Return to Transcripts main page
American Morning
Markets Around World Tumble; U.S. Jobs Report To Be Released; Syria Cracks Down on Protestors; Coming Home; Coming Home; Bus Shooting Caught on Tape; Power Limits Pushed; Stocks Slide South; "Operation: Shady Rat"; The City That Never Shines
Aired August 05, 2011 - 06:59 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEO CLIP)
CHRSTINE ROMANS, CNN ANCHOR (voice-over): Wow. The fear factor sending stocks across the globe down sharply this morning. The selling fueled by an accelerating debt crisis, new concerns about jobs, what it means for your money and the recovery on this AMERICAN MORNING.
(END VIDEO CLIP)
CAROL COSTELLO, CNN ANCHOR: Good morning to you. Happy Friday! It is August 5th. Welcome to AMERICAN MORNING.
ALI VELSHI, CNN ANCHOR: TGIF. I think.
COSTELLO: It is. It's Friday. How could it be a bad day?
VELSHI: Can't be as bad as Thursday one hopes.
ROMANS: I know. Don't tempt the fates.
VELSHI: No kidding. Let's talk about your money. Unless, you were under a rock, you know this story, but we'll tell you the latest on it. Markets across the globe are reeling, selling driven by fears of a debt crisis in Europe and a stalled recovery globally. Our economic growth is slowing in the United States. Manufacturing numbers are down.
Consumer spending is down, and today, in just two and a half hours from now, we will -- is it two and a half hours? One and a half hours from now we'll learn the number of jobs created last month whether it was up or down. We're expecting it to be up by about 75,000 jobs. If that's true that's not great news. If it's worse, it's bad news.
ROMANS: It's just not enough. It's just not enough what we've been seeing in the jobs market. But what we're seeing is much bigger than the jobs market. It's about the whole world, big plays with people with a lot of money in currencies and bonds and debt instruments and in stocks.
Anyone with a 401(k), though, you watched yesterday as the Dow dumped 512 points. That's more than a four percent drop. Yesterday capped a brutal couple of weeks. Just take a look. In just the past ten trading days, the Dow, NASDAQ, S&P all lost more than 10 percent. That's what we call in the business an official correction. That ain't good.
COSTELLO: No. That's painful. But let's go to our Nina Dos Santos in London for a look at the markets overseas, which aren't exactly better.
NINA DOS SANTOS, CNN INTERNATIONAL CORRESPONDENT: Yes. What we're seeing is an eighth straight day of losses. And the European markets obviously taking their cue from the very heavy losses we saw overnight where you were on the United States, those indices falling in excess of four percent. We woke up with European markets falling in excess of three percent. Things are slightly better at the moment but close to the inter day lows.
We also had stocks in Asia which are now shut trading sharply lower for the day as well. All of these concerns really are on the back of, of course, the jobless figures that are going to be coming out where you are later on today, but also ongoing concerns about euro zone leaders' perceived inability to get a grip on the crisis that now seems to be engulfing certain economies where I am that are deemed just too big to fail, economies like, for instance, Italy and also Spain.
And this is where the question of a Lehman Brothers 2008 crisis comes back again. Many people wondering whether we're going to see a double dip recession. We'll just have to wait for those figures where you are later on today.
COSTELLO: Nina, thanks.
VELSHI: All right, so, here's the question. You asked it earlier, how bad is it likely to get? Felicia Taylor is live with us here in New York. Felicia, today's jobs report was going to be the biggest thing we were talking about for a long time, and everything has eclipsed this in the last week. I finally thought this thing might get time in the sun, but then yesterday happened.
FELICIA TAYLOR, CNN BUSINESS CORRESPONDENT: Well, so what we're worried about today is the jobs report. Like you said, if we get a gain of 75,000, that's great, but not enough to make a difference. It doesn't indicate that there's any kind of a trend moving in the right direction. If it comes anywhere below that, certainly you can see that there's going to be more selling. I would bet, and I shouldn't do something like that, but I think we're --
ROMANS: Go ahead.
TAYLOR: I think we're going to see more selling today. There is a number of reasons why investors are uncertain in this economy in the United States. We don't have job growth. We don't have growth in any industry, any area that we can see. There's still no growth in housing, nothing in construction. And that's what the investors need to see. Corporate America's making money. You and I were talking about this a second ago, definitely. But that's because they're letting people go. It's not because they're growing their businesses.
COSTELLO: OK. Well, you know, we always like to point the finger of blame in this country, right. A lot of people are blaming the debt ceiling deal for this. And this has really shaken the markets. I mean how -- what percentage of blame ought Congress to get?
TAYLOR: A fair share, actually. And I've spoken to a number of different hedge fund traders, other investors on the street, and frankly they're pretty angry about what's going on in Washington. There isn't consensus, and that's what they need to see. They need to see some kind of certainty going forward. And until they get that, they're sort of showing -- they're playing their hand and showing Washington that they're upset about what's happened. It should never have gone to the nth hour.
COSTELLO: OK, let's talk about the president's role in this because a lot of people are saying right now that he should come out with this giant jobs plan. He should come out with something really bold and maybe that would make a difference.
TAYLOR: It would make a difference. It definitely would, because the one thing that we haven't heard anything about is job growth. There are a lot of people in this country that don't have a way to pay and put food on their table, pay their mortgages. It's frightening. It's not OK. There needs to be some kind of green shoot. I'm not a fan of that phrase, but something where there's positive sentiment.
ROMANS: How can the White House do that when so many people, all they want to do is tear down anything he proposes as this is, you know, killing the economy, killing the economy. They're completely against anything that he's for.
TAYLOR: Until we see some kind of job growth in this country, we're going to be in the same situation. Corporate America isn't going to put themselves on the line. They're not willing to do it. They have to make money for their shareholders. That's their number one priority. Washington needs to get a grip and hear that message.
VELSHI: All right, we want to bring in --
ROMANS: I'm liking Felicia.
(LAUGHTER)
VELSHI: Let's bring in investment adviser Matt McCall on that very point that Felicia makes. Matt is the president of Penn Financial Group. On that point there is one thing that is working in America and that is corporations are making money in part, by the way, for all of our talk about outsourcing, the one reason American corporations are making money they're making it -- bringing it back from places where they're making it overseas. There is demand in other parts of the world. You're saying that's the one hope right now?
MATT MCCALL, PRESIDENT, PENN FINANCIAL GROUP LLC: It is the one hope. I mean the demand here is very low and a big reason for that is, where's the confidence? People have money. Savings rate in the last month went up dramatically, but people have no confidence in our administration, in anything else that's going on right now. So we're not spending. So where do these corporations get money from? McDonald's is a great example. The majority of their sales growth coming from is coming from Asia.
VELSHI: Not America.
MCCALL: Yes. You're looking at the emerging markets that trend will continue for years ahead.
ROMANS: That was the concern yesterday. Yesterday's concern was an international concern. It wasn't about a weak U.S. It was about a weak rest of the world, because if you're seeing the rest of the world slow down and you're seeing these governments maybe not speaking very strongly about how they're going to be able to bailout their own economies, now you got trouble worldwide.
MCCALL: Yes. What happens is we're still the world leader. We may be slowing down in growth but we're the world leader. If the U.S. slows down everybody else is going to slow down with us. We create the largest demand out there.
What happens is a lot of these other countries will step in and say they're going to blame their slowing growth on the United States. So now they're and pointing fingers at the U.S. and say it's the United States' fault. So it gives them something to fall back on.
ROMANS: Your take on Washington. I like his take on Washington. Do you think there should be a big jobs plan like Carol suggested, or Washington needs to get out of the way, not in the way?
MCCALL: A little bit of both. My play is sitting down with the president, the president keeps coming out with extend unemployment, have a reduction of payroll tax. Unfortunately that does not force a corporation to hire somebody. What you need to do is concentrate on small business and lower taxes and lower regulation. So basically less government at the end of the day is what happens, and then people will start spending their money and corporations will come out and start hiring. You're not going to hire if payroll tax is lower. You'll only hire if demand increases.
VELSHI: I love a lot of your analysis, but if there were demand none of that stuff would matter.
MCCALL: True. How do they create demand? That's the question.
COSTELLO: I was going to ask if from a normal, because I'm not a business expert. I freely admit it. But as a consumer, as an American citizen, I feel pretty powerless right now. I feel like everything has control over my financial health, including businesses on Wall Street who won't spend those enormous profits to hire people. Is there anything that somebody like me could do to force someone's hand, or do I just sit and wait until they figure out what they want to do --
MCCALL: Go and get out there and buy a new pair of shoes. If everybody buys a new pair of shoes money goes in the economy. A lot of people have the money. The problem is all you keep hearing is all this negativity. You convince yourself I don't have money. You may still have a job, may make the same money as last year, but convince yourself I don't have money. I'm going to sit on cash. That's where government comes in, a lack of confidence in our government.
ROMANS: Ken Rogoff has written a book on these disasters, and he says we have a seven-year period of dangerous times here. And this is exactly what happens after a huge bubble burst and you have a financial crisis. We are living through what history books tell us should be happening.
And the fact that it is so difficult it's going to feel difficult, a lot of people who run businesses say we're sitting on cash because that's what the American people should be doing too. We're sitting on cash because we don't know what's going to happen. And if we've been sitting on a little more cash 10 years ago this wouldn't have happened to us. It's a natural reaction.
COSTELLO: That sounds bizarre to me because the problem that consumers said they were spending too much money, they were spending money on things they couldn't afford. Now --
ROMANS: Borrowed money.
COSTELLO: So now they're being responsible and now suddenly that's a bad thing and it's our fault.
ROMANS: Consumers have too much debt. Consumers still have too much debt. That's still a -- that's still a bubble that we are still working through. And it's just -- I mean it's horrible. It's horrible. But that's the -- savings rate is now five percent.
MCCALL: It's 5.4 percent. But we're still compared to other nations not saving as much as we should be.
COSTELLO: Happy Friday, everyone. Interesting conversation. Thank you so much.
ROMANS: Thank you.
COSTELLO: New for you this morning, Congress may have left town, but, yes, they're still making deals. They really are. Senate Majority Leader Harry Reid announcing a bipartisan compromise. When was the last time you heard that? They figured out how to fund the FAA and send tens of thousands of government construction employees back to work.
Basically, here's the deal. The Senate will accept a temporary spending bill passed by House Republicans and Transportation Secretary Ray LaHood will use his authority to block the bill's spending cuts targeting some smaller airports. So people will start getting their paychecks again and look, lawmakers didn't have to leave their vacations.
VELSHI: Still to come this morning despite a new round of global condemnation Syria steps up its brutal assault on anti-government protesters in the city of Hama.
ROMANS: This isn't a story about the water on mars. It's a lake in Texas blood red after a month of stifling heat and a year with barely any rain. The latest on the lethal heat wave ahead. It's 10 minutes after the hour.
(COMMERCIAL BREAK)
VELSHI: Welcome back to AMERICAN MORNING.
Syria's crackdown on dissent is reaching a new level of brutality, and that's saying something. Scores of people killed in the city of Hama, the center of the Syrian uprising. The U.S. is condemning the regime of President Bashar al Assad, saying that it has lost legitimacy after witnesses reported civilians being executed in the streets.
(BEGIN VIDEO CLIP)
SUSAN RICE, U.S. AMBASSADOR TO THE U.N.: It's horrific, it's appalling. He's massacring his own people who are coming out simply to express themselves peacefully. It's absolutely unacceptable, appalling behavior and it deserves not only the condemnation but the full force of the international community to pressure that it stop.
(END VIDEO CLIP)
VELSHI: Syrian security forces have killed more than 200 people in Hama just since last Sunday.
ROMANS: The heat wave suffocating the southern plains not letting up today as 15 states now under heat advisories again. Just to give you an idea of how hellish these conditions are take a look at this blood red lake in Texas. Bacteria that literally feeds off the hot conditions have taken over what's left of the water. On top of the lethal heat, Texas is in the midst of the most severe drought in state history.
Air conditioning theft a hot crime in Texas these days. One of them led to the death of a 79-year-old woman in Dallas. She died after the air conditioning unit was ripped out of her home. With staying cool a matter of life and death, power companies are urging people to use only what you need, set the thermostat at 80. They're warning of rolling blackouts with power usage setting records for three days in a row now.
Rob Marciano is in the Extreme Weather Center. And I cannot tell you, wow, I mean, I don't think there's anybody out there who can hear somebody stealing an air conditioner in times like this and the fatality of an elderly woman and not just be furious at that - ROB MARCIANO, AMS METEOROLOGIST: Yes.
ROMANS: -- that a scoundrel would - would make an already horrible situation worse. But we're going to have another hot day there, aren't we?
MARCIANO: Yes, we are. And, you know, as you mentioned, the power plants at the brink, they're even, you know, taking retired power plants and putting them back on-line to give this area enough juice, because they're going to need it for another couple days.
Heat indices once again well up in over 110 in many spots. And it does stretch back to the east, although there's pockets especially north and east of Nebraska where temperatures have subsided somewhat. But south of there, definitely it's warm.
Wichita Falls, you continue your streak of 100 plus degree days. A record yesterday at 111; McAlester seeing 108; Dallas, Oklahoma and Austin, all seeing record-breaking high temperatures again yesterday. And we may see them again today. We don't cool down much - 108 in Dallas; 110 in Oklahoma City. Again, these temperatures are not heat indexes. This is what's measured in the shade. Doesn't include humidity.
One-oh-seven in Dallas. It must cool down a degree maybe another degree on Sunday. We really don't see a break in this until maybe the middle part of next week.
Here's Emily, what's left of it. It fizzled, hit the mountains of Hispaniola. Gone, at least for now. The circulation may reemerge in the Southern Bahamas. We'll let you know if it becomes a threat.
Meanwhile, places like Atlanta yesterday morning, this is how we rolled into work early about 3:00 A.M. A lightning show across the ATL, it was gorgeous. Of course, it was a little bit wet. Splashing through the parking lot to get to work. But nonetheless, it's not - if I can find an alarm clock, this is probably one out there or at least an app, that has thunderstorms, a thunder wake-up call, you know, as opposed to that annoying buzzing that would be music to my ears. Because that's what I woke up to yesterday.
VELSHI: That would be excellent.
MARCIANO: Yes.
VELSHI: That's really good. You have something bordering on a fetish with thunder and lightning.
MARCIANO: Yes, I suppose. Most weather guys do.
VELSHI: That's good. I suppose that's -
MARCIANO: Not a bad thing.
VELSHI: Good, good, good. As far as fetishes go.
ROMANS: Thanks, Rob.
MARCIANO: Yes. There could be worse fetishes.
VELSHI: Yes.
COSTELLO: Let's not talk about fetishes right now, shall we? Thank you, Rob. We appreciated your weather forecast.
MARCIANO: All right, guys.
COSTELLO: Now is your chance to talk back on one of the big stories of the day. Our question this morning, when will our fears about Muslim-Americans fade? I bring this up because the governor of New Jersey Chris Christie, a Republican, and Tea Party favorite, has had enough of it.
(BEGIN VIDEO CLIP)
GOV. CHRIS CHRISTIE (R), NEW JERSEY: This Sharia law business is crap. It's just crazy. And I'm tired of dealing with the crazies.
(END VIDEO CLIP)
COSTELLO: Christie was defending his choice of Muslim-American lawyer, Sohail Mohammed, for a state judgeship. Conservative bloggers were furious. They accused Christie of being in bed with the enemy. They feared Mohammed would make judicial decisions based on the Koran or Sharia law.
(BEGIN VIDEO CLIP)
CHRISTIE: Sharia law has nothing to do with this at all. It's crazy. It's crazy. The guy is an American citizen.
(END VIDEO CLIP)
COSTELLO: It has been almost 10 years since 9/11. Osama Bin Laden is dead. And, yes, there have been arrests of Muslim extremists within the United States and, yes, we do need to be vigilant about homeland security, but should all Muslims be suspect?
According to the "New York Times" more than two dozen states have considered measures to restrict judges from consulting Sharia law.
So our "Talk Back" question today, when will our fears about Muslim-Americans fade? Talk to us on Facebook, Facebook.com/AMERICANMORNING. Facebook.com/AMERICANMORNING. We'll read your comments later this hour.
VELSHI: You're getting some good responses on that.
ROMANS: It's crazy!
VELSHI: It's crazy, exactly.
Still to come this morning, for the last year they've been on the front lines in Afghanistan. Now, a group of army soldiers face the challenge of returning home.
ROMANS: And new details about "Operation Shady Rat." And a new response from China, dozens of U.S. companies and government agencies hit by cyber hackers. Are we helpless against their attacks?
(COMMERCIAL BREAK)
VELSHI: Twenty-two minutes after the hour. "Minding Your Business" this morning.
World stock markets dropped sharply as global economic worries grow. Stock indices in Japan, Hong Kong, Australia, Singapore, Korea, all closed with losses at the four percent level. And in Europe, markets there are trading lower, one day after the Dow fell 512 points. Here in the United States, Thursday's close was the worst one-day point drop for the Dow since the financial crisis in 2008.
A new jobs report out today. The unemployment rate in July is expected to stay at 9.2 percent. Economists predict 75,000 jobs to be added to the payrolls that's not enough to boost a recovery. We'll have that news at 8:30 A.M. Eastern.
Some one out of seven Americans rely on food stamps according to a new report from the U.S. Department of Agriculture. As of May, almost 50 million Americans were using food stamps, that's an increase of 34 percent from just two years ago.
AIG just reported its first profitable quarter since the financial crisis when the U.S. government bailed out the global insurance giant to the tune of $180 billion. The company reported a net income of $1.8 billion in the second quarter.
And LinkedIn, the business social network online, reported a surprising profit in its first earnings report since going public earlier this year. LinkedIn netted $4.5 million in the second quarter. That actually beat expectations. That's a lot of money. It reported sales more than doubled from a year ago.
Don't forget the very latest news about your money, check out the all new CNNMoney.com.
AMERICAN MORNING back right after the break.
(COMMERCIAL BREAK)
ROMANS: Wow. That's cool. They are part of the troop surge in Afghanistan now a group of army soldiers is talking to our Jason Carroll about the end of their deployment and making the transition from the front lines to the home front.
Jason joins us now with a final installment of his very special series this week, "A Soldier's Story." A fantastic piece of journalism and this is the last installment. It's really amazing.
JASON CARROLL, CNN NATIONAL CORRESPONDENT: Last installment. Yes. You know, I really admire these - these soldiers for their honesty, especially when you - when you hear what they have to say on the subjects that we're talking about.
Sergeant Shorter and his men are now just days from returning home. They talked to me about the challenges they expect to face on the home front, adjusting to life while not fighting a war and about the war itself, namely whether it's the right time for a draw down.
(BEGIN VIDEOTAPE)
CARROLL (on camera): How many people think the surge worked? Now, we're getting and hitting to the point where you hear about the draw down and I'm curious what your thoughts are about the draw down? Because I've heard both sides.
SGT. JOHNATHAN NUNNALLY, U.S. ARMY: We've all lost somebody over here, and if we think we're pulling out too early, it's almost like, those guys were - gave their life for nothing, you know? I don't mind staying over here until the mission's complete where I know this government and the police and army can take care of it.
CARROLL: Do you feel like you're pulling out too early?
NUNNALLY: In a way, yes.
PFC. ROBERT EDWARDS, U.S. ARMY: It's going to take forever to get this whole country, you know, ideally where people want it to be. So at some point they're just going to have to take over or we are just going to see how they do.
SGT. 1ST CLASS RANDY SHORTER, U.S. ARMY: I totally support the president's decision. When it's cost too great, you know, we pay a great cost. Ten years of war, you know, and still no tangible solution, you know? We can sit here and debate all day whether or not the Afghans are ready, but you know what it's about time to put their feet to the fire.
CARROLL: What do you think about this idea of people having tough time adjusting when they get home?
SGT. CHARON RICHARDSON, U.S. ARMY: Oh, I believe it's true. I mean, some people do.
NUNNALLY: My first tour, I had to - I had to deal with that, you know? It hurts almost, you know? It's like, how dare you go on with your life when I was over there fighting. That's how I felt personally.
CARROLL: Do you remember how you were able to deal with it the first time?
NUNNALLY: First time I didn't deal with it too well.
CARROLL: What does that mean? NUNNALLY: Got pretty good at drinking. And I held a lot of it in, you know? Everything I saw that first tour, everything we went through.
PFC. JAIME CARLISLE, U.S. ARMY: When I got here, there's things you have to pick up, certain things, like you have to watch people's hands, the way people walk. When I went home like I went to the mall, being around all those people, kind of freaked me out because watching everybody's hands and stuff like that, I freaked out. So I'd like leave the mall.
SHORTER: You know, the first time, you know, I almost lost my marriage because of that. You know, I didn't talk about it. You know, I thought people didn't care. You know, I sat like Carlisle said in a mall, I watched people. You know, just went about, not really understanding, you know, there's a war out there, soldiers are dying every day, and I felt angry.
I learned from that experience, and my wife, you know, she kind of like smacked me around and said, you know what, you're faulting your family members for not understanding, you know? The way you deal with it, you talk to them. You find ways to release it, so it doesn't affect you.
(END VIDEOTAPE)
CARROLL: Very frank discussion with those men post-deployment problems such as sleeplessness, marital problems you heard about there, even drug abuse are just some of the issues some of the soldiers face in trying to adjust to life after their deployment. The army does have counselors available for the soldiers to speak to and they encourage them to seek out that help when they head home.
COSTELLO: Well, the question is, do they do it? One young man said he was having drinking problems. How did he solve that problem?
CARROLL: Well, he eventually did seek help and for him, it worked out. And you know, one of the other points here, you saw Sergeant Shorter, he has a strong family foundation and even Sergeant Shorter had problems. Even when you have that solid background, it's not a clear way in some cases of even finding help.
ROMANS: Even for the family members, watching this story, when your soldier comes home, you think that's the end but that's the beginning of the end. Because there's all this you have to work through together and the communication. Just to understand the person is there, but the person has changed a lot.
CARROLL: And you know for --
ROMANS: A lot of understanding with that.
CARROLL: For all the thousands of men and women coming home, you know, after spending time with these people, my advice would be seek them out. Don't be afraid to ask them questions.
VELSHI: Right.
CARROLL: You know, nothing helps more than sometimes when they're being in public and you just walk up and say, good job.
COSTELLO: It was really telling when one young man said that he's sitting in the mall and resenting people and he's saying don't you know there's a war going on over there?
CARROLL: We forget. We talk about debt, we talk about falling markets and we forget that every single day there are men and women still giving their lives, still fighting the good fight, every single solitary day. They just don't want to be forgotten.
COSTELLO: All right. Jason Carroll.
VELSHI: You did a great job of helping us not forget.
ROMANS: We have it all on our -- on cnn.com/am so if anybody wants to catch more of it.
CARROLL: Thank you.
ROMANS: There you go.
COSTELLO: Top stories now. A shocking scene caught on tape. Gunmen open fire on a Philadelphia City bus packed with passengers. It happened back in June. The tape was actually shown at a hearing for the six people charged in the shooting. The passengers desperately scrambled for cover. Remarkably, no one was hurt.
Highs of over 105 degrees expected through the weekend in the southern plains. Power companies are warning of rolling blackouts and urging people to stay cool but cut back. Power usage reached its highest level ever in Texas this week.
Right now, the world's markets trapped in a vicious downward cycle. U.S. stock futures are in negative territory, one day after Wall Street had its worst day since the 2008 financial crisis. Overseas Asian markets recorded sharp declines and right now European markets are in negative territory.
ROMANS: All right. According to the CIA the second biggest threat, second biggest threat facing the United States today, is computer hackers. Number one, is a nuclear attack. Think of that.
Cyber warfare has become an enormous problem with hackers targeting our satellite systems and sensitive defense sites. That's why "Operation Shady Rat" is unsettling. It was uncovered by the security firm McAfee and it described a massive espionage hacking scheme.
McAfee said there were 72 targets over a five-year period including 36 corporations, like the Associated Press, where reporters working on stories about China got hit by viruses. The International Olympic Committee was one of 12 non-profits hacked.
Fifteen U.S. government agencies were also compromised including an Energy Department lab and 12 U.S. defense contractors. Now some speculate their attack has roots in China. But late last night, the Chinese state newspaper came out and denied any involvement, calling the accusations irresponsible.
Colonel Cedric Leighton is a military intelligence expert and founder of Cedric Leighton Associates. He joins us live from Washington and from Philadelphia, Duncan Hollis, a professor at Temple University School of Law.
Thank you to both of you. This is something we've been following with. I guess growing alarm for the past five, six, seven years this has become more sustained and more sophisticated, if you will.
Mr. Leighton, let me ask you first, isn't China -- many of these reports and even government agency reports don't like to say specifically one state actor, but when you look at the targets, many say, it's clear, this is coming from China on behalf of Chinese interests?
COL. CEDRIC LEIGHTON, FOUNDER, CEDRIC LEIGHTON ASSOCIATES: Well, Christine, I think that one of the big things that you have to look at is, what is China's interest in this? It's sometimes very hard to attribute cyber attacks through a particular nation or to a particular group.
But in the case of China, you have to look at what they're doing and how they're organizing their government to do that. For example, the People's Liberation Army has a directorate that works what they call cyber warfare type issues.
It's an outgrowth of their intelligence and electronic warfare directorate. That kind of emphasis from the state leads you to believe that they're at least doing something in this area.
Whether they're responsible for all of the McAfee attacks that is hard to say. But they are certainly clearly involved in something and they have vested national interests to do so.
ROMANS: Duncan, would you agree with that?
DUNCAN HOLLIS, PROFESSOR OF LAW, TEMPLE UNIVERSITY SCHOOL OF LAW: I think that's certainly the case. In fact, it's important to remember that it's not just China, it's the United States.
We, in the last several years set up our own U.S. cyber command that's engaged in similar activity in cyberspace as have dozens of governments adding I think to the -- making the environment much more complicated in terms of the various actors that are now out there not just cyber criminals anymore, but actual military.
ROMANS: We're not talking about somebody getting your credit card number from the DSW Shoe Warehouse, which is your typical sort of organized crime cyberhacking. We're talking about efforts by governments to gain an upper hand on other governments. One of the other things, Cedric, I think is interesting here, what they're looking for are -- the United States has everything to lose here and that's what they're looking for.
They're looking for things like sensitive military technology, at least that's what these patterns are showing. Tell me what it is that we have that these cyber hackers want?
LEIGHTON: Well, let me give you an example, Christine. The F- 35, the joint strike fighter, they -- the Chinese are alleged to have stolen terabytes of data that involve the construction, the design, all the ancillary parts of the F-35 and related defense systems.
So, that's one thing that we have they like. They also want to take a look at what our companies are doing. One of the things that you'll notice is, they go after things like what oil companies are doing, are they drilling in a certain area, what are the -- for example, the seismic study results that these people have conducted in various parts of the world.
And then you'll notice in Iraq, for example, that the Chinese oil company, state owned oil company is very active in Iraq and is going through each and every one of these areas and actually getting some of the leases to some of the oil fields there. So those are the kinds of things that they're interested in and that just the tip of the iceberg.
ROMANS: We know that there are concerns there could be ways to, you know, mess around with maybe the international credit card system, there are also ways -- when you look at military technology that's one part.
But also the economy and power systems being able to turn on or off different parts of the power grid and that's something the people in the Pentagon for years have been studying how possible that could be.
Duncan, let me ask you, because there are people I've talked to in covering this story over the past years who said they have no doubt this is how a war would start, a real war.
Starting in a way that we couldn't have imagined 10 or 15 years ago and then you're talking about defense secretary, you know, spending cuts. Do we need to reorder the way we think about how we protect our country?
HOLLIS: I mean, we certainly need to think more seriously about cyber security. I think there's no doubt -- there's important interests to be protected in cyberspace and we need to think about how to do that.
The reality is, I think we've seen in the McAfee report over the last several years people are starting to wake up and realize that it's no longer just your computer or your computer network that could be in trouble, it's the things those computer networks run.
And now computers run everything from pacemakers to cars to the global financial markets to power grids and certainly, you know one aspect of that has to be a better defense strategy. The problem I think is the nature of this technology, doesn't lend itself to defense only.
You can't deal with these threats simply by building bigger walls. I think that's exactly what this McAfee report shows is that the most sophisticated computer actors in the world can't defend themselves. It's a constant cat-and-mouse game where we build better defenses and then face new threats that are quite serious.
ROMANS: You know, for years, we've been hearing these gloom and doom scenarios, gentlemen, but I guess the overriding important thing to remember is that all of these countries are so interconnected, the U.S. and China.
I mean, each can hurt the other, in so many different ways in a way you hope that rules over everything else that no one would do something to really hurt each other if it came down to push came down to shove.
Colonel Leighton, thank you so much for joining us. Duncan Hollis, thank you so much. We'll be talking about this again soon.
HOLLIS: Thank you.
VELSHI: Still ahead, everyone loves their cell phone, right? We know this. But how much do you love your cell phone? Wait until you hear how many cell phone owners would give up sex rather than their cell phones.
COSTELLO: That's sad and pathetic, isn't it? And where have all the shoe shiners gone? Is this job a dying art? Richard hits the streets of New York to find out some shoe shiners are adjusting their pitches to boost business. It's 39 minutes past the hour.
(COMMERCIAL BREAK)
COSTELLO: Good morning to you, Atlanta. It will be sunny later though. It's 74 degrees right now, but more thunderstorms will come later. I don't want to mention that part.
VELSHI: Thanks.
COSTELLO: But it's not going to be an extraordinarily hot, only 84.
ROMANS: As if we weren't hooked on our cell phones already, a new survey shows that Facebook and Twitter are pulling us in deeper, 60 percent of teens in the U.K. said they were highly addicted to their smart phones and social networking is fueling that. And out of all smart phone users, 81 percent said they never turn it off.
VELSHI: You're addicted, but would you give up sex for your cellphone? Another new survey from Telenav shows how creepy the obsession is getting. It says one third of the U.S. population would rather give up sex for a week than their mobile phones.
COSTELLO: So the way to keep your teenagers in line, give them a cellphone.
VELSHI: That was good.
COSTELLO: Like theaters and pay phones, shoe shine stands are vanishing from the American landscape. They used to be on street corners everywhere in cities like New York.
ROMANS: But in this economy, the shoe shiners are facing extinction unless they adapt. Here's Richard Roth.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: Your shoes. Look at your shoes. How long are you going to ignore that, sir?
RICHARD ROTH, CNN CORRESPONDENT (voice-over): If your shoes are scuffed you can bet that Don Ward will let you know, partly because the recession has also roughed up the shoe shiners.
KEVIN TUCKER, SHOE SHINER: This economy the way it is now, it's fallen off really bad.
ROTH: Shine men like Ward have had to adjust their style so customers will take a shine to them.
DON WARD, SHOE SHINER: I'm actually initiating to keep it alive. And I got to work a little bit harder because yes, people have gotten away from basically doing their shoes because with we're a society now of me, me, me, now, now, now, press a button it's there, convenience.
ROTH: New York City is turning into the city that never shines.
WARD: You need to clean those.
UNIDENTIFIED MALE: He's very compelling and funny and I see him all the time. But as far as going doing it, I'll do it at the office at the building. It's easier.
UNIDENTIFIED MALE: People don't get their shoes shined very often anymore.
ROTH: Grand Central terminal provided shoe shine stands to some eight shoe shiners almost 20 years ago. That number has now dropped to three.
FRED CERULLO, PRESIDENT AND CEO, GRAND CENTRAL PARTNERSHIP: It certainly was a business very common decades ago around the city everywhere, and we have the opportunity in the Grand Central neighborhood to continue to keep them alive.
ROTH: As the old story goes Joe Kennedy, JFK's father, claimed he avoided the 1929 market crash when he received a stock tip while getting a shine. But instead of Wall Street tycoons, it's now shoe shiners that need all the tips they can get.
UNIDENTIFIED MALE: With the bad state of the economy we got to get back to the way things used to be. We just forget about a lot of things. Believe me, I'm going to be pitching, clean your shoes.
ROTH: So, these street-level businessmen are expanding their services.
UNIDENTIFIED MALE: The majority of the people wear sneakers and sandals. That's okay because I pumped up my game. I now start to clean sneakers.
ROTH: A fading profession may become a memory for consumers not willing to sit for a shine.
UNIDENTIFIED MALE (singing): There's a shine on my shoes and a melody --
ROTH: Richard Roth, CNN, New York.
(END VIDEOTAPE)
COSTELLO: Maybe they should have that guy sing near the shoe shine stand, and that would attract business.
VELSHI: I love getting a shoe shine. It's my guilty pleasure.
ROMANS: You get your shoes shined?
VELSHI: I get these shoes shined, get them across the road. It's -- they shine up nicely.
COSTELLO: You're propping up a business. So, continue to do that.
VELSHI: I just feel better. I feel like when my shoes are shined, I have a lightness in my step.
ROMANS: Do you sit still long enough to get your shoes shined? That's my question.
VELSHI: Oh, I e-mail. I'm on the BlackBerry and stuff like that. You know how it is.
(LAUGHTER)
ROMANS: All right.
VELSHI: All right. Morning headlines are coming up next, including big news about Mars. NASA scientists may have found evidence of flowing waterfalls.
ROMANS: And it's go time. Dr. Sanjay Gupta is ready to rock the New York City triathlon this weekend. He's finding strength in numbers. He's live in our studios coming up. It's 47 minutes after the hour. (COMMERCIAL BREAK)
COSTELLO: Forty-eight minutes past the hour. Here are your morning headlines.
U.S. stock futures in negative territory this morning. The declines coming one day after Wall Street had its single worst day since the 2008 financial crisis. World markets also following suit; they're down in Asia and Europe.
Power companies warning of rolling blackouts with highs in the 100s again today across the southern plains. Many places in Texas are closing in on records for the most consecutive days of triple-digit heat.
Life on Mars might not be -- may not be so far fetched after all. These new photos of the red planet are creating a real buzz at NASA. That's because the channels in those craters suggest the possibility that saltwater is flowing on Mars. And NASA scientists say where there's water there could be living organisms.
A mission to Jupiter is next on NASA's calendar. Later this morning, the Juno spacecraft is scheduled to launch. If all goes according to plan, it will arrive in 2016. Juno's color camera will snap photos to help scientists study the planet's origins, structures and atmosphere.
You are now caught up on the day's headlines. AMERICAN MORNING back right after this break.
(COMMERCIAL BREAK)
ROMANS: New York City sunny, 73 degrees. Thunderstorms, 84 -- it should be later. It should be -
COSTELLO: What?
ROMANS: Have you ever been in the New York City marathon?
VELSHI: Look at me! You know I never don't run anywhere.
ROMANS: I don't run races. If somebody came after me with, like, a bloody knife, I might think about running.
VELSHI: You might think about running. Yes, no, I'm not much of a runner.
But you know what? You give a busy person something to do, as if he didn't have enough to do. Our chief medical correspondent, good friend, practicing neurosurgeon, Dr. Sanjay Gupta. Because he a lot of times on his hands, he's been training for a triathlon.
COSTELLO: So, you people don't understand how fun it is to exercise!
VELSHI: You're right. I don't. (CROSSTALK)
COSTELLO: I am. I mean, I love to run.
VELSHI: You're right. Guilty as charged. I do not understand how fun it is to exercise.
COSTELLO: It is fun. Especially when you're doing it with other people like Sanjay is.
DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Absolutely. And all these feel-good hormones surge through your body. Think how much faster you would run from that bloody knife.
ROMANS: I've only ever felt pain hormones when I think of running.
GUPTA: Just at the beginning. Just at the beginning.
ROMANS: So, I've got to remember that.
GUPTA: How long did you run?
ROMANS: Only until I felt bad and then I stopped.
COSTELLO: Thirty seconds! She ran 30 seconds and then stopped.
GUPTA: No, you know, I have enjoyed this thing. I have always exercised somewhat but started to actually set goals, which I think is a big part of making this part of your life. So, when you do a triathlon you tell everyone about it, and then as it turns out, you got television cameras following you. So, that is a lot of incentive to do this.
But you know, it's small changes every single day. Do something every single day. Break a sweat every day. I incorporate my kids into my exercise routines because I didn't want to be away from them as much for these longer routines.
ROMANS: And that little one, she can do a four-minute mile now?
GUPTA: Well, no, she -- I have the jogging stroller, I do swims by the park, you know. I take them on a little thing behind the bike. So, it's a lot of fun.
The other thing is diet is so important. People know this. But one of the things I did - again, small changes -- eat breakfast like a king, eat lunch like a prince, eat dinner like a peasant. Keep that in mind. So, your biggest meal --
VELSHI: Breakfast, king -
GUPTA: Lunch like a prince, dinner like a peasant.
COSTELLO: Ha! And we have the perfect shift to do that, right?
GUPTA: Trunk loading in business terms.
ROMANS: I like it! I like it.
VELSHI: OK, so we understand you're showing us your six-pack?
(LAUGHTER)
GUPTA: That's right!
VELSHI: Figuratively. They told me you had a six-pack stand up.
GUPTA: We have six viewers, as it turns out, from around the country. We call them our six-pack.
VELSHI: Oh, so you're not taking off your shirt?
GUPTA: I'm not taking off my shirt. Not this time, Ali. After the triathlon, maybe.
COSTELLO: Actually, he'll take off his shirt if you take of yours.
(LAUGHTER)
VELSHI: Right. Then we would not have any viewers.
ROMAN: I would thank you both for not to.
VELSHI: Come on!
GUPTA: The six -- we put these iReports out for people who wanted to join us around the country. And we eventually picked six people who we thought would get most out of the triathlon. They'd never done triathalons before. A lot of them didn't like to exercise, period.
So, for example, Kendrick is actually a health care person. He was living in Chicago. He weighed about 350 pounds at the beginning. Never done this before. Ate cheeseburgers pretty much every day, never cooked. He has lost about 30 pounds since this all started. Biked 30 miles just last weekend, can swim a mile now and going to do the triathlon.
VELSHI: Wow!
GUPTA: Yes. We got Nina Lovell, who is is 58. When I first met her, she said 58 is the new 28 and she is now dusting people half her age on the course. I kid you know, she has become so fast and looks terrific.
And then Dr. Scott Zahn is a pediatrician right at the sort of front lines of the childhood obesity crisis. He lost so much weight that he weighs what he did in the mid 1980s.
(LAUGHTER)
VELSHI: Wow.
GUPTA: He was on two blood pressure medications and a cholesterol lowering medication, and he is now off all of his medications just through, you know, food, diet, and exercise.
VELSHI: That's a great reward for people.
GUPTA: -- as medicine. Yes. It's really remarkable. And so that is a little preview of who they are.
COSTELLO: That's terrific. So you're going to be participating in the triathlon with them?
GUPTA: Yes.
COSTELLO: Fingers crossed. I don't know. I always thought -- I'm not a good swimmer so a triathlon would really freak me out.
GUPTA: Yes, it's interesting. So this triathlon is an Olympic- distance triathalon. We swim in the Hudson River, which by the way --
COSTELLO: That would freak me out, too!
VELSHI: Yes.
GUPTA: And it's had some problems, as you know, with the sewage dump a few weeks ago, but they say it's clean enough now. But you're swimming with the current, so you actually get a lot of help there. And then you bike up and down the West Side Highway for about 26 miles, and then you add a 10k.
So, it's a lot when you add it all together. But certainly doable. And again, the six-pack, never done this before. Never thought they could do this seven months ago and now they are going to do this.
COSTELLO: Well, the next time you do this, I want to do it. So, I want to be on the team. You don't have to give me any pub.
VELSHI: Wow!
COSTELLO: I don't care. I do.
GUPTA: You heard it here first! You heard it here first. Let me show you what you'll be wearing.
(CROSSTALK)
GUPTA: This is the uniform.
COSTELLO: Oh, that's so cool! Look!
GUPTA: Nice tight pants there, Ali. I want to see you in those, Ali!
VELSHI: I'm not entirely sure that is going to work out all that well!
GUPTA: That is worth the price of admission right there.
(LAUGHTER)
VELSHI: Yeah - no.
ROMANS: Next time you think about the stock market, think of this.
(LAUGHTER)
GUPTA: The real reason the stock market plunged?
(LAUGHTER)
VELSHI: Sanjay, good luck, my friend!
COSTELLO: Awesome! Aww, thanks Sanjay!
GUPTA: These are for all of you.
ROMANS: Thank you. Love it!
COSTELLO: That's so awesome!
VELSHI: Sanjay, good luck and great luck to your team. And congratulations already to those members of the six-pack for what they have done. That's fantastic.
ROMANS: If they can do it, maybe I can do it. Maybe you can do it. Maybe we can do it.
GUPTA: You guys want to commit right here? Ali?
VELSHI: No promises from me. Carol did that. We will talk!
We have to take a commercial break! This weekend, "SANJAY GUPTA M.D." live from the Fit Nation Triathlon Challenge. It's a culmination of the six-pack training. This Saturday and Sunday, 7:30 a.m. Eastern.
ROMANS: All right, our top stories right after the next break. Fifty-six minutes after the hour.
(COMMERCIAL BREAK)
