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Massive Sell-Off as Dow Closes Down 588 Points; Authorities: Gunman Was Planning a Massacre; Source: Biden More Likely Than Not to Run; Source: Biden More Likely Than Not to Run; North, South Korea Pull Back from 'Brink of War'. Aired 5-6p ET

Aired August 24, 2015 - 17:00   ET


WOLF BLITZER, CNN HOST: Happening now, breaking news. Stunning slide, the Dow drops 1,000 points at the start of the day, climbs back, but plunges again. Is China sending world markets into a tailspin? What does it mean for your money?

[17:00:11] Terror on a train. Three Americans are honored for stopping a gunman and preventing a massacre. But there are now new worries that other ISIS sympathizers out there are getting ready, and they're eyeing some very soft targets.

Brink of war. For the first time, tension leads the U.S. to break out its war plan for defending the South? North Korea launched a worrisome military buildup. Why was the communist regime rocking out to a European heavy-metal band?

And is Joe Biden jumping in? From a private lunch date to hints from the White House lectern, there are new indications that the vice president is leaden toward a run for the top job.

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

ANNOUNCER: This is CNN breaking news.

BLITZER: Let's getting right to the breaking news. Wall Street took investors on a sickening roller-coaster ride today. The Dow fell 1,000 points right at the open, battled most of the way back, but then dropped again, closing down more 588 points, more than 3.5 percent. In the last five trading days alone -- get this -- the Dow has plunged more than 1,600 points. The S&P 500 and NASDAQ today closed down nearly 4 percent, and markets around the world suffered massive sell- offs. The stampede started in China, where an economic slowdown has global consequences.

Also, three Americans who tackled and subdued a gunman at a high-speed train received France's highest honors. Officials and fellow passengers say the three friends, along with a British man, prevented a massacre by stopping the heavily-armed suspect. He was reportedly known to counterterrorism agencies in Europe, and officials say he may have had links to ISIS. While the attack was thwarted, worried officials say it does show the vulnerability of soft targets.

Our correspondents, analysts and guests, they're all standing by with full coverage of all of today's top stories. Let's begin with the breaking news, the stunning slide of the stock

markets. Let's go straight to CNN business correspondent Richard Quest.

Richard, what's going on?

RICHARD QUEST, CNN BUSINESS CORRESPONDENT: Have a look at the markets, and have a look at the numbers, Wolf, and you'll see just how unpleasant the whole day was.

We had a very sharp fall at the open, when the Dow Jones was off the best part of 1,000 points.

A lunchtime rally, where the one moment it looked like it might actually go positive, but towards the end, towards the close, the selling just came in again, and the Dow was off 588 points at 15,871.

Wolf, if you look, all the other markets, the NASDAQ off 3.8 percent. What was really serious is the way this went around the world, Wolf. It starts in China. It starts with the Shanghai. It starts with problems in the Chinese economy, Shanghai down 8.4 percent. It sweeps through Europe. Frankfurt off nearly five, Paris off more than 5, London 4.5, and then it comes back into the U.S. markets. And the fear and the contagion and the worry is that, as the world turns, it goes back to China in just a few hours' time, and then the whole cycle starts again.

BLITZER: And what really worries me, as I'm sure it does you and some of the investors out there, in the last five trading days alone, Richard, 1,600 points it's gone down. What, that's about 10 percent. Right?

QUEST: I'm going to show you exactly what that looks like on the graph. There you have one week on the Dow, from 17,721 down to 15,871. Even put it -- it's a loss of 9.5 percent over the course of the week, heading towards the technical correction.

Look at the year, Wolf. Just look at a 12-month graph. And this is -- you see, that's a point around Ebola last year when there was a lot of uncertainty. That's where we were a year ago. That's where we were at the beginning of the year. And now come over here, and you see that dramatic sharp fall is what we are looking at, at the moment.

And what the analysts say is that, unless there is a reason now for this market to turn around, that the pressure is down, and we saw that today. That's what you saw, that lunchtime minor rally, when it looked like thing could get going again, but the pressure is down, and that's the concern at the moment.

BLITZER: What are the experts saying about tomorrow?

QUEST: If I still have my shirt on the back and manage to keep it there by not predicting, and the experts say it's going to take China to come out with some form of policy statement.

There has to be a reason, because you've got one other thing to remember, Wolf. You've got the emerging markets: Indonesia, Brazil, Russia, the whole of Latin America. They've got problems with oil, which is now into $40 a barrel. So in the absence of a reason to buy, the deck, if you like, the cards are stacked against. It doesn't mean there's going to be a calamity or a full-scale bear market. The U.S. is still growing at 2 to 3 percent. It's got low unemployment and low inflation, but it does mean that he headwinds against the global economy have suddenly gotten much stronger.

BLITZER: All right, Richard, thanks very much. We'll stay on top of this story. Richard Quest reporting for us.

Other news we're following: three Americas received France's highest honor today after they and a British man tackled and subdued a gunman aboard a high-speed train headed to Paris. The three childhood friends, two of them service members, were on a sightseeing trip to Europe, when gunfire broke out on the high-speed train and they spotted the suspect.

Airman 1st Class Spencer Stone tells what happened.


AIRMAN 1ST CLASS SPENCER STONE, RECEIVED MEDAL FOR BRAVERY FOR STOPPING GUNMAN: And I turned around, and I saw he had what looked to be an AK-47. And he -- it looked like it was jammed or wasn't working. And he was trying to charge the weapon.

And Alek just hit me on the shoulder and said, "Let's go." And ran down, tackled him. We hit the ground. Alek came up and grabbed the gun out of his hand while I put him in a chokehold. It seemed like he just kept pulling more weapons left and right; pulled out a handgun, took out a box cutter, started jabbing at me with that.

We let go. All three of us started punching him while he was in the middle of us, and I was able to grab him again and choke him unconscious while Alek was hitting him in the head with the pistol, the rifle.


BLITZER: Witnesses say Authorities say as well that the passengers prevented a massacre. There's now new information about the suspect and his alleged ties to terrorism. Brian Todd is here in THE SITUATION ROOM looking into this part of this story.

What are you finding out?

BRIAN TODD, CNN CORRESPONDENT: Wolf, tonight we're getting more details about this suspect. We have learned he was on the radar of European counterterrorism officials. But it's not clear if anyone was monitoring him in the days before he boarded that train or if he had help in planning the attack.


TODD (voice-over): To hear his lawyer tell it, Ayoub El-Khazzani wasn't on that train to kill people. She says he'd found the weapons in a suitcase, abandoned in a Brussels park.

SOPHIE DAVID, ATTORNEY FOR KHAZZANI (through translator): He a few days later had idea of getting on the train that he heard wealthy people take, Amsterdam to Paris. He then thought of doing this to feed himself and to do a robbery where he could get money.

TODD: French officials dismiss his story, saying El-Khazzani was planning a massacre. He was armed with a Kalashnikov assault rifle, a Luger pistol, and a box cutter. Twenty-five-year-old Ayoub El- Khazzani was known to European authorities before this attack. French intelligence officials say they put an "S" notice to his name, signifying an individual who merited surveillance. He got that notice because of apparent connections to radical mosques in Spain where he once lived.

A senior European counter-terrorism official tells CNN analyst Paul Cruickshank of a trip they believe El-Khazzani took not long ago.

PAUL CRUICKSHANK, CNN TERRORISM ANALYST: Well, according to investigators, there is strong indications that he traveled to Turkey from Europe, between May and July of this year, and they believe that he did that in order to try and link up with the ISIS terrorist group in Syria probably.

TODD: It's not clear if El-Khazzani ever got into Syria. His lawyer denies he made that trip.

But a senior European official tells CNN investigators are looking into when El-Khazzani was linked to a group of French ISIS fighters in Turkey, who had previously directed another man to attack targets in France. That man was arrested in April, allegedly plotting to attack a church near Paris.

After moving to Spain from Morocco, El-Khazzani had worked as a house painter, was convicted twice for drug smuggling. He'd moved to France to work for a telecommunications company, but was laid off, and had recently been living in the streets of Brussels.

MATTHEW LEVITT, WASHINGTON INSTITUTE FOR NEAR EAST POLICY: The terrorists that we're seeing today, in Europe in particular, are people who come from broken homes and/or criminal backgrounds. They don't have a way in life, and they're finding meaning and purpose belonging, that kind of family bond, that purpose in life in the Islamic State.


TODD: Analysts say more and more, ISIS is directing those militants to go back home and attack. Tonight a U.S. counterterrorism official told me this attack is an example of how groups like ISIS like to use lone-wolf actors to strike soft targets, and they continue to pose a danger right here in the U.S. and among American allies, Wolf.

BLITZER: Here's a question, Brian. If El-Khazzani did make that trip to Turkey recently, did Turkish officials ever flag him? [17:10:03] TODD: Apparently, they did not, Wolf. Turkey has not yet

confirmed whether El-Khazzani made that trip. And a Turkish officials tells CNN he was not flagged for Turkish intelligence by their counterparts in Europe as a possible terror threat, and it's really not clear, how long he might have been surveilled by officials in Europe. That -- those details hopefully will be coming out in the days ahead.

BLITZER: All right, Brian, thank you.

It was only because of the heroism of a few passengers that the attack on that train was foiled. The incident underscores just how vulnerable civilian targets can be, and that is sparking great concern here in the United States and abroad. Let's go to our justice correspondent, Pamela Brown.

Pamela, what are you learning?


PAMELA BROWN, CNN CORRESPONDENT (voice-over): A thwarted attack on a grounded train. It's increasing concern among counterterrorism officials about how to better protect so-called soft targets.

DAVEED GARTENSTEIN-ROSS, FOUNDATION FOR THE DEFENSE OF DEMOCRACIES: If you tried to make trains look more like TSA, then suddenly they become much more difficult to travel on. And it's also extraordinarily economically expensive to have those layers of security around train stations.

BROWN: The gunman, Ayoub El-Khazzani, was on the radar of French and Spanish authorities because of his suspected ties to terrorist networks, but he still managed to board a train that crossed from Amsterdam to Paris with an arsenal of weapons.

GARTENSTEIN-ROSS: We don't have the manpower to keep up constant surveillance on all the large number of people who are believed to have some sort of extremist ties.

BROWN: Law enforcement officials say he could have just as easily boarded a plane to the U.S., highlighting the challenge of tracking the thousands of potential terrorists in Europe.

In January, terrorists armed with assault rifles walked into the "Charlie Hebdo" newspaper headquarters in Paris and opened fire, eventually killing 16 people. And just months before that, another terrorist killed four at a museum in Belgium.

Tonight law enforcement sources say they worry trains will increasingly become an attractive terrorist target. In Europe, 40 million people travel daily on the rail networks there. In the U.S., 30 million people ride trains and subways every day.

UNIDENTIFIED MALE: I don't think there's anything at all that will stop somebody from getting on a train right now in place with a weapon. Overall, if you have a carry-on and you're getting on an Amtrak going from New York to D.C., there's no security there.


BROWN: And officials I've spoken to today say the Paris terror suspect was not on any U.S. watch list, even though he was known to European counterterrorism authorities. Wolf, the officials I've spoken with say that shows that there is still a gap in information sharing. The concern, of course, is that he could have boarded a plane to the U.S. And caused harm here -- Wolf.

BLITZER: All right, Pamela. Thanks very much.

Joining us now, our counterterrorism analyst, the former CIA official Phil Mudd; our law enforcement analyst, Tom Fuentes -- he's a former FBI assistant director; and CNN terrorism analyst Paul Cruickshank.

Paul, what are you finding out about Ayoub El-Khazzani's trip to Turkey?

CRUICKSHANK: Well, I just spoke to investigators about this. They believe that he boarded a flight from Berlin to Istanbul in May of this year. They believe he boarded that flight in order to get to Turkey, in order probably to join ISIS in Syria.

One of the key lines of inquiry is whether he developed connections in Turkey with a French ISIS cell, who eventually (ph) this year were behind a plot to attack Paris churches and other targets in Paris by an Algerian student.

Now, that Algerian student had been communicating with its French ISIS cell in Turkey, and discussing the idea of attacking passenger trains in Europe.

So they're obviously looking at all that very closely. Emerging concern that Turkey is emerging as a staging spot for ISIS plots against Europe.

BLITZER: Phil, take us behind the scenes. What are authorities doing right now in Europe and maybe even here in the United States to determine whether El-Khazzani was actually working with others?

PHIL MUDD, CNN COUNTERTERRORISM ANALYST: Well, we've only focused on the first piece of this story, Wolf, which is what I call the law enforcement piece: taking down this guy on the train, talking about the awards given to the three individuals, the three Americans. And we're glad they took them down.

There is that secondary piece you're suggesting that's of interest to me. And that is, are there indicators here that intelligence folks can use that in the future? Those are, I want to know: did they get his cell phone? Did they get a laptop? Do they know where he lived? That means you can start talking to the people who lived around him, his neighbors.

Did he travel? Is there indication of travel databases that he was actually on an airplane? That should very quickly, within a day or two, given the digital world we live in, allow you to answer a very simple question. Were there other people involved in the conspiracy or not? So far the conversation has been too focused on the train. We need to go to the intelligence route.

BLITZER: The other issue, Tom, is the weapons he had, the ammunition he had, the box cutters, he was heavily armed, this guy. In Europe, it's not that easy to get those kinds of weapons.

[17:15:04] TOM FUENTES, CNN LAW ENFORCEMENT ANALYST: You know, we keep saying that, Wolf, that it's not that easy, and then we see case after case where they have no problem getting AK-47s and other similar powerful weapons. So apparently, it's easier.

Now, whether they're using organized crime links or there are terror links from others to obtain those weapons illegally, but there certainly seems to be an abundance of weapons for the people that want them in Europe.

BLITZER: Stand by. We have much more to assess. There's other information coming in right now. We'll take a quick break. We'll be right back.


[17:20:20] BLITZER: And three Americans received France's highest honor for preventing a possible massacre on a train. Investigators are urgently looking into the suspect's ties to terrorism.

We're back with our experts. Tom Fuentes, el-Khazzani, the suspect in this case, apparently his rifle jammed, and he didn't know what to do after the rifle jammed. What does that say to you?

FUENTES: Well, it says that he probably doesn't have a lot of experience with that. Although interestingly, the AK-47 doesn't jam very much. That's why it's so popular by terrorist groups. They're able to use it out in the desert. So even if he had trained a little bit with the gun, he may have never have experienced that happening, of a jam and how to clear it, recycle it, get it ready to fire again.

BLITZER: But his lawyer says that he was just going to rob some people. He was not a terrorist. You say?

FUENTES: Well, I'd say to that that usually, when you rob, commit a robbery, you take the money and run. Where is he going to run on a train going 200 miles an hour?

BLITZER: That was -- you don't buy that excuse, and most people don't.

Paul Cruickshank, how many other radicalized individuals are there roaming around Europe right now just like this guy, waiting to strike?

CRUICKSHANK: Wolf, unfortunately, the numbers are truly staggering: up to 6,000 European extremists believed to have traveled to Syria. There are many of them joining ISIS and other terrorist groups. Hundreds and hundreds have come back from Syria and Iraq and are now in Europe.

Thousands of others haven't traveled, but are radicalized. The security services are stretched thin. They can't monitor all but a small fraction of them 24/7.

And so what we're seeing is these youngsters launching attacks with very little warnings. In the old days, the security agencies had a lot longer to act, because people would go out and try to buy bomb- making ingredients and so on and so forth. But now they're just going and getting a Kalashnikov on the black market and, a day or two later, just going and launching an attack. So very, very difficult to prevent from the European point of view. The scale of the threat there is unprecedented. President Hollande of France saying almost every week they're almost learning of a new terrorist plot.

BLITZER: Pretty terrifying when you think about it.

Phil, this guy El-Khazzani, he was on a French watch list. European officials, though, hadn't flagged him to Turkish intelligence as a possible terror threat. Here's the question: Why aren't these agencies -- they're all Europeans, they're all allies, better able to communicate?

MUDD: Well, one of the questions here is you've got to triage people on these watch lists. I heard the world "surveillance." And this guy was flagged for surveillance. That means a lot of things. That can be 24/7 surveillance by human beings. That is very rare. That can be going by somebody's apartment once a week to say that he still has this residence.

So one of the first questions you have in this case: how far up the chain he was.

The second issue we have, Wolf, and finally is an issue we have here in the United States and in Europe. If you're going to say someone is radical in your community, and you're going to a foreign government to report on one of your own citizens, that is you're an American FBI officer going to Britain or France or Italy, and you're going to say, "My citizen is radicalized," radicalization is not illegal. You're telling a foreign security service that they might look out for somebody who's a citizen of your country who has not performed an illegal act yet. There's a lot of debate about whether that's appropriate.

BLITZER: What do you think, Tom? Because you've dealt with international agencies in your role in the FBI.

FUENTES: I agree. Phil is exactly right. The Europeans are very conscious of exchanging information and going too far with that kind of intelligence sharing. That's why you're seeing difficulty of sharing with the Turkish government back and forth to E.U. countries.

So their concern over data privacy, the privacy rights of individuals, this goes back, by the way, to World War II. After -- in the aftermath of World War II, police intelligence was neutered in Europe because of the Gestapo and not wanting to have another Gestapo. They're only slowly getting to the point where they exchange the way we do in this country.

BLITZER: Yes, they've got to start coordinating a little bit better, but I understand the legal problems, if you will, with sharing this information. Leading up to 9/11, there was all those problems of stove-piping. The FBI wasn't talking enough to the CIA, not talking enough to the NSA. Now apparently there's much better coordination internally here in the United States. This is a potential problem in Europe. That the French may not be talking to the Dutch, may not be talking to Turks and all of this. That's the problem.

All right, guys, thanks very much.

Coming up, we're learning new information about a possible presidential bid by the vice president, Joe Biden, as the White House makes some interesting comments about the vice president.

Plus, North and South Korea pulling back from the brink. Details of the deal to avert a new Korean War.


BLITZER: We're following the growing buzz right now about a possible White House bid by Vice President Joe Biden. A Democratic source who's been in touch with Biden's aides and allies, now says he's much more likely than not likely to enter the presidential race, possibly announcing his candidacy in early October.

President Obama hasn't endorsed anyone yet, but the White House has very warm words for Biden.


JOSH EARNEST, WHITE HOUSE PRESS SECRETARY: The president has indicated the view that the decision that he made, I guess seven years ago now, to add Joe Biden to the ticket as his running mate was smartest decision he had ever made in politics. And I think that should give you some sense of the president's view of Vice President Biden's aptitude for the top job.


BLITZER: Let's talk about this and more with CNN political reporter Sara Murray; our CNN political commentator S.E. Cupp; and the former Obama senior adviser, now CNN political commentator, Dan Pfeiffer.

Sara, what do you think? It's looking increasingly likely that Joe Biden might challenge Hillary Clinton.

SARA MURRAY, CNN POLITICAL CORRESPONDENT: Yes, I mean, look, it's interesting to see that the White House had such warm words for him, especially what you see in these stories about how there are so many people in the White House that have already joined team Clinton.

I still think that, you know, Joe Biden's people say he has not made a final decision. This is a very personal decision. He's still getting over the death of his son, and by the way, I think this is a really tough thing, if you don't have the president on your team. And that's not going so far as to say President Obama is behind you if you decide to run, Joe.

BLITZER: You worked for the president for a long time. You remember -- remember that. The -- Josh Earnest, the White House press secretary, he knew he was going to be asked about the president's lunch today with Joe Biden, about the vice president's secret meeting with Elizabeth Warren, the senator over the weekend, at the vice president's residence here in Washington.

He knew he was going to be asked all that. And the first words out of his mouth -- and the words we just heard, the greatest political decision the president made was selecting Joe Biden to be his running mate. That's not a casual utterance by a press secretary.

DAN PFEIFFER, CNN POLITICAL COMMENTATOR: No, it it's not, but it is something that Josh has said many times, the president has said many times about that decision.

But the president is incredibly close personally to Joe Biden. Everyone who has worked for him, has worked for the president is incredibly grateful for the tremendous loyalty that Vice President Biden has shown the president. We all -- all of our hearts go out to him as he's going through a very tough personal time in his life. And he's going to have to make a decision. I think he's going to make it sooner rather than later. But if he does, there will be a lot of people on team Obama who will be willing to get back in the trenches for the vice president. There's no question about it.

BLITZER: Will you?

PFEIFFER: I will not. I will stay retired.

BLITZER: You're going to stay out?


BLITZER: Do you know he will run?

PFEIFFER: I don't know. I think he's clearly taking -- going through a very rigorous and smart process to make the decision. When you read the "Wall Street Journal" report today, there's a pretty big caveat in there, which is he's leaning towards it, if he thinks he can mount a credible, serious campaign. I think that's what he's trying to figure out right now. And I don't think he'll know that until he does more of the meetings he's been doing. If he does, you know, and he decides he wants to do it, I think a lot of people would be behind him.

BLITZER: S.E., what do you think? Could he beat Hillary Clinton for the Democratic presidential nomination and Bernie Sanders and the others?

S.E. CUPP, CNN POLITICAL COMMENTATOR: Yes, I think if she continues to slide, and this is his calculation, as well, she continues to slide, I think he could absolutely come in and speak to a contingent of the Democratic Party that has felt left behind in the rise of the progressive, the older white male, blue-collar voter who actually, if it's just down to Hillary Clinton and Bernie Sanders, might consider a Republican.

Joe Biden speaks their language. I think if he came in and spoke to that wing of the party and not so much of Elizabeth Warren wing, I actually think he could really bring in, back into the fold a lot of those voters that the Democratic Party is in jeopardy of losing to the middle or to the right.

BLITZER: That meeting, on Saturday, he came back from out of town -- I think it was Wilmington, Delaware -- came back to the vice president's residence to meet with Senator Elizabeth Warren, and Jeff Zeleny, our political correspondent, he broke that story. That was a significant moment, because it sent a powerful signal.

MURRAY: Right. Joe Biden is definitely doing enough to keep this idea buzzing. It's clear if you are totally not interested in it, you don't go around doing things like this. You know he's actively courting it.

But someone like Elizabeth Warren, just because you're getting her endorsement, that's not enough to say, "Oh, now I'm going to run for president."

This process is just so grueling. It takes so much out of you. You need to do so much. You need to build a ground game. You need to get money. And so far Joe Biden hasn't done any of that. And I think those are the steps that he needs to take if he's serious about doing this.

BLITZER: Dan, when the president says, when Josh Earnest says the best political decision the president ever made was to select Joe Biden as his running mate, so does that automatically mean he will endorse Joe Biden if he runs for president? Because he doesn't say the best political decision he ever made was to select Hillary Clinton as his secretary of state.

PFEIFFER: No, but I would bet he would say it's one of the best political decisions he's ever made. I don't know whether he would endorse the vice president. I'd be surprised if he got in the middle of a race between the vice president and Secretary Clinton.

BLITZER: Why would you be surprised?

PFEIFFER: Because there's two people who would be -- he believes would both be incredibly qualified presidents, would be great general election candidates. And they're both friends. So I think it would be hard. It's hard for me to imagine that he would...

BLITZER: But he's much closer to Joe Biden personally than he is to Hillary Clinton.

PFEIFFER: He is, but he's also the leader of the party. And this would be an important primary process that would have to play itself out, and it would be, at the end of the day, up to the caucus-goers in Iowa and the primary voters in New Hampshire and everywhere else to do it. I would be surprised, although I don't know that for sure. But I would be surprised if the president put his thumb on the scale.

BLITZER: What do you think?

CUPP: Well, I read a headline today, and forgive me for forgetting the attribution, but the headline said, "The White House's Mind is with Hillary, But Their Hearts Will Always Be with Joe."

And so they've put all of their resources and infrastructure behind Hillary at this point, but there's such a close connection between the president and Joe Biden, it would really put him in a tough spot.

Not to mention the optics, I would just point out, of having a 74- year-old at the time man swoop in to either rescue Hillary Clinton or usurp her, when the Democrats are trying to insist the Republicans have this war on women, don't get women. I don't think that would look very good. And I think the White House knows that.

BLITZER: But a lot of Democrats have said to me, you know what? They think Hillary Clinton is going to be OK. They don't think the e-mail controversy will necessarily derail her campaign, although it will be a headache for some time to come.

But they're seriously looking at a backup in case it's a lot more serious, the FBI investigation turns up something that they don't anticipate turning up. They need a backup, if you will. That could be Joe Biden.

MURRAY: This is the kind of thing that I feel like is thrown around in every election year on both sides of the aisle. Is this, you know, Superman who's going to come in at the last minute, and the guy who's leading the pack suddenly implodes.

And I think Hillary Clinton is in a different situation than others we've seen this scenario floated about, because she does have this ongoing investigation. And when you go out there and you talk to voters, they have a lot of questions. They don't really understand what's going on with the e-mail thing, and they don't feel like she's answered the question sufficiently. If she can do that, maybe they'll throw it away.

BLITZER: Do you think Elizabeth Warren is more inclined to endorse Biden or Hillary Clinton?

PFEIFFER: I have no idea what Elizabeth Warren is thinking. I'd be surprised if she endorsed anyone. I think she has -- she's playing a role as a powered worker in this party. She has a wing of the party. And I would be decide if she decided to jump in on either side this early.

But, you know, the vice president apparently was meeting with her to make the case this weekend.

BLITZER: She's been thunderously silent in endorsing Hillary Clinton over these past several months, right?

CUPP: Yes. I think she's eyeing a 2020 bit or a 2024 bid herself, and so I think she's probably going to stay fairly objective.

BLITZER: All right, guys, good stuff. Good politics to discuss. And we'll see what happens with the vice president.

Coming up, back from the brink of war. A deal reached to defuse the dangerously high tension between North and South Korea. We're going live to Seoul.

Plus Donald Trump pulls Barbara Bush into the presidential campaign in a new video attack on his rival, Jeb Bush.


[17:42:10] BLITZER: North and South Korea have reached an agreement, pulling the two countries back from what North Korea described as close to the brink of war.

Sources tell CNN the tension had been so high that top U.S. military commanders have been reviewing the Pentagon's war plan for defending South Korea from Kim Jong-un's regime.

CNN's Kyung Lah is working the story for us. She's joining us live from Seoul right now.

So what's the latest on this deal to escalate [SIC] the serious tensions that erupted?

KYUNG LAH, CNN CORRESPONDENT: Well, it's not quite a done deal yet. Almost, but not quite. Where are we so far?

Well, North Korea has, quote, "expressed regret." Those are the key words, North Korea expressing regret for the injuries the South Korean soldiers sustained at the DMZ when land mines were planted.

So now that North Korea has essentially sort of said "Sorry," South Korea will stop broadcasting propaganda from the southern side, from giant propaganda speakers into the North.

This is propaganda like news, K-pop music, all of this, frankly, making Kim Jong-un nuts, because that is something that he views as a destabilizing factor of the regime.

So once those broadcasts stop, North Korea will draw down troops, stepping back from the brink of war. Hopefully, at this point, Wolf, this will be that there will be inter-Korean dialogue and that North Korea at least can start talking about its nuclear missiles and weapons.

BLITZER: Since the announcement of this deal was released a few hours ago, are people calming down over there where you are in South Korea, Kyung?

LAH: Well, they're still waking up, but we're always hearing from analysts who are greeting this as, at least, some progress. It's a step forward. It's better than the angry words that both side were flinging at each other. At least they are talking about talking, Wolf.

BLITZER: All right, Kyung. Thanks very much.

Let's dig deeper with an expert on North Korea, the former State Department senior adviser, Christian Whiten.

Christian, thanks very much for joining us. What do you make of this tentative deal?

CHRISTIAN WHITON, FORMER STATE DEPARTMENT SENIOR ADVISOR: Well, it's a good sign for those who -- and I think we all want de-escalation. We wanted an end to the crisis. It's a way for both sides to step away without anyone losing a lot of face.

North Korea expressed regret. That's one step short of a full apology, even though they denied putting the landmine into the DMZ that started this crisis. Most people believe, just from the type of mine and where it was, of course, that it came from North Korea.

It does have both talking. They have an agreement. There's always concerns when you have these agreements as to where there's some back- panel payola, or some sort of inducement that went from South Korea to North Korea, But there's no evidence of that yet.

One last factor, of course: There was a very large dispatch of North Korean submarines, reportedly, during this crisis. I'd say it wouldn't be over until they are back at their bases.

BLITZER: It does show, at least tentatively, a much more mature Kim Jong-un, the new leader, relatively young guy. The new leader of North Korea. Right?

WHITON: Well, he's certainly very confident. The question is, of course, with his recent history, which has included some -- some really murderous killings, executions of very high-level people, people who were thought essentially untouchable within Pyongyang, that, you know, he could face a tieless coup at any moment and we have no warning of that. But yes, clearly he's a very confident leader. He's willing -- really consistently to probe this out, to probe the United States and see how far he can go.

BLITZER: Who blinked first in this negotiation over the past three days?

WHITON: You know, I think it would be unfair to South Korea, unless there is some back-channel payola, as I say, because Park Geun-hye, the leader of South Korea, and she has been president for about 2 1/2 years, I think did very well. She showed confidence. She had her military respond when North Korea lobbed some shells over the DMZ. The South Korean military reacted. There was no distance between the United States and South Korea.

So, you know, I think it's basically a truce, a stalemate, and as long as, you know, South Korea and the U.S. continue their commitment and continue their solidarity, I think it's good for us. BLITZER: In the past where there have been these tensions along the

DMZ, the Demilitarized Zone, separating North and South Korea, in the past very often an outside party like China, for example, that has some influence over Pyongyang would step in and help ease the crisis. Any indication that may have happened this time?

WHITON: There's none this time. And that is remarkable, how quickly, and that separates this crisis from past like the one when, I believe, you're in Pyongyang when North Korea sank a South Korean ship in 2010. This time they jumped into talks fairly quickly. There were bilateral talks, the U.S. and China not involved.

There have been rumors in Washington that the Obama administration may try in its last year or two have some sort of grand negotiation with North Korea like its two predecessors, the Clinton and Bush administrations, but so far it's just the bilateral.

BLITZER: Interesting development. Let's hope this deal works out and there's a little calm over there. Let's not forget there's still a million North Korean troops, north of the DMZ, a million South Korean troops, 800,000 or 900,000, and 30,000 American troops right along the DMZ. A very volatile and tense situation. Maybe the most dangerous spot on earth right now.

Guys, thanks very much for that. Christian Whiton, helping us better appreciate what's going on.

Coming up, a standing ovation for a Western rock band playing the "Sound of Music" in North Korea. We're going to show you the story behind this bizarre concert.

And Jeb Bush jabbed by his mother's own words, in a brand-new attack video from Donald Trump.


[17:52:05] BLITZER: The spike in tension with South Korea didn't stop North Korea from staging a rather bizarre concert with a very unusual rock band.

CNN's Will Ripley is joining us now live.

Will, tell our viewers about this strange show.

WILL RIPLEY, CNN CORRESPONDENT: Wolf, people may remember Laibach from -- when they started in the early '80s. They're known for Nazi themes in their performances and they were one of the few Western groups allowed to the play a concert inside North Korea.


RIPLEY (voice-over): This is something North Koreans have never seen before. A Slovenian rock group in Pyongyang.

IVAN NOVAK, ARTISTIC DIRECTOR: This was something strange for them. RIPLEY: Even stranger because of who this band is. Laibach has long

been criticized for fascist imagery and a totalitarian style. The ageing rockers made headlines last week for being among the first Western performers invited to North Korea.

Joining the likes of Bill Clinton's half-brother, Roger Clinton, who played here more than 15 years ago.

Today, young leader Kim Jong-Un seems more open to Western culture than his father and grandfather. A documentary crew followed Laibach their Liberation Day Tour. They laid flowers at a statue of the late leaders and even visited the DMZ.

It was not the show they planned. North Korean censors made Laibach change many onstage videos and cut their 18-song set list down to nine.

NOVAK: You know, you can't really censor Laibach. As much as you cut away it's still Laibach.

RIPLEY: The 45-minute performance was an odd mix of mostly covers including a medley from "The Sound of Music."

It's one of the few Western movies North Koreans are allowed to see. The audience seemed puzzled. More familiar North Korean pop gets a much different reaction.

When we met up with the band just off their plane from Pyongyang they called their concert the most significant in Laibach's 35-year history.

NOVAK: We do connected really well with the people in North Korea.

RIPLEY: An artistic experiment that even got a standing ovation.


RIPLEY: So the audience, you may be wondering how they were reacting. One of the men who was interviewed after the show said, we didn't know there was that kind of music out in the world, but now we know.

Wolf, as you know, the North Koreans do have occasional access to outside music. We were just -- my producer Tim and I here were talking about North Korean minders singing Frank Sinatra's "My Way" during one of our visits. And you heard them singing -- listening to some music as well.

BLITZER: I heard them listening to Kenny Rogers when I was there almost five years ago.

Good report. Thanks very much, Will Ripley, for that.

[17:55:01] Coming up, three Americans are honored for stopping a gunman and preventing a massacre on a high-speed train. But there are now new worries that other ISIS sympathizers are right now scouting some very soft targets. And breathtaking drops on Wall Street as China's troubles send world

markets into a tailspin. Donald Trump is warning that things could get messy.


BLITZER: Happening now. Breaking news. Massive losses after a day of panic and wild swings on Wall Street. Stock prices end with another nosedive. The Dow Jones Industrials closing down nearly 600 points. How long will the markets keep hemorrhaging?

Terrorist ties. Investigators are zeroing in on a recent trip taken by the suspect in the attack on a high-speed train. Will his travel reveal connections to ISIS?