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Bill Clinton Meets With Kim Jong-il; Senate Debates Sotomayor; More Cash for Clunkers; Obama Meets with Democratic Senators; Australia Terror Plot Interrupted; Taliban Captures, Brutalizes Boys for Jihad

Aired August 04, 2009 - 11:00   ET

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

T.J. HOLMES, CNN ANCHOR: Well, hello there. It's Tuesday, August the 4th, and now we need to bring you the faces that are driving the headlines today.

Two of those faces, Euna Lee and Laura Ling. Also, you need to add another face and another name to the mix as well in North Korea hoping to win the freedom for those two American journalists.

Also, Sonia Sotomayor. The full Senate takes up the judge's nomination to the U.S. Supreme Court today.

Also, Pakistan's lost boys. They say the Taliban stole him from their families and forced them to train for terror.

Hello to you all. Glad you could be here.

I'm T.J. Holmes, sitting in for my good friend Tony Harris.

And you are in the CNN NEWSROOM.

Well, Bill Clinton has turned up in North Korea today, and he sat down with that country's top man, Kim Jong-il. The former president, Clinton, hopes to bring two jailed journalists home with him.

CNN's Elaine Quijano is on the story with us at the White House. Also, our foreign affairs correspondent, Jill Dougherty joining us, as well.

Elaine, I want to start with you here.

We've been hearing a lot coming out of there, and a lot of this information, of course, we can't confirm since our reporters aren't necessarily traveling and a lot of people didn't know about this trip. But one thing that came out of this earlier today was that, in fact, President Clinton was carrying a message from the current President Obama.

What are you hearing from the White House on that? Not the case?

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Yes, T.J. The White House flatly denies that.

In fact, last hour, at the press gaggle, basically, in secretary Robert Gibbs's office, he was asked about this. Was there a message that former President Clinton, because of this report, was there was a message that he was delivering to Kim Jong-il on behalf of President Obama, what about that report? And he said, "That's not true."

Now, we should tell you that Secretary Gibbs wouldn't confirm or deny that President Clinton was, in fact, even sitting down with Kim Jong-il. He basically said, look, it's a very sensitive situation now. He said he wouldn't go beyond his statement from this morning.

It was a written statement where he said this was a solely private mission. The statement went on to say that they don't want to jeopardize the success of what he called former President Clinton's mission. So, interesting choice of language there as, obviously, this is a critical period of time. "Sensitive" and "delicate" are really the watchwords of the hour, T.J.

But the White House being very careful, being very tightlipped. The only bit of information, as you noted, is this denial by White House Press Secretary Robert Gibbs of this report that somehow there was a message that former President Clinton was delivering to Kim Jong-il on behalf of President Obama.

HOLMES: And Elaine, I know they are being careful of what they say, but do we have any indication? Of course, it's a private trip by the former president, but did the Obama administration -- were they aware of the trip ahead of time? How closely are they monitoring it? And also, how closely might they even be in contact with the former president?

QUIJANO: Yes. You know, I wish I had the answer for you on the last question, especially.

I think it's safe to say, obviously, the White House must have been aware. You have got, after all, a former U.S. president who is married to the current secretary of state going overseas in this very delicate situation here at a time when the United States, frankly, has really been trying to get North Korea to back off its nuclear ambitions.

Separate issues, the U.S. has tried to say all along, the detention of these journalists and the nuclear issue. But nevertheless, the White House really isn't saying anything about the extent of the president's involvement in all of this.

I asked Robert Gibbs at the gaggle, in fact, look, will we know more perhaps when the journalists are safe? Could we perhaps find out just how deeply involved President Obama was in all of this? And he said, look, this is sensitive. We'll hopefully have some more for you later on.

HOLMES: Elaine Quijano, we appreciate you. Thank you so much.

I want to turn now to our foreign affairs correspondent, Jill Dougherty.

Jill, I guess I would like to just get some of your first impressions and trying to put this in perspective. Why him on the ground? There are a lot of people who have kind of been working behind the scenes to make something happen and get these two Americans out of there, but why him and the significance of President Clinton being the one on the ground?

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Well, the North Koreans wanted somebody who was really, you know, a heavy hitter in diplomacy. Somebody who would represent the United States.

Now, they didn't get a formal official representative of the United States in that sense, but they got a former president of the United States. And no matter what they say, this is not -- that this is a private trip, et cetera, once you have a former president of the United States shaking hands with the head, the "Dear Leader" of North Korea, that is pretty big. And that's what the North wants.

It wants a personal -- I should say one-on-one relationship with the United States. They are not particularly interested in the six- party talks, in other countries. They want that, let's say, legitimization by the United States. And they have it here.

You know, look at these photographs that we've been showing of the president, former president, and Kim Jong-il across the table. These are very formal-looking pictures. And that is what the leader wants.

Now, is Bill Clinton there to negotiate about nuclear issues? No. He is there to get those journalists out.

And that is one of the reasons that you are getting this clampdown on information. Loose lips sink ships, as they used to say. And one false word in a highly, highly emotional situation could really, you know, destroy this, because think just back a week ago. You had a volley of invective coming in the direction of Hillary Clinton, the secretary of state, calling her not very bright, and she looks like a pensioner one day and a school girl the next.

That's pretty hot stuff. And so, one word could really make it very bad. So they're not going to say much of anything. But the mission is to get them out.

HOLMES: To get them out.

Jill Dougherty, we appreciate you.

I want to turn now to Mike Chinoy. He's covered Asia for CNN for more than two decades, now a senior fellow at the Los Angeles-based Pacific Council on International Policy. He joins me on the phone now from Beijing.

Mike, my goodness, a lot to talk about here. How will, first of all, North Korea play this up? How will they play it up? You heard Jill there talking about how it kind of legitimizes their regime and their country in some ways, but how will they take advantage of having this former president there in North Korea?

MIKE CHINOY, SENIOR FELLOW, PACIFIC COUNCIL ON INTERNATIONAL POLICY: Well, clearly, the North Koreans want legitimacy. They want recognition and acknowledgement of the legitimacy of their system and their leadership from the United States. They want respect.

And by a person of former President Clinton's stature going to North Korea, Kim Jong-il is getting that respect. So, I think it's clear that the North Koreans are very happy with this.

But beyond, I think, the issue of the two journalists, I think there is a big -- there is a broader question that's hugely important. What did Clinton and Kim Jong-il talk about? Whether or not he was carrying a letter from President Obama or a message of some sort, we'll have to wait to find out. But I think it is almost certain that he will have told Kim Jong-il in broad terms that there is a possibility of a better relationship with the United States if North Korea abandons its nuclear ambitions, and probably told him that if they don't abandon their nuclear ambitions, that's going to be difficult to achieve.

I think another important thing and one critical thing to keep in mind here is the way the North Korean system works, you've guy at the top who calls all the shots. And so for him to hear that from a senior American figure is very important. And he's the guy who makes the decisions.

And in turn, it will give the United States, through Bill Clinton, a chance to assess Kim Jong-il's health, his mental state, and whether he's really prepared to engage in any diplomatic activity that might make sense. So, I think it's a very valuable opportunity, but there are no guarantees after it's over, even if Clinton brings the women back, that the broader issues can be solved. But it does serve to diffuse what had been a very tense situation.

HOLMES: Well, Mike, one more thing here before we let you go. You mentioned there is probably no doubt there are some other things they're going to talk about, even though the main focus is to try to get these two women out.

But what is the danger then for maybe President Clinton himself, on a personal level, since this is supposed to be a personal trip, a private trip, as they say? What's the danger for him? And also, maybe a greater danger for the United States if he does not come back with these two women and this maybe is seen to be a failure?

CHINOY: Well, if he doesn't come back with the women, I think it will be seen to be a failure. But I can't imagine that he would have agreed to make this trip unless the North Koreans had given some clear assurances that the women would be released. So, I think it's very likely that he will bring them out.

There will certainly be critics who will say this is kowtowing to a dictator and so on. But I think it's a very important way to both communicate to the people, to the guy who makes the decisions in North Korea, where -- the way the U.S. sees things, and to suss out in what shape he's in and whether there's anything that the two sides can move forward on, because the history of the last eight or nine years have showed that sanctions and pressure and coercion tend to have the opposite of the intended effect with North Korea. And until we really probe at the highest levels there what they want and what might be possible, it won't be -- we won't be able to say whether negotiations will lead anywhere.

So, this is a very potentially useful step forward for the Obama administration. And as long as he comes back with the women, I don't think there's a downside to it.

HOLMES: Mike Chinoy, we appreciate you, as always. Appreciate your expertise. Thanks for hopping on the phone with us. We'll see you again soon, I'm sure.

Let's turn now to Washington, D.C., and the Senate beginning debates on the historic nomination of Judge Sonia Sotomayor to the Supreme Court. Another Republican comes out against the judge who's on track to become the first Hispanic on the high court.

Congressional correspondent Brianna Keilar joins us now live from Capitol Hill.

Brianna, good morning to you.

So, who is this other Republican that's come out now?

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Well, the person we heard this morning, T.J., was Mitch McConnell, the top Republican in the Senate, who got on the Senate floor, despite the fact that official debate hasn't begun, and this is really what we have been seeing, members of the Senate talking about whether they're going to support Sonia Sotomayor or whether they're not going to support her.

And here is just a preview of what's going to come later this afternoon from Mitch McConnell, but also from Harry Reid, the top Democrat on the Senate.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER: A long 10 weeks ago, President Obama made history when he nominated the nation's first Hispanic to be a justice on the United States Supreme Court, and only the third women. This week, the Senate will make history when we confirm her.

Judge Sonia Sotomayor is an American of tremendous qualifications. Both her academic record and her career experience really are second to none.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R), MINORITY LEADER: Judge Sotomayor is certainly a fine person with an impressive story and a distinguished background. But a judge must be able to check his or her personal or political agenda at the courtroom door and do justice evenhandedly as the judicial oath requires. This is the most fundamental test, it's a test that Judge Sotomayor does not pass.

(END VIDEO CLIP)

KEILAR: So, expect Republicans to keep questioning throughout this debate whether Sonia Sotomayor can remain neutral, as you heard Mitch McConnell say there. By his office, their count right now is that 27 Republicans have said that they are not going to vote for Sonia Sotomayor, and I also spoke with a Democratic Senate leadership aide who thinks that they're going to get 64 or 65 votes for Sotomayor.

But bottom line here, T.J., she is expected to be confirmed, although it is expected to be on a relatively party line vote. And that we are expecting to happen on Thursday.

HOLMES: All right. Brianna Keilar on top of things for us on Capitol Hill.

Thank you so much.

Stay here. We'll tell you about a tough situation police have where they're trying to find victims of child pornography without even knowing what these victims look like. Stick around for a really disturbing story.

Also, going to give you the latest numbers on the Dow right now. You can see it there, about 10 points up. We'll take it.

(COMMERCIAL BREAK)

(WEATHER REPORT)

(COMMERCIAL BREAK)

HOLMES: Well, that Cash for Clunkers program you have been hearing so much about, it's picking up support from two reluctant lawmakers. The Senate weighing whether to approve a $2 billion extension of this popular program before it runs out of money. Senators Dianne Feinstein and Susan Collins now say they will support the extension.

And you may be wondering what happens to all those clunkers that people are getting cash for.

Our national correspondent Jason Carroll explains.

(BEGIN VIDEOTAPE)

JASON CARROLL, CNN NATIONAL CORRESPONDENT (voice-over): Major automakers reporting a boost in sales, thanks to the government's Cash for Clunkers program. Consumers giving thanks too.

UNIDENTIFIED MALE: You know, I got $4,500 for this vehicle.

UNIDENTIFIED MALE: The deal is done. We are happy for him.

CARROLL: Official numbers not in yet. But already, tens of thousands of owners have dumped their old cars for new ones.

What happens to the old ones? A fluid put into the engines at the dealership makes them unusable.

What's next?

UNIDENTIFIED MALE: So, this is the first step when they come in over here.

CARROLL: Most end up at salvage yards like this one in Ridgefield Park, New Jersey.

DAN SAVIGNANO, APACHE AUTO WRECKERS: It's definitely helped our business.

CARROLL: Dan Savignano took us on a step-by-step process of de- clunking the clunker.

Step one, evaluation.

SAVIGNANO: These cars came in right from the dealership in Teterboro, right there over the bridge.

CARROLL (on camera): So, this is an example of what some of some of the clunkers for cash that you're getting; right? These three?

SAVIGNANO: Yes. Yes.

So, basically on this, like, normally if it wasn't a clunkers car, I could save the doors, probably the air bags, sell them.

CARROLL (voice-over): The government program doesn't allow every car part to be recycled because they don't want certain parts back out on the road.

(on camera): What's the next step?

SAVIGNANO: Well, step two, when any car comes in to our facility, we put it on this rack over here.

CARROLL (voice-over): Evaluation complete. Step two -- draining.

SAVIGNANO: Rear end fluids, brake fluids. All the fluids are drained here in this area.

CARROLL (on camera): The next step is to recycle the items that are allowed. In this case, the tires, the catalytic converter, the battery, the condenser, and the radiator. These are the only items from these types of cars that the program allows to be recycled. The next step? It's got to be crushed.

(voice-over): Once it resembles a metal pancake, it's done; ready for its final step, shredding.

SAVIGNANO: The little piece is about that big, and then it gets exported to any metal recyclers overseas.

CARROLL (on camera): At the end of the day, if you had to give your assessment of this program, how it's been working for you so far, what would it be?

SAVIGNANO: Well, it's definitely built a relationship with the dealers out there also. And it also helps us to get, you know, every little bit you can out of a car.

(END VIDEOTAPE)

HOLMES: All right. Jason Carroll joins us now live from New York.

I assume they didn't let you hit the button to crunch some of these cars.

CARROLL: I wanted to.

HOLMES: I know you did.

Is there a boon in business even for some of these junk dealers? You know, all these cars are coming in and some of these scrap parts. Somebody's making some money off of this stuff, aren't they?

CARROLL: You know, you're absolutely right about that, T.J. These junk dealers, these salvage yards all reporting an increase in profits as a result of this program. That's why they're hoping so desperately that the program is allowed to continue. So, they're hoping the Senate is listening and seeing that they're making money out there, and they say they have got better relationships with the dealerships. Also, we're hearing from some consumers saying everyone seems to be making a little bit of money, everyone is just waiting to see how long it will last.

HOLMES: How long it will last. And you're in New York. You probably don't own a car, do you?

CARROLL: I don't. But hey, I'm originally from California, so I remember.

HOLMES: You remember what it's like to drive. OK.

Jason Carroll, good to see you, buddy. Talk to you again soon.

CARROLL: All right.

HOLMES: All right. Stay with us here. We've got a disturbing -- really disturbing story to tell you about. A couple arrested for child porn in one city, but police say their victims could be in other places, as well.

Stay here.

(COMMERCIAL BREAK) HOLMES: A Florida deputy sheriff finds himself on the wrong side of the law this morning. Broward County Deputy Jonathan Bleiweiss was expected to go before a judge today. Investigators believe the seven- year deputy forced young, illegal immigrants into sex acts while he was on duty. He's charged with 14 counts of sexual battery, false imprisonment, and stalking.

A business owner in the Oakland Park area, where the deputy was assigned, says alleged victims were weary of authorities.

(BEGIN VIDEO CLIP)

MARTHA HINCAPIE, BUSINESS OWNER: They're not going to tell anybody because they know that they don't have any legal support for this type of situation. And I think it's a shame of the police department.

(END VIDEO CLIP)

HOLMES: And police believe there were multiple victims.

To another story now, where police in Maryland are asking for the public's help in locating some very young victims. They've charged a man and a woman, both EMTs, with sexually abusing children and taping the acts. Police say they found several videotapes in the engaged couple's home in the Baltimore suburb of Middle River.

Joce Sterman of affiliate WMAR with the details.

(BEGIN VIDEOTAPE)

JOCE STERMAN, WMAR-TV CORRESPONDENT (voice-over): This scooter parked in front of this house on Conmar (ph) Road in Essex looks like a sign of children at play, but police say what happened inside this home was far from innocent fun. They say the couple living inside, John Nicklas and Shannon Honea, were sexually abusing kids, taping the acts for use as child porn.

CPL. MIKE HILL, BALTIMORE COUNTY POLICE DEPARTMENT: Anybody in this kind of business, in public service, we see a lot of very sick things. And this is sickening.

STERMAN: Police say the abuse involved kids as young as 2 and as old as 13, with the victims assaulted here in Essex and potentially in hotel rooms in Atlanta, or elsewhere. Court documents show the couple have backgrounds as paramedics and that detectives found a vast amount of prescription bottles in the basement bedroom of this home. One victim abused there was reportedly unconscious during the assault.

TIMMY MCQUAID, NEIGHBOR: I was pretty much disgusted about it and I couldn't believe that they did that.

STERMAN: Neighbors say they were astounded by the news, which had cops seizing CDs, DVDs and computer equipment from the house. It's evidence that's led to even more questions.

HILL: The unfortunate thing that we know is that we know that we have three very young victims and we don't know who they are.

STERMAN: That's why Baltimore County police are asking parents to take a good look and John Nicklas and Shannon Honea. If there's a chance your kids or someone you know have spent time with them, they want you to call.

HILL: What's paramount to the Baltimore County Police Department is first to identify these victims, and then to make sure that justice is served with these people.

(END VIDEOTAPE)

HOLMES: All right. Now, John Nicklas is being held without bail and Shannon Honea is being held on $5 million bond.

Well, finding these alleged victims, that's going to be difficult here. Some could be outside Maryland.

We're going to be joined now by Corporal Mike Hill of the Baltimore County police. You saw him in that piece there.

Corporal Hill, you have a challenge here. Well, I guess, is there any reason to think -- I mean, did they do something in their careers or anything else that would just constantly put them in contact with children?

HILL: Well, that's something that our detectives are certainly looking into, and that's where we really need the public's help, neighbors, friends, family to contact us. Now, we are conducting a lot of interviews to try to put that together. But, unfortunately, you know, knowing that there's a lot of children in that neighborhood, knowing that they have been through several states, leads us to a lot of concern.

We have partnered up with the Federal Bureau of Investigation, assisting us in this, because we do believe we do have victims in other states.

HOLMES: And Corporal Hill, how old -- do you have a good timestamp for how long ago these videos were made?

HILL: Well, unfortunately, we don't. And we are trying to look into that a little bit further. It could have been just a few weeks ago, it could have been months, it could have been years.

HOLMES: Wow.

What were they doing with these videos?

HILL: Well, what they were doing was soliciting these children either into their home or into other areas or other places, and basically engaging, in some instances, in sex acts with them while they were filming this. Turning it into child porn, promoting it, and then sending it through the Internet.

HOLMES: Sir, do these two, as far as you know, have any kind of history, any kind of criminal history of anything like this?

HILL: Well, unfortunately, it's an ongoing investigation, and that's not something I could disclose by Maryland law.

HOLMES: And Sir, again, we got the number at three, you believe, at least, on these videos. Do you have reason to suspect that there possibly could be more?

HILL: We do believe that, especially from the sense that they've been to other states, not even just locally. So, we're reaching out to the public, even in these other states that, if you've seen these two, had any contact, or your children have been around these two without their supervision, that they contact our department.

HOLMES: What have these two told you all as far as your investigation goes? Have they been able to help in the investigation at all or are they being pretty quiet right now?

HILL: Well, I can't go into a whole lot because it is an ongoing investigation, and that is evidentiary. However, they are not being as cooperative as we would hope.

HOLMES: And one last thing here. How far along are you in this investigation in terms of -- I guess, how many leads have come in so far?

HILL: Well, this investigation that started in mid-July. They have been working very hard on it. Since last night, we put it on the media in the local Baltimore area. We do have some phone calls that have come in, and our detectives are looking to verify and gain credibility to some of the information that we're getting.

HOLMES: All right, well, again, the names are John Nicklas and Shannon Honea. For our viewers, and I know you're trying to reach out. We'll put the pictures up there again. We're trying to reach out to people, really, across this country. You have no idea how, really, how far this might go. But like you say, the corporal here is asking that if your kids have come into contact with these two, you might need to get a hold of the police there in Baltimore County.

Sir, Corporal Mike Hill, I appreciate you taking the time on this. I know it's a tough investigation to move forward on, but, sir, good luck to you. We will hopefully be following up with you.

HILL: Thank you very much, sir.

HOLMES: All right.

All right, we'll turn to the stock market for a bit here. And things may be looking a little up for some people in their 401(k)s. Our CNN Money Team bringing that to you next.

(COMMERCIAL BREAK)

HOLMES: President Obama just minutes away from a working lunch with Democratic senators. And among the items on the agenda, what would you guess? The economy, of course.

Our Elaine Quijano at the White House. Elaine, hello to you, again. There have been the past couple days, I guess some good economic news, little glimmers of hope, at least with the stock market and also with Ford even reporting that sales were up. But some important things like job numbers. And also, we're talking about personal income fell 1.3 percent in June, which was worse than economists expected. Those are the things that really matter to a lot of people. So, what's the reaction from the Oval Office?

QUIJANO: Yes, and those are things, T.J., you're exactly right, that will no doubt be a part of the conversation here when 57 of the Democratic senators will be meeting here at the White House. We're told that three will not -- senators Byrd, Kennedy, as well as Senator Mikulski. She's got a broken ankle, apparently.

But in any case, it will be a chance to sit down and talk about those issues and the president's priorities going forward. We know his biggest domestic priority, of course, in addition to the broader overall economy, is health care reform. The Senate leaves on its recess coming up here at the end of the week, and the president very much wants to make sure he drives home this message that he wants to see health care reform done by the end of the year.

Other business, as you noted, the economy. Also the wildly popular Cash for Clunkers program, we're told. White House press secretary Robert Gibbs told reporters earlier today this meeting will be a chance for the president to reiterate that he wants to see the Senate go ahead and extend the Cash for Clunkers program. They think it's been good for the economy and good for the environment. They want to see it definitely continue. A lot on the agenda when the senators meet here in about half an hour -- T.J.

HOLMES: And remind us who got the invite to this lunch.

QUIJANO: It was all 60 senators.

HOLMES: All of them.

QUIJANO: Sixty Democratic senators, I should say. Three for health reasons not coming, senators Byrd, Kennedy and Senator Mikulski, Barbara Mikulski, apparently having suffered a broken ankle, according to Robert Gibbs. So, she won't be making it today.

HOLMES: OK. All right. Elaine Quijano for us from the White House. We appreciate you once agin.

And the president marked his 200th day in office this week. Now, it's your chance to grade the job he's doing so far. You can log on to CNN.com/reportcard and see the results from CNN's "NATIONAL REPORT CARD." That's Thursday night at 8:00 Eastern.

Well, your 401(k) may be looking a little better lately. But you probably already knew that. It's probably not back to the pre- recession levels just yet, but stocks are rebounding from last year's crash, and Christine Romans of our CNN Money Team taking stock of the recovery.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: T.J., let's step back and assess your stock market investments. Anything tied to the major stock market averages are clawing back from the crash of '08. Stocks have now finished the best five months since 1938. Let's look at the S&P 500. It represents the stocks of 500 different companies. It's considered the benchmark. It is now up 11 percent this year as of yesterday's close, back to levels not seen since last November.

You can see on this chart a collapse all the way to 12-year lows in March, and then a sharp rebound. The S&P 500, as of yesterday, up 48 percent from that March low. So, what does that mean for you? It means if you're still invested in the market, the stock portion of your portfolio is recovering. Why? Because the stock market is anticipating the economy will turn around.

The economy is still very weak, but auto sales, housing, manufacturing, construction and earnings are showing signs of stabilizing. As one economist put it, the freefall of the skydive is over, the chute has been pulled and the economy is still falling, but now floating down.

Skeptics see caution ahead. The jobless rate expected to rise to 10 percent, perhaps higher. Foreclosures continue. American consumers are spending less and paying down their debt. That's good for their personal finances, but it's behavior that could slow a recovery.

No doubt this spring and summer rally has been powerful. You will notice it in your 401(k) statements, but you haven't made all your money back. The S&P 500 price is still down 19 percent versus a year ago. It's got a long way to go, T.J.

(END VIDEOTAPE)

HOLMES: All right. Got a long way to go, as Christine said. So, are we getting there? Susan Lisovicz joining us now from the floor of the New York Stock Exchange. How are things today?

SUSAN LISOVICZ, CNN CORRESPONDENT: Well, the bulls are taking a little bit of a breather. Understandable, T.J., given the summer sizzler that we enjoyed in recent weeks.

But, you know, Christine set the table for us very nicely. The market's rally has been, you know, because of these daily signs that things are getting better.

Case in point, a new report that we got just this morning on pending home sales, which rose for the fifth straight month. Now, we haven't seen something like that since the summer of 2003. That's great. But we also got another report that showed personal income dropped by 1.3 percent. That is a big amount. That is a one-month drop, and that is not something you want to see. And it really speaks to why no economists I've spoken to is popping the champagne corks just yet. This is going to be a long slog coming out of this recession.

Why is that? Because we feel that we're under pressure. With the jobless rate rising, with the average workweek shrinking, the personal income did drop a month before in May. It rose by a similar amount because of all the stimulus. The fact is, we are still suffering. What we do with our income generates activity, most of the economic activity in the U.S..

And, so, I think there's a little bit of caution you're seeing on Wall Street today. The Dow's right now on the plus side, just marginally. It's been kind of a seesaw session, T.J. The Nasdaq right now has turned positive, too.

But we've been seeing for most of the morning, we've been seeing a selloff. Just a little bit of caution in the air. That's not a bad thing. In fact, that's even a healthy thing after the gains we've seen recently -- T.J.

HOLMES: Yes, and we could talk about some of those numbers, those job numbers and personal income. Those are things that people really, really feel. So, those are the things we'll keep an eye on. Susan Lisovicz, we...

LISOVICZ: And we have a big jobs report on Friday, and that's probably the biggest headline of the week -- T.J.

HOLMES: All right. Well, we know you are on top of things. Susan Lisovicz, thank you so much. We'll talk to you again soon.

And you can follow the stock market and all the financial news of the day. Just go to CNNmoney.com.

(COMMERCIAL BREAK)

(WEATHER REPORT)

HOLMES: Rob, you still with me? Yes, you look like you're adjusting there.

ROB MARCIANO, AMS METEOROLOGIST: I am. Are they still -- are we still showing the -- yes, show the picture of the shuttle. This is the fun stuff we wanted to see.

HOLMES: Yes, we're showing a picture of the shuttle. Yes, we're going to get to that now. I don't think this isn't live anymore. This is taped. But as fast as this thing goes, Rob, this is one of the most fascinating parts of its journey.

The shuttle has to go from the hangar, I believe, where it's kept -- I don't know if you call it a hangar or not. But it has to make this three and a half-mile journey down to the launch pad. And even though, Rob, people are looking at it, looks like it's just sitting there, it is actually moving right now.

MARCIANO: And this is one of the cases in live television where the tape would be just as exciting as the live... (LAUGHTER)

MARCIANO: ... because it's moving so slowly. But it's cool, and boy, those cobalt blue skies there just developing that contrast. Oh, even some sun rays.

HOLMES: It's moving -- we're told it usually goes about a mile an hour. That's how fast this thing goes from one spot to the other. Takes six, seven hours to do this thing, but it's actually going slower because they've had some bad weather, and it's kind of muddy and mucky down there. It's actually moving. But were told -- this is just video -- it has made it to its destination, the launch pad. And I think somewhere around August 25th, it's going to take off. So, it will be going a lot faster at that point.

MARCIANO: Yes, for sure.

Rob, we appreciate you, as always. We'll catch up with you again here shortly.

And we want to mention here that if people can't watch, they can still track the weather online. Even though, of course, you want to see Rob live do the weather, but if you can't, you can see it online. So many storms have potential to wreak havoc today. And so, just go to CNN.com/newsroom and see where the weather is severe so you need to stay safe, and you need to stay alert.

Well, teenage boys taken out of their homes and trained for terror? You'll hear their stories only right here on CNN.

(COMMERCIAL BREAK)

HOLMES: Police in Melbourne, Australia, say they've interrupted a major terror plot. Four men are accused and are in custody today, accused of planning a suicide attack on a Sydney-area military base. Australian journalist Peter Morris talked with CNN about today's operation.

(BEGIN VIDEO CLIP)

PETER MORRIS, AUSTRALIAN JOURNALIST (via telephone): Well, certainly, the security level on the information that we got out of these raids was kept at a very high level. There were very few people outside of the Australian federal police and state police that knew that this was going to happen. And it was something that unfolded very rapidly in the early hours of this morning, where 400 officers turned out into the suburbs of Melbourne and across the state, where 19 warrants were served on homes, mainly in northern suburbs. And a fifth person is now in custody and charged over this alleged plot.

But certainly, when the detail of the allegations came out today, certainly a surprise to all of us here. And I guess that's why the prime minister and senior police officers have moved to reassure the public that they are handling this situation.

But when you hear the detail of what has happened -- you alluded to it earlier -- where the plan, the alleged plan, was to use semiautomatic weapons to try and get rid of or kill as many people as possible within the Holsworthy Army Barracks in Sydney, and then the -- I guess the assailants to take their own lives.

Just a shocking notion to think that something like that could be planned. And those allegations, I guess, will be tested in our court system as of this afternoon. The suspects have begun appearing as of a short time ago.

(END VIDEO CLIP)

HOLMES: Police say the suspects are all young Australian citizens of Somali or Lebanese descent. They say the suspects are tied to militants in Somalia who in turn have links to al Qaeda.

Well, Congress heads for recess, but nobody's taking a break from health care. Next hour, we'll tell you why some say this month could be the most critical for reform.

Also, we have the latest on three Americans being held in Iran. Who they are, and why they were hiking in that region.

(COMMERCIAL BREAK)

HOLMES: Boys as young as 13 years old brainwashed and trained to kill. Pakistan says it's rescued about a dozen of them from the Taliban, but as CNN's Stan Grant reports from Mingora, Pakistan, these boys are anything but free.

(BEGIN VIDEOTAPE)

STAN GRANT, CNN CORRESPONDENT (voice-over): Look into the eyes of these boys. Pakistan's military says these are the lost souls of the Taliban's terror. The boys tell me they were stolen from their families, abused, beaten and brainwashed by the Taliban.

"The first day, they beat us. Then they made us exercise. They made us run and told us, you will wage jihad.

"They told us that the army is against the Koran, it is against Islam. They said, wage jihad against them."

The Pakistan military gave CNN limited access to these boys. The army says they rescued them during heavy fighting with the Taliban in Pakistan's Swat Valley. Their faces are covered, their identities protected because of the possibility of retribution. The youngest is only 13.

We can't independently verify their stories, but doctors say they have no doubt about their trauma. The boys themselves each tell me how they were kidnapped by the Taliban.

"I was coming from the shop to my house. I had some stuff with me. They said, put your stuff in the car. They said, should we drop you in the village or in the square? When we reached the village, I said, I want to get off here. But they blindfolded me and put a hand on my mouth."

Other boys say they were snatched working in the fields. In militant camps, they say they were being trained to be suicide bombers, to do the Taliban's killing.

(on camera): Would you kill for God?

(voice-over): Yes, he says.

In the right circumstances or the wrong circumstances, would they kill?

DR. FARIHA PERACHA, PSYCHIATRIST: They would kill them, too, and they wouldn't even feel it.

GRANT (on camera): They'd kill, and they wouldn't feel it?

PERACHA: They probably wouldn't have an empathetic response to what has happened.

GRANT: These boys have been so badly damaged by this experience, psychiatrists say it's difficult to know exactly how they are feeling. The doctors say some are psychotic, some psychopathic, and some pose a very real risk.

PERACHA: His statement to the army was that if he had a suicide jacket, that he would have committed suicide. And if he had a Kalashnikov, he would have fired.

GRANT (voice-over): Dr. Fariha tells army chiefs they are just the tip of the iceberg. After talking to the boys, she believes there are possibly hundreds of others just like them.

(on camera): Are the boys brainwashed?

PERACHA: Yes, of course they are. They're brainwashed against you and me.

GRANT (voice-over): The army hopes the boys will one day be able to be rehabilitated and returned to their families, but the doctor says they should be under close surveillance at least for the next decade.

PERACHA: These children, except for two, don't certainly give me any indication that they will be rehabilitated. So, if they're going to gauge their future on the perspective of today or where they are, that future doesn't look very rosy, does it?

GRANT: But Dr. Fariha does not blame the boys. They are the innocent victims, she says. All they are left with, they told me, are the voices in their heads, voices of the Taliban commanding them to kill.

Stan Grant, CNN, Mingora, Pakistan.

(END VIDEOTAPE)