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American Morning: Wake Up Call
Asian Markets Slip After Downgrade; Worst Day in Afghanistan; U.S. Credit Downgrade Blame Game; The Blame Game; World Market Check; Pete Dominick Stands Up; Propping Up Italy and Spain
Aired August 08, 2011 - 05:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ALI VELSHI, CNN ANCHOR: Good morning. It is Monday, August the 8th. This is your A.M.: WAKE UP CALL.
I'm Ali Velshi, joining you this morning from New York.
OK. It's Monday, the first Monday after Standard & Poor's took the U.S. credit rating down a notch to the AA-plus club from AAA. It's a historic punch in the gut.
The shock wave from the downgrade is being felt on the other side of the globe. Tokyo's Nikkei, South Korea's KOSPI, the Hang Seng in Hong Kong and Shanghai's composite all slipped.
European markets are fickle this morning. They've been up and down and all over the place. U.S. stock futures have been down all night. You could see this coming.
Listen to this. CNN's Don Lemon asked Richard Quest from CNNI's "Quest Means Business" the question a lot of folks might be asking.
(BEGIN VIDEO CLIP)
DON LEMON, CNN ANCHOR: Is the sky falling?
RICHARD QUEST, HOST, CNNI'S "QUEST MEANS BUSINESS": Oh, don't be ridiculous, of course not. You may have a Dow futures that are down slightly. You may have a market that's off 100, 200 points. But how we start is never how we finish.
This is a slow-burning, deeply-seated crisis that is affecting the global financial markets.
(END VIDEO CLIP)
VELSHI: European markets have begun the day on a positive note. That's probably thanks to a big G-7 conference call last night. The group of seven industrialized nations promised to help countries in financial trouble. Also, the European Central Bank's plan to buy Italian and Spanish government bonds have helped calm the markets.
Treasury Secretary Tim Geithner was on the G-7 call. He says he's not going to resign even though some Republican says the credit downgrade should have cost him his job.
Geithner and the Obama administration have been slamming Standard & Poor's all weekend. They say the agency basically didn't know what it was doing.
The S&P is planning a conference call for just before the U.S. markets open to explain its decision. The AA-plus smack down has been shocking enough. Imagine if the U.S. credit had been downgraded to AA-minus or just an A. What would that mean? Well, that could happen in the coming months.
List to what S&P's managing director said.
(BEGIN VIDEO CLIP)
JOHN CHAMBERS, S&P MANAGING DIRECTOR: If we have a negative outlook which is fixed to a longer time frame, from six months to 24 months, and if the fiscal position of the United States deteriorates further or if the political gridlock becomes more entrenched, then that could lead to a downgrade. The outlook indicates at least a one in three chance of a downgrade over that period.
(END VIDEO CLIP)
VELSHI: A one in three chance of a further downgrade. I'm going to be talking to that man, John Chambers, a little later this morning, 7:15 a.m. Eastern.
Right after that, I'm going to talk to economist Mark Zandi. He's with MoodysEconomy.com. He's got an interesting take on the S&P downgrade. He says it's a blow to the U.S. ego, but not likely anything more than that.
Other news to tell you about:
In Afghanistan, NATO troops are still looking into the crash site where a U.S. Army helicopter was apparently shot down. Thirty U.S. troops were killed, including 22 elite Navy SEALs. Military sources say those forces were on their way to help Army Rangers in a firefight with the Taliban. Their target was a Taliban commander responsible for attacks on U.S. forces.
The Taliban claims militants shot the Chinook helicopter down with a rocket-propelled grenade.
The fiancee of a guardsman who was killed talked to CNN about her last correspondence with him.
(BEGIN VIDEO CLIP)
CANDIE REAGAN, FIANCEE OF GUARDSMAN KILLED (via telephone): He sent me an e-mail the day before and he told me, he said, "Please don't worry about me." He said, "You and the girls are always in my heart. Don't worry. This place isn't going to change me. I'm going to change this place. That's just how I am."
He said, "I love you, ma. Just take care of my girls. And know that I am here thinking about you all the time. I'll be home before you know it. Love you, ma."
(END VIDEO CLIP)
VELSHI: Wow. Twenty-two elite Navy SEALs were killed in that crash of the helicopter. The incident is the single largest loss of life for U.S. troops since the war began nearly 10 years ago.
We're hoping to get more answers about a shooting rampage near Akron, Ohio. Seven people were killed. One of them is only 11 years old. Police believe the gunman shot his girlfriend first then ran next door and shot five more people, then chased other victims into a third house before police shot and killed him.
And Verizon workers from Massachusetts to Virginia have walked off the job. The contract expired Saturday at midnight. The workers are upset that the company wants to cut health care benefits and their pensions. A union official says the strike could affect your phone, Internet and TV service. Verizon says services will not be affected.
In the wake of the S&P credit downgrade for the United States, let's see how the world's money is doing.
Andrew Stevens, my colleague in Hong Kong, has been following it very closely.
First of all, Andrew, good morning. Let's start with how world markets have been reacting overnight now into the morning.
ANDREW STEVENS, CNN INTERNATIONAL ANCHOR: Not well, Ali, and not surprising either. The Asian markets particularly got off to a pretty weak start today. The markets are down between 2 percent and 4 percent at one stage, did come back towards the end.
Europe started off on a positive note because European policy leaders were seen to be actually doing something, taking concrete action, buying these problem Spanish and Italian bonds. Markets like that. But that's all slipping at the moment as well.
So, there's still a lot of negativity out there, Ali.
Just want to bring back to that point that Mark Zandi made, that this is a blow to the ego, not much more than that, this credit downgrade, and Quest's moment about the sky not falling.
But I think there is a crisis here and that crisis is the crisis of confidence that we talked about on Friday.
VELSHI: Well, Andrew, China happens to agree with you on this. In fact, they've said, quote, "That this is a warning bell for the United States."
STEVENS: Absolutely. And they're absolutely right.
Now, China has been huffing and puffing about U.S. economic policy for a long time now. They came out very strong and they said that basically the U.S. has a debt addiction. They said over the weekend, which is pretty tough even for Beijing.
It is a warning bell, Ali. But China is like many people, many of us, sort of bystanders here. They actually can't do that much about it.
VELSHI: Yes.
STEVENS: What sort of impact is it going to have on Washington? They're going to be concerned, of course. I don't want to upset their biggest creditor too much, but they've also got people close to home to worry about if you like.
VELSHI: Yes. It's going to be a complicated few days of figuring out, feeling everybody out and seeing where they stand. Andrew, thanks for your analysis this morning. Andrew Stevens in Hong Kong -- he'll be watching it 24/7 like we are.
Imagine walking through the woods and finding a shark. I'm serious. How did it get there? We'll show you pictures of the unusual find just ahead.
But, first, check out our quote of the day. Quote, "They made a $2 trillion math error and they forget to check their work." Find out which news maker said this about the debt crisis coming up in 60 seconds.
It is seven minutes after the hour.
(COMMERCIAL BREAK)
VELSHI: It is eight -- pardon me -- eight minutes after the hour. This is your A.M.: WAKE-UP CALL.
Now, back to our quote of the day. It's from Austan Goolsbee, the former White House's chief economist. I would call him the White House's former chief economist.
Take a listen to what he has -- what else he had to say about Standard & Poor's.
(BEGIN VIDEO CLIP)
AUSTAN GOOLSBEE, FORMER CHAIR, W.H. COUNCIL OF ECONOMIC ADVISERS: They made a $2 trillion math error and forget to check their work. So, the rating agencies that didn't make a $2 trillion math error reaffirmed the AAA status.
(END VIDEO CLIP)
VELSHI: I should say Standard & Poor's takes issue with the characterization of what they did as an error. They say they work with different assumptions. They ran it both ways -- their way and the White House's way -- and they felt America should still get a downgrade.
I'll be talking to Standard & Poor's at 7:15 this morning.
That Friday, by the way, was Goolsbee's last day on the job at the White House. He's returning to the University of Chicago's Booth School of Business.
Let's go to Rob Marciano live from Atlanta.
Rob, any flight downgrades today?
ROB MARCIANO, AMS METEOROLOGIST: There may be some flight downgrades today. That's for sure. In places that will see the thunderstorms pop up in the afternoon.
Take a look at the chart here that shows you if you are traveling, Chicago's going to see some delays, Minneapolis as well in the afternoon. Some morning clouds in Philly and New York City and continued on the muggy side until a little front comes through. San Francisco, morning clouds and fog as well and some thunderstorms scattered in the afternoon, Atlanta and Chicago, and Boston.
Hazy, hot and humid conditions will persist across the midsection of the country, couple of fronts trying to make their way South. We're getting now into the middle of August, trying to be optimistic about some cooler air trying to push its way south. But it's still going to have a hard time doing that.
Heat indices up in over 110 again from places like Dallas to Oklahoma City. I think Dallas is day 38 of 100-plus degree heat.
So hot in places sharks are jumping out. Check this out, Ali. Milton, New Hampshire, six to eight-foot blue shark found in the middle of the woods. Now, this is about 50 miles from the Atlantic Ocean. I mean, there's a river there.
But investigators have no idea how this thing got there. Of course, somebody could have put it there. But nonetheless, the smell of the rotting fish turned them on to what was happening in the woods there.
So, that investigation will be ongoing today as you track the markets and we'll be giving you updates, of course, when --
VELSHI: You know what? We need a break from the markets sometimes. We need them to hear about something other than markets. Shark in the woods.
MARCIANO: Those pictures, man. It's not very --
VELSHI: That's a different one. I'm going to use that as an expression from now on. You know how you Southerners, that's like a shark in the woods. I'm going to use it. I have a reason to use it.
Rob, I'll see you in a little bit. Thank you so much -- Rob Marciano in our weather center.
Hey, there's new words of secret tapes of Jackie O with talk of affairs and a plot to kill JFK. We'll fill you in on that.
But, first, today is Happiness Happens Day. It was started by the Secret Society of Happy People. So, if you're feeling crabby or run across an especially crabby individual, tell 'em to suck it up and get happy.
It's 11 minutes after the hour.
(COMMERCIAL BREAK)
VELSHI: Thirteen minutes after the hour. This is your A.M.: WAKE-UP CALL.
Here are three things you should have on your radar today:
There's a change of command ceremony at MacDill Air Force Base at noon today. We're expecting Secretary of Defense Leon Panetta to talk about the deaths of 22 U.S. troops in Afghanistan over the weekend in a helicopter crash that appears to be -- the helicopter appears to have been brought down by the Taliban.
We, of course, will be watching the world markets for you throughout the day. Plus, at 8:45 Eastern Time this morning, a conference call is being held by S&P, the agency that downgraded the credit rating of the United States over the weekend. We'll let you know how that goes.
Well, AAA may be a credit rating, but the battery jokes have already started.
One guy writes in on Twitter, "Until today, I didn't even know America ran on batteries, never mind what size." But I'm dumb (ph).
A little Canada love my way. This person wrote, "Canada currently beating the U.S. Not a hockey update, but a credit report."
And drum roll, please. A yo momma joke -- "Yo momma so poor she raised her debt ceiling and the S&P still downgraded her." I don't get that one as much.
Time now for your Political Ticker with Tim Farley, host of "Morning Briefing" on Sirius POTUS XM live from Washington.
No jokes in Washington about this, pretty serious barbs flying all over the place. And somehow, somewhere, some way, there's going to be political fallout from this downgrade, Tim.
TIM FARLEY, "MORNING BRIEFING," SIRIUS XM POTUS: No question about it, Ali Velshi. And what's interesting is the messages we're getting. You played that cut from Austan Goolsbee. Also, Secretary of the Treasury Tim Geithner saying somewhat the same thing, is that there was a math error.
On the other hand, the president's surrogates and persons of David Axelrod and Senator John Kerry, both using the same phrase yesterday, that this was a Tea Party downgrade. Ed Sweeney being quoted -- Ed Sweeney from S&P -- being quoted by "Bloomberg" as saying that politics was one of five factors.
So, while people are pointing the finger and blame, and there are Republicans pointing the finger of blame at the president, still, there's an underlying issue here and that is how well this next committee, if you will, is going to be able to solve the underlying problems surrounding what led to this downgrade, which is the increasing size of the debt and inability of Congress to seem to work with the president to get something done about it.
VELSHI: Yes.
So, the sniping isn't going to help us out today because that actually did come into it. I'm going to be speaking to John Chambers of S&P again to get that from him again.
But listen to this -- in the midst of this whole thing, you know, there have been talks that Tim Geithner, treasury secretary, will leave after the debt ceiling debates happened. He has now announced he's staying.
FARLEY: Yes. Isn't that nice to know, that one of them is staying? Christina Romer gone, Lawrence Summers is gone, Austan Goolsbee, as you mentioned, Friday his last day.
Secretary Geithner, as the president said when he first appointed him, was uniquely qualified to handle this. He does understand Wall Street. He spent a lot of time at the New York Fed and he is truly an important part of this administration.
Symbolically, if nothing else, it makes good sense for him to be able to stay. I'm not sure substantively what it does. I do know that Michele Bachmann on the campaign trail is calling for his immediate resignation after he says he's going to stick around.
So, I guess that this will also wind up playing somehow into the debate this week and also into the Ames straw poll this week.
VELSHI: All right, my friend. Good to see you. Have a great show. Tim Farley, host of "Morning Briefing" on Sirius XM POTUS in Washington.
FARLEY: Thanks, Ali.
VELSHI: London's "Daily Mail" reports that Jackie Kennedy Onassis believed Lyndon Johnson was behind the assassination of her husband, JFK. It's said to be in secret audiotapes sealed in a vault at the Kennedy Library for decades. There are also revelations of affairs by JFK and Jackie O. The paper reports it's in an upcoming special on ABC.
A sex tape supposedly starring a young Marilyn Monroe went on the auction block Sunday and sold for -- well, it didn't. There were no bidders. A Spanish collector owns the black and white tape. The big problem: a number of experts say it's probably actually not of Marilyn Monroe.
Spoiler alert: if you don't want to know how Charlie Sheen's character in "Two and a Half Men" dies, turn down the sound for about 10 seconds. OK, ready? According to TMZ, Sheen's character falls in front of a Paris subway train and he may have been pushed. There you have it.
OK. All right. Training kids as young as 8 to be hackers. You heard me. Could it be for a good reason? I'll tell you on the other side.
Eighteen minutes after the hour.
(COMMERCIAL BREAK)
VELSHI: People are very divided over the U.S. credit downgrade. Here's perspective from some of the top money minds out there and what the downgrade could mean to you.
(BEGIN VIDEO CLIPS)
CHAMBERS: Current level of debt is quite high and under anyone's plausible scenarios, it's going to continue to rise as a share of the economy. Our figures we published more accurate and our analysis is sound.
LARRY SUMMERS, FMR. DEPUTY TREASURY SECRETARY: Look, S&P's track record has been terrible. And as we've seen this weekend, its arithmetic is worse.
STEVE FORBES, CHAIRMAN AND EDITOR-IN-CHIEF, FORBES MEDIA: The markets are going to be a little uncertain. The key thing is whether the two other rating agencies are going to follow S&P. I don't think they will, and if they don't, the reaction will be rather minimal.
KEN ROGOFF, FORMER CHIEF ECONOMIST, IMF: This isn't the end of the world. It's AA-plus. That's still a really high grade. But, it's disconcerting in the middle of the crisis, as it's deepening.
(END VIDEO CLIPS)
VELSHI: We're going to be talking about the possible ripple effects of the credit downgrade throughout the morning. But I want to turn now to Afghanistan and, perhaps, the darkest hour for the U.S. military in 10 years of war.
Thirty American military personnel were killed, including 22 Navy SEALs, in the single deadliest loss of U.S. troops since the war began. We're now learning their CH-45 Chinook helicopter crashed during a mission to reinforce Army Rangers who were pinned down in a fire fight.
Let's go around the world with Max Foster. He's live from London right now.
Good morning, Max.
Max, what do we know about this mission and the troops who died trying to carry it out?
MAX FOSTER, CNN INTERNATIONAL CORRESPONDENT: Well, Ali, this story was a shock to people around the world, wasn't it? It was a real shocker over the weekend to hear this had happened at all. But imagine if your partner was a SEAL and you were watching this story, as many others will around the world, unfold on television.
This was exactly the situation that Kimberly Vaughn -- she found herself in. And a bit later on, she had a knock at the door, assuming it was a neighbor, but opened the door and two uniformed men there who delivered the awful, awful news that her husband Aaron was involved in that helicopter crash and we've been hearing from her, actually, on CNN over the weekend.
(BEGIUN VIDEO CLIP)
KIMBERLY VAUGHN, WIDOW OF NAYV SEAL: I want to tell the world that he was an amazing man, that he was a wonderful husband and a fabulous father to two wonderful children and he was a warrior for our country, and he wouldn't want to leave this earth any other way than how he did.
(END VIDEO CLIP)
FOSTER: Unbelievable, isn't it, Ali, that somehow she manages to find hope in this shortly after it happened.
VELSHI: Yes. These guys -- these were the most elite of the elite, these Navy SEALs who went down, a very, very tragic story.
Max, the story we're following over the weekend, and it really did get a little blurred by all of the debt ceiling -- the debt downgrade talk. These riots in London, dozens hurt, dozens more arrested. What prompted it and what happened?
FOSTER: It all came out of the blue, this one. It's very surprising. Scenes that you just don't expect to see in London these days. And what happened was a young man was shot by police last week and that sparked some riots in north London. And they really, really took off.
You can see these scenes, buildings caught fire. The police caught off guard. It was a proper riot. And in the end, 61 were arrested.
But what was interesting is once that was resolved on Sunday, there were copycat incidents around London. A hundred people were arrested and people wondering what's going on here in scenes you can't expect -- lots of looting, Ali, really shocking scenes in London over the weekend.
VELSHI: Wow. Yes, those are -- those are incredible scenes we're looking at.
Also incredible scenes of a different sort that we've been getting, some devastating images, Max, over the last few days in East Africa, in Somalia. This famine is really reached crisis proportions and people want to know how they can help.
FOSTER: Yes. What's so bad in Somalia is you've got a conflict, a severe conflict. But you also got a famine at the same time. Very, very difficult for aid groups, many of whom have been barred by the militia -- many aid groups struggling to get in there.
We just want to take you to our Web site, though, CNN.com/impact because if you do want to help, you need to choose your aid groups very, very carefully. So you can help. They need help. You need to go through the right aid groups. The details are on the Web site.
VELSHI: Max, good to see you this morning. Thank you so much for being with us -- Max Foster joining us from London. He'll keep an eye on what's going on around the world for us.
After all the hype, Boeing has finally rolled out the 787 Dreamliner. This new plane could spark a revolution in air travel. First off, it's lighter than most planes because it's made out of carbon composites. So, it also uses about 20 percent less fuel than moist planes of its size. Best of all, it's got a self-serve bar. The first plane is going to Japan's All Nippon Airways.
All right. It's a bird, it's plane, it's a bird on a plane. That's right -- or possibly a bat, sneaked on to a Delta Airlines flight from Madison, Wisconsin, to Atlanta on Sunday.
Check that out. The video shot by one of the passengers. The critter flew around the cabin before getting stuck in one of the bathrooms. I'm led to believe somebody opened the door and sort of guided it into the bathroom.
Wow. That's creepy. Look at that.
All right. According to conventional wisdom, young people are more tech savvy than older folks. Still, most of us find it strange to come across an 8-year-old hacker. As it turns out, kids are the new demographic, target demographic in the hacking community.
The annual hacking convention DEFCON has launched a new conference just for kids from lock picking to cryptography. Organizers say it's important for kids to learn ethical hacking.
A lot of computer programmers refer to themselves as hackers. In their world, it's not necessarily a bad thing. It's a good thing. It's creativity.
World markets in a tizzy over the S&P downgrade. How does it change -- how does the change in the country's credit rating affect you? We're going to talk to financial experts about what this means for your money, straight ahead.
(COMMERCIAL BREAK)
VELSHI: Good morning. It's Monday, August 8th. This is your A.M.: WAKE-UP CALL.
I'm Ali Velshi, joining you live this morning from New York. Thirty minutes after the hour.
From bad to worse, world markets are taking a tumble over the S&P downgrade of the U.S. credit rating. The U.S. stripped of its AAA rating on Friday. This morning, U.S. stock futures are down.
Former Federal Reserve Chairman Alan Greenspan said this is sadly just the beginning. On "Meet the Press" yesterday, Greenspan predicted that U.S. stocks will continue to fall and our economy may see a downward spiral.
(BEGIN VIDEO CLIP)
ALAN GREENSPAN, FORMER FEDERAL RESERVE CHAIRMAN: What I think the S&P thing did was to hit a nerve that there's something basically bad going on and it's hit the self-esteem of the United States, the psyche, and it's having a much profounder effect than I conceived could happen.
(END OF VIDEO CLIP)
VELSHI: Let's cut to the chase. How does this affect you?
The downgrade shouldn't have a big effect on your cash, don't expect to earn more interest if you're in a normal interest bearing account. But if you're feeling skittish experts suggest keeping your money in FDIC insured bank accounts.
For borrowers credit card rates could go up. We're not sure yet, same with college loans, car loans, small business loans. The consensus among experts, however, is be cautious, but don't freak out.
(BEGIN VIDEO CLIP)
STEVE FORBES, EDITOR-IN-CHIEF, FORBES MEDIA: You should put it in the stock market in a broad-based index because I think in a year, year and a half, this country is going to turn around just as it did after the abysmal decade of the 1970s, turned around in the '80s and '90s. so this is the time to get in when everybody else is fleeing.
LAWRENCE H. SUMMERS, FORMER DEPUTY TREASURY SECRETARY: You'll have to use your best judgment, but if you think that Washington will come together on a balanced approach to growth on the deficit, then certainly the United States is the place to put your money.
(END OF VIDEO CLIP)
VELSHI: So who do you blame for the loss of the AAA credit rating? Everybody is pointing fingers at each other. President Obama adviser David Axelrod is calling the S&P action a, quote, "Tea Party downgrade." But conservatives say if congressional leaders would have listened to the Tea Party in the first place the U.S. wouldn't be in this mess.
(BEGIN VIDEO CLIP)
DAVID AXELROD, OBAMA CAMPAIGN ADVISER: The fact of the matter is, that this is essentially a Tea Party downgrade. The Tea Party brought us to the brink of a default.
SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: Well, if we'd listened to the Tea Party we'd have $4 trillion reductions in debt over time and not have been downgraded. Now the Tea Party has come to Washington talking about reducing spending. Thank God they're here.
(END OF VIDEO CLIP)
VELSHI: Now the S&P says it's fighting like that forced them into action. S&P says last week's debt ceiling debate exposed the, quote, "gulf between the political parties and that has reduced the S&P's confidence in the government's ability to manage its finances."
I'll be talking to S&P's the managing director at 7:15 Eastern time morning.
About 20 percent of American households don't have Internet service but cable giant Comcast wants to close the digital divide. It's rolling out an Internet essentials program that will provide vouchers toward the purchase of a computer for qualifying low-income families. They'll also be able to get discounted Internet service.
The "Rise of the Planet of the Apes" finished number one at the box office over the weekend raking in $54 million. The new film staring James Franco is a prequel to the 1968 classic "Planet of the Apes." The only other big film to open this week is called "The Change-Up." It finished fourth behind "The Smurfs" and "Cowboys and Aliens." Both released a week ago.
OK, yes, the United States lost its AAA credit rating by S&P. In today's "Businessman Special" I'm going to tell you about two countries whose stock market actually went up after being downgraded. That's coming up in 60 seconds.
It is 33 minutes after the hour.
(COMMERCIAL BREAK)
VELSHI: Thirty-four minutes after the hour. This is your A.M. WAKE-UP CALL. I'm Ali Velshi. Now back to today's "Businessman Special."
Don't fret about the S&P downgrade today. It actually could have been a good thing. When Canada and Japan lost their AAA credit rating the stocks in both countries went up in the year following the downgrade.
Kind of really, really trying to find a silver lining here.
Here's to get -- here's to get up -- here to get us up to date on the markets, Christine and I have been working a lot this weekend.
ROMANS: That's true.
VELSHI: Let's go to Christine Romans who was here in this seat when markets opened in Asia. ROMANS: That's right.
VELSHI: Overnight. What is going on in world markets and premarket trading around the world and here in the United States?
ROMANS: You know, they're all down. There was some actually a bounce in Europe but you know the Asian markets all opened lower. And I'll tell you something, Ali, it was a run-of-the-mill lower open for those Asian markets. It wasn't anything that will make it in the history books.
VELSHI: Right.
ROMANS: It wasn't anything particularly dangerous or bad or scary. It was a 1 or 2 percent decline. You know markets kept popping around a little bit. So I think what you're seeing here and what some market participants are telling me is it's more an extension of what happened in the U.S. last week and that the debt downgrade is something for the history books, but not necessarily for your pocketbook and not necessarily for the markets to really be too concerned about -- keep in mind, we're going to have probably a lower open.
We've got stock futures down here.
VELSHI: Right. Right.
ROMANS: I mean I'm not saying that it's all angels and unicorns and rainbows -- it isn't.
VELSHI: Right.
ROMANS: But it isn't as bad as some people had feared on Friday night.
VELSHI: All right. You and I were talking to everybody we could talk to from Friday. In fact really all week. Because of everything was going on. What is your sense from everything you've heard, seen and everyone you've talked to, did the S&P do the right thing? Did they get it right?
ROMANS: The White House says no. Market participants say, well of course they did. And we saw this coming for months and everyone knows that the U.S. has too much debt and that has too little political unity to be able to address that debt in a meaningful way.
People in the markets are surprised by the surprise of the politicians that this has happened.
VELSHI: Right.
ROMANS: And that I think is -- I think that's fair to say that's what your reporting is showing too, Ali.
VELSHI: Were you surprised by the amount of bickering going on? I mean you said something, and I just have to repeat it, because you said it on Saturday on TV. You've said the one way to have markets go up this morning was if yesterday the president and the administration and the Republicans and the Democratic congressional leaders all got together and say we got the message, we need to bring America back from this brink of economic turmoil.
ROMANS: And instead you heard the opposite. You heard the White House say S&P is wrong, they made a mistake, and it's the Tea Party's fault. At least two surrogates sort of making that point.
VELSHI: Right.
ROMANS: And you saw the Republican candidates all saying this is the president who now owns the first downgrade in American history. And you had no one owning up and saying, look, America is the most powerful country in the world, we are an economic super power.
VELSHI: Right.
ROMANS: We will speak with one voice, we know we have too much debt and we will bridge our differences to find a way to get the debt as a size of our economy down in a more meaningful way. You haven't heard anybody say that. It's been deflect --
VELSHI: Not heard anybody --
ROMANS: Defer -- right.
VELSHI: Other than you say it.
Christine, I'll see you in about 22 minutes an "AMERICAN MORNING." Christine Romans.
ROMANS: Bye.
VELSHI: Covering this a lot.
All right. Before we go, the United States was downgraded from a AAA rating by the S&P so let's take a look at the countries that have AAA ratings from S&P. There are about 15 of them, Australia, Austria, Canada, Denmark, Finland, France, Luxemburg, Netherlands, Norway, Singapore, Sweden, United Kingdom and Switzerland.
After this break, we'll show you which countries have the AA plus rating along with the United States now.
Thirty-eight minutes after the hour.
(COMMERCIAL BREAK)
VELSHI: Forty minutes after the hour. This is your A.M. WAKE-UP CALL. I'm Ali Velshi in New York.
Now back to our "Get Smart" question. Before the break, we showed you the countries with AAA ratings by S&P. Now let's take a look at S&P's AA plus rated countries. The United States is a new member of this club. New Zealand and Belgium also exist in that environment.
Curious about a double-dip recession because we've been talking about that possibility with all the bad economic news we've been getting lately. It's not a done deal. But I'm going to let Jay Leno do the explaining on this one.
(BEGIN VIDEO CLIP)
JAY LENO, HOST, "TONIGHT SHOW WITH JAY LENO": There's been a lot of talk about the possibility of a double-dip recession. Some people think -- do you know what that is? Maybe this will help.
UNIDENTIFIED MALE: And now a video metaphor for a double-dip recession. This overturned car carrier represents the struggling U.S. economy. The cars inside are the American workers trying to get back on their feet. This tow truck is the Federal Reserve giving the economy a boost. There we go, it's all better. But then the stock market plunges and we got ourselves a double-dip.
(END OF VIDEO CLIP)
VELSHI: That was very effective.
Look who's here. It's my friend Pete Dominick. He's comedian, host of "Stand Up with Pete Dominick" on Sirius XM POTUS.
Good morning, Pete Dominick. Good to see you, my friend.
PETE DOMINICK, HOST, STANDUP WITH PETE DOMINICK: I'm mad at you because you keep saying that we're now AA. My question for you is, just because Standard & Poor's, one of the credit rating agencies, says that we're AA does that mean we should be calling ourselves AA and should I put my money in Luxemburg now or wait until the end of the year, Ali Velshi?
VELSHI: You are what you think you are. Don't let other people define you, Pete Dominick, except that other people are going to try and define us because they're running for elections.
So what do you think the impact of this downgrade is going to have on the 2012 presidential election and congressional elections?
DOMINICK: Well, we are -- we're already seeing it play out yesterday in the Sunday talk shows. You see John Kerry and David Axelrod calling this the "Tea Party downgrade."
VELSHI: Yes.
DOMINICK: We just saw Lindsay Graham and others say thank god for the Tea Party for bringing this to our attention kind of a thing.
In the end, I don't think Americans are going to care that much about it because they're not going to see it affect them. I think voters care about what affects them, what affects their wallet, their pocketbook, their investments. They're going to care as always about jobs, whether or not they have them. VELSHI: Yes.
DOMINICK: So I'm not sure how much this whole AA rating from one of the credit rating agencies is going to affect the election. We'll see.
VELSHI: All right. Rick Perry has a solution to the economic ills of the country is facing. He had some kind of a come and pray away the bad economy get-together.
DOMINICK: Yes. Yes. The -- it's called the Response, I guess 30,000 people showed up at Reliant Stadium in the capital where Rick Perry, of course, is the governor of Texas. And it was billed as nondenominational, Ali Velshi, but tell that to the Jewish folks, the Muslim folks, the Buddhist, the nonreligious and even the Catholics who wouldn't, I don't think, have felt that welcomed.
Rick Perry wants people to fast and get back to Jesus. Well, I don't know -- I don't know how much this is going to matter, but it's certainly going to help him if he runs for election. He's been -- he's looking good for that nomination for the religious right, those who care about these religious things, Ali Velshi.
VELSHI: Well, if fasting helped the economy, if you could convince me of that, I may consider it. And as you know, as you can see from me right here I'm not -- I'm not so big on the fasting. But you know, if you think --
DOMINICK: Yes, I thought about that, too. It's like, was he fasting so we can save money for other things? I'm not quite sure what that meant.
VELSHI: Yes.
DOMINICK: But this is a big deal for Rick Perry this weekend, and if you think that fasting is going to help your family pay its bills, well, maybe you should be listening to the governor of Texas. Ironically, Ramadan started a week ago.
VELSHI: There you go. So Muslims are already set up for this whole thing.
DOMINICK: Right. Right.
VELSHI: That's outside my area of expertise. Good to see you, my friend, as always. Pete Dominick.
DOMINICK: All right. Ali Velshi, good to see you.
VELSHI: Have a great day.
All right, in this day in history, back in 1974, Richard Nixon announced his resignation. It came after the Watergate scandal. Here's a clip of the former president resigning.
(BEGIN VIDEO CLIP) RICHARD NIXON, FORMER U.S. PRESIDENT: Therefore, I shall resign the presidency effective at noon tomorrow.
(END OF VIDEO CLIP)
(COMMERCIAL BREAK)
VELSHI: Good morning. It is Monday, August 8th. This is your A.M. WAKE-UP CALL. I'm Ali Velshi joining you live this morning from New York. Forty-seven minutes after the hour.
Let's go around the world. Nina Dos Santos is standing by live in London.
Nina, we had a good -- I don't mean good, we had a very clear start to the trading day in Asia. Everything was down. Moved into Europe and things are a little choppier. We're not entirely sure. Everything is not down -- everything hasn't been down all night in Europe.
NINA DOS SANTOS, CNN INTERNATIONAL CORRESPONDENT: Yes. Well, it's called a dead cat bounce, Ali. We saw it where you were on Friday after -- just before Standard & Poor's actually downgraded the United States' AAA rating and what we're seeing at the moment is a similar situation.
This is effectively when we have the markets rising, having a bit of a relief rally, and then within about 45 minutes they shed all of those gains because investors realized that the underlying concerns haven't been tackled, of course. What is concerning everybody is the ongoing euro zone debt crisis.
The ECB announcing over the course of the weekend that it will be buying back Italian and Spanish bonds to try and bring down the cost of borrowing. The Europe's third and fourth largest economies.
But there's a lot of concern at the moment that while that seems to be working in the short term, nobody really knows how much money it will take from the ECB to try and calm those bond markets and that is one of the reasons why even though yields so the cost of borrowing for Italian and Spanish debt on the 10-year has been falling, stock markets are falling as well.
VELSHI: So what's the reaction that we're seeing today? A lot of people we've been talking to are saying that the reaction we've got in European markets today and probably we'll have in U.S. markets at least a lower open, really has less to do with the S&P downgrading the United States and that centrally the problem remains Europe, Italy and Spain, and whether or not the European Central Bank has the money to backstop those two countries.
DOS SANTOS: That's right. Economists are also doing the math on this this morning, Ali. And they're saying that if the ECB buys about $2.5 billion euros worth of -- three billion euros worth of bonds every single day, well, that could amount to a massive bill over the course of the year of nearly $1 trillion. And if that is the case, it would effectively exhaust all of the money that the euro zone has put aside to help any countries, struggling countries that may need a bailout.
VELSHI: Yes.
DOS SANTOS: Of course we've already had two bailouts for Greece. We've got a bailout for Portugal, bailout for Ireland. It could just be too expensive to bailout Italy and Spain.
VELSHI: Nina, we'll stay in touch with you through the course of the morning as European market -- U.S. markets get ready to open.
Nina Dos Santos, joining us live in London.
Treasure Secretary Tim Geithner doesn't have any plans to leave his post. He says he's staying on. There were rumors galore in Washington that he would leave after the debt ceiling was raised. Some Republicans say the credit downgrade should cost Geithner his job.
Geithner and the administration have been slamming Standard & Poor's all weekend. They say the agency basically didn't know what it was doing when it demoted the U.S. to the AA plus club.
S&P is planning a conference call just before U.S. markets open to explain its decision. Listen to what S&P's managing director said about what could be coming down the pike.
(BEGIN VIDEO CLIP)
JOHN CHAMBERS, S&P MANAGING DIRECTOR: If we have a negative outlook which is fixed to a longer time frame from six months to 24 months, and if the fiscal position of the United States deteriorates further, or if the political gridlock becomes more entrenched then that could lead to a downgrade. The outlook indicates at least a one in three chance of a downgrade over that period.
(END OF VIDEO CLIP)
VELSHI: I'll be talking to that man, John Chambers, a little later this morning at 7:15 Eastern.
By the way, if you have questions for him, tweet me @alivelshi. I'll ask him for you.
Other news to tell you about. In Afghanistan, NATO troops are still looking into the crash site where a U.S. army helicopter was apparently shot down. Thirty U.S. troops were killed including 22 Navy SEALS. Military sources say those forces were on their way to help army rangers in a fire fight with the Taliban.
Their target was a Taliban commander responsible for attacks on U.S. forces. The Taliban claims militants shot the Chinook helicopter down with a rocket-propelled grenade.
The fiance of a guardsman who was killed talked to CNN about her last correspondence with him.
(BEGIN VIDEO CLIP)
CANDIE REAGAN, FIANCE OF KILLED GUARDSMAN: He sent me an e-mail the day before, and he told me -- he said please, don't worry about me. He said that you and the girls are always in my heart, don't worry. This place isn't going to change me. I'm going to change this place. That's just how I am.
He said, I love you ma. Just take care of my girls. And know that I am here thinking about you all the time. I'll be home before you know it. Love you, ma.
(END OF VIDEO CLIP)
VELSHI: The incident is the single largest loss of life for U.S. troops since the war began nearly 10 years ago.
Let's go to Rob Marciano, live in Atlanta.
Rob, any flight delays we're looking at this morning?
ROB MARCIANO, AMS METEOROLOGIST: I think we'll see some this afternoon at least when the thunderstorms begin to pop up, and especially across the center part of the country, that's where we've got a couple of fronts that are converging.
(WEATHER REPORT)
MARCIANO: Want to show you this map because this map highlights something that a person is doing.
Diana Nyad, she just left Havana last night, Ali, and she's trying to swim from Havana to Key West. Now that's about 100-mile swim or so, 105 miles. And she's got to navigate the Gulf Stream which in that area can be cranking anywhere from two to four miles per hour. She tried it back in the '70s. She's 61 years old. Wasn't able to do it then. But is in the water right now.
VELSHI: Right.
MARCIANO: And CNN crews are reporting back to us with her progress.
VELSHI: We got a boat near her, right?
MARCIANO: Yes.
VELSHI: We're following this whole thing. And that Gulf Stream, your animation showing the Gulf Stream, that's what she's got to sort of struggle against as she's trying. Looks like a straight line, but it's going to push her east.
MARCIANO: Sixty-one-years old. And she's -- she is determined to make this happen. So --
VELSHI: She's more fit than I'll ever be in my life.
Rob Marciano, check you out on "AMERICAN MORNING." See you later, my friend.
Rob Marciano at the Extreme Weather Center.
Before we go, let's take a look at the "Word of the Day." It is -- you guessed it -- AA plus. By this point you know it's America's new credit rating according to S&P and you know it's worse than a AAA. But find out exactly what it means and why it matters after this short break. It's 54 minutes after the hour.
(COMMERCIAL BREAK)
VELSHI: It's 57 minutes after the hour. This is your A.M. WAKEUP CALL.
The "Word of the Day" is AA plus. America's new credit rating according to the S&P. Keep in mind in the eyes of the other two major credit agencies we're still AAA. So our word of the day is actually a twofer.
AAA is the highest rating. It means that a country has extremely strong capacity to meet financial commitments. AA means a very strong capacity to meet financial commitments. S&P says we're in between.
The agency knocked the U.S. down a notch because of political risks and a rising debt burden. A lot of people don't agree with the downgrade. Treasury Secretary Tim Geithner says S&P showed terrible judgment.
Let's go to Carter Evans for a look at your money this morning. He joins me live from the NASDAQ marketsite here in New York.
Everybody is asking today how futures are looking, what's going to happen to our stock market. I know you can't prognosticate beyond the open, Carter, but you can give me some clue as to how it's going to open.
CARTER EVANS, CNN BUSINESS CORRESPONDENT: Yes. First, let's not forget AA plus, that's a high capacity battery, right? I think. OK, just trying to lighten the mood a little bit here because here are futures.
They're not looking so good right now. Dow futures down 280 points. All the major indices down more than 2.25 percent, essentially down about 2.5 percent. We'll see how that opens, how that goes, as the morning progresses.
I also wanted to talk about something on CNNMoney.com this morning that you should know about. Your money in AA rated U.S. So what is going to happen to your money?
Well, keep in mind we've not been downgraded to junk status like Greece, for example. The rating is still very high. Some analysts are saying hey, AA is going to become the new AAA because we are still the best economy in the world right now.
But it is likely our bonds will go up here in the U.S. so our country, our taxpayers will be paying a little bit more for bond interest. That sort of thing.
Credit card rates are tied to prime rates so if prime rate goes up we could pay a little more there.
Treasuries are actually tied to mortgage rates so mortgage interest rates could go up slightly.
Lots more on CNNMoney.com today.
And finally today, Ali, I wanted to point out gold prices because we have never ever seen gold prices this high ever before. Gold prices right now $1,712 an ounce. Lots of people running to the perceived safety of gold today -- Ali.
VELSHI: Carter Evans, thanks very much for that. We'll continue to follow this and we'll be watching those markets very closely.
Carter Evans at the NASDAQ marketsite.
That wrapped it up for us here on WAKEUP CALL. We'll be back tomorrow morning at 5:00 a.m. Eastern. But right now "AMERICAN MORNING" begins.
