continued and will continue, frankly, until there's some form of bottom reached.

BLITZER: Well, what does that mean, bottom reached and will continue?

Can we expect this decline -- the Dow Jones has gone down, what, nearly 2000 points over the past two or three weeks. And a lot of American investors can't take it.

QUEST: Oh, the same in Europe. I mean, look at the DAX in Germany. It was down 5 percent. The CAC Courant in Paris was down 5 percent. What I mean by that is markets will stop falling when one of two things happen. Either the stocks become so cheap, somebody comes in to buy it. It's no different to fruit and veg. You can always take potatoes and make them into stew or something like that. The same with prices on the markets. When things get cheap enough, people will buy.

And the second reason, which we're not there yet, is when the fundamentals start looking up again. Well, frankly, we've got no evidence of that.

Ben Bernanke, yesterday, saying interest rates will be kept low until 2013. Today, we had the Bank of England governor, Mervyn King, saying the headwinds are getting stronger.

Now, you know, when you've got economists saying that the chance of a U.S. double dip is now 50-50, that is the fuel that is pulling this market down. And until that changes, that confidence change, we won't see any real difference.

BLITZER: We'll check back with you tomorrow, Richard.

Thanks very much.

QUEST: Sure.

BLITZER: We're going to have much more on this story coming up.

But take a look at these faces. The next round of America's debt crisis depends on them. House and Senate Republican leaders today revealed their picks for the new super committee charged with finding ways to cut the nation's deficit. They are Senators Jon Kyl, Pat Toomey, Rob Portman, Congressman Dave Kemp, Fred Upton and Jeff Hensarling. Hensarling will be the co-chair of the panel, along with Democratic Senator Patty Murray. She was named yesterday, along with Senate Democrats John Kerry and Max Baucus.

House Democratic Leader Nancy Pelosi hasn't announced her choices yet. We're standing by for that.

But let's go to CNN's Joe Johns.

He's taking a closer look at what this means -- Joe, what are you learning?

JOE JOHNS, CNN CORRESPONDENT: Wolf, cutting $1.2 trillion in debt, It's not going to be easy. The mix of views on this committee so far underscores the idea. This is just round two in a bitter partisan fight that started with the debt ceiling controversy.

(BEGIN VIDEOTAPE)

JOHNS (voice-over): It may be the hottest job in town right now, but it will be a while before they're seen as winners or losers. The super committee list is a mixed bag. It includes the chairman of the top Senate and House tax writing committees. There's also a former Democratic presidential nominee and some true conservatives.

Hard to see how they'll figure out questions like reforming entitlements or increasing federal revenue, let alone the balanced approach the White House wants.

JAY CARNEY, WHITE HOUSE SPOKESMAN: We need to take action collectively, to come together, Democrats and Republicans, to further reduce our deficits and get our long-term debt under control. We strongly believe that the way to do that is to take a balanced approach.

JOHNS: It's already gotten ugly, though. The naming of Democratic Senator Patty Murray of Washington prompted howls of protests from the Republican Party because Murray is in charge of the effort to get Democrats elected to the Senate, with protecting entitlements as a centerpiece issue. The RNC said the committee was no place for Murray because she's so enmeshed in politics. Murray said, in a statement with other Democratic senators, that the group needed to set aside partisanship.

Equally controversial on the Republican side was the name of Pennsylvania senator, Pat Toomey, who used to run the Club for Growth, a conservative organization whose whole reason for existence is reducing the size and scope of government and holding the line against higher taxes. But in a conference call, he said he still thinks there is room for agreement.

SEN. PAT TOOMEY (R), PENNSYLVANIA: This has to be done in a cooperative fashion. It has to be an exercise in finding common ground between Republicans and Democrats. But it also has to be constructive with respect to reducing our deficit and it has to be pro-growth, as well.

JOHNS: There's no a lot of time to do this work. The committee has to come up with a proposal by Thanksgiving, with a vote in Congress by Christmas.

ALAN SIMPSON, FORMER DEFICIT COMMISSION CO-CHAIR: They're going to jump in here and by Thanksgiving, they'll be thankful it's Thanksgiving, because it's going to be a rough haul.

JOHNS: The alternative to getting an agreement is painful to both sides -- deep cuts to both social programs and defense. And the public is watching.

A new CNN/ORC Poll shows most Americans want the wealthy and companies to pay more. And by almost equal numbers, they say they want entitlements to be left alone.

(END VIDEO TAPE)

JOHNS: The committee will not be complete until House Democratic leader, Nancy Pelosi, names the last three people. She has until next Tuesday to do it. And aides have not commented on how long she plans to take -- Wolf.

BLITZER: We checked all six of those Republicans, the three House members, the three senators. They've all signed that pledge to Grover Norquist's organization that they will not support any new taxes. So that's going to be an issue, no doubt about that, in the coming weeks and months.

Thanks very much, Joe, for that.

All right, this just coming into THE SITUATION ROOM. Sarah Palin may be sending a new signal about her presidential intentions.

Our CNN political reporter, Peter Hamby, is joining us now with information just coming in -- Peter, what are you learning?

PETER HAMBY, CNN POLITICAL REPORTER: SarahPAC, the political action committee for Sarah Palin, just sent out an e-mail to her donors saying that the Sarah Palin One Nation Bus Tour is going to start again. And she's going to do it in Iowa, in the middle of a blockbuster political week in the first in the nation caucus state, when the rest of the presidential field is there. The bus tour will start at the Iowa State Fair. Details are still fuzzy as to when she will show up. It could be Thursday, Friday or Saturday.

And she's going to carry the bus tour through, it looks like, Missouri and Illinois.

But this is vintage Sarah Palin. She's crashing the party. She's going to grab headlines and steal attention from the rest of the Republican presidential field, because, you know, there are hundreds and hundreds of political reporters out there in Iowa right now. And again, so is the rest of the presidential field. They're there for the Ames Straw Poll, which is a closely watch test of organization in the caucus state. They're there for a presidential debate.

So all eyes on Sarah Palin once again after a nearly three month hiatus of the bus tour. She's back. BLITZER: She's back.

Did you say she's going to be back this weekend, at the time of the Ames Straw Poll?

HAMBY: Details are unclear. I talked to the treasurer of Sarah Palin's political action committee. He would not provide any further details.

But in this fundraising e-mail to supporters, she said she will be at the Iowa State Fair this week. We're not sure if that means she's going to speak. There's a famous political soapbox at the state fair where candidates, you know, address Iowa caucus-goers. We don't know if she's going to speak there. I suspect it will be before the Ames Straw Poll on Saturday.

She's not on the ballot there, to be clear. And, again, she only has a political action committee. She's not officially a candidate. But she's going to, again, steal the spotlight.

BLITZER: Yes. She's going to liven things up a lot.

Thanks very much, Peter, for that.

In Britain right now, police have new orders from the prime minister to do whatever it takes to stop what he calls "despicable violence." Cities outside London, including Birmingham, Manchester and Liverpool, saw the worst unrest overnight. London was somewhat calmer because of a huge police presence on the streets.

After four nights of riots, vandalism and looting, many people in Britain are growing more scared and angrier.

CNN's Dan Rivers is joining us now from Birmingham.

He's been there all day watching what's going on.

What's the very latest -- Dan?

DAN RIVERS, CNN CORRESPONDENT: Well, Wolf, this is the scene here in the Winston Green area of Birmingham, where last night, sadly, three young British Pakistani men were mowed down by a car. You can see the flowers here on that lamppost. They were hit by a car while they were out trying to protect local businesses from looters.

The looters had been in the area smashing up shops and setting light to buildings, according to locals. The men are still out -- other friends of theirs are still out here on the streets, doing the same job tonight.

Meanwhile, the police investigation into those deaths and into who caused those deaths is well underway.

(BEGIN VIDEOTAPE)

RIVERS (voice-over): A meticulous search of a murder scene -- the police combing a street in Britain's second biggest city, Birmingham. It was here that three young British Pakistani men were killed while trying to protect local businesses from looters.

The men were mowed down by a car. One man has been arrested.

The victims were brothers Shahzad and Manir (ph) Hussein, both in their 30s, and Haroon Jahan, who was just 20 years old.

Amid the tributes paid at the scene, there are now fears that what started as looting may exacerbate already strained race relations between the black and Asian communities.

It's something the families of the dead men are desperate to avoid.

TARIQ CHOHAN, FATHER OF VICTIM: Blacks, Asians, whites, we all live in the same community.

Why do we have to kill one another?

What started these riots and what's escalating them?

Why are we doing this?

I lost my son. Step forward if you want to lose your sons. Otherwise, calm down and go home. Please.

RIVERS: Almost as soon as he finished speaking, there was a graphic illustration of the simmering tensions, as a black woman heckled a local reporter.

(CROSSTALK)

RIVERS: The politician who represents this area is concerned the riots could be manipulated by those who want to stir up trouble.

UNIDENTIFIED MALE: If you've got nothing better to do, go home. (INAUDIBLE).

(CROSSTALK)

SHABANA MAHMOOD, MEMBER OF BRITISH PARLIAMENT: What we don't want is for other elements to now hijack what's happened and make this something else and make it more serious still.

(END VIDEO TAPE)

RIVERS: And that is the big concern, that this will be twisted from something that was about criminality and looting, Wolf, to something that is about race. And that's what everyone here is trying to avoid.

Frankly, I can tell you that this area now is full of police and the local community, who are out here in force. So far, there's been no further violence.

BLITZER: Any new steps that the police are taking to deal with this?

RIVERS: Well, we've been told that water cannon and plastic bullets have not been ruled out. So far, they've not been used, though. And that would be quite a big escalation. Rubber bullets, or baton rounds, as they're called here, have never been used in mainland Britain before. But they haven't been kind of ruled out, as I say, by politicians.

So far, though, thankfully, I think it's the sheer numbers of the police on the streets, like the officers you see behind me, that have helped, really, to -- to bring complete calm to many areas that, 24 hours ago, were feeling very anarchic.

BLITZER: Dan Rivers on the scene for us.

We'll check back with you.

Thank you.

Back in this country, more and more Americans are investing in gold, as the stock markets continue to tank.

Should you consider cashing in?

Stand by.

And Hollywood is working on a movie about the raid that killed Osama bin Laden. You're going to find out why one Republican Congressman says that needs to be investigated.

(COMMERCIAL BREAK)

BLITZER: Jack Cafferty is here with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN CONTRIBUTOR: Hope and change -- those could be but a distant memory when it comes to President Obama's 2012 reelection campaign. Politico reports the president's campaign plans to center on "a ferocious personal assault" -- that's a quote -- "on Mitt Romney's character and business background."

This is based on the expectation that Romney, the Republican frontrunner, will be the party's nominee.

The president's aides have apparently been studying former President George W. Bush's 2004 takedown of Senator John Kerry.

Remember the Swift Boating, flip-flopping?

As one Democratic strategist tells Politico, quote: "Unless things change and Obama can run on accomplishments, he's going to have to Romney, figuratively speaking," unquote.

Sources say there are two aspects to their strategy. The first is to go after Romney on a personal level as inauthentic, unprincipled and, quote, "weird." The second tact is to go after the former Massachusetts governor's record as a businessman. He was the CEO of a venture capital firm called Bane Capital, which both created and eliminated jobs.

The goal is to paint Romney as the picture of greed.

Romney's campaign describes the strategy as "despicable, desperate and disgraceful." They insist there's nothing the president can do to make the election about anything except a referendum on the economy.

And they probably have a very good point. If things continue in the direction we're headed now, it's going to be an uphill slog for the incumbent.

Meanwhile, the Obama campaign is pushing back hard against Politico's story, saying anybody who could claim to hold a crystal ball for their strategy doesn't speak for the campaign. And they say Romney is shredding what they call "crocodile tears."

So let the games begin.

Here's the question -- is destroying Mitt Romney the right way for President Obama to try to win a second term?

Go to CNN.com/caffertyfile and post a comment on my blog, or through our post on THE SITUATION ROOM'S Facebook page. An increasing number of you are taking advantage of that and we welcome all correspondence.

BLITZER: We certainly do, Jack.

Thank you.

Staying in the world of politics, Wisconsin voters have had their say in a political showdown over union rights that sparked massive protests and gridlock this year. Six state senate seats were in jeopardy in yesterday's recall elections. . Republicans held onto four of them, which means the party still has a slim majority in the Senate chamber.

CNN's Ted Rowlands is joining us in Madison, Wisconsin -- Ted, this is a major disappointment for the unions and the Democrats.

TED ROWLANDS, CNN CORRESPONDENT: Oh, absolutely. Republicans would definitely spin it that way. And clearly, the Democrats and the unions wanted to gain control of the senate chamber here.

They, however, are spinning it as a victory overall, saying that what happened here in Wisconsin was that they sent a clear message to other states that may think about curtailing union rights. And that message would be, watch out, we'll come after you and specific politicians could lose their jobs. And they point to the two senators that did last night.

BLITZER: Do -- do the Republicans feel emboldened by managing to hold onto the majority, albeit a slim majority?

ROWLANDS: Well, one would think, obviously, they would. However, we talked to the governor, Scott Walker, about an hour ago in his office. And I was struck -- first of all, he -- he said this -- he doesn't look at this as a victory at all. He also said he's really looking forward to working with Democrats.

Clearly, he knows what's going on in Washington. And these politicians can feel that voters are frustrated, not only here in Wisconsin, but across the country.

I also asked him if he was fearful he might be recalled after his first year.

Take a listen.

(BEGIN VIDEO CLIP)

GOV. SCOTT WALKER (R), WISCONSIN: Well, they might. But I think in our state, there's an incredible amount of fatigue. You know, voters have had it with all the attack ads they've had. From all the money that poured in from outside of Wisconsin. I think the last thing they want is a permanent campaign here in the state of Wisconsin.

What they want, instead, is lawmakers in both political parties and myself to work together, to get more people working again. And that's what we're going to do.

(END VIDEO CLIP)

ROWLANDS: And, Wolf, this recall saga is not over in Wisconsin. Next week, on Tuesday, two Democratic senators will be fighting for their jobs -- Wolf.

BLITZER: The big story coming up on Friday, when the president of the United States welcomes the Super Bowl champ, Green Bay Packers, to the White House. I'm sure a lot of folks in Wisconsin will be happy to see that.

Thanks very much, Ted, for that report.

In Rhode Island, a bitter dispute that led to the firing of almost 2,000 teachers and big protests has been resolved. The Providence Teachers Union approved a new collective bargaining agreement yesterday -- a deal that rehires all those fired teachers and saves the city millions of dollars. Union members overwhelmingly agreed to concessions in exchange for job security.

Starvation literally stealing thousands of lives in Somalia, many of them babies. Our chief medical correspondent, Dr. Sanjay Gupta, is standing by live in Kenya. He'll be joining us.

And new backlash against the White House, as the raid that killed bin Laden goes Hollywood.

(COMMERCIAL BREAK)

BLITZER: I'm Wolf Blitzer. Stories we're working on in our next hour.

A nationwide manhunt for three siblings wanted for armed robbery and attempted murder ends in a dramatic gun showdown with police. We'll have the latest on their capture.

Plus, phone lines snipped and cable boxes sabotage -- just ahead, a mass strike deals a huge blow to Verizon customers here in the Northeast.

And revenge -- NATO takes down the alleged Taliban insurgents behind the deaths of 30 U.S. troops killed in Afghanistan.

You're in THE SITUATION ROOM.

A soaring death toll in Somalia -- starvation literally stealing thousands upon thousands of lives, many of them children and babies. And this alarming statistic from the World Food Program. The food supply could run out within three weeks, given the current level of donations.

CNN is committed to bringing you extensive in-depth coverage of this great humanitarian crisis much of the world, unfortunately, right now, is ignoring.

Our chief medical correspondent, Dr. Sanjay Gupta, is on the ground in neighboring Kenya.

(BEGIN VIDEOTAPE)

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT (voice-over): In the middle of a famine, the sickest of the sick come here. Like Ahmed. He's six years old and has just spent 10 days walking under the East Africa sun. His tiny prone body robbed of nutrition for too long. His doctor can only hope he arrived in time.

(on camera): What happens to a child like this if you weren't here, if wasn't at this facility?

DR. HUMPHREY MUSYOKA, INTERNATIONAL RESCUE COMMITTEE: This child, probably in a few weeks or so, we will have lost this child.

GUPTA: One --

(CROSSTALK)

MUSYOKA: We would lose this child. We would lose this child.

GUPTA: You know, when the doctor talks about death by starvation, I can tell you, it's neither quick nor it's painless. When you come to a place like this, you see it just about everywhere. You can hear it sometimes, as well. You can also smell it. It's in the air. It's this acrid sweetness that is a reflection of the body literally starting to digest itself.

(voice-over): Little kids like Ahmed simply stop growing. They become stunted and drawn. And the tools to save him are basic. It's not like they have much choice, but they (AUDIO GAP).

(on camera): Something else that I think is very important here and this is what doctors use -- a simple measuring device to try and determine if a kid needs acute medical care. You can tell if the kid is malnourished simply by using this.

This is Ian (ph). She's eight months old. You simply take this. You put it around her arm, about 10 centimeters down from her shoulder. And you measure, just measure this. And if the number comes back below 11, that means a kid is in real trouble.

And in Ian's case, you can see here, the number is actually about 9.5. That's part of the reason she's getting these feedings through an NG-tube into her nose.

(voice-over): Ahmed's was 10.5.

One in five kids will not survive with a reading that low. It's grim duty for Dr. Musyoka, the only doctor caring for all of these children.

(on camera): I have three kids. You have a 5-year-old.

MUSYOKA: Yes.

GUPTA: How do you -- how do you do it?

I mean how do you -- how do you see these kids who are -- who are suffering so much?

MUSYOKA: It -- it's difficult, especially since the kind of suffering they're going through and you're transfixed with your own kids. But what -- what keeps you going is that you have to come back and do something good for them, for them to survive.

GUPTA (voice-over):

Ahmed was one of the estimated 600,000 kids on the brink of death by starvation. But today, that may have changed. Ahmed may have been saved. He made it here just in time.

(END VIDEO TAPE)

BLITZER: And Sanjay is joining us now live from Kenya -- Sanjay, this notion that there's only enough food left, what, for three weeks, given the current supplies, the current money to the World Food Program, that sounds so ominous.

Is there any hope that that can change?

GUPTA: Well, I think everyone here on the ground is hoping that's going to change. I mean, there are other smaller organizations that are working very hard as well to try and fill up some of the gaps that are going to be left behind, if this in fact comes true.

And also, looking at the World Food Program to try and assure they can continue to bring resources here. But you're absolutely right, that is an ominous sign. Many saying that they're trying to -- this is very important, Wolf -- is to try and take what the resources are and actually move them into Somalia where people need them the most, as opposed to having people walk sometimes for days on end, sometimes week on end, to get to refugee camps. So those are the two big issues right now that are most acute in terms of saving people -- Wolf.

BLITZER: These little children, these babies that are on the brink of starvation -- you're a neurosurgeon -- what's happening to their bodies as they go through is this?

GUPTA: Well, Wolf, it's tough to talk about, especially since we're seeing it first hand on the ground here. And there's probably no dignified way to say this. But, I mean, what happens is that the body is immediately in search of energy, calories, and it looks to stores (ph) within its own body to try and provide some of that energy.

So, soon after food is cut off, the liver, fatty tissue -- once over-expended, a person literally has no fat left in their body, and then the muscle starts to break down looking for protein. Even the cardiac muscle, the muscle of the heart, Wolf, is broken down.

And obviously the heart starts to get weaker, someone starts to become more listless and lethargic. Their blood pressure drop, their body temperature drops, their heart rate drops. Again, Wolf, there's no dignified way to talk about that, but that is -- what I am describing is death by starvation.

BLITZER: And you're seeing that going on even as you're there these days, Sanjay? You see that in motion?

GUPTA: Yes. I mean, there's no question.

There's 30,000 kids that have died here over the last few months. And Wolf, today we were at a place within this camp where they were literally digging graves within the camp, because there's so many bodies, there's so many people who have died.

And I should point out as well, Wolf, that even if someone makes it to the refugee camp, if they have been malnourished for too long, sometimes even then, even if food is more available, there's nothing that can be done, the children are too far gone. So, again, getting food to the children at the time of their need, as opposed to having them and their parents walk for days on end to get here, really would make a huge difference.

BLITZER: Thanks so much, Sanjay, for bringing this to the world's attention, you and our whole team on the scene over there.

Sanjay Gupta, in Kenya.

You can see a lot more of Dr. Gupta later tonight on "ANDERSON COOPER 360." Anderson will be live from Somalia at his new time, 8:00 p.m. Eastern. Tonight, Anderson will speak with legendary musician, activist Bono about the devastating drought and the famine.

Remember, 8:00 p.m. Eastern, only here on CNN.

And this important note to our viewers. To find out more about how you can help those in need, go to CNN.com/impact.

It was a devastating loss to the United States Navy SEALs. Now it's payback time for the Taliban insurgents behind the deadly shootdown of a chopper in Afghanistan.

And should you get in on the new gold rush? It's the place many investors want to be as the stock market plummets.

(COMMERCIAL BREAK)

BLITZER: New information just coming in to THE SITUATION ROOM about that very controversial immigration law in Arizona.

Lisa Sylvester is here. She's monitoring that, some of the other top stories in THE SITUATION ROOM.

What's going on?

SYLVESTER: Hi there, Wolf.

Well, Arizona Governor Jan Brewer has formally asked the Supreme Court to intervene and allow the state to enforce the legislation. State officials have filed a petition seeking to overturn a federal judge's order preventing parts of the law from going into effect. The Obama administration and immigration activists oppose the law, which in part allows local law enforcement to apprehend and help deport illegal immigrants.

The chairman of the House Committee on Homeland Security is calling for an investigation into reports the Obama administration has granted Sony Pictures high-level access for a film based on Osama bin Laden's death. Representative Peter King says the White House has a responsibility to Congress and the American people when declassifying information. The White House calls the claims ridiculous, saying it doesn't discuss classified information.

The Texas Department of Criminal Justice has released the mug shot of one of its newest inmates. Here he is, polygamist leader Warren Jeffs. You can see the stark contrast in his appearance now with that much shorter haircut on the right side of your screen. Jeffs was sentenced yesterday to life in prison for sexually assaulting children that he said he considered his spiritual wives.

And if you are looking for the latest version of the Apple iPhone, you may be able to find the fake version in China. According to Reuters, the HiPhone 5 is now selling for as little as $31 on a Chinese website. If you want a more genuine version, then you'll have to pay a little bit more, but the HiPhone 5 is based on leaked images of the much anticipated Apple iPhone 5, which should be out in a few months.

That's pretty amazing. Even before the iPhone 5 is out, they have a fake out there on the market. Unbelievable.

BLITZER: They don't call it the iPhone, they call it the HiPhone.

SYLVESTER: The HiPhone 5.

BLITZER: It's amazing that they got this technology even before it's already out, as you say.

SYLVESTER: Yes. This intellectual property problem is a big one though -- Wolf.

BLITZER: It's huge. Thanks very much.

If you're seeing red because of the stock market madness, you might want to start looking at gold. A lot of people are doing that right now.

And it took a nationwide manhunt to nab them. We're going to tell you what's happening now to three armed and dangerous siblings who have been on the run.

(COMMERCIAL BREAK)

BLITZER: Let's get back to the breaking news this hour, another horrendous day for stock prices. The Dow Jones industrials, plunging almost 520 points, continuing a trend of wild up-and-down swings in recent days. With stocks tanking, gold prices are soaring to record highs. Gold settled at more than $1,788 an ounce, just climbing just above $1,800 an ounce earlier in the day.

Mary Snow is looking into this new gold Rush for us.

Mary, what are you finding out?

MARY SNOW, CNN CORRESPONDENT: Yes, Wolf, this is all based on fear. The more fear there is in the market, the higher gold prices climb.

All this turmoil is providing a silver lining, so to speak, for some businesses.

(BEGIN VIDEOTAPE)

SNOW (voice-over): The rest of the world may be worried about the economy, but Todd Tyro sees pay dirt.

UNIDENTIFIED MALE: But right now it definitely is a boom time.

SNOW: Tyro (ph) buys and sells gold, setting up road shows across the country.

UNIDENTIFIED MALE: Hello ladies.

SNOW: After S&P downgraded U.S. debt, he extended his time in New York. He knew it would cause gold prices to soar, and banked on more people cashing in.

UNIDENTIFIED MALE: Right from Germany?

SNOW: These two grandmothers are first-time sellers. So is Deborah Collins.

UNIDENTIFIED FEMALE: With the price of gold, we probably would melt this.

SNOW: She brought in her family jewelry.

(on camera): What prompted you to do this?

DEBORAH COLLINS, GOLD SELLER: Well, I needed some money. You know, times are hard. And I figured I had it, so --

SNOW (voice-over): While people like Deborah are cashing in on record gold prices, others are buying gold.

MICHAEL CLARK, DIAMOND STATE DEPOSITORY: We've seen -- since the Lehman Brothers collapse and the Madoff scandal that -- I've talked to so many people that just lost faith in paper investments and institutional integrity.

SNOW: Michael Clark is president of a gold depository which stores everything from coins to gold bars. He estimates his business has increased between 20 and 30 percent in recent weeks, and not just from individual customers.

CLARK: This is something new, probably in the last year or two that we've seen, where corporations are investing some of their retained earnings into physical precious metals bouillon.

SNOW: With gold shining in the spotlight, financial advisers like Ryan Mack get lots of questions. He doesn't advise clients to buy physical gold. Instead, he invests in gold-exchanged traded funds and increase stakes to 20 percent of portfolios, which is high. He also warns against a rush to gold without a well thought out strategy.

RYAN MACK, FINANCIAL ADVISER: You can lose a lot of money investing in gold. I mean, if you put all your eggs in that one basket, as high as gold and as fast as gold has appreciated over these past few months, or even years or so, you can lose an extreme amount of money. But that's with any asset.

SNOW: And before the gold bubble bursts --

UNIDENTIFIED MALE: A thousand, and $1,100.

SNOW: -- people like Deborah Collins are selling what they can, just trying to get buy.

(END VIDEOTAPE)

SNOW: And Wolf, as high as gold is right now, some believe that prices could climb a lot further before things settle down. Analysts at JPMorgan say gold could reach $2,500 an ounce by the end of this year -- Wolf.

BLITZER: Wow. All right. Thanks, Mary. You're going to have a lot more on this story. The market collapsed today. That's coming up in a few minutes.

A growing backlash against Washington, with many worried Americans demanding answers from Congress and the president over the debt crisis. So is this the time for our leaders to be in recess or taking vacation?

Plus, Verizon customers across the Northeast the latest casualties of a mass strike. Just ahead, why phone lines are being snipped and cable boxes are being sabotaged.

(COMMERCIAL BREAK)

BLITZER: All right. Let's get right to our "Strategy Session."

Joining us, our CNN political contributor Roland Martin and Republican strategist Rich Galen. He's the publisher of Mullings.com.

Guys, thanks very much for coming in.

Roland, you're from Texas. Rick Perry, the governor of Texas, you agree he's going to run?

ROLAND MARTIN, CNN POLITICAL CONTRIBUTOR: Oh, no doubt. He's running for president.

BLITZER: You agree, Rich, he's going to run?

RICH GALEN, REPUBLICAN STRATEGIST: Yes.

BLITZER: All right. So if you run for president, you're going to be scrutinized. Everything about you is going to be scrutinized.

So they've been scrutinizing, "The San Antonio Express News," "Huffington Post," his tax returns. In 2007 -- get this -- he made -- he declared income of $1,109,000. And his charitable contributions on $1 million income -- $1 million-plus -- was $4,458.

Why are you smiling?

MARTIN: Well, you know, last time I was on, we talked about that. One year he actually gave $90 to his church.

Look, when you put on this major event that he did, talking about your Christian faith and really what it means, you can't speak over that portion when it says bring your tithes to the store house. So that's speak volumes for someone who really wants to claim the mantle of being this strong Christian voice. And look, as the husband of a pastor, a Christian author, I'm sorry, you might want to do a little bit more, Governor Perry, when it comes to giving back to the church.

GALEN: Yes. Well, you had to get all the way to the bottom of that "Huffington Post" article, and it was pretty long. Which I did to get to these two points. I'm not going to read the whole thing.

"The head of the Association of Fundraising Professionals says, "Perry's giving is about average, from what I've seen.'"

BLITZER: For $1,100,000 income?

GALEN: Wait a minute. I'm just saying over time.

And then Ken Berger of the Charity Navigator, a watchdog group, says, "Most of this is not showing a great philanthropist, is not showing anything significantly out of the norm."

So, if you take the whole sweep of however long you -- 10 years as governor, and then lieutenant governor, according to people who do keep track of this stuff, not just look for one donation for one church, he apparently is sort of in line with people that are in his income bracket.

MARTIN: But when you give this huge event, and you are talking about praying for the nation, when you are trying to assume the mantle of being a strong prayer warrior, I'm saying you might want to do better. And the way I have been raised in church, that is you tithe 10 percent. That's not 10 percent.

BLITZER: Well, he did -- in 2005, he did give $23,000 to charity either in cash or in various goods. That was about 12 percent of his income in 2005. He obviously did a lot better then.

GALEN: Well, and your original point is correct when you get into these things. The scrutiny becomes very intense. Sometimes the scrutiny really goes overboard and people look for --

(CROSSTALK)

BLITZER: But is there anything wrong with looking at charitable contributions for people who want to be president?

GALEN: No, but I think in this case, the fairness is that people who make their livings looking at the number of people who give how much says it's not out of the norm.

MARTIN: Well, if he says God's going to tell him to run, God might also be saying, why don't you read "Malachi," give a little bit more, Governor.

GALEN: I'm not that close with God, so I don't know.

BLITZER: There's a lot of controversy now about Congress being in recess during this critically important time. The president is getting ready to go himself on vacation with his family.

Listen to Jon Huntsman, the former Utah governor who is running for the Republican nomination.

(BEGIN VIDEO CLIP)

JON HUNTSMAN (R), PRESIDENTIAL CANDIDATE: We've got Congress on vacation. We have a president reading from a teleprompter.

No one is putting forth any ideas that speak to real growth in this country. We need confidence. We need a sense of direction. We need a roadmap. We need leadership in this country right now.

(END VIDEO CLIP)

BLITZER: Is this a time for Congress to be in recess and for the president to be getting ready to go on his vacation?

MARTIN: Actually, I wasn't sure if he was describing the state of the country or his campaign there. Because, frankly, he could be discussing his campaign.

You know what? The president of course could call Congress back from recess.

GALEN: Which Jay Carney didn't know, by the way. And I think he ought to read the Constitution. That would be a good thing.

BLITZER: Should he?

MARTIN: But also, it's an extraordinary situation. He would have to also get the Republicans in the House and Democrats in the Senate to also agree to it.

I do think a whole month off is ridiculous when you have such critical issues right now that you are facing. And there is no doubt we need political leaders to say, look, you don't have time off. In fact, some of you don't have jobs. You have too much time off. We shouldn't be taking this much time away from Washington, D.C.

GALEN: I think I actually agree with you. And as soon as Nancy Pelosi appoints her three members to the super committee, I think they ought to get their rear ends back into town, appoint staff, gets that thing up and running, as, I'm not sure if it was Huntsman or somebody else said, we don't have to wait until school starts. We can get going on this right now.

BLITZER: Because nine have already been appointed out of the 12.

It's not a month. The House is going to be in recess for five weeks, because they're not coming back until September.

MARTIN: So more than a month.

BLITZER: It's more than a month, yes.

MARTIN: Right. So, to Congress, get your butt back to work while too many Americans are out of work.

BLITZER: Well, Dee Dee Myers said something I think -- the former Clinton press secretary -- smart the other day. She said the president shouldn't bring them back unless there is a guarantee they're all going to do something positive if he brings them back. GALEN: No, but it's easier to hold their feet to the fire if they are here. It's a lot harder when they are spread all over the world going -- some of them are on junkets, some of them are on really good trips. I mean, important trips. But the fact is --

MARTIN: I like the good trips, nice trips.

GALEN: Well, I mean, some of them are.

BLITZER: Well, if you go to Iraq or Afghanistan, you're risking your life.

GALEN: That's right.

(CROSSTALK)

GALEN: But the Paris Air Show is over, so they're not there. But the reality is that it makes much more sense that everybody is here. Then they are under scrutiny. There's, what did you do today? Nothing.

MARTIN: Yes. Get to work.

GALEN: Well, they have to work.

BLITZER: Guys, thanks very much.

MARTIN: Appreciate it.

BLITZER: Wall Street had a bad case of motion sickness right now. Stand by for more on the breaking news, another day of massive losses in the stock market. Our business and money team, working the story. They are standing by to join us live, help us figure out what could happen next.

And we are going back to Britain and the fight to stop riots and looting that have shaken the country to its core.

(COMMERCIAL BREAK)

BLITZER: Jack's back with "The Cafferty File" -- Jack.

CAFFERTY: The question this hour: Is destroying Mitt Romney the right way for President Obama to try to win a second term? There is a piece on Politico that suggests that they are going to go after Romney based on the idea that he is the presumptive Republican nominee.

Ken in Seattle says, "If Obama can't find a way to show some leadership, and soon, my Aunt Mable is going to be able to beat him. The hope people voted for has turned out to be false hope. Hillary, we're going to need you."

Kevin in California, "Wait. Now you are talking about ethics in politics. That's an oxymoron kind of thingy. Get a grip on yourself, Jack." Harvey in Mississippi, "I don't see where Obama has much choice. With the deck constantly stacked against an economic recovery, what else can Obama do? He's proven to be a lousy negotiator, so I don't look for anything other than across-the-board cuts to come out of that new super committee, and that will just tank the economy even more."

Ron in Minnesota writes, "The change from the positive theme 'Hope and Change' in 2008 to the negative theme 'Destroy Mitt Romney' theme in 2012 tells you all you need to know about why President Obama's ratings are tanking fast."

David in Tampa writes, "It's a sad state of affairs, but we've elected our presidents over the last few decades based solely on whoever does the best hatchet job on the other guy."

Loren writes, "If that's the president's plan, then he didn't learn anything from his own victory. What he needs to watch out for is the sleeper, not the frontrunner. If Romney gets the Republican nomination, the Republicans have already lost because the voters are going to be looking for more change than what Romney is offering."

And Evan writes on Facebook, "Whether it's the right way or the wrong way is effectively irrelevant because it might be the only way."

If you want to read more on this, you can go to my blog, CNN.com/caffertyfile, or through our post on THE SITUATION ROOM'S Facebook page.

It's a terrific place. You should check it out.

BLITZER: It is a fabulous place. And we're getting tons of reaction to not only what you are writing, I got a blog at our CNN.com/situationroom website as well. You know that, Jack.

CAFFERTY: What are you writing about today?

BLITZER: I was writing about whether or not the president should steal a page from Bill Clinton's playbook back in '95, '96, when he came up with that notion of triangulation. Remember that?

CAFFERTY: Right. Yes.

BLITZER: Remember when he was going to be not to the left, not to the right, sort of in the middle, get those Independent voters. And they actually used to welcome in the Clinton White House some criticism he would get from some on the left, because that would make Bill Clinton seem more moderate to Independent voters, swing voters.

Go to CNN com/situationroom. Check out my blog, Jack.

And I want our viewers to do it as well.

CAFFERTY: Arguably, the shrewdest politician of the last maybe 100 years, except for Reagan, who also had a tremendous instinct for how to navigate these waters.