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CNN Saturday Morning News

Standard & Poor's Downgrades U.S. Creditworthiness; At Least 31 U.S. Soldiers Die in Helicopter Crash in Afghanistan; CNN Fit Nation Athletes Prepare for Triathlon; Financial Adviser Discusses U.S. Credit Rating

Aired August 06, 2011 - 07:00   ET

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

DEBORAH FEYERICK, CNN ANCHOR: And from CNN Center, this is CNN Saturday morning. Good morning. I'm Deb Feyerick in for T.J. Holmes.

We have got the latest on the downgrade for the nation's credit rating. But first, some breaking news out of Afghanistan. A NATO helicopter has crashed in Wardak province in eastern Afghanistan. Afghan President Hamid Karzai says 31 U.S. Special Forces troops are among the 38 killed in the incident. A recovery operation is underway. The Taliban has claimed responsibility for the attack. We will continue to follow the story and bring you the latest as it comes it.

Now to America's stark new financial reality. We are no longer the gold standard as it relates to the world's economy. Yesterday after the markets closed Standard and Poor's downgraded the nation's long-term sovereign credit rating from AAA to AA+. It is a first for the country and an embarrassment for President Obama.

Explaining the decision, S&P says the nation's growing debt coupled with last week's political bitterness over raising the debt ceiling gives them less faith in the nation's ability to repay its loans. It comes days after Congress cut the debt ceiling deal, shaving more than $2 trillion over the next decades. In essence, S&P thinks the deal fell short.

After Standard & Poor's notification of the credit downgrade, the Obama administration fired back, saying the S&P's own figures were off by $2 trillion. S&P acknowledged the discrepancy but says its decision to downgrade stays.

So what's next and where do we go from here? CNN's Felicia Taylor is live in New York with more. Felicia, lots of uncertainty and just the sense over this happening.

FELICIA TAYLOR, CNN CORRESPONDENT: Yes, this is a tremendous surprise, Natalie (ph). It is an unprecedented event. It's something we haven't seen since 1917 when the ratings agencies began to impose ratings on countries.

What this effectively means is that now the United States no longer has a AAA rating, but it is AA+. We are now below what is considered Britain, France, Canada, Germany in terms of their treasury investments. We rank below them, which is significant, because, obviously, we used to be the premier investment country of the world. That means the investments are riskier across the world. So that makes it a downfall for the United States.

Moving forward though, what do we have to worry about? We will look at whether or not Democrats and Republicans can come to the table and effectively govern. That is the problem the S&P has said they are not been able to do, especially when it comes to the debt ceiling. That is the issue up until now.

And Fitch is one of the other ratings agencies, and evidently they are still looking at whether or not the United States needs to be downgraded as well. They have us on negative outlook. And we have to wait and see.

FEYERICK: It's interesting, because the White House came back and said there is no economic reason to downgrade the United States. But at the same time, S&P said the plan showed the debt ceiling plan showed no sort of logical growth enhancement measures and that there no measures to create jobs. That was part of their thinking.

TAYLOR: That is exactly right. The problem with this whole debt ceiling deal is we don't exactly know where the cuts are going to come in the future, where that deficit reduction will happen. Where we will increase revenues and where we will get the jobs coming from. Those things are not spelled out.

And that is the problem when it comes to the ratings agency. They don't effectively see how this economy is actually going to begin to grow in the future. That is the problem. Democrats and Republicans haven't effectively come to the table to agree on anything. That deal was to meet a deadline. It did not effectively announce anything in the future as to how the economy will start to grow.

FEYERICK: Right. Felicia Taylor, thanks so much. The other thing they said is a AAA sovereign nation should separate budget issues from the debt approval process, again, something else in the thinking of the S&P.

Well, last weekend, with all of the wrangling over the debt ceiling and last-minute deal that was ultimately cut, it retrospect it may have hurt more than it helped. Here is S&P's managing director John Chambers on how America's politics played into the S&P's decision making and how the downgrade to have been avoided.

(BEGIN VIDEO CLIP)

JOHN CHAMBERS, MANAGING DIRECTOR, STANDARD AND POOR'S: I think they could have done a few things. I mean, the first thing they could have done is to have raised the debt ceiling in a timely manner so that much of this debate could have been avoided to begin with as it had done 60 or 70 times since 1960 without that much debate. So that's point number one.

And point number two is it could have come up with a fiscal plan, you know, similar, for example, to, you know, the Bowles-Simpson commission, which was bipartisan.

(END VIDEO CLIP)

FEYERICK: The Bowles-Simpson commission that Chambers talked about was the panel set up by president Obama to identify ways to reduce the national deficit. Now the super committee created by the debt deal in Congress will identify ways to bring down the deficit.

And CNN's Athena Jones is live in Washington with a little bit more on this. Athena, this rating change puts more pressure on Congress, on both sides to figure this out and to try to get jobs.

ATHENA JONES: Well, it absolutely does, Deb. This is an indictment of Congress. S&P is saying that let's look at the dysfunction that we is seen over the last several weeks and really months, no ability to agree to come together. It took until the last minute to come together on the debt deal.

If you look at the S&P statement on the decision throughout it is it sprinkled to reference to politics. There is pessimism over the parties being able to come together to reach real reductions in the future. It says that the whole issue of the debt ceiling and the threat of default have been used as political bargaining chips.

And really this deal that was struck last week kicks the can down the road. Now everything is going to be dependent for future reductions on the joint select committee. And so they left aside if there are tax revenues involved.

The S&P statement says the Republican party is against that. Without singling out either party, the S&P is calling on Congress to come together and do something convincing and show that they will be able to reach consensus without the political back and forth down the road, Deb.

FEYERICK: It is interesting. It is sending a message that there has to be some palpable leadership to show cohesion so that things getting done in Washington. I think even President Obama said they don't want a dysfunctional government. Has the president said anything this morning?

JONES: He hasn't said anything. He is at Camp David. We know he was briefed on the downgrade before he left for Camp David. But no more news out of this.

What's interesting is even in the pushback to this downgrade, certainly the treasury department noted that the S&P had made what they called this big $2 trillion mistake in accounting in figuring out the debt to GDP ratio. They said there was no economic reason behind the downgrade. There was a political reason

But the political reason isn't any less important or difficult to deal with. And so what is interesting is soon after the news came out, we got the slew of e-mails from Congress and presidential candidates. It looks like the same argument continues. You have Republican members of Congress saying this shows that there has been too much spending. We need a balanced budget amendment. You have Democrats saying we need a more balanced approach.

FEYERICK: Athena, thank you for joining us. Great information, there.

It has been six months of training for our Dr. Sanjay Gupta and his team of fit nation triathletes. He joins us live from the New York triathlon. That is coming up next. Stay with us.

(COMMERCIAL BREAK)

FEYERICK: The New York beat there. Training for the New York City triathlon is Dr. Sanjay Gupta and six fit nation challenge. Sanjay joins me from New York. Is the Fit Nation team ready to go?

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: I could tell you almost without a doubt, the answer is yes. They have been preparing for quite some time. It is like studying hard for a test and then feeling you are completely prepared. They visualize the race.

You can see behind me, Deb, that is where they start. They will jump into the Hudson River tomorrow right around this time. Maybe a bit earlier and swim a mile down the Hudson River. They will get out and bike for 26 miles. Get off the bikes and run a 10k, about six miles. They visualize the course. They have been training and doing the transitions from sport to sport.

FEYERICK: Were all of them serious athletes, or did some of them sort of start out slower, let's say couch potatoes, kind of?

GUPTA: None of them have ever done a triathlon. I think they would call classify themselves as a couch potato. That was the point. Our six pack, as we call them, represent America. They represent a cross section of people who think about this thing, have a triathlon on their bucket list, but never get around to it.

And then they make the commitment. They make the video and sent it in to join us, really made this commitment. None of them had done one before. We have several athletes who have come from different walks of life. Kendrick works in the health care profession. He weighed about 350 pounds at the beginning of this and has lost a significant amount of weight. His point is to get fit. He biked 30 miles last week and swam a mile.

We have Nina who is 58 years old. She said 58 is the new 28. I love that. And Dr. Scott, another member of our six pack, a pediatrician who is on the frontlines of the childhood obesity epidemic. He said I have to practice what I preach. He now weighs what he weighed in the mid-1980s. It is food and it is exercise as medicine for him. It's really remarkable.

That is incredible. We are all rooting for them here at CNN. We know they will do a great job. What do you have coming up for us at 7:30 on "Sanjay Gupta MD"?

GUPTA: You will meet all of them. We are also going to show you what it takes to be a triathlete. We will meet a man named Rajay (ph). He has competed in iron mans. He specifically has missing three limbs missing. It's really inspiring.

FEYERICK: Thanks, Sanjay. It is coming up quickly.

And it's another sweltering day in Texas, 35 straight days of record heat. Reynolds Wolf is watching that.

REYNOLDS WOLF, CNN METEOROLOGIST: It is unbelievable the heat they are dealing with in part of Texas. The way it looks right now, they don't have relief in sight. And there is a possible as we get to next weekend, they may tie or surpass a record.

Also, we might see a bit of relief in the southeast, too. More on that coming up. You are watching CNN Saturday morning.

(COMMERCIAL BREAK)

(WEATHER BREAK)

FEYERICK: Have you looked at your 401(k) statement lately? We can help. After this week's dramatic stock drop, we have some investing tips that could ease your fears.

(COMMERCIAL BREAK)

FEYERICK: We have been telling you about two major financial stories this week. The Dow dropping 512 points, and now the country's credit rating being downgraded. Joining me now is financial lifestyle coach Clyde Anderson. He will break down these stories.

First of all, let's start with the Standard & Poor's decision to downgrade the AAA to AA+. What does AAA mean?

CLYDE ANDERSON, FINANCIAL LIFESTYLE COACH: AAA means the best rating possible. If you have an 850 credit score, it is a great credit score. If you have downgraded credit, than you have challenged credit. It will be harder to borrow money and you will pay more for it.

FEYERICK: What does that mean for the average American?

ANDERSON: It could be higher rates on homes or cars. The interest rates could increase. Your investments may not be secure as far as the bonds or safe investments.

FEYERICK: And we are talking about home loans and college loans.

ANDERSON: And 401(k). If you invest in treasuries, it will be rocky.

FEYERICK: But everybody, it has destabilized everybody.

ANDERSON: Exactly.

FEYERICK: You have the folks who don't have jobs, the folks who do have jobs. That is becoming more difficult for everybody. It is the under current.

Talk about the Dow and investing. That fell 512 points. It rallied 80 points. What do people do with their money?

ANDERSON: I think people have to see what they are invested in right now. After all of the debt talk it would be shaky. We are expecting that. We are expecting that to come down a bit. It will eventually come back. The market is cyclical.

But what type of money are you playing with? Retirement savings and you need a certain amount of money? Don't react right away. Don't panic. Don't go on emotion and fear. You have to play it out and be calm about it. I know it's hard to do.

But know what you are investing in. Understand the risk and also diversify. Make sure you are not invested in all treasuries. Make sure the person you are dealing with is someone you can trust. There is no one right answer. Your risk may be different than my risk. We have to understand what we are in it for.

FEYERICK: I think you are right, as far as when it comes to just realizing there is no one right answer. We all want a right answer. We want to put our money in and make sure it grows and grows without risk. We have got to be realistic.

ANDERSON: No magic pill.

FEYERICK: All right Clyde Anderson, thank you so much.

Well, our own Dr. Sanjay Gupta is in New York. He is up early this morning getting ready for the New York City triathlon. We will head that way after a break.

(COMMERCIAL BREAK)

FEYERICK: Just because someone is in their 90s doesn't mean they lived a healthy life. A new study has found so called super agers actually tend not to have healthy habits. Researchers found that centenarians have a higher level of HDL. They have genes that protect them against cardio disease and Alzheimer's. Basically it is the luck of the draw. Just ask this 103-year-old.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Oh, boy, do I eat dessert.

FEYERICK: What is your favorite?

UNIDENTIFIED FEMALE: Chocolate. Chocolate cakes, cookies. Every day I eat cookies, every single day.

(END VIDEO CLIP)

FEYERICK: And researchers warn if you don't have those great genes you can't eat desserts every day or smoke and expect to live to 100. Now, if you don't want to count on the genes, there is always exercise. Up next on CNN, a special live edition of Sanjay Gupta MD. And Sanjay is in New York for the New York City triathlon. Sanjay, I just heard you have to get up at 3:30 in the morning for the triathlon. How do you have enough energy left for the race?

GUPTA: Part of it is you go to bed early, Deb. But there is so much adrenaline when you do something like this. There is so much cheering and music and energy. Deb, by the way, next year, about the same time, 3:30 in the morning, you could be out here with us as well. Come join us.

(LAUGHTER)

GUPTA: You don't have to commit right now on television.

FEYERICK: Think. Think. Think.

GUPTA: I'll call you later.

(LAUGHTER)

FEYERICK: OK, we are looking forward to it.

GUPTA: Thanks a lot, Deb.

FEYERICK: Absolutely, Sanjay.

GUPTA: I appreciate it, Deb. Stick around.