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Recession Fears Rock Stocks; Salmonella Outbreak in 26 States; Warren Jeffs Rests his Case

Aired August 04, 2011 - 14:00   ET

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

RANDI KAYE, CNN ANCHOR: For what it's worth, a new hour means we're that much closer to the closing bell on Wall Street. If you have an IRA or a 401(k) or a stock portfolio of any size, the day can't end soon enough, really.

Right now, take a look here with us. The Dow is down 329 points. And if we can't change it, at least we can try to understand what is going on.

Thus, we turn to my colleague Ali Velshi in New York. He's not just a mainstay of morning news, he's CNN's chief business correspondent as well.

Ali, you look very busy there.

Let us also say hello to Leigh Gallagher. She's the assistant managing editor of "Fortune" magazine.

Guys, just yesterday we snapped this eight-day blue chip losing streak. We thought maybe this was a good thing.

But, Ali, now this. Why is this happening?

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Well, we beat it just by a smidgen yesterday. The Dow and the S&P didn't close much higher.

We're down three percent on the S&P 500. That's going to reflect in your IRA and your 401(k). A little less than that on the Dow. So, actually, here's the irony.

You're looking at the market of the three major markets that we usually track, the Dow, the S&P and the Nasdaq. That's down the least. Here's what happened.

Two major central banks tried to intervene to help their economy. It started with Japan, where the government went in to buy the yen off the international market to try and prop up the currency, make the yen worth more. That has failed. The yen is actually now two percent lower than when it started.

And then in Europe, the Central Bank there decided that it is going to buy bonds back, put more money into the system. That had the effect of worrying investors, who now think that things are that serious, or that much more serious. So what basically is happening is investors around the world are doing the equivalent, as I told you last hour, of taking their money and putting it in their collective mattress. This money that's coming out of the stock market, typically you see it going into commodities, oil, gold, things like that. That's not happening today.

Oil is down, gold is down, stocks are down. So, basically, people are saying, not quite sure what's going on in the world. Just going to take my money and hold on to it.

KAYE: Well, let's take a look at the world, Ali and Leigh, both of you. Take a look here at this graphic. I want to show you what's happened in Europe.

In fact, Europe was slammed much worse than we were today. Take a look at the stocks. The highlights there, Madrid, London, Paris, Milan, Frankfurt, Geneva, all closed at least three percent lower for the day. A special mention goes out to Milan, which closed down five percent.

Leigh, are sell-offs contagious? Is that what we're seeing here?

LEIGH GALLAGHER, ASSISTANT MANAGING EDITOR, "FORTUNE": I think one thing we've learned this year is they absolutely are contagious. If we think back, way back to May of 2010, when the debt crisis in Europe first reared its head, that's exactly what happened. It sort of spooked global markets, and that's yet happening again.

As Ali pointed out, the ECB kind of intervened suddenly. This was unexpected, and so any time the market is sort of surprised by something, let alone what it perceives to be as emergency intervention, it's going to, you know, freak out a little bit, and that's what's happening.

We're already so jittery, I think that our problems here in the U.S. with the debt ceiling negotiation that really was pushed to the brink unnerved markets on a global level because of what it said about, you know, America's credit rating and our perception as the grounding force. So there's a lot of things happening.

KAYE: Yes.

Ali, Leigh just mentioned the debt ceiling there. We didn't default. I mean, why aren't investors happy about that?

VELSHI: You know, if you notice, the world markets weren't reacting to this whole debt debate until very close to when it looked like it could actually happen. In other words, most people were betting that the U.S. would pass this bill and increase the debt ceiling, and then sort of the Friday before we got this very bad reading on GDP, the growth in our economy.

And what's happened is, as we've remedied, as we dealt with the debt ceiling, we started to get economic reports that were saying that our economic situation here in the U.S. is a little uncertain. So we've gone from the Greek debt situation to the U.S. debt ceiling, now to this Italian issue.

We've just had no relief from some piece of bad news somewhere in the world. And basically, we're an intertwined world. So if somebody is not doing particularly, it's got investors worried.

I will remind you, by the way, China is doing particularly well. India is doing particularly well. And between the two of them, that's a big part of the world.

So this is not the whole picture. This is the stock market. It is alarming. It's not the end of the world.

KAYE: Is it a correction, Leigh? Is that what we're seeing here?

GALLAGHER: Well, we're headed in that direction. But it's really hard to predict what's going to happen.

I mean, we thought there was going to be a relief rally after -- as you made the point. We didn't default. And you would think there would be a collective sigh of relief. And so then we had this.

So, it's unclear. I mean, Ali makes some great points. This is not the story everywhere in the world. It's not even the story everywhere in the U.S.

If you look at what's happening in Silicon Valley and, you know, the tech boom that we're seeing out there, it's a completely different story. You know, Apple can't -- even China can't build enough stores that are big enough to satisfy all the consumers over there.

So we're really seeing a bifurcated picture. And I agree with what Ali said. The stock market is not nearly the whole story. It tends to be the most psychologically sensitive part of the story. So it's important not to get too caught up in this, even though we are headed towards correction.

KAYE: Sure.

But if investors are so uncertain and so worried, Ali, how do investors get back to that happy place, if you want to call it? How do we get there?

VELSHI: Well, somebody will be buying stocks today or the next day, and they'll find themselves in a happy place when this all comes back in the same way that after those big, big downturns at the end of 2008, in September and October, there were people who were buying it.

If there weren't any buyers, you'd just see a collapse in the market. You'd see 300 points and 500 points and more.

It definitely starts to worry you when you see these kinds of numbers, but the fact is there's a floor. Look at this.

We've been talking all afternoon, and we're still largely not worse than we were at some point. In fact, our low on the Dow was 11,523. We're at 11,539.

We're getting there, but somebody is buying stocks. Somebody thinks there's value in this today. That's why we know it's not as bad as it is.

But, yes, this is not something we like to see. We haven't seen it for a long time.

But, Randi, remember back a couple years ago, we were seeing numbers of this magnitude daily in both directions. This is volatility at its best. You need a steel stomach to be in this market.

KAYE: You sure do.

All right. Ali Velshi, Leigh Gallagher, appreciate both of you coming on chatting about that. Thank you.

GALLAGHER: Thanks, Randi.

KAYE: And we'll of course keep an eye on those numbers on the market there.

Well, yesterday we told you about the story of a homeless man allegedly beaten to death by cops in Fullerton, California. Kelly Thomas was heard begging, screaming, in fact, for his father. And Thomas' dad is making sure that you never forget his son. In about 10 minutes, Ron Thomas joins us to talk about his son's life, his death, and the investigation surrounding the case.

Coming up, the new defense secretary, Leon Panetta, will speak. We are taking his comments live, so don't go anywhere.

And 36 million pounds of ground turkey recalled. There is fear the meat may be contaminated with salmonella. That story after the break.

(COMMERCIAL BREAK)

KAYE: Troubling news about a product that could be in your refrigerator right now. Cargill Meats is recalling about 36 million pounds of ground turkey, making it the third largest recall in history.

There is fear the meat may be contaminated with salmonella bacteria. Outbreaks of the illness have so been found in 27 states, 78 people have fallen ill, and at least one person has died.

The Centers for Disease Control and Prevention estimates one American in six gets sick from food every year. That's 48 million people. An estimated 128,000 are hospitalized over something they ate, and 3,000 die.

Joining me now from Seattle is attorney Bill Marler. Bill has been litigating foodborne illness cases since 1993.

Bill, thanks for coming on the show.

I want to ask you first, who do you think is to blame for this salmonella outbreak in the ground turkey?

BILL MARLER, ATTORNEY: Well, I think there is blame to go around a lot. And one is, clearly, Cargill had a systemic problem in its plant that dates back to early March to the present. That's why they're recalling 36 million pounds.

But also, you know, a bunch of blame really lies on Food Safety Inspection Service, part of the USDA. They have an inspector in that plant and, in fact, government policy allows for salmonella to be in ground turkey.

E. coli is against the law to be in a ground product, but the government frankly allows salmonella to get into the marketplace. And that's one of the things that really needs to change.

KAYE: Wait. I want to make sure I heard you correctly. You're saying that the government allows salmonella to be in ground turkey. Why?

MARLER: Well, it's been sort of an agreement with industry for 50 years. The only bacteria in meat that is against the law to be there is hamburger. If hamburger is found -- if E. coli is found in a hamburger product or a ground turkey product, it cannot be shipped.

But Cargill frankly did nothing wrong if E. coli -- excuse me -- if salmonella was in that ground turkey. They can ship it. The only time they need to recall it is if it poisons and kills people. And that's government policy. It's a strange quirk in USDA, FSIS rules.

KAYE: How well trained are these inspectors that are looking at these plants and working to supposedly keep us safe?

MARLER: You know, FSIS has an amazing cadre of great inspectors. The problem is, is that these bugs, salmonella, E. coli, campylobacter, they're not something you can see, taste or smell. You really have to test for it and you have to have zero tolerance for it.

You know, it really should be that pathogenic bacteria, similar to the E. coli 0104 that was found in Europe that killed 50 people and sickened 4,000, those bugs should simply be against the law to be in our food product. And a quirk is that those sorts of bugs are allowed in our meat supply, but on the other side of the government, at the FDA side, if the same bug was found in spinach or lettuce, it would be pulled from the market, whether people got sick or not.

KAYE: So the rules aren't as tight at the USDA, you're saying?

MARLER: Correct.

KAYE: So what is the answer? We just have about 30 seconds left, but what is the answer? How can we prevent 50 million people from getting sick? MARLER: Well, I think, you know, consumers need to do a better job of making sure they wash their hands and cook their products and wash their products thoroughly. I mean, in many respects, they are the last line of defense, and I'm talking restaurants, as well as moms and dads.

But industry needs to do a better job and government needs to do a better job of oversight and setting the bar. We need so say zero tolerance for pathogenic bacteria that can kill our kids, and that's what industry needs to step up to do.

KAYE: All right. Appreciate your time, Bill Marler. Certainly some very interesting insight there. Good information.

Thank you very much.

And we'll be right back. But when we do get back, we're going to bring you a live report from Texas. Our Gary Tuchman is standing by. He's been covering the Warren Jeffs trial for us there.

Well, Warren Jeffs has rested his case. He's been representing himself. We will hear today's highlights from Gary Tuchman in just a moment.

We'll be right back.

(COMMERCIAL BREAK)

KAYE: Jurors in the Warren Jeffs sexual assault trial are beginning to deliberate. Polygamous sect leader Warren Jeffs rested his case this morning just a day after prosecutors played an audiotape of him allegedly having sex with a 12-year-old girl.

We want to go straight to San Angelo, Texas, where Gary Tuchman just stepped out of court. He has the very latest for us.

Gary, Jeffs just began his defense yesterday, rested his case this morning. What exactly was his defense since it was so brief?

GARY TUCHMAN, CNN NATIONAL CORRESPONDENT: Well, first of all, Randi, I would say this was the single strangest day I've ever spent in a courtroom in my career. Warren Jeffs' defense is that this is a violation of religious principles. He's not saying anything about the sex, he's not denying it, but he says his religion is being tampered with.

He called one witness to the stand yesterday. The witness continued today. It was a fellow member of his church, and they each talked about the Book of Mormon and their religion together, and it sounded like a Sunday school class.

Then he rested. Then it was time for closing arguments, and that was the weirdest part of this trial, what just happened.

The prosecution gave 22 minutes of closing arguments, said this is not a case against religion, it's a case against Warren Jeffs. And then Warren Jeffs was asked to give his closing argument, Randi, and he stood up and he didn't talk. And five minutes went by and he didn't talk.

He just bowed his head. He was silent. Everyone in the courtroom -- there are 200 people in there -- totally quiet. You can hear a pin drop, as they say in that proverbial saying.

Ten minutes went by, 15 minutes went by, 20 minutes went by. He had a 30-minute time limit.

At the 24 minute mark of complete silence in that courtroom, Warren Jeffs uttered his only four words of his closing argument, and he said, "I am at peace." He then turned around at glared at the prosecutors, he appeared to glare at the jurors.

He then sat down. His closing arguments came to an end, and the jury went out 30 minutes ago to begin its deliberations.

KAYE: That does sound like one of the strangest days in a courtroom, Gary.

How did the jury react? I mean, I know they left pretty quickly there, but was there any reaction on their faces?

THOMAS: Some of those jurors looked freaked. This has been a very strange trial.

Warren Jeffs has talked at times, at other times he hasn't talked. He pauses a lot. He stops for two minutes of talking at times.

His followers would say he stops talking because he's listening to what God has to say to him. They say he's a prophet, the closest man on Earth to God.

So, I think the jury, when they're done, they're going to say this is one of the weirdest experiences of their lives, too. But they looked freaked when he started staring at them after being quiet and not saying a word for 24 minutes, just standing there in a complete quiet courtroom.

KAYE: Wow. Gary, certainly a front row seat to a strange day in history.

Gary Tuchman there in San Angelo, Texas.

Gary, as always, thank you.

Strangers recorded his son screaming for him over and over again as police officers allegedly beat him to death. He says his son's last moments haunt him now. In just three minutes, we'll talk to Kelly Thomas' dad about his son's life and his senseless death.

(COMMERCIAL BREAK)

KAYE: You may not know who Kelly Thomas is, but after this story you won't be able to forget him.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: If I don't wake up tomorrow morning and hear on the news that you've resigned, whoa, man. I'm not going to be a happy citizen. I am not going to be a happy citizen.

(END VIDEO CLIP)

KAYE: His brutal death and the response that followed continues to ignite outrage, protest and debate in California. You're seeing some of it there.

What you're looking at is the latest city council meeting. The anger and rage from the community is palpable.

The FBI and Orange County District Attorney's Office are now investigating. The chief of staff at the D.A.'s office told us yesterday they're in the process of interviewing 100 witnesses.

So, it brings us back to our question. Who is Kelly Thomas?

By most accounts, Thomas was a known figure on the streets of Fullerton, California. He was homeless. He was also schizophrenic. He's also a son and a brother.

On July 5th, Fullerton police responded to reports of a man trying to break into cars near a bus station. Now, before I go any further, I have to warn you, the picture I'm about to show you is very graphic.

Witnesses say what began with a search of Thomas' backpack ended with this. Take a look here with me.

That's Kelly Thomas before he was allegedly beaten and tased by six Fullerton police officers, and that other picture there, that's what he looked like after it, bloodied and bruised. And as you can see, barely recognizable.

Thomas fell into a coma and died from those injuries five days later. Crowds of strangers saw what happened, recording what they could with their phones and with surveillance cameras nearby.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Then cops are kicking this poor guy over there. All these cops.

UNIDENTIFIED MALE: We were all yelling at them, "Leave him alone. Stop hitting him! He's not resisting!"

UNIDENTIFIED MALE: Then all the cops came and they hog-tied him. And he was like, "Please God. Please, dad."

(END VIDEO CLIP) KAYE: You may not have been able to make that out there at the very end, but Kelly Thomas was screaming for his dad, a former Orange County sheriff's deputy.

Ron Thomas joins me now live from Orange, California.

First, Ron, let me just say how sorry we are here for the loss of your son. It is just unimaginable what has happened here.

You just heard the recording of your son screaming for you, screaming for dad. What runs through your mind as you hear that?

RON THOMAS, KELLY THOMAS' FATHER: Quite honestly, I turned the volume down. I couldn't listen to it again.

It's horrifying, of course. It cuts right through me. I hear it all day. I hear it all night. I probably will the rest of my life.

KAYE: Ron, we did reach out to the Fullerton Police Department for this story, and after initially agreeing to do an interview with us yesterday, they then cancelled. Instead, they gave us this brief statement. I'd like to read some of it here from Police Chief Michael Sellers, who says, "This is tragic for our community. We're in the midst of an investigation."

Ron, hundreds of people protested, as I'm sure you're aware, outside the Fullerton Police Department over the weekend. Hundreds more packed into City Hall. One officer was put on leave days after your son's beating, but the other five were just placed on administrative leave on Tuesday.

Is that enough for you? And if not, what will be enough for you?

THOMAS: Well, what has happened is I had a one-on-one meeting with the chief, Mike Sellers, and one of the captains, Kevin Hamilton. I requested it. They granted it, a private closed-door meeting.

I pointed out some things that I thought were very relevant, things that were on my mind to them, questions they couldn't answer because of the investigation. I knew that going in there, but whether they would say it or not, an hour after I did that, all of these officers were taken off of duty and put on administrative paid leave.

KAYE: These aren't officers, as you say. You've actually described them as rogue cops.

What do you mean by that?

THOMAS: Well, that's exactly right. When I use the term "police officer," I mean it with respect.

These were a band of gang members, literally, rogue cops. And I mean that to point out that the good men and women of the Fullerton Police Department, as a whole, they are great officers. This is a band of rogue cops that were thinking they were above the law, took it into their own hands under color of authority, and brutally beat my son to death.

KAYE: How did you learn about what happened to your son?

THOMAS: I had a call about 3:30 in the morning from my daughter. Her mother had just called her, and obviously it was a very frantic phone call. And I went immediately to the hospital.

KAYE: You're a man of the law yourself. When you look at what these officers allegedly did, tell me how you feel knowing that you've been on the street yourself.

THOMAS: Yes. I felt totally betrayed, even though I didn't know these thugs, these murderers. I didn't know them, but I felt totally betrayed that this was from law enforcement.

I still have several law enforcement friends, personal close friends. At the protest in front of the police station just last Saturday, several active officers were there, in their street clothes, and let me know who they were, where they were from, and actually held up signs protesting. But, of course, I didn't tell the media or anybody else those are cops. I didn't want to do that for them.

But this is a great show of solidarity. And as a mass, law enforcement knows that this was just so wrong.

KAYE: You know, we talk quite a bit here about your son's death, but I'm interested in his life. How did he end up on the street?

THOMAS: I'm glad you asked that. Kelly was just a normal kid. He was a great kid all through school.

Everybody loved him. Even until the day he died, everybody just loved him. That kind of person.

It wasn't until he was in his early 20s that he started showing peculiar behaviors, hygiene slipping, wanted to sleep on the floor instead of in his bed. Just unusual behaviors.

And finally he was arrested. I'm not sure anymore what it was for, maybe vagrancy or one of the charges some law enforcement agencies feel are needed.

But I got him psychiatric evaluation out of that. I asked the judge to get him into the county program, and he granted it, and only at that time did we learn about schizophrenia and that Kelly had it.

KAYE: And was he getting treatment?

THOMAS: He was getting treatment. Once on the medications he was fine. It made him tired. He didn't like that part of it, but he was fine.

He even held a couple different jobs. He joined the California Department of Forestry, the CDF, for a short period. And it was a short period because he went off his medications. And then the behaviors started coming back and they let him go. He was in and out of board and cares (ph) where they monitor medications, fed him, of course. He had his own room, a very structured program. And he was fine.

The vicious cycle of schizophrenia is though, when they are on the medication they don't see a reason. Kelly would always tell me, "Dad, I feel fine. I don't need the medication." And I could never convince him that it was, look, you're OK because of the medication. He would go off of them, he would wander, and it would start all over again.

KAYE: From what I understand, you have not brought a claim against the city in your son's case. But yet the city or at least an attorney for the city did try to settle with you. Can you tell us what happened there?

THOMAS: Yes. I haven't -- I haven't filed yet. I'm certainly going to. I've been extremely vocal as a voice for my son, and I didn't want interference from attorneys saying "I don't want you saying that. We'll speak for you."

The people have been extremely vocal for Kelly, but it's time now that I seek legal assistance on this. I do need an attorney for this, an I've been talking to some.

The settlement came from an attorney representing the city. The city is now denying it. I do have the printed document of the entire offer. $900,000 to just walk away from it. Of course, that's irrevocable. Once you sign it, the city is off completely. No more liability.

I found it a huge insult. Didn't accept it. Don't want it, so we're proceeding.

KAYE: Have you had a chance to speak with the mayor, and if so, what was that conversation like?

THOMAS: I spoke with the mayor twice. I've been to two city council meetings. The first one I introduced myself, spoke with him. He's a man of very few words and quite honestly babbles a lot, and I'm not trying to be funny here. He doesn't hold good composure, should never be a mayor. That's my opinion.

This last city council meeting, he was the same way. Couldn't put his words together, hinging on insulting, degrading, not good at all. And I've got to tell you, two members of the city council at Fullerton have come forward. They called Kelly's mom and I, very compassionate, very caring. One of them, Bruce Whitaker and his wife Linda, actually came to my son's service. I don't know this man from anybody. That's how compassionate they are, very caring.

But the other city council members haven't said a word. The mayor, and I called him out on this at the last meeting -- and he hasn't called. He hasn't cared to call. I think he should get out there and call a press conference, him and the chief of police and try to calm fears in the city. They haven't done a thing to calm the people about this or to show their condolences to the family.

KAYE: Well, we would certainly like to have the mayor come on and tell us what he feels about this. But Ron, I have to ask you. You certainly want to be a voice for your son. You have made this your mission now.

But what about you? How do you and your wife get through this?

THOMAS: Well, honestly, Kelly's mom and I divorced in '82, but I understand your question and that's OK.

It's so tough, so, so tough. I haven't had the time to grieve as of yet. And it's coming, believe me. There are moments when I'm just right on the edge of losing it and crying and all that kind of stuff, but I need to stay strong. I'm in a fight here for my son, and that's what keeps me going.

KAYE: Is this what he would have wanted you to be doing?

THOMAS: You heard him cry. You heard him crying for me to save him.

KAYE: Yes.

THOMAS: Yes. And -- and the toll you ask -- I've lost 15 pounds in the last 30 days. It's taken a heavy toll on me, but I can't stop. I've got to seek justice. We need to prevail.

And on the civil side of it, the monies are going into a foundation I've started in Kelly's name to help out all the organizations that support the homeless, feed them, clothe them. These donations will be given in his name, and I feel very strongly about that.

Am I after a lot of money? Yes, I am. I want the city to pay for what's happened. Do I want the money? No. It's going to the foundation. That's what I need to do with this.

KAYE: I know that it will take possibly forever for you to wipe your son's last words from your memory and certainly that horrific picture of him in the hospital room. But we wish you luck, Ron, getting through this. And we certainly appreciate you coming on and talking about it. I can't imagine how difficult it is for you right now, so please take care of yourself.

THOMAS: Thank you so much.

KAYE: Thank you. And we'll be right back.

(COMMERCIAL BREAK)

KAYE: Before "Jaws" was scaring us in the water or predators and aliens were fighting it out in space, Alfred Hitchcock made us jump and scream in black and white. He has us watch neighbors commit murders through windows and gave a new meaning to psycho. You see here a clip from the classic universal studios film "Birds." That was pretty frightening, and behind the scenes, the film legend also changed the way cinema was created.

This week, Alfred Hitchcock presents us a new film, a lost melodrama from 1924 called "The White Shadow." It was discovered by researchers who were combing through a New Zealand film vault, of all places.

And joining me now is Frank Stark, chief executive of the New Zealand Film Archive who found the film. And David Starrett, a Hitchcock expert and chairman of the National Society of Film Critics.

Frank, tell us more about the film and how it was discovered.

FRANK STARK, CHIEF EXECUTIVE, NEW ZEALAND FILM ARCHIVE (on the phone): Well, the film - (INAUDIBLE) not all the film. It's only got three reels of probably six original lengths of the film. The first three reels. So we get the set up for the story and, unfortunately, it's a bit of a cliffhanger, we don't know quite where it goes after that.

The film was probably shipped to New Zealand about 1924, the year it was made and would have been exhibited here. And then when it got to the end of its commercial life, probably the instruction was to destroy it. It wasn't worth shipping all the way back to Britain where it came from. But rather than destroy, it probably a projectionist, mayor a distributor, worker, I don't know -- thought it too good a film to throw away. And so he or she smuggled it out the back door, took it home and for the next 80 years or so it just got passed around between collectors. Not quite sure who had it and what they did with it.

But in the 1980s one of the major collectors in the New Zealand, he died and his grandson decided that (INAUDIBLE) all of his films was to put them into the New Zealand Film Archive. And we've looked after them ever since.

We knew that there was interesting films in this big case of American and British nitrate film, but it wasn't a priority for us to be honest to actually do the research. We just looked after it, make sure it was safe. And from time to time were entertained the living scholars and researchers, film buffs. And they can look through that collection there and see what they can find. Last year, we searched this ground a lot (INAUDIBLE) and here it's Alfred's turn.

KAYE: Let me bring David in here. David, why do you think the discovery of this film is so important?

DAVID STARRETT, CHAIRMAN, NATIONAL SOCIETY OF FILM CRITICS: Well, first of all, anything relating to Alfred Hitchcock is enormously important -

KAYE: I agree with you there!

STARRETT: -- and understanding his career - yes, well, especially his evolution as an artist. And what we have here, I mean, commercially, this is not an important find. This is not going to be a movie you'll get from Netflix next month or something. But in terms of film history and in terms of film criticism, it's sort of a missing link. Because it allows us to see a production that Alfred Hitchcock was not a director of, but that he was all over. Writing the scenario, designing the production. Working alongside the director and then editing the film once it was shot. Doing all these things.

And so, we get to see as a very young man was starting to put together ideas of how he wanted to use the art of film, put together these ideas in his head, and then start to learn how to realize them on film. So, it's just enormously important in tracing his evolution as an artist really, reallyearly on.

KAYE: Well, it is an amazing discovery. I know certainly Hitchcock fans are excited about that. I know folks will get to see it very shortly. David Starrett, Frank Starks, certainly appreciate your time. Thank you.

The nation's new defense secretary is about to hold his first press conference. Leon Panetta took the top spot at the Pentagon last month after leaving the CIA. CNN Pentagon correspondent Barbara Starr joining us live now from the Pentagon.

Barbara, I'm sure with all the talk of debt in the budget, defense spending will certainly be among his topics.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: We expect the press conference to start any minute now, Randi. And you can see the room behind me is full.

You bet. You know, with the Dow falling more than 300 today points alone, I think you can expect the economy, the deficit, debt reduction, the whole crisis on Capitol Hill to be front and the center. We expect Secretary Panetta. We're just looking to see if he's coming in now to be asked by all the reporters in this room what his plan is for defense cuts.

Pentagon officials, administration officials are already talking about the possibility that they would really rather see Congress go after entitlements and tax cuts rather than take a bigger budget knife to the Pentagon budget. A lot of talk that there would be layoffs from the military, forced separations by the troops and even cuts to health care benefits for the troops that have been serving, of course, so long for the past teen years.

We expect the secretary in the room in just about two minutes. He will get the usual questions, al Qaeda, Afghanistan, Pakistan, Yemen. But really, on a day like today, when the Dow is really the leading indicator of the concern in the country about what's been happening in Washington, I think we can count on the fact he will get asked a lot about spending. Randi?

KAYE: I'm sure. And he's certainly not one to mince words, is he? STARR: No. This is a secretary that I think the most we can say right now is known for his salty talk. That's what they call it around here, and we'll see just how salty it gets when he enters the room and sits down with the chairman of the joint chiefs of staff, Admiral Mike Mullen, who will be retiring in a few weeks.

And they talk about this. Admiral Mullen was just in Afghanistan. Admiral Mullen wanted to talk about the war. The troops wanted to talk about whether or not they would get paid when this was all going on just a few days ago. It's an indicator, Randi, of the massive concern in the U.S. military right now about where all of this is heading and what cuts they will be facing here. They pretty much have had unfettered spending for the last 10 years. They know that's not going to continue.

But the troops do want to know that they will get paid and their families are going to be looked after, and that's what they are going to want to hear from the new secretary of defense, Randi.

KAYE: And do you think he's been in the president's ear on this one?

STARR: Oh, I think there's been a lot of talk about all of that. But you know, now it will shift back to Capitol Hill. Lobbying by the Pentagon.

He's coming into the room now, so we'll sit down and hear what he has to say.

(BEGIN LIVE COVERAGE)

LEON PANETTA, SECRETARY OF DEFENSE: Good afternoon.

This is my first press briefing here at the Pentagon as secretary of defense, and let me begin by saying how important I think these briefings are and regular engagement with all of you, and I intend to continue this on a regular basis, as did my predecessor, Bob Gates.

As you know, I've just completed my first month as secretary. During that time I've had a chance to travel to the war zones to meet with the troops and the commanders there. I've had a chance to consult with a number of the ministers of defense and hosted four of my counterparts here at the Pentagon.

I've also begun visiting some of the key commands out there. I've visited NORTHCOM, last Friday, and I'll be traveling to STRATCOM tomorrow, and then to SOCOM on Monday. And I'll continue to do that on a regular basis.

I've also had the privilege of visiting Walter Reed and meeting with our wounded warriors.

And finally, I've established, I think, a regular dialogue with congressional leaders up on the Hill and have built a very close working relationship with the service chiefs and the service secretaries and meet with them on a weekly basis.

I've been truly impressed with the expertise and the professionalism of the department's senior leaders, and I'm proud that we're going to build on this terrific team in the weeks ahead. We just announced yesterday, the president announced that he will nominate Ash Carter to be my next deputy secretary of defense.

And the Senate confirmed General Marty Dempsey and Admiral Sandy Winnefeld to be the next chairman and vice chairman of the Joint Chiefs, along with some other posts that were approved.

And I'm very pleased that the Senate was able to rapidly approve those nominations.

I've had the honor of administering the oath of office to Admiral Winnefeld this morning in my office.

These fine leaders give me a sense of confidence that we will continue to have a great team as we confront a lot of the challenges that will face this department and the nation, as we lead our efforts to try to meet both our fiscal and our national security responsibilities.

That brings me to the debt ceiling agreement that was enacted this week and its impact on our national defense.

As I said in the message to DOD personnel that I issued yesterday, the reductions in the defense budget that were enacted as part of the debt ceiling agreement are largely in line with the civilian and military leaders of this department, what we were anticipating and preparing to implement.

Make no mistake about it, we will face some very tough challenges here, as we try to meet those numbers, but those numbers are within the ballpark that we were discussing with both the president as well as with OMB.

And we have the opportunity to make those decisions based on sound and balanced strategy and policy and within -- with the best advice that we can get from our service chiefs and from the service secretaries on how to proceed to build a strong defense, not only now but in the future.

Thankfully, so far this is a very different process than has so often been used in the past when there have been defense drawdowns, where defense cuts were applied across the board and the force, as a result, was hollowed out.

It was left undersized; it was underfunded relative to the missions and responsibilities that this country must fulfill.

And that approach would be particularly harmful, because we are a nation at war. We face a broad and growing range of security threats and challenges that our military must be prepared to confront, from terrorist networks to rogue nations that are making efforts to obtain a nuclear capability to dealing with rising powers that always look at us to determine whether or not we will in fact maintain a strong defense here and throughout the world.

It is that multitude of security challenges that makes me particularly concerned about the sequester mechanism that was contained in the debt ceiling agreement.

This mechanism, this kind of doomsday mechanism that was built into the agreement is designed so that it would only take effect if Congress fails to enact further measures to reduce the deficit.

But if it happened -- and, God willing, that would not be the case -- but if it did happen, it would result in a further round of very dangerous cuts across the board, defense cuts that I believe would do real damage to our security, our troops and their families, and our military's ability to protect the nation.

It is an outcome that would be completely unacceptable to me as secretary of defense, to the president, and, I believe, to our nation's leaders.

Most importantly, it would be unacceptable to the American people. The American people expect that our military will provide for their security.

Rather, they expect that we will always protect our core national security interests, while meeting reasonable savings targets.

As I've said before, we do not have to choose between fiscal discipline and national security. I recognize the resource limitations we face as a result of the size of the deficits that confront this country. But I also recognize that the Department of Defense has responsibility to do its part in dealing with that, and we will do so.

But we always have to remember those who are doing their part for the defense of this nation -- our men and women in uniform and their families. Throughout this process, I will be working closely with the leaders of this department, including the service chiefs, to ensure that we do not break faith with our troops and with their families.

We have a volunteer force that is the heart and soul of our military strength and we have to do everything possible to protect that volunteer force. I have no higher responsibility as secretary of defense but to do everything I can to protect and support them. Every decision I make will be made with them in mind. They put their lives on the line, too many have made the ultimate sacrifice on behalf of this country. We owe it to them to do this right and to do this responsibly.

Mike?

ADMIRAL MIKE MULLEN, (USN), CHAIRMAN, JOINT CHIEFS OF STAFF: Thank you, Mr. Secretary.

I would only add that the chiefs and I fully agree with you. We have no issue with the military budgets being held to account in these challenging times or with the need to make tough program decisions moving forward. Indeed, we had long ago braced ourselves for a decrease in defense spending and have worked hard to ease some of that pressure by finding efficiencies where we can.

We are gratified an agreement was struck to raise the debt ceiling, and we believe the terms of that deal are, at least in the near term, reasonable and fair with respect to future cuts.

The cuts required by this agreement over the next 10 years are certainly in keeping with the president's previous budgetary direction, and we are already hard at work inside the comprehensive review process to find the requisite savings.

But we also, to a one, share your concerns about the devastating impact of further automatic cuts should the Congress fail to enact additional deficit reduction measures.

The Defense Department may represent 50 percent of the discretionary budget in this country, but there is nothing discretionary about the things we do every day for our fellow citizens. From the two wars we are fighting, in Iraq and Afghanistan, to the support we provide our NATO allies in Libya, from disaster relief missions like those in Haiti and Japan, to the training and exercises and joint combined operations we conduct around the world, the U.S. military remains a linchpin to defending our national interests.

To loosen that pin unnecessarily through debilitating and capricious cuts nearly double to those already in the offing puts at grave risk not only our ability to accomplish the missions we've been assigned, but those we have yet to be assigned as well.

I just returned, as many of you know, from a trip to Afghanistan and Iraq, and I was struck by the degree to which the debt and the state of the economy preoccupied our troops.

You probably saw the media coverage. There was hardly an engagement, large or small, that I conducted in which this issue was not raised. On the one hand, I found it encouraging that the troops were informed and interested. On the other hand, I found it lamentable that they needed to be.

Our men and women down range have enough to worry about just getting the job done. They shouldn't also be concerned about whether or not they will be paid to do that job, or whether or not their families will continue to get the support they need during long absences.

We can do better than that as a military and as a nation.

As I have said many times, our growing debt remains the single biggest threat to our national security. The military exists to eliminate or mitigate security threats. So we will do our part in this regard.

But we cannot allow that effort to go so far and cut so deep that it jeopardizes our ability to deal with the other very real and very serious threats we face around the world.

And we cannot allow it to break the all-volunteer force upon which whose backs we place the burden of national defense.

A balanced approach is what the chiefs and I seek and sensible cuts are what we expect. We look forward to working with you, Mr. Secretary, as you lead the effort to make these difficult, critical decisions.

Thank you.

PANETTA: Yeah?

QUESTION: Mr. Secretary, as you start now to look across a defense budget that's doubled over the past 10 years, where would you see the best opportunities for savings among big programs, among health care and all those other benefits?

And, Mr. Chairman, do you think that these cuts as they sort of progress will affect the pace and the drawdown in Afghanistan as well as the number of troops and equipment and other resources that the U.S. can leave in Iraq for beyond the end of the year?

PANETTA: With regards to the first part of your question, we have, and it's ongoing, a comprehensive review to look at all areas of the -- of the defense budget. And the service chiefs are looking at all of those areas and will ultimately make their recommendations as part of this comprehensive review, which -- which I look -- which my goal is to be able to use that comprehensive review to inform the decisions and strategies that we have to make.

So that's going to be key to what decisions we make and what areas we look to for savings.

MULLEN: From the standpoint of the true presence, if you will, in Iraq and Afghanistan, and actually in other places around the world, I don't think there's a decision now that isn't going to take costs into consideration. We have to do that.

You said, Alita (ph), that our budget has -- has doubled. A significant part of that, and rightfully so as far as I'm concerned, has been the investment in our people and our families over the course of the last 10 years because of what -- who they are and what we've asked them to do in fighting these two wars and the stress that they're under.

I would argue with this strategic comprehensive umbrella that the secretary described that a balanced approach looking at obviously our operational costs, looking at the investment in our people, as well as in programs. And where the service chiefs are is -- is recommending very strongly that we look at all these, and given the strategic approach, adjust accordingly.

All of that said, I have no expectation with -- from what I've seen, Secretary Panetta, certainly the president, that we will send people in harm's way without the support they need and the resources necessarily to fund that support and I expect that will continue whatever the outcome is in Iraq or Afghanistan or somewhere else.

QUESTION: (INAUDIBLE) the comprehensive review isn't complete yet -

(END LIVE COVERAGE)