books about it. that is the difference. he is educated and steep in this and you can agree with him or not agree with him but rick perry has not conveyed he knows about this. >> it doesn't matter. michele bachmann won the straw poll and everybody is talking about rick perry. >> that's going to do it for us. "cnn newsroom" begins right now with kyra phillips. >> we need you in 25 seconds here, chris steen. it doesn't feel like groundhog day day but there will for the wallet. wall street is headed toward another very ugly day. the opening bell when it rings in about half an hour. world markets took a beating overnight. this morning, new measures of the economy is adding to all of the gloom. christine romans, part of our money team, joining us once again from new york. where do things stand now? >> reporter: we have been watching this unravelal the past

four hours or so. morgan stanley come out with a global note cutting its global growth forecast and saying the u.s., the world is dangerously close to recession quite frankly and naming a couple of different reasons why they think that global growth will not be as strong as they thought. among them, europe's debt problems and also mentioning what they call policy mistakes in the u.s. and also the drama about the debt ceiling. they say, overall, consumer confidence, business confidence, almost this negative feedback loop we are on the verge of people being so worried and not able to break out of that. lowering their global growth forecasts and enough to shake a shaky market which bank stocks in europe are down and real concerns about the debt crisis in europe. still even after france's aaa rating was reaffirmed. an icky situation here this morning. the dax and ftse is down and cac

is down also. bracing for a big sell-off this morning. saw new data from the united states. jobless claims above the 400,000 mark. you know last week was the first time they fell below 400,000 and new unemployment benefits filed in four or five months. returning on that upward trend for jobs in this country. basically, shaky situation, kyra, and just one more reason to be a little concerned about it. this report from morgan stanley which is raising the possibility of weaker than expected growth for the rest of the world. >> got it. chris steen, thanks so much. the other story breaking in the investment world. the federal investigation into s&p and claims it allowed greed to dupe investors. we have "the new york times" reporter at the end of the half hour on that. breaking news out of the middle eastship it's usually a quiet border area but this

morning talking about shoot-outs and attacks. six people have now been killed and in syria, the u.s. is about to call for bashar al assad to step down. we have our reporters with us. let's get straight to kevin flower, our jerusalem bureau chief. kevin, tell us exactly what is going on right now. >> reporter: kyra, what israeli military is calling an intricate and ongoing attack by militants in southern israel. this is what happened. after noon local time today, a group of militants in a car attacked a bus with gunfire. shortly after that attack, another attack, this was an improvised explosive device or a

roadside bomb, detonated against an israel military vehicle that was responding to the attack of the first scene. this was followed by mortar attacks in southern israel and then the firing of an anti-tank missile at a vehicle in southern israel as well. all of this happened about 20 kilometers north of the southern israeli city of eilat. the israeli military said this incident is still going on. the death toll is thus five, at least five people have been killed in this attack. israelis. we don't know whether those are israeli military or civilians at this point and seven of the attackers have been killed the israel military tell us as well. >> we mentioned it happened there on the border. kevin, thanks so much. let's head to cairo now. ben wedeman, with mubarak now gone, what does this tell us about the security situation right there on the border and could we see more attacks like this going forward?

>> certainly, kyra, the security situation in the sinai peninsula which abuts israel is shaky indeed. the egyptian army last three days conducting a security sweep in the northern part of the sinai because they are worried about the growth of al qaeda affiliated groups in that area. just to give you an idea of how dramatically the situation in egypt has changed since the revolution in february when 23,000 prisoners escaped from egyptian jails and according to senior egyptian security sources, only around 7,000 to 8,000 have actually been brought behind bars. among those escaped prisoners are, for instance, the former doctor to osama bin laden. there are members of palestinian militant groups and members of egyptian militant groups who have escaped and on the run and

widely believe many of them are in the sinai peninsula. egyptian officials say they are investigating the claims coming out of israel that some of the militants may have come from egyptian territory but, at this point, no solid information. >> also breaking this morning. syria in the fate of its long time syrian leader bashar al ass assad. secretary of state hillary clinton has called for a news conference. arwa damon is live in beirut. what are you hearing about secretary clinton and this announcement that is supposed to take place? >> reporter: well, there has been widespread speculation that the u.s. is going to call for the president to step down. now, if that is, in fact, the case, one would have to assume that they are not going to be the lone voice on this because the u.s. has already clearly stated that it is not going to

stand alone and calling for the president to step down, saying that that would basically not have any sort of an impact. one would have to assume if that is going to take place there are other countries that will follow shortly. this is all part of an ongoing bid to exert even more international pressure on the assad rah jej regime to try to satellite news center the anti-government demonstrators on the street. regional voices also. we are seeing a country moving into further isolation. it's only real solid partner right now in the region is iran. >> do you think assad cares? do you think this even matters to him that secretary clinton will call for him to step down? >> reporter: i think if the u.s. is the only voice to call for him to step down, then it's not going to have any impact

whatsoever. in fact, the us has gone so far to acknowledge that. if this then leads to other countries joining into this course, if this then leads to a growing amount of international pressure, if it leads to more pressure from the united nations, remember there is also the briefing that is set to take place by the u.n. high commissioner for human rates later on today. widespread speculation that syria is recommended to the international criminal court. those sorts of actions, analysts are telling us could put enough pressure on this regime at least to begin implementing some sort of a reform but at the end of the day analysts will tell you this is a government that is backed into a corner right now and its soul strategy appears to be survival and it seems as if it will go to any length possible to try to ensure that. >> as we watch the video straight out of the there at the beginning of the week. arwa, thanks and we will follow that news conference next hour. zain verjee has more on the world view of the situation.

some would say a stronger response from the united states should have happened a long time ago, but basically critics say what took so long? >> reporter: well, the u.s. is going to come out with this statement shortly. we should be hearing from the secretary of state hillary clinton in just under an hour or so. the u.s. has to tread carefully here. fact of the matter is according to analysts the u.s. doesn't have a whole lot of leverage against syria. the purpose of doing this would be to encourage opposition groups in the country and to really stand with the syrian people that want to go out on the streets here. but it's important that the u.s. doesn't come off doing this alone. frankly, assad doesn't care what the united states has to say. though syria cares about the credibility of the united nations and other countries too from the european union, turkey also. a very key player in the international and diplomatic

world and important to hear what they have to say. the true that assad's strategy is survival. the regime hasn't experienced this kind of pressure from all around the world and within its own country. this is a very important formal move the u.s. is expected to make. >> zain verjee, thanks so much. president obama is taking off on vacation and as you can imagine, his challengers are probably criticizing that as they are going to begin a bit of an offensive wondering, okay, we have a lot of business to do. why is the president taking off on vacation? senior little editor mark preston at a rick perry event that is getting under way. i can see behind you there, mark, all about the economy and sure to say something about is this the right time for the president to be taking a vacation? >> reporter: well, it will be interesting to see if rick perry criticizes president obama as he comes to this cafe here in port

smith, new hampshire. we will hear him talk about the economy. the laugh few days he is talking about. not surprisingly we are hearing this from all of the candidates and heard it from mitt romney who was up here in new hampshire as well yesterday. that is the number one issue on people's minds right now and become the number one issue on the campaign trail. >> mark, let us know once again when that gets under way and we will dip in to hear what rick perry has to say. you remember ris christine o'donnell? she ran a tlf commercial with the extraordinary claim she is not a witch. she is back in the news pitching a book and pitching a fit over questions asked by our piers morgan. >> i'm asking you a question based on your own public statements and now what you've written in your own book. it's hardly rude to ask you that. surely! >> well, don't you think as a host, if i say this is what i want to talk about, that is what

we should address? >> not really, no! you're a politician. >> yeah. okay, i'm being pulled away. we turned down another interview for this. >> o'donnell says she only wanted to talk about tea party principles outlined in her book and asking any questions beyond that was being a little rude. next hour, our piers morgan will join us to discuss this testy exchange. that is at 10:15 eastern time. coming up, frustration over unemployment boil over in the black community. now one african-american lawmaker tells voters to unleash them and put pressure on the president. a big promise from presidential candidate michele bachmann. 2 dollar gas. that's right! 2 dollar gas. is that really possible? releases armies nology of snowmen masseuse, who cuddle up with your soreness and give out polar bear hugs. technology. [ male announcer ] new bengay cold therapy. the same technology used by physical therapists. go to bengay.com for a 5-dollar coupon.

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checking stories across the country. in san francisco for the second time this weeks, hackers targ the website of b.a.r.t. this time someone posted home addresses and e-mails of more than 100 b.a.r.t. police officers. it's not clear who is to blame for the latest incident. six different looks at one bank robbery suspect. police arrested the bad hair ban died. 46-year-old sintian vanhollit wanted for a string of bank robberies last summer wearing a bunch of bad wigs along the way. we can never get enough of these stories. an army mom what hasn't seen her daughter since february surprised her little one yesterday at school. mom and daughter have 15 days to

catch up on what has been going on in staff sergeant smith's life before she leaves to go back to her post in iraq. a lot of anger and outrage over the economy. the african-american unemployment rate has nearly doubled the national rate now. heated discussions dominate a congressional black caucus town hall in detroit last night and voters demanded accountability. maxine waters asked to unleash her and other black lawmakers to unleash the president on jobs. >> we don't put pressure on the president because y'all love the president. you love the president. just a minute. just a minute. you're very proud to have a black man. when you tell us it's all right and you unleash us and you tell us you're ready for us to have this conversation. we're ready to have the

conversation! >> now that town hall took place right after a detroit jobs fair one of several responsed by the black causeus. another one kicked off this hour in atlanta. this is cohosted by georgia congressman hank johnson who joins me live now. as you know, congressman, maxine waters and what she had to say to voters there has made news across the country this morning. i guess i want to ask you straight off, do you agree with what she said? >> well, i believe that there is a lot of frustration about the pace of change in this nation, particularly for middle class and working people, and it's justified. i would point out the fact that it's the house republicans and the senate republicans, the republicans in congress who are the ones obstructing the progress that president obama has been working on since he

came in office and despite that opposition, he has accomplished quite a number of progressive accomplishments during his administration and there is a lot of congressional business that has been put off. >> let me ask you this. >> because of these false debt ceilings. >> are you afraid to criticize barack obama? maxine waters was saying to black voters, hey, you know, you like him so much we are afraid to go after him and criticize so unleash us. let us criticize the president and hold him accountable. i want to ask you, are you afraid to criticize president barack obama? >> no. i don't see the need to criticize president barack obama. i believe our criticism is directed at the house republicans and the senate republicans. that's where the problem is. it's not president obama. president obama must be reelected in 2012 for us to have an opportunity to do the

business of america that we need to be about and that is reestablishing the american dream. >> let me ask you this. with the black unemployment rate so low, you know, do you feel -- excuse me so high. >> so high. >> yes, so high. thank you. do you feel that president obama is -- he is touting jobs and creating jobs. is he creating the kind of jobs that resonate with the black community? >> well, unfortunately, our history in this country has been that blacks are the last hired and the first fired. that still holds true regardless of who is president, that has been the course of action in america, something that we certainly don't want to live with and we want to continue to fight and it's by having president obama in office and having democrats in charge in the congress that we will accomplish that. >> congressman hank johnson, appreciate your time this

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michele bachman is making a pretty big promise. 2 dollar gasses. >> under president bachmann, you will see gasoline come down below $2 a gallon again. that will happen. >> alison kosik, she sounds pretty confident. is that really possible? >> reporter: you know what? i have to say so michele bachmann. good luck with that. she says she will push down

prices prices. what she wants to boost supply but analysts say it's not going to do much good because opec would respond by squeeze the price and making it higher. oil makes up almost 70% of that gas price. and the price of oil depends on how the economy is doing and if you look at the economy since 2009 the global economy has picked up, which means we have rising demand and those higher prices. the thing is gas prices are likely to fall to that 2 dollar mark but only if we fall into another recession and i don't think that is the way any of us want to go, especially michele bachmann. >> now let's talk about the markets. we hear a sell-off today. what is going on? what do you think? >> reporter: the bears are back. dow futures down about 200 points following on the heels of europe and asia where there were sell-offs there as well. morgan stanley lowering its

outlook for global growth saying the u.s. and europe are hovering dangerously close to recession though morgan stanley isn't forecasting that will happen but spooking the markets before the opening bell. >> thank you. allegations of greed, deception and corporate bullying. part of the federal investigation into standard & poor's. yep, the agency that downgraded our nation's credit rating. we will talk to "the new york times" reporter who broke the story. rick perry talks about jobs created because of his policies in texas. does the hype match the reality? tinted moisturizers t with scientifically proven soy complex and natural minerals. give you sheer coverage instantly, then go on to even skin tone in four weeks. aveeno tinted moisturizers.

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the same technology used by physical therapists. go to bengay.com for a 5-dollar coupon. checking top stories now. sources tell cnn the u.s. will call for syrian president assad to step down. secretary of state hillary clinton will make a statement on syria at the top of the hour. president obama heading to martha's vineyard for a summer vacation and plans to unveil a new jobs growth plan after labor day. all right. just about half past the hour

and within moments you're witness yet another gut-churning plunge on wall street. let's break it down, she with? ali velshi is still with us and alison kosik at the new york stock exchange. let's start with you, ali. the countdown clock has begun. what do you think is causing all of this anxiety today? >> reporter: we had weak markets overnight in asia and going into europe and a report from morgan stanley that has downgraded their growth estimates for the entire world. gdp growth. keep in mind this is how economists arrive at this. the calculations that everybody makes as to how much the world is going to grow and then consensus look what goldman sachs and morgan stanley and all of these companies doing. morgan stanley saying international growth is going to be lower and saying the chances a global recession have increased although it's not their base case. they are just saying it's gotten worse. we have heard that from other people as well. the bottom line, they say they

have to see more from the european central bank and the u.s. federal reserve. by the way, more of the very stuff that rick perry, the other day, said would be treason ivert. more money put into the economy, because really the central banks are the only game in town. they are the only ones with the ability to get these economies going. the report also cited policy errors in the united states and europe and said the drama surrounding the deted ceiling e has created a debate. a big sell-offs and now that bell is going to ring in about six seconds and dow open up lower maybe 200 points. >> alison, for days, you and i talk about that loss in confidence and how it has continued to impact the market. >> reporter: oh, yeah. you're seeing that today, especially when you see morgan stanley coming out and saying that the u.s. and europe are getting close to a recession.

doesn't do much for confidence especially with old americans and investors as well, especially when you look at the market. this is a market driven by headlines these days and the headlines out of europe and their debt troubles possibly spilling over here to the united states and a headline from morgan stanley just sort of accelerates that feeling that we really could be headed toward a recession and that is why you see the markets tanking today. the dow right now down about 150 points. >> alison and ali, i'll ask you guys to hold on a second. i want you to weigh in with our next guest if you don't mind. another money-oriented story that broke this morning and lucky enough to get the reporter who broke it. you remember a few months ago, you probably would have never heard of standard & poor's, right? it's the largest credit ratings agency in the nation. and it's the namesake of wall street's s&p 500 but it became a household name to so many people that didn't know what it was when it downgraded our credit rating and it weakened as we were talking about weakening the

confidence in all of us with what has been happening in our economy. this added to that lack of confidence that we have felt. well, now s&p or standard & poor's has troubles of its own. "the new york times" in an article this morning is talking about the s&p is under federal investigation for possible wrongdoing and lead story the reporter who helped break that story and, louise, i might have ali and alison have a question for you. we saw the article this morning on the front page of "the new york times." i guess, you know, first of all, when did this investigation begin? did it happen before the s&p made the decision with regard to our credit rating? >> that is what a lot of people wonder because politicians in washington are so upset about the downgrade of the united states, but i interviewed people who have been interviewed by the

doj. these are witnesses in the potential case against s&p and they were interviewed before the downgrade. they have been interviewed this summer. it does appear that the department of justice was ramping up this investigation into standard & poor's this summer. it's really in direct contrast, the department of justice has been closing a lot of its other investigations into the financial crisis. they have closed their investigation into countrywide, the mortgage company, and washington mutual, the bank, but they are going heavier into standard & poor's, the rating agency, over the way it rated mortgage securities before the financial crisis. >> so what do you know? what kind of evidence exists or what have you sources told you about these allegations that the s&p actually made an error in its debt calculations and, in addition to that, the allegations that they were too close, analysts were much too close to big money business? >> well, you know, the irony

here, of course, is people are criticizing standard & poor's for being too negative on the united states and downgrading the united states, but what i wrote about this morning is really a separate instance and it has to do with how standard & poor's graded mortgage bonds in '06 and '07 when they were too positive. back then, they said that mortgage bonds full of very toxic loans were rated aaa. as we all know now that was just not right. the people they have been interviewing is former s&p employees who have spoken with me have told me the kinds of questions the doj lawyers are asking. first of all, the doj lawyers have been telling potential witnesses that this would be a civil case, not a criminal case, which is a common thread in the financial crisis cases we really haven't seen many criminal cases. second of all, they are asking about a lot of examples where a ratings analyst might have said, you know, we have got a downgrade this mortgage bond and

then a business person would have said, no, no, no, no. you can't do this. that calls into question a lot of things that the rating agencies, you know, their protection under the freedom of the first amendment and whether they are driven by profits or by driven for the truth in their ratings. >> ali, i want you to weigh in. >> yeah. >> let me point out markets down, dow jones industrials down 283 points now. >> louise, in hindsight, we will all be able to know that they were wrong. here is my question to you. were they wrong because it was an error in calculation? were they wrong because the system of evaluating was wrong? or were they -- i know i don't want you to speculate -- were they wrong because people deliberate l deliberately misrated these bonds? >> this is the big question. really of the entire financial crisis. the question is was wall street, you know, essentially wrong?

were they stupid? can they miss things or make mistakes or was there fraud? in the s&p case that is what the doj is trying to uncover. they are trying to uncover whether the models were just wrong but it was an innocent mistake, or whether there were ratings analysts there that knew these mortgage bonds were not zoas good as they were saying but were they overruled by continuing to make profits. the ratings agencies made more, the more of these deals they rated and because they got paid by the banks that created the deals, there was an incentive, critics say, for them to rate them favorably. >> here is my question. ali, you know, you probably are wondering this too. louise is the justice department also investigating moody's and fitch or is s&p singled out?

>> i have only talking to people contacted sapp. i have not found people aware of the other people. the other thing to keep in mind here there was only a little bit of reform of the ratings agencies that were done after the financial crisis, only a few changes. if a case comes out with evidence that this was not just an innocent mistake, that this was really a fraud, it could give more political moment in washington to overhaul the entire way ratings are used in our financial system and of course, you know with all of the anger over the u.s. downgrade, there is greater movement afoot in washington for nmore reforms >> appreciate it. ali, thanks. louise, great job with your reporting there of "the new york times." the dow jones industrials continuing to tank and we will continue to follow that. a developing news coming out of syria. we were telling you that our sources were telling us that

possibly secretary of state hillary clinton coming up in the next hour would call for bashar al assad to step down. now the president of the united states has put out a statement here on the situation in syria calling for bashar al assad to step down. i'm going through the statement right now. okay. he has not led up to the sake of the syrian people. the time has come for president assad to step down. all right. so it's a much longer statement. that is the gist of what he is asking for directly for him to step down. i will get through this statement out of the white house and bring you more information as this story continues to develop. all right. also ahead, rick perry, talking about jobs he has created because of his policies in texas but how much credit does he really deserve? we will go live to texas to fact

check.

real quickly. i've had a chance to read through the statement coming from the president of the united states with regard to the situation in syria and the president calling for its president bashar al assad to step down. we are talked to much, our arwa damon, in particular, about the brew tall its against protesters in syria, fighting for democracy and all of it coming forward in the hands of the government under the instruction of bashar al assad. now the president is saying the united states opposes the use of violence against peaceful protesters in syria and the president continues to say he has not led. for the sake of the syrian people, the time has come for president assad to step aside. we are expecting secretary of state hillary clinton to hold a news conference possibly within 20 minutes or so. we will bring that to you live

as soon as it happens. okay. also the markets, the other developing story this morning. take a look at this. it's what we expected. we have been talking with our ali velshi and alison kosik and our christine romans about the fact we would see numbers tank and they did. as soon as the opening bell rang at half past the hour, we have watched the markets continue to slide at a negative territory. dow jones industrials right now down 332 points. all right. rick perry's record as a job creator in texas, it's already become a big theme of his presidential campaign as we know. our ed lavandera took a look at the number of jobs created during his term as governor and whether rick perry can actually really take credit for it. >> reporter: rick perry loves to talk about jobs. >> my actions as governor are helping create jobs in this country. >> reporter: really? he really loves to talk about jobs. >> it is time to get america

working again. >> is recognize perry and the restoration of american jobs and the american dream begins now? >> reporter: the campaign ads are clear but does the type with consist stand secrete knee? sense perry became governor 11 years ago the state has gained more than a million jobs and the rest of the country lost 1.5 million jobs. some call it the texas miracle. perry says tort reform and low taxes and more business friendly regulations make texas a model state. critics like the center for public priority center say take a closer all right. u wouldn't state your model state would be number one in low wages and also a lack of hurngs. y health insurance. you wouldn't think it would be smack dab in the middle in terms of your unemployment. that doesn't sound like the model. >> reporter: this is the newly opened headquarters of a high tech company called virtual computing environment.

>> we look both coasts. san francisco, bay area, we look chicago area, boston. >> reporter: tim page says the company picked a dallas suburb in large part because of a program created by governor perry. they offered 2.5 million dollars to hire almost 400 texas workers at high wages. >> did texas come after you guys? >> they didn't approach us pro actively. we had come here, they embraced us efficiently and didn't let go until we made a decision. >> reporter: golden living would be moving its headquarters from ft. smith, arkansas, to this office building in the dallas suburb of plano and create jobs in texas. the company is relocating 50 of those employees here to texas and hire the other 50 here locally. critics say that kind of job creation is nothing more than job snatching.

>> job attraction and job creation are two different things. if all you're doing is moving jobs from utah to texas, the nation is not any better off competitive competitively. >> reporter: critics say governor perry is claiming credit for things out of his control. about a fourth of the jobs created in texas under perry are actually government jobs, mostly teachers hired to keep up with the state's population boom and that the states also benefited from high energy prices fueling growth for gas and oil companies. perry is convinced voters will give him credit for making texas a better place to do business. christine o'donnell's appearance in national politics was brief but colorful. a darling of the tea party and prone to a number of gaffs and ran a commercial claim she is not a witch. she is back in the spotlight with a book but refusing to answer questions about some of

the topics. >> i'm asking you questions based on your own public statements and now what you've written in your own book. it's hardly rude to ask you that. surely! >> i am being pulled away. you know? we turned down another interview for this. >> where are you going? o'donnell says she only wanted to talk about tea party principles outlined in hur book an asking any questions beyond that was, quote, being a little rude. piers morgan will join us an hour from now to -- no, about half an hour from now to talk about that. now they are making headlines for looting and beating, flash mobs. our next guest is going to say, well, don't blame social media. ♪ do you love me

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we continue to watch the markets slide. still in naegive territory. not getting any better. dow jones industrials down 351 points. we are going to continue to watch the markets for you throughout the hour. other stories now. in new york, parents, students and teachers of the bronx new school are finding out they will be going elsewhere when school starts next month. that is because potentially cancer causing toxins have been discovered in the building. the teachers union wants to know why it took so long to take accession. check this out. at this cap rather, off the coast of massachusetts. 12 feet long, we're told.

458 pounds. it's a blue shark. apparently the 15-year-old fisherman that reeled it in couldn't believe it, either. the catch could beat the state record, by the way, by four pounds. in springfield, massachusetts, recently unearthed stories written by dr. seuss. a long time fan of the children's writer stumbled upon seven forgotten treasures that briefly appeared in magazines in the 1950s and now we may get a chance to read all about these new characters. so flash mobs, what happened? started with young people using social media to quickly gather in groups and they danced together in public like this. or they gathered by the hundreds for a huge pillow fight. now when we hear about flash mobs, they're linked to scenes like this, mob beatings. pretty disturbing. or scenes like this, young people pouring into a store. not to dance but just to rob it. douglas rushcough is author of "program or be programmed." and he's an expert in social

media. actually wrote an op-ed piece on what's going on here. so, what has happened, douglas? how did it go from such a fun event to something so horrific like the gathering of mobs beating up people and robbing stores? >> i know. it's funny looking back at the early flash mob dancing as, i don't know, almost nostalgic good old days. i think what people have to contend with is that different media are biased in different ways. i don't mean biased like left-right. i mean biased in that they have leaning or tendencies. like radio, back in the day, in the 1930s, it was youused by hitler. it was a powerful medium towards a biassed to rally people together to make them believe it was a magical technology. and likewise now, social media is biased in other ways. social media is very arousing in certain ways but it's also very

distancing. when we see kids teasing each other in ways through social media that they wouldn't maybe do in real life or the kind of picking on people that happens. it's because it's also a desense . if you're going to rob a store or beat someone up, if you get a little text command telling you to do that, it's -- you feel much less personally responsible for what you do. >> so, douglas, let me ask you then. do you think access to technology like this is just too dangerous to handle? >> no. well, first, it's here. it's with us. it's not that it's too dangerous to handle, it's that it's too dangerous the handle if we don't know how to use them. you know, we can't -- you can't have a tool like language unless you really know how to speak and how to listen. you can't have text unless you know how to read and how to write. and we can't really have these broadcast technologies in our hands unless we're taught oh we

oh and this really means from an early age. this means in school, in elementary school, unless we're taught how these technologies work. what are they? how do they make us feel? and what do they compel us to do. until we really get that learning curve, i think we're going to see people acting in really unpredictable ways. >> doug glarks thanks. . if you didn't get a chance to read douglas' piece about flash mobs, you can. if you like during the conversation, leave a comment for him.

well, stories making news later today. this morning at 11:00 eastern in new york city homeland security secretary janet napolitano

honors the firefighters who died in 9/11 terror attacks. president obama consults with the national security team. and 2:30 eastern in los angeles, actor danny devito gets a star on the hollywood walk of fame. following lots of developments next hour of cnn newsroom. let's start with your jerusalem bureau chief kevin flower. kevin? >> kyra, today, they waged an open battle with heavily-armed militants near the egyptian/israeli border following a brazen daylight attack against israeli civilian bus. we'll have more at the top of the hour. i'm alison kosik at the new york stock exchange. i'm watching stocks sell off and it's only the first half hour of trading. kyra, i'll tell you why wall street is worried today. the dow down right now 356 points. i'm mark preston in port smith, new hampshire, with one of the republican presidential candidates. number one issue on voters'

minds is the number one issue on the campaign trail. jobs. i'll have more on that on the top of the hour. >> thanks, guys. also ahead, he asked a question, she answered by walking off the set. so what exactly ticked off tea party darling christine o'donnell? piers morgan joins me next hour to explain. discover customersl are getting five percent cashback bonus at the pump... and at many of the places their summer plans take them. it pays to switch, it pays to discover.

[ male announcer ] they'll see you...before you see them. straight to secretary of state hillary clinton as the president called for the resignation of syrian president bashar al has sad. >> torturing op pigs leaders, laying siege to cities, slaughtering thousands of unarmed civilians, including children. the government has now been condemned by countries in all parts of the world and can look only to iran for support for its brutal and unjust crackdown. this morning president obama called on hassad to step aside and denounce the strongst set of sanctions to date targeting the syrian government.

these sanctions include the energy sector to increase pressure on the regime. the transition to democracy in syria has begun and it's time for hassad to get out of the way. as president obama said this morning, no outside power can or should impose on this transition. it is up to the syrian people to choose their own leaders in a democratic system based on the rule of law and dedicated to protecting the rights of all citizens regardless of ethnicity, religion, sect, or gender. we understand the strong desire of the syrian people that know foreign country should intervene in their struggle, and we respect their wishes. at the same time, we will do our part to support their aspirations for a syria that is democratic, just, and inclusive.

and we will stand up for their universal rights and dignity by pressuring the regime and assad personally to get out of the way of this transition. all along, as we have worked to expand the circle of global condemnation, we have backed up our words with actions. as i've repeatedly said, it does take both words and actions to produce results. since the unrest began we have imposed strong financial sanctions on assad and dozens of his cronies. we have sanctioned the commercial bank of syria for supporting the regime's illicit nuclear proliferation activities. and we have led multi-lateral efforts to isolate the regime from keeping them off the human rights counsel to achieving a strong presidential statement of condemnation at the u.n.

security council. the steps that president obama announced this morning will further tighten the circle of isolation around the regime. his executive order immediately freezes all assets of the government of syria that are subject to american jurisdiction and prohibits american citizens from engaging in any transact n transactions with the government of syria or investing in that country. these actions strike at the heart of the regime by banning american imports of syrian petroleum and petroleum products and prohibiting americans from dealing in these products. and as we increase pressure on the assad regime to disrupt its ability to finance its campaign of violence, we will take steps to mitigate any unintended effects of the sanctions on the syrian people. we will also continue to work

with the international community because if the syrian people are to achieve their goals, other nations will have to provide support and take actions, as well. in just the past two weeks many of syria's own neighbors and partners in the region have joined the chorus of condemnation. we expect that they and other members of the international community will amplify the steps we are taking, both through their words and their actions. we are heartened that later today the u.n. security council will meet again to discuss this on-going threat to international peace and stability. we are also working to schedule a special session of the united nations human rights council that will examine the regime's wide spread abuses. earlier this week i explained how the united states has been engaged in a relentless and systemic effort with the

community pursuing a set of actions and statements to make crystal clear where we all stand and generating broader and deeper pressure on the assad regime. the people of syria deserve a government that respects their dignity, protects their rights, and lives up to their aspirations. assad is standing in their way. for the sake of the syrian people, the time has come for him to step aside and leave this transition to the syrians themselves. and that is what we will continue to work to achieve. thank you all very much. >> it happened. first we had talked to you about the sanctions. now we -- it is official. the president of the united states, we received a statement just about 20 minutes or so, now secretary of state hillary clinton coming forward holding the official news conference calling for syrian president bashar al-assad, the syrian

president to step down, making the point clear it all centers around, as she says, the slaughtering of unarmed civilians, including children, during those pro-democracy rallies in syria. okay. also, developing story or the breaking news story that we've been following since half past 9:00, and that was the opening of the markets. and look at that. the numbers continue to slide to the negative territory. dow industrials now down 440 points. we're going to continue to follow the markets for you and what it means to your wallet. in addition to these developments that are continuing to happen out of syria. do you want to go to alison kosik or zain vergee first? zain, stay with us. alison kosik, to you. down 453 points now. we suspected this was going to happen. it's not getting any better as the minutes tick on. an hour and a half in.

>> yes. >> half an hour in. 30 minutes in now. >> half an hour in. we are seeing the losses on the dow accelerate a bit. what's spooking the markets? more talk of recession. morgan stanley saying the u.s. and europe are dangerously close to another recession within the next year. morgan stanley also lowering its global growth outlook for this year and next. what's morgan stanley blaming? blaming policy mistakes. meaning lawmakers here and in europe. they didn't act fast enough to get a handle on these debt problems. losing confidence of consumers and businesses. important caveat, morgan stanley says we're close but it still does not expect a recession to happen. still that headline really grabbing investors, sending them to the exits. the dow now down 469 points. >> okay. alison kosik, still watching the numbers for us. appreciate it now. other breaking news story, that is coming out of syria. the president of the united states issuing a statement, you just heard from secretary of state hillary clinton calling for the resignation of syria's

president bashar al-assad. zain vergee joining us out of london. critics coming forward saying, what took so long? for weeks and weeks we've seen the video, even, you know, the video that's gone viral on the internet, showing the brutal crackdown of unarmed civilians there within syria. >> well, the u.s. has come out and said bashar al-assad must go. they have done it unequivocally and formally which really increases pressure on the regime. what's important here, too, is that the u.s. hasn't just come out alone and done it. you've got the u.n. that's going to be talking about syria today. you've got france, germany, and the uk just moments ago coming out and saying bashar al-assad has lost legitimacy and he needs to face the reality. so it's important that the u.s. is acting in lock step with the rest of the world and really isolating bashar al-assad. analysts i've spoken to though says syria doesn't really care what the u.s. has to say here.

these sanctions will bite but it's not going to be enough for him to shift his policy. what's important here they say and what we're hearing out of the white house today on syria is this is also a message to the syrian people, the u.s. is with you. and also a big encouragement to the opposition, as well. will bashar al-assad stand down because of the u.s.' statement in unlikely. >> zain, another question for you as we continue to follow the markets here. i know you're following the markets, as well, overseas. and the international reaction. dow industrials continuing to tank now in negative territory of 502 points. zain, as we watch these numbers and as you've been following the breaking news out of syria, as well, you know, what is -- could -- is this going to be the type of situation where moammar gadhafi, where bashar al-assad, as you pointed out, doesn't care about this call for resignation and sanctions and will fight

until the bitter end? >> it's really unpredictable. throughout the arab spring and the situation in the arab world, we just don't know how things will shake out. and that's actually what makes it so dangerous and has an impact on global politics and geo politics and the markets as well. we should keep in context, too. why does syria matter to the u.s.? syria is literally in the middle of the middle east. so if syria goes down it really is going to reverberate throughout the region. syria is also a very important player in any future peace between israel and the arab world. syria backs hamas and hezbollah which the u.s. designates as terrorist groups. the u.s. has been trying for a long time to cut off the relationship between syria and iran. iran is syria's only buddy. lastly, if assad goes and syria goes down, there's a danger that there could be a great level of destabilization in the region, more so than we're seeing and many say that's not good for

u.s. security there. >> zain, we will keep talking about it. we've got ali velshi wired up to talk more about the dow dropping. ali velshi, negative -- it's now hit negative territory. 507, now 511. this is brutal. this is -- >> yeah. >> this is -- we knew it was going to be bad. just looking at what's coming across the wires, as well. all the investors, the pictures from wall street, it's those images of everybody, you know, the head on the hand, like, okay, what the hell are we going to do? >> yeah, kyra, i don't know if you can hear me. i can't hear you anymore. but i'll tell you what's going on here. we've got -- we have a number of things that have come together. i spoke to you half an hour ago about this morgan stanley report that came out that said world growth, economic growth was slowing. and that there was a greater chance of a recession. we already went into asian markets and european markets overnight and we had already seen lower markets.

and then at 8:30 we got a jobs report. this is a weekly unemployment benefits report. that was lower than we expected. that was higher than we expected. more people filed for unemployment claims last week than we expected. only by a smidge, and this is the important thing to understand, kyra. there is nothing that has happened today that is a whole lot of a surprise from what we knew. we knew growth was slowing around the world. we knew europe has problems. united states has growth problems. we know we're not going gang busters on unemployment. housing data weak coming out. you and i have done this probably three times before in our entire working history. kyra, where everything moves the market. there's so much volatility. and there's so much going on here. so that's basically the problem that we've got right now. investors don't want to be caught holding the bag when something happens to suggest that the world's headed into a recession. this is not an indication, kyra, that the world is headed into a recession. it's an indication that investors are putting their money somewhere other than stocks. people are putting their money

into gold. we've seen a brand new record in gold today. well over 1800, i don't know what it was the last time i checked. well over $1800 an ounce. you're seeing people put their money into the safety of u.s. treasuries. ten-year yield is now lower than 2%, which means the government can borrow money for ten years for less than 2%. that's what you call a flight to safety. that's what you're seeing. i hate so say it because it slunds like a lot of what i've been saying in the past. flight to safety. people of concern as to what's going to happen to their money if they leave it in the stock market. >> can you hear me now? >> yes. >> great. all right. stay with me. we've also got alison kosik from the new york stock exchange. alison, as you look behind you, give us a feel for the mood, how the reaction has been, what's the vibe? >> you know, people have been asking me all morning is this panic? this is not panic. this is fear. when you hear morgan stanley coming out, you know, stoking fears about another recession,

that causes investors to run for the exits. you know, also one thing at play here is the volume of trades that are coming through here. it's much lower. there are fewer trades coming through this week. there are a lot of people on vacation. we're kind of back to those normal summer days where not many people are at work. it's something different than we saw last week where traders and investors actually stayed home from vacation to keep an eye on their portfolio. that's factoring in. when volume is lighter it causes more volatility. that's why you're seeing these big spikes like we've been seeing. one thing i want to point out with this morgan stanley note that came out today. everybody is kind of focusing on this headline. but you have to look at that kind of looks worse than maybe the contents of the report because if you look a little deeper you see that morgan stanley went on to say that it sees three reasons why the country would probably avoid another recession. first of all, the pile of cash that companies are sitting on. secondly, declining oil prices. and the expectation that the u.s. federal reserve and the european central bank would

eventually intervene if the recovery stumbles more. these are things that we touch on almost on a daily basis. but what you're seeing today is kind of that knee-jerk reaction to the headline. and also because of what's going on in europe, their debt problems as well. a lot of this is knee-jerk and it's fear based on what morgan stanley said about a possible recession. kyra? >> okay. so, ali and alison, ali, maybe you can weigh in on this. it's like groundhog day. here we are again looking at these horrible numbers. >> yeah. >> and talking about, alison pointed out, staying home from vacation to watch our 401(k)s plummet. for the average viewer watching the numbers and they are, as she says, it's not panic, it's fear, they're afraid of what's happening to their money. what do people like you and me need to do? >> okay. this is -- the good question, kyra. i'm just going to take this out because i'm still having audio problems. the stock market is here, right? and over time, unless the world

turns upside-down and it's not going to do that. even if there's a recession the stock market will go to here. that's what the stock market does over time. but when you zoom into little windows like we're in right now what you see is a lot of this. it's very frustrating but ultimately we bounce around for a little while and then something gets fixed and we start to move. this is in the worst we've ever seen, in the great depression, and in the recession that we saw in 2008. that is exactly what happened. no time in history has that not happened. so if you have a or rye zone that allows you stay vested, you reposition. if you had precious metals you sell some of them because they keep hitting new records and you bring your portion down to whatever it was that you would have invested in. say 5%. if you have emerging markets you sell and bring it down. if you have cash you start to invest it in some of these low areas or you hold on to it until you're feeling a little bit better. but you conduct yourself in that way because you can't influence this. but remember, there's nothing about this that says this is the one time in history when stocks are going to go just -- they're

just going to go down. volatility is always what it looks like. in ten years when we pull it back, you won't even see this blip. but right now it's all we see, which is why everybody is focussing on it. >> okay. ali, stay with us. dow industrials down 474 points. continues to remain in negative territory. we're going to keep talking about what that means for you and your money and what we could see going forward. we're going to take a quick break. every time a local business opens its doors or creates another laptop bag or hires another employee, it's not just good for business -- it's good for the entire community. at bank of america, we know the impact that local businesses have on communities, so we're helping them with advice from local business experts and extending $18 billion in credit last year. that's how we're helping set opportunity in motion.

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what we're seeing dow industrials tanking right now. negative 432 points. and ali velshi, alison kosik, and now we have paula monica from money to talk with us about this. ali, let's start with you. today, what has happened, particularly -- in particular, today? >> right. >> it's rooted in the european banking system, these fears that are coming forward, right, because looking at its debt, the federal reserve looking at its debt crisis, how it's going to impact our banks now which of course has all investors completely freaked out. >> yeah. >> -- about their money. >> yes. so, look, on a daily basis it's something. if we didn't have a major report come out this morning from morgan stanley talking about the economy we probably would still have seen a down market because markets are down in asia and in europe. but then morgan stanley came out with a report which will probably look similar to the reports we'll see over the

course of the next few weeks, basically saying we are downgrading the expectations for how much global economies will grow over the course of the year. we expected that would likely happen but finally someone has done the math and said it's going to be downgraded. they also said the case for the world going into a recession or a double dip has increased. they still don't think it's base case but it's increased. now, remember, i want to take you back to 2008 when we used to talk about markets that did this. there's one key difference. back in 2008 no matter how well diversified you are, everything went down. people really did take their money out of the market and may have kept it in safe storage in cash. this is not the case here. today you see a market that's going down. fairly substantially. even seeing recovery on the dow. you are seeing money going into gold, for instance, which hit a new record. and you see money going into u.s. treasuries. ten-year note now yielding or pay an interest rate of less than 2%. when more people want to buy them the demand goes down. you have to pay less interest on those. and so the interest rate has

come down. that is really, really historic. i mean, we're now talking about people just saying, i don't know what's happening in the market, so i'm pulling my money out. i just want to make that distinction, kyra, because that's not the same as people saying everything is going to hell in a hand basket. they're saying i don't know what the next economic report is going to do to the market and i don't want that volatility. logical decisions about what to invest in, do not make sense this week. they didn't make sense last week. they may not make sense next week. this is just people pulling their money out until they get a sense of who is growing, who is not growing and who is going to get the world out of a recession, if anybody. >> paul, when can we get some sort of sense of who is doing well and not so well and then we know what to do and eliminate a lot of the fear? >> unfortunately i think it's going to take some time, as ali mentioned. there's a lot of confusion, uncertainty is the word of the day, it seems. you know, all the past month or so now. you know, you have to look also at the economic reports in the

u.s. i don't think that this sell-off today is just about europe and morgan stanley report. we had jobless claims going up again. that's not a great sign since everyone knows the employment picture is pretty bleak here right now. you had consumer prices also, a key government report on consumer prices was much higher than expected in july. a lot of it due to gas prices. and that's got a lot of people worried. the economy is slowing and at the same time consumers paying more for goods, maybe it's not really inflation in the classics economic 101 sense but tell that to a consumer going to the grocery store and gas pump and paying higher prices. it doesn't matter if it's not real inflation. i think that's spooking a lot of people right now. >> stay with us, guys. alison kosik, we'll talk to you right after the break from the new york stock exchange. dow industrials down 466 points at 10:21 eastern time.

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>> reporter: hernando, mississippi, is number 7 9 on "money" magazine's list of the best places to live. i know what you're all thinking, what do we do? stocks right now sinking, dow industrials down 442 points now as we look at the big board there. but our cnn money team is on it. we've got ali velshi, alison kosik, paul lamonica. richard quest now is getting seated. alison, i promised the viewers we would get right to you on the other side of the break. how does it feel there? you say you don't get a sense of panic. just a tremendous sense of fear right now as you look over your shoulder and watch what's happening there on the floor of the new york stock exchange. >> exactly. i just talked with a couple o l traders. they're not seeing anything good come out about the u.s. economy. paul focused on this a bit. we had a bunch of economic reports coming out today. jobless claims figures rose. that is spooking the markets, that we're not seeing much

improvement in the jobs market. we've got a regional manufacturing report. that's signaling we're in contraction mode. that's not the direction that you want to go in if you're in a recovery. we also got home sales numbers. they're down 3.5%. the housing market still stuck in the doldrums. and for most of us, for many of us, our homes are really where we have big chunk of our inve investment locked up. when you see the value of our homes going down and the fact that we can't put our homes on the market like we used to, that could also hurt confidence as well. the good news is that the loss is on the dow are holding steady at 425. the dow down 425 points. we're seeing investors get out of stocks and go right to gold. gold up about 1 3/4% right now. but that vix index we watched that fear indicator of the fear in the marketplace is jumping about 29%. kyra? >> ali velshi, you said that all of this is happening today. as we watch the numbers continue to tank, the dow industrials now

down 425 points, that this only makes a stronger case for the whole recession theory. >> yeah. well, makes two strong cases. first of all, makes a stronger case for the recession. but that's largely because people are seeing it. this is morgan stanley coming out and saying what many others have said. there's a case if we're going into a double dip. everything is hedging. nobody says there's a better than 50/50 chance of going into it. nobody is saying it's the likely case. they're just more people saying it's possible that it could happen. but for proper policy intervention by the european central bank and by the federal reserve. i want to remind you that it is that very intervention, whether you want to call it qe-2, quantitative easing, or you want to call it oh we whatever you want to call it, it's the very thing that rick perry said that it would be treasonness if ben bernanke were to do it. you've got the world saying the central banks are the only organizations with the ability quite possibly to keep this economy on sound footing.

i don't know if paul is still there. earlier paul was saying to you we can't discount the fact we got inflation reports, jobless report earlier today, we got a number of reports that were not great. there is no circumstance under which is combination of those three reports all of which we did not expect to be great, would have resulted in a 3.8% drop in the markets. so what you have is an already jittery market and then you take little bits of information that on their own wouldn't cause this kind of a drop and it just piles on. that's the problem. because everybody is jittery. one last piece of information and they say i'm getting out of the market. the net effect here, kyra, is we're looking at this, it's your 401(k) and you will make spending decisions on the basis of that. you'll sit there and say, you know what, maybe i'm not taking a trip, maybe i'm not buying something new. that's where you have a problem. everybody is stalling. everybody is just stopped in their place to decide what's going on. and we don't know what the answer to that is. that's where you're seeing it. final point, kyra, the stock market is a reflection of the value and the earnings of the economies in the stock market.

it is unclear that the value of those company or their earnings has changed. so what you're seeing is the bedding in the one place you can place the bet. the stock market is not the only indicator of the economy and it is unclear that the economy is universally bad. but this is the thing we get to look at as the -- it sort of feeds the reaction. that's what you're seeing. >> richard quest, another question i'm asking as an investor, where will future growth come from? >> and that is exactly the question that politicians now are starting to ask. the real challenge as ali has just mentioned is that wherever you look, the policy options are simply awful. you've either got to print money through quantitative easing or you have to run a very hi fiscal deficit through government spending. and at the moment, you've got the united states slowing down, you've got germany, you've got the uk. just putting it into numbers today for you, we've had the manger man market, the dax, down

more than 6% this morning n. and into the early afternoon. there is no reason why on this thursday in august this should be happening, other than as ali rightly points out, these little pieces of economic news, because, look, when we had the fall -- when we had the falls two weeks ago it was based on fear. now we're starting to get falls based on fact. we know things are slowing down. these asset prices, kyra, are bearing the burden. >> do you think policymakers around the world are simply out of ideas and that just contributes to the fear and the confusion and the lack of confidence? >> no. i don't think they're out of ideas. i think they're out of ability to perform any of the ideas. there's a lot of talk in europe. every time the european union, whether it's sarkozy or merkle

or the commission, they talk and come out with a plan and everybody says it's not bold enough or not strong enough. you take the united states, for example. you've got the fed coming out saying rates lower until 2013 but you've got the two dissenters coming out. you've got rick perry coming out. so there's a huge amount of noise. but what is seemingly lacking, at least as seen from the market's point of view, is hard action. and that's what they're looking for. things are going down, not fast, but they are going down. >> ali? >> yeah, you know, richard brings up a very big point. it's something we really have to pay attention to here in the united states. you know, we complain a lot about the stimulus. $800 billion. did it work, did it create jobs or did it not? do you know how much money the federal reserve put into this economy? it is in the trillions. the european central bank, the swiss bank, the bank of canada, the bank of japan, all of these banks over the central banks over the years, since 2008, have put trillions upon trillions of

dollars to stabilize this economy. now you've got politicians in the united states talking smack about that and saying it's the wrong thing to do. we may handcuff ourselves because the federal reserves and the central banks around the world can make instant decisions and they have access to more money than our governments do, and i think it's something we have to -- voters and listeners -- have to understand that while tough talk sounds great, this could be very, very dangerous tough talk to say that there shouldn't be any central bank intervention. >> richard, stay with me. ali, stay with me. quick break in, guys. i promise we'll continue this discussion. this is the only place to be to find out what's happening to your money right now as we watch the markets tank. dow industrials down 464 points. do go away. we'll continue to tell you what this means for your money, your savings, and what you should do next. [ male announcer ] get ready for the left lane. the volkswagen autobahn for all event is back. right now, get a great deal on new volkswagen models,

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if you're just waking up, if you're just turning on the television, just tuning in, okay, gotcha. dow industrials now down 448 points. ali velshi with us, also, richard quest. guys, you know, how many

times -- i feel like we're just going back in time and doing the same thing over and over again right when we think everything is kind of getting better, you know, we get word that we're in trouble once again. and, ali, just to kind of lay it out for everybody that is just tuning in. dow industrials sinking because of the various reports that we have seen come out this morning. and it just took a matter of minutes for the numbers to dive. >> yeah. it was very strong right out of the gate. look, we're seeing a lot of volatilit volatility. we see 500 swings to the upside. we've had a lot more to the downside than the upside this month has been particularly brutal. and this is another one of these days where i call it irrational because generally speaking the price of a stock should be based on a multiple of how much that stock is going to earn. it's relatively mathematicamath. at this point the price of most major stocks that you would hold in your portfolio or in your mutual fund that forms your

401(k) or ira, it's not rational, it's not related to how much that company is going to earn. the new mystery is are they going to earn less than they thought they would because there's a slowdown all over the world? are your clintents in europe gog to buy less, are those companies clients in america going to buy less? this is the new mystery. we don't know how to price stocks. so the stock market is just about stocks, which is one piece of the economy. the other piece of the economy are housing, interest rates, jobs, the most important piece. we are making very slow progress on jobs but as we saw at 8:30 this morning the number of jobs, number of people who applied for first time benefits last week has gone up a little bit from the week before. just a little bit. under normal circumstances it wouldn't be enough to move the markets just even a tad. but we are so nervous that you are seeing these exaggerated moves and the attention of the world is now moving to the central banks, european central bank, the federal reserve and the other central bank in the world saying what tools do they have to kick up the economy. it's what richard said, policy

tools, that's what they're talking about? lowering interest rates? interest rates are very low. can't lower them. what else can they do? can the fed print money? kyra? >> so, richard, what do you think? is that a good idea? the fact that bernanke has talked about printing more money, good idea, bad idea? >> you've got no choice. this is the environment that you're in. look, i want to make -- there's one thing that you have to say and it's uncomfortable to say to one extent. and when you get comments like rick perry's and treasoners and the sort of comments he made concerning the fed and ben bernanke, the markets take those sort of comments quite seriously. and they take them with a certain amount of unease. these are, as the one word again and again and again people are talking about, global economy, particularly in developed worlds, is dangerous. morgan stanley talked about it. other economists are now saying

it's a dangerous time. and anything that creates a crisis of confidence, such as calling the federal reserve chairman's actions treasoness or treachero treacherous, i understand that may play later in the year but it's a very, very difficult time. and frankly, those sort of comments you can see the sorts of unease it creates. >> and if i may, kyra, here's the issue. back in 2008, at the end of 2008, when governments didn't really know what was going on, it was the central banks of the world who came together and said, while there is no credit available we will make credit available to each other, to financial institutions, and even to corporations. it was unprecedented in history that corpses could borrow money from the central banks of the world. now, what you are today is a political situation in america and all over the world where it is evident that government -- that politics is not coming

together to solve these problems. idea lodge ji is keeping people apart. the only hope we have for sensible policy making is at the central bank level, which in most countries is separated an divorced from the political process. when you start putting political strings on the central banking process you start -- this is what worries the markets. if politics are going to dictate what we do, i'm getting out of the stock market. >> stay with me. >> no. >> we've got to pimake money, p. >> somebody has to. >> if with we don't have corporate profits we're going to be in trouble. hold on, guys. we're going to go to alison kosik from the new york stock exchange just after the break. we've got our entire cnn money team working on this news. all about your money.

our cnn money is still on top of the breaking news. dow industrials down 472 points. ali velshi and alison kosik with me right now. ali, you know, we were kind of laughing before we went to break

about, hey, we've got to take a commercial, we've got to make money. but in all seriousness you're talking about what we're seeing here kind of raises the case, right, for a recession and the only way to prevent a recession is corporate profits. if you look at companies across the board and all the various balance sheets, i mean, they're not doing so badly. i mean, we're in a completely different environment businesswise than we were two years ago. >> yes. you're right. a, they're not doing so badly. b, they can borrow money. i want to remind people why this is not 2008. in 2008 nobody could borrow money, including companies with great credit ratings and that money was expensive. right now money is cheap. the yield on a ten-years note in the united states, benchmark bond against which your mortgages are set is 2%. under 2%. a mortgage 30rks-year fixed mortga mortgage, under 4 1/2% in the united states if you have good credit. a lot of indicators are not bad. here's the thing, kyra. we've been talking for a few

weeks. is there a possibility of a double-dip recession? now all of sudden morgan stanley said, yes, not the main case but there's a possibilities. now we react to the facts that somebody was reacted to the fact that we've been talking about it. you and i have had this specific conversation i would say three years ago, kyra, i would say we've done it before that, where we know that this becomes self perpetuatin perpetuating. until it stops, until some big hedge fund around the world or a group of people collectively say this is really undervalued. i need to get in and i'm having those conversations with investors, professional investors and individual investors who say, what do i buy right now? we're not -- this is not capitulation. this is not people saying i'm completely gone. this is extreme volatility. it's a razor thin edge but that's the difference right now, kyra. >> talk about value. let's talk about gold and what that -- and historically, if you look at what's happening with gold, we know a what that means. >> gold is this hedge against

inflation. it's a hedge against the u.s. dollar going down. i have to remind people gold still has a value. right now we're looking at gold above $1800. i'm just trying to check what the last price was for gold. here it is. $1821. and -- >> $1820. >> gold is still something that you have to sell at some point. it can still go down which is why the safest, most cautious money is going into bonds of actually into cash. we did a report on money.com that people are buying more safes. people are holding on to more cash. it's this flight into something. qu kyra, it's important to remember that there is money going into different places. it's not a complete wash. >> ali, you make a good point. you make a good point because in this case this time around it's different from 2008 where it was more of a crisis of liquidity. we're not see that today because of what you were just talking about. you know, corporate america is

flush with cash. richard had pointed out this before. you know, i think, kyra, you asked him what's it going to take to get this economy moving. he said it's going to have to be the fed or the central bank stepping in. they've already done that. they've done that twice. they poured trillions of dollars into this economy. and look where it got us. it got us to this point where we're watching the dow plunge this month. we're watching this litany of economic reports come in that are downbeat, to say the least. manufacturing, jobs, housing. i really -- >> you're right. but remember where we were. >> i really question -- >> from 2009, the beginning of 2009 to now, to today, if you invested in march of 2009 to today you are up by 50% or more. 50%. so the fed thing did work for a couple of years. it seems to have worn off at the point. all i'm saying is we need to keep those options open. i agree with you. i don't think it's decided that we need the fed or central banks to step in. we do need them in europe. but it did work. >> guys, we're going to continue

this discussion. >> we've got inflation moving hotter as well, ali. that's a factor, as well. >> that is true. >> okay, guys. energy prices, they're going back down. that's not a bad thing. okay. guys, we're going to talk more. quick break. it's 10:48 eastern time. dow industrials down 461 points. we are watching your money as the dow plummets just after 9:30 at the opening bell. we're keeping an eye on the numbers, your money, and what you should do next as an investor.ll ence that's helping drive the future of business. in here, inventory can be taught to learn. ♪ machines have a voice. ♪ medical history follows you. it's the at&t network -- a network of possibilities... committed to delivering the most advanced mobile broadband experience to help move business... forward. ♪ my son and i never missed opening day.

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okay. it's 10:50 eastern time. just ten minutes before the top of the hour. if you have been watching your money since the opening bell at

9:30 you can see it is not good news. we are still in negative territory. an hour and a half into it. dow industrials down 434 points. we got our entire cnn money team working every angle, from overseas with our richard quest to our ali velshi right here, alison kosik from the new york stock exchange and now carter evans from the nasdaq on the other side of the break. stay with us. as a manager, my team counts on me to stay focused.

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hi, we continue to follow our breaking news. dow industrials down 434 points. as soon as the opening bell rang at 9:30 eastern time we saw the marks tank.

it has got gotten any better. still in negative territory. we haven't had a chance to go over to the nasdaq yet. carter evans joining us live from there. carter, what are you talking about at this moment? >> well, you know, i tell you. the nasdaq is fairing the worst of all the major indices right now. charts of how things are looking. this is the dow, down 3.8%. you see that big drop right off the top. here's where we are now. down about 432 points. the nasdaq, though, off 4.4%, down 110 points. it's a much bigger percentage drop than the dow or the s&p 500, which is down 4% or about 47 points. we have seen a lot of selling, of course, right off the top. but i want to show you one green spot behind me. unfortunately this green is not good news. this is the vix. it's commonly known as the fear gauge. it's a measure of fear in the markets. it is up, kyra, almost 30% today. >> so, carter, let me ask you. we've had a few up-days in the market. has everybody just forgotten about that?

is this -- you kind of wonder why that can't have an i'm m pact as well? it's so easy to look at the negative but we have had a few up days. >> right. and you've got a mix of people in the markets as well. you've got people that are scared, who may be calling up their financial people saying, i can't handle this anymore. you've also got the big institutional investors who still have to do their jobs. of course, they're answering to their clients but also trying to make the best moves. we have big gains. sometimes you want to cash in on those while you can. now, we've seen a lot of those ups and downs the last week or so. nothing fundamentally though about our situation has really changed. of course there is fear about what's going on in europe right now. certainly. but what it is is the fear of the unknown. other than that, the corporate earnings we're getting in are still really good. lots of companies still holding their value as far as the amount of cash they have and as far as the amount of business that they have currently. nothing has changed fundamentally to those companies

in the last couple of days. so what you're seeing is fear driving the market. >> and that's a point well made, richard quest, is that that is the one way we are going to prevent a recession. and that's corporate profits. the balance sheets do look good at the companies. but i want to ask you, european markets not doing well. as we are watching ours, you are watching yours. >> yes, let's see -- >> yes. >> yes, richard. carter, stay with me. >> the thing i would say about corporate profits to round that out. corporate profits are doing very well and they are on the balance sheet and they have to decide what to do with the money which is why you're seeing some companies return to shareholders through shared buybacks and you're seeing others doing some m and a activity. but there is a weakness that is now starting to create or come into corporate profits that is also causing somewhat of a concern. european markets, let me tell

you roughly where we stand. the worse of the markets, i'm afraid, is in europe at the the moment. the ftse is off 4 1/2%. the dax in frankfurt, 5 1/2%. the cac is off the best part of 5%. so europe is being pummeled, absolutely pull mmmelepummeled. it opened up badly. it never recovered. the reason is euro zone debt problems. i think seeming inability of european officials to get on top of it. >> all right. richard quest, stay with us. thanks so much. carter evans at the nasdaq. we appreciate it. entire cnn money team on the story. the numbers are tanking in europe. look at our numbers, dow industrials down 447 points. what it means to you, your money, your investments, what you should do next. we're going to stay on this story. take a quick break. more from the "cnn newsroom" straight ahead. you could save a bundle with geico's multi-policy discount.

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