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Where Did Economic Stimulus Funds Go?; Thousands Flooded Free Clinic in Virginia This Weekend; Link Between Lack of Sleep and Current Economy; New Home Sales for June Up 11 Percent; IEDs Pose Some of Biggest Threats to Marines in Afghanistan; The Other Side of the Goldman Custody Battle

Aired July 27, 2009 - 10:00   ET

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

HEIDI COLLINS, CNN ANCHOR: And this hour, in fact, we'll be getting a new measure of the economy. At any moment we expect to hear that new home sales went up 2.3 percent last month. And that bolsters hopes the housing market is indeed beginning to stabilize.

We're also hearing a more optimistic tone from Federal Reserve chairman Ben Bernanke now. He said that the financial crisis has made Americans save more and spend less. He says those factors and tighter federal regulations will eventually make the economy stronger and less likely to face a similar crisis in the future.

On Wall Street, nearly 150 companies will offer their polls of the economy. They are releasing earning reports and investors are poised and ready. CNN's Susan Lisovicz joining us now live from the New York Stock Exchange. Hi there, Susan.

SUSAN LISOVICZ, CNN CORRESPONDENT: Hi, Heidi. Well, we've seen the market turn around. Why is that? Well, you just mentioned new home sales. The expectation was that new home sales rose 2.3 percent last month. Guess what? It jumped 11 percent.

COLLINS: What?

LISOVICZ: That is the number we are seeing.

COLLINS: What?

LISOVICZ: Yes. May was revised higher to 2.4 percent. This comes on the back of last week's existing home sales. We sold a third straight monthly increase, Heidi. That, of course, is the biggest part of the housing market but new home sales, of course, also important, giving us an indication of whether there is any demand, whether people can get financing and at what price people will buy. Tomorrow we get actually another report on home prices. So that will give us an indication of exactly where we are on that end. But the point is, the market is rallying, opened weaker.

It's rallying just a little bit on the back of this news and that's really what we've had, Heidi, over the last two weeks, a remarkable summer scorcher. The sense that corporate America is telling us things may be bottoming out or in some cases improving just a little bit and so the market has taken off on that. The Dow's best two-week run since the beginning of the decade, the NASDAQ rose rallied 12 consecutive sessions. We haven't seen that since before the dot com bubble, way back when in 1992 and now we're getting this information that the housing market, which I think many would argue which is where this crisis all began is showing signs of life. And that's encouraging.

COLLINS: A couple of quick questions for you. I want to make sure I understand you correctly here. We were thinking that it was going to go up by 2.2 percent or that was just last month? And it's 11 percent is now -- clear this up for me.

LISOVICZ: OK. We're going from month to month. That is how, you know, corporate earnings compare year over year. But this is month to month. So June, what we had is that new home sales rose 11 percent from the month before, that was May and that May was actually revised higher as well. And I'm just looking at the census - the census - excuse me, the Commerce Department right now. So backing up on this very encouraging report.

COLLINS: OK. I'm sorry. I'm a little slow. I just want to make sure I have this right. We thought it was only going to go up by about two to three percent but it actually went up 11?

LISOVICZ: Correct. As far as new home sales go.

COLLINS: OK. That's right.

LISOVICZ: These are estimates. As you know, sometimes they are way off. This would be an example. A lot of time, you'll see revisions and you'll see revision as well. The revision was higher. You're seeing a trend in the housing market. It could be because we're seeing prices so low...

COLLINS: Yes.

LISOVICZ: Whether existing home sales move to sell, distresses sales, as well as builders doing anything to move it off the lot. But the fact is, there's activity. That was a lot too much to tell.

COLLINS: Yes, next time we talk to you, I would love to talk to you about credit. Because to me it seems like, you already mentioned it, but to me it seems like that's the next question. If people are really able to go out there and get the loans that they need in order to buy these new homes. So...

LISOVICZ: It's a big issue. There's no question about it. It's still not -- credit is not flowing.

COLLINS: Right.

LISOVICZ: Not like it used to be. That's both good and bad.

COLLINS: Yes. Well, Susan, thank you. Breaking news there. New home sales going up 11 percent. Who knew? In fact, it is a huge investment and you have no control over it goes, it's the taxpayer- funded economic recovery package. About 10 percent has been doled out now. And CNN's Christine Romans is tracking where exactly it's gone -- you may in fact -- and you probably won't really like the answer. So, Christine, do we know? First off, where is this stimulus money going?

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: First, I can tell that $67.4 billion has been paid out and about $187 billion has been allocated. So the money is flowing out there. And that means more than 10 percent right now and we can see when go to recovery.gov, the government's Web site. They paid about $18,000 per contract. Their own stimulus project to put all of this on-line for you so you can see yourself.

So, we've been going through and looking at these projects and one of the projects that is on top of the list of all the people who are critics of the stimulus is a project for an unused train station in Elizabethtown, Pennsylvania. $9.3 million to put this train station back in work. Right now, it's abandoned. It's an eyesore. About 80,000 a year used that platform but they don't use the train station and critics say, look, you don't need this thing, come on - to put up a coffee shop in there right now, how is that really stimulative?

But this is a project $9.3 million is on the list. And also bird watching roads in Colorado. This is $2.5 million. It's the U.S. Water (ph) Service. This actually though is a place that attracts -- it's a national grass land. Apparently if you look for rafters, this is where you go. There's -- erosion has hurt some of the roads there. They want to spend $2.5 million and to do some signages and some interactive kinds of things for tourists.

So this is putting my money to work at the (INAUDIBLE) national grass land, $2.5 million for that. So there a couple of examples of projects that critics of the stimulus say, come on, how much jobs is this going to create? We don't know how many jobs that will create.

COLLINS: I don't know if you guys are meant to this or not but you're traffic there was a little Candyland (INAUDIBLE)...

ROMANS: Yes, I think they meant to do that. It kind of follow the path in spite of all kinds of different things that don't seem to relate to each other but are all part of the overall tapestry of the (INAUDIBLE).

COLLINS: Right. Right. Well, are there examples of good use of stimulus dollars?

ROMANS: Well...

COLLINS: I know it's subjective because not everybody agrees.

ROMANS: It is subjective. And there are people frankly who will say that the train station is a good use and the bird watching roads is a good use. Here's another one though. This is something that's not necessarily brick and mortar. It's not a building. This is $3 million for 23 fellowships for early career scientists. This is a partnership with Vanderbilt University to fund global health research leaders.

These are for people, frankly, one of the projects is in China, one is in South Africa, but they are Americans, scientists early in their career who may have lost their funding because of the recession but now will be able to continue their research on things like HIV, syphilis in Shanghai, heart disease, health issues here in the United States, obesity, all these other kinds of things. So that's funding science, technology, funding knowledge that is supposed to be a building block for the future economy.

So tell me, Heidi, when you look at some of these contracts, it's amazing how different some of them are. And $787 billion, there are so many different contracts in there to analyze and investigate frankly. You can go to recovery.gov and you can report if you think there's fraud or waster or you know that there are shenanigans to these contracts. You can actually report it yourself to the government as well.

COLLINS: What will they do?

ROMANS: I don't know. That's a good question.

I hope they investigate. I'm telling you there are so many projects to keep track of.

COLLINS: All right.

ROMANS: And we're just going to start getting the quarterly reports from the people who are receiving these funds starting in October. So that's one of the reasons why all the money hasn't been paid out yet quite frankly, Heidi, is because some of the people who are getting the money are trying to figure out how they can - they have to abide by an awful lot of, you know, restrictions and dust the eyes and cross the teas, if you will.

COLLINS: Exactly.

ROMANS: So some of the money hasn't been spent yet.

COLLINS: All right. Well, we're watching and you're watching closest. Thank you.

ROMANS: Yes.

COLLINS: Christine Romans, appreciate it.

Gas prices are edging up now, according to AAA, the national average now stands at $2.50. That's an increase of less than a penny a gallon from yesterday. But it is nearly 15 cents a gallon less than what we were paying a month ago and nearly $1.50 less than pump prices from one year ago. Keep that in mind.

Meanwhile, later this hour, a formal unveiling for the cash for clunkers program. Remember that? Here's what you need to know -- if you want to cash in on that opportunity, the program offers up to $4,500 for old, gas-guzzling vehicles, and that money can then be spent on newer fuel-efficient cars or trucks. The goal of the program is to stir up new auto sales while also reducing emissions. But few warned that there are a lot of restrictions and fine prints. So for more information, go to the governments Web site for that, cars.gov.

If you don't have health insurance, there may be another option but be ready to wait.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: ... at midnight and (INAUDIBLE) 1027, 1028, 1029.

UNIDENTIFIED MALE: Last year, at midnight (INAUDIBLE)

UNIDENTIFIED MALE: 265. 266.

(END VIDEO CLIP)

COLLINS: The line at the DMV has nothing on this free clinic in Virginia. We'll tell you all about that. And also, Rob Marciano joining us in just a moment here. He will tell us how things are shaping up for the work week and the weather across the country.

ROB MARCIANO, AMS METEOROLOGIST: Well, Heidi, you're finally settling into a more typical summertime pattern with this humidity building across the east as thunderstorms that pop up. We'll discuss that. Fairly dry but smoking hot across the pacific northwest. We'll set some records today. CNN NEWSROOM with Heidi Collins is coming right back.

(COMMERCIAL BREAK)

COLLINS: Twelve people, including a 12-year-old girl and a pregnant woman are being treated for injuries after a gunman opened fire at a cookout in Baltimore. Police officials say that a man walked into a barbecue on an avenue in East Baltimore last night and started shooting. None of the injuries are life threatening. Detectives are working with witnesses to get the description of the shooter.

In Seattle, the military thought it had finally found a deserter. They threw him in jail for a week. They shipped him to Fort Knox. They even shaved his head. The only problem, Chris Parks says he was never actually in the military.

(BEGIN VIDEO CLIP)

CHRIS PARKS, WRONGLY ACCUSED OF GOING AWOL: How the paperwork got mixed up and said that I was actually in the military and hadn't made it there. I was actually -- it says that I was in there for two years before they finally figured out that I wasn't and started counting me as a deserter.

(END VIDEO CLIP) COLLINS: Parks says that he nearly joined when he was 18 but backed out. Somehow his name stayed in the system. Homeland Security flagged him on a trip from Central America. Eventually, he got out but he still wants a full explanation.

One massive tornado. 163 homes damaged and now a state of emergency in Port Orange, Florida. In fact, take a look at these pictures. Officials say the tornado was triggered by something called sea breeze merger. When heavy winds come in opposite directions collide and then start rotating. It created a water spout that hen spawned the tornado. Take a look at the damage too. The Florida governor, that will be Charlie Crist is expected to visit the are today. Only one person though had minor injuries. So that's very good.

Rob Marciano standing by. Are you impressed with my meteorological prowess?

MARCIANO: Yes. Nice. You know, it's not easy to differentiate the difference between a water spout and a tornado. I mean, the same thing but they do kind of form differently and typically water spouts and what makes this one so surprising or impressive is that water spouts are very weak tornadoes over the water and if they do come on shore, they typically don't do a lot of damage. That one is a strong one and obviously tore up that neighborhood pretty good.

COLLINS: Yes. And then there's a sea breeze merger, right?

MARCIANO: Nice work on a sea breeze merger.

COLLINS: Yes, OK. Thanks.

MARCIANO: That was -- I got to admit, I was only listening to the last half of your thing there.

COLLINS: Terrific. I knew it...

MARCIANO: Your soliloquy there.

COLLINS: Trying to impress you.

MARCIANO: I'll look at the tape.

COLLINS: OK.

MARCIANO: I'll give you my feedback. All right. More thunderstorms possible across parts of Florida. Actually, everything south of the stationery boundary will see humid conditions and thunderstorm that will pop up in the afternoon. And then this guy right here -- the highlighted red area, that's where potentially see severe thunderstorms there. In some cases, it could produce a tornado that will be northwest of Chicago.

Right now, we got Dallas, some showers and storms rolled and rotating through here. It's just a disturbance really that will slowly propagate off to the east. Again, these two fronts kind of moving slowly, southern half typically drag their (inaudible) you'll see more heavy rain across parts of the mid south and more scattered thunderstorms across parts of the East Coast.

All right. Portland is going to be hot. Seattle's well excessive heat warnings out for this part of the country. And temperatures are going to be well into the 90s and may up well over 100 degrees in spots. Portland tower cam for you, it looks like (inaudible) looking over the horizon, towards the rising sun. KGW, thanks for that shot. We will see near record breaking temperatures. So try to stay cool out there in the northwest.

Heidi, I'll listen more carefully when you're going through your meteorological discussion. I like that, as you know.

COLLINS: OK. All right. Rob, we'll check back later. Thank you.

MARCIANO: All right. See you.

COLLINS: If you don't have health insurance, take a number. Quite literally, if you live around Weiss, Virginia, the sight of a massive free clinic over the weekend. Dana Wachter from our affiliate WJHL tells us more people are asking for help than ever before.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: 265, 266, 285.

DANA WACHTER, WJHL CORRESPONDENT (voice-over): Before dawn, hundreds of people wait for their number to be called.

DARLENE BECK, PATIENT: I got here about 9:00 last night and I'm 790.

WACHTER: For many, camping out was necessary. By sun rise, tickets were gone.

UNIDENTIFIED FEMALE: At midnight, were 1027, 1028, 1029.

UNIDENTIFIED MALE: Last year, at midnight we were just at 300.

WACHTER: Optician Chris Hall worked with Ram (ph) for 12 years.

CHRIS HALL, OPTICIAN: I'm seeing a growth, seeing each clinic becoming larger.

WACHTER: And without these clinics...

BECK: I wouldn't get what I needed...

UNIDENTIFIED FEMALE: Be without.

UNIDENTIFIED FEMALE: I wouldn't be getting the glasses.

WACHTER (on camera): It's not your typical doctor's office here with tents and trailers spread out on the fairground but this weekend, about 1,600 patients each day will be served. At least 1,100 pairs of glasses will be given out. Twenty-eight pairs of dentures will be fit and over 3,000 teeth will be taken out right here behind me.

(voice-over): Volunteers give their time and supplies.

DR. SCOTT MILLER, DENTIST: A set of dentures in my prosthodontic practice is about $2,500. That's a pretty good sum and free work when you consider the labs donating their part of it, too.

WACHTER: Because people need it.

UNIDENTIFIED FEMALE: It blows my mind how many people are here who really don't really have medical care.

WACHTER: And so volunteers share what they can.

HALL: That feeling when you're driving home from wherever it is, knowing that you just turned down 1,000 pair of glasses and that's 1,000 people that are seeing sharper than they were earlier.

(END VIDEOTAPE)

COLLINS: Stressed out and can't sleep because of the economic mess? Well, you are not alone. What people are doing to find relief and get a little shut eye.

(COMMERCIAL BREAK)

COLLINS: A new study out of Germany links a chemical used in many plastic products to liver problems in premature babies. The study suggests foliate (ph), which is used in intravenous feeding tubing, could put the babies at risk for liver disease. There is no official proof implicating the chemical studies and some scientists are skeptical about the study. Premature babies' livers are immature so they are already at risk for liver damage.

The nation's financial crisis may have robbed you of your investment and even cost you your job. Now millions of Americans are finding that it's also taking a toll on their sleep. We get the details from Poppy Harlow of CNNMoney.com.

(BEGIN VIDEOTAPE)

POPPY HARLOW, CNNMONEY.COM (voice-over): If a good night's sleep seems like a faint memory, blame the economy. One-third of Americans are losing sleep over their concerns about their personal finances or the economy, according to the National Sleep Foundation.

DR. GARY ZAMMIT, EXECUTIVE DIRECTOR, SLEEP DISORDERS INSTITUTE: We're seeing a combination of people, people who have had long- standing problems with their sleep and who report that their sleep is getting worse because of the added stress of the economy as well as people who are coming in saying that they've never had a sleep problem before.

HARLOW: Prescriptions for sleep medications are at a record high topping 56 million in 2008 and up 54 percent since 2004. But if pill popping doesn't sound like the solution, consider a good, old-fashion power nap.

ZAMMIT: You can nap in response to sleep loss so after the fact or you can nap in anticipation of sleep loss because only sleep can replace sleep.

HARLOW (on camera): And napping may be just a ticket. Business is booming here at Yelo Wellness where believe it or not, people in Manhattan will pay nearly $30 for a 40-minute nap.

NIOCOLAS RONCO, FOUNDER & CEO, YELO: It's been a real interesting change in terms of consumer behavior. Before September, a lot of people were coming here and saying, you know, I'd like to get a nap and now what's been happening is that people actually need their nap. It's become a real necessity in people's life.

CAITLIN BUSH, LAWYER: I just think it make as real difference, first of all, in my work. I do a much better job and that means I'm going to get a better bonus and I'm not going to burn out.

HARLOW: Two-thirds of adults think that sleep interferes with their concentration and makes handling stress on the job more difficult. Regulars here say the fee to sleep is a small price to pay to overcome exhaustion.

BUSH: Coming here and spending the money and taking a nap allows me to kind of burn the candle at both ends.

HARLOW: Poppy Harlow, CNN, New York.

(END VIDEOTAPE)

COLLINS: Your home. Obviously it's a huge investment. And this morning, some encouraging news about the housing market. We'll break down the latest numbers and show you how they may impact you.

(COMMERCIAL BREAK)

COLLINS: Wall Street pretty much on pins and needles this week as nearly 150 companies are putting out their earnings report and together they will offer a snapshot of the economy. We'll have a live report just ahead from the New York Stock Exchange, as we check out the numbers there. Still the Dow Jones industrial average above to 9,000. That's a good thing.

And our personal finance editor Gerri Willis also has an update on a key element of the economy and that is new housing sales, unbelievable. Big numbers, huge surprise. We'll get to that.

Also, Poppy Harlow has some advice from the oracle of Omaha. She'll tell us what legendary investor, Warren Buffet, has to say.

So another snapshot of the state of the housing market. The Commerce Department just released June new home sales. Personal finance editor, Gerri Willis is here (inaudible) But first off, tell us the number again, because I'd just like to hear it. 11 percent?

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Yes, new home sales for June up 11 percent.

COLLINS: Yes.

WILLIS: To 384,000. This comes as a big surprise to Wall Street which was expecting a tiny increase, 2.3 percent. So you can say it's a big increase over what we were expecting.

COLLINS: Yes.

WILLIS: This is the biggest increase in the monthly sales numbers in nine years since December of 2000. Now -

(1030 CAPS BELOW)

first off, tell us the number again, because i'd like to hear it. 11 percent?

yes, new home sales for june up 11 percent.

yes.

To 384,000.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: This comes as a big surprise to Wall Street, which was expecting a tiny increase. 2.3 percent, so you can see there's a big increase over what we were expecting. This is the biggest increase in the monthly sales numbers in nine years. Since December 2000.

You should understand that the new home market is a small part of the overall housing market. Existing home sales is really a much bigger barometer of how the market is doing. I want to show you the numbers to give you an idea of why people say the housing market may have found the bottom and may be correcting right now.

Existing homes sales have experienced three straight months of gains. If you look at April, May, and June of this year, each of those months have experienced an increase up to 4,890,000. That really blows out the size of the new home sales market. We're seeing some signs of an improvement.

And just to give you an idea of an individual market, Las Vegas reported its highest June sales since December 2006. That was a market that was really hard. You're seeing recovery all across these markets but it's at a very low threshold. And you have to understand that a lot of the sales are foreclosure sales, so it's really getting some of these houses off the banks' books and getting them out of the market. Heidi?

COLLINS: Yes. Some of those bad assets. So, then obviously it's not all positive news. We have to put those types of things into this percentage increase.

WILLIS: Right. Exactly. There are some negatives here as well. We still haven't seen prices improve. In fact, prices are down 15 percent from a year ago. The median house price in this country, $181,000. And I have to also say that unemployment here is also bad news for the market. That's the old-fashioned way that people used to go into foreclosure. Is they would lose their job and couldn't pay their mortgage.

You should also understand that the federal tax credit for first- time home buyers, that $8,000 tax credit. That expires later this year. The jolt that's given to the market will go away and by the end of the year. But if you're looking for glimmers, look no further right now today than new home sales because that's a big boost, an unexpected, even surprising Wall Street, which tries to keep pretty close tabs on this thing. Housing an important indicator for the entire economy.

As you know, when people buy homes, they buy furniture, they buy all kinds of things. It really helps get the economy get going. It's nice to hear some positive news for a change, Heidi.

COLLINS: We'll hold on for as long as we can.

Gerri Willis, thank you. Appreciate it.

WILLIS: My pleasure.

COLLINS: The chairman of the Senate Reserve is once again taking his case to the people now. Ben Bernanke says that the people will recover, but there are very important lessons to be learned from this recession.

Susan Lisovicz is at the New York Stock Exchange with more on this. Hi, Susan. Those are pretty strong words coming from the Fed chair.

SUSAN LISOVICZ, CNN CORRESPONDENT: Pretty strong words and again, speaking very plainly. And I guess that was really -- he wasn't speaking to economists. It was only right. Ben Bernanke was speaking at a town hall session in Kansas City for PBS and says that there is actually a silver lining to this recession and that we, the American public, are saving more.

Of course, we've been the biggest consumers in the world. He says we saw what happened to our 401(k) and they became 201(k)'s and quote, "people are adopting good habits, so not only will we be back on track, but the economy will be stronger than it had been before this started.

And I know you and Gerri were talking about the extraordinary report we got at the top of the hour. The overall market is selling off -- not a surprise after two weeks of pretty strong gains, but if you look in the housing sector, if you look at companies tied to the housing market, it's green arrows across the board. I'm looking at Havnania (ph), for instance, the big home builder. Its shares are up 8.5 percent. The Dow industrials right now down a half a percent. The NASDAQ is down three-quarters of a percent. And that's on the back of the report just 30 minutes ago.

COLLINS: Yes, wild.

Also, Ben Bernanke is saying we may have learned our lesson, but did the Fed learned its lesson? I mean, is it going to be able to prevent another financial crisis? I know that's what he's saying.

LISOVICZ: Very fair point. The Fed chair said, of course, recessions in general can't be eliminated. They are a natural part of the economic cycle.

But one thing that he's adamant about, he said he had to hold his nose about this, is allowing these companies that exercised reckless judgement, to prop them up. And he said "Too big to fail has to go. There are new laws and regulations that need to be put in place so that-- sell it off, let it fail, but ensure that the whole financial system isn't brought down with it."

That a quote, Heidi. And that's the situation that didn't exist, and that is why the government did step in.

COLLINS: All right. We're watching it all every day. We sure appreciate it. Susan Lisovicz, thank you.

LISOVICZ: Yes.

COLLINS: In fact, Warren Buffett says (INAUDIBLE) America will recover from this recession. CNNMoney's Poppy Harlow asked the legendary investor about his thoughts of the economy and where he thinks average Americans should be putting their money.

Poppy's got the breakdown for us there from New York. Hi, Poppy. Interesting conversation.

POPPY HARLOW, CNNMONEY.COM: It was an interesting conversation, Heidi, with Mr. Buffett. He's had good lessons in fiscal responsibility ever since he was a little boy. He's been making money ever since his father opened a savings account for him at the Omaha National Bank when he was just six years old. So, a little help from his family but he's done a lot since then. He told me one on one, have faith in the American economy because when you look back at history, we always emerge stronger from a crisis. Take a listen.

(BEGIN VIDEO CLIP)

WARREN BUFFETT, LEGENDARY INEVESTOR: From 1776, anybody that bet against this country has lived to regret it. We have a system that unleashes human potential and will continue to do so. But you won't see that tomorrow or the next day, necessarily. But I will guarantee that five years from now, 10 years from now, you and your kids and all of the people will be living better than today. That's the history of America.

(END VIDEO CLIP)

HARLOW: All right, Heidi. And of course, he acknowledges we've hit some major, major obstacles. Some bumps in the road. He also said, ultimately it's really American ingenuity. It's this entrepreneurial spirit in him and in many of us, not government stimulus that is going to get the economy back on track. That's what he said when I asked him do we need a second stimulus package, Heidi.

COLLINS: Yes. It's very curious to me, though. I mean, we talk about history shows this and obviously, that's what these analysts do. But we've never had the government intervention that we had before as we talk about what is going on. Uncharted water and so forth.

So, love hearing what he has to say. Did you talk at all about how the average American should be investing right now? Everyone is worried about putting their money on the line in the market these days.

HARLOW: It's a great question, and we asked him as the final question I posed to him. I said, "Listen, should Americans have any confidence to hold that little savings that they might have out of the mattress and actually put it to work in the market, and listen to what he told me.

(BEGIN VIDEO CLIP)

BUFFETT: I think you can always have confidence in America. I think the time to have the most confidence is when other people have the least confidence. I mean, that's when things are cheap. You know, they -- people were buying these same businesses a couple of years ago when the Dow was 14,000, and the businesses have not gone away.

(END VIDEO CLIP)

HARLOW: Basically, this saying that he's known for, he said "Be fearful when others are greedy, and be greedy when others are fearful." Heidi, that's what he did a year ago. He made multi- billion dollar investments in Goldman Sachs and General Electric. The Goldman investment's paying off, not so much the GE one yet. But he jumps in when every one else runs away. Take a listen from the Oracle of Omaha. You can see that full interview whenever you want at CNNmoney.com. Heidi.

COLLINS: Somehow I feel like he's got a little more of a stash to do that with...

HARLOW: Yeah, a little bit more of a cushion.

COLLINS: Little bit more. Poppy Harlow, thank you.

HARLOW: Sure.

COLLINS: We've been asking you all morning long what you think about this. Have you actually changed your spending habits or your saving habits because of the recession? We have been getting a lot of responses. Let's check out what you guys have been saying to us.

The first person, Carolyn said, "Yes, as a single woman, I used to have takeout delivered about four days a week at $20 per visit. That turned out to be over $200 in a month and $2,400 in a year. I couldn't believe it. It was definitely time to shift my priorities." Yes. Interesting.

OK. So James then says, " I have not changed my spending habits. I pay cash, credit cards actually paid in full at the end of each month for all but the most major consumer goods and products, which would include homes, of course. That is why I have no debt."

And just a reminder to send in your comments to CNN.com/heidi and we'll try to get them on the air for you.

Meanwhile, a sad sight after a criuse ship hits major trouble in northern waters. This problem was more out of "Moby Dick" than "Titanic."

(COMMERCIAL BREAK)

COLLINS: Summer thunderstorms are what we are talking about now. Rob Marciano in the Severe Weather Center. I guess it's across the eastern part of the country, yes?

ROB MARCIANO, AMS METEOROLOGIST: Yes. Really rough weather and pop-up thunderstorms.

(WEATHER REPORT)

COLLINS: Rob, you may want to stick around for this next story. A crew of a cruise shit pulls into port in Vancouver, unknowingly dragging a massive passenger back with them. In fact, a dead 70-ton fin whale stuck to the bow. The ship probably hit the whale in Alaskan waters somewhere. Nobody realized that it was impaled until the crew docked. The (INAUDIBLE) Cruise Line says it doesn't know how it happened, but they have strict rules about avoiding marine life.

Seventy tons. Holy cow.

They are the number one threat to troops in Afghanistan. Improvised explosive devices, IEDs. How U.S. forces are getting around them and staying alive.

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COLLINS: Followers of exiled Honduran president Jose Manuel Zelaya making their way across the Nicaraguan, border where is he hanging around and stirring up support. On Friday, he even set foot back in his own country. Zelaya was forced out by a military coup one month ago. He has criticized the United States for not doing more to restore him to power. But tomorrow, he'll be in Washington for a meeting at the State Department. We'll keep an eye on that for you. And then a cease-fire with the Taliban struck in a tiny part of northern Afghanistan. The deal covers part of the Badghis province. They'll actually let a road project move forward in the area. And presidential candidates can open offices there, too. President Karzai is running for reelection against 38 other candidates. Today, Karzai is telling the Associated Press that he will talk to Taliban leaders who renounced violence. He is also calling for new rules for international troops in his country because he says that he is tired of seeing so many civilians hurt or being treated unfairly.

This has been indeed the deadliest month for international forces in Afghanistan. The Helmand province has seen the most intense fighting.

Ivan Watson takes us offroading with US forces there to show us how they deal with the biggest threats to their lives.

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IVAN WATSON, CNN CORRESPONDENT (voice-over): Marines blazing a trail in the desert and sometimes getting stuck in the sand. They are offroading to avoid improvised explosive devices, known as IEDs.

LANCE CPL. ALEX LYTCH, U.S. MARINE CORPS: The open desert's the best way to go. There are not too many main roads, but if there are, we try to stay off of them because they know it's the best place to catch us.

LT. JOSHUA SPENCER, U.S. MARINE CORPS: Over the course of the long war, both in Iraq and Afghanistan, IEDs have been the number one killer of coalition forces.

WATSON: Lieutenant Joshua Spencer is the 24-year-old leader of the counter-IED team for the Second Late Armored (ph) reconnaissance batallion. To protect his men, he tries to think like a Taliban bombmaker.

SPENCER: I'm curious about who they are after. Because they don't just try to take out any coalition force. They are smart as well. They try to take out key leaders, key assets.

WATSON: This photo shows an IED blowing up under a bomb hunting foot patrol earlier this month. Two Marines were killed in the blast. Cheap, easy-to-make roadside bombs have taken their toll on American and NATO forces. This has been the deadliest month yet of this eight- year war.

CORPORAL CHARLES HETTLE, U.S. MARINE CORPS: Like, you hear a pop, and then all of a sudden you hear boom -- the explosion and all you see is dust and your ears are ringing. Your body, your adrenaline is rushing. Body is so tense at the time. You, like, have no time, like, trying to react. You don't know what to do.

WATSON: Corporal Charles Hettle survived an IED strike against his armored vehicle on July 11. The bomb killed two Marines.

HETTLE: I have flashbacks as to what happened a week ago. And all I can do is snap myself back to reality.

WATSON: The threat of bombs has forced coalition forces to rely more on helicopters to move troops and supplies, but the Marines also have an arsenal for combating this deadly booby tracks.

UNIDENTIFIED MALE: This is an example of a mechanical solution. It's a mindroller (ph). And what you will see is the wheels here. They cover a path that is slightly wider than the track width of the vehicle, and what it's intended to do is set off a pressure plate line, or an IED.

WATSON: Sometimes all it takes to find a bomb is a good nose.

CORPORAL CHUCK MARION, U.S. MARINE FORCES: He's doing this side- to-side pattern and clearing both sides and we're out.

WATSON: Corporal Chuck Marion and his 3-year-old Labrador, Cabella, are part of a canine bomb hunting team.

MARION: He's kind of our Savior. So, we're walking out there in front of the convoy on an uncleared route and he saves our lives. Not to mention the rest of the Marines on the convoy.

WATSON (on camera): Seven of the eight Marines killed during the first two weeks of this operation were hit by roadside bombs. Unlike Iraq, Afghanistan has few paved roads, making it easier for bombers to plant their explosives. These Marines make a deadly gamble every time they go out of the gates of their base.

Ivan Watson, CNN, Afghanistan.

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COLLINS: A messy custody case spread across two continents. A New Jersey man fighting to get his son back to the U.S. And now only on CNN, we hear from the man on the other side of that fight.

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COLLINS: One boy, two families. One in America, one in Brazil. It was a custody case that was an international tug-of-war. You may have heard Sean Goldman's father give his side of the story. Now his Brazilian stepfamily is breaking their silence in an exclusive interview with our Deborah Feyerick.

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FEYERICK: At the age of 35, Bruna Bianci had everything she dreamed of, living in Brazil with her American-born son, happily remarried, a baby on the way, her own business. It was almost perfect.

UNIDENTIFIED MALE: She was really, really brave to come here. She wanted her life back.

FEYERICK: It came with a price. Bruna gambled she'd be able to keep her son Sean in Brazil and work out custody with her first husband in New Jersey, David Goldman.

FEYERICK (on camera): No one except Bruna knows the exact moment she decided to stay here in Brazil, but it's at this point that the story's husband and wife take sharply different turns.

FEYERICK (voice-over): David went to court in New Jersey, Bruna in secret went to court in Brazil, and attempt to beat the system. Each got custody. But under the terms of the Hague Convention, the U.S. court ordered Sean be immediately brought home.

PATER LAUZON, CHILD CUSTODY EXPERT: Oftentimes parents are not allowed to move, and that's why, in all likelihood, she took this particular step of kidnapping the child.

FEYERICK: Goldman says Bruna warned him not to go to police, threatening --

DAVID GOLDMAN, FATHER: I would never see my son again.

FEYERICK: Her mother and brother say not true.

FEYERICK (on camera): Was she threatening him, don't come, you'll never see your son?

UNIDENTIFIED FEMALE: She asked him to come many, many times.

FEYERICK: Goldman's attorney called the invitation a bold-faced lie. Meanwhile, years passed. Sean was living in Rio, learning Portuguese, and making friends.

Then, tragically, last August, his mom died hours after giving birth to a daughter. Again, Sean's world was about to change. A Brazilian high court judge ordered Sean's immediate return to Goldman, concluding Bruna's family had alienated the child from his real dad.

Sean's stepdad is making a legal claim for Sean to stay in Brazil, where he's lived half his life.

GOLDMAN: I'm pleased with this decision today.

FEYERICK (on camera): Why, as a stepfather, you are fighting for custody of another man's biological child?

JOAO PAULO LINS E SILVA, STEPFATHER: I was 60 percent of Sean's life. I've given him love, care, protection, supporting him financially.

GOLDMAN: Silva, a man with no blood relation, to keep another parent's child is against their own laws.

FEYERICK (voice-over): So why is Sean, now nine, still in Brazil?

SILVANA BIAHNCHI RIBEIRO, GRANDMOTHER: She always asked me to me, to "Mom, if someday, something will happen to me, please, Sean, he's your son. Promise that you are going to stay with him." FEYERICK: Bruna's family, still grieving her death, is determined to fight on.

SILVA: Can you imagine that you have to live in America, and you have to live with someone that you don't know but is your biological father, and you do not remember? Just go. I mean, he doesn't want to go.

BIAHNCHI RIBEIRO: He's so sad. And I miss my daughter so much.

FEYERICK: Deborah Feyerick, CNN, Rio de Janeiro.

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COLLINS: The changing face of war where robots are doing the fighting. That's coming up next hour. I'm Heidi Collins. CNN NEWSROOM continues now with Tony Harris.