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American Morning

New Video Released on Interrogations at Guantanamo Bay; Federal Bureau of Investigation Turns 100 This Year; Controversial Billboard Up in Florida; Barack Obama and John McCain Locked in a Fierce Battle for Latino Votes; General Motors Set to Announce More Restructuring Plans

Aired July 15, 2008 - 08:00   ET


KIRAN CHETRY, CNN ANCHOR: All right, Lou Dobbs from Sussex, New Jersey, this morning. Watch him tonight at 7:00 p.m. Great to see you. Thanks.

JOHN ROBERTS, CNN ANCHOR: It is coming up now to the top of the hour. And for the first time ever, we are seeing what an interrogation looks like at Guantanamo Bay, Cuba.

This morning, lawyers for a Canadian citizen Omar Khadr have released part of a video showing him being grilled by a Canadian security agent in 2003. Khadr was captured when he was just 15 years old. He is accused of throwing a grenade that killed a U.S. soldier during a firefight in Afghanistan in 2002.

Iran State television reporting today that President Mahmoud Ahmadinejad would welcome direct talks with the United States in the near future. The report says Ahmadinejad would sit down with Washington but only if both parties were on, quote, "equal footing."

Meantime, the Iranian president is planning another visit to New York. He will attend the U.N. general assembly in September.

A new report says the government is more than three years behind schedule in safeguarding legitimate radioactive materials. Those materials are used in occupations like the medical field but could be stolen if unsecured and used potentially in a radioactive dirty bomb. Nuclear officials say a system to track shipments should be in place by the end of the year.

Presumptive Democratic nominee Barack Obama will make what his staff calls a major speech on the wars in Iraq and Afghanistan today. He is expected to lay out his plan for future combat including taking troops out of Iraq and putting them in Afghanistan.

As for public sentiment, a Washington Post-ABC News Poll shows that John McCain has a slight two percent lead over Obama on the issue of handling the wars.

CNN's Barbara Starr is following that story for us and she is live at the Pentagon this morning.

Good morning, Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Good morning, John. Well, what Barack Obama and John McCain may be about to find out is the road home from Iraq goes right through Afghanistan.


STARR (voice-over): With Taliban fighters staging deadlier and more sophisticated attacks, Afghanistan is now the hotter war facing John McCain and Barack Obama. Even as they argue about Iraq and the surge ends later this month, American troops won't be home for long.

Commanders say more troops and armor must be sent to Afghanistan to fight the rising violence. But first, the Pentagon says U.S. troops have to get out of Iraq.

ADM. MICHAEL MULLEN, CHAIR, JOINT CHIEF OF STAFF: I've made no secret of my desire to flow more forces, U.S. forces to Afghanistan just as soon as I can. Nor, have I been shy about saying that those forces will not be available unless or until the situation in Iraq permits us to do so.

STARR: Obama still focusing on getting out of Iraq.

SEN. BARACK OBAMA (D), PRESUMPTIVE PRESIDENTIAL NOMINEE: I'm going to call in the Joint Chiefs of Staff and give them a new mission. And that is to bring the war in Iraq to a close. We are going to get out.

STARR: McCain still focusing on criticizing Obama.

SEN. JOHN MCCAIN (R), PRESUMPTIVE PRESIDENTIAL NOMINEE: His proposals would jeopardize the fragility of the success we've achieved.

STARR: But little discussion about what U.S. commanders are urgently recommending, sending up to 10,000 additional troops and a lot more equipment.


STARR: And, John, what commanders also say, however, is it could be months before they could really free up the troops and the armored equipment to send to Afghanistan. And, in the meantime, intelligence shows that Taliban insurgent threat there is growing and getting more sophisticated and more capable in many instances of carrying out these deadly attacks against U.S. troops.


ROBERTS: Barbara, anything more on that urgent request for those MRAP vehicles you were telling us about yesterday?

STARR: Well, indeed, the commanders in Afghanistan are now asking for between 600 to 1,000 MRAP vehicles, and that is going to take some time. It will happen two ways. New armored vehicles coming off the production line and vehicles, again, being freed up from duty in Iraq. But that key decision to have that drawdown in Iraq has to be made first.


ROBERTS: All right. Barbara Starr for us this morning from the Pentagon. Barbara, as always, thanks.

And Senator Obama will be Larry King's guest tonight. You can see "LARRY KING LIVE," right here on CNN at 9:00 p.m. Eastern.

CHETRY: Ali Velshi joins us now with a little bit more about GM's quote/unquote "restructuring plan." Which they've been hurting a lot lately, the automaker, and it looks like what they could to be shedding some jobs.

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Looks like that. We're going to be hearing in about an hour from the CEO of GM, Rick Wagner, in an announcement that we are expecting will contain the following.

One of the things that they've been struggling with is rumors on Wall Street because of the stock price being as low as it is, below $10, a 54-year low. There are some rumors of possible bankruptcy filings with General Motors. They would like to quash those rumors. That will be the first thing on the books that they are going to talk about.

They're going to try and discuss what they're doing in order to make sure that they are financially secure including further truck production cuts. Probably some buyout offers to salaried workers and some changes to how executives there get paid.

Now, what they've already done since June is that they've stopped the development of the next generation of trucks. They've announced that there are going to be four truck plants closed by 2010. They're transferring a lot of their production from trucks to cars.

They're cutting truck production by 170,000 units and they're increasing car production by 47,000 units. They're also trying to sell or they are considering selling Hummer. So, we'll probably get an update on that, probably further production cuts and maybe plant closures. But this is an effort to sort of say they're on track to try and become profitable at some point and certainly avoid bankruptcy.

I'll be talking a little later on to the vice chairman of General Motors, Robert Lutz. And you can see that interview on "ISSUE #1," 12:00 noon Eastern. And of course, we'll be covering the story all day and as it develops.

CHETRY: Sounds good. Ali, thank you.

ROBERTS: Inside Myanmar. We got an exclusive look at what a devastating cyclone has done to the country's classrooms. CHETRY: Barack Obama and John McCain getting personal as they defend their records on immigration. Just how critical is the Latino vote heading into November.

Also, a plan to fight obesity in South Central Los Angeles, keeping fast food out so that waist lines stay in. You'll see what an L.A. City congresswoman is proposing.

ROBERTS: And Brad Pitt and Angelina Jolie reportedly auctioning off photos of their newborn twins. Ahead, why do celebrities do this and is it right? You're watching the "Most News in the Morning."


ROBERTS: Nine minutes after the hour. Welcome back to the "Most News in the Morning" here on CNN. Tropical storm Bertha could re- strengthen into a hurricane today. It passed Bermuda with no reported injuries but power was knocked out to about 4,000 people.

Another disturbance, by the way, has developed this morning. Forecaster says it could become the third tropical depression of the Atlantic season.

Rob Marciano, of course, as always in Atlanta watching the weather for us this morning. What about this new storm, Rob? Is it looking like it could become yet another named storm?


CHETRY: CNN's Betty Nguyen has been giving us an exclusive look inside of Myanmar months after a cyclone devastated the country. And this morning, she looks at efforts to rebuild schools from the ground up.

Betty Nguyen live in Bangkok for us with another exclusive report.

You got a chance to talk to a mother who lost her only child in this cyclone?

BETTY NGUYEN, CNN ANCHOR: And she is one of many mothers, Kiran. The sad thing is that life goes on along the Irrawaddy Delta, but I will tell you that the Myanmar government says all schools have reopened in the cyclone devastation.

And we did see students going to class even in some of the villages that have received very little aid. But still, thousands of desks will remain empty. And it's just a painful reminder of the lives lost in the storm.


NGUYEN (voice-over): School has officially begun along the Irrawaddy Delta, even though few classrooms are still standing. Cyclone Nargis did more than destroy lives; it robbed many of a bright future. This woman survived the tidal surge by grabbing on to a tree trunk. Today, her hands are wrapped tightly around a picture of her daughter killed in the cyclone.

She says she never imagined losing her. And even though they're poor, they did their best to give her an education. After all, she was their only child. Two weeks after the storm, they learned she passed her final exam and would have graduated high school.

UNIDENTIFIED FEMALE (through translator): I couldn't help but cry out loud.

NGUYEN: Sadly, she isn't the only mother crying. Dozens died in this small village.

NGUYEN (on camera): Her daughter attended this high school. As you can see, there's not much left. Some two months since the cyclone hit, they haven't even begun rebuilding because they're still waiting on materials and skilled workers.

NGUYEN (voice-over): And until it arrives, these piles of wood will stay right where the cyclone left them. In fact, very little aid has even reached this farming community.

Yet, there is the sound of hope. Thanks to UNICEF, work has begun on the elementary school. Eventually, books will be recovered from the rubble and placed back on these desks. And just maybe, there will come a time when children can once again look out these windows and see better days.


NGUYEN: UNICEF says some 4,000 schools were damaged in the storm. Tent schools have been set up in some villages. In others, class is being held in monasteries. They're pretty much using whatever they can to bring some kind of normalcy back to their communities.


CHETRY: Betty, great reporting. Live for us in Bangkok this morning.


ROBERTS: Thirteen-and-a-half minutes after the hour. John McCain telling Latino voters they should be concerned about Barack Obama when it comes to immigration reform. A look at the candidate's stance on the issue, ahead.

A Los Angeles City councilwoman wants a moratorium on fast food restaurants opening in South Central Los Angeles. See what is behind her proposed ban on burgers and fries.

After the fall, Miss U.S.A. takes a tumble for the second straight year at the Miss Universe pageant and -- well, some people just can't get enough of it.


JEANNE MOOS, CNN CORRESPONDENT: Now, there is someone else who has a right to be almost as upset about the latest beauty contestant fall as Miss USA herself.


ROBERTS: Jeanne Moos takes us on a trip down memory lane.

CHETRY: Coming up on AMERICAN MORNING -- a rare look inside the FBI's crime lab. And if you think you know it all from watching TV, think again.


UNIDENTIFIED MALE: That's very unrealistic.


CHETRY: You're watching the "Most News in the Morning."


ROBERTS: Well, based on that music, you can pretty much imagine where this segment is going. The Federal Bureau of Investigation turns 100 this year. Everyday its experts are called upon to help solve cases using its crime lab, a lab that is so state-of-the-art it inspired a hit TV series, the theme of which you're listening to right now.

CNN's Kelli Arena was granted access inside the lab and she joins us now live from Washington.

It's a pretty special thing to be able to get in on the ground floor, Kelli.

KELLI ARENA, CNN JUSTICE DEPARTMENT AND SUPREME COURT CORRESPONDENT: Oh, John, you know, we got more access to the lab than we've ever had before. Lab officials are obviously sensitive because they're dealing with evidence that can't be compromised.


ARENA (voice-over): Before, the crime lab looked like this. There was this -- one agent, a single room and the crime of the century. It was 1932. The toddler son of famed aviator Charles Lindbergh was kidnapped and murdered. All the FBI had to go on were handwritten ransom notes. But they were enough to convict the killer.

Over the next seven decades, the FBI crime lab, which has gone through several transformations, has worked on everything from the JFK assassination to the September 11th attacks.

ROBERT FRAM, CHIEF OF SCIENTIFIC ANALYSIS SECTION: We had the luxury of being a larger lab that was able to specialize in a lot of different areas.

ARENA: It even inspired one of the most popular crime series on TV.


UNIDENTIFIED MALE: All right, bingo. Your bullet came from that gun.





ARENA: That show, "CSI" drives the FBI nuts.

CARLO ROSATI, FORENSIC EXAMINER, FIREARMS: The part about solving a crime in an hour, though, that's very unrealistic. We work on some cases for years at a time.

ARENA: And real crimes often don't get buttoned up as neatly as they do on television. Yet, that's what some juries have come to expect. Still, the myth is not all that far from reality.

UNIDENTIFIED MALE: This laser will help us detect any prints that fluoresce on here.

ARENA: The laser is great for picking up prints that can't be seen with the naked eye. With boxes of evidence arriving every day, accuracy comes first. But speed is a close second.

The DART machine short for direct analysis in real time can quickly identify things like poisons and explosives.

DR. MARC LEBEAU, CHIEF OF CHEMISTRY UNIT: So, we're able to take advantage of this newer technology and actually perform analyses within minutes as opposed to hours.

ARENA: And when human hands are not fast enough, there are robots -- already making a big difference in examining DNA evidence.

RICHARD GUERRIERI, CHIEF DNA ANALYSIS UNIT: The robotic system behind me allows us to process anywhere from 80 to 90 samples at a time in a period of less than two hours.

ARENA: The FBI crime lab's successes are legendary. But it's had some major failures.

In the 1990s, the lab went through major reform after accusation its scientists slanted evidence in favor of prosecutors.

And in 2004, fingerprint analysts mistakenly linked Oregon lawyer Brandon Mayfield to the Madrid train bombings. FRAM: No one is infallible. A mistake can be made, the idea is to minimize that and the idea is to act on it if it was made and correct it and make sure it doesn't happen again.

ARENA: From that one room to a globally-recognized facility, a crime lab itself under a very powerful public microscope.


ARENA: You know, it is important to point out that the evidence that we were allowed to shoot up close was test evidence. There are some shots of real evidence, but those were taken through a glass partition. Again, the biggest issue that we ran up against was not to compromise anything.


ROBERTS: Right. Right. Good information to have.

Kelli, are they being a little overly sensitive about "CSI"? I mean, first of all, it's time compression and, second, it's a TV show.

ARENA: Well, you know, juries, though, have come to expect that, you know, the evidence brought in trial will be, you know, very precise. That, you know, you'll have all of this scientific, you know, backup. And it just doesn't happen that way in real life. And so there is a lot of pressure, you know, from that show. But obviously, you know, nobody hates the publicity.

ROBERTS: It's an amazing exclusive look inside this crime lab. What do you got coming up for us tomorrow?

ARENA: Well, tomorrow, we're going to look at how the FBI has battled organized crime over the years. So you just make sure you're there, OK? You got it?

ROBERTS: All right. Absolutely. We've got to remind our viewers again. Exclusive stuff from Kelli this morning on the FBI crime lab. Fascinating. Great job, Kelli. Thanks.

ARENA: Thanks, John.

CHETRY: There's a controversial billboard up in Florida. A businessman puts a picture of a burning World Trade Center with the message, "Please Don't Vote for a Democrat." What both parties are saying about it this morning.

And Barack Obama accusing John McCain of walking away from immigration. And now McCain is firing back. We're going to compare the two candidates' position.

Coming up on AMERICAN MORNING -- banning burgers and fries.


UNIDENTIFIED MALE: I know it's bad but I still eat it. (END VIDEO CLIP)

CHETRY: One community looks to fight obesity by cutting out the value meals. You're watching the "Most News in the Morning."



JESSE VENTURA, FORMER MINNESOTA GOVERNOR: I will tell you now, I am not going to run at this moment. But if between now and 5:00 maybe God comes and speaks to me like he did the president, and tells me I should run, like he apparently told the president to invade Iraq, well, then maybe at 5:00 tomorrow, Larry, don't call me a liar. Just understand God send me the file. How's that?


CHETRY: Welcome back to the "Most News in the Morning." That was former pro-wrestler and former Minnesota Governor Jesse Ventura telling our Larry King that he will not make a run for U.S. Senate.

Ventura had been considering running as an independent but said he didn't want to submit his family to more public scrutiny. Today, by the way, is the deadline for filing as a candidate in the Minnesota race.

On the campaign trail, Barack Obama and John McCain are locked in a fierce battle for Latino votes. A growing minority group that could have a considerable influence in a number of key battleground states this November.


OBAMA: So I'm here today to ask you for your help. Make no mistake about it. The Latino community holds this election in its hands. You hold this election in your hands.


CHETRY: Well, joining me here in New York this morning is Kety Esquivel. She is a Christian progressive blogger and the founder of the blog

Thanks for being with us today.


CHETRY: Good to see you. You know, a lot of people talk about getting out the Latino vote. A lot of people associate Latino votes with immigration. But you have a chance in your blog to communicate daily with Latinos around the country.

What are some of the biggest concerns, if you can boil it down?

ESQUIVEL: Of course. Well, the Latino community is definitely interested in the immigration issue that the candidates are speaking to. But there are many other issues that are also important to our community.

There are issues that are important to the American population as a whole. Issues of the economy, issues of education, health care, et cetera. We, at the sanctuary, a group of Latino bloggers came together to put together a survey speaking to all of these different issues of interest to our community.

CHETRY: You're listening very closely to what the candidates have to say about these issues. You have not taken a position yet? You're not supporting or endorsing either one of the candidate so far, correct?

ESQUIVEL: Exactly. Right.

CHETRY: I understand that you guys did send in a questionnaire, though, with a lot of questions about issues that are important to Latino voters. You're still waiting to hear back.

ESQUIVEL: Exactly, yes. We are waiting and we are a little bit frustrated because with all of the energy that both campaigns have been putting into trying to garner the Latino vote, for them not to respond, creates a pause for us, you know. We are wondering why aren't they responding. Why the silence?

CHETRY: So you sent this out at the end of June. You're still waiting for a respond. So, it hasn't been a month yet. So you're going to give them a little bit more time to get back to you about some of those issues.

ESQUIVEL: That's correct. And we're hopeful that -- you know, we were reported actually in "The Wall Street Journal" blog, through here, this conversation on CNN, that the candidates will be looking and listening and that they will respond so that we actually have specific policies as well as the lip service that they've been paying to us today.

CHETRY: All right. Well, they certainly been at least trying to get out there and get the Latino vote. They spoke to the National Council of La Raza. It's one of the country's largest Hispanic organizations.

And Senator Obama actually accused Senator McCain of backing down on immigration reform for political reasons. Let's hear what McCain's response was to that.


MCCAIN: At a moment of great difficulty in my campaign, when my critics said it would be political suicide for me to do so, I helped author with Senator Kennedy comprehensive immigration reform and fought for its package, not once but twice.

(END VIDEO CLIP) CHETRY: It really did almost cost him supporting this, which included some pathway to citizenship for millions of illegal immigrants. It almost cost him the Republican nomination. Is that resonating with Latino voters that he tried?

ESQUIVEL: I think that our community is very interested in what both of these candidates have to say as it relates to the undocumented workers. And specifically, John McCain is a candidate that we're watching very interestingly because there's been some differences in so far as what he stated as it relates to immigration, as it relates to things such as the Dream Act.

And so, for us, it's very important to see consistency. So, what he says to us we're hoping that he will also say to the general electorate. Therefore, when he's in office, hopefully he will be having the positive stances that he stated in such conferences such as the National Council of La Raza, which has just happened.

CHETRY: Yes. On paper it seems that he and Barack Obama actually have a quite similar plan. They talk about border security first. They talk about some pathway to citizenship. They talk about many things as it relates to immigration.

Yet, Barack Obama is, at least in the latest polling, he's got 60 percent of the Hispanic vote to McCain's 30 percent in a recent poll. Why is he seeming to have a much more Latino support?

ESQUIVEL: Well, I think one of the things that has given us pause as a community has been the flip-flopping, has been him going back and forth on different issues that are important to our community. So if, for example, he says to our community in a closed- door room meeting --

CHETRY: You're talking about McCain here?

ESQUIVEL: Correct. If he says to us one thing, we want to be able to see that that's the same thing that he thinks the American populace as a whole. Unfortunately, we haven't seen that consistency. And that's I think what's giving a lot of people pause.

Also, Obama has been stating that he's very interested in the Latino vote and we're very interested in hearing back from his campaign with specifics as it relates to policies. That's really what we're going to gauge -- what our response will be when it comes to the '08 election.

CHETRY: All right. Very interesting. Kety Esquivel, the Christian progressive blogger of Thanks for being with us this morning.

ESQUIVEL: My pleasure. Thank you for having me.


ROBERTS: It's coming up to the half hour now. Planning a trip to Europe this summer, get ready to dig deeper into your pockets. A new low for the dollar today. The Euro has climbed to just over $1.60 American. This as overseas investors still nervous over the mortgage mess here in the United States.

And happening in less than an hour now. Automaker General Motors set to announce more restructuring plans. Officials tell CNN, they will discuss, quote, "sweeping changes." GM has lost $50 billion in three years and its stock has hit its lowest point in a half a century.

Ali Velshi monitoring this, and will bring us live developments.

And this morning, Israel's cabinet approved a prisoner swap with Hezbollah. It's now set for tomorrow morning, 9:00 local time.

Among the five prisoners being handed over to Hezbollah, a convicted murder who killed an Israeli police officer, a father and his 4-year-old daughter and 2-year-old girl. Israel expects to receive the bodies of two soldiers whose kidnappings sparked a 34-day war in 2006.

Also, the first-ever video scene of an interrogation of a suspect at Guantanamo Bay, Cuba. It shows a Canadian prisoner who was just 15 years old when he was captured being questioned by Canadian interrogators in 2003. Omar Khadr is accused of throwing a grenade that killed a U.S. soldier during a firefight in Afghanistan back in 2002.

Our Justice Department Correspondent Kelli Arena has seen the videotape. She joins us once again this morning.

What did we learn from it, Kelli?

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Well, you know, John, we've never seen an interrogation at Guantanamo on tape. We know that other tapes have existed, but we were told that they were destroyed.

I mean, the fact this is the first look at an interrogation obviously makes it news. But, you know, the tape itself doesn't show any interaction with U.S. officials. It doesn't show Khadr being mistreated or tortured. But he was very young on these tapes.

He was 15 when he was taken into custody. And these tapes were shot about a year later. He's now 21.

And it was his lawyers who released these tapes, hoping that it would bring worldwide attention to his plight. You know, some civil liberties advocates that I've spoken to this morning expect these tapes to increase the criticism of Guantanamo and put further pressure on the Bush administration to close that facility.

You know, on the video, a Canadian security intelligence services agent is grilling Khadr about what happened before his capture as an enemy combatant. The video shows Khadr uncontrollably weeping. His face is buried in his hands.

At one point he says he was tortured in Afghanistan. He pulls up his shirt to show his wounds.

Khadr was charged with killing a U.S. soldier in Afghanistan, though, in 2002, and he's expected to go before a military tribunal. So it's not likely we're going to see him released anytime soon -- John.

ROBERTS: And Khadr is in a unique position, Kelli, because as we said, he was 15 when he was captured.

ARENA: That's right.

ROBERTS: Sixteen years old when he was interrogated. And a lot of people are wondering, what are the military rules for detaining a child?

ARENA: I mean, this has been a matter of great controversy. There were eight others, eight detainees who were taken in as juveniles. Most of them have been released, but Khadr and one other detainee, enemy combatant, were both charged. And so those two are still being held.

Obviously, now they're both adults. But, you know, this is one of the many reasons that there's been an international outcry about Guantanamo Bay.

ROBERTS: All right.

Kelli Arena for us this morning from Washington with that.

Kelli, thanks so much.

ARENA: You're welcome, John.

CHETRY: Alina Cho joins us now with some other stories new this morning. And an infamous visitor perhaps making a second trip to New York City.

ALINA CHO, CNN CORRESPONDENT: That's right. He's back, as he said earlier.

Good morning, guys.

Good morning, everybody.

New this morning, Iranian President Mahmoud Ahmadinejad is planning another visit to New York City. He will attend the U.N. General Assembly in September.

You'll recall his visit last year set off a firestorm when he asked to lay a wreath at Ground Zero and speak to students at Columbia University. Tehran state TV, meanwhile, says Ahmadinejad is willing to meet directly with U.S. officials as long as both countries are on "equal footing."

In Florida, a billboard is stirring angry comments on both sides of the aisle. Take a look at that. It shows a burning World Trade Center with the message, "Please don't vote for a Democrat." St. Cloud businessman Mike Meehan (ph) says he's only trying to help Republicans. Well, Republican officials call it inappropriate, and Democrats want it pulled down, too, and some residents agree.


MARY ANDERSON, OPPOSES BILLBOARD: Just looking at it, I'm not thinking Democrat or Republican. I'm thinking about the twin towers. You know, all the families that were killed there.

UNIDENTIFIED MALE: They can have their opinion. I mean, it's a free country. You want to pay for the ad? Yes, that's an expensive ad.

UNIDENTIFIED MALE: Why use the twin towers for that purpose?


CHO: But the billboard won't come down. The company that put it up said it's a First Amendment issue and the ad will stay up until after the November elections.

Paramount Pictures is walking away from a $450 million financing deal with Deutsche Bank. The studio is blaming current credit conditions. Under the failed deal, the bank would have funded about 30 films, including a sequel to "Transformers" and a new version of "Star Trek." Paramount says it's now looking at alternative funding sources.

And in this economy, well, a lot of people may be thinking about downsizing their homes, but this might be a bit ridiculous. Try 96 square feet. Take a look at this.

Jay Shafer is the man that built the tiny home about two years ago, and now, well, he's teaching others to do the same. Homes that range from 70 to 1,000 square feet.


JAY SHAFER, LIVING IN TINY HOME: ... taking space than I had to.

ETHEL SOHL, INTERESTED IN TINY HOMES: The idea of it is wonderful. We don't need that much space.

UNIDENTIFIED FEMALE: I mean, everything is really simple. It's just clean. It's open.


CHO: Well, Shafer says a tiny home is good for the environment, and of course good for your finances, too. The cost is about $40,000. The only disadvantage, he says, is a small refrigerator, and that he can't throw a large party. Of course, it cuts down on the housework and...

CHETRY: Hey, that would go for $500,000 in Manhattan. CHO: Yes, exactly. It cuts down on clutter, too. You know, you only...

ROBERTS: Ninety-six square feet?

CHO: Yes.

ROBERTS: That's slightly bigger than the Kaczynski cabinet.

CHO: Yes, exactly.

CHETRY: But a lot neater. Not as much paperwork.

CHO: A third of a studio apartment in New York.

CHETRY: Thanks, Alina.

ROBERTS: Thanks.

Thirty-six minutes after the hour. A new study about Alzheimer's and how physical fitness could help keep the debilitating disease away as you get older. Our Dr. Sanjay Gupta takes a look.


CHETRY (voice over): Coming up on AMERICAN MORNING, banning burgers and fries.

UNIDENTIFIED MALE: I know it's bad, but I still eat it.

CHETRY: One community looks to fight obesity by cutting out the Value Meals.

You're watching the most news in the morning.



ROBERTS: All morning our Ali Velshi has been telling you hour your U.S. dollar is worth less over in Europe. Well, apparently it's worth less here at home as well, and he's here now with more on that.

Good morning, Ali.

VELSHI: Yes, that's exactly the analogy.

Inflation numbers are in for the month of June. These are wholesale inflation. We get retail inflation tomorrow. But wholesale inflation tells us where we're going.

Wow, what a number. Year over year. So the inflation today, the gain over last year is 9.2 percent. That is dramatic in that it is the highest we've had in a year since June of 1981, at which time we were in a fairly substantial recession.

So very, very serious. Obviously, it's food and energy prices that have been pushing this headline number.

When you strip out the food and energy, which are the volatile parts of inflation, the number is much smaller. But the reality is, you can't strip out the food and energy. It's useful for economists, it's not useful for you.

So inflation running much higher, even the month-to-month number is higher than expected. It's 1.8 percent versus the 1.3 that economists were expecting. So, this doesn't bode well for tomorrow's report about how much you are paying, but of course you already know that.

So inflation running at record levels. That's the fastest pace in 27 years -- John.

ROBERTS: Yes. And certainly, Ali, anybody who has got to travel anywhere or eat food to stay alive is going to feel the total effect...

VELSHI: That's right.

ROBERTS: ... of inflation, not just the core level. Ali, thanks so much for that.

VELSHI: No problem.

CHETRY: They're linked to brain shrinkage to Alzheimer's disease. Now a new study says that staying active may keep your brain bigger, keeping the disease at bay.

Sanjay Gupta takes a look.

ROBERTS: Plus, food apartheid. One woman's crusade to get burgers and fries out of the inner city.


CHETRY: New York City did it. Now California could become the first state to ban trans fats. Yesterday, state lawmakers approved a bill that would ban restaurants and bakeries from using the artificial vegetable oil. It's known to make French fries taste good, but unfortunately it increases the risk of heart disease as well.

Well, some city officials in Los Angeles are threatening to ban any new fast food joints from opening in South Central L.A. They claim the city is "nutritionally segregated." Fresh, healthy food for people on one side of town, and greasy, fried fast food for people on the other.

CNN's Chris Lawrence has details for us.


CHRIS LAWRENCE, CNN CORRESPONDENT: John and Kiran, this is a part of Los Angeles where some folks say you've got to drive miles for fresh fruits and vegetables, and the only thing close and convenient is fast food.

(voice over):

In South Central L.A., teenagers scarf down fast food on their way to school.

MAYNOR DIAZ, HIGH SCHOOL STUDENT: For me it's good. I know it's bad, but I still eat it.

LAWRENCE: And a mother who's running late drives through McDonald's to save time.

MAXINE PARKER, RESIDENT OF SOUTH CENTRAL LOS ANGELES: There's never any place you can go to buy, like, organic food. OK? There's no Trader Joe's over here. I go all the way to Torrance to a Trader Joe's.

LAWRENCE: That's 15 miles away in L.A. traffic. Critics call it food apartheid.

JAN PERRY, L.A. CITY COUNCILWOMAN: Forty-five percent of the restaurants in South L.A. are fast food restaurants. That's a pretty shocking statistic.

LAWRENCE: Especially compared to the city's west side, where only 16 percent of restaurants serve fast food.

City Councilwoman Jan Perry is pushing for a moratorium that would stop any new fast food places from opening in South Central. She hopes to see more restaurants and grocery stores like the one about to break ground. If approved by city council, the ban would cover 32 square miles. And some say that hurts small businesses.

JOE HICKS, COMMUNITY ADVOCATE: Because we think of the big fast food chains. What happens if I decide I want to open a hamburger joint in that area?

LAWRENCE: Joe Hicks runs an economic empowerment group. He says fast food places provide jobs and people choose to eat there because the food tastes good and it doesn't cost much.

HICKS: So, it's insulting to insist that the government has to tell people what's good for them or not.

LAWRENCE: The health department says more South Central children are obese compared to other kids in L.A. County. Even though the chains have added healthier options to their menus, supporters of the ban are demanding more grocery stores and casual restaurants that serve fresh vegetables and food that's not fried.

UNIDENTIFIED FEMALE: With gas prices, it would be a lot more convenient if it was in our neighborhood.

LAWRENCE (on camera): They're probably going to vote on the moratorium in the fall. And, again, if it passes, it doesn't mean these go away. It just means no new ones would be allowed to be built.

Chris Lawrence, CNN, Los Angeles.


ROBERTS: Oops, she did it again. Another Miss USA takes a spill at the Miss Universe Pageant. That is two years running. Our Jeanne Moos takes us on a trip down memory lane.

And a new study that could help shed more light on Alzheimer's disease. Could more physical activity slow down the debilitating sickness?

Our Dr. Sanjay Gupta is watching that story. And he's next.


CHETRY: News just in on General Motors announcing layoffs, production cuts, and borrowing money to stay vital. Ali Velshi has more on what they've been announcing in the company this morning -- Ali.

VELSHI: Kiran, just sort of getting through the announcement from General Motors, but it's an attempt to save -- or increase their cash position by about $15 billion by selling some assets worth $4 billion to $7 billion. They're going to cut 20 percent of their salaried cash costs. We don't know how that divides up, but we do understand that it's a lot of white collar workers.

They're going to cut their truck production further -- we had discussed earlier it was about 170,000 units -- down. It's going to be more than 300,000 units down for the year.

Information is just coming in now about where these cuts are coming, but we're still expecting, obviously, if they're going to cut truck production and they're reducing their salaried worker staff that we will see some closures. We're trying to figure out where those salaried workers are coming in from.

As you know, General Motors' stock is off about 62 percent this year to 50-year lows, and as a result, there's been talk of the financial stability of the country. General Motors CEO Rick Wagoner on air right now to assure investors that the company has a handle on its financial situations.

I'll continue to listen in and bring you more information as I have it.

CHETRY: Ali Velshi for us.


ROBERTS: Well, we have long known that exercise could lower blood pressure, rev up your metabolism, even be helpful in fighting off some cancers. Well, now doctors are finding that it may slow progression of Alzheimer's. Joining us this morning from the CNN Center in Atlanta, our only chief medical correspondent, Dr. Sanjay Gupta.

So, researchers are finding another noticeable difference in the brains of people with Alzheimer's who exercise. What kind of difference?

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Well, it was interesting. The biggest difference seemed to be the size of the brain overall, the actual physical size. But it was also more than that. It was the connections between various cells in the brain which seemed to increase both in their number and their efficiency with simple exercise, as you point out.

What they did, John, was they actually looked at people who had Alzheimer's versus those who had healthy brains. They tried to find noticeable differences.

Let me show you here. It may be a little bit hard to tell, but this is the brain of someone who is healthy. Look at these areas in here, sort of the middle fluid-filled spaces.

They're relatively small. That's because the brain is filled with important nerve cells that are actually conducting signals back and forth.

Someone who has mild Alzheimer's or someone who's not exercising, these fluid-filled spaces actually start to get a little bit bigger. And that's because a lot of the brain tissue around that has started to shrink down in size.

That's sort of the key here. The brain is changing, both in terms of the number of cells and the efficiency overall. It may be a clue, John, as to someone who is going to develop Alzheimer's later in life.

ROBERTS: You know, Sanjay, we keep hearing when it comes to Alzheimer's disease and brain health, you know, use it or lose it, either through mental functioning or exercise. Get the blood flowing through there. But is this something somebody needs to do early in live to stave off Alzheimer's, or is it possible for older people who may already have some of these early changes to stave off the progression of Alzheimer's disease by getting involved in an exercise program?

GUPTA: It appears to be a lot of the second what you mentioned there.


GUPTA: People who are starting to develop some mild dementia early, Alzheimer's. There's no question, John, that for a couple of reasons, people who have advanced Alzheimer's, this probably isn't going to work, in part because they don't exercise as much. That's something that may sound basic, but it's actually true. Now, what seems to happen, John, is just the increased oxygen that's going to these blood cells, these nerve cells in the brain, seems to make a difference. That's what they believe, sort of the genesis of why this might work is. But also this idea that plasticity, this idea that your brain can change, was something that was largely relegated to young people.

What we're finding is that older people can change their brains as well. And it can be done by something as simple as exercise, even walking 30 to 40 minutes a day.

ROBERTS: Wow. That's incredible stuff.

Sanjay, some good news for us out there this morning.

GUPTA: Hopefully, yes.

ROBERTS: Appreciate it. Thanks.

GUPTA: Thanks, John.

CHETRY: And the winner is, the Miss Universe Pageant. Well, who cares who won it. All the headlines are about Miss USA falling down the second year in a row.

Jeanne Moos looks at some of the more infamous falls.



DAVID LETTERMAN, "THE LATE SHOW WITH DAVID LETTERMAN": The talent portion of the Miss Universe contest always great. Am I right, ladies and gentlemen? For example, Miss Iran showed us how to enrich uranium. Did you see that?



CHETRY: I don't think you have to do talent for the Miss Universe. That's why there's hope for many more people.

ROBERTS: I thought it was a little tongue-in-cheek.

She's fallen down, and some people just can't get enough. For the second year in a row, Miss USA took a tumble at the Miss Universe Pageant.

CHETRY: Yes. I guess the talent is walking and smiling and not falling on your behind.

CNN's Jeanne Moos looks at some clips that will live in YouTube infamy.

(BEGIN VIDEOTAPE) JEANNE MOOS, CNN CORRESPONDENT (voice-over): Who cares if a beauty queen can twirl? What the public falls for is a fall. Or as Perez Hilton's Web site put it, "Miss USA eats it" -- and we eat it up.

The fall zoomed to number one most popular video. It was replayed...

TONY HARRIS, CNN ANCHOR: Let's just keep this rolling on a little bit of a loop here.

MOOS: ... six times in 40 seconds on CNN. "The Today Show" played it nine times over a phone interview with Miss USA, in which she had this advice for a future contestant who might fall in her footsteps...

CRYSTLE STEWART, MISS USA: I would tell her to put grips on the bottom of her shoes and wear a short dress, not a long dress.

MOOS: If only last year's Miss USA had passed on that advice after she fell. At least they both made expert recoveries -- Miss USA '08 clapping and Miss USA '07 cocking an eyebrow.

RACHEL SMITH, FORMER MISS USA: I'm tired of talking about it.


SMITH: Who has not tripped?


SMITH: I just happened to do it in front of a billion people. Oops.

MOOS: Rachel Smith had a costume defender on YouTube falling all over her.

YouTube is a magnet for videos of people falling. This one was billed as probably the funniest fall ever caught on TV. In this one, a guy who preceded the models managed to stomp a hole in the runway. Seconds later, a model fell in. But holes aren't usually the culprit -- it's when high heels get caught in a hem. Ask Beyonce.

Of course, Kelsey Grammer wasn't wearing heels when he fell.

KELSEY GRAMMER: ... a U.N. interpreter. Oh, good lord. Oh, damn.

MOOS: Sometimes it's not the beauties themselves who fall, but what they wear. From a sash...

MOOS: ... to a skirt.

UNIDENTIFIED MALE: And gave a new meaning to media exposure.

MOOS: When Carmen Electra went sprawling and a would-be rescuer in heels rushed to her aid, even Carmen cracked a smile.

(on camera): Now, there is someone else who has a right to be almost as upset about the latest beauty contestant fall as Miss USA herself.

(voice-over): That would be the Miss Universe winner -- Miss Venezuela, who ended up second banana in many a headline.

(on camera): The moral of the story -- a fall isn't necessarily the downfall of a beauty queen.

(voice-over): There are worse things that can befall you.

UNIDENTIFIED FEMALE: I personally believe that U.S. Americans...

MOOS: Jeanne Moos, CNN, New York.


CHETRY: Isn't she the best?

All right. Well, we want to let our viewers know as well, because of some breaking news on the economic front, we ran out of time and weren't able to bring you the story about some celebrity baby photos going for as much as $15 million. Angelina Jolie's new twins one of them.

So, is that ethical, and what are the implications of that? Even if it's going to charity, is it the right thing to do?

ROBERTS: Yes, so that will be shown in "NEWSROOM," which is coming up in just a few minutes' time.

Meantime, this just in to AMERICAN MORNING. President Bush will hold a press conference a little more than an hour from now, 10:20 Eastern.

White House correspondent Elaine Quijano joins us now from the north lawn of the White House. She's got the latest on this.

And Elaine, the president always likes to say something at the top of these press conferences. What's he expected to say this morning?

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Well, he's going to give his take on the current state of the economy, according to Press Secretary Dana Perino. It will be a short statement, about five minutes long, we're told.

He'll also talk about steps the administration has taken to shore up and help stabilize the housing and financial markets. He'll talk about the lifting of the executive branch's ban on offshore oil drilling, and the need for Congress to move forward on appropriations bills.

But clearly, John, the president trying to push back against some of these negative headlines on the economy that Americans have been seeing, really a steady stream of over the last few days and weeks -- John.

ROBERTS: On this issue of offshore drilling, the president yesterday, when he lifted the executive order that his father signed back in 1990, implored Congress to do the same. What's the likelihood of that, and how much pressure and what sort of levers is the White House trying to work behind the scenes here on members of Congress to do that?

QUIJANO: Well, certainly the White House understands that perhaps there might be some momentum out there as anger continues to rise over these high gas prices. There are some Democrats, the thought is here at the White House, that might eventually budge.

Now, we did not hear it yesterday after the president's announcement. But certainly there is the feeling here that perhaps, perhaps, there might be an opening. And, of course, the president is trying to let members of Congress know as well that time is quickly running out. Of course, Congress will be leaving for their summer recess in a few weeks, so the president wants to make clear he's doing something, wants the American people to know now it's Congress' turn to do something as well.

ROBERTS: Definitely becoming a big election year issue.

Elaine Quijano, thanks. We'll see you back soon for the president's news conference.

And that's going to wrap it up for us.

Thanks so much for joining us on this AMERICAN MORNING. We will see you back here again tomorrow.

CHETRY: Keep watching, though. Here's CNN "NEWSROOM" with Tony Harris and Heidi Collins.