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American Morning
Perry to Announce White House Bid; GOP Debate; "Corporations are People"; U.S. Markets Bounce Back; "Super Committee" Set; U.S. ID's Troops in Downed Chopper; Cameron to Rioters: "You Will Pay"; Anthony "Responsible" for Daughter's Death; 120,000 Post Office Layoffs?; Tiger Roars, Then Unravels; Google Me Bachmann; Five Americans Killed In Afghanistan; Michael Jackson Tribute Line Up; Fight Against Flash Mobs
Aired August 12, 2011 - 06:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: You'll be back, Ali.
Good morning, everyone. I'm Carol Costello. The Republicans who would be presidents squaring off in Iowa. The debate speeches the usual sniping is at President Obama and some highly personal sparring between two GOP candidates from Minnesota.
CHRISTINE ROMANS, CNN ANCHOR: I'm Christine Romans. No longer the elephant in the room. Texas Governor Rick Perry set to announce he's joining the Republican race for president.
ALI VELSHI, CNN ANCHOR: Elephant room, I like that.
I'm Ali Velshi. Mitt Romney may be the Republican front-runner, but he was not feeling the love at the Iowa state fair. He got heckled and laughed at over three words he said, words he may come to regret on this AMERICAN MORNING.
COSTELLO: Thank God it's Friday.
VELSHI: Hold on. I've got to move my stuff.
COSTELLO: Good morning. Happy Friday to you. It's August 12th. Welcome to AMERICAN MORNING.
ROMANS: OK, up first, Texas Governor Rick Perry, the elephant in the room, is about to go all in for 2012 after weeks of speculation about whether he'd actually enter the Republican presidential race. Perry says he's ready to toss his 10 gallon hat into the ring.
(BEGIN VIDEO CLIP)
GOVERNOR RICK PERRY (R), TEXAS: We're going to have an announcement at 1:00 Eastern Time over in South Carolina and then hop in an aircraft, come straight to New Hampshire.
And I hope you'll be watching your television set and listen to however you're picking it up on the internet or whatever. We'll have our announcement to give our intentions of what our future holds and I think a little bit about what the future of America holds as well.
(END VIDEO CLIP)
ROMANS: He's talking about tomorrow, of course, and jumping in an aircraft and going up to New Hampshire. Perry's candidacy would be a game-changer for the GOP, the eight declared candidates who took part in the debate last night in Iowa were asked about Perry joining in.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I'm very pleased that he's coming in because he represents the status quo and I feel like I'm sort of separated from the other candidates with my strong belief and liberty and limited government and different foreign bill and want to deal with the fed. So he'll just get all their votes.
UNIDENTIFIED MALE: Welcome to the contest. From my perspective, it doesn't bother us or my campaign. That's just one more politician and that makes this business of problem solving stand out more.
UNIDENTIFIED MALE: We all need prayers and I hope he offers a lot for everybody on this stage.
(END VIDEO CLIP)
VELSHI: Eight declared candidates shared the stage last night ahead of a key test vote tomorrow. We keep talking about that, the Iowa straw poll in Ames.
CNN's deputy political director Paul Steinhauser has an enviable job this morning. He's live in Des Moines where the Iowa state fair is going on with some morning after analysis. Good morning, Paul.
PAUL STEINHAUSER, CNN DEPUTY POLITICAL DIRECTOR: Good morning, Ali. Listen, you guys were talking about it. You know, listen, a lot of story lines in this debate. This was the first presidential debate in two months since our own CNN debate in New Hampshire.
What happened in our debate in New Hampshire? Michelle really shined. Since then she's been doing very well on the polls. And the other person from Minnesota, the former governor up there, Tim Pawlenty, not doing as well.
They've really been sniping on the campaign trail the last couple of weeks and it played out big time at this debate last night. That was really the biggest story line of all.
Pawlenty questioning the congresswoman's - basically her agenda and she in a way comparing him to Barack Obama, those are fighting words. Take a listen.
(BEGIN VIDEO CLIP)
MICHELE BACHMANN (R), PRESIDENTIAL CANDIDATE: I didn't cut deals with special interests where you put the pro-life issues with tax increase issues. That's a fundamental. It's a nonnegotiable. When we come to a nonnegotiable, we must stand and I stand.
TIM PAWLENTY (R), PRESIDENTIAL CANDIDATE: If there with two things in the bill, a tax increased and we're hypothetically stripping away pro-life productions, which we weren't, then it's a double against it. She voted for it.
BACHMANN: I need to respond to that. I need to respond to that.
(END VIDEO CLIP)
STEINHAUSER: Just a little taste there of that back and forth gone on all night. As you mentioned the straw poll tomorrow, both these candidates really need to do well, show they've got a lot of momentum and a lot of organization. One of the reasons why you saw that big dynamic last night, guys.
VELSHI: And of course, Paul, Mitt Romney coming under attack as the front-runner. Tell us a bit about that.
STEINHAUSER: Yes. He is the front-runner right now. At this stage in the race, he's at the top of most of the polls nationally and in most state polls as well.
We thought he would come under attack by the other seven candidates on the stage last night. It didn't happen as much as we thought, Ali. It didn't happen in our debate either two months ago.
Except for his health care plan in Massachusetts, remember Tim Pawlenty had a big chance in our debate two months ago to go after him, he didn't. There was a lot of criticism over that. Here was take two. Take a listen.
(BEGIN VIDEO CLIP)
PAWLENTY: Obamacare was patterned after Mitt's plan in Massachusetts. For Mitt or anyone else to say they are not substantial similarities or they're not essentially the same plan it's incredible. So that's why I called it Obamniecare and I think that's a fair label. And I'm happy call it that again tonight.
ROMNEY: I think I like Tim's answer at the last debate better.
(END VIDEO CLIP)
STEINHAUSER: Another dynamic last night, kind of a back and forth between former Senator Rick Santorum and Congressman Ron Paul. So what's next as you also mentioned, that straw poll tomorrow, it's a real test of the campaigns organization.
As you also mentioned, also you've got Rick Perry jumping in, making it official in South Carolina. He's going to be here in Iowa on Sunday. Guess who's probably going to show up right here around the corner from our bus today at the state fair, Sarah Palin. I tell you, guys, this campaign is definitely changing big time by the end of this weekend.
VELSHI: I love the bus. I miss the bus and I love the Iowa state fair. The CNN Express at the Iowa state fair are like my two favorite things in the world.
COSTELLO: He wants a deep fried pickle.
VELSHI: I definitely want a deep fried something. Thank you my friend, Paul Steinhauser.
COSTELLO: OK, speaking of Mitt Romney, I'm sure everyone has heard about this by now. He said these three words, corporations are people. Remember that line because it may come back to hunt Mitt Romney.
The frontrunner for the Republican presidential nomination was at the Iowa State fair yesterday fielding questions from voters and some Democratic plans, to be honest about it. When he was asked about the question of raising taxes and that's when things heated up.
(BEGIN VIDEO CLIP)
MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: Ultimately, not just this year, but over the coming decades going to be able to balance our budget and not spend more than we take in. We have to make sure that the promises we make in Social Security, Medicaid and Medicare are promises we can keep.
And there are various ways of doing that. One is we can raise taxes on people -- of course, they are. Everything corporations are ultimately goes to people. Where do you think it goes?
(END VIDEO CLIP0
COSTELLO: As you might expect, Democrats are jumping on Romney's "corporations are people's" line. DNC Chair Debbie Wasserman Schultz is calling it a shocking admission and shameless.
It's interesting the plans we've seen in these events too, you know, like really kind of stirring it up, looking for a justice kind of a moment to capitalize on.
ROMANS: Well, the really odd thing about this is Mitt Romney hasn't been campaigning in Iowa and all of a sudden he shows up at the state fair and he gives this impromptu campaign speech and look at what happened.
COSTELLO: Maybe he should have followed his original game plan.
ROMANS: Shareholders are people, too, Ali.
VELSHI: Yes.
ROMANS: Wall street bouncing back, speaking of shareholders and investors and the rest of us who are watching our 401(k)s move around because of shareholders and investors. Investors are snatching up stocks that have been beaten down over the past weeks.
The Dow jumped 423 points, nearly 4 percent yesterday. The Nasdaq and S&P 500 were also up more than 4 percent. You know, but come on, what we've seen this week was unprecedented.
Never before in history has the Dow bounced 400 points either up or down four days in a row. So if you feel like you are reliving history from a downgrade to stock market reaction to it, you are right.
Now overseas, Hongkong's Hang Seng also closed up. Japan's Nikkei was down slightly. In London, trading is under way right now. Stocks are higher.
VELSHI: All right. The Super Committee is set. Twelve lawmakers, six Democrats, six Republicans, six members of Congress, six members of the House, six senators, they now have less than three months to agree on a $1.5 trillion in budget cuts.
Here are the final three Democratic selections made by House Minority Leader Pelosi, Representative James Clyburn of South Carolina, Chris Van Hollen of Maryland and Xavier Becerra of California.
Here is the gang of 12. Some are calling them 12 angry men. There's one woman on the panel so I supposed you can't do that. I had a chance to sit down with Christina Romer yesterday. She is the former chair of the President's Council of Economic Advisors under President Obama.
Back before she joined the administration in 2007, she was a professor of economics at Berkeley. She co-wrote a paper on the effect tax changes have on the economy. The research has been quoted to make the case for raising taxes to lower the deficit and for making the case against raising taxes because of the harmful effect on economy and jobs.
One study going both ways. I asked her to set the record straight.
(BEGIN VIDEO CLIP)
CHRISTINA ROMER, FORMER CHAIRMAN, PRESIDENT COUNCIL OF ECONOMIC ADVISORS: Even though I very much support raising taxes for dealing with the deficit gradually over time, now's not the time to do it.
Because either raising taxes or cutting spending now would absolutely be very hard on the economy, but that doesn't mean you can't legislate it to kick it when the economy is back to normal. That's when the economy would be much more able to deal with it.
(END VIDEO CLIP)
VELSHI: You can see the entire interview with Christina Romer on "YOUR MONEY" airs Saturday and Sunday at 3 p.m. Eastern right here on CNN. ROMANS: OK, the Defense Department releasing the names of all the U.S. troops killed when their helicopter was brought down in Afghanistan. Thirty eight people died in last weekend's attack.
Twenty two were U.S. Navy personnel including 17 SEALs, five so-called conventional forces who worked regularly with the SEALs, three were with the U.S. Air Force and five were with the U.S. Army. Eight were Afghan military personnel.
VELSHI: Rioting up the rioters, police in London have been raiding homes trying to track down those responsible for days of street violence and looting.
More than 1,600 people have been arrested nationwide so far in connection with the rioting. Prime Minister David Cameron admits police waited too long to take action after a shooting last weekend that triggered the unrest.
COSTELLO: Casey Anthony is responsible for the death of her daughter Caylee. That's according to a report just released by the Florida's Department of Children & Families.
That conclusion comes a month after a jury acquitted Anthony of murdering Caylee. They say their case is now closed. Despite the finding, the agency says their case is now closed.
VELSHI: And the financially strapped U.S. Postal Service is asking Congress to remove collective bargaining restrictions so it can lay off 120,000 workers.
The agency also wants permission to replace existing government health care and retirement plans. Postal Service says mounting losses and declining mail volume require drastic measures to cut costs.
COSTELLO: You guys ready for this?
ROMANS: I'm ready for it, Carol.
COSTELLO: OK, now's your chance to talk back on one of the stories of the day. The question this morning, should there be gay characters on children's television shows?
You know where I'm going here because I'm sure you heard there are calls for Sesame Street's Bert and Ernie to get married. An online petition has been flying around the internet, 6,000 plus signatures so far.
It's the brainchild of a Chicago man who says we're not asking that Sesame Street do anything crude or disrespectful. Only that they allow Bert and Ernie to marry or even add a transgender character to the show.
Even at a time same sex marriage is allowed in six states, that's controversial. I mean, who can forget the Tinky Winky controversy. Evangelist Jerry Follow accused the Teletubby of being a closet homosexual because he carried a purse.
A, quote, "immoral lesson for little boys." Spongebob Squarepants and Patrick also targeted because they hold hands a lot. They, too, accused of sending the wrong message, but according to the creator of the Bert and Ernie get-married petition, a same-sex marriage or even a gay character on children's television will teach tolerance to those who are different.
As for what Sesame Street says, it says Bert and Ernie are best friends and they remain puppets and do not have a sexual orientation. Still, the talk back this morning, should there be gay characters on children's television?
Facebook.com/americanmorning. You know, the subject's on the rage is on the front page of the "New York Post" this morning, Sesame wed furor.
ROMANS: I always thought they were brothers actually. So to find out they are just friends from Sesame Street is actually -- that's cleared up a little more information --
COSTELLO: They can't possibly be brothers. They have different- shaped heads.
ROMANS: Carol, this is America. They're all kinds of different families. I think what the Chicago man is trying to point out. But can't, you know, children television be the last bastion of no agenda, no politics, just furry puppets who are asexual that's what I'm looking for.
COSTELLO: As ABC put it, they have nothing below the waist anyway.
VELSHI: All right, coming up next on AMERICAN MORNING, the Pentagon conducting a test flight of the HTV II, that's the fastest plane ever built. The first 30 minutes went smoothly and then something went terribly wrong.
ROMANS: A bull running free through the streets of New York. It was an escape attempt. He didn't want to become dinner. Running bull video. Today is an episode of -- speaking of the running bull video, there he is. We'll tell you how he is.
COSTELLO: That's a Hartford though. Anyway, Tiger Woods showing flashes of brilliance at the PGA before absolutely imploding. We're live at golf final major.
(COMMERCIAL BREAK)
(COMMERCIAL BREAK)
ROMANS: All right. Trouble at 13,000 miles an hour. The Pentagon's test flight and the fastest plane in the world, the HTV-2 ended after 30 minutes when officials lost contact with the aircraft and it crashed into the Pacific. The HTV-2 was designed to be able to reach any military target in the world within 60 minutes. It can go - so put it in perspective how fast it could go? It could go from New York to L.A. in 12 minutes if it doesn't disappear.
COSTELLO: Right. Exactly. It can go anywhere.
VELSHI: Right. That's a problem keeping track of this thing, so they're going to try it again at some point.
He's running for his life, literally. Look closely. That is a bull running rampant in Queens, New York. Officials say he escaped in nearby slaughterhouse. The bull made its way onto your college campus, ended up smacking into a construction scaffolding. His freedom was short-lived.
COSTELLO: Oh.
(CROSSTALK)
ROMANS: Come on. If you could escape, he should be able to get a get out of jail free card. Tell me -
VELSHI: Very permissive today. First, it's the stuff - TV characters and the cartoon characters, and now the bull. Everybody should just go free and do whatever they want.
The slaughterhouse workers wrestled him to the ground. I'm not judging. I'm just telling you what happened. Do you think it should have been - what should he - what does free mean? Let him lose in Queens?
COSTELLO: No. Where would you put him in Queens? He could be shipped to a farm that's what Christine is thinking.
VELSHI: Give him a special apartment in the Queens slaughterhouse? You just live here.
ROMANS: Oh. I just think if you were smart enough to get out and run away and evade all those, I mean, humans, you should get - get out of jail free card.
COSTELLO: I think we should move on now.
VELSHI: All (ph) those questions.
COSTELLO: Yes. For a few moments during the first round of the PGA Championship, it sure looked like the old Tiger Woods. Three birdies in the first five holes had Tiger near the top of the leader board briefly. Then it all unraveled. That was a nasty shot. Woods followed that up with three double bogeys finishing with his worst score ever in the opening round of a major.
He's now 14 strokes behind the leader, Steve Stricker, who tied the record for the lowest run ever recorded in a major tournament, a 7 under par 63.
ROMANS: Yesterday, we're talking with the guy from TNT. And he said that he thought Tiger - he wouldn't - he wouldn't win, but he would do better, like he's going to come back. He's going to (INAUDIBLE) better.
VELSHI: Then you cursed him. You said he was -
ROMANS: I said I thought that his personal -
COSTELLO: Well, it's not over yet.
ROMANS: -- mental issues were a bit more important than the need.
COSTELLO: It's not over yet. It's not over yet.
VELSHI: She's very sympathetic to the bull, though.
ROMANS: Animals and Muppets, I'm giving a pass. Tiger Woods, for some reason, I am not.
VELSHI: They are getting ready to teeing up for round two. Rob Marciano is there, by the way. He's at Johns Creek, Georgia, site of the 93rd PGA Championship.
ROMANS: Good morning, Rob.
VELSHI: Good morning, Rob.
ROB MARCIANO, AMS METEOROLOGIST: Good morning, guys. Aren't you all financial guys kind of sympathetic to the bulls? Isn't that what you do?
VELSHI: Oh.
ROMANS: Yes, kind of. Oh.
VELSHI: That's what it is. That's what it is, Rob. Very good.
ROMANS: We need a little bit of that bull.
MARCIANO: It seems obvious to me.
VELSHI: When we see a bear getting out, we think it should be trapped and thrown into a cage.
ROMANS: Shoot it.
VELSHI: Yes. MARCIANO: Good morning, guys.
Well, we're talking yet about another animal. Tiger, as you mentioned, firing a 77 yesterday afternoon. What he told the media after the round was, yes, he decided to play by feel after he was playing so well. He's been playing so mechanical and had so many mechanical swing thoughts. He said, you know, I'm going to go out there and play it by feel and that's when things got - it went awry.
So maybe he's not at that point yet where he can forget about mechanics and start playing by feel. So that was the explanation he gave the media.
We saw him on the range yesterday. He was just lacing them when he was playing mechanically and I caught up with some fans to ask them some hard-hitting questions.
(BEGIN VIDEOTAPE)
MARCIANO (on camera): What do you think of Tiger's outfit today?
UNIDENTIFIED MALE: It looks good.
MARCIANO: Do you like the purple?
UNIDENTIFIED MALE: Yes, the purple is good. The sneakers are a nice touch.
MARCIANO: How about you, sir? Are you looking to be on Tiger's back?
UNIDENTIFIED MALE: No, thanks. No, no.
MARCIANO: You don't want that kind of pressure?
UNIDENTIFIED MALE: No.
MARCIANO: Or you just let him out. Talk to the media too much?
UNIDENTIFIED MALE: I just want to binge out his social calendar. That sounds like a lot more fine job than being a caddie.
MARCIANO: How about you? Who have you got your eyes on?
UNIDENTIFIED MALE: I'm looking at Rory. Rory.
MARCIANO: Where is Rory?
UNIDENTIFIED MALE: He's not out here yet.
MARCIANO: So you're not looking at him right now, but you're looking at him to maybe play well.
UNIDENTIFIED MALE: Yes. To me that's tough open, but he did great at the U.S. Open and this guy would come back.
MARCIANO: How old are you?
UNIDENTIFIED MALE: I'm 18.
MARCIANO: OK. So you're a young punk like Rory.
UNIDENTIFIED MALE: I'm a young punk.
MARCIANO: So that's why you're looking at him. That's why you want him to win.
(END VIDEOTAPE)
MARCIANO: I'm joking, of course. That young punk Rory showed just how tough he was yesterday. Early in the round, injuring his wrist by swinging into a - a tree root and in pain the whole time. He managed to come in with an even round 70, so that was impressive. He'll be out on the range early today. He goes off around 8:30, so we'll see if that - if he decides to go off because of that wrist injury.
Weather today should be OK. It was pretty nice yesterday, although on the toasty side. High temperatures will, of course, be in the 90s. It increased the chances for showers and thunderstorms Saturday and Sunday thus prove to be cooler.
Speaking of cooler, Dallas - well, they broke the streak. They were looking for 42, 43 days in a row of 100 degree plus, temperatures, yesterday, they hit 97 with a little bit of much needed rain getting into part of Texas, not all the way to Dallas. But, you know, if you talk to folks in Dallas and they say, we want - you know, you suffer for so long, you want to at least break the record and they would have to get it to Sunday to do that. The bad news is today they'll probably be up in over 100 degrees again today.
It will be a toasty one here at PGA for round 2 of and we'll be reporting live throughout the morning. Guys, back to you.
ROMANS: Rob, did you say he was playing by feel or playing the field?
VELSHI: Oh.
COSTELLO: She's relentless. Rob Marciano -
ROMANS: It's Friday. I work too many days in a row.
MARCIANO: Yes.
ROMANS: Somebody's got to send me home.
MARCIANO: Nice work. I have to ask his new caddie there. There were some interesting remarks on the range we got from the camp (INAUDIBLE).
ROMANS: I bet there were. I bet there were. I - I'm just saying what they're all saying there in the gallery, and you know it. All right. Nice talking to you, Rob. Thanks.
MARCIANO: All right, guys.
ROMANS: You can track your favorite players right through the weekend. Live coverage of the tournament can be seen all day on PGA.com and beginning at 1:00 P.M. Eastern on TNT.
We'll be right back after that. Almost 24 minutes after the hour.
(COMMERCIAL BREAK)
ROMANS: "Minding Your Business" this morning.
Another big upswing - upswing in U.S market yesterday. The Dow gained - the Dow back about four percent. The NASDAQ and S&P 500 each gained a little more than 4.5 percent. But the stocks are still down overall for the week into today's session. It's been a historic week.
As we've seen all week, a lot of volatility in pre-market trading ahead of the opening bell this morning. Right now, U.S. stocks futures are trading higher again. A potential market mover this morning retail sales numbers for July, that reports come out in about two hours from now.
Investors also watching European markets today. In an effort to calm down the markets there, Italy, France, Belgium and Spain have announced a temporary ban on short selling. Short selling, of course, betting the financial stocks will go down in value, which the government there hopes it will at least take some of the speculation out of the market. The U.S. did this in 2008 during the financial crisis. Experts, by the way, are mixed on the results for ban on short selling.
And here stateside, mortgage rates are still falling. The average rate for a 30-year fixed mortgage dropped to 4.3 percent in the past week. That's getting close to record lows, according to a survey by Freddie Mac. Have you checked to see if you can refinance?
You could see higher food prices at the supermarket this fall. The USDA says heat, drought, flooding have made for a brutal growing season for corn, soy beans and wheat. That's expected to push up the prices for any related food items. That includes everything from pasta to soda and they got corn syrup in it to vegetable oil.
A hundred twenty thousand postal workers could lose jobs or at least face big cuts to their benefit packages, this if Congress approves a cost-cutting proposal from the U.S. Postal Service. The Postal Service claims it needs to eliminate 220,000 jobs by the year 2015, less than half of those cuts can be made through attrition. The mass layoffs require, of course, Congressional approval.
AMERICAN MORNING will be back right after this quick break.
(COMMERCIAL BREAK) COSTELLO: Good morning to you and thank you for waking up with us. It's 32 minutes past the hour.
Time for this morning's top stories.
Overseas markets are mostly up this morning after the Dow shot up 423 points yesterday. The NASDAQ and S&P 500 also up more than 4 percent. Though, if you look at the past week, the Dow is still down over 300 points.
The debt supercommittee is all set. House Minority Leader Nancy Pelosi making final three selections, adding Democrats James Clyburn of South Carolina, Chris Van Hollen of Maryland and Xavier Becerra of California to the gang of 12. That's what we're calling them now.
They have less than three months to agree on $1.5 trillion in spending cut.
And Texas Governor Rick Perry is joining the party. He's scheduled to launch his bid for the Republican presidential nomination at an event in South Carolina tomorrow. From there, he will head to other early voting states to New Hampshire and Iowa.
VELSHI: Philadelphia is fighting back against flash mobs. Kids some as young as 11 years old have joined these groups and have been going around attacking random people.
ROMANS: Philly's mayor has laid down the plan to curb the mobs. He's tightened teen curfews on Friday and Saturday nights and he says he's ready to punish the participants in these mobs and their parents.
CNN's Susan Candiotti joins us now with more.
I mean, and Mayor Michael Nutter has been very clear. This is a family and community issue. I mean, he's really putting -- I mean, he stood up in front of his own church and really gave it to people saying you've got to be in charge of your own kids.
SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: Oh, yes. It's -- you know, he's had it up to here and he's making no bones about it and take nothing prisoners.
You know, there's tough talk from Mayor Michael Nutter. He's had enough of violence, shenanigans stirred up by flash mobs around his city, so tonight's the night. A curfew in Philadelphia is being extended by an hour in a few areas starting at 9:00 instead of 10:00. So, for anyone under 18, you'd better be off the streets or else.
There have been about eight incidents in under two years and at the end of last month, two especially violent attacks involving teenagers and a youngster who's only 11 years old. The major says those involved are predominantly black and he's had harsh words this week. In his words, you damage yourself, you damage your own race.
(BEGIN VIDEO CLIP)
MAYOR MICHAEL NUTTER, PHILADELPHIA: There is no excuse for young people being out so late at night by themselves and then making bad decisions and literally assaulting other citizens. I will not tolerate that.
(END VIDEO LCIP)
CANDIOTTI: But the mayor is not laying this all at the doorstep of young people. He's calling out parents. He's going to start enforcing laws that slap parents with fines. First, they'll get a warning if their kids get in trouble. After that, the parents will have to pay up to $500 and they could be liable for injuries.
One young woman, an editor for the satirical publication "Onion" suffered a broken leg during an attack in June.
(BEGIN VIDEO CLIP)
EMILY GUENDELSBERGER, FLASH MOB VICTIM: I would imagine that these kids don't have great lives if this is what they're doing. And, again, I don't know if that really means that I feel bad for them.
(END VIDEO CLIP)
CANDIOTTI: The mayor's calling on volunteers to beef up civilian patrols this weekend to send a message that enough's enough.
And because of the attention in Center City, the question is does this mean that other areas might be neglected? But, no, the mayor is saying we have enough police elsewhere. Yes, if trouble crops up someplace else, we'll get phone calls. We'll respond. But the force can't be every place.
COSTELLO: You got to pay for it, too. What's it costing the city of Philadelphia?
CANDIOTTI: Well, I mean, he says they're not going to expend any more money other than -- they're not hiring more people, they're not bringing more in from other places, but they're reassigning people in areas or keeping them on longer than expected.
ROMANS: Using their existing resources --
CANDIOTTI: That's right.
ROMANS: -- differently and more efficiently.
Some of those pictures are interesting because it reminds me of some of the wide shots we've seen in London. People were saying could that happen here. Apparently, there are things like that happening here, you know?
VELSHI: Yes -- I mean, look, Philly has struggled over the years. And it struggled with the reputation as a place with a lot of crime. And he -- you know, he managed to get that gun murder, rape down, and I think they're really determined that they don't push people out or coming to Philly.
CANDIOTTI: And I think other police agencies around the country, including New York, they are spending more time monitoring social media to keep track of these things and asking for help from the public.
COSTELLO: Well, let's hope it works for the city, because it's a great city, Philadelphia.
VELSHI: All right. More now on the eight declared GOP candidates taking part in the televised debate last night in Iowa, ahead of tomorrow's straw vote. The campaign has been a rocky road so far for former House Speaker Newt Gingrich and he bristled at a question about the current state of team Gingrich.
(BEGIN VIDEO CLIP)
CHRIS WALLACE, FOX NEWS: Speaker Gingrich, one of the ways that we judge a candidate is the campaign they run. In June, almost your entire national campaign staff resigned along with your staff here in Iowa. They said that you were undisciplined in campaigning and fund raising and at last report, you're $1 million in debt.
How do you respond to people who say that your campaign has been a mess so far?
NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: Let me say first of all, Chris, that I took seriously Bret's injunction to put aside the talking points, and I wish you would put aside the gotcha question.
(END VIDEO CLIP)
ROMANS: All right.
COSTELLO: But the gotcha question came from the FOX News. I don't know if that would have worked as well for Gingrich, as it would have if it may be a so-called mainstream media type.
ROMANS: And Richard (INAUDIBLE) who's a conservative sort of strategist and talking head, he said something. He said the two biggest winners were Barack Obama and Rick Perry.
VELSHI: Because they weren't there.
ROMANS: Because they weren't there.
VELSHI: Yes.
ROMANS: Yes. So interesting.
COSTELLO: I don't know. I think Mitt Romney came off quite well.
ROMANS: Oh, do you?
COSTELLO: I do. He stayed above the fray, didn't get too involved, because he's not participating in the straw poll. So, he did exactly what he was supposed to do.
ROMANS: I heard it was boiled down to snippy Minnesotans. That's how it boiled down to.
All right. Well, we want to know what you think also about this, the debate did have its lighter moments, including one featuring businessman Herman Cain.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: And to you now, Mr. Cain. When President Obama joked about protecting the borders with alligators and the moot -- not only did you embrace the idea, you upped the ante with, quote, "a 20-foot barbed wire electrified fence." Were you serious?
HERMAN CAIN (R), PRESIDENTIAL CANDIDATE: America's got to learn how to take a joke.
(END VIDEO CLIP)
COSTELLO: He is funny.
In the meantime, the FOX News debate moderators learned something about one of the other candidates. No one puts Rick Santorum in a corner.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: We have other people here.
REP. MICHELE BACHMANN (R), PRESIDENTIAL CANDIDATE: I have to respond to that -- I need to respond to that.
UNIDENTIFIED AMLE: Michelle -- Michelle there are some --
UNIDENTIFIED MALE: I understand. You had a chance to --
UNIDENTIFEID MALE: You have the next question, senator, I promise.
(END VIDEO CLIP)
COSTELLO: Poor Rick Santorum, he couldn't get a word in edgewise because Michele Bachmann and Tim Pawlenty were arguing.
VELSHI: It was good TV.
COSTELLO: It was feisty.
VELSHI: Yes, it was feisty.
ROMANS: All right. Up next on AMERICAN MORNING: a lot of people right now are trying to make sense of what happened in the stock market. The Dow has been up or down more than 400 points in the past four days. Every single day it's been either up or down. And what's crazy is that the first three days of the week were each the biggest move of the year.
So what can we expect next? We're going to get some insight. You cannot afford to miss it.
COSTELLO: I'm not watching it.
(LAUGHTER)
COSTELLO: Layoffs for a group of factory workers from Ottawa. But don't feel bad just yet. They're now $7 million richer, and you see why.
We'll be right back. It's 39 minutes past the hour.
(COMMERCIAL BREAK)
VELSHI: Some optimism returning to Wall Street at least for a day. The stocks bounced back yesterday with the Dow up 423 points. The S&P 500 which reflects possibly some of your investments almost up 4.75 percent.
This week's dizzying swings has left many of you wondering about your financial future, the value of what's in your 401(k).
Joining me now, Shawn Tully. He's senior editor at large with "Fortune" magazine. Good friend of ours.
Shawn, good to see you.
SHAWN TULLY, SENIOR EDITOR-AT-LARGE, "FORTUNE": Hi, Ali.
VELSHI: People are very confused as what to do. And one of the discussions for those who are prepared to continue looking and looking at their 401(k), is whether or not stocks right now are undervalued -- whether there's been too much of a selloff and whether it's an opportunity for some people, they say, to back up the truck and pile on.
You're not of the view that stock market is unvalued right now.
TULLY: No. Before the recent decline it's somewhat expensive. Now, why do we say that, given that when you look at official P.E.s, they looked they were very low and stocks were a bargain.
VELSHI: P.E. is the way you price the stock. The price in relation to its expected earnings.
TULLY: Right. Expected -- it's not expected necessarily but current earnings. They look cheap.
But the problem is Wall street is always trying to sell stock and they're always taking what is now peak earnings which is virtually in a bubble and saying that from those peaks, earnings are going to soar skyward. That's not going to happen. Earnings will probably come down from here.
Companies haven't hired virtually at all since they laid off tons of people in 2008 and 2009 as if there were a depression coming. They have to hire again.
Margins are very high. That brings in more competition. That brings margins down. So profits will decline from here.
We're already seeing problems with that.
VELSHI: You think problems will decline and that's regardless of whether or not you think the economy is actually slowing. You think they are just circumstances that will cause profitability to start to decline.
TULLY: Yes. We saw zero profits overall in 2009, for example. We have periods where profits go to zero literally because I did the Fortune 500 list many times and they go in very, very wide swings. They do not go into bubble territory and rise from there for long.
So, stocks were relatively expensive. And then you had this sudden re-appreciation of how risky the world is.
VELSHI: Right.
TULLY: People woke up a few mornings ago and decided that they wanted much higher returns on stocks and bonds than they had a week before. We've seen obviously dangerous signals from all over the world, and when people perceive that the world is risky, they mark down the prices of things, and that's what happens. You have a combination -- it's not a good combination when you have relatively expensive stocks and the world getting riskier. People then want more of the cushion to compensate for that risk.
ALI VELSHI, CNN ANCHOR: So, the question is whether or not you think the world is as risky as many investors have thought it has been in the last week or so.
TULLY: It certainly appears the growth rates are coming down, but it's very difficult to predict where the economy is going to go. I remember being in a class with Milton Friedman many years ago, and someone gave a very long presentation and Friedman said about future growth rates. Friedman said why is this any more reliable than taking the last five years and dividing by five.
VELSHI: Right.
TULLY: It's really very difficult to predict these things. Most forecasts are wrong. It's a probability thing. The probability of a recession is less than 50 percent, but who really knows.
VELSHI: So, I guess, the point is what do you do then? Do you think the stock market needs to come down further, and if it does, do you think our viewers should get in and buy?
TULLY: Again, stocks are not a huge bargain if you're buying the whole S&P. VELSHI: Right.
TULLY: However, what is interesting is there are certain high dividend stocks now that are looking pretty good. Typically, another issue is with dividends yields are very low in general, which they are now on the S&P in general, usually you have a correction.
VELSHI: Right.
TULLY: It's the same argument I used before, but there are a lot of consumer stocks like a Heinz, for instance, with a four percent dividend yield, Con Edison. When you get into this range of certain stocks that have low PEs and high dividend yields and very reliable earnings, that's the place to be. You do not want to be in Apple. Apple is a very high -- not that it's not a great company.
VELSHI: Right.
TULLY: But it's a very high percentage of the market cap of the S&P and a very relatively low percentage of all the assets and earnings, et cetera. So, it just can't grow fast enough to give you a return on top of a very high price.
VELSHI: OK.
TULLY: So, the danger is really in a lot of very, very expensive tech stocks.
VELSHI: Have you seen a big run up in tech stocks within the last year or so? All right. So, your view is be cautious. If you're talking about the whole market, you still think it's overpriced, but there are opportunities, particularly, in companies with stable earnings and high dividends that are priced comparatively lower.
TULLY: Correct, yes. There are opportunities there. You want to stay out of these very, very high-priced growth, especially technology stocks.
VELSHI: All right. Shawn, good to see you as always. Thanks so much. You check out Shawn's work in "Fortune" magazine and, of course, the online version is on money.com. So, take a look there. Am I going to break now? Christine, go ahead.
CHRISTINE ROMANS, CNN ANCHOR: You're going to me. Yey. Thanks. Nice to see you, Shawn.
All right. You can't get any luckier than this, right? Imagine getting laid off, then -- this is the lucky part -- winning a lottery. That's what happened to a group of employees at an Ottawa manufacturing plant. Eighteen workers hit $7 million jackpot the same day their company, Smart Technology, announced they've been lay-off. Ten of the winners received their notices.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I looked at the numbers and I had to ask somebody to come take a look at them because I wasn't sure if I was reading them right. And, she said, oh, you've about got them all. And, you know, I started to shake, vibrating, my seat. And then, I had to go out and tell some other people that were in it, and of course, nobody believed me.
(END VIDEO CLIP)
ROMANS: Vibrate in my seat.
(LAUGHTER)
ROMANS: Each worker will take home about $400,000, and apparently, a nice bottle of scotch.
CAROL COSTELLO, CNN ANCHOR: I love their accent. Can you do it?
VELSHI: Of course, I can do it.
ROMANS: Do it.
COSTELLO: (INAUDIBLE) over the years.
VELSHI: Give me two days in Toronto. I'll be back --
ROMANS: And you'll be back and go out in the boat at the central park.
(LAUGHTER)
COSTELLO: It's 48 minutes past the hour this morning. Top stories straight ahead, including the most Googled presidential candidate in Iowa right now.
(COMMERCIAL BREAK)
VELSHI: Ten minutes to the top of the hour. Here's what you need to know to start your day.
(BEGIN VIDEOTAPE)
VELSHI (voice-over): So much for Minnesota night. Michele Bachmann and Tim Pawlenty into verbal fist fright during last night's presidential debate in Iowa. The two are trying to impress voters as an alternative with GOP frontrunner, Mitt Romney. The man who wasn't part of the debate may have made the biggest splash. However, Texas governor, Rick Perry, says he's entering the GOP race. Perry is going to make it official at an event tomorrow in South Carolina. We'll have it live for you.
Tea Party darling, Michele Bachmann is the most Googled candidate in Iowa just ahead of tomorrow's straw poll. Bachmann related searches have surged in the past week. Bachmann's generated far more interest than any candidate on this straw poll ballot.
More American lives lost in Afghanistan. Officials say five U.S. service members were killed yesterday by an improvised explosive device. Their deaths coming just a few days after 30 Americans died in a helicopter crash.
Markets overseas are mostly up this morning after the Dow soared more than 400 points yesterday. It's the first time in history the Dow has had four consecutive days of 400 points swings.
Christina Aguilera, Cee Lo Green, Leona Lewis, and Smokey Robinson were among the singers will be performing at a Michael Jackson tribute concert. The event will be held October 8th in Cardiff, Wales. A portion of the concert proceeds will go to charity.
(END VIDEOTAPE)
VELSHI (on-camera): That's the news you need to start your day. AMERICAN MORNING back right after this.
(COMMERCIAL BREAK)
COSTELLO: All righty. Now is your chance to talk back on one of the stories of the day. For years, a pair of famous friends have shared a home and a bedroom, though, they had separate beds. We're talking about Bert and Ernie. Now, I'm sure you've heard about this.
There's a petition out there online asking the show to have the two get married. They say it would be a way to teach tolerance. "Sesame Street" says the two do not have a sexual orientation, so they will not be getting married on the show, but, still, it begged the question. Should there be gay characters?
VELSHI: Can we just say that Christine thought they were siblings?
ROMANS: I thought they were siblings. That was they're really like. They're best friends like Felix --
COSTELLO: That's exactly what they are like, right, Felix and Oscar. Anyway, we asked the question, should there be gay characters on children's television?
This is from Emily. She says, "How would they introduce that the characters were gay in the first place? Bert and Ernie having a civil union ceremony? Bert wearing a gay pride t-shirt? As a parent, it's my responsibility to introduce sexuality to my child at the appropriate time."
This from Stephanie, "I'm sorry, I don't see why they have to be gay, straight, or anything at all. It's a children show. Why are we worried about teaching our, two, three, and four-year-old children about sex in the first place? People need to get a life. Our children are losing their innocence earlier and earlier. It's sad really."
And it's from Kwanza, "People don't act gay, they are gay. Why should we have to intentionally make a gay character, and then label them? Just develop a character with particular characteristics and allow people to embrace what they like."
VELSHI: That's kind of how work for Christine, right? You dislike Bernie and Ert -- Ernie and Bert.
ROMANS: Bernie and Ert.
(LAUGHTER)
ROMANS: Bernie and Ert, those will be your alaternatives.
VELSHI: I've worked too many hours. That's the alternative. Right. Exactly.
COSTELLO: You, guys, are silly.
ROMANS: Bernie and Ert. Ah!
COSTELLO: Any who, keep your comments coming, facebook/americanmorning, and we'll read some more of your thoughts a bit later.
ROMANS: All right. More money funnies from the boys of late night. We love these amidst all the volatility. Take a look.
(BEGIN VIDEO CLIP)
JIMMY FALLON, HOST: President Obama took a campaign volunteers out for burgers yesterday, and apparently, he left a 35 percent tip. Man, that guy is so generous with China's money.
JAY LENO, HOST: According to the so-called super committee to deal with this debt problem. You know, look, I'm no expert on the topic but, really, these are the best financial minds you can come up with? Take a look.
UNIDENTIFIED FEMALE: He gets to pick three, and he's done it and here they are. All three are experts in taxes and finance. Wesley Snipes of New York, Nicolas Cage of California, and Willie Nelson of Texas.
(LAUGHTER)
(APPLAUSE)
ROMANS: (INAUDIBLE)
VELSHI: No kidding.
Coming up next, whiplashed on Wall Street. The market staging a rally yesterday. What a rally. We'll check the numbers heading into today's session to see how your 401(k)s holding up on this AMERICAN MORNING.
(COMMERCIAL BREAK)
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