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THE SITUATION ROOM

Dow Closes Down More than 400 Points; U.S. to Syrian President: Step Down; President Obama Leaves for August Getaway; Feds Investigating Standard & Poor's; GOP Presidential Candidates Go East; Interview with Texas Representative and GOP Presidential Candidate Ron Paul; 'Strategy Session'; Jihadists' Death Threat Against David Letterman

Aired August 18, 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: And happening now -- thanks very much, Brooke -- breaking news. Another massive plunge in stock prices. The Dow closing down more than 400 points. Traders are warning that it's a war zone -- war zone in the markets right now.

Plus, President Obama's long awaited call for Syria's leader to step down. This hour, the impact on Bashar al-Assad and his crackdown on Syrian protesters -- the hopes and worst fears in the region right now.

And a surprising target of an online terror threat. It's David Letterman and it's no joke. You're going to find out why extremists say the comedian's tongue should be cut out.

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

ANNOUNCER: This is CNN breaking news.

BLITZER: We'll begin with the breaking news. All of us with money in the stock market were just catching our breath and now this, the breaking news, another big sell-off on Wall Street. All three major indices way down -- way down at the closing bell. The Dow losing a hefty 419 points. It's the fourth biggest slide for the Dow in a month of big losses. The Dow has plunged 1152 points so far since -- so far this August. And that's a drop 9.5 percent and the month isn't even over yet.

Let's turn to CNN's Richard Quest.

He's following what's going on -- you know, a lot of traders on Wall Street, Richard, they're blaming what's happening where you are, in Europe, for a lot of the problems here in -- here in the United States.

Do they have a point?

RICHARD QUEST, HOST, "QUEST MEANS BUSINESS": Way too simplistic to put it like that, Wolf. There are problems on both sides of the Atlantic.

What prefaced today's fall was the Morgan Stanley report that warned of a dangerous risk of recession in the United States and in the Eurozone because of what it called "policy errors and sluggish growth." It's not -- you cannot say one side or the other is to blame.

The danger part about today is that it's now becoming a self- fulfilling prophecy. Markets are falling. Investors get worried and pull out. Markets fall even further.

The only bit of good news for today, the session was off its lows. And, Wolf, yes, the buyers -- there were some buyers -- but they came in late in the day. But it certainly was not the sort of day you wanted to be holding stocks.

BLITZER: But how much trouble are some of the major banks in Europe in right now that could -- that could promote further disruption not only in Europe, but here in the United States?

QUEST: There are rumors that one small regional bank went to the ECB for some credit support. That's not been confirmed.

Most of the big major banks in Europe are no different in many ways to the US. They've improved their base capital, their tier one capital.

But even so, the fears are there. And what you and I need to watch out for in the next few days and weeks is to make sure that those fears do not translate into the money market, the interbank market, so banks stop lending to each other. That's what happened after Lehman. We're a long way off that, but the big difference, I think, between two weeks ago and now is two weeks ago, it was just fear driven. Now we are getting GDP, jobless, Morgan Stanley, retail sales. We're starting to get evidence that things are not good and that's what's moving the market.

BLITZER: Richard, thanks very much.

Richard Quest reporting for us from London. More on this story coming up.

But let's move on to some other breaking news we're following.

After months of brutality and bloodshed in Syria, U.S. leaders now are saying the words many people around the world have been waiting for, President Obama declaring in a written statement that it's time for President Bashir Assad to step aside. He also ordered new and tougher economic sanctions against Syria.

The secretary of State, Hillary Clinton, says the goal is to further isolate the Assad regime.

(BEGIN VIDEO CLIP)

HILLARY RODHAM CLINTON, SECRETARY OF STATE: The people of Syria deserve a government that respects their dignity, protects their rights and lives up to their aspirations. Assad is standing in their way. For the sake of the Syrian people, the time has come for him to step aside and leave this transition to the Syrians themselves. And that is what we will continue to work to achieve.

(END VIDEO CLIP)

BLITZER: And joining us from Beirut, our correspondent, Arwa Damon -- Arwa, any reaction to these statements coming in from Damascus yet?

ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT: No, there's been no official government reaction just jet. In fact, we've been keeping a very close eye on Syrian state television to see if anything would come out of there. And they quite simply seem to be ignoring it. There is no mention of this whatsoever. In fact, they have been repeatedly running this clip that they say is a weapons cache that they found in one of the cities where the military crackdown is still ongoing, according to activists.

As for the activists themselves, of course this has been something that they've been calling for for five months. And they've been increasingly frustrated at the amount of time it has taken certain global leaders, especially the United States, that has been such a -- such an advancer of democracy, if you will, to come to this stage.

That being said, they do say -- some of them do say that at this stage, at least they feel they are not in this completely on their own.

BLITZER: Is it your sense -- and you've studied this closely, you've been to Syria -- that today's announcement from the U.S., Britain, Canada, France, Germany, the others, and the increased sanctions that are being imposed on the Syrian regime will really make much of a difference, when all is sudden and done?

DAMON: Well, if we look at the way that Syria has reacted to other actions, one would have to assume that, no, it's not. When Secretary of State Hillary Clinton, more than a month ago, said that the government had lost its legitimacy or that Assad had lost his legitimacy, the Syrian government simply scoffed at that.

When the European Union first implemented sanctions on the Syrian regime, the foreign minister came out and said fine, we'll live in a world where Europe does that exist for us. We're going to look to our friends in the east.

The sanctions by the U.S., although, yes, they do target the vital energy and oil sectors, that's not going to have such a big impact. What activists say is that Europe needs to then follow with similar sanctions, because there are major European countries that are still purchasing Syrian crude. There are two significant oil companies, Shell and Total, that are operating inside Syria.

And then, of course, there is the factor of Russia. Russia is still selling weapons to the Syrian government. Turkey, we still are not sure what sort of steps it is going to go take. Saudi Arabia, for example, critical countries when it comes to the United Nations Security Council, like China and India. So it's going to take a large, much larger, coalition standing up, calling for the president to go down, before it's really going to begin to shake this government.

BLITZER: I write about this on my blog, my SITUATION ROOM blog, Arwa. The prime minister of Iraq, Nouri al-Maliki -- and you've spent years in Iraq, as well, as all of our viewers know -- he seems to be siding with Bashar al-Assad and the Iranians, who are, of course, siding with Syria, the Syrian regime, as well.

Are you surprised that this U.S. ally in Baghdad is -- is with Bashar al-Assad when it comes to this uprising?

DAMON: No, Wolf. This is not surprising at all. I think the current Iraqi government, led by Nouri al-Maliki, it would be a bit of a stretch to assume that it is even a U.S. ally at this stage, given how indebted and tied to Iran it is. In fact, many will tell you that the outcome of the U.S.-led invasion to Iraq has only been to hand Iraq over to Iran on a silver platter.

So there's absolutely no surprises there, that the Maliki-led government would be siding with Iran.

Also, you have to remember that senior U.S. generals have been coming out now and saying that Iran poses a greater threat to security in Iraq than an element like al Qaeda. So it just goes to show you that Iran has not only political influence over the Iraqi government, but it also wields a lot of influence -- in fact, funds a number of the Shia militias that still operate inside Iraq. So it very well could be that Iran is putting pressure on Iraq to then side with it, to side with Syria, to try to create a new axis of control and to do whatever it can to really continue to prop up the Syrian regime.

BLITZER: Arwa Damon joining us from Beirut.

Arwa, thanks very much.

Bashar al-Assad was the second oldest son of Syria's long-time leader, Hafez al-Assad. He'll be 46 years old on September 11th.

Al-Assad went to medical school in Damascus. He later studied ophthalmology in London. He was called back to Syria in 1994 to be groomed for the presidency after his older brother died in a car accident.

Assad was -- became the Syrian president in 2000. He ran unopposed after his father died of a heart attack. There was no challenger in the race and he was reelected once again, without any opposition, to a second seven year term in 2007.

That is Bashar al-Assad.

President Obama, meanwhile, left Washington just a little while ago, on his way to what the White House calls a working vacation on Martha's Vineyard. And a lot of people, especially Republicans, are asking, is this really a good time for the president of the United States to get away?

Our White House correspondent, Dan Lothian, is already up in Manhattan in Martha's Vineyard covering what's going on.

So what -- what are they saying up there, Dan?

What's going on?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, you know, a lot of people here excited to see the president come here to Martha's Vineyard. But, you know, the -- the point that you were talking about there, the criticism of this White House, the White House brushing aside that criticism of the president's vacation, saying that, look, even though the president is physically away from the White House, he has not left his job.

(BEGIN VIDEOTAPE)

LOTHIAN (voice-over): For the third summer in a row, President Obama and his family are returning to Martha's Vineyard for a vacation at the pricey Blue Heron Farm in Chilmark. The welcome signs on the island are out. The tourists are hoping to catch a glimpse.

UNIDENTIFIED FEMALE: I can't wait for him to come over.

UNIDENTIFIED MALE: We're very happy he's coming. We -- we both voted for him.

LOTHIAN: But this setting of surf, sunsets and seemingly endless golf courses is not the presidential picture some Americans want to see as the stock market stumbles, as the president forms his new jobs plan and as the administration turns up the pressure on Syria.

CLINTON: The people of Syria deserve a government that respects their dignity.

LOTHIAN: Republican presidential hopeful, Mitt Romney, took a swipe at the president and his 10 day getaway.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I wish the president were in Washington calling back Congress and dealing with the challenges we have.

LOTHIAN: The Republican National Committee is circulating a harsh tongue in cheek rebuke on the Internet -- 18 postcards with doctored photos of the president and captions like, quote, "Finding a wave in Martha's Vineyard is almost as hard as finding a job."

While not responding directly to take attack, White House Spokesman Jay Carney recently defended the president's decision to stick with vacation plans on the islands.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: There is no such thing as a presidential vacation. The presidency travels with you. He will be in constant communication and get regular briefings from his national security team, as well as his economic team. And he will, of course, be fully capable, if necessary, of traveling back, if that were required.

(END VIDEO TAPE)

LOTHIAN: Carney says he doesn't think that the American people begrudge the president for spending time with his family.

Wolf, as you know, this is not anything new. Presidents have long been criticized for taking vacations. Look back to President Bush, when he took a month long vacation, not on an island, but on his ranch. And he was criticized for doing that, as well. BLITZER: Every president in my memory, they always get criticized for going on vacation.

All right, thanks very much for that.

Dan Lothian up in Martha's Vineyard.

Republican presidential candidate, Ron Paul, is a severe critic of the Federal Reserve.

But does he agree with his rival, Rick Perry, that the Fed chief may be on the brink of treason?

Stand by for my interview with Ron Paul.

And we're going to tell you why the Justice Department is now investigating the agency that downgraded America's credit rating.

(COMMERCIAL BREAK)

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

JACK CAFFERTY, CNN CONTRIBUTOR: Well, the 2012 campaign is well underway now, the Republican candidates out there every day tripping all over themselves and each other, trying to win their party's nomination.

As the incumbent, President Obama is expected to be the Democratic nominee.

But what if he's not?

Consider this. A new CNN/ORC poll shows 70 percent of Democrats want the president to be the party's nominee. Well, that number might sound high, but it's actually 11 points below what it was in June. Working in the president's favor, only 57 percent of Democrats wanted the party to re-nominate Bill Clinton back in 1994. And, of course, we know how that turned out.

However, there are other bleak signs on the horizon for President Obama -- a lot of them. His job approval rating continues to decline, hitting a new low of 39 percent for one three day period last week, according to Gallup. Americans are increasingly unhappy with Mr. Obama's handling of the economy, always the number one issue short of war in this country. According to Gallup, he gets a lousy 26 percent approval rating on the economy, 24 percent for handling the federal budget deficit and 29 percent for job creation.

In a word, these are terrible numbers.

As if to confirm them, Morgan Stanley was out with a report this morning that says the United States is, quote, "dangerously close to a recession in the next six to 12 months."

On that happy note, the stock market headed right into the toilet. The Dow closed down 419 points.

President Obama says he has a plan for job growth, but he's going to wait until after Labor Day to tell us.

Why is he waiting?

The unemployment rate is 9.1 percent.

Do you suppose there are millions of Americans who would like to know how the government is going to create jobs, now, not after the president's vacation on Martha's Vineyard?

We do know the president hopes to extend the payroll tax cut and unemployment benefits, spending additional hundreds of billions of dollars that we don't have.

Anyway, here's the question -- should another Democrat perhaps challenge President Obama for the nomination.

And if so, who?

Go to CNN.com/caffertyfile and post a comment on my blog, or, as increasing numbers of you are doing, you can go to our post on THE SITUATION ROOM'S Facebook page and unburden yourselves there -- Wolf.

BLITZER: People love that page.

All right, Jack.

Thanks very much.

New confirmation, meanwhile, that the Obama Justice Department is now investigating the financial ratings agency, Standard & Poor's. That's the same agency that recently downgraded America's credit rating.

Our senior correspondent, Allan Chernoff, has been working the story for us -- Allan, what are you finding out?

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Well, Wolf, the fact is that these investigations have been underway well before S&P's recent downgrade of the United States. Sources confirmed to CNN that the Department of Justice and the Securities and Exchange Commission have been digging into the inner workings of the nation's largest credit agencies, Standard & Poor's and Moody's, focusing on their failure to fail to assess the risk of mortgage securities.

(BEGIN VIDEOTAPE)

CHERNOFF (voice-over): Standard & Poor's and Moody's are targets of federal investigations into mortgage securities that went sour during the financial crisis. According to sources familiar with the inquiries, attorneys from the Department of Justice and the Securities and Exchange Commission have been digging into the rating agency's methodology. In particular, did executives veto credit analysts' efforts to downgrade ratings so as not to lose business on the issuers of securities who were paying to be rated.

REP. SPENCER BACCHUS (R), ALABAMA: The credit rating agencies failed spectacularly in the years leading up to the financial crisis.

CHERNOFF: The rating companies have been getting slammed in Congress and in depositions given on to federal investigators. One former credit analyst told CNN he had had two interviews in the past six months with federal agents and had shared evidence of what he described as improper management influence in the ratings process. Quote:

"They have plenty of ammunition," he said. "There are plenty of people who will squeal on them."

The SEC has been on this issue for some time. A 2008 report quoted one e-mail from a credit analyst saying:

"Let's hope we are all wealthy and retired by the time this house of cards falters."

Just several days ago, a former top credit analyst from Moody's filed a comment with the SEC that charged:

"The goal of management is to mold analysts into pliable corporate citizens who cast their committee votes in line with the unchanging corporate credo of maximizing earnings."

The SEC said it would neither confirm nor deny the existence of an investigation, but added:

"Cases arising from the financial crisis are among the highest priorities of the enforcement division."

The Department of Justice had no comment.

(END VIDEO TAPE)

CHERNOFF: A spokesperson for Standard & Poor's told CNN:

"S&P has received several requests from different government agencies over the last few years regarding U.S.-related mortgage securities. We have cooperated and will continue to cooperate with these requests."

CNN also asked Moody's for comment, but did not receive one by deadline -- Wolf.

BLITZER: Allan Chernoff, thanks very much for that report.

Congressman Ron Paul -- is he a media darling or has his presidential candidacy been downplayed by the national news media?

I'll talk to him about his concerns. Stand by.

And we're looking into the online terror threat against the "Late Night" host, David Letterman.

(COMMERCIAL BREAK)

BLITZER: I'm Wolf Blitzer.

Here are some of the stories we're working on for the next hour of THE SITUATION ROOM. Republican presidential hopeful, Michelle Bachmann, promising $2 gas if she makes it to the White House.

Can she deliver?

South Carolina's governor, Nikki Haley -- some say she could be a perfect vice presidential running mate. I'll ask her whether she's ready to make that plunge.

And an urgent appeal to President Obama from some of those suffering economically the most.

Is the first African-American president doing enough for African- Americans?

Stand by.

You're in THE SITUATION ROOM.

The Republican presidential candidates are focusing largely on two early primary states today, New Hampshire and South Carolina. Michele Bachmann and Ron Paul are looking to build on their first and second place showings in the Iowa Straw Poll last weekend.

WOLF BLITZER, HOST: And joining us now from Manchester, New Hampshire, the Republican Congressman, Ron Paul.

He's a candidate for president of the United States.

Congressman, thanks very much for coming in.

REP. RON PAUL (R-TX), PRESIDENTIAL CANDIDATE: Thank you, Wolf.

Good to be with you.

BLITZER: Thank you.

At that last Republican debate, you really differentiated yourself from all the other Republican candidates, dare I say the Democratic candidate -- that would be the president of the United States -- as well, when you made it clear that on national security and foreign policy, you want to bring American troops home immediately from Iraq, Afghanistan, Germany, South Korea.

Is that right?

PAUL: That is correct. And immediate, of course, can be qualified a little bit. You know, it takes a few days to get over there and pick them up.

No, as soon as possible. The American people are with me on that. The majority respond in that manner. I don't think we can afford it anymore. I don't believe it's in our best interests to be there, because I think it undermines our national security.

BLITZER: So including Germany and South Korea, bring those thousands of troops home?

PAUL: Yes. You know, the immediate benefit, before you reorganized and decided how big the Army and the Navy should be, is just think of all those troops spending all that money back at home. You know, a few years ago -- and they're thinking about doing it again -- they closed down all the bases here at home. Well, there are some bases in this country that probably shouldn't be open, but the ones overseas are more important to be closed down than the ones here.

So bring the troops home and have them spend all those salaries here at home, because Germany actually likes us to be over there for economic reasons. That helps them. It helps their economy, as well as the other countries.

So I would say the immediate effect would be even the psychological benefit of knowing, wow, things are changing. He's bringing these troops home. This is going to help our economy.

BLITZER: And I just want to clarify your position on Iran.

Do you believe Iran represents no real threat to the United States?

PAUL: No real threat. I think it's a threat just like there's a lot of threats around the world.

But if you compare it to what?

Compared to the Soviets that we stood down?

They had 30,000 nuclear weapons and that's when I was in the military. You know, during the Cuban crisis, is when I was drafted.

So, yes, there's always some threat. But there's not that much from a country like Iran. They -- they -- they can't even produce enough of their own gasoline. They don't have a real -- any inter- continental ballistic missile. I see that it's so similar, Wolf, to what was happening to the lead-up to the war in Iraq, because remember they kept saying, oh, there are al Qaeda over there and there's weapons of mass destruction, we have to go in there? It turned out not to be true. And just think of the tragedies that have occurred since then.

So, no, I don't think it's a real threat. And our CIA, as well as the United Nations, does not argue the case that they're on the verge, you know, of having a -- a nuclear weapon. So the last thing in the world we should be talking about is a war. And remember just recently, Bob Gates, coming home, he says, you know, anybody that's thinking about another war needs their head examined. And I think that's the way the American people feel.

BLITZER: Because the president and other top officials, they -- they expressed fear that the Iranians are working to try to build a bomb, even though they may not be on the verge of having it, they're -- they're in the process of trying to develop one.

You don't agree?

PAUL: Well, I think they -- they sure -- certainly would have an incentive. But we haven't been able to verify it. That's what my argument is.

But I even extend it one step further.

What if they -- you know, what if, in one year from now, they have one nuclear bomb?

What are they going to do with it?

They can't deliver it. And -- and if they tried to, they'd be wiped off the face of -- they'd be wiped off the face of the earth because there would be retaliation. So they -- they aren't that threat that people play -- play them up to be.

As a matter of fact, Iran has a pretty good history of not invading other countries and -- and looking for these kind of fights. The last time they were in a war is when we instigated Iraq's invasion of the Iranians.

So, no, I don't -- I just don't see that as a -- as a major threat. I -- I see --

BLITZER: All right --

PAUL: -- the radicalization of Islam fundamentalism as a result of our foreign policies going back all the way to 1953.

BLITZER: For years, you've been an outspoken critic of the Federal Reserve, the central bank, in effect, here in the United States.

Now Rick Perry, the governor of Texas, your opponent for the Republican presidential nomination, he's going one step further and blasting Ben Bernanke, the chairman, who was originally named by President Bush.

Let me play the clip and then we'll discuss.

(BEGIN VIDEO CLIP)

GOV. RICK PERRY (R-TX), PRESIDENTIAL CANDIDATE: If this guy prints more money between now and the election, I don't know what you all would do to him in Iowa, but we -- we would treat him pretty ugly down in Texas. I mean printing more money to play politics at this particular time in American history is almost treacherous -- or treasonous, in my opinion.

(END VIDEO CLIP)

BLITZER: All right, Congressman. You're a fellow Texan. What would do you to Ben Bernanke if he came to your state?

PAUL: I'd try to educate him. I'd try to explain to him why he's embarked on a terrible course of history and that he's not going to be remembered well unless he changes his way.

But hopefully you've never heard and at least I try never to make it the individual as much as the philosophy, the Federal Reserve system. They say -- sometimes they'll ask me, "What would you do? Would you immediately get rid of Bernanke? Will that solve our problems?"

And it really doesn't. It's the system. It's the Federal Reserve system. It's the fiat money, it's no backing to the currency, the monetization of debt, the way they do it in secret, the $15 trillion that they worked with in the bailout, the way they bailed out foreign central banks and foreign governments during the crisis. A third of that money went over there.

So I would say it's the philosophy, it's monetary policy that we have to deal with. So he is not my target, even though I hopefully address it in a different manner when he's before the committee and try to ask him questions to expose what he's doing in running the monetary system.

BLITZER: So did Rick Perry cross the line in talking about treason, talking about getting ugly? I mean, you know your governor. Tell me, is he temperamentally qualified to be president of the United States?

PAUL: Well, it may surprise you, I don't know the governor. I don't recall ever having met him.

BLITZER: Really?

PAUL: No, I haven't met him. I didn't know he had an interest. And I don't know exactly what he's up to.

So I just don't use that language. I would think that he wasn't being literal. You know, I just don't believe that he believes that, but those words did come out of his mouth, as you just revealed. But I think it's different. In politics, it's very easy to target somebody by name and target your opponents and talk about them specifically. In many ways, I try not to do that.

BLITZER: It's hard for me to believe he's been governor for 10 years and he doesn't know one of the most distinguished members of the congressional delegation. But let me move on, because we're almost out of time.

Has the national news media been fair to you?

PAUL: Well, a lot of other people say they have not been.

BLITZER: What do you say?

PAUL: I think candidates have this belief that they're never treated really fairly. But generally speaking, I would say it was really weird. And in that sense, I guess that verges on what people are saying, it was very unfair that I did pretty well, you know, in Ames and achieved a bit of a victory, from our perspective, and then to have five networks not take any interviews -- and then we had one major network on Monday morning that got canceled at the last minute.

So it was definitely different, but I don't dwell on the word "fairness" and what am I going to do about it. I just try to keep doing my job and presenting my case. And I figure, you know, we've probably sort of won that little argument, because we did get many, many interviews and many, many things on the Internet, where I think we benefited by showing, what are they afraid of? Why can't they recognize what Ron Paul is doing?

BLITZER: Yes. Sorry for interrupting, but I just want to ask you one final question. A Twitter follower asked me to ask you, "If you don't get the Republican nomination, would you consider running as an Independent?"

PAUL: I haven't thought about that. Right now I'm concentrating -- I'm in the middle of a race.

I described it today as like I used to run track. I don't think much about the end. I just run hard and see how things come out. But as far as contemplating a third party, that has not given me any serious thought at all.

BLITZER: Congressman, I'll see you September 12th, when CNN hosts the Republican presidential debate in Tampa, Florida. Good luck.

PAUL: Thank you, Wolf.

BLITZER: Punches thrown, chairs flying. Just ahead, some dramatic video of a vicious brawl that broke out at a U.S. college basketball game in China. Stand by for that.

And this -- Israel fighting back following a deadly new wave of attacks.

We'll have the latest.

(COMMERCIAL BREAK)

BLITZER: Israel retaliates after a deadly string of attacks near the southern resort city of Eilat.

Our Lisa Sylvester is monitoring that, some of the other top stories, in THE SITUATION ROOM right now.

Lisa, what's going on.

SYLVESTER: Hi there, Wolf.

Well, Israel's military says it launched an air strike in Gaza due to what Israeli Prime Minister Benjamin Netanyahu's calls concrete evidence the perpetrators from the region. At least seven people were killed and another 40 wounded in the initial assault which targeted buses and civilian vehicles. Hamas denies responsibility for the violence and says Israel was looking for a reason to strike.

Computer giant Hewlett-Packard is planning to spin off its personal computer business. The dramatic move to reshape the company is due in part to an industry-wide slump in PC sales, while tech tablets like the Apple iPad have soared in popularity.

And the FBI says the woman believed to be the so-called "Bad Hair Bandit," that she has been apprehended. Cynthia Van Holland (ph) is wanted in connection for up to 20 bank robberies in four states. Now, she got the nickname the "Bad Hair Bandit" from a variety of different wigs that she was wearing when she was committing these crimes.

And amazing video of a brawl -- you have to check this out -- at a basketball game in China. Absolute chaos broke out between Georgetown University's men's basketball team and a Chinese team.

Punches, chairs, even water bottles were thrown during the melee. It's unclear what prompted the fight. The game ended abruptly, tied at 64 apiece. The brawl happened a day after Vice President Biden attended a Georgetown game on his official trip through China.

Very unfortunate, and it was a really sad incident. This was supposed to be an friendly exhibition match between the two sides, but it got physical -- very physical.

BLITZER: Yes. I'm surprised in China, of all places.

Thanks very much, Lisa.

Some members of the Congressional Black Caucus are very publicly venting their frustrations right now with President Obama. Here's the question: Has he let the African-American community down?

And Mitt Romney versus Rick Perry when it comes to the environment. Could global warming be a decisive issue in the Republican presidential race?

That and more coming up in our "Strategy Session."

(COMMERCIAL BREAK)

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

Joining us, our CNN political contributor, Roland Martin, and Republican strategist Terry Holt.

Guys, thanks very much for coming in.

Let me play a clip. Congresswoman Maxine Waters, you guys know her. She's outspoken. She said this today about the president and the African-American community.

(BEGIN VIDEO CLIP)

REP. MAXINE WATERS (D), CALIFORNIA: The Congressional Black Caucus loves the president, too. We're supportive of the president, but we're getting tired.

We want to give him every opportunity, but our people are hurting. The unemployment is unconscionable. We don't know what the strategy is. We don't know why on this trip that he's in the United States now he's (INAUDIBLE). We don't know that.

(END VIDEO CLIP)

BLITZER: That was actually Tuesday, while the president was on his bus trip through Minnesota, Iowa and Illinois.

Does she have a point?

ROLAND MARTIN, CNN POLITICAL CONTRIBUTOR: The point that she is making I've heard from a number of people. But one of the other points that she made that we didn't show is that African-American leaders, members of Congress, organizational leaders, are frankly afraid of criticizing the president because their constituents are going to come after them big time.

She said, "You've got to unleash us." And so you've seen other folks who criticize the president who are African-American, and they have gone after them. Even when the CBC fought to get more money from the financial reform deal, African-Americans said, how dare you oppose the president? They got $4 billion in concessions and were still criticized, so they're in a very tough position.

BLITZER: Because he's very popular in the African-American community, even though Maxine Waters, obviously, is venting some frustration.

TERRY HOLT, REPUBLICAN STRATEGIST: He will be almost no matter what, but I haven't seen any evidence that Barack Obama cares about the African-American community except insofar as it gets him votes on Election Day. I think it was astonishing that the CBC had a jobs fair in Detroit and he didn't show up.

I mean, Michigan is still a targeted state, it made political sense, but he snubbed them. And I think -- (CROSSTALK)

HOLT: Well, I think it's evident that across the Democratic Party, there is widespread dissatisfaction. And in fact, it may indicate that this is a presidency that's really at war with itself. This executive branch is going one way and another on a lot of different issues.

BLITZER: Well, let me ask Roland, is the president just assuming, taking the African-American community for granted?

MARTIN: No. First of all, Terry is wrong in terms of he snubbed them, because the CBC is actually going to five different cities. The president's bus tour --

HOLT: Is the president going to any of those --

MARTIN: Again, the president's bus tour --

HOLT: -- to bring attention to the job plight in the community. I think that would be --

(CROSSTALK)

MARTIN: One second. The president's bus tour took place in another part of the country. So to say he snubbed them is incorrect.

Also, to suggest he hasn't done anything for the black community is also incorrect. What they have done is they have actually sent their various officials out to more than 100 cities to talk to some 1 million African-Americans about what they've done for African- Americans.

But, again, what folks are saying is that, wait a minute, you got a high percentage of votes from African-Americans than anybody else. So, therefore, if you speak to gays and lesbians, you speak to Latinos, you should be able to speak to us as well on our issues. That's what they've been actually saying.

BLITZER: You want to add anything?

HOLT: I think they should hire Roland to help them explain themselves out of this mess.

MARTIN: They can't afford me.

(LAUGHTER)

BLITZER: Let's talk a little bit about this little feud that's developed between arguably the two front-runners right now -- and this obviously could change very easily -- Rick Perry, Mitt Romney. They disagree on the issue of global warming.

Here's Rick Perry.

(BEGIN VIDEO CLIP) PERRY: I don't think from my perspective that I want America to be engaged and spending that much money on still a scientific theory that has not been proven, and from my perspective is more and more being put into question.

(END VIDEO CLIP)

BLITZER: Mitt Romney, on the other hand, is not questioning global warming, man's role and women's role in global warming.

Is this going to be a big issue in the Republican fight?

HOLT: I don't think there's any reason to believe that it won't be. And in fact, energy issues over the next 12 months are going to be a huge issue for both the president and whoever challenges him. The fact is, if we don't have affordable energy in this country, the economy can't grow, we can't create jobs. Energy is a cornerstone issue of the presidential campaign.

MARTIN: But to suggest that somehow it has no effect is absolutely nuts. We also have to remember Governor Perry has been in a fierce battle with the Environment Protection Agency in Texas. And so, when they have tried to deal with polluters in that state in terms of trying to control pollution going out across the state, he's been fighting the EPA. So this is a cornerstone of his campaign --

(CROSSTALK)

HOLT: A lot of people are fighting the EPA at this point. The EPA, a lot of people believe, is overreaching its responsibilities.

And it's interesting, because Barack Obama talks about the importance of having affordable energy sources. He's been good on this issue in a lot of ways. But again, he's at war with his own administration because, while he's out on the stump talking about affordable energy, the EPA is here in Washington taking control of the situation and killing jobs.

MARTIN: No, no, no. Lisa Jackson was appointed by President Obama. Trust me, they are advancing the policies of the administration. But what you have is that the whole fierce battle in terms of businesses who are saying, oh, no, we can't afford this, especially right now, that's the struggle.

HOLT: If he's going to do an economic policy after Labor Day, he should include a strong energy component so that we can create jobs and keep --

(CROSSTALK)

MARTIN: Actually, he has. But again, the Republicans don't like the one he's presented, so therefore they want to change it.

HOLT: No, because he's talking about costing this economy trillions of dollars and killing jobs in the process. We need to grow the economy, not kill it. MARTIN: Because people are also being killed by pollution and by environmental disasters. So he must confront that. The health of Americans also is important to the health of a business.

HOLT: Well, and as we see the Republican primary, we're going to have an honest, open debate about --

MARTIN: But I like clean air.

BLITZER: Who doesn't?

HOLT: Don't we all?

MARTIN: And clean water.

HOLT: Clean water and clean air.

BLITZER: Apple pie. How about apple pie?

MARTIN: I like cherry.

BLITZER: Thanks very much for coming in.

President Obama says it's time for the Syrian president, Bashar al-Assad, to go. Is it too little too late? You're going to hear what some potential challengers out on the campaign trail are saying about the president.

And a chilling new death threat against the comedian David Letterman from a group with ties to al Qaeda.

(COMMERCIAL BREAK)

BLITZER: A jihadist Web site with tie to al Qaeda is setting its sights on an unlikely target in a graphic and chilling new death threat against the comedian and talk show host David Letterman.

Mary Snow is in New York. She's monitoring the details for us.

What's going on here, Mary?

MARY SNOW, CNN CORRESPONDENT: Wolf, both the FBI and the New York City Police Department are investigating this. A spokesman for the FBI saying, "In the post-9/11 world, we take all of these threats seriously."

(BEGIN VIDEOTAPE)

SNOW (voice-over): This is the joke David Letterman made in June.

DAVID LETTERMAN, LATE SHOW WITH DAVID LETTERMAN: Anyway, they picked a successor to Osama bin Laden, and his name was Ilyas Kashmiri. Well, guess what? He was blown up by an American drone. Yes.

(APPLAUSE)

SNOW: It was a quip that led to a death threat. On Wednesday, a group that monitors jihadist online chat found a posting citing the Letterman monologue and calling for the talk show host's death, saying, "Someone should cut the tongue of this lowly Jew." Letterman isn't Jewish.

Rita Katz of the SITE Intelligence Group that tracks jihadist Web sites, says it was posted by someone who writes frequently on a site linked to al Qaeda.

RITA KATZ, SITE INTELLIGENCE GROUP: It's a message board that currently has about 15,000 members from all over the world. Some are al Qaeda fighters, others are al Qaeda sympathizers.

SNOW: These message boards are filled with rants. The vast majority amount to nothing.

A federal law enforcement official says these kinds of threats are common. Scores of Americans from all walks of life have been mentioned in recent months on such forums.

Still, the FBI says it takes all these threats seriously and is investigating. The New York Police Department says its unit that monitors Web sites seen here last year was also aware of the posting and is also investigating.

Letterman isn't the only celebrity who has been targeted. Last year, an extremist group issued a thinly-veiled threat to the creators of "South Park" over a cartoon depicting the prophet Muhammad in a bear suit.

(END VIDEOTAPE)

SNOW: Now, a spokesman for Letterman declined comment. His show was also on tape this week. But fans have rallied to his defense on the show's Facebook page. One supporter tells Letterman to keep doing what he's doing, adding, "We've got your back" -- Wolf.

BLITZER: Mary Snow, thanks very much for that report.

Stand by for more on the breaking news we're following right now, another huge stock sell-off. We're adding up just how much the market has lost in this volatile year.

And a reality check on Michele Bachmann's astounding new claim. The Republicans says gas prices will fall -- get this -- below $2 a gallon if she is elected president of the United States.

(COMMERCIAL BREAK)

BLITZER: Let's take a look at some of this hour's "Hot Shots."

In Honduras, a boy feeds a piglet a bottle of milk.

In Cambodia, villagers paint their faces green during a rally against the destruction of the forest.

In Germany, children play in giant beach balls called funny bubbles.

And in London, look at this. Bolivian squirrel monkeys play with a toy soccer ball at the zoo.

"Hot Shots," pictures coming in from around the world.

Let's go back to Jack for "The Cafferty File."

You're smiling already, Jack.

CAFFERTY: That's cute. I love the animal pictures.

The question this hour: Should another Democrat challenge President Obama for the nomination? And if so, who would that be?

David writes from Pasadena, California, "Obama is OK. He's not the real problem, despite what Perry, Bachmann, Romney and Paul would have you believe."

"You can't blame Obama for the recession. That's like blaming you for 'The Jersey Shore.' The Democrats should keep their political differences quiet, unify behind the president, and put the so-called Republicans on notice. Either help us or get the hell out of the way."

Jerry writes, "No, because it would be a suicide mission. Any serious challenge to Obama would do one of two things: seriously weaken Obama or nominate a candidate who is stripped of the power of the incumbency. Both would lose."

Kim writes, "The Democratic Party has become a gutless, wimpy whipping boy for the Republicans. I seriously doubt there is a Democrat in this country who has the backbone to come forward and rescue us from a Republican hell."

Michael on Facebook, "If you really want a name, General Wesley Clark."

Ed in California, "I know he's not a Democrat. I would like to see Senator Sanders run, or even Mayor Bloomberg of New York. Outside possibility, Warren Buffett. President Obama is capable, but he needs better advisers and I need him to be a lot more aggressive."

Jeff in Pennsylvania, "Who would that be, Jack? They are all on vacation."

Michael writes, "I think we ought to run two Republicans."

And Cheryl in South Carolina, "Jack, my dear, I say this with great love. You have got to let go of this fantasy of Hillary running against Obama. It ain't gonna happen."

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

Remember how much fun we had when Hillary and Barack were teeing it up for the nomination last time?

BLITZER: I remember very, very vividly moderating that last debate in Los Angeles at the Kodak Theatre between Hillary Clinton and Barack Obama. And we know what happened after that, Jack.

CAFFERTY: Doesn't get any better than that, though. That was some stretch of primaries.

BLITZER: All right, Jack. Thank you.

CAFFERTY: Yes.