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American Morning
Stocks Dive After Downgrade; U.K. Riots Spreading; Perry Ready to Run?; Stock Markets in a Tailspin; Cameron Speaks on Riots in Britain; All Eyes on the Fed Today; "Always Will Be A "AAA" Country"; S&P Downgrades Fannie and Freddie; Hundreds of Municipalities Downgraded; Rioting In Britain; Selloff Continues Across the Globe; Perry Ready to Announce; Teen Curfew In Philly; Paterno Injured During Practice
Aired August 09, 2011 - 06:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN ANCHOR: Good morning, Ali. Stocks dive after the downgrade. I'm Christine Romans. Wall Street records its worst day since the depths of the financial crisis in 2008. Overseas investors are selling at a staggering pace. So what should you do with your money right now this morning? We're live across the globe with the news you need to know.
CAROL COSTELLO, CNN ANCHOR: And good morning to you. I'm Carol Costello. It started in London, now streets violence and looting has spread to three other cities in Britain. We're live in London with the latest on this growing unrest.
ALI VELSHI, CNN ANCHOR: I'm Ali Velshi. A big weekend ahead for Rick Perry. The Texas governor is planning strategic stops in two key primary states. Could he be ready to announce he's running for president? We'll find out on this AMERICAN MORNING.
ROMANS: All right. Good morning, everybody. It's Tuesday, August 9th. This is AMERICAN MORNING. The morning after the big 6.66 percent slide for the Dow.
VELSHI: Unbelievable.
ROMANS: It felt horrible.
COSTELLO: Like deja vu all over again from yesterday. As we speak, the world's stock markets are clearly in something of a tailspin in Europe and Asia the selling that started last week just keeps on going.
It follows the worst day on Wall Street in more than two years. Just take a look. The Dow reacting for the first time to America's credit downgrade was down at the opening bell and never looked back.
Even as President Obama went on television to try and reassure Americans the markets still dropped. Down 635 points by the time the closing bell rang. An estimated $1 trillion in wealth wiped out. Hitting your average American where it hurts most, their stock portfolios and their 401(k)s. ROMANS: All right, so we have reporters across the globe this morning to take a look at what's happening the morning after. Our Andrew Stevens is live in Hong Kong but let's start with Nina Dos Santos live in London.
Nina, good morning. It looked as though European stocks were higher than they were lower. The volatility continues. What's happening now?
NINA DOS SANTOS, CNN CORRESPONDENT: Yes. They're definitely down at the moment, Christine, down to the tune of about 4 percent if you look at the DAX for instance, which had been the best performer between among these three markets, the FTSE, the CAC 40, the DAX had been the stronger performer. It was down about 8 percent on the year just last week.
But still it's the one that's really suffering today. FTSE 100 also down about 2.5 percent, similar situation for the CAC 40 in France. Just saying, Christine, it's been a really choppy morning. Some of the stock markets after opening in the negative, pushed higher to the tune of about 1.24 percent, but then they quickly shed those gains.
We've been about 10 minutes I saw the chart shift into the red and all of those arrows go sharply low. We've got a number of the banks very much suffering, particularly in places like France because as the ECB is now into its second day of buying Italian and Spanish debt to bring the yields or the borrowing costs down for those two countries.
Well, it seems as though France and the United Kingdom are the next two countries people are getting worried about. The head of JP Morgan's Fixed Income Department, someone who's very positioned to comment about this thing is reported to have said that he wouldn't be surprised if France and also the United Kingdom were also lower like the United States losing their AAA coveted credit rating and go down towards AA- or AA plus.
One benefit that we do have at the moment during these troubled times as you expect is gold. It's surpassing $1,750 an ounce. I was talking to a hedge fund manager yesterday and he said that's all he's buying at the moment.
ROMANS: All right, thank you so much, Nina.
VELSHI: All right, let's go live to Hong Kong now where the Hang Seng closed down by more than 5 percent. Andrew Stevens standing by live for us in Hong Kong.
What a roller coaster Asian markets were overnight, Andrew. What's the scene from your perspective?
ANDREW STEVENS, CNN INTERNATIONAL CORRESPONDENT: It was interesting what happened here today. For the first time, Ali, we've seen governments through their state-owned pension funds, things like that, stepping into the markets to try to buy, to shore up their market.
We saw it in South Korea today. The KOSPI in South Korea was down around 9 percent at one stage. This is a huge fall. So the governments are now starting to take some action to try to stem the losses there, but it does give sellers -- some buyers out there, may not have much of a long-term impact.
Basically everybody is waiting to see what happens in the U.S. Is there going to be any form of moves from the Federal Reserve to try to stop this, stop this slow down, restore confidence, to have a plan. There's a lack of a plan at the moment.
Ali, it's interesting, I was talking to a couple people today, there's a consensus building that we could still have another 10 percent of fall before we start seeing things clearing out here. So it's still very much on the downside.
We saw Asia pretty much tumbling across the board. Australia did finish up, but we can't say that's going to last very long. Japan down 1.6 percent. Hong Kong 5.6 percent. All the arrows are still very much red.
VELSHI: Andrew, thanks very much for that. We'll keep checking in with you. Andrew in Hong Kong for us.
ROMANS: British Prime Minister David Cameron speaking right now outside his office at 10 Downing Street in London. Let's listen in.
(BEGIN LIVE COVERAGE)
DAVID CAMERON, BRITISH PRIME MINISTER: Scenes of people looting, vandalizing, thieving, robbing, scenes of people attacking police officers and even attacking fire crews as they're trying to put out fires. This is criminality, pure and simple, and it has to be confronted and defeated.
I feel huge sympathy for the families who have suffered, innocent people who have been burned out of their houses, and to businesses who's seen their premises smashed, products looted and their livelihoods potentially ruined.
I also feel for all those who live in fear because of these appalling scenes that we've seen on the streets of our country. People should be in no doubt that we are on the side of the law abiding people who are appalled by what has happened in their own communities.
As ever, police officers have shown incredible bravery on our streets in confronting these thugs. But it's quite clear, that we need more, much more police, on our streets and we need even more robust police action and it's that I've been discussing in cobra this morning.
The metropolitan police commissioner said compared with the 6,000 police on the streets last night in London, there will be some 16,000 officers tonight. All within the metropolitan police has been canceled. There will be aid coming from police forces up and down the country and we will do everything necessary to strengthen and assist those police forces that are meeting this disorder.
There have already been 450 people arrested. We will make sure that court procedures and processes are speeded up and people should expect to see more, many more, arrests in the days to come. I am determined, the government is determined, that justice will be done and these people will see the consequences of their actions.
I have this very clear message to those people who are responsible for this wrongdoing and criminality. You will feel the full force of the law and if you are old enough to commit these crimes, you are old enough to face the punishment.
And to these people I would say this -- you are not only wrecking the lives of others, you're not only wrecking your own communities, you are potentially wrecking your own life too. My office this morning has spoken to the speaker of the House of Commons and he has agreed that parliament will be recalled for a day on Thursday.
So I can make a statement to parliament and we can hold a debate and we are all able to stand together in condemnation of these crimes and also to stand together in determination to rebuild these communities. Now if you'll excuse me, there is important work to be done. Thank you.
VELSHI: U.K. Prime Minister David Cameron wrapping up some quick comments. He and a couple ministers are on their typical August vacation. They were not in the country. They came back on the third night after the third night, I guess overnight was the third night of rioting, looting, these demonstrations, and they really are having a problem getting a handle on what's behind this and who's behind this.
ROMANS: It started with the police shooting, but there's this undercurrent.
COSTELLO: It's more about the high unemployment rate, the deep cuts in government spending, that's why there are no jobs out there. One rioter, so to speak, was quoted in this article as saying, I don't have any money, I don't have a job, why don't I partake, break into a store front and steal some stuff.
ROMANS: This is something that economists and social scientists worry about when you get 10 percent unemployment and it's something has been studied many times that you start to get social cohesion melts away when you have so many people out of work or -- so it's something that -- to watch.
VELSHI: Some sense that why follow the rules because the rules haven't helped me.
ROMANS: That's right.
VELSHI: We don't know. Look, there's always in riots like this there's some element of hooliganism and some element of who people joined because something is going on. But it would be helpful if we got the root of it and figure out how to address that. All right, we'll stay on that story for you.
ROMANS: OK, with the fears that nation is slipping into another recession here. All eyes will be on the Federal Reserve today. It meets this afternoon.
Investors will be paying close attention to see if the fed says anything about the economy, whether the nation needs to adapt some kind of a new stimulus program, new kind of measures by the fed. What could they do or say to help? We'll be watching that.
COSTELLO: Yes. We really want them to say something. As we mentioned earlier, President Obama tried to calm financial fears following the nation's credit rating downgrade.
He said the drop from AAA to AA plus reflects the political gridlock, not America's true credit worthiness.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: Markets will rise and fall, but this is the United States of America. No matter what some agency may say, we've always been and always will be a AAA country.
(END VIDEO CLIP)
COSTELLO: The president said he'll be presenting his own ideas on how to fix the economy in the coming weeks.
VELSHI: All right, after downgrading America's credit, Standard & Poor's announced the downgrade of mortgage giants Fannie Mae and Freddie Mac as well. It's a move that could increase the cost of buying a new home and could also damage the already fragile housing market.
ROMANS: Like they need anything else to damage it, right?
Over the next several days, Standard & Poor's will downgrade hundreds of municipalities that are currently rated AAA. This is because their debt is backed by the U.S. government.
And since the nation's credit rating was lowered, the agency must lower the ratings of the municipal bond issuers. One expert telling CNN Money, there's no need to panic, adding the default risk has not increased. So it's better for investors to wait and not do much of anything on this. Don't just do something. Stand there.
VELSHI: All right and stay with us. In less than 20 minutes, we're going to check of how the U.S. markets may open this morning and then at 7:30 Eastern, we'll talk to Jim Awad. He's the managing director of Zephyr Management about whether anything could stop this global sell-off and what you should do with your money right now.
COSTELLO: And now is your chance to talk back on one of the big stories of the day. Are republican women unfairly criticized because they're women? We hear a lot.
There's a double standard when it comes to criticizing politicians who are female. Republican and Tea Party favorite Michele Bachmann, who has had a few missteps with historical facts says yes, she makes mistakes.
But she, unlike liberal politicians, doesn't get a pass from the media. Bachmann told CBN's David Brodie it's something she, Sarah Palin and other conservative women just have to deal with.
(BEGIN VIDEO CLIP)
REP. MICHELE BACHMANN (R), MINNESOTA: She has been unfairly criticized and I think that we've seen that with other conservative women as well across the country, whether they are political commentators or whether they're in public service.
(END VIDEO CLIP)
COSTELLO: This morning, conservatives are fuming over the latest "Newsweek" cover that shows a startled looking Bachmann with the title "Queen of Rage."
One blogger saying can anyone say with a straight face that the mainstream media is not biased against conservatives. Bachmann's critics haven't been measured.
Commentators like MSNBC's Ed Schulz called Bachmann a psycho talker. Remember this from Jay Leno. He holds nothing back when it comes to the so-called mama grizzlies.
(BEGIN VIDEO CLIP)
JAY LENO, HOST, "THE TONIGHT SHOW WITH JAY LENO": Republican Congresswoman Michele Bachmann now under fire for claiming the founding fathers eliminated slavery. Well, and Sarah Palin, she is upset. Sure, another female Republican out there, trying to steal the dumb vote.
(END VIDEO CLIP)
COSTELLO: Politics is rough for both women and men. Just how rough, though, may depend on your gender. So the talk back question today, are Republican women unfairly criticized because they're women? Facebook.com/americanmorning, facebook.com/americanmorning. We'll read your comments later this hour.
ROMANS: That should take my mind off all the discussion about the stock market. Bring it on, I want to hear.
COSTELLO: Me too.
VELSHI: All right, coming up ahead on AMERICAN MORNING, more on the growing unrest we were talking about in Britain. There have been more riots in London, fires, it's now spreading to other major cities. Prime Minister David Cameron has addressed the media. We're going back to London for some interpretation of that just ahead.
ROMANS: And a town turns off the water when residents need it the most. People hot and really bothered by the move. It's 13 minutes after the hour.
(COMMERCIAL BREAK)
COSTELLO: It's official, as if you didn't know, it is the hottest summer ever in Texas and Oklahoma. NOAA says the average temperatures were near 90 degrees for May, June and July. And that's for the whole day. Dallas could set a record on Saturday with 43 straight days of triple-digit heat.
VELSHI: Unbelievable.
One Texas town has now turned off the water leaving boiling residents boiling mad.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: You tell them that this old woman's hot down here and not just because of the heat. A hundred and seven degrees in my blood because you people and those people down there will not get off their duff and fix this stuff.
(END VIDEO CLIP)
ROMANS: Wow.
COSTELLO: Woo-hoo.
VELSHI: She told them.
ROMANS: They really tell them in Texas.
VELSHI: Yes. City officials in Kemp, Texas, made an emergency decision to shut down the town's water supply on Sunday. The city says the underground pipes that haven't been updated since the 1930s are rupturing in the intense heat wasting what little water they have left.
The "Dallas Morning News" says the water could be back on by 4:00 P.M. local time today. In the meantime, the city is giving out bottled water to residents at City Hall. Wow.
ROMANS: Can you save infrastructure spending? I mean, they have highways they said that were buckling. We've never been tested for even that kind of heat --
VELSHI: Right.
ROMANS: -- for such a long sustained time. Rob Marciano is in the Extreme Weather Center. Good morning, Rob.
ROB MARCIANO, AMS METEOROLOGIST: Good morning, guys. You know, that heat and lack of rain, obviously, exacerbated the drought situation. We've been keeping what's called the drought monitor for about 12 years now and this deep, deep red that you see here that's what we call exceptional drought. That's the most extreme drought conditions and this is the largest footprint that we've ever seen encompassing a huge percentage of this lower 48 since we've been keeping the drought (INAUDIBLE). That gives you an idea of just how much this heat has really affected the drought situation there.
The heat continues although the footprint for these advisories and watches has shrunk just a little bit. So that's encouraging, although if you live in Dallas, it's not all that encouraging. A hundred and eight is what we expect to see today for a high temperature.
Are we going to cool down? Are we going to break that record of 42 days in a row of 100 degree plus days? Well, tomorrow we're up to 106. Do we cool down at all come Thursday? Not really. So it looks like we will especially as we get towards Friday and Saturday, eventually next week we'll probably cool down just a little bit.
We're looking for thunderstorms to roll into the northeast. Be aware of that. Probably will cause some travel delays as well. Guys, back up to you.
VELSHI: Rob, thank you, my friend. We will check in with you through the course of the morning.
ROMANS: Meanwhile, checking on the unrest in Britain spiraling out of control. Rioting has now spread from London to three other cities, Birmingham, Bristol and Liverpool. Street gangs have been looting and setting fires in London. Police have made more than 300 arrests. The violence was sparked by a police shooting this past weekend.
Just minutes ago, British Prime Minister David Cameron addressed the chaos following an emergency cabinet meeting.
CNN's Atika Shubert is live in London. And, seriously, Atika, this is something that started as a police confrontation in an already tense -- tense country because of austerity and just continues to grow.
ATIKA SHUBERT, CNN INTERNATIONAL CORRESPONDENT: Well, this is it. I'm actually in Ealing, which is normally a quiet, residential suburb known more for its pretty houses outside of London. But as you can see behind me, the shops have been completely looted, put on fire overnight. There's the -- there's the shells of cars on the road here.
And Prime Minister Cameron was basically addressing residents of places like Ealing saying we will use the full force of the law. Here's what he said.
(BEGIN VIDEO CLIP) DAVID CAMERON, BRITISH PRIME MINISTER: Let me first of all completely condemn the scenes that we have seen on our television screens and people have witnessed in their communities. These are sickening scenes, scenes of people looting, vandalizing, thieving, robbing, scenes of people attacking police officers and even attacking fire crews as they're trying to put out fires.
This is criminality, pure and simple, and it has to be confronted and defeated.
(END VIDEO CLIP)
SHUBERT: I know I spoke to one woman here in Ealing who said she had a harrowing night. She didn't have any sleep because she was visiting a friend in Ealing when the violence broke out and her car was parked right down this street and she barely had time to get it out before she said she saw a group of kids basically coming in smashing the windows and falling upon another car and attacking it with -- with fire bombs essentially. She saw two cars go up in flames.
And she says, you know, she's so scared she's saying the police did the best they could but they seemed completely overwhelmed. Maybe it's time to bring in the Army. This is what people are saying.
ROMANS: Atika, who are these rioters and looters and vandals? Are they young people? Is it a mix of people? There have been more than 300 arrests. Who's doing it?
SHUBERT: Well, originally, it was, you know, this one -- this group in Tottenham, that's where it started. But then, basically, groups of young teenagers took advantage of the violence and started sporadic looting in other parts of the city.
And now people are saying it's not just teenagers. They've seen a mix of ages on the street. It just seems pure criminals are now taking that opportunity to loot, steal whatever they can and they're getting involved in the action, too.
ROMANS: Atika Shubert. Thank you, Atika.
COSTELLO: And just ahead on AMERICAN MORNING, a powerful storm raking China's northeast coast causing nearly half a million people in the region to evacuate.
VELSHI: And soccer career doesn't pan out, he'll be able to fall back on his first grade education. A world class soccer team signs a kid to a pro deal.
It's 23 minutes after the hour.
(COMMERCIAL BREAK)
VELSHI: Twenty-six minutes after the hour. "Minding Your Business" this morning. U.S. stocks took a beating yesterday, you probably know that already. Uncertainty took hold of Wall Street and didn't let go. The Dow lost 5.5 percent, the NASDAQ dropped nearly seven percent. The S&P 500 about 6.5 percent to start the week.
On paper, investors lost a trillion dollars in the market yesterday that's according to the Wilshire 500, which is the broadest index of U.S. stocks. Stocks are down about 15 percent in just a few weeks. But here's some perspective, the S&P 500, the best indicator for what's in your 401(k), is now up 64 percent from the lows back in March of 2009.
Every single stock in the S&P 500 ended lower today -- yesterday, financial stocks were among the hardest hit. Bank of America dropped a staggering 20 percent, a huge sell-off was due in part to the news that AIG is suing the bank over hundreds of mortgage backed securities.
Investors saw a big drop in Asian stock markets overnight following the sell off on Wall Street. European markets are taking a hit so far. Both debt concerns in that region as well as fallout from yesterday's plunge in the U.S. markets has investors on edge this morning.
Lots of volatility in pre-market trading for U.S. stock futures this morning. Right now, the Dow, the NASDAQ, the S&P 500, all trading a little bit higher ahead of the opening bell. But, boy, they've been all over the place this morning.
Investors are waiting for a decision on interest rates today from the Federal Reserve meeting in Washington. That comes out at 2:15 P.M. Eastern. Economists surveyed by Briefing.com expect the federal funds rate to remain unchanged at about a quarter of a percent. Fed Chief Ben Bernanke is not expected to give a press conference following that announcement.
And a new report out this morning says any signs, any glimmer of hope that the housing market will stage a recovery in the coming months has all but vanished. That's thanks to a recent series of bad economic news over the past several weeks. It's going to take at least two years before median home prices return to the levels from the first quarter of 2011. That's according to an analysis of home price trends by (INAUDIBLE) and Case-Shiller Indexes.
AMERICAN MORNING will be right back after the break.
(COMMERCIAL BREAK)
COSTELLO: Time to get out of bed. Good morning, everyone. It's 6:30 Eastern Time. Time for this morning's --
ROMANS: Don't get out of bed on second thought.
COSTELLO: You must, because this is a temporary thing at least I hope so. We're going to talk to Felicia in just a minute about that. But let's talk about the financial situation right now for a second.
For a second day, the painful downgrade of America's credit slamming markets across the globe. In Asia, Hong Kong's Hang Seng closed down by more than 4 percent, Japan's Nikkei was down by about 2 percent and in Europe where trading is under way, the markets are in negative territory.
Bring us up, Christine.
ROMANS: I know. We'll have to see the stocks are up 64 percent from -- 64 percent from the worst levels in March.
VELSHI: You found a positive statistic.
ROMANS: Meanwhile, we're watching this other very important story, the remains of 30 U.S. troops shot down in a helicopter in Afghanistan will arrive home this morning at Dover Air Force Base in Delaware. The 30 Americans included 22 Navy SEALs. It's the worst single incident loss of life for the U.S. since the start of the Afghan war.
VELSHI: And British Prime Minister David Cameron promising more arrest and vowing to bring rioters to justice. Violence and looting that exploded in London over the weekend has spread to three other cities.
ROMANS: Let's get a check of the U.S. stock index futures.
Felicia Taylor is watching the numbers for us this morning.
Good morning.
They were up and then Europe turned around. And now, what's happening?
FELICIA TAYLOR, CNN BUSINESS CORRESPONDENT: It's all over the place. I mean, it's erratic trading right now. I mean, you got futures up on the Dow but then on the NASDAQ, and they're down again. The back and forth like this.
Gold is up another $61.
VELSHI: Unbelievable.
COSTELLO: What?
TAYLOR: It's at $1,773. Tell me what that says to you.
COSTELLO: People are scared.
ROMANS: Yes. People are scared.
TAYLOR: There's a lot of fear. There's a lot of uncertainty. We don't know where things are going to pan out today.
What everybody is going to be watching for is any word from Ben Bernanke at the FOMC meeting. So, we'll be looking for that at about 2:00 this afternoon and see if there's any hint about any further stimulus and whether or not he's willing to do something like that right now or is he going to play it safe.
I talked to one trader this morning and he's actually a little concerned about hearing words about a stimulus because that means, for him, that things are really bad.
VELSHI: Well, think back to last Thursday, this is kind of what happened.
TAYLOR: Only last Thursday.
VELSHI: Right. But that was that big drop that we thought was crazy, 512 points on the Dow. The European Central Bank had came out and said they were going to buy bonds and some people took that -- some said, it's not far enough and others who weren't that concerned thought, oh, boy, the central bank is involved this must be serious and that's what some people are worried about today.
TAYLOR: Exactly right. And I spoke to a guy at the NYMEX about gold and he said that central banks have been entering the market for the last couple months taking up gold. That's also an indication --
ROMANS: Really?
TAYLOR: Yes. That's also an indication that there are some serious concerns about what's going to be happening and whether or not we're going to have this double dip recession.
COSTELLO: The president gave his speech yesterday and we all know what happened after the speech, the markets tanked.
So, Ben Bernanke may come out and say something as you said. So, I mean, what do investors need to see? Do they need to see President Obama come out with John Boehner, perhaps, and like present a united front to show investors that the bickering in Washington will end?
TAYLOR: Yes. What they need to see is leadership. They need to see some concerted effort on behalf of both Republicans and Democrats that enough is enough. We are tired of hearing this bickering back and forth.
It's got to stop. And it has to stop yesterday. Not tomorrow. This is done now.
And if they don't get the message loud and clear, I don't know what it's going to take.
COSTELLO: So, should Congress come back from vacation?
TAYLOR: Yes, I think they should to be perfectly honest with you.
ROMANS: We need a plan, don't you think? I mean --
TAYLOR: I mean, why are they all on vacation when the markets are going to hell in a hand basket? It's not OK.
VELSHI: This is a serious matter. I'm not sure whether -- I'm not sure whether the vacation is the problem or not. I don't know that getting them back in a room would help.
ROMANS: I don't know that they know what to do.
TAYLOR: That's even a worse --
VELSHI: That's it. I'm worried about what happens before November 23rd, their deadline to get something done.
TAYLOR: Right. The super committee.
VELSHI: There's nothing that indicates that these guys are on the track to compromising and making deals.
TAYLOR: We don't even know what the super committee is, who's on it, what decision are they really looking at, where are the spending cuts coming from? We need answers to these questions.
(CROSSTALK)
COSTELLO: Why don't they just like up the schedule and get that done right now instead of waiting for that timetable?
VELSHI: I think that is a really smart idea.
TAYLOR: Absolutely.
ROMANS: On top of that, you have -- whatever kind of thing the fed is going to do or whatever the government is going to do in terms of a jobs stimulus or job package. I mean, the president would like to see payroll tax holiday extended, he might need unemployment benefit extended, could the president ever get that through, you know, just say no to the president Congress -- House, I don't know. Probably not.
VELSHI: That might be the best idea we've heard first. Just move the deadline up.
TAYLOR: And it's not fair to place the blame or responsibility on the Federal Reserve yet again. We've already seen them come in twice into the marketplace with stimulus. Is it really their responsibility to do it a third time?
And, frankly, the first two times they did it, anyway, it didn't help the jobs front. And that's where we need to se action.
VELSHI: Yes. You're absolutely right.
COSTELLO: Felicia Taylor --
(CROSSTALK)
VELSHI: She's more in tune today.
COSTELLO: I love that.
The New York City hotel maid has filed a civil suit against Dominique Strauss-Kahn. Nafi Diallo is seeking unspecified damages of the former IMF chief, claiming physical, emotional and psychological harm. Strauss-Kahn is already charged with sexually assaulting Diallo in his New York hotel suite back in May.
VELSHI: In China, tropical storm has weakened but it's still bringing heavy rains and gales off the coast of northeastern China. Nearly half a million people had to be evacuated because of the storm. No deaths or injuries have been reported.
ROMANS: Oh, and Diana Nyad's attempt to swim from Cuba to the Florida Keys -- folks, it's over this morning. The 61-year-old swimmer called it quits early this morning after 29 hours in the water. She was suffering from severe shoulder pain, asthma and vomiting.
Nyad was trying to become the first person to make that 103-mile swim without a shark cage. She made it about halfway, almost halfway.
VELSHI: Wow.
COSTELLO: I still admire her.
VELSHI: Sure. Absolutely.
ROMANS: I couldn't have made it even a little --
VELSHI: I got trouble getting to the other side of the pool. So, I'm full of admiration for her.
All right. Real Madrid, one of the greatest soccer clubs in the world, has gone to grade school to look for new talent. The team has signed a 7-year-old prodigy out of Argentina. How good is he? He already just has one name, Leo.
ESPN says the kid will begin training in Madrid in September. If all goes well, he should be ready --
COSTELLO: Who's he going to train with?
VELSHI: I don't know.
COSTELLO: Like adults?
VELSHI: He's going to be ready to see action on the team between seven and 10 years from now. So, he's going to do a lot practicing for the next seven years.
COSTELLO: By himself.
VELSHI: Wow.
COSTELLO: It's crazy.
ROMANS: All right. Up next, a potential game changer for the GOP. Rick Perry making big weekend plans, folks. Is the Texas governor about to announce he's going to run for president?
It's 38 minutes after the hour.
(COMMERCIAL BREAK)
VELSHI: Wisconsin voters are heading to the polls today, deciding whether to recall six Republican state senators. The state has been deeply divided since Republican Governor Scott Walker took over and decided to strip public workers of collective bargaining rights. Democrats are hoping to take back the state Senate if their recall effort succeeds today.
COSTELLO: It is the end of an era on Capitol Hill. The House page program which began in the 1820s wraps up at the end of the month. House Speaker Boehner and Minority Leader Nancy Pelosi say they cannot justify the $5 million a year program when pages are no longer needed to deliver messages for lawmakers since everybody pretty much e-mails each other.
The program employs 70 high school age students each semester and during the summer. For now, the program will continue.
VELSHI: Why? They don't have electronics?
COSTELLO: No, I thought the amazing part of that story they agreed to cut something.
VELSHI: Together. Together. Yes.
ROMANS: There you go.
All right. Rick Perry supporters gearing up for a big weekend, folks. On Saturday, the Texas governor plans to make stops in South Carolina and New Hampshire, two, of course, early primary states. He's hoping to steal the spotlight from the other GOP candidates in the Ames straw poll in Iowa.
And Perry supporters hoping to hear an official announcement maybe he's running for president.
Erick Erickson, the editor-in-chief of RedState.com joins us live from the CNN Center in Atlanta.
Welcome to the program. I know your group is organizing this event and you can talk to him, do you know what he's going to say? Do you think he's going to announce he's going to run or he's going to clearly signal that he's in this race?
ERICK ERICKSON, CNN CONTRIBUTOR: I haven't talked to him but my understanding is that he probably will say something clearly he's running for president. You don't go to South Carolina and then fly to New Hampshire.
I mean -- just so everyone understands. He's been committed to come to our event since last year. We held our event in Austin, Texas, last year. He decided to come this year. But my sense is, just based on media reports really, that, yes, he's definitely going to say something, but it's not going to be an official announcement.
ROMANS: We know this week he had a big sort of prayer meeting that got a lot of attention. Give me a sense of what a Rick Perry presidential candidacy would do to the Republican field. I mean, people have been talking about and speculating about it for an awful long time.
What does he add to the field?
ERICKSON: Well, when you look at the polling numbers, Mitt Romney has a troubling sign he's fairly well capped at about 33 percent of the Republican primary vote and there are a lot of other candidates there who are picking off the other 66 percent, 67 percent.
So, Romney has an advantage there in that the field is crowded. If Perry comes in the field probably begins to consolidate behind a guy like Rick Perry and he will probably be able to get in a position to make it a one-on-one race with Mitt Romney -- in which case Romney probably doesn't stay as competitive as he has been.
ROMANS: You think that -- you've said people like Sarah Palin, Rudy Giuliani, you think that endorse a Perry candidacy.
ERICKSON: Yes. I'm not sure. Mark Halperin from "TIME" magazine put on Twitter last night. That was he was hearing, is that Sarah Palin and Rudy Giuliani might endorse. Maybe, I'm not sure. A lot of people still think Sarah Palin is going to run. I'm not as convinced that she is though.
ROMANS: Straw poll the same day in Ames, Iowa. You think after the straw poll and with a Perry candidacy, you're going to see people falling out of the pact and who will those people be? Who goes first?
ERICKSON: You know, I suspect Newt Gingrich is the first guy to go. He's out of money. Rick Santorum as well. I already consider them former candidates for the most part.
It's going to impact Tim Pawlenty pretty early on because he's trying to set himself up to win in Iowa. But most of the polling in Iowa shows if Rick Perry were to get in, then it pushes Pawlenty down further and the top three become Perry, Bachmann and Romney.
ROMANS: You know, tell me, as a true conservative, what is it conservatives want to see? You know, the Tea Party, and I know you've defended the Tea Party and it's hand, and what happened with the S&P downgrade, but the Tea Party has been widely blamed, even by moderate Republicans saying that, you know, they're partly to blame for this whole downgrade.
I mean, does that -- is that what true conservatives want to see more of in the presidential race and from their candidates?
ERICKSON: Yes. I definitely think they want to see fiscal conservatism. It's so funny to me that a group that maybe has 36 members of Congress who considers themselves Tea Party members -- they've bee there six months -- suddenly, they're to blame for the world's troubles.
Not really. And they need somebody to stand up and be a strong defender of them. I think Rick Perry would be. He was a guy who has Tea Party rallied around in his primary in Texas against Kay Bailey Hutchison for as -- I guess he's now into his 11th year as governor of Texas.
You know, he and Barack Obama have a lot in common. They both replaced a guy named George Bush. And Rick Perry raised his credit rating, while Barack Obama has got his lowered.
ROMANS: Can I ask you about a jobs plan? Who's got a jobs plan? I'm going to be honest with you -- I haven't really heard a good one. All I've heard is keep cutting taxes, keep cutting taxes.
You know what? We've been cutting taxes for a lock long time and the economy is still in the tank. So, what is the jobs plan? Who do you think has got the best one out there?
ERICKSON: You know, this is Rick Perry's key selling point, I would suspect, for a Republican primary. Half the jobs created since Tim Geithner December (ph) of recovery were created in Texas, and that's a big selling point. He's got a balanced budget in Texas, $6 billion surplus, and he's created a lot of jobs.
ROMANS: One last question. Question of the day today, pegged off this "Newsweek" cover of Michele Bachmann. Some say it's like caught her in unfavorable looking a little startled. Question is, are Republican women unfairly criticized because they're women? What do you think? Weigh in. Have you seen this cover?
ERICKSON: I have seen the cover. I'm not sure that I would make that big a deal out of that "Newsweek" cover. I would say, though, that I think Michele Bachmann has, to a degree, been benefited by a lot of the criticisms of Sarah Palin. It's very hard to make the same attacks against two conservative women and not have it come across as sexist or something.
When you have Ashton Kutcher, for example, and Demi Moore among others on Twitters saying enough is enough with the bashing of Sarah Palin and others, I think, at some point, it's kind of been an exhausted topic. Michele Bachmann's benefited from it. The caveat for a lot of conservatives is they shouldn't rally around someone just because the media may be perceived to be attacking that person. Michele Bachmann can stand on her own record.
ROMANS: Erick, I want to go back real quickly to one thing that you said. You said that, you know, that the difference between President Bush and President Obama is that President Obama had a downgrade. You know, a lot of people would point out that President Bush had a financial crisis first. Do you really blame the president for the downgrade? You know, this has been a long, ugly process that got us here.
ERICKSON: Yes. It's been a very long and ugly process. I was kind of shocked that the president's advisors came out in one hand and said S&P made a $2 trillion math error, and on the other hand, it was the tea party to blame when, you know, Barack Obama and the Democrats controlled Congress and the White House for two straight years. They saw the warning signs on horizon, and they decided to go with health care and call it entitlement reform.
ROMANS: S&P didn't say anything about health care. S&P said that there was political dysfunction in Washington that made the problem of too much debt a problem. Too much debt is something we've had for a long time but never got the downgrade. The political dysfunction and the thing (ph) that tips it over the edge.
ERICKSON: See, but we've had political dysfunction forever as well. I mean, it's a feature not a bug in the system despite what a lot of people are saying these days. I frankly think the economic team in the White House is probably right. I think S&P told a lot of their people that -- who they advise that they were going to downgrade, they found out there was a math error, and for credibility sake, they couldn't walk it back. So, they had to do the downgrade.
That's what the president's economic team has said, and they're probably right. That would explain a lot of what S&P did, and it is a bipartisan problem, but you can't downgrade for a political reason that we've had forever. I mean, my goodness, have we forgotten about the Reagan years where the Democrats in control or the Republicans shutting down congress in 1995 with Bill Clinton? None of those things were really a lot different than what we have today.
ROMANS: All right. We have to leave it there. Erick Erickson, the editor-in-chief of RedState.com. Thanks so much.
ERICKSON: Thank you.
ROMANS: We'll be right back. It's 48 minutes after the hour.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: My name is (INAUDIBLE). I'm a saxophone player. I just walk into airports assuming that I have absolutely no control over any of it. It makes everything easier. At one time, you know what a metronome is? My metronome went off in my carry-on. They freaked. You, come back here. Explain that. And I said, it's a metronome. What is that? It's a practice instrument for playing music.
Tick, tock, tick, tock. Terrorist alert. The metronome! I'm a curious person. I can't be on planes without books, without a computer, and without music. That's what I like about this. Everything is contained. My books are in here. I play word games. There's a cool game that they have called words with friends, and it's basically scrabble. You can play with anybody with an internet connection around the world.
My buddy, Harry Connick, Jr., he and I do this constantly. There've been times when they lost instruments. I carry the big one on. You know, I've been traveling like crazy.
(END VIDEOTAPE)
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ALI VELSHI, CNN ANCHOR: Fifty-one minutes after the hour. Here's a look at your morning headlines.
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VELSHI (voice-over): U.S. stock futures have been up and down all morning after the first ever downgrade of U.S. debt sent the Dow plunging 635 points yesterday. Overseas markets in Asia closed lower. They're also down in Europe where trading is currently under way.
The remains of 30 U.S. troops killed in a helicopter crash in Afghanistan over the weekend are due to arrive home this morning at Dover Air Force Base in Delaware. Their chopper was shot down by an insurgent rocket-propelled grenade.
The chaos continues in Britain. British Prime Minister David Cameron blames the rioting that has spread from London to three other cities on thugs and promises more arrests. The unrest was sparked by a police shooting over the weekend.
Kids in Philadelphia being warned, get home earlier or face fines. Mayor Michael Nutter imposed curfews after a string of youth mob attacks. The most recent involving 20 minors, one as young as 11 years old, who attacked two random people.
Legendary Penn State football coach, 84-year-old, Joe Paterno, was hospitalized after he was accidentally blind sided during a practice. Paterno says he's doing fine. He expects to be back soon. He even reportedly conducted his morning coaching meeting from his hospital bed.
Diana Nyad forced to abandon her attempt to swim from Cuba to Florida without a shark cage, almost halfway into the 103-mile trip this morning when shoulder pain and asthma made it impossible for her to continue.
(END VIDEOTAPE)
VELSHI (on-camera): You're caught up on the day's headlines. AMERICAN MORNING back right after this.
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COSTELLO: Now is your chance to talk back on one of the big stories of the day. With conservatives fuming over the latest "Newsweek" cover of Michele Bachmann, we asked you this question, are Republican women unfairly criticized because they're women? And I must say that our Facebook friends do not like Michele Bachmann, at least, most of them who responded on our page.
This from Edward, "I don't hear anybody criticizing Kay Bailey Hutchison, Amy Holmes, or Peggy Noonan. If you're only speaking of Sarah Palin and Michele Bachmann, there's nothing unfair about the criticism at all. People are terrified at the prospect of an anti- intellectual loose cannon being put in charge of this country by a mob with small minds and misdirected anger." What did that tell you?
This from James, "No, not at all. I rather like the photo and the caption. I think it's correct. Fair? What is fair in politics? If you're going to put your face out there in the public, you might expect not everyone will like you and may even toss a tomato or two."
This from Eileen, "No. If anything, the media doesn't nail them on all of their idiotic errors for fear of appearing biased against them."
Keep those comments coming, Facebook.com/americanmorning, and thanks, as always.
ROMANS: Because moderate Republican women, moderate Republican women tell me that Sarah Palin and Michele Bachmann are not the face of the Republican Party for them. Although, they are the face of the Republican Party. They're the two you talk about most in terms of running for president.
COSTELLO: We tend to lump all conservative women together, right? They all believe exactly the same thing. They'll act exactly the same way, and that's just not true. That's not true of women in general. So, why would it be true of conservative women?
(CROSSTALK)
ROMANS: When Hillary Clinton was sort of the face of women in Democratic politics?
COSTELLO: I think so. Hillary Clinton got a lot of --
ROMANS: Right. You're right. You're right. All right.
COSTELLO: Yes.
ROMANS: OK. Let's go back a little bit. Let's go back in time to "Dirty Dancing." It's making a comeback to the big screen.
COSTELLO: No.
ROMANS: Carol loved the original too much to mess with it.
COSTELLO: Don't back baby in a corner.
(LAUGHTER)
ROMANS: Lions gate is remaking the classic 1987 film which starred, of course, Jennifer Grey and Patrick Swayze. The original choreographer, Kenny Ortega, is going to direct the remake. "Dirty Dancing" was made for 46 million. It went on to gross $214 million worldwide. The studio says the remake will include hits from the original film as well as new songs. No word yet -- I mean, even watching the old clips is cool. It makes you miss Patrick Swayze, too.
COSTELLO: Who are they going to cast? Like the cast of "Glee?" I mean, it's just not going to be the same.
VELSHI: Yes. There's -- that's definitely a movie that I entirely associate with the cast.
ROMANS: But you think our parents and grandparents have the same thing? Can you believe they're remaking X, you know, like all the shows that they're remaking.
(CROSSTALK)
VELSHI: That will be worth it. All right. Coming up next hour, London is burning, at least, parts of it. Violence spreading like fire across England this morning. The prime minister now weighing in, police desperately trying to take back control. We're live in the U.K. when we come back.
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