Return to Transcripts main page

CNN Newsroom

Battle Over Debt and Persistently Weak Economy; Ceremony Held for U.S. Troops Killed in Helicopter Crash; Interview With Ohio Democratic Representative Marcia Fudge; Wisconsin Holding Recall Elections of Republican Senators; Riots Continue in London; Bus Driver Fired for Helping Police

Aired August 09, 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: It is the top of the hour, just 15 minutes before the Federal Reserve speaks. And the markets, well, nobody knows.

So far we've seen a pretty nice bounce on Wall Street. And if you can forget yesterday's bloodbath, it looks even nicer today. Right now, the Dow is up about 112 points right there.

The Fed, as you may know, has used every tool in its box to keep credit flowing and interest rates low in the wake of the great recession. Now the whole world is watching to see what, if anything, it will do in the wake of the U.S. credit downgrade, the battle over debt and the persistently weak economy.

Christine Romans is here now to talk about this a little bit with us.

What, if anything, Christine, can the Fed do now to help?

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Well, the Fed kept interest rates at zero to a quarter percent. Basically zero since December 2008.

So what the Fed usually does at a meeting like this is announce whether it's going to lower or raise its fed funds target. Well, it really can't do that. So, what else could it do?

Well, twice now the Fed has embarked on a major stimulus buying back treasury securities, essentially flooding money into the system and buying treasuries. So that has been happening twice until it just wound down. The second one just wound down this summer.

So what could the Fed do now? And what will the Feds say, Randi, about the health of the economy? Will the Fed hint that we could be moving closer to a double-dip recession?

That would clearly unnerve the markets. But will the Feds say that it stands ready to embark on new policy tools to do some kind of, as Richard Quest was saying last hour, fiddling with the system to make sure that there is still liquidity and money in the system and keep the credit flowing? That's what we're waiting to find out. It's typically about four paragraphs, the Federal Reserve statement, after an FOMC, a Federal Open Market Committee meeting. That press release, those four paragraphs, will be scrutinized for how it's different from the last time around and what it says new about the economy.

The last time we heard from the Fed was in June. And quite frankly, Randi, a lot has changed since then.

We know that the first quarter was weaker than we thought. We know the second quarter only grew 1.3 percent. That's not good enough.

What will the Fed do? That's what everyone wants to know.

KAYE: Yes. And we'll be waiting for that in just about 13 minutes or so from now.

Christine, I also want to ask you for a little perspective here, because a lot of folks yesterday watched the markets tank. They watched their retirement accounts basically disappear.

Can you put this in perspective for us? Is it as bad as it looks?

ROMANS: Well, you know, they watched their retirement accounts yesterday. The stock part of it declined by about 5.5 percent, or six percent, if you think about the S&P 500.

When you look at the S&P, which is most likely your stock part of your portfolio, it's down 18 percent in a couple months. It's been a rough summer.

There's the S&P right now. Gosh, you know, that's from Monday. It was a tough day with pretty consistent selling throughout the day. But let's put it in perspective.

You are still well above where we were in March, 2009. You're 64 percent above where you were in March, 2009. And no one says this is a 2008 redux.

It's a completely different kind of situation in the economy. The economy is a little more healthy than it was then.

But, you know, stock prices yesterday, not even in the top 20 percentage-wise of declines. We have really wild sell-offs. It's here, it feels bad. But put it perspective. We've been here before.

KAYE: All right. That is excellent perspective.

Christine, I know you're going to stick around, because we have that Fed announcement coming up in about 12 minutes. And we'll get back to you then to discuss that one. Thank you.

We want to turn now to a very somber ceremony that took place this morning at Dover Air Force Base in Delaware. The remains of 30 American troops, including 22 Navy SEALs, were returned to their loved ones.

President Obama was also there, along with Defense Secretary Leon Panetta and Joint Chiefs Chairman Admiral Mike Mullen. The event was closed to the media.

Some of the victims are seen here in these pictures. Those who died were highly trained professionals. Their missions, always shrouded in secrecy.

Their deaths Saturday marked the single deadliest day for U.S. forces in the Afghan War. They were killed in a combat operation when their helicopter crashed in central Afghanistan. The U.S. troops were traveling in a CH-47 Chinook helicopter like the one seen here in these pictures. Also killed in the crash were seven Afghan soldiers and a civilian interpreter.

Joining us now for much more on this story, Pentagon Correspondent Barbara Starr.

Barbara, what can you tell us about this ceremony that's taking place at Dover today?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Randi, it will sadly go on, we are told, for several hours, because they have a number of transfer cases. That's what they call them, essentially caskets for the removal of the remains from the two C-17 aircraft that landed earlier today.

Thirty-eight sets of remains will be taken off the planes in a very somber ceremony in front of the president of the United States and the family members that have traveled to Dover. We only have this photo of the president arriving. We're not allowed to be there and show any of the ceremony.

The Pentagon and the military also, perhaps, setting another precedent here. We are now being told it is entirely possible -- even though we have photos, their families have come forward publicly of their own free will -- in many of the cases that the Pentagon may decide not to publicly, officially release the names of the 22 SEALs who were lost in this helicopter shootdown. Because they belong to a covert unit, they may decide not to name them.

Leon Panetta is being asked by the Navy Special Forces not to allow those names to officially come out for the protection of other members of the team. I think we can assume they believe by not naming anybody, they will protect the team members that went on the raid that killed Osama bin Laden.

But this would be precedent-setting. No one here can remember, Randi, another case of an American service member fallen in battle, in action, in wartime, this recent 10 years of war that has not been publicly acknowledged by the Pentagon -- Randi.

KAYE: Yes. That would be certainly an interesting move.

I want to ask you about the mission and about the crash. Have you been able to get any more details on exactly what happened there?

STARR: We have indeed. What we are now able to confirm is the helicopter with the 22 SEALs on board, the crew, the other Special Forces from the Air Force on board, the Army crew, it was actually called in not even to do what the SEALs are normally trained to do.

Normally, these guys go on highly dangerous covert counterterrorism missions, essentially assaulting, air assault, helicopter assaulting into areas to go after very tough targets, very covertly. That isn't even what happened here.

What we know is they were called in by Rangers on the ground, Army Rangers who were in a firefight and saw some of the Taliban they were fighting begin to try and escape. They called for backup help to try and cut off the escape of those Taliban, and it was the SEALs that were on tap to be the so-called backup force. So, they, of course, got on their helicopter and were ready to go.

It's just really sad. It wasn't really the mission that they are routinely trained to do -- Randi.

KAYE: Yes. And what about these Chinook helicopters? We said they were in a CH-47 Chinook. These are huge helicopters. I mean, they're not exactly stealth.

Are they basically sitting ducks when they're in these for the enemy?

STARR: Well, you know, to some extent, the helicopter missions in Afghanistan are just so dangerous all the time. We have flown in these at very high altitudes up in the mountains which is the scenario they were in here.

The advantage of the Chinook is it can go into these steep mountainous areas, they can fly at high altitude, they can carry a large number of troops and get them in, in one helicopter mission. That's the positive side.

The negative, perhaps the challenge, is they are big, slow lumbering, noisy. The Taliban can see and hear them coming.

They try and fly them at night. This time it just didn't work out. But it's not a helicopter that has any kind of stealth capability, if you will.

KAYE: Yes, certainly not.

Barbara Starr, appreciate the update. Thank you.

STARR: Sure.

KAYE: We want to tell you more about one of the victims and his 10-year-old son.

Brian Nichols (ph) was a U.S. army pilot from Kansas who flew Chinook helicopters. He can be seen here on the far left in this photo.

When his son Braydon Nichols learned about his father's death, he couldn't understand why the Navy SEALs, who were also killed, were getting so much media attention. So he sent us this photo in an iReport to CNN and this request: "My father was one of the 30 U.S. soldiers killed in Afghanistan with the SEALs rescue mission. My father was the pilot of the Chinook. I have seen other pictures of victims from this deadly mission and wish you would include a picture of my father. He is the farthest to the left."

Braydon, we want to thank you for sending the picture of your dad. And we are so very sorry for your loss.

Here's a picture of Braydon with his father. Happier times. His aunt, Sue Keller (ph), says Braydon was his father's only son and that they were very close. He was counting the days until his dad came home. In fact, there were just nine days left before Brian Nichols (ph) was to fly home to Kansas City to his son for a two-week leave.

Black lawmakers are taking matters into their own hands, all in the name of getting the unemployed back to work. Their latest efforts to help thousands land a job, next.

And as we go to break, we want to show you a live look at the Big Board as we wait for the Fed announcement. Still up, positive territory, 83 points -- now 87 points.

We'll be back in just a moment.

(COMMERCIAL BREAK)

KAYE: The Congressional Black Caucus is kicking off a month-long campaign to help get African-Americans employed. Why? Because the disparity between unemployed black people and white people is alarming. Check this out.

According to the Bureau of Labor Statistics, for the month of July the jobless rate for African-Americans inched up to 16.8 percent. Compare that to the jobless rate for white Americans, which is actually down a little to 8.2 percent. In fact the jobless rate for African-Americans is higher than any other racial group.

Joining me now is Representative Marcia Fudge. She hosted the first Congressional Black Caucus Job Fair in Cleveland.

First off, thank you for coming on the show. Such an important topic to discuss here.

You had quite a turnout at yesterday's job fair, about 4,000 people. How did that go?

REP. MARCIA FUDGE (D), OHIO: Well, thank you, first, for having me.

It went extremely well. I mean, certainly to have 4,000 people show up is great, but on the other hand, the problem is so severe, that 4,000 people would show up. So I think that what we did was good, but it also shows the gravity of the problem in this country.

KAYE: You know, we've seen these job fairs. Our reporters have been at these job fairs across the country. You can see people packing in. They're desperate for jobs. I mean, when you have a thousand positions open, say, you get triple or quadruple the amount of applications.

I know that the job fairs are going to Florida, to Michigan, to Georgia, California. Do you think this approach will actually help this time around?

FUDGE: Well, I think this job fair was very different. Before any employers were allowed to come to the job fair, they had to commit a certain number of jobs.

And so what we did was put employers and persons looking for jobs together, knowing that these jobs were available. They just weren't out there taking resumes.

We knew jobs were available. We had more than 2,500 jobs on the table. And just today, one of the employers this morning I saw at a meeting indicated that he had enough resumes and talked to enough people to fill the 50 positions he had available. Someone else told us that they had hired a couple of engineers and a couple of forklift operators.

I mean, so we put people together that we knew needed jobs with those who had those skills.

KAYE: What do you hear from those who are looking for work? How desperate is the situation for many of them?

FUDGE: You said the word. It's desperate. Many of them have been out of work for some time. And it is difficult in this kind of an economy to find work.

And based upon some of the things that have gone on in the last few months and weeks, it's going to get worse. We're going to lose more jobs than we're going to gain.

And so people really are desperate to feed their families and to pay their mortgages. It's a difficult time in this country.

KAYE: Do you think it has to happen at the state level? I mean, how do we get there?

We've been talking about this. We've been talking about job creation. We've heard all the promises.

How do we get there?

FUDGE: Well, we get there doing what the CBC just did. I mean, we've stopped talking about it. We've taken it upon ourselves to do our part.

If through these five cities that we go to over the next few weeks we get 10,000 or 15,000 people hired, it may not seem like a lot to people because of the huge problem we face with more than 15 million people out of work, but to those 15,000 people, we've made a difference.

KAYE: And we talked about the jobless rate for the African- American population. What can be done specifically to help that group?

FUDGE: Well, I think two things need to really happen. We need to target communities of highest need.

Certainly, the majority of them may, in fact, be African- American, but all are not African-American. So we need to target those communities with special attention and programs.

And secondly, I think one of the things that needs to happen is that we need to, as a Congress, pass a transportation and infrastructure bill so that we can put construction people back to work, we can take care of our crumbling roads and bridges. We can as well take care of our aging communities with things like more neighborhood stabilization programs that are going to help us rehab old homes or tear down ones that are bringing down the values in our neighborhoods.

KAYE: Right.

FUDGE: There are a number of things that can be done. Certainly we do understand how to do it. We just haven't done it.

KAYE: Yes. We need to get those jobless numbers moving in the other direction.

Representative Marcia Fudge from Ohio.

Thank you. Appreciate it.

We're waiting to see how the Fed is going to react to all the chaos on Wall Street. Their big announcement, any second now.

Before we go to break, though, one more look at the Big Board. The Dow still up 138 points.

We'll be right back.

(COMMERCIAL BREAK)

KAYE: Breaking news now as we take one more look at the markets. Still up 114.

We've been waiting for the Fed to make a policy statement, and Christine Romans is in New York. She has that statement in hand.

Christine, any word on it?

ROMANS: Well, the Fed is not making any change to interest rates. And of course we told you that they wouldn't because the rates are so low, that they really can't move them. Zero to a quarter percent interest rate, you can't really switch that. I just got the statement, by the way. They're going to keep a low monetary policy through at least the year 2013.

And here's what the statement says in the very beginning. Information received since the last meeting in June indicates that economic growth so far this year is considerably slower than the committee had expected.

I had told you that the first quarter -- barely had any growth in the first quarter. The second quarter, of course, was really tough as well, 1.3 percent.

A couple of bright spots. Business investment to equipment and software continues to expand. My producers and I are scouring here to figure out if there's any kind of new policy tools that they are embarking on.

I don't see any in here quite yet, but I had told you that they might be able to do some things like change the duration of the securities that they hold, do things like reinvest some of their principal payments to be able to continue their existing policy of keeping interest rates low. They said, of course, they're going to continue to review that as necessary.

Stocks, though, as you can see, have given up a good 80 or 90 points here. So what Wall Street is telling you is that they don't like the assessment of the economy and they don't see anything in here really to get them too excited about new things the Fed can do to keep things going.

Let me take a little bit more of a look at this.

KAYE: Yes, you take a look. I'll get to Alison Kosik. She's at Wall Street right now.

Alison, what is the reaction there from the statement from the Fed on policy?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: As Christine said, the numbers show everything. The Dow, for the first time today, dipping into the red, now down 47 points.

You know, Wall Street was kind of looking for the Fed to really take the lead and say something to calm the markets, to maybe even be a white knight. But you know what? That's not the Fed's job when it comes down to it, even though Wall Street was really looking for that, especially after, you know, stocks have really just taken a pounding over the past couple of weeks, with the Dow losing almost 1,900 points in 11 sessions.

So, clearly, Wall Street not hearing what it wanted to hear from the Fed at this point, with the Dow now dropping 34 points -- Randi.

KAYE: Yes. And Alison, this is the first time that we're in the red today certainly. We've had a positive market so far for the day.

What do you think that investors did want to hear? You said they didn't hear what they wanted to. What were they hoping to hear from the Fed?

KOSIK: Talking to traders down there, they really wanted to hear some leadership. They wanted to hear something in this statement that had the appearance of the Fed may be getting control of the situation or a signal showing that the Fed has some control over the mess that the economy is in, to be quite frank.

But, you know, the Feds' hands are kind of tied on this, because on the one hand, you know, you're seeing the disappointment in the market, that nothing clearly was said by the Fed of any kind of stimulus measure. So you're seeing the disappointment there.

But if the Fed would have also come out and maybe hinted or even announced a new stimulus measure, you could have also seen a sell-off for stocks, because the fact of the matter is, it could have spooked investors into thinking, well, does the Fed see something worse in the economy than we don't see? Is this why they're introducing this stimulus package?

So, really, the Fed kind of was -- it was kind of a catch-22 here, with the Fed really having its hands tied on what it really can do at this point -- Randi.

KAYE: All right, Alison. Thank you.

Let me get back to Christine Romans.

Christine, I know you've had a chance to look at that Fed statement just a little bit longer there. Anything more you want to share with us?

ROMANS: Yes. Just quickly, a downgrading essentially of the economic outlook and the economic forecast, which is something we all feel every day. Right?

As I said, they expect -- the economy is growing slower than they had expected. Also saying that inflation was picking up a little bit. And also that the jobs market, they're not expecting a quick pickup in the jobs market, a slower pace of recovery overcoming quarters they're expecting now. And they don't think that the unemployment rate is going to go anything more than a gradual decline in the near term here. So they say -- and this is sort of the money line -- downside risks to the economic outlook have increased.

Also, the date, 2013. It's the first time I've heard them say put an expiration date on how long, or a target date on how long they're going to keep interest rates so low at zero percent. And they're going to continue to find all the ways that they can to keep them at zero percent, at least through mid-2013.

So, that tells you they're thinking that the economy is going to remain here sluggish in the near term, certainly. KAYE: The Dow went up to positive territory there for just a moment. Now it's dipped back down to negative territory.

But who would you say, Christine, this impact the most?

ROMANS: I think this impacts the most -- wow. I would say this is something very closely watched by the big investors, by the big economists and strategists who are trying to figure out their assumptions for where the economy is going. And really, you know, I can make the argument that what the Fed does affects every single one of us, because whether they're "printing money" by flooding the economy with more money, whether they're the ones who are going to step in, in the absence of any kind of cohesive plan in Washington, it's the Fed who really is sort of controlling the purse strings here at this point.

So what the Fed does or doesn't do really affects everybody.

KAYE: Do you think we would have seen a different reaction if they did flood us with cash?

ROMANS: Well, you know, it's interesting, because I think Alison and I are of the same mind that, you have to be careful how -- if they came out too strongly with some kind of new policy tool, some people could say, well, they're just reacting to the stock market decline, and then get even more concerned. So, I think we're of the same mind that it's unclear how the market could react.

And again, they're still assessing it. And also, this is just the stock market reaction. Bond market, commodities markets, every other kind of market, many of them that are bigger than the stock market, react as well. So we'll be watching in the minutes to come to see how those markets interact with one another.

KAYE: One word I can tell you I've heard you say quite a bit over the last few days, you and Ali Velshi, is the word "uncertainty." Is this market still a reflection of uncertainty at this point?

ROMANS: It really is. And I think that it's a reflection of fragility, too.

I mean, the global situation right now is pretty fragile. And it doesn't take much, as you can see, to tip people into fear factor. So that's where we are right now, uncertainty, but by the same token, there's a fragility that makes everything that much more, I don't know, magnified in the market. And that's what makes it so -- kind of nerve-racking.

KAYE: And before we go, the biggest take away from this policy statement today?

ROMANS: Downgrading the economic assessment of where we are. Things are somewhat weaker, somewhat softer than the Fed had thought. They're going to keep their foot on the pedal as they're driving the car. They're going to keep their foot on the gas, full on out, until at least the year 2013, mid-2013. And we don't know what, if anything, they have left in their armory, but they certainly say they're going to keep rates going low and keep their foot on the pedal.

KAYE: All right. And certainly the Dow back in positive territory, up about 91 points right now.

Christine Romans, appreciate it. Thank you.

Are they the new Bonnie and Clyde and Clyde? The FBI is in hot pursuit of a sister and her two brothers. They're considered very well-armed and very dangerous.

We will check it out, along with you, next.

(COMMERCIAL BREAK)

KAYE: Now, it's about half past the hour. Let's take a look at some of the headlines and other news you may have missed.

After rising 200 points, the Dow quickly erased its gains today after the Federal Reserve released it's much anticipated the policy statement. Taking a look there right now. It's still up, 37 points.

The Fed says economic conditions require it to keep rates exceptionally low until 2013 and risks to the economy have increased, but investors were apparently hoping to hear much more.

President Obama was on hand today as the American troops killed in the deadliest day of the afghan war came home. The remains of the 30 troops including 22 Navy SEALs killed in a helicopter crash in Afghanistan arrived at Dover air force base in Delaware this morning. The president, Defense Secretary Leon Panetta, and Joint Chiefs of Staff Admiral Mike Mullen were there for the somber transfer ceremony along with the families of the fallen troops.

The hunt continues for three siblings accused in a two-state crime spree. Lee Grace Daugherty and her brothers Dylan and Brian, all in their 20s, seen here, are wanted for armed robbery and attempted robbery. Police say they robbed a bank in Georgia with an AK47 assault rifle, then opened fire on a police car in Florida. The officer wasn't hurt, but authorities are worried all three siblings have criminal records. Ronnie Daugherty has 14 felony arrests since 2007 and he recently was sentenced to 10 years probation for sending harmful information to a minor.

It only took 30 minutes for a Texas jury to decide the fate of Warren Jeffs. After the half-hour deliberation, the self-proclaimed prophet was sentenced to life in prison plus a $10,000 fine. Jeffs was found guilty on one count of aggravated sexual assault and another count of sexual assault, both involving underage girls. The sentence was the maximum possible.

After nearly 29 hours in the water, endurance swimmer Diana Nyad abandoned her attempt to make history today. The 61 year old arrived in Key West, Florida, aboard a boat after asthma and shoulder pain forced her to call it quits halfway through the 103-mile swim from Cuba to Florida. Despite her disappointment, Nyad said that she does not see herself attempting the big swim again.

If you recall that ruckus over budget cuts and labor rights in Wisconsin, if you recall the Democratic lawmakers leaving the state, the bill they despised passing anyway, the protests, the sit-ins the court fights, the you'll want to hear about the recall elections. A half-dozen Republican state senators are fighting for their jobs today a whole lot sooner than expected.

CNN's Ted Rowlands is in Madison. Ted, let's talk about this. These are incumbents. Their terms are not up, but they could be voted out just like that. Explain for us.

TED ROWLANDS, CNN CORRESPONDENT: Well, basically, this was promised back in February when we saw all of the thousands of folks come down to the state capitol. They were very frustrated, saying we're going to try to recall the sitting lawmakers. And basically, the process is simple. You gather enough signatures then you can subject a sitting politician to a recall election, which is basically a do-over election in the middle of a term.

So that's what they've done. There are six Republican senators, as you said, fight for their jobs today in districts across the state. People were eligible for recall. Governor Scott Walker, the Republican sitting governor, is not eligible for recall, so he is not fighting for his job today. He'll be eligible after a year of service, and, of course, Democrats are vowing to do that.

Right now, there's a 19-14 majority in the Senate here in Wisconsin favoring Republicans. Democrats are hoping they can take the majority. They need a three-spot swing, if you will not only from this election but then next week two Democrats are facing the same thing.

In the end after next week, Democrats say they hope they will have the majority in the Senate, and they think they have the votes to do so. So this is what they promised they would do back in February and here we are, voters deciding the fate of these lawmakers today.

KAYE: It could turn things around in the Senate. This isn't just -- certainly this story is Wisconsin. But this isn't the only place. I mean, we see the same passions running throughout the country.

ROWLANDS: Yes. And this actually has very little to do with Wisconsin in the grand scheme of things. This is the ongoing battle, the war between Democrats and Republicans, and the center of it is unions. You recall the reason this started is the governor wanted to destabilize the public employee union here by taking away collective bargaining rights, which he did by getting this law passed.

Well, that created a -- it brought in union money from across the country, and $30 million has been spent on these recall elections. We're talking about little tiny towns in northern Wisconsin where normally, you know, the candidate would go to the elks club to generate some votes. Now, they've got full-on commercials and pamphlets because all of this money has come in here. And the reason is this -- Democrats need unions, not only for funding purposes but to get people out to vote. If the unions don't fight back in a big way, it will send a clear message to other states that are thinking about doing similar things that it's OK. That's what's really behind this is a message from the unions, do not do this in Ohio and other states that are contemplating it because you'll have this happen to you, which these lawmakers may have them happen in Wisconsin. You may lose your job. That's what they're trying to accomplish here.

It's -- to some people it's a disgusting example of what's happening across the country in politics. So much money wasted for this inside politics advantage, if you will.

KAYE: To a lot of people, I'm sure. They see is at a waste of money. Ted Rowlands in Madison, thank you.

London burning -- unbelievable damage from three days of rioting. Live report from the frontlines right after this.

(COMMERCIAL BREAK)

KAYE: You could call it the new battle for Britain. Gangs of young people slugging out with riot police in London and other British cities. The destruction is simply unbelievable. Buildings and homes set on fire, shops trashed, burned-out cars. And now one person killed.

Prime Minister David Cameron cut short his vacation in Italy and called members of parliament back from summer break to deal with what he describes as what he describes as, quote, "criminality pure and simple." And he's ordered 16,000 police into the streets to restore order. CNN's Dan Rivers has more from the frontlines.

(BEGIN VIDEOTAPE)

DAN RIVERS, CNN INTERNATIONAL CORRESPONDENT: As looting continued with impunity in London, for the first time British police used the armored trucks to clear roads in a number of areas. This was Peckham in south London. This is who they were up against, gangs of masked criminals who had taken over the streets.

(on camera): So you can see the police are running down here in the center trying to reestablish order. But it's a very, very scary atmosphere. There's huge gangs of kids on the streets. Many of them -- you see there's a large amount of damage here as well. So we're not going to hang around. Get out of the way.

(voice-over): Caught in the middle, terrified young families trying to get home. This was Peckham high street, normally choked with traffic, now overwhelmed with rioters who looted dozens of shops. As night fell, the gangs became even more brazen, nose to nose with the police who were outnumbered.

The situation is anarchy down here in Peckham. There is no sense of anyone intervening to stop this. Perhaps the police feel intervening would make the situation worse or they haven't got the numbers. I'm not sure. This is a supermarket that's basically been completely emptied.

(on camera): We're going to have to move. Things are being thrown.

(voice-over): This was west London, cars left to burn in normally quiet leafy streets. Here almost every shop had been smashed, the economic cost as well as the social damage clear to see. This shopping area remained lawless and volatile hours after the first windows were hit. And this bus was abandoned down a side street after a gang smashed its windows, stormed aboard, and set it a light.

ANDREW BOE, BUS DRIVER WHO WAS ATTACKED: It was scary. It was scary. That's why I didn't want to talk about it. I was shocked. After throwing all the stones, bottles, everything in front of me, I was shocked.

RIVERS: Few of the gangs would talk, but this man who says he wasn't involved in the violence, did agree to speak.

UNIDENTIFIED MALE: People don't got no money. It's not one person. It's a group of people. It's a chain effect, isn't it? That's how it goes when people got no money. People want money.

RIVERS: But much of what's happened seems to be mindless vandalism. Now everyone in the U.K. is wondering how and if the government can regain control of the streets.

(END VIDEOTAPE)

KAYE: An amazing scene there. Dan Rivers joining us now from one of the hard hit areas in London. Dan, what's it like where you are right now?

RIVERS: Well, this is a town in east London on the other side of the city from where we were last night. Give you a look around. There's lots of police here. There has been a clash here earlier on, some bottles and bricks and stones thrown at buses and at the police.

Now things are pretty quiet. You can see there's still people out in the streets, still a lot of police here. These police, for example, have been drafted in from Wales. They've come to bolster the number of officers on the streets, which is now standing at about 16,000 police officers in London, 10,000 more than yesterday. And they're hoping that by surging the police, if you like, this will really keep a lid on all this trouble.

So far it's tense here, but it is quiet now. It's very quiet across the rest of London. And we're being told in the kind of upscale areas like Chelsea and Kensington, it's eerily quiet. People are just staying inside waiting to see what happens.

KAYE: Do officials believe they're getting control over the situation? I'm just curious why they haven't put in place a curfew of some kind. RIVERS: Well, that has been discussed here as has the use of rubber bullets, of rounds which have never been used on mainland Britain before. That's not being ruled out. At the moment, though, they feel, I think, with sheer numbers, they can get a grip on this situation.

But this is an incredibly difficult thing to police, because it's so dynamic. These gangs appear out of nowhere, hitting buses or any signs of authority, and then straightaway -- here's some of our friends here -- straightaway then they melt away back into the streets and it's very difficult for the police to keep up with them.

The police, you know, they've got vans and lots of equipment, there are helicopters up in the sky. But these guys can weave around quickly. They know the streets here. I mean, this is the kind of thing being thrown at the police, these lumps of concrete. The floor here is littered with bits of brick and things that have been thrown at the police. There's broken glass all across the street here.

And you can see, it is still fairly tense. There are still people hanging around. There are still gangs of kids around. It's calm, but I wouldn't say that this is over by any means yet.

KAYE: I'm sure. I can see you looking over your shoulder there a few times. I certainly don't blame you. Dan rivers, be safe. Thank you.

RIVERS: What if I told that you despite yesterday's market plunge, your 401(k) could be up 64 percent from 2009? We'll explain that. But in the meantime, look at the market right now, down negative territory, down 192 points. We'll talk more about your 401(k) after this.

(COMMERCIAL BREAK)

KAYE: Yesterday was not a good day for Wall Street. But it wasn't as bad as you might think. Christine Romans joins us again to break down the numbers and look at who took the biggest beating.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: OK, here's some perspective. Investors lost $1 trillion in stock value according to the Wilshire 5,000. That's the broadest gauge of U.S. stocks. Standard & Poor's downgrade of U.S. debt, overall economic concerns, the worries over the debt crisis in Europe all this Wall Street in a vice grip yesterday.

And the Dow Jones industrial average as you know plunged a whopping 635 points yesterday. That makes it the sixth biggest point drop of all-time for blue chip stocks since the Dow index was created back in 1896.

But the number of points really isn't as important anymore as the percentage drop. Now, the Dow lost 5.55 percent of its value yesterday. That's a lot. But it doesn't even rank in the top 20 for percentage drops historically. On black Friday in 1987, black Thursday, actually, in 1987, the Dow lost 22 percent in one day.

Now, still all the indexes took a pretty big beating yesterday. The S&P 500, the best indicator for what's in your 401(k), it lost about 6.5 percent. Every single stock in the S&P 500 ended lower. But financial stocks, wow, those were among the hardest hit. Bank of America dropped a staggering 20 percent. Citigroup and Morgan Stanley each dropped at least 15 percent each.

Now, stocks are down overall, 15, 16, 17 percent in just a few weeks. But here's perspective. The S&P 500 is now up 64 percent from the lows in 2009.

Christine Romans, CNN, New York.

(END VIDEOTAPE)

KAYE: Thank you, Christine.

Like a kick in the gut, a good Samaritan gets a pink slip instead of a reward. It is just unreal. You do not want to miss this next story. He's going to join us next right here in the CNN --

(COMMERCIAL BREAK)

KAYE: All right, you are not going to believe this next story that we're about to tell you. A good Samaritan who stopped his school bus to help police officers in trouble is now out of work. Yes, you heard me, out of a job.

It happened during a dangerous hailstorm in Long Island. This is a little of what it looked like there. The police, turns out, were trapped by flooding and the golf ball-sized hail. That's when George Daw happened by.

I really can't do the story justice without George Daw. So let's bring in George to tell us about it for himself.

Hi there, George. What happened in the hailstorm? Can you take us back?

GEORGE DAW, FIRED SCHOOL BUS DRIVER: Sure. I mean, it was -- I've driven in every type of weather since I had the job. I've driven in hail before. I've driven in snowstorms. But this was highly unusual. I picked up the child in Queens. I go from Queens, Long Island. I'm sorry. I go from Long Island into Queens every day and I pick him up in Queens and bring him back to Long Island.

But in any event, on this particular day, I picked up the child and I turned around and I had seen the storm was behind me. After I picked up the child, I knew I had to head that way. And it was -- I seen this out of the ordinary light display with lightning. I'm saying, you know, this is where I'm heading. It looked like night and day and I'm heading into night. It looked like, this is an extraordinary -- this is something like I've never been involved with before.

KAYE: But then you came across these police officers. So you rescued them.

DAW: Right.

KAYE: And a lot of people probably thought that you should have received some kind of reward or at least a pat on the back for this. Instead, you lost your job. Tell us how that went down very quickly.

DAW: Well, the thing is, yes, I had to write up an incident report because I came back late due to the flooding and whatever else transpired. I got back about an hour and a half late, almost two hours late. And I had to do a write-up on the bus, what caused the damage, what transpired. Also, I had to do a full report the following day.

KAYE: But were you shocked when you lost your job as a result of this?

DAW: Absolutely. Again, this is something that when every American comes home and you turn on the news, this is what every American throughout the United States is doing anyway under the horrendous conditions that have happened around the United States with hurricanes and tornadoes and floods.

I mean, you're seeing the community work with first responders getting the community back together and working together as a community. So for me to do anything other than any other American is -- that's what you're supposed to be doing. I didn't -- so Friday came, I had wrote up this incident report and it was done. To me, I forgot about it and I did my part like everybody else.

KAYE: And are you -- I do want to point out, George, that we did call the bus company that you worked for, tried to reach them several times and we didn't get a return call back. We wanted to ask them why you lost your job.

DAW: Yes.

KAYE: What was the explanation that you were given?

DAW: Well, see, the thing is, when people see the documentation, can you explain it to you -- it was because they felt that understandably, you cannot let a person under any circumstances on a school bus with children. I don't know who these people are and understandably nobody would.

But when people are telling you they're police officers and they're asking for your help and they're in this situation and they're telling you they got to get to the precinct. You're assuming that they're being called in because of this horrendous situation you're in with this bizarre storm. So you know, what do you do? I did what I thought anybody would do anyway and it was no big deal. So when Friday came and they told me it was because they felt I endangered the welfare of a child.

KAYE: You did have one child on the bus? DAW: Right. But even as a child, when you think of a child, you think of maybe a five-year-old or whatever. This is a 16-year-old child that has a slight speech impediment, and I have an adult that supervises the child and is with the child anyway. It's not a small child. He's not a fragile child. He's an -- actually, he's in a theater company somewhere in New York City, and he goes back and forth in New York City on the weekends by himself. His parents let him. It's not like this is a small fragile child.

KAYE: We understand it was a tough situation. You had the child on the bus but then you had people's lives in danger. Now you're out of work. We appreciate you coming on and sharing your story. And do keep us up to date if you do get another job.

DAW: Oh, absolutely. In the --

KAYE: We have to leave it there, George. I'm sorry.

DAW: All right, I appreciate it. Thank you very much.

KAYE: Thank you. We'll be right back after this.

(COMMERCIAL BREAK)

KAYE: Paul Steinhauser is in Washington with a political update. Hi there, Paul.

PAUL STEINHAUSER, CNN DEPUTY POLITICAL DIRECTOR: Randi, do you need more proof that people are pretty pissed off, I guess, at Congress? Check out this out, a brand CNN/ORC poll.

Do you think your congressman, your representative deserves to be reelected? Only 41 percent say yes, 49 percent say no. That is an all-time low for us in our polling. I guess it's more proof that Americans are not so happy with what's been going on here in Washington with the debt ceiling and everything else, Randi.

KAYE: Nobody is happy these days.

STEINHAUSER: Nobody is happy.

KAYE: Paul, thank you very much.

CNN NEWSROOM continues with Brooke Baldwin.