prosperous like china and india, and some of the other countries are doing so well like never before, and on our beck, if the country was doing well all the things as to entitlements and social security and all the other things you are talking about would pale in comparison, they would go away. but we have a country that is not doing well, and it's doing much worse than people understood, and we don't have our jobs, and we don't have our manufacturing, and you look at what is going on in china. we are rebuilding china. we are rebuilding china, and they manipulate currency and make it impossible to compete because of that, and it's unfair what they are doing, and they will make hundreds of billions of dollars of profit. let's use the word profit, on this country, on our country, and we have nobody that protects us. we have no leaders that go in there and protect. i am honored by mike's suggestion. i think he would have done unbelievably well, and he

probably would have gotten the nomination had he decided to run. but, look, we do need somebody that will take our country back. we have lost -- we have lost or at best are losing our great country. >> you have any regrets or any second thoughts about your decision? i just want to point out. it's the top of the hour. i want to alert our viewers in the united states and around the world we're awaiting a statement from the president of the united states, and he will go in the dining room over there at the white house, and the president will go to the podium there and make a statement. we are told it will be on the overall state of the u.s. economy, and the u.s. economy as well as the tragedy, the death of the 30 american troops in afghanistan over the weekend. 22 navy s.e.a.l.s killed when the helicopter went down. we are told it has been delayed

by half an hour. he will speak in about 30 minutes from now. we will have live coverage here in the "cnn newsroom." we have all the reporters and analysts standing by, and we are continuing the conversation with donald trump. the decision you made a couple months ago not to seek the presidential nomination. any regrets? >> first of all, i want to say as i was listening to you eloquently state about the president's conference, i was saying what a terrible time this is for our country. our economy is absolutely doing horribly, and the helicopter was just a disaster yesterday. what a tragedy that was. and just what a terrible time it is for this country. this is things that you would have thought could not have happened. it's just bad news after bad news. the economy, the helicopter, you could just go story after story. everything bad, nothing good. it's a terrible time. i made a decision, as you know,

and in fact i was watching a particular show called "meet the press" the day before i did this, and i was leading in the polls with mike huckabee, the two of us were leading in the polls. i made a division for the reason that i made, and however, i will tell you and i was happy with the decision, but if the economy continues to be bad, and it looks to me like it's getting worse and not better, and if the republicans pick the wrong person, i would seriously consider doing it as an independent, and i think it's maybe time for that. hopefully i won't have to. i love what i am doing. you know what i am doing and i am having a good time and we're doing well. but if the economy continues to go the way it's going and if the republicans pick the wrong candidate, i would certainly consider it, wolf. >> who would be -- do you know who the republican candidates are, and presumably rick perry the governor of texas will throw

his hat in the ring. tell me who the right person would be and who the wrong person would be? >> i know a lot of them and a lot of them have come to trump towers lately, and sarah palin came in, and michele bachmann came in and she was great. i don't know romney. i do know the governor of texas, rick perry, who is a very interesting candidate, and i think he will prove to be a interesting candidate. it's early for me to speak up on that. i will have something to say about it in the future. i really don't know romney. i will tell you that i was very disappointed that romney didn't interject or intercede in some form to get a better deal done in terms of the republicans. really, no, in terms of the country. i was amazed that here is the guy that is the leading contender, and he allowed this, as you know this renegotiation to go after the election instead of before the election, because if you had the renegotiation before the election, obama could

not have won. he just could not have won. we would have gone through the same thing as what we are going through now before the election, so if you are running and if you are a leading candidate, you want to make sure this comes due. it's not necessarily for the good of the country, it was for the good of getting re-elected, which is for the good of the country. >> do you degree with president obama that any long-term reduction in america's debt, the deficit spending has to include what is called a balanced approach, and some entitlement cuts, and cuts for medicaid and some increase taxed revenue, the subsidies, and that's some of the big corporations thget, or people like you, wealthy people, is that a balanced approach? >> the good economy solves all

problems. it solves the ills of medicare, which i would protect to the death, because i think it's very sad when they have to start playing with medicare. i thought when congressman ryan came up with a plan i think a lot of republicans will lose elections. right, wrong, indifferent he should not have come up with the plan at that time. in buffalo, a very popular republican lost easily to a person that would have never beaten her without that plan. but the economy solves the problems. with that being said, i will tell you, and i am a republican, but with that being said, when the oil companies are making billions and billions and billions of dollars, and believe me, they are in cahoots with hoe pe opec. they are in total cahoots with opec, and nobody, including china has abused this country

like opec. when the oil companies are paying very little tax, i would tax them and i would tax them very happy. that i can tell you. >> so they would lose -- exxon mobile, they are making billions of dollars -- donald, old on a second. does exxon mobile need government subsidies making tens of billions in profits? >> absolutely not. it's absolutely insane to think that exxon mobile is getting subsidies from the united states government. that's absolutely insane. the oil companies have not been doing their job in terms -- in terms of what is good for this country. if you look at what i am seeing, and i am looking at some subsidies that they get, and when you look at exxon mobile

and some of the other oil companies, every one of which is making money like nobody has ever seen made before, and -- >> here is another example. >> and on top of that, they are in cahoots with opec. >> two other examples, and you tell me if you think this is some area where increased revenues for the u.s. government for american taxpayers could come in. there's a hedge fund manager, and i don't know if you know him named john paulson, and he runs a hedge fund. he made last year $4.9 billion. that's probably more than you make, donald. $4.9 billion, and most of the income was taxed at 15% rather than the maximum 35%. is that fair? >> well, it's something that i will be discussing in the future if i decide to do something, okay. i don't want to get too much into it. i can tell you this. i am very strongly for not raising taxes, because i do believe in the incentive theory. i am a big incentive person, and

i believe in not raising taxes, and smaller taxes make people work harder and etc., etc. it's something that i will be discussing in the future, because i have strong views on it. >> the whole 15% -- >> no, i have something to say but not right now. >> warren buffett says his tax rate for a lot of the income is a smaller tax rate for his secretary's tax rate. >> i understand exactly what he is saying. >> let me just press you. >> i will make those views public at some point. >> what about general electric -- >> i know john paulson. i know john paulson. in fact, he manages some of my money and he's doing a good job. john paulson is a good guy. he's a good guy, but i do have strong views on it and i will make them public sometime. >> what about ge, which made $14 billion in profit last year, and $5 billion of which here in the united states, and the rest overseas. they paid virtually no federal

income tax because they had losses in earlier years. is that an area where there should be tax reform? >> if you look, a friend of mine, and he's a great guy and he was appointed by president obama to be head of the council, and obviously it's okay with the president. >> he is looking for ways to create jobs -- >> no, he was appointed by the president to be the head of the the council. he's a very -- >> yeah, the jobs creating council. >> i think that's fine, and i have a lot of respect for jeff, and i think he's a great guy. it was a tough period of time for him over the last two years but is bring general electric back. you have to look at the particulars of that one. >> that's an area a lot of people are looking at as far as tax reform down the road. i don't know what your schedule is like. we want to take a quick break. the president is speaking in about 20 minutes.

can you stick around or do you have to go? >> i am in my office working like i am supposed to be, and so have your folks call back. >> or you can wait two minutes -- >> okay. i will wait. you have always been fair to me and i will wait. >> donald trump is with us, and we have john king and ali velshi, and we will set the stage for the president's rocks. the markets not doing well. much more of the coverage here in the "cnn newsroom" right after this. we're thinking about them. a couple decades ago, we didn't even realize just how much natural gas was trapped in rocks thousands of feet below us. technology has made it possible to safely unlock this cleanly burning natural gas. this deposits can provide us with fuel for a hundred years, providing energy security and economic growth all across this country. it just takes somebody having the idea, and that's where the discovery comes from. from a completely different city?

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we're back here in the "cnn newsroom." we're awaiting the president of the united states in about 15 minutes or so and he will go into the diplomatic dining room in the white house to address the nation and indeed the world on two subjects, the economy right now, when we see the markets going down on this day, the first trading day after the downgrading of america's credit rating from aaa to aa plus. the president will speak about the loss of 30 american troops in afghanistan over the weekend. 22 of whom were navy s.e.a.l.s when there helicopter went down, was brought down allegedly by taliban in the fire fight. we don't know if he will be answering questions from reporters. i suspect he won't, but we will hear what he has to say. we have all the reporters and analysts standing by, and donald trump is joining us as well, and

he has been kind enough to spend time with us. donald, as you look at the president of the united states, the u.s. credit rating has been downgraded from aaa to aa, and what grade do you give the president in the first two and a half years of his administration? >> well, obviously, it's not been a good period of time for him or for the country. i don't want to give him grades, because i don't think it's appropriate. it would be obvious what the grade would be and i don't think it's appropriate to say. but i will say it has been a very, very bad time for this country in terms of its history. it's been an embarrassing time for this country in terms of its history. thus far, if you talk about 2 1/2 years or so it has been quite a significant blow for the united states. we're no longer the same. i read constantly about china overtaking us in 2016. unthinkable if you thought about that five or six years ago, that china would overtake us.

we're allowing them to overtake us, and by them ripping us and making all of our products and we're not taxing them and manipulating. and when i read that, i wouldn't want to be president and have china all of a sudden supersede the united states, which, again, was unthinkable just a few years ago. >> a lot of our viewers, donald, are watching and are nervous, and they have 401(k), and iras and savings and what have you, and they are wondering what should they do to protect their growth. you are a billionaire. do you want to share advice with folks out there. >> i would not take money out, and it has gone down a lot, and urban king on other people running the company.

at this point, with the down that you have seen, you will take it out and then all of a sudden it goes back up. i would not recommend they take the money out. it's sad. again, there's no reason for this. >> you know, as you were asking me before, why are they so respected? they should not be respected. it's just years of tradition and history. based on all of the calls that they made over the last number of years, lehman and lots of others, they should not be respected. >> because the two other major credit rating agencies, moodys, they have not downgraded the u.s., and only s&p has. >> i watched a couple of the standard & poor's top people on the television over the last couple days, and they are loving it and having such a good time,

and moody's might say, they are having a good time and let's do the same thing. we just don't have a well-run country. it's as simple as that. if we did, you would not be talking about medicare cuts, and paul ryan would not have to be doing all the things he's doing in terms of the potential cutting of medicare, which is a disaster as far as i am concerned. it happens to be a great program. get rid of the abuse and all of the problems that you have with it, but it happens to be a great program. >> social security as well. >> yeah. the economy can solve those ills. if we had somebody that could get the economy going, you would not be talking about social security, and you would not be talking about the entitlements. you would not be having to think about cutting medicare. i don't want to cut medicare. you wouldn't be talking about that if the economy was roaring, and it could very easily if we stopped other nations from abusing us, and if the economy was roaring, people wouldn't

have to be talking about cutting medicare. and social security. >> richard quest and ali velshi are with us as well, two of the excellent business reporters. i wonder if they have a question. would you mind answering a question for either one of them? >> no. >> ali, go ahead and ask your question. >> talk to me about your concerns about china. china is a big issue because they are the biggest buyer of foreign debt. you are a smart guy, and you know that china's growth has nothing to do with the administration or how the government has been run. i am not sure what you are thinking we could do differently? we have a recession, and we have a china and india that is growing. i need an answer from you. what do you think we should be doing? >> the truth is you can do something immediately, and ali, you know, because we had many

discussions and i was never a big fan of george bush because it started there, but now it has gotten so rampant and it's totally out of control. the fact is china is manipulating their currency and making it difficult and almost impossible for our companies to compete with their companies, and they are making our products. what i am saying is because of the manipulation, if you through a 25% tax on all products, made in china, because of the manipulation, and it should be a 41% tax based on the numbers, but forget that. you throw a 25% tax on all products made in china, and number one, your coffers will be brimming with money, and china will do everything possible for you not to do that, and they will make concessions you never dreamed of. when you talk about the administration, what can they do? they could do a lot and start by taxing all chinese products. ali, china will make $300

billion plus, and much more than that, that was the projection but it's going to be higher, this year on the united states. and we have to rebuild our country. to hell with china. they are an enemy and not our friend. >> i know you have to go. but a quick question from richard quest. >> sure. hello, richard. >> donald, good to talk to you as always. two questions for you. firstly, how would you have stopped s&p from effecting the downgrade? surely that would have been impossible to stop them from doing the downgrade? and after what john mccain said yesterday, does anybody believe that s&p was wrong on their assessment of the u.s. economy? >> well, i actually think what s&p did was wrong, and i think they did it for a lot of other reasons, richard. i think you probably feel that

also. i think what they did was disgrateful. we have a bad economy and things are not going well, and we are a dysfunctional, and the president himself said it, and we have become a dysfunctional nation. but somebody should have really put the clamps on s&p, at least by going and talking and doing whatever they had to do. that doesn't mean they would have been able to stop them, but something should have happened. and at a minimum, a better deal should have been made so s&p couldn't have gotten away with their nonsense. >> we'll leave it there. donald trump, it was nice of you to join us as we set the stage for the president of the united states. always good -- by the way, i did not say congratulations to you on the birth of a grandchild. congratulations to you as well. >> thank you, i appreciate that. >> of course. donald trump. thanks, very, very much. >> ali velshi is staying, and john king is here, and our coverage in the news room will

continue after this.

we're awaiting the president of the united states. he is getting ready to go into

the diplomatic dining room and speak to the nation and the world on two subjects, the u.s. economy and what is going on, another bad day up on wall street today in the aftermath of the downgrading of america's credit rating, and then we will hear from the president on the tragedy, what happened in afghanistan, 30 american troops killed when a chinook helicopter went down, 22 navy s.e.a.l.s. our reporters are standing by. john king is with me here in our cnn's washington studios. john, this is the late addition, and the president was not scheduled to speak now, but i am sure he felt he had to go out there and reassure the nervous americans that the united states is not in that bad of shape. >> he had consultations with his colleagues about trying to get the europeans to do more, and

his challenge is to convince the american people and down the road the financial markets that he will pressure the super committee to do more about the debt and deficit. more broadly, friday night into saturday, i think it's fair to say was the darkest moment of the obama presidency. he's the first president in history to have the downgrade happen on his watch. just as he is digesting that, he is told it's the deadliest day in the 10-year war in afghanistan. this is a very difficult chapter for him as wepresident, and the debts having a lot of people to beg the question, did the surge work, and can we get out, and some say get out now or yesterday. and this is a time, and this is not a political moment, it's a presidential challenge to address the nation and the world right now, but let's be honest, we're moving closer and closer to a campaign re-election year, and the economic challenge

significantly undermine the prospects, and the president knows that. >> david gergen, and if you were advising this president in the hours leading up to his remarks right now, what would you say to the president at this historical moment? >> it's tough. john king was right. the president just concluded the worst week of his presidency and his credibility is not high on these issues. the fear and anger levels are incredibly high. people, i don't think, wolf, are looking for more words but are looking for more actions, and are looking for decisiveness. and i think what is critical to go to john king's point again, what is critical here is that this not be seen as more politics, and that this statement today and the statements in days ahead be

about how do we get to unite the country, and even if he loses the presidency doing it, he has to say the country is in serious danger of go into a second depression, and we have to pull together and do whatever it takes. put politics aside to get the country back on the right path. >> richard quest was with us, but not any more. but ali velshi, we see the markets going down as dramatically as they are here in the united states. it's following the lead of what happened in europe and what happened in asia. this is a worldwide phenomenon that we are seeing, the dow jones industrials down 323 points. >> i will take this opportunity to disagree with john and david on this. i remember a day, and maybe it was monday, september 29th, and maybe i am getting it wrong, in 2008, when the do you dropped because t.a.r.p. was not passed.

in january of 2009, when you saw that 75,000 people were laid off, and nobody other than us cared or knew about the u.s. credit limit prior to two months ago. canada, one of the strongest banking systems went for years without a aaa credit rating, and bounced back. i will tell you this. fascinating to me, the right is angry at s&p, and the left is angry at s&p, and ben bernanke said several months ago in testimony, all you need to know is read a newspaper to know what the u.s. problems are, and donald trump was right about that. s&p says we were less than we were, and moodys and fitch don't, and i disagree and i know a lot of smart people disagree

with me, i don't think it goes down in history as some turning point because president obama is the first to preside over the downgrading of the aaa credit rating. you said mortgage rates are set by the 10-year note, but the 30-year treasury. it's down since friday. the 10-year note, it costless money for the u.s. to borrow money for ten years than on friday. the 30-year note, people will loan money to the u.s. for 30 years at a rate that i can't get a mortgage for. clearly, the borrowing pain has not been felt. i think that that's -- it's one of those things where there is an irrational jumpy investor population, and that's what you are seeing in the market. i truly do not think -- i think our debt problems are serious, and deficit problems are serious, and i just don't think

that this is reflective of what this is. >> all right. ali, hold on, i twund remind our viewers who may just be tuning in. we are expecting to hear from the president of the united states from the diplomatic dining room. the president will speak on the economy, and on the deaths of those 30 american troops in afghanistan. both subjects, we expect them to be speaking for ten minutes. let me bring john king back into the conversation. people think about what is happening on wall street, and it may be irrational or a panic sell or whatever, but in the past two or three weeks, the market has gone down well more than 1,000 points. the dow jones industrials. you talk about what that means, and we're talking at least $1 trillion, maybe $2 trillion in equity, and that's investments that simly have gone away. >> i hope my friend, alv velshi

is correct. ali is right, it's not just about the impact. the president said job growth is modest and unemployment rate is high, and there are 16 million americans out there unemployed or under employed, and the president has been the leader of the country for 2 1/2 years for which the economy is treading water or worse, and then he gets the horrible tragic news in afghanistan, and there's a funk in the country right now, and it's reflected in our new poll. the economy is still in a downturn and are conditions getting worse. 60% said it's getting worse. how are things going in the country today? in may, 60% of america said badly, and now it's 75% say badly. and i don't think ali will disagree, it's a consumer

spending driven economy. if consumers think things are going badly, they save their money and that makes it worst. you try to be the incumbent evidence of the united states, in that kind of environment, and now a reminder, and god, let's pray that this is a one-bad thing in afghanistan, and a reminder that there's a ten-year war that most of the country wishes would be over. >> i want to touch on what is going on in afghanistan. barbara starr is working this part of the story. let me go to you first. we don't have barbara, and we will have her in a moment. but we have brian todd. are you in norfolk, virginia, right now. >> virginia beach, virginia, right now, right near norfolk. >> you have been speaking to some of the family members right now of a those navy s.e.a.l.s who were killed in that chinook takedown. the taliban using shoulder-fired

grenades, i believe, to knock down that helicopter carrying 30 american troops, and another seven or eight afghan troops. 22 navy s.e.a.l.s. the president will be speaking about this momentarily. do we know yet, brian, when the remains will arrive at dover air force base in delaware? >> reporter: it's a little unclear right now, wolf, when they will be returned. we are getting word it will be probably within the next couple of days. i did hear one report saying it could be as early as tomorrow. sometimes these things are a little fluid obviously as they get the bodies processed properly overseas and then brought back to dover air force base. but we are told in the next couple days that those bodies will be returned, and we have spoken to the families who said they plan on going to dover to meet their loved ones. >> how were the familiesbeach, so many navy s.e.a.l.s were

based, i can only imagine how upset the whole community must be? >> reporter: the community is really reeling at this point. the responses from the families run the gamut. we talk to one of the widows yesterday, kimberly vaughn, very composed over the phone and talked about her husband and when we got into the interview, she got emotional and started to cry and talk about her children. and the families are strong, but it's so so difficult. a couple hours ago we went to two of the navy s.e.a.l.s' houses, and the responses are interesting. i knocked on one more and a young man came to the door clearly a friend of one of the s.e.a.l.s, and he was very stowic and courteous but said the family did not want to talk right now. and then another family's home, the sister-in-law of one of the

navy s.e.a.l.s that died, said the family did not want to talk and then broke down and started crying. you feel guilty forei even knocking on the door. you walk away feeling so badly for these people. the sacrifices they are making, and it's a community wide thing. a real kinship with the s.e.a.l.s here. >> yeah, my experience over the years, so many of the surviving family members, they want to speak about their dead son or their father or their brother or sister, because they just want people to remember something about them during these critical hours after they get the horrible news. brian stand by. barbara starr is standing by. we expect to hear from the president of the united states momentarily. he will speak about the tragic loss of the troops in afghanistan, and the overall state of the u.s. economy.

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personal pricing now on brakes. tell us what you want to pay. we do our best to make that work. deal! my money. my choice. my meineke. you are looking at live pictures of the white house. momentarily, we're told the president of the united states will go to the microphones there and speak about two subjects, the economy, this on a day where the dow jones industrials are down by 300 points as we speak right now, and we will speak about the deaths of those 30 american troops in afghanistan, whose chinook went down in a fire fight, and 22 navy s.e.a.l.s went down as a result. barbara starr is with us.

any updates with what is going on right now? >> well, wolf, what is happening behind the scenes right now is family members of the fallen are being offered the opportunity by the military to fly to dover air force base. that's what goes on when the fallen return. the families are offered the opportunity to go there and be there when their loved one comes off the plane for that final journey home. we're being given some indications that the return ceremonies at dover could happen as soon as tomorrow. it's a long flight from afghanistan. the plane will stop and refuel along the way before it comes back to the united states. they can always run into weather or other problems. still, a bit of vagueness about this. the thinking is that they will possibly be back home in the united states sometime tomorrow, and we are awaiting word, and we expect defense secretary leon pennetta to travel to dover, and the possibility is the president

will also go. but no official word on that yet, wolf. >> in recent years, they have allowed coverage, camera crews to go to dover air force base and see the planes come in with the remains and bodies. i assume that will happen tomorrow, right? >> under very strict rules, we do expect that to happen. the privacy of the families will be very much respected. the way it happens is, television camera is allowed to take a single shot, a camera shot of the casket being removed from the plane, and honors being rendered and salutes being given, and family stands off camera and nobody wants to invade their privacy at this point. we will not be able to show their faces at all. as we have seen over the last couple days and over the weekend, many family members across the country coming forward, and many want to speak about their loved ones and want their loved ones to be

remembered, tell stories about their lives and service to the country and what has happened to their families now, but many families, wolf, decide to keep this very private. they are terribly grief stricten. funerals being planned across the country, and some will be laid to rest here at arlington national cemetery here in washington. >> our deepest condolences to all of the family members that suffered as a result of the latest incident in afghanistan. the other subject the president will be addressing is the state of the u.s. economy. let's take a look at the dow jones industrials right now. take a look at the numbers. you can see, 390 points down. getting closer to 400. ali velshi is watching what is going on. ali when i woke up this morning, i assumed we would go down 100 or 200 points, and i am

surprised it is approaching 400. >> it just crossed 400 when you were talking to barbara a few moments ago. and we have the markets, and one of the things that i know you know and our viewers are most concerned about is how does the downgrade affect you on the ground. if you have a 401(k) or ira, it affects you right now. i remember two things. many credit cards work off of the prime rate. the prime rate is determined by what the fed does. right now the fed rates are between zero and a quarter percent, and prime is a little higher, and then mortgages are set in the 10-year bond market, and the 10-year bond, as you pointed out when we started our coverage is down right now. for the moment, and here is your dow below 400 now, off more than 3.5%. while the instinct of the downgrade should have led to interest rate increases, so far that has not come to pass.

if you are going to move krer money out of being vested into american bonds, where does it go? there are not enough canadian and australian bonds and other countries aaa rated, and you are not taking your money to europe right now because europe is globally possibly as big of a problem as in the united states, and here in the united states our debt problems are political, as we have seen play out for the last several months in that greece, litly and spain, places like that, they are much more structural and harder to change, and that's why you saw rioting in the streets and you don't see that in the u.s. american bonds, the american dollar is still a safer investment, and the economy economy is still most likely to generate a return. that's why you are seeing no increase in interest rates yet. who knows what the next 12 hours or 24 hours or three weeks or three months hold, and i think long-term, i have always been betting on the fact that interest rates will go up, but for now no reaction to the downgrade where it really

matters in the bond market. >> down 400 points, the dow jones industrials. once the president starts speaking a lot of people will look at where the dow jones is at the beginning of the remarks and ten minutes later at the end of his remarks to see if he raised further concerns of those investing in wall street. we will take another quick break, and our coverage continues after this. of yours in one place. ♪ the race of your life you never ran. the trip around the world you never took. the best-selling novel you never wrote. but there's one opportunity that's too good to miss. the lexus golden opportunity sales event, with exceptional values on the lexus es. but only until september 6th. see your lexus dealer. it's schwab at your fingertips wherever, whenever you want.

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not a good day on wall street. take a look at this, the dow

jones industrials down 426 points and getting closer to the 11,000 marks. only a couple weeks ago it was over 12,600, i believe. it dropped a lot over the last couple weeks, but today has been the brutal day up on wall street. ali velshi is watching what is going on. you suggest this is irrational panic on the part of investors and traders out there. explain what you mean. >> a debt downgrade has a relationship to bonds. if you are downgraded it will cost you more money to lenned money to. so the place you should see the reaction to a debt downgrade of the united states is in the bound market, and that's not where we are seeing. we skipped the reaction in the bond market, the place where it matters, and we have gone straight to the stock market. the stock market tends to be more irrational, and day traders, and people who -- hedge

funds, computerized trade, and there's lots of reasons. if you take all the value of the stock markets in the entire world, wolf, it's half as much money as all the bond or debt markets in the entire world. so the stock market tend to be more irrational. you're seeing that playing out here. there's no reason why the dow companies of the 30 companies, all but one, 29 companies are down right now. there's no reason why a company like mcdonald's or kraft should be substantially many percentage points less than in value than on wednesday before we saw the first down leg on thursday and then this. if you're a rational investor and you value stocks based on what their earnings are likely to be and what the return should be, this doesn't make any sense whatsoever. as john king pointed out, if the markets are not always rational beings, psychology and panic play a big role in this thing. there are days, wolf, you and i

have worked them over the last years where you've seen a downturn in the market and we've been able to discuss why it's happened. this is just fear and panic over overtaking the market. the bond markets are holding steady. >> ali, i assume the president will try to calm the markets. that's why he decided to come out while the markets are open. he could have waited until 4 p.m. eastern when wall street closes but he decided to do it now to reassure jittery investors. david gergen, we're close to hearing from the president. give us a thought as we get ready to hear. >> wolf, i was in chicago yesterday with a top of investment advisors around the country. they're making the argument this is not irrational. as you pointed out, this started before s&p. the s&p thing added one more psychological blow. what people are really worried about is a second recession. >> double dip recession as they're calling it. some are suggesting now there could be one in three chance that that could happen.

>> the president of the united states is about to walk into the diplomatic dining room in the white house and address these two subjects. the hurtful u.s. economy right now, as well as what has happened in afghanistan over the weekend when 30 american troops died as their chinook u.s. army helicopter went down in a firefight with the taliban. 22 navy s.e.a.l.s. among those dead. the president will speak about both. we assume as far as economy is concerned, the president will try to reassure the nation. he knows the world will be watching at the same time. that the u.s. economy is not in such horrible shape. the dow jones as you can see down 411 points. it's dropped 1500, 1600 points in the past two weeks, a significant, significant fall in the dow jones industrials. it's causing a lot of concern out there. and presumably, the president of the united states and his advisors said it's a good idea to address the country right now and give thoughts on what's

going on. the president will walk out, we'll hear what the president has to say and try to get some -- get a reaction, obviously. we're going to stay on top of this story. it's a big story for all viewers. here's the president. good afternoon, everybody. on friday, we learned that the states received a downgrade by one of the credit rating agencies. not so much because they doubt our ability to pay our debt if we make good decisions, but because after witnessing a month of wrangling over raising the debt ceiling, they doubted our political systems ability to ablgt. the markets, on the other hand, continue to believe our credit status is aaa. warren buffett who knows a thing or two about good investments said if there were a aaaa rating, i would give the united states that. i and most of the world's investors agree. that doesn't mean we don't have a problem.

the fact is we didn't need a rating agency to tell us that we need a balanced, long-term approach to deficit reduction. that was true last week, that was true last year, that was true the day i took office. we didn't need a rating agency to tell us that the gridlock in washington over the last several months has not been constructive to say the least. we knew from the outset, that a prolonged debate over the debt ceiling, a debate where the threat of default was used as a bargaining chip could do damage to the economy and the world. that threat coming after a string of economic destruction in europe, japan and the middle east has royaled the markets and dam dampened confidence and slowed redofr i. this is legitimate source of concern. here's the good news. our problems are imminently

solvable. we know what we have to do to solve them. with respect to debt, our problems are not confidence in the credit. the markets continue to reaffirm our credit as among the world's safest. our challenge is the need to tackle our deficits over the long-term. last week we reached an agreement that will make historic cuts to defense and domestic spending. but there's not much further we can cut in either of those categories. what we need to do now is combine those kpeng cuts with two additional steps. tax reform that will ask those who can afford it to pay their fair share and modest adjustments to healthcare programs like medicare. making these reforms doesn't require any radical steps. what it does require is common

sense and compromise. there are plenty of good ideas how to achieve long-term deficit reduction that doesn't hamper economic growth right now. republicans and democrats on the bipartisan fiscal commission that i set up put forth good proposals. republicans and democrats in the senate's gang of six game up with some good proposals. john boehner and i came up with some good proposals when we came close to agreeing on a grand bargain. so it's not a lack of plans or policies that's the problem here. it's a lack of political will in washington. it's the insistence on drawing lines in the sand. a refusal to put what's best for the country ahead of self-interest or party or ideology. that's what we need to change. i realize that after what we just went through, there's some skepticism that republicans and democrats on the so-called super

committee, this joint committee that's been set up, will be able to reach a compromise. but my hope is that friday's news will give us a renewed sense of urgency. i intend to present my own recommendations over the coming weeks on how we should proceed. and that committee will have this administration's full cooperation. and i assure you, we will stay on it until we get the job done. of course, as worrisome as the issues of debt and deficits may be, the most immediate concern of most americans and of concern to the marketplace as well is the issue of jobs and the slow pace of recovery coming out of the worst recession in our lifetimes. and the good news here is that by coming together to deal with the long-term debt challenge, we would have more room to

implement key proposals that can get the economy to grow faster. specifically, we should extend the payroll tax cut as soon as possible. so that workers have more money in their paychecks next year and businesses have more customers next year. we should continue to make sure that if you're one of the millions of americans who is out there looking for a job, you can get the unemployment insurance that your tax dollars contributed to. that will also put monday any people's pockets and more customers in stores. in fact, if congress fails to extend the payroll tax cut and the unemployment insurance benefits that i've called for, it could mean one million fewer jobs and half a percent less growth. this is something we can do immediately, something we can do as soon as congress gets back. we should also help companies that want to repair our roads and bridges and airports so that

thousands of construction workers without jobs for the last few years can get a paycheck again. that will help to spur economic growth. these aren't democratic proposals. these aren't big government proposals. these are all ideas that traditionally republicans have agreed to. have agreed to countless times in the past. there's no reason we shouldn't act on them now. none. i know we're going through a tough time right now. we've been going through a tough time for the last 2 1/2 years. i know a lot of people are worried about the future. here's what i also know. there will always be economic factors that we can't control. earthquakes, spikes in oil prices, slowdowns in other parts of the world. but how we respond to those tests, that's entirely up to us. markets will rise and fall, but this is the united states of

america. no matter what some agency may say, we've always been and always will be a aaa country. for all of the challenges we face, we continue to have the best universities, some of the most productive workers, the most innovative companies, the most adventurous men entrepreneurs on earth. what sets us apart is that we've not had the capacity but the will to act. the determination to shape our future. the willingness in our democracy to work out our differences in a sensible way and to move forward not just for this generation but for the next generation. we're going to need to summon that spirit today. the american people have been through so much over the last few years dealing with the worst recession, the biggest financial crisis since the 1930s.

they've done it with grace. they're working so hard to raise their families. all they ask is that we work just as hard here in this town to make their lives a little bit easier. that's not too much to ask. ultimately, the reason i am so hopeful about our future, the reason i have faith in these united states of america is because of the american people. it's because of their perseverance and their courage and willingness to shoulder the burdens we face together as one nation. one last thing. there is no one who embodies the qualities i mentioned more than the men and women of the united states armed forces. this weekend we lost 30 of them when their helicopter crashed during a mission in afghanistan. their loss is a stark reminder of the risks that our men and

women in uniform take every single day on behalf of their country. day after day, night after night, they carry out missions like this in the face of enemy fire in grave danger. and in this mission, as in so many others, they were also joined by afghan troops, seven of whom who lost their lives as well. i have spoken to our generals in the field as well as president karzai and i know that our troops will continue the hard work of transitioning to a tronger afghan government and ensuring that afghanistan is not a safe-haven for terrorists. we will press on and succeed. but now is also a time to reflect on those we lost and the sacrifices of all who serve as well as their families. these men and women put their lives on the line for the values that bind us together as a nation. they come from different places. their backgrounds and believes

reflect the rich diversity of america. but no matter what differences they might have as individuals, they serve this nation as a team. they meet their responsibilities together. and some of them, like the 30 americans who were lost this weekend, give their lives for their country. our responsibilities to ensure that their legacy is an america that reflects their courage, their commitment and their sense of common purpose. thank you very much. >> all right there it is. the president of the united states speaking on the two subjects that the white house said he would address. the state of the u.s. economy and the death of the 30 american troops in afghanistan, plus seven afghan troops aboard the chinook helicopter. ally velshi, i want to get to you. the dow jones was down around

400. when he stopped speaking, it's now down, what about 437 points. >> yeah. >> it didn't really move all that much. but i guess we're going to have to wait and see how much he reassures, reassured investors, traders out there that the u.s. economy is in his words, the united states is a aaa country. >> we were at 11,037 when he started speaking. it dipped below 11,000 for the first time since november of last year. now, look, i don't put a whole lot of stock in exactly as i've been saying for a few days, this is an irrational market. i don't know how much stock we put in the fact that he was speaking. the bottom line is it did go down to 10,984. we're looking at the dow. you can see the percentage drop there, 3.6%. the s&p 500, which, wolf, is more reflective of people's holdings in their iras and 401(k)'s. it's down substantially more than that. down more than 4%. this is definitely a major,

major selloff. there's no sugarcoating that. i thought it was interesting what the president said, he was quoting somebody saying that if you can have pay aaaa rating, america would have that. while there's a lot of criticism of s&p for the downgrade for its behavior in the financial crisis when it had a ratings on lehman brothers and aig. before it collapsed. the reality is there's a judgment that something is wrong with what's going on with america. i will reiterate, this is a serious selloff. it's recovering some of what was lost while the president was speaking. it's higher now than before he started. the bond market, which is where you would see a reaction, the ability for the united states to borrow money on international markets, which you would think would be affected by a downgrade is easier and cheaper than it was on friday. >> remind me, ali, i don't think we'll get near that point, at what point do they stop trading on wall street if there's a continued steep decline? >> would have to be 1200 points

and it would have happened before 2:00. it gets reset every few months. but a drop of 1200 points before 2:00, would have stopped the market. what happens, wolf, it's good you bring this up, these days with these kind of market, because the trading is computerized, there's a momentum, when you get to a certain point, it triggers more selling. these computers can sometimes sort of overtake things. it's called a circuit breaker. basically like a fuse in your house: if the selling is too heavy at some point, it stops the market nor a little while and makes humans come in basically and intervene. that's not going to happen today. we're not in that range yet but it's good to keep in mind. we're very clear on this. it is important to note that the dow dropped below the 11,000 level for the first time since last november. >> i think he was quoting warren buffett, the investor when he said that was a aaaa country as opposed to aaa. john king is watching. it's tough for any president on

a critical day like this to go out there and reassure and also stay on top of what's going on. >> he wants to convince the american people he's on top of this. he's speaking not only to investors on wall street but globally. as we've learned, like it or not, the gloebl economy, we're connected now. what happens in europe, moves to asia and the united states. it's interesting, the president had no new proposals, wolf. he said this super committee had to get about business. it was created as part of the deficit reduction deal. the only thing new he said is that there would be recommendations from the administration to get them going. then he repeated the called for the payroll tax cut on unemployment insurance, infrastructure bank. the last two they've said no, unemployment insurance. the cost of this with spending cuts elsewhere. it was interesting the president said he would have his own recommendations. what a lot of people are waiting for now is how big will this super committee rye to do. it is charged with coming up

with at least $1.5 trillion in additional spending cuts and or revenue increases. that's the mission. there's no reason it can't, say, shoot for 3 trillion or 4 trillion. some are saying that's the reassurance to send to the markets in terms of the downgrade will that be enough to get standard & poor's to say aaa again? probably not. that would be a reassuring nal. when you're worried about a double dip recession, the emphasis is on spending cuts. a lot of people say that could hurt the economy even though it helps the politics. >> david gergen is watching as well. david, the president specifically said and some on the left won't liket he said whatever recommendations this super committee, 12 members of congress, senate and house, six democrats, six republicans, come up with should include, in his words, modest adjustments to medicare as well as tax increases for those who could afford it. the wealthy. the president, he's always wanted tax increases on the wealthy and the big corporations.

some removal of loopholes and adjustments. here he's saying specifically he would like to see modest adjustments in medicare. that's not going to necessarily ring all that well with some on his left. >> not at all, wolf. but the president clearly now wants to put the grand bargain back on the table. he came very close with john boehner. he thought the gang of six as he said today was on the right track. whether you can get it or not, i'm not sure. what surprised me today about the statement, wolf, that he just made is it did not seem aimed at investors. it seemed aimed at the general public more. i thought there was very little in there to tell investors what he would do to staunch this route. to stop this route on wall street. rather, it was a way to talk to the general public about how he framed the arguments about how he got here and, you know, republicans will read into that, whether he meant it or not, they're going to read into it. he's trying to blame us for the

route we're seeing on wall street because he said it was basically those people who wanted to engage in a long prolonged battle over the debt ceiling. they got us in this trouble. they don't see it that way. they'll see this as a part stand samt. the critical thing, i'm not sure he spoke to the investors as you said, the market seemed to go down as he was speaking. i did this is that the markets went back up when ali velshi was speaking. >> now they're back down again while you're speaking, david maybe you're not reassuring. 430 points. >> exactly. >> the dow jones industrials now. i wouldn't read too much into any of that. the traders and the investors, they do what they're doing, i'm not sure they pay that much attention to what those of us in washington are saying. those of -- even what the president of the united states necessarily is saying. they've got other issues they're dealing with, specifically in asia and europe and here in the united states. our coverage will continue. this is an important day, an historic day.

the first day of trading in the aftermath of the downgrading of america's aaa credit rating down to aa-plus. t dow jones now down 418 points. our coverage continues after this. ♪ introducing purina one beyond a new food for your cat or dog.

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personal pricing now on brakes. tell us what you want to pay. we do our best to make that work. deal! my money. my choice. my meineke. take a look at these pictures. this is aaron carson vaughn. matt mills, john brown, kevin houston, michael strange, patrick hamburger, craig vickers. just seven the 22 navy s.e.a.l.s. killed in saturday's chopper crash in afghanistan. total of 30 u.s. service members were killed in the attack, which is the single largest loss of life for the u.s. military since the afghan war began nearly ten

years ago. afghan officials say the ch 47 chinook helicopter went down after it came under heavy fire and a rocket propelled grenade attack from the taliban. the s.e.a.l.s. were going to help troops on the ground fighting insurgents. the crash site has been cordoned off. seven afghan troops were aboard the helicopter as well and they died. barbara starr is joining us from the pentagon now. i understand, barbara, the pentagon has released information about coverage at dover air force base in delaware where the bodies will return to the united states. what have they told us. >> reporter: that's right wolf. this is the most unsettling news we are going to tell people very precisely what the pentagon has said. it will be unsettling, perhaps, to the families. but the pentagon has just given the news media a statement. i want to read it. it says, due to the catastrophic nature of the crash, the remains of our fallen service members

will be returned to the u.s. via dover air force base in and unidentified status. wolf, what this means is due to the catastrophic nature of the explosion, the crash of this helicopter, the remains that are being returned to dover simply are in a shape that they cannot be positively identified with any reasonable certainty as to who these men are. they cannot sort out the remains at this point. that is what the pentagon is telling us. that means, under pentagon policy, technically, there will be no news media coverage. the media will not be allowed to be there and see the return of the fallen to dover because it is only allowed under very strict pentagon issued policy when the remains are at least fairly certain. they call it reasonable to be identified as being a particular person. so this is really tough to explain. but that's what we're talking about. the remains are in such poor

shape this, they cannot be certain who they are. therefore, there will be no media coverage. we still have reason to believe that some very high-level administration officials will be going to dover, that they will render honors to the fallen. but at this point, we will not even be allowed as members of the news media to record that rendering of honors and show it to the world. so very tough news, very unsettling. we presume the families have been told but we're also told that the pentagon will not ask the families if owe if even with this development they wish to have coverage to have it shown that their members are coming home and honors being rendered to them. wolf? >> barbara, to be precise on this point, as heartbreaking as it is, we know that that chinook helicopter was brought down, we believe, by rocket propelled grenades, if you will. and that it crashed and burned. that's probably why the remains have not been identified.

but the remains will be taken to forensic labs to highly sophisticated facilities that the u.s. military has and eventually they will be identified, i assume, through dna tests and other forensic evidence. >> absolutely, wolf. if it is at all possible. that will happen. service members give a dna sample, of course, especially before they're assigned to a unit going into heavy combat. there's dental records, dna. all sorts of ways that this will take place. remains are returned to dover for that precise dna formal identification for legal and forensic reasons. but when someone is -- we're allowed to cover it when they have a fair reasonable certainty of who it is and they can match up a name and a set of remains. tough business to talk about here. but that's the way it goes. if they have a reasonable certainty of a set of remains and a name that goes with those remains, then they will ask the family if they wish to have

coverage to have their service member remembered and honored by the news media. in this case, by all accounts from what the pentagon is telling us just in the last few minutes, the remains are in such poor shape, they cannot go that far. we are asking, though, very strongly if there's any accommodation that can be made, if there's any picture that can be recorded, any image shown in any way, shape, or form so americans can see these people coming home for their final journey. wolf? >> all right, barbara, thanks very much. we'll stay on top of this part of the story. i want to take a quick break. before we do, take a look at this. dow jones industrials close to 500 points. it's below 11,000. 10,944. a drop of 4.5% almost on this day. if you add up the drop over the past two weeks, well over 15, 16, 1700 points over these past

two, three weeks. the dow jones industrials, we're going down even before the s&p decision to go ahead and lower america's creditworthiness from a aaa to a aa-plus. much more coverage from the cnn newsroom. [ female announcer ] we're rolling away misperceptions about energy independence. did you know that today about a quarter of all new transit buses use clean, american natural gas? we have more natural gas than saudi arabia has oil. so how come we're not using it even more? start a conversation about using more natural gas vehicles in your community. is best absorbed in small continuous amounts.

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just a few seconds ago, the dow had gone down more than 500 points. it's rallied a little bit. 468 points down. but it's below the 11,000 ali velshi is watching this very, very carefully. nervous investors out there. lot of nervous traders. this market, this down slide, ali, keeps on going. >> yeah. i mean, we're sort of past

nervous into panic. we're below 11,000 for the first time on the dow since november. as you said, moments ago, the dow dropped 513 points. you'll remember, last thursday it was a 512-point drop. little more than that. so we've surpassed that from a point perspective. what's more important is the effect on the percentage. on thursday, the major drop was 4.3%. at this point, we're at 4.12%. so it's a bigger drop on a percentage level than it was on thursday. i want to give you one other statistic. that is that, as you know, wolf, the s&p 500, we don't have a board, it's more influential and more represents the 401(k)s and iras. on thursday the loss was 4.8%. on the s&p 500. that exchange is now trading almost 5.25% lower. these are dramatic drops. achs i've been emphasizing there

doesn't seem to be a cal cue labl rational behind why we're having this drop, it is a serious drop from a percentage and a point basis right now. so we're down as you can see clearly, below 11,000 and we surpassed the drop that we saw on thursday. all in all, wolf, let's hope that the next 90 minutes or so goes better than the rest of the day did. >> yeah. there's still a lot of time out there and nervous as you say panicy investors worried about what's going on. lets bring in john king. he's watching what's going on as well. if the president had hoped, i don't think he did, it's unfair to the president to think that ten minutes of his remarks saying the united states remains a aaa country and warren buffett thinks it should be a aaaa country. i don't think it was going to turn the market around. it didn't reassure a lot of investors. >> i'm sure the president hopes the numbers go in the other direction. his goal is not to so much drive the numbers today. it's to drive the psychology,

the mood of investors and the american people because they're connected as well too. consumer confidence has a lot to do with the economy. what the president is trying to do and if you look around the world, european officials, the central bank over the weekend, european leaders are trying to say we understand. the president is trying to say we get the message. if you listen to him talking about the political dysfunction, david gergen mention thissed, the president was saying i disagree with what s&p did but i agree with the reason for doing it. meaning gridlock in washington. the president was trying to make the point that we get the message and this super committee will do more and that he will kick it and make it a priority and he will give it some recommendations. are you going to drive the numbers in the market fod? probably not. we're seeing evidence now. the dow below 500 points again at the moment as we watch this play out. but he's trying to send a signal that we get our problem here at home. we will keep at it. trying to connect that with what's happening in europe. but this is an inexplicable.

ali called it irrational. weak manufacturing, high unemployment, add in the political dysfunction in washington, there are serious policy and financial questions here and, again, it's our job to connect these dots. we are at 456 days to the 2012 presidential election. if you are the president of the united states who happens also to be a candidate for reelection, you're saying things as president to the country as the leader, you're also as a candidate thinking, if this continues, i'm in trouble. >> yeah. david gergen is watching what's been going on. he's been watching presidents for a long time. david, as we see the numbers, the drops on this day on the heels of significant drops over the past couple of weeks, the president, he's got a tough assignment right now in not only dealing with this but with what's going on in afghanistan. this was a very, very sensitive moment in his presidency. >> so tough. john king made the point, he's come off a terrible week as

president. i feel sympathetic for him. but i continue to sense, wolf, that i thought the statement that they didn't quite hit the mark in terms of what was needed for investors and the economic outlook. what people are deeply worried about on the economic side is not just the debt. you know, it's a fight down the road right now. it's how do you shore up this economy. >> david, hold on one second. it's now dropped -- david hold on one second. it's dropped 600 points. it's below 600. 604-point drop. sorry to interrupt. i wanted to let the viewers know it's down to 10,854. >> we have larry somers saying there's a one in three chance there's a recession -- nor yell row bin i came out in the financial times saying we're heading toward a global recession. can't stop it. let's head off a depression. there is genuine fear out there that we're heading down on the economy and our political

leaders are infect ul. what the president need to do is act especially on the jobs front. he needs to cut a deal with republicans. get his payroll tax, get his unemployment insurance in exchange for and you were pointing to this earlier, in exchange for the president saying okay, republicans, i'll hold off on some new regulations. i'll do things on immigration with the talented citizens coming in. i'll do other things you want to do. he needs to act. words in a moment like this just don't help very much. look at the route we're having. it's gone down a lot just since he spoke. >> very quickly, david, should the president have done what donald trump and others recommended that he do, call congress back to washington, they're in reves right now -- recess until september 7th. you know what, gentlemen, ladies, you have to get back here, we have issues to deal with. the country is ailing. this is no time to be in recess. should the president have done that? >> i thought donald trump was on

the right track from my point of view. he ought to call the leadership back and see if he can get a deal on jobs. not the long-term on the deficit. get the jobs picture front and center. and give americans reassurance that somebody is in charge. there's a feeling in the country that nobody is in charge. that we don't have a game plan. that this is all rhetoric out of washington. this is finger pointing and posturing. what people want is action. to do that, the president needs to bring the top leaders in and frankly, i any he needs to bring the best -- the best, most respected people in the country together, like paul volker and others to find an action plan to put this country on a better path. that's what's going to give people reassurance. that's what's needed. people need to feel that there is somebody who has ahold of this thing and we'll find our way out of it. >> market rallying a little bit. 550. i hate to say rallying.

it was down below 600 a few minutes ago. now it's 552 points down. the dow jones industrials. david, thanks very much. we'll continue the breaking news coverage right after this. we ne, please! [ nurse ] i'm a nurse. i believe in the power of science and medicine. but i'm also human. and i believe in stacking the deck.

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dow jones industrials you can see down 521 points. that's relatively good considering five minutes ago it was below 600. it was down more than 600 points only a few minutes ago. it's rallied a little bit. alison kosik is at the stock exchange for us. it must be a brutal day for traders, investors, alison. give us a flavor. >> reporter: it is brutal. you walk downstairs and you see the long faces. you know what the concern is about, wolf? it's about the long-term implications for the s&p downgrade. no one knows because this is so historic. it's never been done before. the fact remains that the downgrade is what sparked this tumble initially. but it's not the only reason nor the selloff. the fact of the matter is, the u.s., it has a debt problem and the u.s. economy is extremely weak. so what you're seeing investors do right now when you see the stocks plunge is investors

moving to the sidelines, reassessing what to do and they're taking any risk off the table. you know, it's all about confidence at this point. especially when you watch the movements on wall street and the ebb and flow on wall street. it depends on confidence and what many analysts and traders told me over the past few days is the s&p downgrade has more to do with really chipping away at the confidence than rising, the confidence of the american people than raising interest rates. wolf? >> all right. alison, stand by. ali, the s&p downgrade, i think if you read that statement that they put out and listen to all the interviews, the top leaders have been giving over the past few days, it was mostly a vote of no confidence in the political system in washington as opposed to the u.s. economy. would you agree? >> i would say at least a vote of no confidence in the political systems. there's an algorithm that goes into the calculation, that is they wanted to see a greater number of dollars cut from the

budgets over the course of the next ten years. moody's said the same thing. they didn't think this went far enough. they thought the president's initial plan of $4 trillion in cuts was more meaningful. they said that would be one way to get the aaa credit rating back if they were to somehow get back on the road toward a plan cutting the deficits further. you're right, wolf, they were very clear about the fact that the inability for washington to get it together and the fact in their words that the budgeting process was separate from the debt authorization or payment process, that they linked those two together was disturbing. whether or not you agree with s&p or -- boy, we've seen people on both sides of the political spectrum who don't agree with what s&p did. the reality is, i any we all see that part, right? we all say that we don't -- nobody in america thinks, well, nobody save a few people think that what happened in the last three months in washington was an example of functional government. i think what you've got is you've got growth problems in the united states, economic

growth problemsment you've got problems in europe. you have a slowdown in china. you have the whole world slowing down again and it's the same problem, i don't want to equate this to 2008 too much, wolf. but it's the issue of who pulls us out of this mess. there was always somebody doing better. at this point, in europe and the u.s. are having problems and whee don't have the political leadership in the united states to deal with it, this is where you're seeing it play out. alison makes a good point, as people worry about what stocks are going to do, they pull the money out of there and it goes into other things. in this case, still going into bonds and still into u.s. bonds. so the net effect of lowering the credit rating on the united states has not had the obvious effect of increasing interest rates in the united states. interest rates are as low today for the u.s. government as they were on friday. so it's a very interesting juxtaposition. you're seeing panic playing out on the board that you're not seeing everywhere else in the financial system here in the united states or globally.

>> and you're seeing massive fluctuations, only a few minutes ago the dow jones was below 600, went down 600 points and now it's rebounded a little bit. 456-point decline so far. guys, stand by. we're watching what's going on. we're getting more reaction coming in. our coverage will continue in a minute. to keep in balance after 50, i switched to a complete multivitamin with more. only one a day women's 50+ advantage has ginkgo for memory and concentration, plus support for bone and breast health. a great addition to my routine.

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the dow jones industrials flirting once again with the 500-point drop. it's down 485 right now. about ten or 15 minutes ago it had dropped more than 600 points. 490-point drop as of right now. 4.28% drop. the dow, for the first time

since last november, down below 11,000, 10,955. we heard from the president about a half an hour ago. he tried to reassure the country that the united states, in his words, remains a aaa country, despite the decision by standard & poor's to downgrade the u.s. credit rating from aaa to aa-plus. brianna keilar, white house correspondent is standing by. brianna, what are they saying behind the scenes right now. the president has specific ideas. he announced a repeat of them. continuation of the payroll tax cut, unemployment insurance continuation of that and then infrastructure development fund, if you will. he says he's going to be coming up with more ideas for the so-called super committee to consider. any more information we're getting about tangible steps the white house is putting forward to deal with this economic crisis? >> quite frankly, wolf, no. this has been a question that we asked. i asked austin gools by on

friday. the president's outgoing chief of council of economic advisors. what there is beyond this arsenal that the president laid out. the point that you will hear white house officials make is that there would be plenty of jobs in these proposals that they've put forward, be it extending unemployment insurance, the payroll tax extension and infrastructure bank. some of the things, of course, having problems that you heard delineated by john king. the idea of patent reform was something we've heard recently coming out. so free trade agreements before congress, these are really the five things that the white house has been talking about, and so if you talk to white house officials, they say these are important things that we can move on and that congress can move on as soon as they come back from vacation and so we should be dealing with the things that are within our power and they've said recently a lot, wolf, not focusing too much on the things that are not and when they're talking about the -- they're talking about ratings agencies, they're talking about

the markets, but of course, as we've seen from today, both of those things very much concerning the administration even though we hear them say that those are things they can't control. >> really a bad day on wall street today. almost 500 points down right now. but a few minutes ago it was down almost 600. it was more than 600-point drop. let me bring in the professor of business at the university of maryland. someone who helps us better appreciate what's going on from time to time. peter, what do you make of what's happening today? >> first of all, i don't think it had anything to do with the s&p downgrade or very little. i mean, this has been going on for a week now. it's a continuation of what was going on on friday. the bond market responded much as i expected, as this is really not an issue. there's really no place for money to go other than into u.s. securities. the europeans don't provide a viable alternative. the japanese don't have bonds out internationally. i don't expect owe t. means a lot to credit markets.

what was troubling to me today i have to say is the president really didn't say anything new and a lot of the things that he's talking about would have long-term consequences, but not in the next year or two. whether it's an infrastructure bank, take a year to get it up and going. free trade agreements are wonderful things. they take years to implement. the patent reform. there are things you can do now. for example, he could streamline the approval process for drilling in the gulf. that provides a private infrastructure project. the stuff you to do to develop domestic oil and gas. i don't work for those people, i have nothing to do with them, okay? as concrete, steel pipes, the very same stuff that goes into roads. it would be private money. he wouldn't have to pay for it. likewise, there's the trade issue with china. finally resolving that. they're chastising us right now. but the reality is, their currency policy and the fact that they buy all those dollars

is part of our problem. he knows that and he's talked about doing things directly. but he hasn't acted. i need to see a new game plan from this guy and that's what the market is saying today. >> i guess there's a limit. there's a restriction as to what he can do. you have creative ideas out there. i'm sure a lot of others will come in. peter hold your thought. we're going to take a quick break. to stay ahead of her c. morning starts with arthritis pain... that's two pills before the first bell. [ bell rings ] it's time for recess... and more pills. afternoon art starts and so does her knee pain, that's two more pills. almost done, but hang on... her doctor recommended aleve because it can relieve pain all day with just two pills. this is lisa... who switched to aleve and fewer pills for a day free of pain. and get the all day pain relief of aleve in liquid gels. handle more than 165 billion letters and packages a year. that's about 34 million pounds of mail every day.

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we're taking a look at the dow jones industrials. down 479 points. they were down more than 600 points not that long ago. horrendous day on wall street.

the first trading day since the standard & poor's credit rating of the united states was reduced from aaa to aaa-plus. we'll get back to wall street in a few moments. anderson cooper is joining us on the phone. anderson is reporting tonight and all this week from kenya and later in somalia. anderson, it's a horrendous situation, a human tragedy unfolding where you are right now, literally millions of people potentially on the verge of starvation. human crisis. set the scene for us. tell us what's going on. >> as you know, wolf, as you say, i mean, some 3.2 million people are at the risk of starvation. need life-saving intervention immediately. frankly, just because of the conflict in somalia because of this group which controls parts of southern somalia, aid workers haven't been able to get food to where they need it.

a lot are fleeing the country, going to ethiopia and coming to kenya. what is the largest refugee camp built for 90,000 somali refugees 20 years ago, it's got more than 400,000 in the camp. under 65,000 on the outskirts of the camp waiting to get in. there's simply not enough money in the pipeline that's been sent to care for all these people and to deal with this. they're in the worst drought they've seen in 60 years. that on top of the conflict, they're concerned over the next two months before the rains come, it's going to spread and more people are going to die. >> horrendous situation. you're seeing it up close. anderson, i know you're going to be reporting tonight, tomorrow from the scene there. you're getting ready to move into somalia too, is that right? >> reporter: yeah. we'll be going there tomorrow and broadcasting for the next two days from there. right now we're on the border

where all the refugees have poured across in a camp run by the unhcr. >> be very, very careful, anderson. i know sanjay gupta is with you, our team of correspondents and producers watching what's going on. a critically important story for the world. i want to let viewers know, anderson's ac 360 moves to 8:00 p.m. eastern tonight as well as 10:00 eastern. but at 8:00 p.m. eastern, you'll see anderson tonight live from kenya, tomorrow and wednesday from somalia. a horrific story unfolding with enormous, enormous consequences. millions of people potentially on the verge of starvation. want to applaud anderson, sanjay gupta, our entire team for going there and bringing this news to our viewers here in the united states and around the world. we'll get back to the other big story we're watching, wall street. right now the dow jones down more than 500 points.

517 points right now. it was down more than 600 about half an hour or so ago. a loss of 4.5% on this day. well below 11,000 right now. we'll stay on top of this story and much more news when we come back. ♪ gone, gone away ♪ gone, like my landlord's smile ♪ ♪ gone, gone away ♪ my baby's gone away with dedicated claims specialists... and around-the-clock service, travelers can help make things better quicker. will your auto and home insurer... be there when you need them most? for an agent or quote, call 800-my-coverage... or visit travelers.com.

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there are plenty of good ideas about how to achieve long-term deficit reduction that doesn't hamper economic growth right now. republicans and democrats on the bipartisan fiscal commission that i set up, put forth good proposals. republicans and democrats in the senate's gang of six came up with some good proposals. john boehner and i came up with some good proposals when we came close to agreeing on a grand bargain. so it's not a lack of plans or policies that's the problem here. it's a lack of political will in washington. >> that was the president

exactly one hour ago. 1:52 p.m. eastern. it's now 2:52 p.m. eastern. trying to reassure the country. the dow jones at that point was around 400 points down. it's now had the 6 points down. it was down more than 600 points about a half an hour or so ago. there's been a little rebound but not much. john king is watching what's going on. the president did say he's going to come up with some new ideas for this super committee, these six democrats, six republicans to be announced, we think, in the coming days to come up with more significant deficit reduction plans. >> if you listen to what the president just said, they're coming into the segment, wolf, whether a democrat or republican, whether independent or far left or right, you can't argue with what the president said. there are a lot of ideas. the problem is putting the ideas on a piece of paper and getting the political voetsz. not just will, it's votes to get them passed. the president said he would make recommendations to the super committee and in a reflection of the atmosphere we're in, already, if you picked this up,

you have e-mails from republicans saying will they be specific recommendations or just speeches again? they're saying the president better put forward specific plans. his team over the weekend called this a tea party downgrade. that's the democratic party line. we're in a fiercely polarized environment in which the president is saying we have to try again because this debt compromise deal, not only our poll shows a majority of the american people don't like it, the markets don't like it, it's not viewed as doing enough, now as they try to do more, the question is can they get along, have a big agreement? some of the proposals out there, liberals again from the left don't touch medicare or social security, mr. president, we're right back into the political debate about this which is one of the reasons the deal was late coming, deadline and a lot of people didn't like it to begin with. the question is, can the president and the republicans find some way to break that political model that we're stuck in and do a bigger deal. every day we're closes to what, an even numbered year, election year. >> the president wanted tax

increases and modest adjustments in medicare. let's bring in a financial analyst, ryan mackey, president of optimum capital management. what do you make of what's going on? 500-point drop so far, ryan. is this rational or irrational? >> essentially, we've been irrational from the dow jones 6700 up to 12,750 when the entire market essentially forgot exactly why this economy was weak. we had weak housing market, had a credit crisis and high unemployment. none of the issues were fixed and we have the smoke screen of the debt ceiling debate was finally un -- after august 27bd we realized we have a weak market and with the downgrade, essentially what's happening is adding insult to injury. i don't necessarily think it's a big issue. when you couple it with an extremely weak economy and a lot of fixing to do that we've not deserved to be as high as 12,000

in the first place, a lot are realizing it's a hard row to hoe ahead. we have to buckle down and do things ourselves. >> all right, ryan. hold on for a moment. alison kosik is at the new york stock exchange. alison, basically another hour to go, little bit more than an hour to go. a lot of nervous traders. this could be a wild ride this next hour. is that what you sense? >> reporter: as it usually is. especially when you see the volatility that we're seeing today, wolf, yes. the dow now down 534 points. you know, what analysts are telling us is that part of what you're seeing here is what's known as program selling. that's where the big institutional traders, mutual funds and hedge funds, they automatically sell when the major averages and the individual stocks they drop to certain levels. when they reach those levels, you see more and more selling. it's that momentum. this is something different today that we're seeing that we didn't see last week. because last week, most of the

selling came from individual investors, known as retail investors. today what you're seeing is the institutional investors and you're seeing the levels kick in. wolf? >> ali, one final thought before we go to a break. >> alison's points makes a lot of sense. i have to underscore the fact that the one thing you should have seen from a downgrade of the united states would be an increase in interest rates, the cost of the u.s. borrowing money. the ten-year note, which is the benchmark for that, is not showing any move. it is actually still down. this is something else that's happening. it is a growth issue. but it's a momentum trades that are being executed. you're absolutely right in saying, it's a very strange time, wolf. when you can look at a market that's down 527 points and say, it's up from where it was. >> john king, we'll have more on at 7:00 p.m. eastern. i'll be back at 5:00 p.m. for the situation room. thanks for joining us. brook baldwin continues the coverage in the newsroom after this. onomic growth.

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