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Doom & Gloom for European Markets; U.S. Stocks Seesaw After Huge Sell-Off; Fullerton Police Face Federal Lawsuit; West Memphis Three Freed from Prison; Social Media Plays Political Role Around the World; Global Markets Falter

Aired August 19, 2011 - 13:59   ET

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

ALINA CHO, CNN ANCHOR: We're coming up on the top of the hour. And talk about a wild roller coaster ride at the opening bell on Wall Street. This morning, the Dow was down. Then it moved up, then back down again.

But that of course, is a massive improvement over the huge selloff yesterday, a 419-point drop triggered by the sluggish U.S. economy and fears over the European debt crisis. As for Europe, more doom and gloom today. Our Richard Quest tells us in a nutshell what happened.

(BEGIN VIDEOTAPE)

RICHARD QUEST, HOST, CNN INTERNATIONAL'S "QUEST MEANS BUSINESS": The Europeans were down initially and they went down further. They rallied with Wall Street.

We closed down one percent in London. In Paris, 1.5 percent. Frankfurt, once again, the German market, is absolutely being creamed by what's happening at the moment by -- far and away being brutally attacked. And that's because it did see the best of the gains, and German industry has made much from exports, and those promise to be hit by the U.S. slowdown elsewhere in the world.

(END VIDEOTAPE)

CHO: That was our Richard Quest in London.

Now to the floor of the New York Stock Exchange. Alison Kosik is there.

So, Alison, first, tell us what's happening in the markets today. Is it fair to say that it's a little quieter than yesterday?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Definitely, much, much quieter, even though we are seeing those swings that you mentioned. You know, we opened the bell this morning 121 points lower on the Dow. Then we saw it go up another 96.

We're down now about 71. Expected to get a little bit more volatile though as we get closer to the closing bell.

To talk more about the markets is Jason Weisberg. He's with me from Seaport Securities.

This is a really headline-driven market. Today, we're not getting many headlines. Is that why it's kind of the calm here?

JASON WEISBERG, SEAPORT SECURITIES: I think the combination of a very news slow day, so to speak, or news light day, and you couple that with the fact that it's a Friday, a lot of people, certainly event-driven traders, they want to go into the weekend flat, they don't want to have any exposure or too much exposure with any news that might come out over the weekend that would disrupt their portfolios with a great deal of damage.

KOSIK: Is volatility really going to be the trend these days? Let's look ahead to next week.

WEISBERG: I think volatility is going to be the trend, at least for the next month out. I know that the president plans on speaking about some form of economic stimulus in September.

Until things calm down in Europe, until things are right -- have been righted here in terms of the political atmosphere -- the corporate underlying story is very good here, but it's being overwritten by all these negative macro overhangs in the marketplace. And I think certainly the last two weeks of summer is traditionally slow. We might see some volatility, but that's just because of a lack of participation.

Very easy for markets to swing one way or the other when there's a void on our side or the south side. And I think until we have some positive direction from Washington, we can expect to see this volatility for quite some time.

KOSIK: What's the number one worry for Wall Street at this point?

WEISBERG: The administration, coupled with Congress, don't instill confidence in the U.S. that they're going to be able to fix the economy, or at least point it in the right direction.

KOSIK: Is this more of a crisis of confidence morning than anything else? And how do you fix that if it is?

WEISBERG: Well, this is clearly a confidence issue. I think if you look at the earnings this period, earnings have been very good for the most part. Companies have figured it out.

We have -- we're at a record time now for companies participating in corporate buybacks. They're putting their money to work buying their own stock. And plus, that is also due to some instability in not knowing, or the uncertainty of what the government is going to do.

KOSIK: But they're not hiring?

WEISBERG: Well, that's right, they're not hiring. But they can't plan long term. Investors can't plan long term. No one can plan long term until there's a clear message from Washington.

KOSIK: OK.

So I guess we can count on volatility and uncertainty. There you go, Alina.

CHO: Alison, just a quick question for you though. I mean, obviously, the Dow is down only slightly, 62 points, but we're still below that key benchmark of 11,000. You talk about prices of confidence. How important is it to close above 11,000?

KOSIK: You know, I don't know how much we're really watching the level as much as those headlines that come out. You know, you think about what Morgan Stanley came out with yesterday in its notes, saying that the U.S. and Europe are getting dangerously close to a recession. It's headlines like that, that I think really grab a more attention than that psychological benchmark of 11,000, even though, of course, investors would love to see the Dow pop above that 11,000 mark -- Alina.

CHO: All right.

Alison Kosik, from the floor of the New York Stock Exchange.

Alison, thank you very much.

Investors are still clearly jittery over Europe's debt crisis and the future of our own economy, of course. All of this, a major punch in the gut to many of us, your 401(k)s, retirement, investments, even your job.

So let's get down to it. What do you do? How do you ride this volatile market to safety?

Earlier, I spoke with financial expert Valerie Coleman Morris for some answers.

(BEGIN VIDEO CLIP)

VALERIE COLEMAN MORRIS, FINANCIAL EXPERT: Being active in a good way is what I suggest, and that does not mean go and shift your money and try and rearrange everything. I want you to be paralyzed in the sense of not reacting to what's going on, but be positive in the sense of creating a plan. This is an opportunity now for you to renew and recalculate your relationship with your money.

CHO: So is what I'm hearing from you, don't make major decisions at this point, maybe stay put?

MORRIS: I think you should stay put. Here's the reason. Whenever you make decisions about money under pressure, it's usually a wrong decision.

Let's look at the Warren Buffetts and the billionaires of the world. Warren Buffett always says you sell into a rising market and you buy into a declining market. So is this not an opportunity? You see, sometimes people just say here's the negative side of it. And don't get me wrong, I know people are greatly concerned. They're wondering how this is going to trickle down to them.

But it's an opportunity for you to say, you know what? I need to buy if I have a little money on the side. There's some great companies that are available now.

(END VIDEO CLIP)

CHO: Well, Valerie has other tips for you. These are the main things she says you need to keep in mind. Take a look. Other financial experts agree.

This is not the time to react to this volatile market. Instead, take this time to make future plans. Make or revise your budget, hire a financial adviser. And, of course, who wouldn't agree with Warren Buffett that a declining market is a good time to buy?

(NEWSBREAK)

(COMMERCIAL BREAK)

CHO: We want to update you on a development that is happening right now. It's connected to the case of a homeless man in Fullerton, California, Orange County, Kelly Thomas, who police are accused of beating to death.

Now, we are hearing that a federal lawsuit involving the Fullerton Police Department is being filed today. A press conference is taking place at this moment in Los Angeles. We are told that Thomas' attorney is briefing reporters about this federal lawsuit. And you are looking live there from our affiliate KCAL and KCBS. We have a CNN crew there to bring us the latest as well.

Now, this comes in the wake of Kelly Thomas' beating and death and the public outrage that has followed. We have followed this case on this show very closely, and I have to warn you, the photo we're about to show you is graphic, it is hard to look at, but it's important.

This is Kelly Thomas before and after the alleged beating.

Now, Thomas was homeless and schizophrenic. Witnesses say what you're seeing was done at the hands of six Fullerton police officers back on July 5th.

What began with reports of car burglaries and a search of Thomas' backpack witnesses say ended like this -- Thomas being hog-tied, tasered multiple times, and brutally beaten. Thomas died from his injuries five days later.

The police chief, Michael Sellers, took paid medical leave just last week as calls for his resignation have intensified. The six officers, meanwhile, allegedly involved in the beating have been placed on paid administrative leave. But all of this, Kelly Thomas' family and their attorney, say could have been prevented. Thomas' family attorney also represents another alleged victim, a man named Veth Mam, who claims one of the police officers involved in the beating of Kelly Thomas viciously attacked him, too, in a separate, earlier incident last year.

Which brings me back to today's press conference that's going on right now. And I remind you, you're looking live. The attorney is officially announcing he is filing a federal lawsuit in Mam's case today that alleges that Fullerton police used excessive force, made a false arrest, and ultimately lied in their arrest reports to cover their tracks.

The attorney told our Randi Kaye earlier this week Kelly Thomas could still be alive today if one of the officers in Mam's alleged attack had been held accountable.

(BEGIN VIDEO CLIP)

GARO MARDIROSSIAN, ATTORNEY FOR KELLY THOMAS' FAMILY & VETH MAM: And had the police department and the D.A. taken note and brought Mr. (BLEEP) to the foreground, and questioned him about falsifying reports and bringing false charges against Mr. Mam, he would not have been there that night beating Kelly Thomas.

(END VIDEO CLIP)

CHO: On the other side, Fullerton police issued this statement about the Mam case, saying, "Based upon the information that was brought to our attention over the last week, Acting Chief Hamilton is very concerned and has ordered an internal affairs investigation into the matter to determine what happened that evening in October of 2010 and the court case this year. There is a strong possibility that we arrested the wrong person that night (Veth Mam)."

Now, the attorney for Mam and Kelly Thomas' family says he is preparing to file a similar state and maybe even federal lawsuit in Thomas' case at a later time.

Meanwhile, the FBI, the Orange County District Attorney's Office, and now an independent consultant are all investigating the Fullerton Police Department and the Kelly Thomas case.

Of course, we will continue to watch every moment in this case very closely.

Now, look at these pictures, one of the most biodiverse places on the planet. And there may be only four months left to save it.

So that's why film star Bo Derek is going to join me with more on this effort, next.

(COMMERCIAL BREAK)

CHO: It's 18 minutes after the hour. And we want you to look at this, amazing images of the Yasuni National Rainforest in Ecuador. It's in the Amazon, and it's one of the most biodiverse places on the planet, full of exotic birds, rare frogs, and home to nearly two dozen threatened and near-threatened species.

It is truly amazing. But its survival is coming at a cost.

The Ecuadorian government is asking for $3.6 billion with a "B" dollars, $100 million just by December, in their initiative for paying to keep one billion barrels of heavy crude oil under ground and leave this biological and cultural diversity undisturbed.

Joining me now for more on this is Bo Derek. Of course, she's the actress, model and Goodwill Ambassador appointed by the president of Ecuador to the Yasuni Initiative. And she's joining us now.

Bo, great to see you.

First of all, I laid it out a bit. But tell us, what makes this area so very special?

BO DEREK, ACTRESS, GOODWILL AMBASSADOR: You know, this is one of the last places of Amazon rainforest that's completely untouched and pristine. So many of our conservation programs are trying to put back what we've already spoiled. This is unspoiled. There are two indigenous tribes living there in voluntary isolation. If you were to go there as a tourist, you couldn't even go by motorboat. You have to go two hours by canoe to get to the heart of this park.

It's so beautiful, so spectacular. And this is -- the way it comes across, it sounds as though Ecuador is looking for dollars, and to sell this, in essence. But what they've done is they put this in trust at the United Nations, this project. And by asking for $3.6 billion from the world to keep this oil in the ground forever, they are contributing $5 million in income that they will never see by presenting this project.

CHO: Bo, you're hoping to raise, in partnership with the United Nations, $100 million just by December. How much have you raised? How much more is there to go? So what are you doing to raise that money?

DEREK: You know, various countries have already contributed and pledged to contribute for the next 13 years. The project is just now being open to the private sector, to foundations, to the NGOs. And I think this $100 million by the end of the year is a sign of good faith and intent from the rest of the world that they value this idea and this historic project.

CHO: So what you're looking for are promises from countries and corporations, and people to make good on those promises.

You know, I think what's extraordinary about the Yasuni National Forest is the fact that this is also, as I mentioned earlier, an oil- rich area. Ecuador could make billions of dollars on this land. And yet, they're choosing not to. And they're doing something really extraordinary. And they're setting a precedent, aren't they?

DEREK: Yes, they are. And it's a developing country, so this income is a big sacrifice to them financially. Seventy-eight percent of the people support this initiative

President Correa, I met with him five years ago. His passion and commitment to this project is unquestionable.

I think that -- I think the Ecuadorian people -- I've spent a lot of time there -- do have a sense of the nature. They have the Galapagos Islands, they have this last piece of untouched Amazon rainforest.

Also, oil is their number one source of income. And they've seen, frankly, good drilling and bad drilling, and the adverse effects from it. So this is an opportunity for all of us to contribute and save this last Garden of Eden on Earth.

CHO: Garden of Eden, a good way of putting it. And I know that Yasuni means, literally, sacred land.

I have to ask you -- you have a really great life, you have a really cute boyfriend. Why did you get involved in this project?

DEREK: You know, honestly, I get a lot of credit I don't deserve for taking on projects like this. Sometimes it's as simple as sitting next to someone at a dinner party, and you become enthralled and almost you want -- what they're doing is so important. They have the answers, they have the solutions. They're so dedicated, they're so brilliant, and they say, "Will you help?" And I'm only too happy to help them.

CHO: Well, you're a great public face for this project.

Bo Derek, actress, model, Goodwill Ambassador.

We thank you for joining us. I think you have a birthday coming up as well, don't you?

DEREK: Thanks. Yes, I do.

CHO: So happy early birthday, Bo. It's great to see you again.

Bo Derek, thank you so much.

DEREK: Great.

CHO: Checking some of the top stories we're following today.

It's been an up-and-down day on Wall Street, but a big improvement over the massive sell-off yesterday which was triggered by the sluggish U.S. economy and fears over the European debt crisis. Markets in Europe and Asia, also down today. Right now, the Dow is down sharply, 136 points.

Bank of America says it's cutting 3,500 jobs. That's on top of the 2,500 cut earlier in the year. A spokesman for the North Carolina-based bank says cuts will be spread throughout the company and occur internationally. An outside analyst says Bank of America is selling off parts of its business, including credit card and life insurance portfolios, to comply with international banking rules.

And get a load of this. A Florida woman has been charged with child neglect after a police dashcam video captured her riding in her -- her baby, rather, riding in the back of the truck. Take a look at that.

According to CNN affiliate WESH, several people called 911 after seeing the pair in the back of the truck. So it's her with her baby in the stroller.

Investigators say Keyona Davis was babysitting for a friend when the incident happened. She told the court she didn't realize it would be considered endangering the child since she said she had a grip on the stroller.

There you have it.

Up next, desperately facing starvation, thousands of children depend on the work of this week's CNN Hero.

(COMMERCIAL BREAK)

CHO: We've all seen the heartbreaking images from Somalia, tens of thousands of children literally starving to death, victims of famine and war. But the drought that has ravaged Somalia extends across Ethiopia and Kenya.

And that is where one group founded by a 2010 CNN Hero has stepped up its efforts to reach thousands of the youngest victims.

(BEGIN VIDEOTAPE)

ANDERSON COOPER, HOST, CNN'S "ANDERSON COOPER 360" (voice-over): As millions struggle across the drought-ravaged Horn of Africa, in what the U.N. Refugee Agency is calling the worst humanitarian disaster in the world, CNN Hero Magnus MacFarlane-Barrow's organization, Mary's Meals, is in the middle of the crisis.

We've been working in northern Kenya for about four years now. We've seen the situation worsen steadily.

MAGNUS MACFARLANE-BARROW, CNN HERO: Today, around one-third of the children are malnourished. And so we have a real situation of life and death. And because of that, we are trying desperately to expand our program to reach more children at risk.

COOPER: Since 2006, Mary's Meals has been feeding thousands of young children in schools across the region.

MACFARLANE-BARROW: The mission of Mary's Meals is about linking food to education, allow education to be the light out of poverty for their whole community.

COOPER: In recent weeks, Magnus' organization has responded to the drought crisis by feeding an additional 6,000 children daily, 24,000 in all, the kind of important global work for which Magnus was named a Top Ten CNN Hero last year and received an Order of the British Empire from Queen Elizabeth. But Magnus remains laser-focused on the critical work in Africa.

MACFARLANE-BARROW: As part of our East African emergency response, we intend to reach many more thousands of children, and we'll do that as funds allow us to.

COOPER: Many more thousands of children to be supported by an organization already feeding 500,000 children daily in 16 impoverished countries.

MACFARLANE-BARROW: It's so much just about the will of people to share a little of what they have in order that these children can be fed.

(END VIDEOTAPE)

CHO: And to learn more about Mary's Meals, or to donate to its relief work, visit CNNHeroes.com.

And there's just little more than a week left to nominate someone you know who is making a big difference in your community. Remember, every CNN hero is chosen from people you tell us about. We need you. Visit CNNHeroes.com to nominate someone today.

Just ahead, a scientist warns what we're doing right now might grab the attention of extraterrestrial life? We'll have details next.

(COMMERCIAL BREAK)

CHO: It's about half past the hour. Here's a look at the headlines and other news you may have missed today.

Look first at the Big Board at the New York Stock Exchange. Stocks are down about 112 points after yesterday's big selloff. The Dow has been up and down all day as investors focus on Europe's debt crisis and other economic concerns right here at home.

A woman whose ill-fitting wigs earned her the name the "bad hair bandit" has been arrested in California. Police say Cynthia Van Holland and her husband were arrested Monday after being accused of a bank robbery near Sacramento. Her husband is accused of being the getaway driver in that heist in which Cynthia was not wearing a wig. A sheriff's department spokesman says Van Holland been cooperating with detectives providing enough information to confirm her as the bad hair bandit. She's accused in more than a dozen robberies.

A sixth person has just died from the stage collapse at the Indiana state fair. And 40 others were hurt when the gust of wind toppled the stage moments before the country music duo Sugarland was about to perform. And it happened again in Belgium. A stage collapsed there during a violent storm at Europe's largest music festivals. Five people were killed, 50 others injured. The storm struck hours after the concert began. Belgian authorities are investigating.

In Philadelphia, three teenagers pleaded guilty in a flash mob attack on Monday. Among the charges against them, felony assault, robbery and inciting a riot. Investigators used text messages between two of the older teens to tie them to the attack. The judge in the case has denied the request that the teens be freed on bail until their trial next month.

And listen to this one, one of my favorite stories of the day. A NASA affiliated scientist at Penn State University has released a report about how alien contact might affect human life. Along with his colleague Sean Goldman, they have broken down alien-to-human contact into three categories. Listen carefully -- beneficial, neutral, or harmful. He says greenhouse emissions may send a message that we are a population out of control and a threat to the universe, and that those greenhouse gas emissions may make us more vulnerable to a Martian attack.

Facebook and twitter have been mostly social platforms until recently. These websites are now the way in which revolutions, pro- tests and criminal activities are planned. Next we take a closer look at the global impact of this social media revolution.

(COMMERCIAL BREAK)

CHO: The power of social media, it fueled riots in London, sparked protests in Syria, and helped lead a revolution in Egypt. We take a global look now at social media and its impact, starting in San Francisco, where metro transit police blocked online communications to stop a protest. Here's Dan Simon.

(BEGIN VIDEOTAPE)

DAN SIMON, CNN CORRESPONDENT: We're at a BART station in downtown San Francisco. And the saga al began when protestors threatened to disrupt passenger trains and put a wrinkle in the commute for thousands of people who rely on BART on a daily pay sis. That prompted BART to shut down the cell phone communication on several of its platforms.

They thwarted the protest but it angered BART critics, including the hacking group Anonymous. It hacked into a BART website and since then they've been on the defensive and said it had to shut down the cell phones because it was a matter of public safety.

BART meanwhile has been battling an image problem. There have been a couple of shootings involving its police officers. The most recent one occurred last month when officers shot and killed a homeless man who was allegedly carrying a knife. That's what's prompted a flurry of protests and everything that's followed.

Dan Simon, CNN, San Francisco.

(END VIDEOTAPE)

(BEGIN VIDEOTAPE)

ATIKA SHUBERT, CNN INTERNATIONAL CORRESPONDENT: Here in Britain, we've already had two people sentenced to four years in prison for inciting a riot very a Facebook. Social media played a critical role. We know that Twitter and blackberry messenger were two of the ways that rioters organized some of the looting online. It was considered such a threat that Prime Minister Cameron told lawmakers he was consulting with police to see whether or not it was appropriate to stop communication on social media if there was any evidence of plotting disorder, violence, or criminality. As you can imagine, a tremendous backlash from critics who said that would be a violation of free speech.

I'm Atika Shubert in London.

(END VIDEOTAPE)

(BEGIN VIDEOTAPE)

BEN WEDEMAN, CNN SENIOR CORRESPONDENT: The authorities in the U.K. and elsewhere might think that shutting down communications networks is a good way to bring unruly elements back under control. But before they touch that kill switch, a cautionary tale from Egypt. For five days during the revolution here, the former regime shut down the cell phone networks and the Internet for five days, hoping to nip the revolution in the bud. But it was a blunt weapon that hurt friend and foe alike. It damaged the Egyptian economy, damaged its reputation, and for many people who had been sitting on the fence, it convinced them that the regime was willing to do anything, even bring the country to a screeching halt in order to hold on to power, power which, of course, in the end, it lost.

Ben Wedeman, CNN, Cairo.

(END VIDEOTAPE)

ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT: The Syrian government regularly monitors and tries to regulate communication, taps phone lines. And this is not even something that it necessarily tries to hide. State-run television has broadcast what it said were secret phone calls between activists. Activists for their part, fully aware of this, often will only make a brief phone call on their cell phones or send a quick text message before they remove the battery to make it more difficult to trace them.

When it comes to military operations, we've regularly seen the government shut off the internet, land lines, cell phones as well. So activists developed a smuggling network to try to get satellite phones and other technology to various areas under siege to continue to get their message out and post the videos that we keep seeing emerging on YouTube.

When it comes to the internet, interestingly, the government unblocked access to social media sites like Facebook. Activists say it's so they can continue to spy on them on-line. Either way, despite the government's effort to try to control communications, activists have always found ways to circumvent the government's various blockades and efforts. And demonstrations most certainly have not let up.

Arwa Damon, CNN, Beirut.

(END VIDEOTAPE)

CHO: That's a look at how social media is perceived around the world.

The men convicted of brutally murdering three young boys in a satanic ritual get what they've been fighting for, for 18 years, their freedom. We'll take you live to Arkansas for the latest on the West Memphis Three, next.

(COMMERCIAL BREAK)

CHO: It's 44 minutes after the hour. They served nearly two decades in prison for crime they say they never committed. Now the three men dubbed the West Memphis Three convicted of brutally killing three young boys in West Memphis, Arkansas, walk away today free men.

The court made a ruling just a couple of hours ago. Prosecutors argued that Jason Baldwin, Damien Echols, and Jessie Misskelley, Jr., who you see here -- these are old photos -- were driven by satanic ritual, that they hogtied these three boys with shoelaces and mutilated their bodies before tossing them in a ditch.

But this case has gotten national attention. Even celebrities like Eddie Vetter and the Dixie Chicks along with actor Johnny Depp were rallying for their release. Why? Because of what investigators could not do, which is provide direct evidence that tied the three men to the boys' murders. DNA evidence later failed to link the men to the crime.

So I want to go straight to Jonesboro, Arkansas, now, where our David Mattingly is standing by outside the courthouse. David, this case has gotten so much attention, not the least of which because -- the conviction, rather, was not overturned and yet they were set free. So explain to us exactly how this happened.

DAVID MATTINGLY, CNN NATIONAL CORRESPONDENT: That's right. This attention that's been focused on this case for so long it's not going to go away, because there's still plenty to argue about here. It was a very complicated deal that went down in that courtroom today. We watched the three of them walk in, but then they had to agree to put in a guilty plea to first degree murder charges. And if they did that, then they would be able to go free with time served. It's called an altered plea where they're not actually saying they're guilty even though they are entering a guilty plea.

This allows the prosecution and the defense to both claim a victory. But when you talk to the defendants themselves, they found that their first taste of freedom was somewhat bitter because it wasn't the clear statement of innocence that they had wanted. Listen.

(BEGIN VIDEO CLIP)

JASON BALDWIN, FREED FROM PRISON: This was not justice. We told them nothing but the truth that we were innocent. They sent us to prison. We had to come here, and the only thing that state said we would let you go only if you admit guilt. That's not justice no matter who you look at it.

DAMIEN ECHOLS, FREED FROM PRISON: It's not perfect. It's not perfect by any means. But at least it brings closure to some areas and some aspects. We can still bring up new evidence and continue the investigation. We can still try to clear our names. The only difference is we can do it from the outside instead of sitting in the prison and do it.

(END VIDEO CLIP)

MATTINGLY: Prosecutors say that they believe that their prosecution of these three was just and that they are not reopening this case because the case is now closed, that the people responsible for it have been punished. Defense attorneys say, however, that you would not see this deal being done, the state of Arkansas letting these three go if they truly believed that these three were guilty. And the arguing goes on. This case may never be settled, Alina.

CHO: David Mattingly watching it from Jonesboro, Arkansas, thank you very much. And for more, watch "Presumed Guilty, Murder in West Memphis" tonight at 11:00 eastern right here on CNN.

With no clear end in sight to the current turmoil in the world's markets even here at home, are fears of a potential global recession, a double dip recession, valid? Our stream team weighs in next.

(COMMERCIAL BREAK)

CHO: While you were sleeping, markets in Europe and Asia suffered big losses last night. Today on Wall Street stocks wavered between gains and losses. Simply put, it's been an ugly August. This month alone the Dow dropped 9.5 percent. That's more than a thousand points. We closed below 11,000 yesterday.

And economists, including Morgan Stanley, are warning that Europe and the United States are dangerously close to a recession.

Joining me to talk about this, political analyst Roland Martin, chief U.S. economist at HIS Global Insight Nigel Gault, and the president of Optimum Capital management, Ryan Mack. Roland, I want to begin with you. Are these fears legitimate or are economists legitimate, or are economists just yelling the sky is falling? What's going on?

ROLAND MARTIN, CNN CONTRIBUTOR: No. Americans have been sitting here acting like we somehow are separate from everybody else. If anybody was paying attention to what's happening in Greece, what's going on in Italy, what's happening in Spain, in Germany, the world economy is totally linked. And so we've been acting like the politicians saying oh, forget anyone else. We're sort of on our own. We're not. We've always been affected by what has happened globally. It's now been exacerbated over the financial system over the past decade.

CHO: Nigel, you're a chief economist at HIS Global Insight. You know a thing or two about this. You ask ten people opinions on whether we're headed for a recession and you might hear ten different answers. What's your best guess?

NIGEL GAULT, ECONOMIST: Well, I think we are on very thin ice here. We place recession odds at 40 percent. U.S. economy even before we hit the latest problems, the latest market volatility, was showing almost no growth, barely above zero during the first half of the year.

Now the euro zone crisis has gotten substantially worse. We have a crisis on policy making on both sides of the Atlantic. And the latest evidence we're getting from consumers says confidence has fallen sharply. Unfortunately, yesterday we had a bad survey of manufacturers from the Philadelphia region indicating a steep drop in orders. So recession risks, I'm afraid, are very high right now.

CHO: That is not news that I want to hear. Ryan Mack, I want to turn to you now. Several analysts are saying in terms of the euro debt crisis that there is "no solution in sight." For people who think the U.S. economy is the biggest and best, you know, I mean, I think we need to remind our viewers that Europe and Asia are tied very closely to us, right?

RYAN MACK, PRESIDENT, OPTIMUM CAPITAL MANAGEMENT: Absolutely. I think what we're seeing here I don't think we'll see another double dip. But I do think we'll see a correction because for quite some time, again, we've been going up from the Dow Jones at 6700 up to 12,800, thinking that the housing and credit and job crisis corrected themselves and they really hadn't corrected themselves.

Pre-recession, we've gotten used to a level of unsustainable existence using debt level excessively and borrow for today what we hope to earn tomorrow. That was not working when the rug was pulled beneath us.

What we're seeing now is we've come to a new normal where companies -- the bright side is they have solid corporate earnings, but the systemic issues in the housing market and job market a little bit too far have been overlooked. We're seeing a new normal. Quite frankly, companies are not hiring as much because of demanding more productivity from the workers they have.

But dividend yields, Kellogg's and Procter & gamble they're paying high dividend yields because they have healthy balance statements. It's not something as hard as before. Companies are still healthy but the systemic issues until we see growth from the individuals laid off --

CHO: Roland, I want to ask you quickly. I see you nodding. Why are you nodding so much?

MARTIN: For the last several months on the show and here, I've been talking about how average Americans have finally gotten into their heads, you know what, I can't live on debt. That was part of the problem we had beforehand.

So what is happening, had we talk about consumer confidence, that's based upon do we still want to go out and spend money. Are we still thinking the economy is going to get better? People have decided, you know what, I can't live above my means. Now, 70 percent of the U.S. economy is based upon consumer spending. When Americans begin to say, I've better save more and stop living off credit, guess what? That has an adverse impact on the economy.

So this is the new normal, and we better get used to it. Ben Bernanke has been saying, get used to a longer period of time to rebound. Americans don't like to hear that. We want to see a six- month fix. It's not going to happen.

CHO: Roland, you sound like my mother. Roland Martin, CNN political analyst, chief U.S. economist at IHS Global Insight Nigel Gault, and the president of Optimum Capital Management Ryan Mack, we've got to end the conversation there. Thank you to all three of you for joining us today.

Meanwhile, former advisor to President Reagan calls a Republican candidate for president not that smart. Kate Bolduan will bring you the details after the break.

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CHO: News from Wisconsin that Democrats may be disappointed to hear. To explain all of this Kate Bolduan is at the Political Desk in Washington with details.

What's this all about, Kate?

KATE BOLDUAN, CNN CONGRESSIONAL CORRESPONDENT: Hey there, Alina.

You said it right. It's an announcement that is likely to disappoint many which is Wisconsin Democrats. Former senator Russ Feingold announced today that he will not be running for public office in 2012. He lost his reelection bid in 2010 to now Republican senator Ron Johnson.

But former senator Feingold has been very involved in politics since then, staring his own public action committee and serving as a pretty strong voice against Wisconsin's Republican governor during the budget battle there over collective bargaining rights for state employees.

There has been talk of him running for governor or taking another shot at running for Senate since there will be an open seat once Democrat Herb Cole retires. But in a statement Feingold said pretty simply, quote, "In my case, I don't need an excuse and will simply say that the time with family, friends, and loved ones in the past few months has been among the best in my life and I am not eager to give that up." So there you have it.

CHO: All right, Kate Bolduan from our political desk in Washington. Thanks so much for joining us.

And thank you for joining me today. I'm Alina Cho. I'll see you again tomorrow morning. CNN Newsroom continues now with Brooke Baldwin. Hey, Brooke.

BROOKE BALDWIN, CNN ANCHOR: Hey, Alina, welcome to Atlanta. Nice to have you here.

CHO: Thank you.

BALDWIN: Thank you very much.