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Flooding in North Carolina; Jobs Report Released; Financial Troubles Circling the Globe; Sentencing Phase Beginning in Jeffs Trial; Stocks Up on Better than Expected Jobs Report; Flash Flood Hits Charlotte, North Carolina; Former Senator Alan Simpson Interviewed; Former Treasury Undersecretary Jay Powell Interviewed

Aired August 05, 2011 - 15:00   ET

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

BROOKE BALDWIN, CNN ANCHOR: Hey, Randi. Thank you very much.

And hello to all of you.

We want to begin here with some breaking news we are just now getting into CNN. If you live in North Carolina, if you're anywhere in the neck of the woods of Charlotte, take a look at these pictures that we are getting in.

We're talking flash flooding. In fact, we're hearing now that two different neighborhoods are being evacuated because of this massive flash flooding near Charlotte.

Let me just look down and get some of my note.

And Chad Myers I see hustling over here to help me out.

Here's what we know. Charlotte Fire Department spokesperson says the city has received three inches rain or more in some places. And in terms the rescues that are going on right now, they say 16 rescues so far is what the city has had to perform. People just simply trapped in their vehicles, and you see why, taking a look at this building, this parking lot, many of the vehicles completely submerged. The city right now is under flash flood watch for the next hour.

Chad Myers, when I read three inches, three inches rain and how long?

CHAD MYERS, CNN METEOROLOGIST: Well, it's been raining now for about four hours.

BALDWIN: Four hours.

MYERS: But it didn't stop. It rained hard. The rain came up from the south. It started, and it was basically just south of Charlotte. It stopped at Charlotte for no reason. The rain shower just stopped. Then it turned to the east and it's those three hours worth of rain. I do have areas now that have more than three inches.

BALDWIN: More than three inches.

MYERS: yes. BALDWIN: This is some video that is just coming into to us from our affiliate WCNC. I know that's an affiliate out of Charlotte. You can see how just quickly the water is rushing by because of some of the rain. And we will just continue to watch this, you and I both sort of on the fly here, but you can see, you know, in some places, clearly on the right-hand side of the screen, it's much deeper than on the left. What is your read?

MYERS: Well, even I-85 for a while was closed. There was no way to get through because the water was just so high. When the water is up to about the middle of your hubcap, literally the entire car can begin to float. You don't think so because you say, oh, my car is so heavy, there's no way water can pick it up.

But water weighs so much as well that your car can float, and so some of these rescues have been people that were just stuck in cars. Those cars aren't going to run today. That is just not going to go anywhere right there. And the water as it runs over the roadway also has some force. That force can push you off the road as well.

BALDWIN: I'm being told -- guys, let's go back to the live picture from SOC, and that's how we can see the building and all of the cars, many of which are partially submerged.

I have Charlotte Fire Department Captain Rob Brisley on the phone.

Captain, talk to me about what you are seeing and what kind of rescues you all are partaking in right now.

CAPT. ROBERT BRISLEY, CHARLOTTE FIRE DEPARTMENT (via telephone): Well, we are about two hours into the storm and the biggest concern has been some of the many motorists that are trapped in their vehicles and glad to report no serious injuries, but with a weather system like this that slows down, the storm drains get backed up and it's unfortunate that drivers make that poor decision and find themselves in harm's way, but glad to report no serious injuries so far.

BALDWIN: That is wonderful news. No serious injuries. But if you can explain to me, Captain, when you say rescues with regard to motorists, what are you seeing?

BRISLEY: Well, it is common where a storm drain or an intersection gets backed up and the driver needs help getting out of their flooded cars and Charlotte firefighters, all of our companies have their own personal flotation device, the ropes, the tools necessary to safely get people out of harm's way.

This is kind of typical for a metropolitan city like ours that when a rain or a storm system stalls like this, many of these roads become impassable. And we can't emphasize how important it is during severe weather. If the road's flooded, turn around, don't drown, take a different route to your destination.

BALDWIN: Are you looking -- stand by for me, Captain. We're looking at those picture. I wasn't quite sure if that was a road or some sort of --

MYERS: There is a road under that, but there's a river over the road.

(CROSSTALK)

MYERS: Hey, Captain. It is Chad Myers.

(CROSSTALK)

BRISLEY: That's of great concern because sometimes you just know the integrity or how safe that road is.

BALDWIN: You don't know how deep the water is.

(CROSSTALK)

BRISLEY: -- people to exercise caution.

MYERS: You would think that that road is still there, but if that water has eroded the roadway, all of a sudden you're not driving into six inches of water, you are driving yourself into a canyon.

Captain, have you had any swift-water rescues?

BRISLEY: No. So far, the creeks themselves, some have flooded the banks and we safely evacuated just a few homes using our rescue boats. But we're glad to report that nobody's been in really treacherous situations and we just want people to exercise caution, stay alert, stay safe. It can really make a difference when a storm like this hits a city.

BALDWIN: One more question for you, Captain. I'm also getting information here that at least two neighborhoods are being evacuated after massive flash flooding. What do you know about that?

BRISLEY: Yes. That is an area just north and west of Charlotte downtown area, just a couple of homes where the creek nearby was rising very quickly.

But thanks to our alert system and our notification, we were able to get a few of these people out of their homes ahead of dangerous conditions with using our boats and using our firefighters and their equipment.

BALDWIN: It's fantastic. That is excellent news.

Captain Rob Brisley, I thank you for calling in. Keep us posted. I know our Southeast desk is going to work the phones as well.

Chad Myers, keep us posted as well.

MYERS: The rain stopped, but that doesn't mean --

(CROSSTALK)

BALDWIN: Yes. It doesn't look like it is raining in that live picture.

MYERS: Correct. But that doesn't mean the water is still not going to rise in some places because that water is parked up on hills and that water has to run down into valleys. And if you are living in a valley, your water may still be coming up.

BALDWIN: OK. Chad, thank you very much.

And from that story to the one you and I were talking about right around this time yesterday, the whirlwind on Wall Street. And in just one hour from now, we will know where that pendulum ultimately ends up.

Blue-chip stocks trying to keep up a rally that did begin with some good news at least on the labor front early this morning, but after yesterday's scare, really, it is anyone's guess. Over the next couple of hours, we are going to take you across three continents as nervous eyes watch over a jittery global market.

Let's get started here, beginning with yesterday. After dropping more than 500 points, it ended on the Dow down 512 at 4:00 yesterday. The Dow has been popping up and down like a bungee jumper. Talk about whiplash here when you look at the volatile market.

Alison Kosik looking at these numbers for yet again at the New York Stock Exchange.

And, Alison, just talk to me about some of the numbers. What are we seeing now. Positive territory it looks like for now.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: We are finally seeing some consistent movement to the upside, the Dow up 19 points, but I'm watching it fizzle out at this point. We will see if it stays that way, even by the time we finish talking here.

The Dow has been trading in the plus column for the last couple of hours or so, and that may not sound like much, but if you look how the whole day has been today, you will know why it's a big deal that it has kind of stayed in plus column. We were down as much as 244 points, as much as -- we were higher by 172 points.

And some of this was fueled by word that the European Central Bank is ready to buy Italian and Spanish debt, if the governments there agree to certain reforms. Now, the ECB, remember it's the equivalent of the Federal Reserve right here in the U.S. and the fact that it is going to be making this move is something that investors really like to hear.

And Italy also took some steps to reassure investors that it is going to deal with its own debt problems. So there were worries that no one would be willing to buy up the country's bonds at this point because it's having such big debt issues.

Now, we also got that big jobs report this morning, better than expected, Brooke, not necessarily enough to sustain a rally on its own, but it looks like it has stopped some of the bleeding, so to speak. You think?

(CROSSTALK)

BALDWIN: I hear some cheering behind you.

(CROSSTALK)

KOSIK: Now we're in the red. I told you, right when we finished talking.

(LAUGHTER)

BALDWIN: I know. I know.

(CROSSTALK)

KOSIK: They are watching horse racing.

(LAUGHTER)

BALDWIN: Oh, my goodness. Well, we are watching the numbers as you speak. Yes, now it is down, speaking of getting whiplash. How about investors? Are they panicking right now?

KOSIK: You know, they are not panicking.

What you are seeing is -- especially yesterday, what you saw was more orderly trading. If you saw the Dow plunge again today, you may really be questioning that, but really what we really saw yesterday was more sort of orderly selling, so I wouldn't go as far as to say it was panicking at all.

(CROSSTALK)

BALDWIN: OK. And also, before I let you go, the number of trades happening today, are there more trades happening during this summer?

KOSIK: Well, what's interesting is that summertime here on Wall Street is really -- it's usually very quiet here on Wall Street because a lot of these traders, they go on vacations, they go to the Hamptons. We are definitely not seeing that, with the volume of trade going on here.

You know, they're putting those Hamptons vacation on hold, they're sticking by their portfolios, they are watching the news headlines, they are watching their portfolios, and they are making moves. They are back in the game. What usually happens during the summer is you see everybody kind of sit on the sidelines and just kind of go on vacation. We're definitely seeing a change of attitude this summer, where we are seeing lots of people actually taking part this summer because the market is just all over the place -- Brooke.

BALDWIN: As we are witnessing right now. We are going to continue to keep a close eye on it with your help.

Alison Kosik, my thanks to you.

Also, looking around the world here, stock markets did take a hit today.

I want to begin in Asia. CNN's Andrew Stevens is in Hong Kong -- Andrew.

(BEGIN VIDEOTAPE)

ANDREW STEVENS, CNN CORRESPONDENT: Big falls at the end of the trading week right across Asia this week, Japan, Hong Kong, Australia all down between 3 and 4.5 percent. And it was nothing to do with local issues. These are all to do with things going on beyond Asia's borders. The policy-makers in the U.S. and in Europe can't come up with the right solutions.

And until they do, markets across Asia are going to be very, very wary and investors aren't going to be investing until they see some form of light at the end of this what looks like a very dark tunnel.

(END VIDEOTAPE)

BALDWIN: Andrew, thank you.

And from Asia to Europe, let's go to one of the countries really causing concern in financial markets around the world, that being Spain.

Belen Chiloeches is in Madrid.

Hey, Belen.

BELEN CHILOECHES, CNN CORRESPONDENT: Hi, Brooke.

It's a crisis of confidence in the Eurozone leaders, and their ability to solve the debt problem has made the Spanish stock market suffer a lot this week. The index, the main index, IBEX 35, has lost today only 0.2 percent in a high volatile session. But in the past five days, it drops 10 percent of its value. The Spanish 10-year bond ends up around 6 percent in a day. But we also have non -- bad economic data. The economic growth of Spain has lowered in the second quarter.

BALDWIN: Belen Chiloeches, thank you.

And the job market grew stronger in July. Alison alluded to numbers we got this morning. The number though of new jobs, it is still far from what's needed to pull the economy out of the dumps. President Obama wants to get cracking on the jobs situation as soon as Congress gets back from vacation, that being next month.

And here's his wish list of, well, shovel-ready steps to get people spending and working.

(BEGIN VIDEO CLIP) BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Extending the payroll tax credit to put $1,000 in the pocket of the average worker, extending unemployment insurance to help people get back on their feet, putting construction workers back to work rebuilding America, those are all steps that we can take right now that will make a difference.

(END VIDEO CLIP)

BALDWIN: Let's go to Poppy Harlow in New York to give us some of the jobs numbers.

And, Poppy, I don't know if you were listening to the president, I know I was this morning, and he mentioned that the job growth for the month of July is 154,000, but really it is 117,000. Why?

POPPY HARLOW, CNN CORRESPONDENT: It is 117,000, Brooke. And it is much better than expected, I will tell you that. We were expecting -- economists were saying somewhere between 75,000 and 85,000 jobs.

The key here that you have to count for a difference is the loss of government jobs, 37,000 government jobs lost in the month. That is not good. We're likely going to see many more government jobs lost because of this debt ceiling deal. When you cut spending that equates to cutting jobs.

But let's pull up the numbers and let's take a look at how much better this was than expected, Brooke. I was sitting, anticipating these numbers this morning, thinking, oh, my goodness, is it going to be like June? Is it going to be so much worse than expected? Then we heard sort of this cheer in the newsroom when the numbers came in, 117,000.

BALDWIN: Thank goodness.

HARLOW: Thank you very much for those numbers. But I want to point out, Brooke, that these are not nearly enough jobs created to really make a dent in unemployment in this country. As you saw up, employment only ticked down slightly to 9.1 percent. And the troubling part of this report is, when you dig a little bit deeper in it and you look at the labor participation number, that is how many people are out there actively looking for work or working right now, it's 63.9 percent.

That's the lowest rate we have seen since 1983. So that is a very bad sign. It means you have more and more discouraged workers out there, people that gave up looking for work. And they're not included in that 9.1 percent unemployment rate.

So, Brooke, I always encourage people to look past that top-line number and see the reality of the situation, is that many people that are out of work aren't even counted as unemployed, Brooke.

BALDWIN: No, it's a good point we need to make and each and every time we talk about that employment percentage. When we talk about the net gain of 117,000 jobs for the month of July, Poppy Harlow, what everyone wants to know is, where are the jobs? Where are these great jobs where people are hiring?

HARLOW: That's a very interesting point. Right? We expected it in health care reform. We saw 31,000 jobs added in health care last month.

What we didn't expect were the additions in retail and manufacturing. When you look at retail, 26,000 jobs added, manufacturing, 24,000, this is after some very weak manufacturing reports, so we like it see that. In retail, this is great news, because 70 percent our GDP in this country comes from consumer spending, so we like to see these retail numbers higher.

But I do want to point something else out in this report, Brooke, that again doesn't get a lot of attention. When you look at who is getting the jobs, guess what? The jobs were going to people without a high school diploma or just with a high school diploma, not to people with college degrees. Those jobs actually went down over the month. And that tells us that these jobs aren't necessarily the high-paying, skilled labor jobs necessarily. These are more lower-end, lower- paying jobs.

So, that's not a great thing. It's good for anyone to get jobs, but it's showing us that the jobs that are being added right now may not be those high-level, high-paying jobs, that, of course, people are hoping for. I think a mixed bag in this report. It is a good top- line number, but one jobs number does not an economic crisis solve and right now, you are hearing increased chatter about the possibility of a second recession. We don't know if that is happening, but we need to see many more good signs, including a lot of growth in this country, not just one good jobs number, Brooke.

BALDWIN: Poppy Harlow, thank you very much.

And now I want to talk Europe here.

Let's go to Jim Boulden for a broader look at the situation in that continent.

And, Jim, we talk a lot about volatility in the financial markets and a lot of it is because of Italy, Spain and their abilities to handle their debt loads. Talk to me about the situations in both countries.

JIM BOULDEN, CNN CORRESPONDENT: It's so interesting, Brooke, because if you get the debt problems in Europe, so you get the markets going down and then you had the U.S. a numbers and the markets went with up, and then they started going down again.

So both markets in the U.S. and Europe are playing off of each other, trying to find some good news. And when the markets here closed, they were still looking very negative, so a very bad week. But since then, Prime Minister Berlusconi has held an extraordinary press conference on Friday night in Rome and he announced some speeding up of measures, of austerity measures, including the balanced budget amendment he said would be implemented.

This is the kind of thing that we wanted to hear that they were going to speed up these reforms. The theory is or the rumors is that the European Central Bank will now go in and buy the bonds of Italy that worried everybody because the spreads were getting so high.

Also, Berlusconi said he will speak to U.S. President Barack Obama later today and possibly calling for an emergency summit of the G7 finance ministers. So Timothy Geithner might be meeting with some of his European counterparts. The idea is to globalize all this and try to get everybody on the same page and they wanted to put some very strong signals out before the markets reopened on Monday.

BALDWIN: So Berlusconi floating the balanced budget amendment. We have heard a thing or two about that, haven't we here in Washington lately? What about German Chancellor Angela Merkel? I know she has also had some emergency talks. Did she come up with any possible solutions?

BOULDEN: Yes, well, they're all on holiday, pretty much. And so there have been a lot of phone calls today from President Sarkozy of France. And the idea was to tell the markets that they are talking to each other, to make sure we know that they care that there were problems in the stocks in the last 24-48 hours and that they could do something about it.

And what they need to do -- and Merkel has been very strong on this -- is that they are trying to create this new fund and the flexibility of the flexibility of this fund to use in case more countries get into debt, serious debt problems, the way we have seen Greece, Ireland and Portugal.

But these are politicians, and they're finding it very hard to create the fund in a way that it pleases the markets, at the same time, not upsetting the taxpayers. And that's been the problem in Europe all this year.

BALDWIN: Jim Boulden, thank you for the perspective overseas. We appreciate it, as it is all interconnected. Thank you, sir.

And he says man of God, a prophet, but a Texas jury says Warren Jeffs is a child rapist. Coming up, the polygamist sect leader is sentenced today. Wait until you hear his bizarre proclamation again in court today.

Plus, attention all space nerds, NASA making a major announcement about Mars. What scientist says they have found that could change your thoughts about the planet. What could it be? Stay right here.

(COMMERCIAL BREAK)

BALDWIN: Forty minutes away from the closing bell. Quick check of the markets. It is back and forth. I'll tell you what. You can see some of the green, some of the red right now, up five. But that can change at any moment. We're keeping a close eye on the markets. You can always check the numbers. Go to CNNMoney.com. We're all over that.

But to this trial that has been playing out, now to the sentencing phase, to really judgment day for polygamist sect leader Warren Jeffs. He is back in this courtroom in San Angelo, Texas, one day after a day being found guilty of raping two children. Jeffs kicked off today's session with another proclamation. He says it came from God.

Beth Karas is a correspondent for "In Session" on truTV. She is in San Angelo.

And, Beth, today begins the sentencing hearing, presenting more evidence. What, dare I ask, happened in court today?

BETH KARAS, TRUTV: Well, Warren Jeffs started the day in court, but he is no longer there. He has asked to be removed from the courtroom voluntarily. Remember, he is representing himself.

He sat at the defense table alone throughout the guilt phase of this trial, really not cross-examining one witness and giving nothing for a closing argument, except that "I am at peace," those four words.

The judge granted -- mandates that she appoint a lawyer. So, his lawyer who had been advising him is now at the table instead of Warren Jeffs. This punishment phase is going to be decided by the same jury. They do that in Texas at the request of a defendant.

So these jurors are going to hear several days of evidence by the state or arguably criminal acts committed by him in other states, elsewhere, even within Texas, but not prosecutable by this office, because they don't have jurisdiction or maybe they are too old, other immoral acts also, including his 78 unlawful marriages, 24 of them to children, and sex acts he allegedly committed against other children -- or when they were children, some of whom are expected to be on the stand.

BALDWIN: OK. So as the sentencing -- as they determine how long he could go away, which from what I understand could be a couple years to life in prison, I have to just ask you quickly, when it came to that guilty verdict yesterday, that jury, speaking of swift Texas justice, bam, guilty quickly.

KARAS: That is right, in about three hours. And that included lunch for those jurors, 10 women and two men. He glared at them and they glared back, just before they started their deliberations. It really didn't come as a surprise to most.

BALDWIN: Beth Karas, thank you very much in San Angelo, Texas.

Straight ahead today, have you heard about this? Scientist says they have discovered something key on Mars, possibly flowing water. We will tell you why that is so important and the amazing new proof.

Plus, this: history in the making today. We will tell you more about NASA's Juno mission to Jupiter and its special on-board crew. Wait until you hear how long it's going to take to get there. Just try to guess. Try to guess how long it might take to get to Jupiter

Also, we have that breaking news we're still following, as rescues had been under way for folks in and around the Charlotte area because of the rising water, flash flooding. There's the radar. You can see it is slowly still hovering over the city. We're making calls. If anything changes, we will let you know.

CNN NEWSROOM is back in a flash.

(COMMERCIAL BREAK)

BALDWIN: Want to bring Chad Myers in off the top, because I want to continue our conversation when it comes to Charlotte and the flash flooding.

If we have the pictures, guys, let's pop some of the pictures back up, if we can explain. We were talking to Captain Brisley of Charlotte Fire Department.

And as we can see some of the cars submerged, they have been just very busy trying to get people out from being stuck in their cars.

MYERS: Yes, at least a couple dozen rescues. And we are not talking about what he was saying was swift-water rescues. And maybe I will just go back and I will tell you what that is.

When you think about that, where somebody is holding onto a tree and the water is rushing under them and they need a boat to go get that person, they have not had that type of rescue yet, but that doesn't mean it couldn't happen if people aren't smart.

(CROSSTALK)

MYERS: You get yourself in that water, all of a sudden, it's rushing, the car gets pushed off the road and you are the one holding onto that tree, so, we got keep those people safe.

BALDWIN: You said three inches of rain in the course of four hours, some areas maybe more, and the rain may appear finished but still doesn't mean folks are out of the woods.

MYERS: Correct. If you get water that is at 800 feet in elevation, at some hill that has to go down to a valley, that valley is going to run into a creek, and that creek can still be rising even though the water and the rain has stopped.

About OK, we are going to stay on that.

But if I may make the turn, because I like talking about NASA, and so do you, as we were there for the Atlantis launch. It's a big day. It's a big day for NASA. Hang tight, Chad, because I want you to talk about with this with me, as it gets ready to investigate the solar system's largest planet.

For the first time since the shuttle program, we remember, the Atlantis launched last month, NASA has launched this new space mission today. This is the Atlantis -- or excuse me -- this is the Atlas V rocket. It's carrying the Juno spacecraft.

And the solar-powered satellite is expected to reach Jupiter in a day? No. A week? No. Try 2016, 2016. It gives scientists a peek at how the gas giant formed. It could also help them understand more about our solar system.

NASA is also excited about the findings of another orbiter. This one has been spying on Mars.

And, Chad, talk to me here, NASA coming out, saying, hang on a second, we might have found maybe proof of existence maybe because there is water.

MYERS: Could be water. No question that the surface of Mars changes color in the spring. It changes color and they think with these streaks coming off of hills, they get darker and those darker streaks appear to be water streaks, now, probably not freshwater, but maybe some type of brackish --

BALDWIN: Saltwater? Yes.

MYERS: -- saltwater, very, very salty, because typically nothing of the Martian surface is above freezing, so you would have to have something that is maybe 50/50 salt or even more. It's still enough to be flowing, and that would be some years in the past, I don't know, millions or billions. Maybe it was a freshwater. Maybe things did live on this planet.

Maybe they still do, because you know what? Things at the bottom of the ocean grow that we don't even know about yet, because they are living in saltwater without sunlight. Some of these microbes still could be living in these water.

BALDWIN: I love how we're sitting here and we're saying maybe this, maybe that, maybe, maybe.

(CROSSTALK)

BALDWIN: We don't know.

MYERS: They have to send you there.

(CROSSTALK)

BALDWIN: Right. Exactly. We are going to Mars, you and me both eventually. Yes, right. Maybe.

But we know that there has been previous reports, hey, we think there's water, hey, we think there could be thus then later on signs of life. And then why should we believe the news now?

MYERS: It only makes sense because this dark streak, they look like waterfall. They only happen during the spring and the summer of the Martian season, and so they believe that this ice probably is -- it goes away, it goes underground for the winter when it gets very cold and then it shows up as the dark streaks, some type of water running down.

If you have H20, whether it's full of sodium chloride, whether it's full of any other type of salt that keeps it from being a frozen surface at some point in time, things can live in that water.

BALDWIN: I wonder how long it takes to get to Mars, if it take five years get to Jupiter. I wonder if I could get PTO for that long.

(CROSSTALK)

MYERS: I think you could.

BALDWIN: OK. We will work on it.

MYERS: We will get you a little satellite dish and you can beam back and forth.

BALDWIN: IReport.

Thanks, Chad. Appreciate it.

(CROSSTALK)

MYERS: All right, sure.

BALDWIN: Still to come here, there were some chilling, chilling moments caught on camera. Two men shoot up this city bus. Wait until you hear the reason why.

And take a look at this, lava flowing from a crater in Hawaii right now -- more amazing pictures straight ahead.

And let's get some live pictures of the Big Board. It is down. First, it was up. Then it was down -- whiplash today at the New York Stock Exchange. We have got your markets covered.

Stay here. CNN NEWSROOM is right back.

(COMMERCIAL BREAK)

BALDWIN: The day of the word on Wall Street, volatility. The Dow has been swinging up and down one day after losing more than 500 points. Remember, it closed down 512 at 4:00 yesterday. Right now it is up nine points. Investors focusing on Europe's growing financial crisis and continuing drag in the U.S. economy. Dow is up as we hit the last half hour of trading. We're going to bring the closing bell, of course, live at the top of the hour, 4:00 eastern time. Stick around for that.

Now to this -- a jury reaches a verdict in the controversial shootings at the Danziger Bridge in New Orleans. You remember those two men shot and killed in the chaotic aftermath that was hurricane Katrina. Four others were wounded. Today, four current officers and a former officer were found guilty in those shootings, depriving victims of their rights and other civil rights violations. They will be sentenced this coming December. And some chilling video I want to share with you released here. This bus in Philadelphia, shows alleged gunmen looking into the open door of the bus last moment. Then passengers huddling, you saw them by the door, dodging bullets, flying blasts. There were no injuries. A male passenger testified a woman -- here they are coming back on -- a male passenger testified a woman called in the gunman after he criticize herd for slapping sop. The woman and the boy got off the bus before the shooting gap. Two people now facing attempted murder charges in that case.

New streams of lava flowing on Hawaii's big island, new fissures have opened from the Kilauea volcano. Look at this. Scientists are now tracking the lava flow, which is now ponding in low areas of the volcano's national park. That area obviously closed to the public for now. The lava flow has slowed down a good bit since it began on Wednesday.

So the debt deal is a done deal, but does do enough to make a dent in our economy? My next guest says not the even close. In fact, retired senator Alan Simpson says the stock market is plummeting because the dealt compromise didn't go far enough. So what will it take to work? We are going to ask him, next.

(COMMERCIAL BREAK)

BALDWIN: We are pleased to have with us from Cody, as in Buffalo Bill's Cody, Wyoming, U.S. senator Alan Simpson. Alan Simpson, Republican co-chair of the presidential debt commission which issued recommendations to cut the national debt last December. Senator Simpson, nice to have you on. I appreciate it.

A lot to cover here, sir, and I want to begin with taxes. When the good times roll, Republicans insist on tax cuts, economy goes sour, Republicans insist on tax cuts. Sun comes up, tax cuts, sun goes down, tax cuts. Senator is your party's brand too closely tied with tax cuts?

ALAN SIMPSON, (R) FORMER U.S. SENATOR: It ain't my brand, but today we identified $1.1 trillion of tax expenditures in the tax code. They are really spending by any other name, we called them tax earmarks. We said, look, get rid of those and we can go to a rate of tax of zero to 70 grand for 8 percent, 70 granted, 210, 14 percent, 210 over that 23 and lower the corporate rate to 26 and 36.

But the point is, we have a situation which is absurd. Tom Coburn, Senator Coburn, struck ethanol subsidies out of the tax expenditure list that's $6 billion to support a product which goes into human and animal beings and shouldn't go to-to-your gas tank. He got rid of it, knocked it out. And Grover Norquist and his happy band of zany warriors say that that is a tax increase. If that's tax increase and Coburn said for you to call that a tax rate increase is ludicrous. I call it deception.

BALDWIN: Senator, let me jump in because you mentioned Grover Norquist. Do you think he has too much influence on the Republican Party? SIMPSON: Are you kidding? He got 95 percent of them both parties to sign up -- pathway that they would never raise tax under any situation. Good grief, anyone that would sign any kind of pledge before you get there to look at the evidence, examine things, do your research, listen to the debate is a robot. You can't do that.

And boy now, he holds them to the fire. And if he is -- if he is the most powerful person in America, he may well be now, then he should run for president.

BALDWIN: He may be, you say. I do have one more question about your party, sir, and I promise I will move on. But senator, there are a lot of folks saying rightly or wrongly that New Jersey Governor Chris Christie just blew it, blew his future in the GOP by nominating a Muslim-American to a state court judgeship, and then calling out folks who claim this judge will impose Muslim law. I want to pay this piece of sound. This is Governor Chris Christie.

(BEGIN VIDEO CLIP)

GOV. CHRIS CHRISTIE, (R) NEW JERSEY: This Sharia law business is crap. It is just crazy. And I'm tired of dealing with the crazies. It's just unnecessary.

(END VIDEO CLIP)

BALDWIN: Again, that was Republican governor Chris Christie of New Jersey call out Islamophobes. You, Senator Simpson, recently called out homophobes. Should more Republicans follow your example, follow Chris Christie's example and go head-to-head with the haters out there?

SIMPSON: Boy, that's what I do. I mean, it's not hard to do if you just don't shriek and tear your hair. Grover Norquist is a good egg with a very bad idea. And how he got these guys to sign up on this stuff -- what I say to people, look, if -- now, Grover can't murder you, and he is not that kind, and he won't burn your house down, he is not that way, The only thing he can do to you is defeat you for reelection.

And if that means more to you than helping your country through a rocky time of fiscal disaster coming, then you shouldn't be in Congress. That's what I tell them.

Homophobe, we all have -- we all know someone we know or love who is gay or lesbian. What is that about? And abortion is a horrible thing, but I practice real law with real human beings. That's deeply intimate and personal decision, and I don't think men legislators should even vote on it.

Now, they might throw things at you. I have been called a baby killer. I have been called everything. But in the course of it I found that most human beings feel as I do. They have common sense they respect each other, they love each other, and they don't listen to guys who talk -- now, get gay marriage out of the scene. If you take marriage away that's a flashpoint deluxe. But you get no special privileges and no special penalties. What is this about? You go to church and --

BALDWIN: You say call them out. Call them to out.

SIMPSON: Call them out.

BALDWIN: Senator Simpson, let's talk economy here while I have you. I want to go back to 1937. A lot of economists say FDR miscalculated. He thought the nation was emerging from the depression, he cut government spending, focused on reducing the debt, and the economy took a nosedive again. Recognizing today that the debt is very much so a problem, are we right now making that exact same mistake?

SIMPSON: I would say that isn't even possible to think and equate them. 1937 and 011 are like the Jupiter and Mars. I mean, we didn't pay in those attention in those years. We didn't know where Greece was. We didn't care about Greece or Italy or Spain or Portugal or Ireland. Now we are all hooked. Globalization, they buy our bonds, we buy their bonds, it's all different. We have a totally different world. Whoever heard of a debt which has now been raised to $17.1 trillion? And the interest on that debt, if we do nothing, in 10 years it will be $1 trillion. That's down the rat hold, doesn't help education, culture, anything. This is madness.

BALDWIN: Senator, you have worked with a number of presidents, you have worked with Democrat, you have worked with Republicans. Let's talk about our current president. How do you rate President Obama as a leader and specifically during the drawn out, you know, fill in your adjective, debt negotiations with members of your party? How do you rate the president?

SIMPSON: Well, I wouldn't have taken it on. I have had business with him. It isn't so I get called, you're just covering Obama's fanny so he can destroy the Republicans Party. They call Erskine a fake Democrat, ruin the liberal base. It's madness.

Anyway, we said everything is on the table, he said yes. He didn't do anything with our proposal because we have been torn to shreds by people waiting to tear him to shreds. So Paul Ryan, give him credit, a gutsy guy, dealing with the biggest mastodon in your kitchen that is Medicare. You can call it Obamacare, Elvis Presley care, I don't care, it's unsustainable. And it is on automatic pilot. Can you touch it? Are you kidding? Here comes the AARP. All these senior groups rip and snort, this guy loaded with bucks, gets a heart operation, doesn't even get a bill. Come ,on this can't work.

BALDWIN: Senator Alan Simpson from your perch there in Wyoming, speaking your mind. I appreciate it, sir. Senator Simpson, thank you so much.

SIMPSON: Thank you. It was a treat.

BALDWIN: And before we go to break, quickly here, we're watching the flash flooding situation in Charlotte, see the radar, a lot of rain in and around Charlotte area. We are all over that. Also coming up next, we're going to get some dramatic video of a hotel roof collapse. I will speak with a guy who shot the video. We will be right back.

(COMMERCIAL BREAK)

BALDWIN: I want to take you back to our breaking story there in Charlotte -- flash flooding causing issues for people who are trying to drive through some of this rain. Take a look at some of the video, you can see how, you know, some of the streets completely covered. In fact that looks like a river. Look at this video from our affiliate, WCNC.

I talked to the captain of the Charlotte fire department earlier, Captain Grizzly told me they have done in the ballpark of 18 different rescues. We're not talking swift-water boat rescues, but we are talking about people who simply have driven through the stuff and got stuck.

Also I want to let you know, we have got someone on the line, still waiting for this video to come in, but it is video, some sort of a roof collapse at a hotel in the Charlotte area. As soon as we see that video, working ton right now, we will get it for you. But again, looking at the these pictures, Chad Myers was saying three, four inches so many hours, right?

MYERS: A couple of hours two inches an hour for two hours, you are going to have street flood nothing matter where you are. It's simply a matter of fact this one happened, the middle of a farm field that rain would soak in. When you have all the concrete and all this asphalt and all these places where the water is not going to soak in, just run off, runs into some place, runs into parking lots, runners over rivers, runs over roads what we have had all day in Charlotte.

BALDWIN: Let's go back to the live picture we can, you can see how the cars are parked, near a building, more or less, this live picture -- I'm being told we don't have it now, you can tell the water, excuse me, the rain has stopped. To your point that is great news at first glance, but that just means -- still have the water quickly moving past that just simply means where it is puddled where it is pooled, it will go downhill into valleys where it create deeper ponds and areas and don't drive through it.

MYERS: Sure, you have to understand this water is eventually going to get to the ocean, the oceans is hundreds of miles away. So the water is going to go up, the levels are going to group, at least downstream for a while, and you need to be careful.

And especially if there's a power line down. There's a power line in the water. You need to stay completely away from that because those power lines can still be alive even going through the water. You don't want to be in that water at all.

BALDWIN: All right, again, we are working on getting this video of this roof collapse in Charlotte. As soon as we get it we'll pop it on TV for you.

MYERS: I have seen it. It's dramatic. Don't go away.

BALDWIN: OK, well, I haven't even it. So I'll watch it fresh with you.

Meantime, let's move on and talk numbers in terms of jobs. July's jobless numbers, they are out today. And they are not horrible, but there's certainly nothing hopeful about them either. In fact millions of Americans becoming so discouraged about finding a job, they have given up completely.

So is there any light ahead for some of you? We're going to get some answers for you next.

Also a reminder, we're keeping our eyes on the marks here. In the green for now, up 52 points. We are 10 minutes away from the closing bell at the New York Stock Exchange. We'll bring that to you live and see if there's any late day alarming selloff as we saw this time yesterday. We'll be right back.

(COMMERCIAL BREAK)

BALDWIN: We continue to focus on the economy, on jobs, and on the financial markets. And Jay Powell is a former Treasury undersecretary for finance in the George H.W. Bush administration. He joins us from Washington.

And Mr. Powell, it's good to see you back. I was thinking about this. I thought the last time we spoke here on this program, it was really essentially the eve of the debt deal, and you were saying you really felt for the folks who were currently working at the treasury department, and you were nervous for them. How do you think they're feeling today?

JAY POWELL, FORMER TREASURY UNDERSECRETARY FOR FINANCE: Well, relieved that we managed to get the debt ceiling increase as I hoped and believed we would, and we avoided all the pain of a default. But we did walk into this 500-point down day yesterday, so I guess that relief will have quickly dissipated.

BALDWIN: Let's talk about the markets and specifically also those jobs numbers that came out today and breakdown of the July jobs numbers. I know we gain in the Month of July 154,000, subtract 37,000. That's what we lost in government jobs, equals net gain 117,000 jobs. What's your read on that? What sort of shape is the labor market in?

POWELL: Well, it's not as bad as was expected, and it does signal that a double dip recession is less likely. But it's not good. The net of it is it's about 154,000 in private sector jobs. The government sector is really flat if you ignore the loss of jobs due to the Minnesota shut down. So 154,000 is about equal to the population growth in a typical month. So you have an economy that's really going sideways and you have an underlying labor market that's in terrible distress.

BALDWIN: Mr. Powell, I apologize. Do me a favor if you can, stand by. We're sitting here juggling a couple of stories. Right now, we're also watching the breaking news out of Charlotte and all this flash flooding. Right now on the line I have Erik Slemon. Erik, I'm talking to you for the first time, seeing your video here for the first time. Walk me through where this is shot and what the world is happening.

ERIK SLEMON, SHOT VIDEO OF ROOF COLLAPSE: OK, it took place at the Embassy Suites here in Charlotte. I am a rep for a fashion line called Robert Graham, and I'm here for the southern branch. So the hotel hosts about 200 plus people coming here for business. And I was coming down the elevator, and I exited the elevator and turned left and noticed that some of the fixtures in the lobby were dripping water, which quickly escalated into more -- I mean, it was as if someone had opened up the entire ceiling. So I pulled out my phone and started shooting, and then within a couple of seconds the whole ceiling had just dropped down.

BALDWIN: Let's review that quickly, guys. Let me ask you, Eric, how long ago was this?

SLEMON: This was about an hour and a half ago.

BALDWIN: An hour and a half ago.

SLEMON: So it went from -- I'm sorry. Go ahead.

BALDWIN: No, no, please you, go.

SLEMON: It went from being completely dry outside, no rain, to torrential downpour to -- and I guess the hotel, one of the drainage pipes -- it totally overwhelmed the drainage pipes and it caused damage you see there. It was absolutely insane. I've never seen anything like it in my life.

BALDWIN: Amazing. Erik, thank you. Stand by for me. I want to continue my conversation and also continue my conversation with Mr. Powell. We've got to get a break in. We are less than four minutes away from the closing bell. Be right back.

(COMMERCIAL BREAK)

BALDWIN: OK, and we are just about one minute away from the closing bell on Wall Street. Taking a look now, we are in the positive territory at 77 points. Keep in mind right around this time yesterday we were watching it plunge and plunge and continue to plunge. The day ended up closing at negative 512 points. With Alison Kosik standing by, she will join me once we start talking ability the numbers.

Also I want to remind you, we're following the breaking news out of Charlotte, North Carolina. I was told during the break we're also getting some more video of some of these rescues now. I was talking to the captain of the Charlotte fire department, and they're actually having to evacuate, not just one but two of these neighborhoods in and around the Charlotte area. Let's take a listen to the closing bell there on Wall Street.

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