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Kim Jong-il Dead; Interview with Ambassador Young-Mok Kim; Saab Files For Bankruptcy; Electronic Health Records Breaches; North Korean Leader Kim Jong-il Dies; House May Reject Senate Payroll Tax Cut Extension Bill; Group Provides Microfinance to Low-Income Individuals; Students Boost Local Economies; North Korea Unveils the "Great Successor"

Aired December 19, 2011 - 07:59   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

ALINA CHO, CNN ANCHOR: North Korean dictator Kim Jong-il is dead. The country already announcing what it calls a great successor to the so-called dear leader.

ALI VELSHI, CNN ANCHOR: At the ready, I'm Ali Velshi. The region on alert and the world trying to figure out what now for North Korea and its nuclear weapons. All of that ahead on this AMERICAN MORNING.

CHO: Good morning. It's Monday, December 19th. I'm Alina Cho along with my friend Ali Velshi. So glad you're with us on this edition of AMERICAN MORNING.

VELSHI: It is a very busy morning for us. Question marks about a hostile nuclear power after the death of North Korean dictator Kim Jong-il.

His 17-year reign of absolute total power is now over.

CHO: The big question is what next? The news of the death was announced last night on North Korean's state television by a weeping television anchor. North Korea says Kim Jong-il died on Saturday of a heart attack he suffered while on a train. He was 69 years old.

VELSHI: We're getting a rare look inside the hermit kingdom this morning. New video of North Koreans sobbing over the death of their so-called "dear leader". Although many suffered, millions starved to death during his rule, they were told stories of Kim Jong- il's divine birth and super hero-like powers.

Well, instability in the region is a major worry.

Stan Grant is live in Beijing with reaction there this morning.

In fact, Stan, we're likely to get the most information out of Beijing. This was North Korea's greatest ally, China.

STAN GRANT, CNN SENIOR INTERNATIONAL CORRESPONDENT: Indeed. You know this relationship, Ali, has been described in the past as like lips and teeth. That's how closely it's being seen, forged on the battlefield during the Korean War when Chinese fighters fought alongside North Koreans. You know, according to a 1961 treaty, China has sworn to defend North Korea against any unprovoked aggression.

That said, China and North Korea do not have an easy relationship. While it is very close and China has a great economic stake in the country, providing about 80 percent of the consumer goods to North Korea, about 90 percent of its fuel, about 50 percent of its food, at the same time, analysts have said that China (AUDIO BREAK) North Korea.

Now, if we look at the nuclear tests of North Korea carried out, they were seen as causing strains in this relationship and China has been concerned about North Korea blundering into a conflict that could put at risk China's continued growth.

Now, what's really going to be crucial in the coming days, the crucial relationship here, Ali, is the relationship between the United States and China -- U.S. in South Korea's corner, China in North Korea's corner. The ability of those two, the big superpowers of this region, to be able to work together could be the key to the ongoing stability of the region and avoiding any misunderstanding that could lead to conflict -- Ali.

VELSHI: Yes. And we've heard this morning measured responses from the State Department, from the White House, from South Korea, Stan. So, we'll be watching all of these reactions about those parties around North Korea very closely. Stan Grant in Beijing for us.

And, of course, he made a reference to the missile test. We know that North Korea has tested and fired a short-range missile --

CHO: Right.

VELSHI: -- this morning. This is not an armed missile and it is not a nuclear missile.

CHO: And this happens from time to time as we've been reporting this morning, not necessarily linked to the death of Kim Jong-il. We are watching world reaction, of course, including from the White House. It says it is in constant touch with its allies in the region.

CNN's Dan Lothian is live for us at the White House with more on that.

Dan, good morning to you.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, good morning. As you know, the U.S. and other allies as well have been for some time now trying to tame North Korea's nuclear ambitions through sanctions, trying to isolate North Korea.

And so the question now for the Obama administration is what happens next. There have been some steps that have been taken, some baby steps, if you will, in trying to establish a dialogue between the United States and North Korea. You know there have been talks about, again, resuming food aid to North Korea as well. So, will it be a continuation of this effort or will it be more of the same, perhaps even a slide backward?

The Obama administration for its part has been in touch with the South Koreans, in particular South Korean President Lee. President Obama, according to the White House spoke to him by phone at midnight. They talked about the situation on the Korean peninsula, said they would continue to stay in touch and that their national security teams would continue to coordinate.

But again, as you've been talking about from the White House here and other nations who are part of the six-party talks, there has been a very measured response and in fact the White House only releasing a short statement not long afterward went out last night that Kim Jong-il had, in fact, died. The White House saying that, quote, "We are closely monitoring reports that Kim Jong-il is dead." The president has been notified, continues to be in touch with allies such as South Korea and Japan, and that, quote, "we remain committed to stability on the Korean peninsula and freedom and security of our allies" -- Alina.

VELSHI: Similar language to what was released by the South Korean government.

CHO: That's right.

VELSHI: The stability on the peninsula is most important. This idea until we have a better handle on the situation, don't say too much.

CHO: That's right. And I think it's probably a smart response on the part of the world community. To most, Kim Jong-il will be remembered as an oppressive ruler who controlled a nation for 17 years through fear and intimidation.

And now that the man with all that power is gone, the big question, of course, is what will happen to North Korea and its nuclear weapons?

VELSHI: We are joined now by Ambassador Young-Mok Kim. He's the consul general of the Republic of Korea here in New York.

Ambassador, thank you for being with us. We appreciate it.

AMBASSADOR YOUNG-MOK KIM, CONSUL GENERAL OF REPUBLIC OF KOREA IN NEW YORK: Good morning. Thank you for the opportunity.

VELSHI: Alina had a chance to speak with your government this morning. And the response is very similar to the one we've heard from the White House and from the State Department, that we're interested in stability and peace in the region.

What can you tell us about what the South Korean government has gone through this morning?

KIM: I think we have done all the measures which you can do, from military and internal security and government officials, because we don't know what will happen. The most top priority is to prevent anything troublesome, any provocations or any (INAUDIBLE). I don't think that North Korea can afford some provocation at this point. We must make sure that everything is OK. That is the top priority.

The second thing is we must check and keep communicating with the neighboring countries, particularly with allies, the United States and China for sure. I do not believe that everybody has known what's happening correctly inside of North Korea. We're all curious what happened.

CHO: President Lee Myung-bak, as you know, held an emergency cabinet meeting today. He cancelled his regular schedule. He's spoken with President Obama and the leaders of Japan and Russia. But it's largely believed that the world community was caught off guard by this news.

How surprised were you to hear that Kim Jong-il had died?

KIM: Well, it's surprising to me, but we have had information and watched the North situation for a past few years. Apparently, there were reports that Kim Jong-il suffered from diabetes and other --

CHO: A stroke in 2008.

KIM: And we watched how he rest (ph).

I personally worried that he outreached too much this year, because he went to China, the North, at eastern provinces and he had to go through different cities, and he went to Russia, Siberia this time. He went to Siberia. I was wondering how this guy who has been --

CHO: Ill?

KIM: Been ill, seriously ill, could agree to travel.

VELSHI: The North Korean agency, the news agency, said that it was a lot of stress and that he was going through that. What do we know about his son, who has been named his successor? We don't know as much about his son as we do about Kim Jong-il.

KIM: Yes. I do not believe everybody is curious about his son and his government coming into the North Korean system. His son is apparently young. He was sent to Switzerland when he was young and he had some international education.

So, I believe he's more international, his son. He knows what's happening in the world. I think there is a change -- there's been a change within North Korea's society to some extent --

CHO: But very little is known about him. We don't even know his age. He's said to be either 27 or 28 years old, no military experience. The North Korean people had not even heard his name until October of last year.

So, having said that, you know, Kim Jong-il had been groomed for many, many years to be the next leader to succeed his father, Kim Il Sung.

From the South Korean perspective, how concerned are you about this young man who is now taking over the most repressed society in the world?

KIM: His ability and his background is not well-known -- not only not well-known, not well-formed, as you said. That makes a lot of people worried.

I would like to point out that I would like to believe in the leadership of North Korea to be responsible for their own problem.

Troubling point for us is that North Korea has a record to let millions of people die from starvation. And there were many killings. But they were continuing to develop missiles and nuclear capabilities.

In this announcement of his death, I carefully read and then they said this leader, Kim Jong-il, has made this nation great by making it a nuclear weapon state and military strong and spiritually strong. So I think that they will continue to literally provocative way and approach in dealing with matters of --

CHO: Engagement.

KIM: -- foreign policy and security. Even though Kim Jong-il tried to negotiate with the United States and he had (INAUDIBLE) very in my own experience. However, as long as they put the military force policy on the top and then they put the resources on missiles and nuclear, which they think secure their position, but, you know, why people are starving and children can't have proper nutritions, this cause a lot of human disasters.

So what worries me is that not this -- Kim Jong-il's personality but priority of North Korean leadership, where they put the first priority.

CHO: All right. Ambassador Kim, the consul general of New York, thank you so much for coming in and joining us.

KIM: Thank you.

CHO: Coming up, a fierce storm is moving in on the Southwest. Meteorologist Rob Marciano is tracking the storm for us in the extreme weather center. We will get to him next.

VELSHI: Plus, could we be heading back to the drawing board when it comes to extending the payroll tax cuts? We'll talk about that when we get back as well.

And a rare look inside North Korea. Alina travels to Pyongyang last October as the country started grooming a new dictator. It's an opportunity very few Western journalists have ever had. We'll share it with you when we come back.

It's 12 minutes after the hour.

(COMMERCIAL BREAK)

VELSHI: Oh, Alina, I just came back last night from Chicago. I love that town.

CHO: You had a book party.

VELSHI: Yes. On Friday night, Christine and I were there.

CHO: It's winter, isn't it?

VELSHI: Yes.

CHO: It's really December. Welcome back, everybody.

Kim Jong-il's death sparking concern over who exactly is in control of the reclusive nation and its nuclear program.

VELSHI: Joining us now is James Rubin. He is the former assistant secretary of state. Good to see you.

Nice to see you both.

VELSHI: You know, the ambassador from South Korea was just here, the consul general of New York, and he was sort of saying that, look, there is some concern that while this new leader has been named, Kim Jong-il's son, he's not very well known. And because he's not militarily proven, there may be people in the military who have other ideas, and that this may not be as stable a transition as much of the world is hoping, at least, it will be.

JAMES RUBIN, FORMER U.S. ASSISTANT SECRETARY OF STATE: I wouldn't bet on a perfectly stable transition. This is not an easy thing to do. Remember, in a communist state to go from father to son, it never happened before when the founding leader gave it to Kim Jong- il. So, it's not easy to pass it on. And that's because there are many different power centers, the military, the party, the security apparatus, the secret police, whatever.

And, you know, some of them may not feel comfortable with the fact that this young man, who's not really done very much will suddenly be in charge of this country and its nuclear weapons. But I think whether the ambassador is right is that it's less an issue of his specific personality than the policy of this group, whether it's him doing it or this military regime doing it.

They have made a decision to become an outlaw state, to focus all of their energies on military, to build a huge military, to build a ballistic missile, to build nuclear weapons, while letting their people starve.

CHO: Right.

RUBIN: And that's why it's so important for them maybe, under a younger man who's seen more of the world or at least been able to, to see the value of North Korea opening, and then, it could be a great thing. CHO: Do you see that, I mean, as a potential scenario? I mean I don't -- it's hard to imagine.

RUBIN: Well, you've been there. A lot of people have been there. It's a really awful place where millions and millions of people have been pressed and starved to death. But the modern world makes it harder and harder to remain in isolation. And I think with every passing year, we're closer to the day than this system will collapse. Now, what will happen? What will replace it? Will it be instability? Will it be chaos?

This is what China worries about, and this is why China has refused to put pressure on North Korea that they could in spite of their nuclear weapons program. So, I think a lot of people will now be raising the scenarios of what happens if there's a collapse, what happens if one wing of the regime takes control of the nuclear weapons, what do we do if there's an incident at sea with the South Koreans.

VELSHI: China is now -- I would say, this morning, China becomes more of our ally than not, because we don't like this -- we don't even know exactly how old this new leader is. China probably has more information and more contact with North Korea than anyone else. And at this point, there is some pressure on China to make sure this doesn't unravel.

RUBIN: Well, you know, china Wants to be a leading player in the world.

CHO: Right.

RUBIN: They want to be treated with respect, and they want to have equal access to markets around the world, but with that comes responsibility. And too often, the Chinese have left to the United States and others the hard work of putting pressure on countries, of making people not like them. The Chinese would prefer everybody like them. Let them buy and sell their stuff and they can get rich.

Now is the time for China to show that it has become more than just a seller of goods but is actually participating in making the world a safer place. We'll see. I'm not optimistic. The Chinese, yes, they know a lot about the North Koreans, but they've been reluctant to put pressure on them for fear, as I said, of chaos.

CHO: Well, maybe the only government to have actually met Kim Jong Un face to face, the now leader of North Korea. Now, just yesterday, there was a report from the Associated Press saying that the U.S. was ready to send food aid to North Korea. In return, you know, North Korea would take steps to deactivate its uranium enrichment plan.

Obviously, that's all in question right now. You know, how do you see this playing out in terms of the resumption of the six-party nuclear talks, which is what I think the world community wants to see.

RUBIN: Well, you're exactly right, and I think that is the really important question right now. Clearly, there has been an effort bond to seems to sequence a series of steps beginning with food aid, then the exchange of meetings, then, perhaps, the beginning of real proper talks, the freezing of certain North Korean nuclear programs. It's very, very difficult to orchestrate these things in the best of circumstances with North Korea.

I kind of wonder whether a new regime with a sudden change from father to son and the instability that goes with that will be prepared to take these steps that they may have agreed to last week, last month.

So, if I were in the administration, I would be wondering whether this deal that they had struck would really be carried out, because it would lead ultimately to the big question that the ambassador talked about, the priority given to the nuclear program versus the lives (ph) of its people.

CHO: Right. It is the good question.

VELSHI: James, lots of questions. We'll continue to look at it. James Rubin is the former U.S. assistant secretary of state. And we are going to be watching this all very closely.

CHO: That's right.

VELSHI: Everybody's responses to it.

RUBIN: Thank you.

CHO: Jamie, thank you.

Still to come on AMERICAN MORNING, some college-based programs are helping students make a difference by creating jobs in needy communities. Find out how. It's 21 minutes after the hour.

(COMMERCIAL BREAK)

VELSHI: Good morning. It is 24 minutes after the hour. " Minding Your Business" this morning.

Right now, U.S. stock futures are trading higher ahead of the opening bell. We're expecting low trading volume this week ahead of the holiday weekend, which could mean exaggerated market swings all week.

New this morning. The maker of Saab cars is filing for bankruptcy. That puts the 74-year-old car maker on the brink of shutting down for good. GM sold Saab back in 2010. It just recently rejected plans to rescue the Swedish automaker.

New concerns about your privacy as more and more doctors use electronic medical records. The number of security breaches is up. According to one research group, breaches have spiked 32 percent from last year. That's costing the industry an estimated $6.5 billion.

One company here in New York is betting that you'd rather watch a commercial than pay those pesky ATM fees. The company is called free ATMs NYC, and all you have to do is watch an ad while you're waiting for your money in order to avoid that roughly $2 charge. They're planning to launch several thousand of these ATMs in the next year. One caveat is that you still could be charged by your bank for using an out of network ATM.

"Sherlock Holmes" topping the box office this weekend, but the film starring Robert Downey Jr. took in a disappointing $40 million. "Alvin and the Chipmunks" debuted with chip wrecks at more than $23 million.

Up next, is the plan to extend the payroll tax holiday falling apart in Washington? AMERICAN MORNING back right after the break.

(COMMERCIAL BREAK)

CHO: Welcome back to AMERICAN MORNING for Monday, December 19th. It is 29 minutes after the hour and here are your top stories.

North Korea reportedly test firing a short-range missile as the nation announces that leader, Kim Jong-il, has died.

(BEGIN VIDEO CLIP)

CHO (voice-over): South Korea's military on high alert and the White House watching the situation very closely. North Korea says Kim Jong-il died on Saturday of a heart attack that he suffered while on a train. He was 69 years old and held total power over North Korea for 17 years.

VELSHI (voice-over): The board of trustees at Florida A&M is considering whether to suspend the school's president in the wake of a hazing scandal. Last month, the drum major, Robert Champion, was killed in a suspected hazing. His death has been ruled a homicide.

Florida's governor says the president of the university should step aside, but alumni want the governor to take back those comments, afraid that the interference may put the school's accreditation in jeopardy.

CHO: The southwestern plains bracing for heavy snow, strong winds, and icy roads. Blizzard warnings in effect for parts of New Mexico, Colorado, Texas, Oklahoma and Kansas. Some areas could see up to two feet of snow. Officials are warning that the storm could cause dangerous driving conditions as well.

All right, back to the big story, breaking news story this morning, the death of the North Korean leader. Barbara Starr has just returned from a briefing on North Korea with U.S. chairman -- with the chairman of the joint chief of staffs, General Dempsey. He joins us on the phone now from Ramstein Air Base in Germany. Barbara, obviously this is of great concern to the U.S. military. What have you heard?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Ali, good morning to you. We are traveling with General Dempsey, the chairman of the Joint Chiefs of Staff, and he has just briefed a very small group of reporters, including CNN. He was woken up overnight here in Germany. There was an interagency phone call with the most senior members of the United States military and the national security community at the White House where they all got together on the phone to discuss the priorities, what happens now.

Top priority, to make sure they have the intelligence assets. That means satellites, eavesdropping equipment, electronic surveillance equipment to keep an eye on the North Korean military. They are watching very closely. So far General Dempsey tells us, they see no movement of North Korean forces, but these are the key military indicators that they are watching for right now.

And indeed we were told separately that short-range missile firing that has been reported overnight was something actually that they had expected. It was reported through the Armistice Commission. They say they're not really too concerned about that. But they are watching they closely.

General Dempsey also saying he continues to be concerned about the succession plan in North Korea. Everyone believes the son will take control, at least for now. But he is young and inexperienced, General Dempsey says, as does everyone else. So they are going to watch all of this very closely. Right now U.S. forces in South Korea he said not on any particular alert status other than their usual. But this is front and center. People were up all night long trying to get things in place.

VELSHI: OK, that's good information for us, because we wanted to know how are they reacting to this. General Dempsey seems to be sharing the concern we've heard from other analysts this morning that the succession, the effectiveness and smoothness of the transition is what is concerning everybody. Is the son really going to take over as his father did from his father, or will there be others with other ideologies who may want to complicate things? Barbara, thank you very much. Keep in touch if you have any other developments.

CHO: And part of it because there's so much mystery surrounding this young son, who is said to be 27 or 28 years old, not groomed for a very long time, unlike his father who was Kim Jong-il, who ruled for 17 years.

VELSHI: You know, part of it - Kim Jong-il when he came in had been shown for years. He was a horse rider and a marksman, a military guy. This son hasn't. And I wonder whether the scheduled military test this morning, this missile that was fired, is just part of showing that he's in charge or this country still has military priorities.

CHO: It could be. Again, it's also something that they typically do from time to time, so we'll have to watch that very closely.

Meanwhile, I want to talk a little bit about what's going on in Washington and the gridlock there. No letup in the squabbling over how to pass an extension of the payroll tax holiday. House Republicans are not happy with the Senate's plan to extend the cuts for two more months. House Speaker John Boehner in fact telling NBC this short-term fix is just not acceptable.

(BEGIN VIDEOTAPE)

REP. JOHN BOEHNER, (R-OH) HOUSE SPEAKER: Two months is just kicking the can down the road. The American people are tired of that. Frankly I'm tired of it. On the House side we've seen this kind of action before coming out of the Senate. It's time to just stop, do our work, resolve the differences and extend this for one year and remove the uncertainty.

(BEGIN VIDEO CLIP)

CHO: We want to go live now to Washington where our Kate Bolduan is standing by live. As I said before, here we go again, Kate. So what's the latest?

KATE BOLDUAN, CNN CONGRESSIONAL CORRESPONDENT: Hey there, Alina, hey there, Ali. Well, just when Washington and pretty much many in the country thought that Congress had finally reached a deal, a compromise for extending the payroll tax cut, here we go again, now another twist in this bitter, bitter year-end battle.

House Republicans are not happy with the compromise the Senate passed Saturday. With broad bipartisan support the vote Saturday was 89-10. The Senate in that vote approved a two-month extension, and that was because leaders couldn't agree on a more comprehensive deal that they were trying for to extend the payroll tax cut for a full year.

Now Speaker Boehner says House Republicans are opposed to that two-month extension because quite frankly they say they're tired of the short-term fixes, if they're going to agree to any extension, it does need to be for a year.

That's an apparent shift for Boehner from just this weekend. During a conference call with House Republican members, Boehner, according to a Republican source, called the Senate vote a, quote, "good deal and a victory." Democrats now from the White House on down are pouncing on this, saying that the house was two choices, pass the Senate bill or, as Senator Chuck Schumer said in a statement, "they alone will be responsible for letting taxes rise on the middle class."

So in the short term this is what's happening today. The House is set to vote on the Senate compromise this evening, but Senate Democratic leaders have given no indication that they're willing to bring the Senate back if the house makes any changes to their deal. One Senate Democratic aide telling me there is zero chance that the Senate will reconvene from their holiday break.

CHO: All this back and forth, Kate. Thank goodness we have you to watch it for us.

BOLDUAN: I have whiplash. (LAUGHTER)

CHO: Kate Bolduan, live in Washington.

VELSHI: Are you hoping for a white Christmas? Are you going to be here?

CHO: I am going to be here.

VELSHI: I don't think we're getting one here. There's snow and fierce winds moving in on the southwest right now.

(WEATHER BREAK)

VELSHI: All right, coming up next on AMERICAN MORNING, a really interesting story. One program is helping to create a new generation of entrepreneurs we need the most, but it's also making an important difference in less fortunate communities. We're going to tell you how when we come back. It's 38 minutes after the hour.

(COMMERCIAL BREAK)

VELSHI: Good morning, New York. Wake up, for heaven sake, it's 20 to 9:00 in the morning. It is 32 degrees and partly cloudy. It sure feels like winter out there. It's going to get up to 46 and it is going to be a beautiful, sunny day, just like yesterday was, just clear skies, fantastic.

Welcome back to CNN. It's 42 minutes after the hour. A group powered by college students is helping college students create jobs in some of the country's least fortunate communities. it is called Campus Microfinance Alliance. Joining me now Sinye Tang, a student participant in the Campus Microfinance Alliance along with co-founders Rohan Mathew and Andy Postner. Good to see you all. Thank you for being with us.

SINYE TANG, STUDENT PARTICIPANT IN CAMPUS MICROFINANCE ALLIANCE, COO: Thank you.

VELSHI: This world of microfinance is still a little unfamiliar to people. It's a well-established world, but it's the concept that you provide loans of the right size to people who need to start something up. Rohan, tell me about what you do.

ROHAN MATHEW, CO-FOUNDER, CAMPUS MICROFINANCE ALLIANCE: Yes. I'm the executive director of an organization called the Intersect funds. We're based in New Jersey. What we do is for entrepreneurs who are looking to start a small business or grow a small business is we provide a little advice and capital so they can get their business off the ground.

VELSHI: What kind of businesses are we talking about? How much money do they need, what do they do?

TANG: An example is a lot of food carts will come in looking for money for a generator. So we have a client, Mildred, that need to apply for a loan to get a generator for a food cart to start operating. And that was the difference between her being unemployed and now being employed.

VELSHI: And these are not the kind of things you typically go to a bank for. It's too small a loan. There's not enough business going on for a typical bank to get involved?

TANG: Yes. And for most of our clients it's also a question of personal credit. That's where we step in and we're able to help them fill out documentation, protect their finances and figure out what's best for them.

VELSHI: Andy, where does the money come from?

ANDY POSTNER, CO-FOUNDER, CAMPUS MICROFINANCE ALLIANCE: Well, foundations, individual donors, also people can lend us money. My organization is called the Capital Good Fund, and then we lend to low income people in Rhode Island.

VELSHI: Very surprising with microfinance, Rohan. Worldwide when I've studied this, the interest rates tend to be higher than you would think. These are not low interest loans, necessarily. And the repayment rates tend to be quite high. Why is that?

MATHEW: I think when you're dealing with a microfinance institution, you're dealing with a real person, it's a real face. It's not just a statement that comes in the mail every month. So right here small businesses are challenged with access to credit, and they need it, because as we know -- in fact if one in three small businesses were able to add just one job, our country would be at full employment.

VELSHI: Just one in three businesses were able to ad one job. But the case of this woman whose example you gave me, where she came and wanted to buy a generation, that's basically keeping her employed at the moment. And there are some people watching who will say why a high interest rate? What kind of interest rate would she pay for that?

TANG: So we offer a 10 percent interest rate on a declining balance, and that works out to $162 monthly payment, 13 months on a $2,000. And actually that's much lower than any other option that's currently available.

VELSHI: Why do you think the repayment rate is as high as it is generally in micro financing? Is it the same when you lend?

TANG: So our repayment rate for Elm Seed is currently at 91 percent. And I think it's so high because we have personal contact with our lenders, with our clients and we also put a lot of effort into making sure that we don't put an unnecessary burden of debt on anybody, so we do a lot of homework on our end as well.

VELSHI: And Andy, what -- what kind of people should think about going to an organization like yours to get finance? What's the range of things that they can borrow for and the amounts of money? POSNER: We lend up to $5,000, so these are micro businesses. You know traditionally people that are low income, a lot of time they're part-time businesses. But after the recession as you know a lot of people have lost their jobs, we've seen a lot of middle income people who have poor credit and just can't find a loan anywhere else.

I mean these are people looking to do things like a contracting business or painting business, catering, things like that.

VELSHI: So they need -- they need small amounts of things. Is it always a capital investment or can it be operating money that they need from you?

ROHAN MATHEW, CAMPUS MICRO-FINANCE ALLIANCE: No sometimes it can be for a marketing initiative or some insurance or, you know, maybe you're a contractor and you're trying to get a big job with a government agency. Or they probably aren't going to pay you for 90 days an you need a little bit just to pay your employees and get started.

VELSHI: So what do they have to bring to you? Because in some cases the smallest of businesses certainly are not sophisticated in terms of the things that they need to do like business plans.

TANG: Right so Elm Seed is really fortunate to have a dedicated crew of student volunteers 40 -- around 40, and we actually work with entrepreneurs to do everything so they can just come to us with their idea. They use the funds and we will work with them to produce all the documentation they need, which are production, a business plan and personal credit.

VELSHI: Andy, you mentioned starting jobs. How much money -- I mean this is the age-old question because all we want to do in this country is create jobs it'll solve so many of our problems. How much money does it take to create a job?

POSNER: Well, that's a good question. I mean, we're extremely cost effective. We have a pretty small budget, we have five employees, a couple of thousand bucks to create a job at this level.

VELSHI: Really. Right.

POSNER: It's not -- these aren't like -- we're not looking to bring the next Google into Rhode Island, we're just starting in a local economy with existing resources.

VELSHI: Right.

POSNER: And it's a very cost-effective way to create jobs.

VELSHI: So it's -- it's like a trickle-down effect. You're providing money to people who are -- who you know are going right out there and creating jobs. Again, I'm fascinated by this repayment rate and the very low default rate. Is it just that you have a sense of when you're loaning money? I mean, clearly not everybody who comes to you to borrow gets a loan. TANG: No, that's not true. Not everybody comes gets a loan from us. We have an extensive underwriting process and have a very developed personal relationship with our clients.

VELSHI: I got it.

TANG: We work with them for a while before we lend.

VELSHI: So you've got to know them and you've got know what their plan is.

What a great thing. I hope it continues to work for you. And thanks for doing that.

TANG: Thank you.

POSNER: Thanks.

VELSHI: Rohan Matthew, Andy Posner and Sinye Tang are all involved in microfinance, a growing field and one that our larger banking system may actually take some lessons from.

All right, still ahead, a rare look inside North Korea. A look back at Alina's trip to Pyongyang. It's going to blow your mind; a massive military parade as the country started grooming a new dictator. Many, many big developments. We'll bring you up to speed on it.

It's 48 minutes after the hour.

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CHO: Ten minutes before the top of the hour. Here are you "Morning Headlines".

Markets open in about 40 minutes and right now U.S. stock futures are trading slightly higher, even though the markets in Asia were down after the news of Kim Jong-Il's death.

North Korea reportedly test firing a short-range missile as the nation announces that leader Kim Jong-Il has died. North Korea says Kim Jong-Il died Saturday of a heart attack that he suffered while he was on a train. He was 69 years old and held total power over North Korea for 17 years.

House members are expected to take up the Senate's payroll tax cut plan today. It includes a two-month extension. House Speaker John Boehner says he wants a full year extension.

Penn State is rejecting CNN's request for a copy of a 1998 police report against former football coach Jerry Sandusky. A university lawyer is saying the school doesn't fall under Pennsylvania's right to know law. The mother of one of Sandusky's accusers alleged he showered and hugged her son. No charges were filed in that case.

A fourth hearing today for Army private, Bradley Manning. He's accused of leaking hundreds of thousands of government documents, many of which ended up on WikiLeaks. Investigators say Manning's computer has secretly downloaded those documents.

That's the news you need to know to start your day. AMERICAN MORNING is back after this.

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VELSHI: Fifty-two minutes after the hour. Welcome back. The U.S. and close allies in Asia are watching North Korea this morning after the death of Kim Jong-il.

CHO: That's right. A little more than a year ago I was given a rare opportunity to report from inside North Korea when the nation put on a show of military might for its heir apparent. It was a stunning glimpse inside one of the most secretive societies in the world. Take a look.

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CHO (voice-over): Your eyes are not deceiving you. This is communist North Korea. Its newest attraction, this Western-style amusement park and it's packed. There's a ride called "Power Surge". And take a look inside the food court. You'll find Western fare. The Un (ph) family comes here often to unwind.

He says "Words cannot explain the excitement after working so hard, General Kim Jong-il has given us this park to relax. We really love it." If North Korea is Stalin's last playground, this is its version of Disneyland.

Not far at this outdoor food market, they're serving up more traditional fare like soybean pancakes, and people are paying like their enemy neighbors in South Korea, North Korean currency is also called the yuan but this features a hammer and sickle. 100 North Korean yuan equals one U.S. dollar. That will get you two sweet potatoes, one ticket to the amusement park or a hot dog at the food court.

In the two years since I last visited North Korea, I've noticed some changes. For one, more average North Koreans speak English.

(on camera): Do you like coming here?

UNIDENTIFIED MALE: Yes, very much.

CHO (voice-over): For the first time there are traffic lights, installed this spring. Most notably in a country closed off to the rest of the world, North Koreans are now talking on cell phones. This girl says everyone in her family has one, but international calls are for bidden; word is, punishable by death. In that way and others, time stands still.

We can only see what our government minders want us to see, and undeniably it's North Korea's best face. Many North Koreans live in poverty, there are very few cars. In this city, there's no such thing as a traffic jam.

(on camera): This is Pyongyang's (INAUDIBLE) subway station, one of two main hubs and one of the main forms of transportation for average North Koreans. Many don't own bikes, let alone cars, so this is how they get from Point A to Point B. And today, the trains appear to be running on time.

(voice-over): And many travel on foot. On the streets, there are no ads, just propaganda. And listen, they not only see the message, they hear it. North Korean propaganda songs blaring across Pyongyang.

(on camera): But look what we happened upon. We're in the middle of week-long celebrations here in North Korea commemorating the 65th anniversary of the Workers' Party of North Korea. This is how people are celebrating. They are literally dancing in the streets.

(voice-over): It's possible they are also celebrating the choice of their next leader, Kim Jong-Un, son of the ailing dictator, Kim Jong-il. For all the small changes we've seen, the larger question remains will a change at the top affect the average citizen. For now, North Korea remains sealed.

(END VIDEOTAPE)

CHO: I never get tired of looking at that.

VELSHI: It's hard though to believe -- I mean for us to conceive of how sealed it is. And while some have said maybe it's a little less sealed than it used to be, it's still pretty sealed.

CHO: It is, you know. I mean for all the talk about the western fare and cell phone use, you and I point out that you can't call outside of the country.

VELSHI: Right.

CHO: I mean just to give you an idea. When you arrive there as a Western journalist, your passport is immediately confiscated, your cell phone, your Blackberry immediately confiscated. You don't get it back until you leave.

A couple of interesting things going forward is that Kim Jong- il's body is in a mausoleum in Pyongyang. North Koreans will be able to see it. His father's body is there as well, Kim Il-Sung.

The funeral is December 28th. The official mourning period ends on the 29th. Going forward, April 15th of 2012 is an important date. It's the 100th anniversary of the founder of North Korea.

VELSHI: They were preparing for it. This was going to be a big thing.

CHO: They were preparing for a massive celebration and presumably to invite Western journalists inside the country. Obviously the tenor of that celebration, if you can even call it that, it will be different now.

VELSHI: There's, like we say, a lot more questions than answers than there were in North Korea yesterday. We don't even know officially how old this new leader is.

All right, we'll be back in just a moment. We're continuing to cover this story. It's 57 minutes after the hour.

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