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Truck Bomber Targets U.S. Base; Report: S&P Under Investigation; Obama's Jobs Plan Outlined; Perry: I'm a Job Creator; Scandal Rocks University of Miami; Christine O'Donnell Walks Off; World Markets Sell-Off; Bus Attack In Israel; We Have A "Fitchuation"
Aired August 18, 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: I'm Christine Romans. As we all know, Standard and Poor's downgraded the United States credit rating. Now the U.S. Justice Department investigating S&P. We will tell why you, ahead.
ALI VELSHI, CNN ANCHOR: I'm Ali Velshi. President Obama leaving for summer vacation with a promise to deliver a plan for new jobs in economic growth. All of this as public approval of his handling of the economy reaches another new low.
CAROL COSTELLO, CNN ANCHOR: I'm Carol Costello. Bombshell allegations against the University of Miami athletic program. A former booster claimed he spent millions on gifts for athletes, meals, jewelry even prostitutes. We'll have a live report just ahead on this AMERICAN MORNING.
ROMANS: Good morning. It is Thursday, August 18. Welcome to AMERICAN MORNING.
VELSHI: That was quite something. Anderson --
ROMANS: He was giggling.
COSTELLO: That's the first time I've ever seen him completely lose it. It was funny.
VELSHI: We got a lot to talk about this morning, but we do have some breaking news. A suicide truck bomber targeting the U.S. military base in Afghanistan. It happened in the city of Gardez just a few hours ago.
Officials say the truck ripped through the main security gate killed two Afghan guards. Nine others were hurt and the Taliban is taking credit for the attack.
COSTELLO: Less than two weeks after downgrading America's AAA credit rating, Standard and Poor's is reportedly the target of a Justice Department investigation. That's according to "The New York Times."
The feds want to know how the credit rating agency somehow missed the mortgage crisis. You will remember S&P along with the other major credit agencies gave those mortgage backed securities very high ratings. Even though we now know they weren't worth the paper they were printed on.
"The Times" is reporting the Justice Department is looking into claims S&P business managers overruled analysts who wanted to assign lower rating to the bonds because they were making record profits.
Now they the investigation reportedly began before the nation's credit rating was downgraded. CNN contacted the Justice Department, but they declined to comment this morning.
ROMANS: Next after President Obama, a vacation on Martha's Vineyard after he meets with his economic team today. All that coming on the heels of a new Gallup poll that shows just 26 percent of Americans approved now of how he's handling the economy. That's a new low.
Mr. Obama does have a new jobs plan, which he says he will lay out after Labor Day. One he suggests can be paid for by deficit reduction.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: When folks tell you that we have a choice between jobs now or dealing with our debt crisis, they are wrong. They are wrong. We can't afford to just do one or the other. We have to do both.
(END VIDEO CLIP)
ROMANS: The new jobs package is expected include tax cuts, infrastructure spending, help for the long-term unemployed, and also targeting specific struggling industries. The White House announcement may have been well timed, but it cuts both ways.
(BEGIN VIDEO CLIP)
DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: What you would want to do before you went on vacation to Martha's Vineyard hurting the way they are? Put out something that has there will be action.
Most Americans would like to see him have right now -- people at the White House saying Republicans -- here are my proposals. What are your proposals? Let's see if we can't make a marriage with the two and get going now. Why wait, wait, wait?
(END VIDEO CLIP)
ROMANS: The White House says the job plan is still a work in progress.
VELSHI: Texas Governor Rick Perry casting himself as a Republican presidential candidate who is best suited to create jobs and grow the economy. He's calling himself a job creator. He is calling the president a job destroyer.
Our senior political editor Mark Preston is traveling with Governor Perry. Mark joins us now from Portsmouth, New Hampshire, this morning.
Mark, while Governor Perry is not holding back in his criticism of the president in terms of the economy, he continues to stand by his fairly ridiculous comments calling Fed Chairman Ben Bernanke ridiculous.
And a lot more evidence is coming to light that Rick Perry may not have been as responsible for job creation as he would like to have the country believe.
MARK PRESTON, CNN SENIOR POLITICAL EDITOR: Well, you know, actually Ali, he was up here yesterday meeting with business leaders in the city of Nashua just a couple of hours at this coffee shop behind me doing a little retail meet and greet.
But you're absolutely right. There has been criticism that Rick Perry is taking credit for all the job creation happened down in Texas. When many people say it was -- due in part because of the oil and gas industry.
And of course, the federal government is as well, which has large military bases there. We've been hearing a lot of that from Democrats certainly. But Rick Perry continues to sound that them here in New Hampshire.
He also was very critical of President Obama, as you said and clearly the gloves are being taken off. In fact, listen to what he had to say yesterday about President Obama.
(BEGIN VIDEO CLIP)
GOV. RICK PERRY (R-TX), PRESIDENTIAL CANDIDATE: The president said I needed to watch what I say. I just want to respond back, if I may. Mr. President, actions speak louder than words. My actions as governor are helping create jobs in this country. The president's actions are killing jobs in this country. It's time to get America working again.
(END VIDEO CLIP)
PRESTON: There you have the Texas Governor Rick Perry in New Hampshire yesterday speaking to business and political leaders here in the state. He calls himself the pro-business president, Ali. So we will hear what he has to say today when he meets with locals here in the city of Portsmouth.
VELSHI: The election clearly, like the last one, is going to be largely about the economy. The two leading Republican candidates right now, Rick Perry, Mitt Romney, they have to win that GOP nomination if they want to take on President Obama. But there are other people that are tracking the hearts and minds of Republican primary voters.
PRESTON: Yes and look, the two leading contenders as you say is Mitt Romney and Rick Perry and they are both running very hard on the issue. In fact, I was talking to a Perry adviser. He said this is what you are going to hear from Rick Perry, jobs, jobs, jobs.
That's going to be his message. You know, interestingly, we saw Mitt Romney here in New Hampshire yesterday. He was at a steel plant. Today, we will see Rick Perry talking to the owner of a home manufacturer.
So when they are here in this state, when they're running for president, they are going to be talking about the economy, Ali.
VELSHI: Mark, good coverage. Thanks very much for being out there and look forward to talking to you again. Mark Preston in Nashua, New Hampshire.
COSTELLO: Now is your chance to talk about on one of the big stories of the day. The question for you this morning, are Rick Perry's treason accusations against the fed out of line? I know.
This whole treason thing has been dragging on for days now. It won't die because Perry's critics won't let it and neither will he. The tough talk of Texan is not backing down.
He said it would be treasonous for Fed Chair Ben Bernanke to continue printing money to play politics. Yesterday, he upped the ante.
(BEGIN VIDEO CLIP)
PERRY: they should open their books up. Until they do that, I think there will continue to be questions about their activity and what their true goal is for the United States.
(END VIDEO CLIP)
COSTELLO: Critics are appalled that includes some Republicans. Tony Fredo, a former Bush White House spokesman tweeted Perry's remarks are inappropriate and unpresidential although Perry has the supporters, too.
(BEGIN VIDEO CLIP)
TUCKER CARLSON, FOX NEWS ANALYST: The fundamental point he makes is totally true! Actually, we are devaluing the currency. It is happening because of the Fed's policies. It is benefiting in a short- term way I think the White House.
(END VIDEO CLIP)
COSTELLO: Still treason? As defined in Article 3 of the Constitution? If you don't have your pocket sized Constitution handy this is what it says, levying war against them or adhering to their enemies, giving them aid and comfort, as in Benedict Arnold, who betrayed America during the revolutionary war.
Fed Chair Ben Bernanke? The man running the Federal Reserve, which is basically the central bank for the country, is he conspiring against the United States?
So the talk back question this morning, are Rick Perry's treason activity against the fed out of line? Send your comments to facebook.com/american morning, facebook.com/americanmorning. Read your comments later this hour.
ROMANS: A Florida teen's plot to bomb his former high school. This could have turned out to be worse than columbine. That's according to Tampa police. It was spoiled and that's a really good thing. They arrested 17-year-old Jared Cano on Tuesday.
He allegedly planned to set off several pipe bombs on the first day of class at Freedom High School. Investigators say they found explosive materials inside his home.
Also found there, a manifesto outlining a minute-by-minute plan to hunt down two assistant principals, to kill about 30 students. The school's principal says this young man was expelled last year for, quote, "inappropriate behavior."
VELSHI: His mother gave police permission to search his place and they say that it was pretty definite. It could have hurt a lot of people.
ROMANS: Deadly.
VELSHI: All right, the University of Miami rocked by a widening scandal this morning. Jailed businessman and ex-booster Naven Shapiro claims he spent millions of dollars on Hurricane athletes over an eight-year period.
Giving them expensive jewelry, meals and even prostitutes and he claims several coaches knew about it. Shapiro is serving a 20- year sentence for fraud.
David Mattingly joins us live from Coral Gables, Florida with this shocking story. Good morning, David.
DAVID MATTINGLY, CNN NATIONAL CORRESPONDENT: Good morning, Ali. Everyone here at the University of Miami this morning talking about Naven Shapiro, that former booster who's now in federal prison on violations from a Ponzi scheme. He opened up in an interview and gave all sorts of details about alleged violations that he participated in while a booster here at the University of Miami.
He says that it involves 72 players for the year's 2002 to 2010. This is also involving about a dozen current players. It is very serious for the University of Miami if these allegations are true. These are allegations that almost defied description.
He talks about first of all gifts that he gave players, televisions, jewelry and clothing. But he also talks about entertaining the players, taking them out for nights on the town at expensive clubs. He took them to strip joints. He claims also that he paid for prostitutes for Miami players and actually hosted sex parties for these players.
And on one occasion he says he even paid for an abortion for a stripper who claims that she was impregnated by one of the Miami players. Now this has been under investigation for some time. The new coach here at the University of Miami, Al Golden, took over in December.
All of this allegedly took place before he got here and he has been talking about it. We expect to hear from him later today. He's already said that part of his job now is to be here and to get to the bottom of all of these allegations, Ali.
VELSHI: All right. What are the -- these Miami players, former Hurricane players, and the NCAA saying about the allegations?
MATTINGLY: Everyone involved with this program knows just how serious this is. If any of these prove to be true, this program could face very serious sanctions.
And some of the players, very few of them actually have come out in the last 24 hours, but they are not giving a lot of information about their dealings with Shapiro, but are talking a little bit. Listen.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: You can go back and forth with someone in jail and try to explain yourself. Don't want to do that. That's very unnecessary.
UNIDENTIFIED MALE: You know, he knows and I know, you know, what really happened. But -- you know, it is -- you know, it is over. It is done with. The NCAA is family and we just are moving on.
(END VIDEO CLIP)
MATTINGLY: Now Mark Emert, the president of the NCAA, says that that organization has been investigating these allegations already now for five months. The University of Miami says that they have been cooperating and a full partner in this investigation as well.
But the NCAA saying this could be very significant here at the University of Miami and if these allegations are true, they could have impacts on schools all across the country looking at possible changes to be made in the way these schools deal with these boosters, Ali.
VELSHI: David, thanks very much. We will stay on top of the story with you. David Mattingly in Florida.
COSTELLO: You know, the saddest part about that, the players that have gone pro that left the university, they won't pay at all. The students there now, they are the ones that will pay.
VELSHI: The program will get hit or something will happen. You are right.
ROMANS: Including students who don't know who this guy is.
VELSHI: Right.
COSTELLO: And why would somebody who clearly loved that school if all of this true -- that's what I don't understand --
ROMANS: Big man on campus, man. You are like -- hanging out with the star players and also, I -- I believe that players who are being recruited, he also took them out and wined and dined them to make -- you know, entice them to come to the University of Miami.
COSTELLO: Why would he turn on them now? If he is serving time for an unrelated offense, why turn on the school now?
ROMANS: He is singing like a canary.
COSTELLO: Coming up on AMERICAN MORNING, David Letterman, a terror target. Why one Jihadist website is posting death threats against David Letterman.
ROMANS: And former Tea Party darling Christine O'Donnell, she walks out of CNN's Piers Morgan in the middle of an interview. We will show you what happened and why she said he is rude. You are watching AMERICAN MORNING. It's 13 minutes after the hour.
(COMMERCIAL BREAK)
COSTELLO: Sixteen minutes past the hour. Good morning to you and welcome back to AMERICAN MORNING.
Late night talk show host David Letterman is being targeted by terrorists. An assassination threat posted on a Jihadist Web site calling for Letterman's tongue to be cut out and his mouth shut forever. This after the funny man cracked a joke about an al Qaeda leader's death. Listen.
(BEGIN VIDEO CLIP)
DAVID LETTERMAN, HOST, "LATE SHOW WITH DAVID LETTERMAN": So anyway, they picked a successor to Osama Bin Laden and his name was Ilyas Kashmiri. Well, guess what? He was blown up by an American drone. Yes.
(END VIDEO CLIP)
COSTELLO: The FBI is looking into the threat. No comment from Letterman's camp.
ROMANS: All right.
A bizarre encounter here on CNN last night when former Delaware Senate candidate Christine O'Donnell walked off the set during an interview with Piers Morgan. O'Donnell came on the show to promote her new book called "Troublemaker." But when pressed by Piers about her position on gay marriage and "Don't Ask, Don't Tell," it seems O'Donnell had enough. (BEGIN VIDEOTAPE)
PIERS MORGAN, CNN HOST, "PIERS MORGAN TONIGHT": Why are you being weird about this?
CHRISTINE O'DONNELL, FMR. DELAWARE SENATE CANDIDATE: I'm not being weird about this, Piers. I'm not running for office. I'm not promoting a legislative agenda. I'm promoting the policies that I lay out in the book that are mostly fiscal, that are mostly Constitutional. That's why I agreed to come on your show. That's what I want to talk about. I'm not being weird. You're being a little rude.
MORGAN: I don't - I'm baffled as to why you think I'm being - I think I'm being rather charming and respectful. I'm just asking you questions based on your own public statements and now what you've written in your own book. It's hardly rude to ask you that, surely.
O'DONNELL: Well, don't you think as a host, if I say this is what I want to talk about, that's what we should address?
MORGAN: Not really, no. You're a politician.
O'DONNELL: Yes. OK. I'm being pulled away. You know, we turned down another interview for this.
MORGAN: Where are you going? You're leaving?
ROMANS: OK. Then you can see a shadowy figure tries to stand in front of the camera apparently trying to block the view of O'Donnell.
Later, Piers talked about the exchange with CNN's Anderson Cooper.
MORGAN: I found it a very strange moment. And I don't think anyone who watches the interview would deduce I was being rude. I'm a little bit cheeky, maybe, but not rude.
ANDERSON COOPER, CNN HOST, "ANDERSON COOPER 360": You are a cheeky monkey, but - but I think it's completely fair game to ask about past statements that people have made, and particularly someone's position on - on same-sex marriage. I mean, that's in the news. That's - that's not like you're pulling it out of a hat.
MORGAN: Not completely. And I - I found it odd that she would use that particular moment to leave because I think on reflection when she looks back at this, it looks like she has something to hide. In other words, her view may be so extreme or contentious that it would cause her political damage. That was the only thing I could deduce from it. But a rather bizarre encounter.
(END VIDEOTAPE)
ROMANS: O'Donnell was invited back on the show tonight, but she tweeted this. "Piers, thanks for the invite. Schedule is already packed. Maybe another night. No hard feelings, you cheeky bugger." COSTELLO: Now, what's the definition of cheeky bugger?
ROMANS: I'm not sure. But, I mean, she must know that you don't get to say - you don't get to say what you're going to be asked in an interview especially when you've written a book about your policies.
VELSHI: Right.
ROMANS: I mean -
VELSHI: And she (ph) went raucous.
ROMANS: Ali, next time I come on your show -
COSTELLO: She only wrote about fiscal policies, Christine. Not about social issues.
ROMANS: Ali, next time I come on your show I'm only talking about the things I want to talk about.
VELSHI: It's not a dinner party. I mean, I - the invite on to a TV show is - in the news is to get information on -
ROMANS: And also that's how you sell your book. If she's trying to sell her book, you sell your book by telling what you think about things, what your positions on are and that - that connects with people or doesn't connect with people and they buy your book.
COSTELLO: Maybe she did it on purpose.
VELSHI: If she comes back I'm certainly tuning in. That's for sure.
COSTELLO: Let's go to our own cheeky bugger. Rob Marciano - oh, we're not going to our own cheeky bugger, Rob Marciano.
VELSHI: Why not? Because he's left. He turned his mike off and he left.
ROMANS: He decided he was only going to answer the questions he wanted to answer.
VELSHI: Yes. And he - he knew where he were going with this.
COSTELLO: He didn't like the way this is going.
VELSHI: So, you know what, you get your weather somewhere else for now. We're going to take a break.
COSTELLO: We'll come back and talk about Joe Biden after this.
(COMMERCIAL BREAK)
VELSHI: Hey, 24 minutes after the hour. "Minding Your Business" this morning. U.S. stock futures are trading much lower this morning. Dow futures down more than 160 points ahead of today's open. That, as European markets, are tumbling now after Morgan Stanley put out a note warning of global recession. We'll talk about that in five minutes.
Vice President Joe Biden is in China to kick off a five-day official visit. He's meeting with his counterpart, Xi Jingping, for talks on trade and currency. Upon arrival today in Beijing, Biden praised China's rapid growth and called for more cooperation between the U.S. and China.
The Securities and Exchange Commission is under fire for allegations that it illegally destroyed thousands of files related to probes of Bernie Madoff, Goldman Sachs and others on Wall Street going back years. Iowa Senator Chuck Grassly called for an investigation of the agency after an SEC whistleblower contacted him with the allegations.
The drought in Texas has racked up $5.2 billion in agricultural losses. That's a record for the state. Economists say Texas at Texas A&M says that without more rain to help winter wheat, it's going to get even worse.
Hugo Chavez is getting in on the gold rush. Venezuela's president says he's planning to take control of the country's gold industry. That's a move that allows him to crack down on illegal mining and move the country's existing gold reserves out of foreign banks and into Venezuelan vaults. One critic describes the reserve relocation as the looting of the nation's savings.
And it's official. The plug-in Cadillac is coming. GM announces it's moving forward with plans to build an electric Cadillac Coupe. The new car is said to be a luxury version of the Volt. No word on how much it's going to cost or when it's going to hit showroom floors.
AMERICAN MORNING back right after the break.
ROMANS: It's 29 minutes after the hour. Time for the morning's top stories.
The deadly attack on a U.S. Military base in Afghanistan, it happened in the City of Gardez earlier this morning. Officials say a truck bomber ripped through the main security gate, killing two Afghan guards, nine others were hurt. The Taliban taking credit for that attack.
Standard & Poor's is reportedly under investigation by the Justice Department for the ratings it gave mortgage securities in the years leading up to the financial crisis. According to "The New York Times" the Justice Department is looking into whether S&P business managers overruled analysts on deals to potentially keep earning more money.
Scandal at the University of Miami. Jailed businessman and ex- booster, Nevin Shapiro, he claims he spent millions of dollars on gifts, meals, and prostitutes for Hurricane athletes, this over an eight-year period. He says that several coaches knew about it. Shapiro is serving a 20-year sentence for fraud on another matter. The school and NCAA are investigating.
VELSHI: Breaking news about your money this morning. Morgan Stanley warning the global economy is, quote, "dangerously close to a recession." And that report is slamming markets around the world.
Nina dos Santos is live in London for us this morning. She's had a chance to get through it.
And, Nina, we were having a rough morning on markets nonetheless. But it does seem to have been accelerating. I don't know what happened in the last little while. But bring us up to speed, please.
NINA DOS SANTOS, CNN INTERNATIONAL CORRESPONDENT: That's right. We got some markets like for instance the DAX in Germany down now in excess about 2.3 percent. Heavy losses right across the board, the FTSE, the CAC 40 in France as well. And this follows already on a pretty dismal performance in Asia as well.
Let's take a look at what Morgan Stanley actually said. The bank cut its global gross domestic product forecast to 3.9 percent for the whole world from 4.2 percent. And that means investors are now even more closely watching the global economy and perhaps some say pricing in the possibility of a double-dip going back to a recession.
And Morgan Stanley's report is particularly interesting because it comes just two days after Nicolas Sarkozy, the French president, and Angela Merkel of Germany, tried to hammer out some kind of agreement to shore up the euro. In fact, a lot of people have been saying over the last two days from Paris to Frankfurt, to London, that what they came up with was not enough and Morgan Stanley is also saying they are not just worried about things in Europe, they are also worried about the United States.
So, broadly speaking, markets down as a result. Gold is still rising, though, Ali. Heading perilously close to yet another record of after surpassing $1,800 an ounce.
VELSHI: You know, Nina, just looking at that time report Christine has been going through it -- they talk about policy errors in the United States. They say they expect more action from central banks, including rate cuts and non-standard easing from the Fed and the ECB.
Rick Perry won't like that very much.
It says dangerously close to a recession. Not the base case, though. That's the good news. It's -- they are saying it's not the base case but it's close.
But what I also noticed as Christine pointing out here is that they are saying that -- the -- slow and insufficient response in Europe to the sovereign debt crisis and the drama around the lifting of the U.S. debt ceiling have weighed down on financial markets and eroded business and consumer confidence.
The debt ceiling debate over but the -- European question is still in play.
DOS SANTOS: Definitely still in play. And from what we heard in Paris, because I was reporting from there when Merkel and Sarkozy met, it really wasn't enough. They came up with three proposals including starting up a new Euro zone governance to try and get these countries to get their budgets in order because, of course, you have a monetary union but not a fiscal union.
And they also came out with a finance am transaction tax. That has been punishing banking stocks here in Europe for the last two days. Also punishing the stock exchanges, stocks.
I do want to point out one thing, though. S&P just over the last half hour or so is saying that it is still confident about that AAA rating for France. That will give some support to the markets one would have thought. But for the moment, the economic picture, I'm afraid, is bleak, Ali.
VELSHI: All right. Nina, always good to see you sort of because every time we see you, it means there's something going wrong in Europe. But thanks very much for staying on top of it. We'll check in with you later.
COSTELLO: Thanks for being our voice of doom, Nina.
But pay attention to this because I'm going to ask you guys questions about this story. Because Michele Bachmann says she has a great idea. Congressman Bachmann, she is making this bold campaign promise on the stump. She told a crowd if she is elected president, you will see the price of gas, which is now about $3.60, drop by more than a buck 50.
(BEGIN VIDEO CLIP)
REP. MICHELE BACHMANN (R-MN), PRESIDENTIAL CANDIDATE: Under President Bachmann, you will see gasoline come down below $2 a gallon again. That will happen.
(END VIDEO CLIP)
COSTELLO: So, how do you make that happen as president of the United States? I mean, seriously. Can he do that?
ROMANS: A global recession with huge deflation which is -- destroys jobs --
VELSHI: Right. That's one way to get gas prices down.
ROMANS: That's one way to get prices down.
VELSHI: But if she can do that, maybe she can grow hair on my bald head.
ROMANS: I think, you know --
VELSHI: I mean, if somebody could do that without messing the economy, would you -- would you think someone would have done that?
ROMANS: It's a huge global market.
COSTELLO: What if she opened the oil reserves?
ROMANS: That would last how many days? How many days?
VELSHI: The oil reserves wouldn't do it. You'd have to open up a whole lot of drilling in the U.S. and it would be several years before you could get the oil it of that.
I mean, Michele Bachmann knows this topic quite well. She knows oil quite well. It's a strange --
ROMANS: You've actually been --
VELSHI: I was up with her in Alaska. I was up there when we were looking at -- opening up drilling in Alaska. So, strange commentary, but if she can come up with reasons why she'll get that done, it might be very attractive to people. We'd all like lower gas price, wouldn't we?
ROMANS: Pictures of a global recession, I don't want --
VELSHI: I don't want that for a global recession.
ROMANS: -- in exchange for a global recession.
All right. Ahead on AMERICAN MORNING, Rick Perry's campaign offensive hitting a few bumps in the road. But he is keeping it in overdrive. We're going to talk to our political panel.
Thirty-four minutes after the hour.
(COMMERCIAL BREAK)
ANNOUNCER: This is CNN breaking news.
VESLHI: Some breaking news we've been working on here at CNN. We are trying to get you accurate information on this.
There is more violence in Israel, an attack on a bus in the city of Eilat. That is near the Egyptian border. Israel radio reporting three terrorist opened fire. At least five people were hurt. And there's also reporting of another bus attack nearby.
We've got our people working on this story. We will bring you more information as it develops. An attack on a bus in the Israeli city of Eilat.
COSTELLO: OK. In the world of U.S. politics, Rick Perry is fighting back against his critics this morning. They are railing at him for his disbelief in global warning -- criticizing the job creation record he brags about and then there's that treasonous comment. Plus, Perry says the Fed should be audited, even though its financial statements are audited every year. Something that has the -- all something that has the "USA Today" editorial board saying this.
In today's paper, it says, "Perry is smart enough to know all of this but apparently cynical or clumsy enough not to really care. His detour to the low road is a bad sign for a presidential campaign that has barely begun."
He certain is a gift that keeps on giving now.
Joining me to talk about this are: Will Cain, CNN contributor and conservative commentator; Kate Zernike, national correspondent for "The New York Times" and author of a book about the Tea Party.
Welcome to you both.
WILL CAIN, CNN CONTRIBUTOR: Glad to be here.
COSTELLO: I can't wait to have this conversation.
Kate, let's start with you because everybody criticized -- or nearly everyone is criticizing Rick Perry for his comments. But is he crazy like a fox? I mean, he's appealing who he has to appeal with to win the primary, right?
KATE ZERNIKE, "THE NEW YORK TIMES": Yes. I mean, I think the treasonous comment is obviously for all the reasons we discussed, other people laid, is over the top.
But I don't think it's going to seem so over the top to an electorate, Tea Party electorate having so much power in November, who actually has been -- talking about the Fed quite a bit and does hear what he says and is in the mood for that kind of temper and that kind of outrage of the Fed. They believe that the Fed has been -- as Ron Paul talked about for years -- levying a hidden tax on all of us by printing more money because that means that those of us that have money, it's worth less.
COSTELLO: OK. Well, "The Wall Street Journal" is standing up for him. I'm going to read what it says on "The Wall Street Journal." "The Wall Street Journal" did say that Rick Perry shouldn't have used that treasonous word thing. But the op-ed in "The Wall Street Journal" also says, "The U.S. also needs a debate over the Fed's political independence. In our view, that independence has been compromised over the last 15 years as Greenspan and Bernanke allow themselves to get too close to the White House and the Treasury."
The problem with all of this is average Americans, they really don't quite know what the Federal Reserve does and Ben Bernanke --
CAIN: But they should.
COSTELLO: But Ben Bernanke's like Punxsutawney Phil. He pops out and talks about interest rates and then goes back in his hole. So, when someone says something about the Federal Reserve and it's inaccurate, it's very difficult, people to get to the truth.
And that's not a good thing, is it, Will?
CAIN: Well, no. But, Carol, you put the point right on it. The good thing is that we are talking about the Federal Reserve.
The comment about treason as Kate said, look, it was inappropriate. Look, it was mostly trash talk, campaign trash talk. It's now being overblown.
That being said, you know, I think Rick Perry is putting the Fed in the spotlight. He has a principled position. I think core conviction level, he is right. You should be wary of the Federal Reserve.
As Kate said, if they print too much money, it can -- can cause inflation and devalue the money in your pocket.
The problem is the position of Perry has now put out there isn't nuanced. There is no room for intellectual nuance. If you believe there is a role for the Fed, that we should have fiat money, and these are things like you said, people don't understand, well, then, you got to know that the population grows, money contracts, we have to print money sometimes.
COSTELLO: But -- the comment he said yesterday, and he intimated there is a conspiracy between the Fed and the White House to pour more money into the economy, whether we all want it or not. I mean, that's -- it is not a great thing to say, is it?
ZERNIKE: Well, I think -- you know, the argument against this is that this is how monetary policy works. You -- you know, you control the supply of money. That's -- control -- you --
(CROSSTALK)
ZERNIKE: Control, OK? Let's say control.
So, this is how monetary policy works. I think what he is saying they need to have more -- I think he would like to see Bernanke -- more treasonous perhaps, but I think he'd like to see Bernanke to be more independent but I think that this is sort of -- you know the notion of the -- he's too close to the White House, that sort of -- you know, again, that's -- this is how --
COSTELLO: Right. It resonates with a certain segment of his constituency, right? But most people don't understand it. And he is sending like out these -- he's throwing these bombs, not clarifying, and that's really not good for the country, though.
ZERNIKE: Right. I do think there is a certain -- what's happening now is that people are looking for a reason why their money is worth less, why the economy isn't coming back. And the Fed, again, we have seen so many easy answers and the Fed becomes sort of an easy target.
CAIN: And I got to disagree with you, Carol. Look, I think that the way he is putting it out there is not the best but it is -- overridden by the fact we are talking about the Fed. This is one of the most important things in our society.
And, in the end, the "Wall Street Journal" is right. There's no conspiracy. I have a hard time buying the theory of conspiracy.
But you want to ensure that the Fed is not politicized. You don't want the president or his administration or Congress for that matter influencing the decisions of Ben Bernanke.
COSTELLO: OK. So, on another tag, I heard there is another push out there to get Chris Christie to run, New Jersey governor.
CAIN: I wish.
COSTELLO: See, you wish. That -- Will told me that he thought Rick Perry would become president.
CAIN: I did.
COSTELLO: But now you're saying oh, I wish.
CAIN: No. In fact, I wrote this. There's only one man standing between Rick Perry and the White House, in my opinion. And that is Chris Christie. He is the one person that I can think can go toe to toe with Perry. Take his big combative personality and put it against Perry's big combative personality and win.
Without that everyone else is a shrinking violet to Perry.
COSTELLO: So, as far as Tea Party members are concerned, are they wishing for a Chris Christie?
ZERNIKE: Oh, they love Chris Christie. They love Chris Christie.
It's interesting, in the early polls before people thought to ask what they thought of Chris Christie, Tea Partiers volunteer as they'd say, you know, who do you like for president, they would list off, you know, Ron Paul, Michele Bachmann, Sarah Palin. They would all say, Chris Christie.
So, yes. I think there's very -- there's great enthusiasm for him.
COSTELLO: Yes. Well, I don't think he's not going to do it.
CAIN: It's not a coincidence Karl Rove keeps writing and saying that Chris Christie might run.
COSTELLO: Yes. But he hates Rick Perry.
CAIN: That's right. He is raining on Rick Perry's parade.
COSTELLO: Will and Kate, thank you so much for joining us. That was fun.
Back to you, guys.
VELSHI: That was an excellent discussion.
Forty-five minutes after the hour.
Let's get up to speed on the top stories right now, including -- well, the latest on a bus attack in Israel. We're getting a little more information on that. We're going to bring it to you on the other side of this break.
So, stay with us. There's a lot of news developing right now.
ROMANS: Also, we are going to tell you about how Abercrombie & Fitch is still P.R. pain after asking the "Jersey Shore" cast to stop wearing their clothes. The publicity stunt maybe gone terribly wrong. Our marketing expert weighs in, next.
(COMMERCIAL BREAK)
ROMANS: Forty-six minutes past the hour. Here's what you need to know to start your day.
(BEGIN VIDEOTAPE)
ROMANS (voice-over): We're following breaking news right now out of Israel. An attack on a passenger bus in the city of Eilat left at least five wounded. Now, that's near the Egyptian border. Israel radio reports that, at least, three gunmen in a car opened fire. There are reports of an anti-tank missile fire at another bus. It comes as the Egyptian army and police are cracking down on an anti- terror operation in the Sinai area at Egypt.
A suicide truck bomber targeting a U.S. base in Gardez, Afghanistan this morning. Officials say two Afghan guards were killed. Nine others injured. The Taliban taking responsibility for the attack.
"The New York Times" reports the justice department is investigating whether Standard & Poor's improperly gave mortgage backed securities a AAA rating when it knew they didn't deserve such high marks at the height of the housing bubble.
Scandal rocking the University of Miami this morning. Jailed businessman and ex-Booster, Nevin Shapiro, he claims he spent millions of dollars on gifts, meals, even prostitutes for Hurricane athletes over an eight-year period. He says several coaches knew about it. The coach, the school, and the NCAA are investigating.
(END VIDEOTAPE)
ROMANS (on-camera): That's the news you need to start your day. AMERICAN MORNING back right after the break.
(COMMERCIAL BREAK) ALI VELSHI, CNN ANCHOR: Abercrombie & Fitch has got itself a situation. The public diss of "Jersey Shore" star, Mike "The Situation" Sorrentino is turning into a PR nightmare for the company. Abercrombie, apparently, offer the The Sitch cash to stop wearing its clothes claiming that he is damaging their image. Our marketing expert, Adam Hanft, will join us in a few moments to talk about this, but Adam, I want you to listen with me -- to Jeanne Moos' very nicely done package on this. Listen in.
(BEGIN VIDEOTAPE)
JEANNE MOOS, CNN NATIONAL CORRESPONDENT (voice-over): Take a good look at this lime green sweatpants because they're what led Abercrombie & Fitch to offer to pay this "Jersey Shore" star not to wear their clothing.
UNIDENTIFIED MALE: What I don't want is for you not to be yourself.
MOOS: And the guy who calls himself The Situation only made things worse with these blue pants by Abercrombie.
UNIDENTIFIED FEMALE: Actually --
UNIDENTIFIED MALE: Come on.
MOOS: An Abercrombie & Fitch employee noticed the outfits and told the CEO.
VOICE OF MIKE JEFFRIES, CEO, ABERCROMBIE & FITCH CO: And someone came up and said, Mike, I have terrible, terrible news for you. Last night, on "Jersey Shore," The Situation had A&F product.
MOOS: And that's when the company decided --
JEFFRIES: Let's pay them not to wear our product.
MOOS: But outside their Fifth Avenue store, the one with a half naked doorman --
UNIDENTIFIED MALE: I found it ironic that the "Jersey Shore" promotes going to gyms, tanning salons, and going to clubs. People at the door here are tan, hard bodies, and there is a rope out here that looks like a club.
MOOS: Abercrombie has even sold a T-shirt combining Fitch and The Situation, The Fitchuation. As for offering to pay The Situation for not wearing their clothes, Abercrombie's CEO says --
JEFFRIES: We're having a lot of fun with this.
MOOS (on-camera): What do you call this, anyway? Unbranding? Anti-branding? An unendorsement?
MOOS (voice-over): How about a big publicity stunt? The producers of "Jersey Shore" said it's a clever PR stunt, and we'd love to work with them on other ways they can leverage "Jersey Shore" to reach the largest youth audience on television. This reminds us of a story of Snooki's Gucci bag. The one she was carrying when she got arrested for being drunk on the beach.
UNIDENTIFIED FEMALE: Get the (EXPLETIVE DELETED) off! Get off.
MOOS: And the "New York Observer," Simon Doonan, wrote that luxury accessory houses are sending Snooki free bags, but here's the shocker. They are not sending her their own bags. They are sending her each other's bags, competitors' bags, in apparent effort to make their rival seem tacky. The article calls Snooki, "the typhoid Mary of luxury branding."
MOOS (on-camera): And then, there's another situation, one with Abercrombie & Fitch stock. The stock price took a shot in the abs.
MOOS (voice-over): Down more than eight percent Wednesday. Analysts say it has nothing to do with the "The Situation" situation, but you can bet he and his six-pack abs are shaking with laughter.
(LAUGHTER)
MOOS: Jeanne Moos, CNN, New York.
(END VIDEOTAPE)
VELSHI: I'm a fan of "Jersey Shore," but for those of you who aren't "The Situation" is Mike Sorrentino's abs which he refers to the situation, and as a result, he gets called "The Situation." It's a strange situation. Adam Hanft is here. He's the CEO of the marketing firm, Hanft Projects.
Adam, let me just ask you this. It's very enticing to think that this was all marketing ploy. It may well be, but there is a real underlying problem here, and that is that Abercrombie & Fitch is positioned now. They've got a huge growth market assuming things go OK in Europe where their positioning as a premium product more so than they are here in the United States. And frankly, "Jersey Shore," which is in Italy this year, it is kind of messing with their target audience.
ADAM HANFT, CEO, HANFT PROJECTS: Let's look at it. In reality, you got a reality show and you've got fantasy. Abercrombie is a fantasy brand even in the states and particularly in Europe. They want to create an image for themselves that is imaginary.
VELSHI: Right.
HANFT: And when you have a reality show, there's a clash there, fundamental clash, and they want to disassociate themselves from reality, they're selling a fantasy.
VELSHI: Let's -- how different is that fantasy, because I've walked by these stores. I was by the Abercrombie & Fitch, their Hollister (ph) store yesterday, and it is like a club. It was in the middle of the day. There are ropes and people come in and it's dark inside and they spray that perfume. And everybody is a hard body in there. And these clothes are supposed to be for hard body people who are tanned and fit which is what you see on "Jersey Shore.
HANFT: Right, but I don't think that we can say that all hard bodies are created equal. So, there's a trashiness and the cheesiness about the reality show, about snooki, about The Situation, and Abercrombie wants a bit of class and dignity with in their hard bodies. So, it's a nuance, but it's important to their brand.
VELSHI: All right. What about the audience? What about the fact -- what about "Jersey Shore's" response to say we do have the largest youth audience on television. Isn't that worth more to Abercrombie than the fact that it might be a little trashy?
HANFT: I think "Jersey Shore" is doing the right thing. Abercrombie picked a fight with them.
VELSHI: Yes.
HANFT: They're having some fun with it. Abercrombie is using this to ride this kind of a conversation. So, they're detaching themselves from the brand, and the media is disassociating themselves, and it's a win-win for them.
VELSHI: So, we've been suckered, basically, by having this conversation.
HANFT: You know, it's August. It's silly season. It's a fun media story.
VELSHI: All right. I'm going to end it now just so that we don't fall for this trap anymore. Adam, thanks very much. Good to see you, my friend -- Carol.
COSTELLO: I'm still frightened you watch "The Jersey Shore," but, whatever.
We've been giving you a chance to talk back on one of the big stories of the day. And boy, you have a lot to say. We asked you this question, are Rick Perry's treason accusations against the fed out of line? Here are some of your responses.
This from Joshua. "Of course, Perry was out of line, but thanks to the media. He's gotten a lot of attention for it and energized to supporters. Take the word treason out of what Perry said, the underlying message of Perry's statement just shows his ignorance of economics, and to me, that's what's out of line, not to mention, scary."
This from T. Samuels, "I'm not fond of Rick Perry, but he is entitled to point the finger to whoever he chooses. If his accusations hold no ground, then why does anyone care? It would only reflect poorly on himself. I like his tenacity, but not enough to vote Republican."
And this from Cameron, "I'm not a Rick Perry fan by any stretch of the imagination, but even I have to admit that his treasonous comment isn't even close to being out of line. It's just your standard Tea Party rhetoric. Wait until the actual election season starts, then things will really get nasty, and this will seem tame in comparison."
Keep your comments coming. Facebook.com/americanmorning, and, we'll read more comments later on in the show.
ROMANS: All right. Up next, the latest on this morning's breaking story. An apparent terrorist attack on a bus in Israel. We'll have the latest for you there and the developments in that part of the country. It's 55 minutes after the hour.
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