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Italy's Debt Crisis; London Student Protests; The Battle for Homs, Syria; Iran Calls IAEA Report Baseless Lies; President Sarkozy, President Obama Caught Criticizing Israeli Prime Minister

Aired November 09, 2011 - 08:00   ET

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

KRISTIE LU STOUT, HOST: Welcome to NEWS STREAM, where news and technology meet.

I'm Kristie Lu Stout, in Hong Kong.

And we begin in Italy, where Silvio Berlusconi agrees to step down. But will that be enough to help Italy turn the economic tide?

And we look at why Homs has become the center of the protest movement in Syria.

And Sarkozy's little slip, how a private comment between two world leaders became a public issue.

And we begin in Italy, a country in a state of political limbo, with world markets breathing down Rome's neck. In the past few hours, the yield on Italian bonds rose above the critical 7 percent mark, the level at which other countries have had to seek international bailouts.

Now, Prime Minister Silvio Berlusconi, he has promised to resign and vowed not to run the country's next parliamentary elections. But he says he'll only leave after parliament passes crucial budget reforms, and that could take weeks.

For the very latest on the situation, I'm joined now live by Becky Anderson in Rome.

And Becky, even though Berlusconi has agreed to step down, Italian bond yields, they have stayed above 7 percent. What's going on here?

BECKY ANDERSON, CNN INTERNATIONAL CORRESPONDENT: This is a question of clarity, or lack thereof, Kristie. That's the problem here.

When we heard yesterday evening, late, that Silvio Berlusconi was indeed going to resign, but not until he had gotten these austerity measures passed through the senate, it seemed at least that we had the beginning of the end, as it were, of this sort of uncertainty in Italy. But the problem is this: we know he's going, but we don't know when he's going, and we also don't know what's going to happen after he goes.

Will there be a coalition government? Will there be a government of technocrats here? Or, indeed, will there be early elections, something Berlusconi indeed wants? At least he'd like to see some of his men in a position of authority going forward.

So, there's really no coherent strategy here and no sense of clarity. You and I know very well that the markets hate uncertainty, those who are looking for clarity. There are others in the market who love uncertainty, because those are the ones who were betting against this country at the moment.

You're absolutely right, foreign costs have gone sky high, to a critical level. Remember, every one percent increase in borrowing costs here in Italy costs Italy three billion euros -- or $3 billion. So it's critical that these borrowing costs come down as Italy looks to renegotiate its debt going forward.

And how much is that debt? Well, let's remind our viewers once again, it's $2.5 trillion at this point.

So, how do people feel in Italy? Well, we went out into the streets to ask them. Listen to this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Does the economic crisis in Italy worry you?

UNIDENTIFIED FEMALE: Yes, every day, every single day, because of the jobs, because for young people it's difficult to come into the world job. And many people go away.

UNIDENTIFIED MALE: The markets did not await our decisions, and we are losing a lot of money now in every single moment.

(END VIDEO CLIP)

ANDERSON: That's how people feel. That was this morning, after what was a tumultuous day here yesterday, chaotic, I think, one might call it.

The earliest this vote could be is Tuesday, we're told, next week. The betting here is that the vote could be as late as the beginning of December, which if indeed there were elections, it would mean those elections weren't until after the Christmas break.

Let me just give you a sense of who might lead Berlusconi's party going forward. There's three real candidates here at the moment: Gianni Letta, who is the secretary to the Council of Ministers, people backing him to lead Silvio Berlusconi's party going forward; the Italian justice minister, Angelino Alfano, also a possibility; and Luca de Montezemolo, is the chairman of Ferrari S.p.A., also a possibility.

A number of other candidates out there to lead the other party. Also, the possibility, of course, at this stage of a party of technocrats, the likes of Mario Monti, an incredibly well respected economist here in Italy, a possibility going forward.

But all things up for grabs at this point. A lack of clarity, and that is why, as I say, I think these markets are still betting against Italian bonds -- Kristie.

STOUT: Becky Anderson, live in Rome.

Thank you very much for that.

Now, the office of French President Nicolas Sarkozy confirms that Mr. Sarkozy and Greece's outgoing prime minister, George Papandreou, have talked. Now, according to the Elysee Palace, the two discussed the formation of Greece's new interim government. And the makeup of that coalition government has yet to be announced, with talks between party leaders running into their third straight day. Mr. Papapandreou is expected to meet the Greek president a couple of hours from now.

And in London, police hope a large student protest will stay peaceful, but officers are prepared for potential violence, so they are authorized to use rubber bullets if necessary. Ten thousand students are expected to join the demonstration, and these are live pictures of the crowds on the streets there in London.

Now, these student protesters, they are opposing cuts to the education budget, as well as higher tuition fees. And some 4,000 officers have been deployed to keep an eye on all of them.

Let's take a look the protesters' route. Their march, it started last hour at the University of London's Students' Union, and the demonstrators will go past Trafalgar Square and could potentially pick up more people there.

And another key location is the London Stock Exchange. And for the last few weeks, Occupy London protests have taken place against the LSE. And that group is primarily based at the nearby St. Paul's Cathedral. We'll be taking you there for a live report in just a moment.

And the march will end at Moorgate Junction. That sits just north of the Bank of England.

So, what is motivating today's march? Well, one student activist wrote this explanation for "The Huffington Post."

Aaron Peters, he says this: "We are marching because a debt-centered model of higher education funding is destined to fail." And he adds, "We have been inspired to believe another education is possible, one built not on debt, but the dignity of learning and common purpose."

But, as you'll recall, a similar demonstration last year ended with violence. And Atika Shubert is standing by at St. Paul's Cathedral.

Atika, first of all, describe where you are and how it relates to the student march.

ATIKA SHUBERT, CNN INTERNATIONAL CORRESPONDENT: Well, I'm here -- basically, this is the heart of Occupy London. This is the tent city that's based here. You can see some of the activists behind me speaking now.

The demonstration is expected to come near this area. It won't quite come to St. Paul's Cathedral here, but it is expected to come close. And really, the fact that the students are protesting these tuition hikes is not so different from the protests that we're seeing here, in front of St. Paul's.

Essentially, it's the same thing, the feeling of widespread anger that this is a recession that has not been created by them, but that people here are paying for. And so this is what these demonstrations are an expression of.

Now, the fear from the police's side is that this could get disorderly, it could get out of control. Remember, about a year ago, there was another student protest in which thousands of students were on the streets, and that descended into disorder and vandalism. And that's something police do not want to see happen again, so they've deployed more than 4,000 cops out on the street, and they've even said that they are willing to use plastic bullets or baton rounds.

Here's what one police commander told us yesterday in preparation for the demonstration.

(BEGIN VIDEO CLIP)

SIMON POUNTAIN, LONDON METROPOLITAN POLICE COMMISSIONER: What I've asked for is that those resources, the batons, are available to me on Wednesday. And the reason I want them to be available to me, on standby, and not on the street, is so that, should there become the need -- of it arising to actually deploy them, I don't have to wait for hours to get them to me. And they're available then to protect my staff, which is really important to me.

(END VIDEO CLIP)

SHUBERT: As you heard there, police are saying they won't be using those plastic bullets or baton rounds unless absolutely necessary. So far, of course, everything is peaceful, and student demonstrators say it will remain peaceful, that it's simply provocative action by police.

We're waiting to see. Those demonstrators are on the way here. We understand there's about 3,000 of them. We'll see if they pick up more people as they get closer.

STOUT: And have you talked to a number of the Occupy protesters behind you who have been camping out for weeks now about the imminent arrival of these thousands of student protesters? Will it galvanize their movement?

SHUBERT: Well, they're certainly hoping so.

You know, as someone pointed out, this has sort of reached a new phase. The initial euphoria of the Occupy movement is over, and it's now making sure that their message continues and that they keep the sort of solidarity. And this is what they're trying to show, is that they have solidarity with the student movement, with other movements that are protesting against those government cuts.

So that's what those demonstrations are really about. And again, it's about that widespread discontent and anger at the way the government has been handling this economic crisis.

STOUT: Atika Shubert, joining us live from London.

Thank you very much for that.

And still ahead here on NEWS STREAM, the battle for Homs. The latest amateur video suggests that the violence is escalating there, in Syria's third largest city.

Plus, garbage piling up. Thai residents wade through floodwaters that look like rivers of rubbish.

And inside one of Spain's anti-trafficking units. The CNN Freedom Project follows police as they fight human trafficking.

(COMMERCIAL BREAK)

STOUT: Welcome back.

Now, the United Nations says more than 3,500 people have been killed in Syria since anti-government protests began there in March. The U.N. says there are reports that Syrian troops have killed dozens of people this past week alone. That's only days after the government signed on to an Arab League peace plan and pledged to end the violence.

CNN cannot confirm the authenticity of this amateur video, but it seems to show uniformed security forces on a main street in Homs. And that city has been an epicenter of protests, and the situation appears to be escalating.

(BEGIN VIDEOTAPE)

RIMA MAKTABI, CNN INTERNATIONAL CORRESPONDENT (voice-over): The battle for Homs, now a critical trial of strength for the Assad regime and its opponents. This city of nearly one million people has seen almost daily protests for nearly six months. But recently, that unrest has turned into organized and sometimes armed resistance.

Many neighborhoods now look like urban battlefields. This video was uploaded to YouTube by activists and residents in Homs, but CNN can't verify when and exactly where it was shot. The Syrian authorities have not allowed CNN and other international media to report from inside the country.

Despite heavy shelling and troops going house to house in search of protesters, the regime has been unable to pacify Homs, Syria's third largest city.

HAYATHAM AL MALEH, HUMAN RIGHTS LAWYER/ACTIVIST: The people in Homs, maybe they are more stronger than the others. Maybe they take more important steps because they don't want to stop their revolution to see this regime is finished. But really, they are brave.

MAKTABI: Syria's first military academy was established in Homs in 1932, and it has always been a source of recruits for the army. But more recently, defecting soldiers named the Free Syrian Army have begun to organized armed resistance here. But human rights activists say that Homs is also seeing growing sectarian strife between the majority Sunnis and minority Alawites, who traditionally support the regime.

The U.N. High Commission for Human Rights reported that the Syrian government's brutal crackdown on dissent have claimed 3,500 lives. Sixty of them reported killed over the past week, even though the Syria government signed a peace plan sponsored by the Arab League that would include pulling the Syrian army out of restive cities.

(on camera): But the latest evidence from Homs is that the army and militia are tightening their grip on some neighborhoods, rounding up young men alleged to have been involved in the protests. The international community continues to condemn the Assad regime's clampdown on protests, but is offering no blueprint for resolving the crisis, and has consistently rejected the idea of enforcing a no-fly zone.

So, what happens in Homs may mark a turning point in the battle for Syria's future.

Rima Maktabi, CNN, Abu Dhabi.

(END VIDEOTAPE)

STOUT: The Thai government is telling people to stay out of Bangkok's stagnant floodwaters. Ahead, we've got the latest on Thailand's worst flooding in 50 years.

(COMMERCIAL BREAK)

STOUT: Coming to you live from Hong Kong, you're back watching NEWS STREAM.

And we are keeping an eye on a student protest in London. One year ago, a similar demonstration ended in chaos and vandalism, and here is what it looks like right now. Some 10,000 students are expected to be here in this demonstration, and all of them, they are opposing higher tuition fees, which could triple under the government's plan.

Now, some 4,000 officers have been deployed for security, and some of them are armed with rubber bullets.

We will continue to watch the situation there as it unfolds this day.

(WEATHER REPORT)

STOUT: And now to a scandal in U.S. politics that just won't quit.

Herman Cain, one of the front-runners for the Republican nomination for president, has hit back against allegations of sexual harassment. He has now been accused by four different women, and all the accusations date back to the 1990s.

Now, Karin Caifa reports from Washington.

(BEGIN VIDEOTAPE)

HERMAN CAIN (R), PRESIDENTIAL CANDIDATE: I have never acted inappropriately with anyone, period.

KARIN CAIFA, CNN CORRESPONDENT (voice-over): GOP presidential candidate Herman Cain faced reporters Tuesday to deny allegations of sexual harassment leveled against him by four women, including Sharon Bialek.

CAIN: My first response in my mind and reaction was, "I don't even know who this woman is."

CAIFA: Cain said the controversy will not end his campaign, but his remarks came as the identity of another accuser was revealed. Karen Kraushaar worked at the National Restaurant Association in the late 1990s.

JOEL BENNETT, ATTORNEY FOR CAIN ACCUSER KAREN KRAUSHAAR: She's unhappy that her name has come out, but she realizes in today's day of instant communications, it's very difficult to stay private.

CAIFA: Cain said he recalled Kraushaar's name, but told reporters Tuesday the accusations were found to be baseless.

Bialek was the fourth woman to accuse Cain of sexual harassment, but the first to go public with her story. Her attorney, Gloria Allred, said Tuesday morning the accusations are to be taken seriously.

GLORIA ALLRED, ATTORNEY FOR SHARON BIALEK: Women have a right to be free of sexual harassment, and that is why Sharon is standing up to fight that.

CAIFA: And so, analysts said Cain's news conference Tuesday was key, a serious test for a campaign that's made a striking ascent to the top tier of the GOP field.

ALEX CASTELLANOS, REPUBLICAN STRATEGIST: He's the guy who is supposed to be different than Washington, where they think the rules don't apply to them, where they say one thing and mean another. This goes at his very core. He's fighting for his candidacy here.

CAIFA: In Washington, I'm Karin Caifa.

(END VIDEOTAPE)

STOUT: Now, still ahead on NEWS STREAM, allies in nuclear development. We'll look at the countries who may be helping Iran in its nuclear ambitions.

And CNN's Freedom Project undercover. We'll follow Spanish police as they work to fight human trafficking.

(COMMERCIAL BREAK)

STOUT: I'm Kristie Lu Stout, in Hong Kong.

You're watching NEWS STREAM, and these are your world headlines.

Now, Italy's borrowing costs have reached the 7 percent threshold. That's a level that many economists consider unsustainable. And the surge is raising concerns that Italy could be on the path to default of a bailout.

And it comes less than a day after Prime Minister Silvio Berlusconi announced that he plans to resign.

And the waiting game goes on in Greece, where we still don't know who will be the next prime minister. Outgoing Prime Minister George Papandreou is expected to meet the president in just a couple of hours, and talks over a unity government reportedly have stalled over EU demands that rival parties agree in writing the terms of the financial bailout.

And 4,000 police officers have been deployed to watch this, a student protest in London. You're looking at live pictures on your screen. And this crowd -- it's a big one already -- could grow to 10,000 as the march to the city's financial district. And students are demonstrating against tuition hikes. Now similar protests led to violence last year.

And there have been protests in the Syrian city of Homs. As the UN reports, at least 3,500 people have died in the government crackdown since March. The opposition reports that dozens of people were killed in the past week alone despite Syria's pledge to end all violence as part of an Arab League peace plan.

All this week, the CNN Freedom Project is following police in the eastern Spanish region of Catalonia as they fight human trafficking. Now the special unit has granted CNN access to footage you won't see on any other network. And they allowed us to join them as they investigate Chinese brothels to see if the women who work there are victims of sex slavery.

Martin Savage reports.

(BEGIN VIDEOTAPE)

MARTIN SAVAGE, CNN CORRESPONDENT: This is a tricky operation for the human trafficking unit at Spain's Mosses D'esquadra. The goal of this investigation is to find out if some of the many Chinese brothels they see advertised in newspapers are in fact sources of forced prostitution.

XAVIER CORTES, SUB-INSPECTOR MOSSOS D'ESQUADRA (through translator): I invite you to look at (inaudible) and in these pages you will find dozens of ads where Chinese women are advertised as prostitutes in flats where they show the address, the particular legal consumption of prostitution in our country allows them to advertise this activity and there is no immediate police response.

The police reaction will come when we do enough research to know the women are being held against their will and sexually exploited.

SAVAGE: In this operation, undercover agents are checking out two apartments. They had trouble with the first when the (inaudible) his clients were thwarted by a man who wouldn't let the min.

Since they didn't have a warrant, they moved on to the second suspected brothel located behind that white door.

Our crew is asked to stay in the car while the agent in charge talks us through what's happening.

UNIDENTIFIED MALE (through translator): As you see, simply from the outside you cannot see anything that catches your eye, just the door of a house, and therefore the people who come here have prior knowledge that prostitution is practiced here.

SAVAGE: This time, the agents do get in the door posing first as clients, then once inside announcing their doing a police check. What they find confirms their suspicions, signs that this was no ordinary apartment.

UNIDENTIFIED MALE (through translator): All rooms are equipped minimally to practice sexual services, prostitution, with the classic characteristics of a red light, bed light table, condoms and toilet paper.

SAVAGE: A woman who let the agents in, the only one there, says she's just watching the place not a prostitute. But they don't believe her story. Before they can figure out if she's indeed a victim, they're called back at the first apartment. Some of the agents had stayed there to see how this moved on to look for a man with an arrest warrant thought to be connected to that flat. He was spotted and arrested. And he let them inside.

This time, investigators say they found three women and further evidence of prostitution. Suspecting the women may be afraid to speak freely in the presence of the men in the apartment, the agents bring the women back to the station. They want to try to find out how they got to Spain. In other words, are they victims of sex slavery, trafficked across borders and forced into prostitution?

UNIDENTIFIED MALE (through translator): Now, fellow police are taking statements from one of the women located inside a building we last accessed. Our intentions to talk with her and find out her personal situation. How did you arrive in Spain? If you have a debt, how much did you have to pay to come here? How long have you been in the business of prostitution? Did you start here, in Spain, in Barcelona, or elsewhere?

SAVAGE: One of the women admits she'd only just come from China one week ago. Since the investigators found her in an apartment that they say had signs of prostitution, her statement, they say, gives them further evidence that women are being brought here specifically for that reason.

The next step will be proving the women are being coerced, and figuring out if there is a larger group behind these brothels. If so, how wide does it stretch?

For the CNN Freedom Project I'm Martin Savage.

(END VIDEOTAPE)

STOUT: Now since we first filmed this operation, detectives have discovered there was, indeed, a vast criminal organization behind these brothels. And tomorrow, we'll go along on one of the units final raids as police discover that Barcelona is also a major portal to an international human trafficking ring.

(BEGIN VIDEO CLIP)

SAVAGE: What agents discovered in some of the brothels went far beyond the forced prostitution they had already suspected, signs that this was a major criminal organization with many talents.

First, drugs: investigators say they found more than 2,600 ecstasy pills and the means to make an emerging drug called Ketamine.

Weapons that they suspect were used to keep the women in line and even to extort other businesses in the Chinese community.

Credit card forgery equipment.

And what investigators consider the most important find of all, evidence of human trafficking.

(END VIDEO CLIP)

STOUT: A peak there at the next installment of our undercover Catalonia series. See it Thursday right here on News Stream.

Now Iran has reacted angrily to a nuclear watch dog's report expressing serious concern over development of its nuclear program. Now President Mahmoud Ahmedinejad says the International Atomic Energy Agency Document is a fabrication of facts aimed at satisfying U.S. allegations. And the report says that the information indicates that Iran has carried out activities relevant to the development of a nuclear explosive device.

And it goes on to say that Iran has made efforts, some successful, to procure nuclear related and dual use equipment and materials by military related individuals and entities. And has acquired nuclear weapons information from a clandestine nuclear supply network.

Now scientists from a handful of countries, including Pakistan, are suspected of aiding Iran's development of a nuclear program.

And for reaction from Islamabad, I'm joined now live by Reza Sayah. And Reza, first the situation in Iran and what it's up to. Is Iran developing a nuclear bomb?

REZA SAYAH, CNN INTERNATIONAL CORRESPONDENT: Well, Kristie, the answer to that precise question is no if you look at this latest IAEA report. This report doesn't come out and say Iran is building a bomb, it says the IAEA is concerned that Iran may be building a bomb. There's a lot of semantics and vague language there.

And I think that's an important factor that sometimes gets lost in the alarming headlines. This report doesn't out and directly accuse the Islamic Republic of building a bomb. But essentially it alleges that there is some evidence that Iran is studying, doing theoretical work on a nuclear weapon, some computer models of nuclear explosions, some alleged studies on trigger mechanisms as well. There are obviously serious and compelling allegations, but what's missing in this report is the so-called smoking gun, the direct accusation by the IAEA.

And as long as there's this absence of the smoking gun, Iran's government seems to have an easy time refuting these claims.

Today, Iran's president once again denied that Iran is making a bomb. He said Iran doesn't need to make a nuclear bomb. He says these latest accusations in this IAEA reports are the latest signs of aggression and bullying by Washington and western powers. But he also added that Iran is not budging from its path of a peaceful nuclear program, Kristie.

So this is a political dance and finger pointing that we've seen several times in years past. It seems like we're seeing it again.

STOUT: Now on the back of this report, there is now again a call for more sanctions on Iran. If implemented, and it's a big if since Russia and China have to be on board, what impact would sanctions have on Tehran and its ability to continue its nuclear program?

SAYAH: Well, if history is any indication, if you look at the previous four rounds of sanctions, they haven't had much effect when it comes to Washington's goal of curbing Iran's nuclear program. Despite four rounds of sanctions, Iran has slowly made progress with what it calls a peaceful nuclear program.

Will a fifth round of sanctions make a difference? Many say the key is targeting these sanctions for them to impact the revolutionary guard, the defense ministry. It's not clear exactly if that can be done. Many say these sanctions are affecting the public instead of the government. So it remains to be seen.

Again, if history is any indication, these economic sanctions haven't had an impact. Will another round of sanctions be any different. It remains to be seen.

STOUT: Now the IAEA report also makes clear that Iran had plenty of foreign assistance from Pakistan among others. What more can you tell us?

SAYAH: Well, these are accusations that were linked to A.Q Khan here, the so-called father of Pakistan's nuclear program, other nuclear scientists allegedly from Russia. But again what Iran is saying, what their position is, that these are old allegations rehashed from some documents that were taken from a stolen laptop allegedly stolen back in 2004. They say they've refuted these claims and they're just being rehashed and there is simply no evidence that these documents are real. They claim these are forged.

So again they're having seemingly a comfortable time refuting them, because of the absence of a direct and explicit accusation and evidence that Iran is building a bomb.

STOUT: Reza Sayah on the story. Thank you very much for that.

Well, up next here on News Stream, scandal rocks an American institution. And these college students show support for their football coach who is not accused of anything illegal, but some say what he did just wasn't right. We'll explain.

(COMMERCIAL BREAK)

STOUT: Now if you are an American college football fan, then you know this man. He is the head coach at Penn State and has been since 1966. He has the winningest record and a reputation for running one of the country's cleanest programs. But now he has been dragged into a mess. The allegations are against his former assistant coach, Jerry Sandusky, who is accused of abuse involving eight young boys. And even more disturbing, most are linked to a charity that Sandusky helped to establish.

Now Penn State is setting up a special committee to investigate the scandal that's rocking the campus. It's important not just for the school's reputation, but for its bottom line.

Now Penn State's football program made a profit of more than $50 million last year. And more than that, college teams, they are a huge part of American culture. Remember, there are just 32 NFL teams, but 50 U.S. states. And that means not everyone has a professional team near them. But almost everyone has a college team.

Now a preliminary hearing for Sandusky has been set for December 7. And Jason Carroll tells us how this case started.

(BEGIN VIDEOTAPE)

JASON CARROLL, CNN CORRESPONDENT: The allegations of sexual abuse by former Penn State defensive coordinator Jerry Sandusky go back to the mid- 1990s. Several alleged assaults occurred on the Penn State campus, the most shocking in March of 2002.

LINDA KELLY, PENNSYLVANIA ATTORNEY GENERAL: Sandusky was seen committing a sexual assault on a young boy of about 10 years of age was reported to university officials by a graduate assistant who happened to be in the building late one Friday evening.

CARROLL: That graduate assistant reported the incident to long time head football coach Joe Paterno.

UNIDENTIFIED MALE: Joe Paterno is 38...

CARROLL: In a statement, Paterno said in part, it was clear that the witness saw something inappropriate involving Mr. Sandusky. He goes on to say, because Sandusky was already retired at that point, I referred the matter to university administrators.

UNIDENTIFIED MALE: And we believe all the pieces are in place...

CARROLL: That administrator was Timothy Curley, Penn State's athletic director. He and Gary Shultz, senior vice president for finance and business, took away Sandusky's locker room keys and banned him from having children in the football building, according to authorities, but never reported the incident to law enforcement.

KELLY: Their inaction, likely, allowed a child predator to continue to victimize children for many, many years.

CARROLL: Curley did, however, report it to Second Mile, the children's charity which Sandusky founded and where he allegedly met most of his under aged victims. The charity said in a statement, Mr. Curley also shared that the information had been internally reviewed and that there was no finding of wrongdoing. They, too, didn't report the incident to law enforcement or ban Sandusky from contact with children at that time.

According to the grand jury report, Sandusky began abusing another victim he met through Second Mile in 2005 or 2006. But it wasn't until November or 2008, according to the charity, when Sandusky to them he was being investigated that they immediately made the decision to separate him from "all of our program activities involving children."

That 2008 investigation finally led to explosive charges this weekend. Sandusky is accused of sexually assaulting eight boys. He maintains he's innocent.

JOSEPH AMENDOLA, JERRY SANDUSKY'S ATTORNEY: Regardless of whether he eventually proves his guilt or innocence that people are going to think he did this stuff.

CARROLL: And Curley and Shultz are charged with failing to report abuse and lying to a grand jury. Their attorney's say the charges are bogus.

CAROLINE ROBERTO, TIMOTHY CURLEY'S ATTORNEY: It is unconscionable that the attorney general's office would level such a weak case against a man of integrity like Mr. Curley.

THOMAS J. FARRELL, GARY SHULTZ'S ATTORNEY: This is disappointing, because rather than follow the law, the attorney general has fabricated a fiction.

CARROLL: As far as the 84 year old coach Joe Paterno, the attorney general says he will not be charged, but there are calls for his resignation. Today, a press conference for Paterno was hastily canceled. But he did say this to CNN.

JOE PATERNO, PENN STATE FOOTBALL COACH: You guys got a lot of good questions, and I'd like to answer them, but I can't do it now.

CARROLL: Jason Carroll, CNN, State College, Pennsylvania.

(END VIDEOTAPE)

STOUT: Now still ahead here on News Stream, what happens when the microphone is left on and journalists are listening. The diplomatic fallout from a private conversation after the break.

(COMMERCIAL BREAK)

STOUT: Welcome back.

Now part of a private conversation between French President Nicolas Sarkozy and U.S. President Barack Obama has become public. Now reporters overheard the two leaders making disparaging remarks about Israeli Prime Minister Benjamin Netanyahu. And Brianna Keiler shows us how the leak happened. And what the fallout might be.

(BEGIN VIDEOTAPE)

BRIANNA KEILER, CNN CORRESPONDENT: An open mic during last week's G20 summit caught President Obama and French President Nicolas Sarkozy complaining about Israel's prime minister, according to a report by Reuters.

"I cannot bear Netanyahu. He's a liar," said Sarkozy.

Obama, according to a French interpreter who is translating his remarks replied, "you're fed up with him, but I have to deal with him even more often than you."

The president didn't exactly come to the defense of Netanyahu whom he most recently saw at the UN in September. It's not surprising, says Martin Indyk who served as U.S. ambassador to Israel during the Clinton and Bush administrations.

MARTIN INDYK, FRM. U.S. AMBASSADOR TO ISRAEL: It reveals the inner feelings of the president to what Prime Minister Netanyahu. I don't think it's any secret that these two leaders have not gotten on, basically, from their first meeting on.

KEILER: And an Oval Office encounter this past May further revealed the frosty relationship between the leaders.

BENJAMIN NETANYAHU, ISRAELI PRIME MINISTER: While Israel is willing to make generous compromises for peace, it cannot go back to the 1967 lines.

KEILER: Netanyahu essentially lecturing a stern faced President Obama. White House press secretary Jay Carney in an off camera briefing would not comment on the open mic gaffe. He instead stressed the president's support of Israel, most recently in opposing a vote to give the Palestinian Authority membership in the UN's cultural agency UNESCO, a move France supported.

BARACK OBAMA, PRESIDENT OF THE UNITED: America's commitment to Israel's security is unshakable.

KEILER: It's an embarrassing incident. And as both the U.S. and Israel keep a close eye on regime changes in the Middle East and on the growing threat of a nuclear Iran. But, says Indyk, it may have no real effect on U.S.-Israel relations.

INDYK: It's unlikely that the personality differences that have been highlighted by this mic that wasn't turned off are going to infect the coordination on Iran. If you like, the subject is too serious to be affected by personalities. They agree on the nature of the threat, and they also agree on the way to deal with it, that is by ratcheting up sanctions.

KEILER: Of course this does give ammunition to President Obama's critics, namely Republicans, who have said he hasn't backed Israel enough. We've heard from the pro-Israel advocacy group the Anti-Defamation League, expressing disappointment and saying this was an unpresidential exchange.

Brianna Keiler, CNN, the White House.

(END VIDEOTAPE)

STOUT: Now both French and American officials have been keen to play down the incident.

Now according to the Sydney Morning Herald, the French foreign ministry spokesman Bernard Velero cites that the issue saying, "I've heard about the hype. I don't want to talk about it. It's hype."

Now as the for U.S., well we have the White House press secretary Jay Carney, he also refused to be drawn into the issue. And there has been no word yet from Benjamin Netanyahu himself. But one Israeli newspaper, The Maariv quotes a source in his office as saying, quote, "the prime minister will continue to determinedly insist on upholding the security of Israel's citizens even if this involves suffering irrelevant barbs of criticism."

And Reuters is quoting one of the prime minister's deputies vice premier Silvan Shalom as shrugging it off saying, quote, "everybody talks about everyone. Sometimes even good friends say things about each other certainly in such competitive professions."

But it seems that one group, now the Anti-Defamation League is less forgiving. And the Israeli newspaper Haaretz quotes its director saying, quote, "what is sad is that we now have to worry to what extent these private views inform foreign policy decisions of the U.S. and France two singularly important players in the peace process."

Now these guys aren't the first to get caught off guard. An open mic caught Prince Charles saying some unkind things about the British press back in 2005.

(BEGIN VIDEO CLIP)

PRINCE CHALES, PRINCE OF WALES: Bloody people. I can't bear that man. He's so awful, he really is."

(END VIDEO CLIP)

STOUT: And the American media has managed to catch some crazy comments from unwitting politicians as well. Take a look.

(BEGIN VIDEOTAPE)

GEORGE W. BUSH, FRM. PRESIDENT OF THE UNITED STATES: The (inaudible) irony is that what they need to do is stop doing this (EXPLETIVE DELETED) and it's over."

UNIDENTIFIED MALE: Why would he do that?

OBAMA: He's a jackass.

JESSE JACKSON, RAINBOW COALITION: See Barack been, uh, talking down to black people over this faith-based -- I want to cut his nuts off.

BUSH: There's Adam Clymer, major-league (EXPLETIVE DELETED) hole for the New York Times."

UNIDENTIFIED MALE: Oh yeah, definitely.

(END VIDEOTAPE)

STOUT: A good wrap up there.

Now Adobe says it will stop developing Flash for mobile devices in what some people are seeing as a final victory for Steve Jobs. Now Flash player is used across the web for things like games and video. YouTube is one of the many sites that use Flash. But Apple famously decided not to include Flash in the iPhone and iPad.

Apple co-founder Steve Jobs, he wrote a public letter to Adobe in April of last year explaining Apple's stance on Flash. And Jobs says Flash is bad for battery life, is unreliable, and does not run well on mobile devices.

Now Adobe responded with this newspaper ad which we covered on CNN about one year ago. And while the iPad never used Flash, some other devices did support it. Now Adobe will continue to issue fixes for Flash on those devices, but will stop development of Flash for mobile devices.

And that is News Stream, but the news continues at CNN. And we will be keeping a close eye on the student demonstrations in London today. Here is a live look at Central London. Again, 10,000 students are expected to be on the streets protesting higher tuition fees. And we'll keep watching that in the hours ahead.

World Business Today is next.

END