or women who are nursing, pregnant, or may become pregnant. simp blood tests will check for liver problems. tell your doctor about other medicines you're taking... or if you have muscle pain or weakness. that could be a sign of serious side effects. ask your doctor about high cholesterol... plaque buildup... and if crestor is right for you. if you can't afford your medication, astrazeneca may be able to help. welcome back to the cnn newsroom. i'm brooke baldwin. we have a huge two hours, including the fact that we're 60 minutes away from the close on wall street. look at the number right there. another horrendous retched, you fill in the ad jek tiff for stocks. down 523 points right now. on the first trading day, the first full day since the controversial downgrade of america's credit rating, that happening friday night. we have our allstar team standing by across the country

and around the world. with ali velslei velshi, richar. also today, aaron burnett will join me live. again, one hour ago we heard from president obama and we heard him make sort of a back handed reference to the downgrade issued by s&p. in fact, did it right off the top. he also said he's hopeful right now. listen to the president. >> 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 entrepreneurs on earth. >> so quickly here a little perspective. in the past two weeks, beginning friday, july 22nd, the dow lost

more than 1600 points. you see this graphic here. it takes us through last friday. we're continuing to see, as you've been watching the big board. additional losses today. richard quest is live on wall street. ali velshi, i want to begin with you in new york. ali, at one point in the last hour when i was watching you and wolf and the president, at one point the dow dipped below 600 points. so i have all kinds of questions. let me start with two questions for you. what do you make of the volatility today and what will it take for the markets, ali, to stabilize again? >> they have to become rational, brooke. i'm getting people tweeting me saying why do i say that? let me explain. the credit rating of the united states was downgraded. if you downgrade somebody's credit rating, it should cost more to borrow. slightly greater risk. where you would see that play out very specifically is in u.s. bonds. 3, 5, 10 and 30-year bonds. those yields or the interest rate that it costs the u.s.

government to borrow money, have gone down from friday. in other words, it is cheaper today than to borrow money back when we were a aaa rated country. why? because where are you going to take the money? this is big money. u.s. bonds are big money. there are other aaa rated countries that pay higher interest, australia and canada are two examples. they don't put as much debt. you can't take it out of these bontds and into somewhere else. a big economy is where you can do that, are european economies. who is putting their money into europe right now? the debt side of things hasn't reacted to the downgrade. debt markets in the world, bond markets are twice as big as stock markets are. the total value is twice as big as the total value of all stock markets. you didn't see the reaction where you were supposed to see it. you're seeing it play out here in the stock markets and that's why that's irrational. when i say that, it means people are selling because they're seeing other people selling. computerized programs are triggering selling because stocks hit a certain point. that's what you're seeing. sort of momentum.

add to that aig is suing bank of america. that is down, last i checked, about 16 or 17%. that's a part of it. it's not entirely rational behavior. >> do you think, ali, the numbers are just this initial shock to all of the different factors you rattled off and that you know after today, perhaps it will start to level out? >> brook e, if i knew the answer to that, i would call in this report from my yacht. i will tell you, it didn't make sense today. >> wishful thinking on my part. >> what you and i were covering together, it's not as bad as this. it was 512 poichbts, from a percentage basis, we're already at 4.4%. the s&p 500 which is reflective of your 401(k) and ira, we have bigger losses today than on thursday. on thursday, that was actually a real reason. if you recall, you and i discussed, this was the europeans talking about the italian and spanish debt.

there was a believable issue. it shouldn't have gone on as long as it did. it was a real issue. this is unusual. >> you mentioned italy and spain. let's bring in richard quest, not from you on wall street. richard quest, let's begin with i know that european central, they came out with a statement yesterday saying they're ready to start buying italian and spanish government bonds because of the fears of default. talk to me about how what's happening in europe is playing into our markets and vice versa. >> well, because you and i have talked so many times about globalization. the shear extent of which money just flows across the atlantic backwards and forwards. you're seeing that today. the european markets were down very sharply. germany down more than 5%. the uk down heavily as well. yet, the bond markets in italy, they did rally slightly because of that. what we're seeing and ali talked about it so eloquently a second

ago, what you're seeing is not rational. there's no reason. we're no worse off today than we were on thursday or friday. i remember once and old trader once said to me, markets don't crash on a monday in august. well, they don't crash on any day in august. it's just a day when fear dwrips the market -- grips the market and the cycle begins. that's what's happened and it's going to take more than just frankly, a few bits of soothing words from a president and the ecb. to make this right. >> richard, what will it take? what do folks in europe need to see from washington in order for the markets to improve? >> they need to feel that the policy makers are ahead of the curve. remember, it was the debt ceiling crisis that precipitated what took place in the united

states. it wasn't a raising of the debt ceiling to $16 trillion. it was the bickering and the inability to get that agreement that caused the uncertainty and the lack of confidence. in europe, it is the inability of them to put to rest this debt problem of countries that have overspent the spanish, the italian, the greek, the portuguese and the irish. and it's that scenario -- look, at the end of the day, markets are you and me. it's our 401(k) plans, our investments, our children's wedding and bar mitts fa funds. that's what makes up what's in that building behind me. it's not some money milking machine. it's real people's money. at the moment, what people are looking for is confidence in the pillars over there. >> richard quest, i thank you. ali velshi, i'm sure you agree that we're all looking for confidence for the numbers in the building to improve.

it is interesting, i think you pointed this out earlier, it's this odd juxtaposition between the frightening numbers you see there on the big board, but also you look at some place like the u.s. treasury and interest rates and that's faring pretty well. >> clearly what's happening is this -- you remember this from a couple years ago. anything in any direction can affect this market disproportionately. christine roman said something on saturday when we covered this. it bears repeating. i've seen it in a few other places. i heard it from christine first. she said, you know what could make monday's markets do well is if sunday night the administration, the treasury, republicans and democrats from congress all got together and say, hey, we heard you loud and clear. this charade was ridiculous about the debt ceiling. the fact that we held the debt ceiling hostage and told the world that maybe we'll pay, maybe we won't pay, it's all got to do with politics. unlike europe where they have real structural problems. people keep saying we have structural problems in the united states. whee absolutely do not.

not when it comes to debts and deficits. we have political problems. problem of plitd cwe're going t prove that this isn't accurate. instead the left and the right, the white house surrogates, tea parties, everybody blamed everybody, including blaming s&p. don't listen to them. moody's has a triple a rating. people do their own ratings. the problem was this was half about politics, the downgrade and politics stood in the way of finding a solution to this. if they had come out and said this isn't good, this is what we're going to do, we've heard the message. i think you would have seen a different result. people are looking for leadership somewhere, saying i got this under control. here's a plan to go forward. you couldn't get congress to agree on what color to paint the walls. >> they come back to work in a couple of weeks. got to assign that super committee, don't they? >> that will work out well. >> as the president mentioned,

maybe this downgrade will add a sense of urgency. maybe the men and women will compromise and cut. >> everybody read it a different way. it's the same tea leaves that are being read differently. conservatives are saying see, we didn't cut enough. we don't have cuts that are coming soon enough and liberals are saying, it's because the conservatives held out. i mean -- >> it's back and forth, back and forth. >> i've never seen -- there's nothing more straightforward than a rating from pay rating agency on a country's debt. it's not a complicated thing. i couldn't imagine that people could read this as differently as they do. >> ali velshi, pretty smart guy. i look forward to the day we get to talk to you on a yacht. and do me a favor and stand by. we're not going far from this story. we have you standing by, people all around the world here. cnn 24/7 global resources. whee plan to tap into. there's been good news. it's a three-letter word. we're going to talk about that with ted row lands live in chicago. the president spoke earlier today.

what is he saying about the downgrade and can we compromise in washington? we'll be right back. [ jon ] we don't just come up here for the view up in alaska. it's the cleanest, clearest water. we find the best, sweetest crab for red lobster we can find. yeah! [ male announcer ] hurry in to crabfest at red lobster. the only time you can savor three sweet alaskan crab entrees all under $20, like our hearty crab and roasted garlic seafood bake or snow crab and crab butter shrimp. [ jon ] i wouldn't put it on my table at home, i wouldn't bring it in. my name's jon forsythe, and i sea food differently.

[ male announcer ] want to pump up your gas mileage? come to meineke for our free fuel-efficiency check and you'll say...my money. my choice. my meineke. . welcome back to the newsroom. take a look at our team. we have a superstar team. ali velshi, ted rowlands. we're tapping into every single resource for the best articles on-line. go to cnn money.com. dan loath i, i want to begin with you. we heard from the president earlier. off the top, talking about s&p, talking about all this partisan bickering. but i understand jay carney in the dalg briefing moments ago was asked a question about

whether or not congress could actually come back from vacation a couple weeks early. what was his response? >> well, his response is that essentially they don't have any control over what congress does, that this is the way it's set up. he wished that they could prod congress to come back. certainly, that's something the president could request. but congress has a way that it carries out its calendar. that's what they're abiding by. certainly, there was from the president today a sense of urgency directed at congress. now is the time, put aside everything that has happened over the last several weeks and months and really work at coming together in a bipartisan way to attack the fiscal problem of this country. >> dan, let me jump in. we have just turned around that sound. let's play the sound. this is from jay carney moments ago in the briefing. then we'll continue our conversation. here's jay carney. >> the markets go up and down. we cannot, we do not and cannot react precipitously in reaction

to how the markets behave on a given day or week. we did achieve, after an ugly process, a significant step forward in terms of deficit reduction. that will be implemented. congress will set up this select committee and that process will move forward. and congress will working with this president, we believe, in a bipartisan way, take action to support job creation through the free trade agreements and the payroll tax cut extension of unemployment insurance. >> so dan, he's saying, hey, we can't control congress, we can't make them come back to work. >> right. that's essentially what he's saying. there is a calendar, there is a way that congress is structured and that is certainly what congress is abiding by. but i think what the bigger point was from the white house today is listen, there is a sense or there must be a sense of urgency now. a real need for there to be a bipartisan approach to attacking

the fiscal problem of this country. secondly, i think what you saw from the president was trying to reassure americans that, yes, you might be skeptical about what has happened. you might not feel good about your own personal situation, but that things will eventually get better. at least that was the message from the president. even as the stock market continued to fall. >> we're watching the numbers, 394 down, number 11,053 here. as we continue this conversation, he did mention he was hopeful, dan. i want to play some of the president's remarks. these were the first remarks from mr. obama since the credit downgrade on friday. what he said was that no one certainly doubts the creditworthiness of our country, but they do doubt, is the will in washington to make these tough decisions to let the debt down. let's listen to the president. >> 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. >> so, dan, i realize you can't bring congress back to work. but can the latest news suggest that the white house will press the super committee, this bipartisan committee of 12 to go bigger on debt reduction than the $1.2 trillion they are charged with finding? >> well, look, i think all arrows are certainly pointing in that direction. that super committee which is yet to be collected of 12 bipartisan group of 12 people will be charged with as a floor, cutting $1.5 trillion. it's clear now, at least based on what everyone is saying, that that number may just be the beginning. in fact, i asked jay carney if perhaps what the president will be pushing forward in terms of recommendations he talked about that today, if that will be pretty much the grand bargain

with a few tweaks. it's going to be all of the above. i mean, i think the president is going to look at what he was able to hammer out with speaker boehner, look at what the gang of six also was able to work out, that bipartisan group. then that's what the president will be pushing. i think things changed from last week to this week where that may have been the $1.5 trillion -- may have been a ceiling. right now it may be the starting point. >> dan lothian thank you. i want to bring in ali velshi from new york again. we were talking about u.s. treasury, interest rates. i know we have ted rowlands in chicago with more on that. >> i'm taking a look at commodities right now. pretty much everything is down but for gold, which is up again. most commodities are down, cotton is up a little bit. ted is at the chicago mercantile exchange in chicago where these commodities get traded, where s&p futures get traded. you're in the only place on

earth right now, ted, where money is actually going in. money is coming out of every other market. give me a sense of what's going on with treasuries. the one thing that should have been hit hard by this downgrade didn't get hit hard. >> yeah. on one level that's accurate. but people are saying, listen, this downgrade did one thing. it was another negative component into this fueling of the selloff that we're seeing today. as you've pointed out, what happens when you sell off? you have this money to park. where are they parking it? ? treasuries because it's the only game in town in terms of a safe-haven. people are selling because they heard of this downgrade possibly or at least it's a component. then they're going around a circle and buying that same product which was downgraded because they think it's safe. they know it's safe. the bond market trading just ended here at the top of the hour. investors, while they're surprised somewhat that the interest levels are not going to go up, they say it makes absolute sense because people

still trust the u.s. government. they know they're going to pay and as you've pointed out, it's really the only place to park your money. >> you're also on one of the most active -- the most active trading floor in the united states. probably in the western world. i know you were talking to people. was there some sense of how this day turned out? what were the traders down there saying about this downgrade and the effect it's going to have? >> well, they were -- the downgrade, like i said, most traders believe it is a small component in an already battered mood, if you will. >> right. it was a catalyst to kick this selloff today. people were looking at the numbers. as you know, they get to certain levels and it can go from a sort of periodic slowdown to a free fall. that was a big concern which we saw a little bit of it when it got down to 600. the people here are looking at the reality that the treasury market is not going to be a problem in terms of interest

rates. this was a big concern after the rating drop. people thought my car loan is going to go up or this loan because of this. clearly today, we know that is not going to happen, at least in the short term. >> ted, thank you for that. brooke, ted is not given to overstatement the: when he said bonds are the only game in town, at the moment they're the only game in the world. he's exactly right. the way he categorizes was perfect. the downgrade comes, people say i better take my money out of these things. they go everywhere in the world. stock markets, commodities, they look at everything around the world and end up where they started because in the end, in this uncertain world we're in, believe it or not, even a downgraded u.s. treasury is a safer investment than much of what else is out there. >> also, ali, if i may add one more layer of positivity, aren't oil futures traded at that exchange and oil is looking pretty good. >> oil gets traded the other most exciting place in the world, which is right here in new york.

the new york mercantile exchange. but way down. you're right. >> way down. which is great news for us. >> they're down as much, if not more than the stock markets. last i checked, it was over 4% lower. in theory, that should lower gas prices, which you know is basically like a tax cut, right? because a tank of gas, you buy the same amount of it all the time and if you pay less for it, that's money that you can spend somewhere else. some weird things going on here. we're fixated on the stock market t may not be the most serious. it's an interesting day where the dow is down 390 points and it's better than an hour and a half ago. >> it's all about perspective. ali, thank you. stand by for me. our colleague poppy har low is also standing by. i'm told she had an interesting interview with a trader at the new york stock exchange who had a story to tell about the moment the president spoke today from the white house. perhaps that may tie into things. more cnn newsroom.

dow down. the sons of former slaves and the sons of former slave owners will be able to sit down together at the table of brotherhood. i have a dream today! [ male announcer ] chevrolet is honored to celebrate the unveiling of the washington, d.c., martin luther king jr. memorial. take your seat at the table on august 28th.

welcome back to the newsroom. we're not going too far from the story there at the new york stock exchange. the dow down 385 points. we're 35 minutes away from the closing bell. i have my colleague, ali velshi helping me out this afternoon live from new york. ali, i appreciate it. for now, i do want to go to poppy harlow with cnn money.com. poppy, i understand you interviewed a trader today who had some perspective on the moment the president spoke. what did he say? >> reporter: that's right. i talked to two critical people. one on new york stock exchange. teddy wiseberg. you talked to him last week when we saw the fall on thursday.

on the floor more than 40 years. also, chief investment strategist at standard & poor's. we'll get to him in a minute. let's talk about what the trader told me. he said, i remember the president spoke about an hour or so ago. he said as soon as president obama stopped talking, the market tankds 1250 points. it fell 604 points. are you relating the two? do you think they're combined? he said absolutely. he told me i and the traders on the floor did not hear anything different than we usually hear from this administration. he said it was similar to back in 2008. that sort of feeling of chaos in the winter of 2008. the beginning of the president's term. the message that the street wanted to hear, that the market did not hear is that there is confidence and there is direction. he said we didn't hear any specifics. that's what we wanted to hear. the market didn't get a sense of confidence that anything is different. he said why didn't the president call congress back to work? you played sound from jay carney earlier saying, look, we can't tell them when to come back here.

that it sounds like that's what the marketed wanted. moving to the chief investment strategist for standard & poor's. i want to know separate from the rating agency, same overall company but totally separate division. this is a guy who manages people's money from pensions to your investment. he sees the market as average investors see the market. he said, what happened after president obama gave those remarks on the overall economy and on the downgrade, he said what was critical was it was about what the president did not say. he said what investors wanted to hear was that there is some sort of safety net out there. that there is some plan they wanted some leadership from washington. they feel like they didn't see it. you have two sides here. you've got the average investor side, someone looking over your 401(k) and then you also have the new york stock exchange trader mentality and they're both sending the same message here. nice that we've rebounded, no longer down 600 points, but we're still down steeply. we're still right now second worst day we've seen since the

financial crisis for stocks and the market hasn't closed yet, brooke. >> that is interesting that teddy wiseberg was willing to connect with 2008 with regard to the president speaking to now. i know last week he was hesitant in doing that, saying it's a different time period. that's significant for me to hear coming from a 43-year veteran trader. let me ask you this, poppy. what fundamentals in the economy are scaring investors now, would you say? >> reporter: so this is another thing that teddy and i spoke about. it's the fact that keeps coming up. a week and a half ago or so, we got this horrible gdp report showing us the economy is growing slower than we thought. the reason that's still important and ali keeps making this point is that the stock market is a reflection of how companies that are traded there, citigroup, exxon-mobil, how you look at their numbers, they're very strong. but because the gdp report that we got recently was so bad, it's

causing everyone to revise their numbers downwards for the second half of the year. saying the outlook isn't going to be rosie. overall for the economy, americans' ability to spend isn't going to be as great as before. ultimately, that will weigh on the companies that are traded in this market. that's how you can reflect and really bring together the fundamentals of the economy and how these companies are trading. their numbers may be good now but the outlook is that they won't be good in the long-term. another expert that i was speaking with this morning, brooke had an interesting point that ultimately, you're not going to see that strong consumer spending that we need that makes up 70% of our economy because people are dee levering at home just like this country is trying to get out of debt, individuals are trying to get out of debt. you at home watching may be in this situation. as you try to save more, you're ultimately going to spend less. that may be good for your bottom line and your pocketbook. it's not good for this economy. >> yeah. people are nervous. the confidence isn't there. as ali and i were mentioning.

some people are panicking. poppy harlow, thank you. ali velshi, to you. some people may be panicking, investors are clearly panicking. i feel the word we keep using is volatility and ir rationality. i guess it's a good time if you want to buy, huh? >> i would be day trading right now. if you have stomach for this, it is not a straight down market. look at that chart. it goes down, then up, then down, then up. if you know things about how stocks are priced and which ones -- every day, there are 30 stocks on the dow that are all down. p and g i think was up. generally speaking they don't move in unison. there's a reason why x stock will get hit instead of y. you can make money on this. if you cost average and get in, ultimately, when you go up, you'll make money. that argument falls flat on a lot of people now. what happens is the momentum comes in, anybody looking at the screen is going to sit there and say my 401(k). high my ira took a hit.

something they're about to buy doesn't get bought because they're feeling flush. alison at the exchange, the last 29 minutes of trading, alison. you know, brooke pointed out that teddy wiseburg. he's starting to think that some of this looks a little bit like some of the days in 2008. what are the traders telling you? >> reporter: they're telling me that they're concerned, ali. they're concerned because they don't know what this downgrade, that s&p did on friday, what it really means in the long-term. you know, they're looking at today's selloff as just a day. it was kind of expected but they are truly worried about what's going to happen in the future. i think what you're also seeing is what i explained before is a lot of that program selling. the big institutional components, those hedge funds and those mutual funds. they're selling today. something we didn't see last week that we're seeing today. last week is more about the individual seller getting out there and running for the exits. i think now you're seeing --

that's why you're seeing huge spikes in trading. the 100-points turns, because the institutional investors are getting into the fray. because there is concern about the long-term ramifications of this downgrade. >> they're a calm bun. . i think you would agree with me, they're not in panic mode. the traders have seen a lot. they're not panicking. >> no. they're not panicking. but make no bones about it, they are very concerned. >> yes. >> a lot of what poppy said is true. they were really looking to that speech to find some sort of nugget to take away to show calm to the market. they did not find that. and they directly attribute the plunge that we saw as soon as the president got off the air is attributed to what he didn't say in his speech. >> yeah. thanks for that, alison. we're going to stay close to you and richard is outside the exchange. brooke, the worst of the crisis was in the fall of 2008 and

beginning of 2009. >> yeah. >> remember in the spring of 2008, when things were starting to look bad, you would see on a regular basis, you would see president bush and treasury secretary hank paulson coming out and making speeches and the same thing would happen. the markets wouldn't react well. investors don't typically get what they want out of a speech washington. i think the speech today -- >> investors. >> i think he was out there to calm the public down, to say hold on guys, there's a big dino owe in my perfect world, when i run a network, i'm going to have charts like that. that size of a chart for all the things you should know in your financial live that are important. i would show you that while that stock market is down, bond prices, bond interest rate is down too. the two weigh against each other. while we have a scary chart there, it tends to work on the psyche. i bet some people logged on and called their financial advisor and said get knee out of this market. >> we talk about the fear index.

the vicks is up for sure. if you own a home, you're worried about the value of your home right now. as we've been talking, interest rates are still low. >> yes. >> so that's one positive slice of this whole economic pie, if i may. i know we have allen chernoff covering that for us. we'll get to allen after the break. the dow down 519 points. we're just about 26 minutes away from the closing bell. ali velshi and i will be right back. that one day on the red hills of georgia, the sons of former slaves and the sons of former slave owners will be able to sit down together at the table of brotherhood. i have a dream today! [ male announcer ] chevrolet is honored to celebrate the unveiling of the washington, d.c., martin luther king jr. memorial. take your seat at the table on august 28th.

my brend brooke baldwin in atlanta. we're following the last 23 minutes of trading right now. the question on a lot of people's mind other than the obvious, what's going on with the stock market is what does this mean for the cost of credit. wee know there's been a credit downgrade. what does that do to the cost of buying a house. allan chernoff is here with me in new york. he's been looking at that. the good news is that it's been cheap, it's been cheaper in the last few months to get a mortgage. the place where the mortgages are financed, at least today,

didn't become more expensive. >> ali, this is one fear that's not being realized in the marketplace today. the downgrading of fannie may and freddie mac led to worries that mortgage rates could shoot up. but what we're seeing today in the marketplace is actually the opposite is happening. now, fannie may and freddie mac are extremely important. the government sponsored entities buy mortgages from banks and thereby allow the banks to receive more cash to make more mortgages. they're essential. you would think that mortgage rates would shoot up. but a more important factor is happening right now. that rush into treasury bonds, into treasury securities. keep in mind, the mortgage rate, the 30-year fixed mortgage rate is tied to the ten-year rate. we've got a graphic here. have a look at this. i'm calling the treasury bonds essentially the eye of the storm. people are rushing into them. so prices are up. rates are down.

the fixed-year mortgage right now, tied to the ten-year treasury, it's at the moment at 4.5%. that rate is actually going to be headed down as a result of the fact that those t notes are going to go down in terms of the yield. in terms of the adjustable rate mortgages, the same inning is happening. right now they're at 3.2% for a five-year arm. that rate is even going lower. may not hold for a very long time. but at the moment, we're seeing lower and lower rates as a result of people rushing in to government securities. >> allan, explain this to me. i've tried to sort of say it. i think we need as many analogies or comparisons as we can to understand this. if i'm the u.s. government and i just got downgraded, it should be obvious to everybody in the thinking world that it should cost me more to borrow money. why is it not costing the u.s. more to borrow money today? >> that's if you have more faith

in standard & poor's than you have faith in the united states government. but the fact is, in spite of the downgrades, the full faith in credit of the united states still does indeed have meaning. investors see government bonds as a relative safe-haven, particularly when they see the stock market plunging the way it is. as a result, they're rushing into the bonds. when they buy bonds, the interest rates move in the opposite direction, prices up, interest rates down. that carries over to your mortgage. a sliver of good news on this otherwise horrific day. >> all right. allan, thank you for that. this is definitely brooke one of the major concerns of people out there. the idea that interest rates are going up. i know that there are a lot of our viewers who are very sophisticated about this and fully realize it. but even people who work in the markets and study this and report on it all the time can find this a little perplexing. that the interest rate is not going up as a result of a

downgrade. again, brooke i don't want to speculate too early on into this game what's going to happen with interest rates. i think most experts and economists and allan will tell you that the expectation is that over time, these are record low interest rates and they are likely to go up over time, which is can why a lot of advisors advise you to take a fixed rate mortgage at these levels. but the bottom line is, certainly not happening today. >> it's vexing. >> it is. >> ali velshi, thank you so much. the dow down 510 points. we're 20 minutes away from the end of this trading day. the first full trading day since the s&p downgrade to a aa-plus. alan cher nef, alison kosik and poppy harlow and eric burnett is standing by as chief business correspondent in new york. she will provide some of her own characterizations of the market moves and what whee dgoing forward tangibly speaking. got to get a break in. dow down 511.

welcome back to the newsroom. breaking news here as we continue to watch the markets here. we have next to me, ali velshi and cnn ank sorer inburnett. let's -- before i begin my conversation wither rin. it's down 549 points there. off and on, we're 15 minutes away from the end of the trading day. the closing bell. we'll continue all of this coverage live. i want to go to youer inburnett and welcome to cnn. >> thank you. i wish it was under better circumstances.

>> welcome, we're again in the red here in terms of the new york stock exchange. let me, help put this in perspective. ali and i were having a conversation about this. his word was irrational. how would you characterize the market moves and what does the market need tangibly to stabilize? >> it's a really interesting question. i was thinking about it today when watching the market. it was throughout the day we've seen this. i know we had a little bit of a run at a recovery. now back down below 500. made me think about two points in time. one was the fall of 2008 where sitting at the new york stock exchange. we had roller coaster rides, 700-plus point moves full of panic. last year, you remember the flash crash. this is so different than that. take a look at today at the flash crash, just a year ago, we had procter & gamble drop in moments. this was a collapse in the system. today is a much more steady. sure there is panic.

proctor gom believe down 1.4%. this is the real deal. it's not a mistake. not necessarily panic. as ali said, you're seeing regular people throwing in the towel and want to get out of this market. a lot of the biggest investors, though, have been pulling the numbers. if you look at other economies that have lost this top rating and look at them over the next year, on average, their stock markets go up. so there's a precedent that could be positive. but it really is going to come down to what happens with the economy. much more important than the credit rating. >> you mentioned that the regular folks, that includes us, we have 401(k)'s we have money in the stock market and hopefully our 401(k)s are diversified. what advice, i don't want to put you in the position to give advice, overall, is this really a time to panic? if i'm sitting there with a lot of money in the market, i'm panicking. >> can't blame you. about half of american households own stocks. ali has been talking about the bank of america situation. bank of america is one of the

most widely held stocks in america. if you look at your pension plan or anything like that. yes, you would see a lot of people panic. it's at moments like this, though, brooke that you see a lot of the smaller investors runaway when the big investors will be ready to put money down. if you look at analysis today, there are only seven other periods in american stock market history according to paul hickey where stocks have been more oversold. as we're careful to say, just because it's cheap doesn't mean it can't go down further before it actually goes up. on a purely technical basis, a lot of people would say this market is very nervous and those are the moments where it overreacts. that's not to say the same thing as go out and buy. a lot of investors will do that. yes, ali. >> i want to let you know what's going on. we've hit new lows on the dow. we're getting back to -- we've gained a little bit there, but we took a big dropoff.

erin will know, this happens in the final minutes of trading, there are some people thinking this is an opportunity at this point. they're doing battles with people. other times, people buy into the market. brooke, what happens is stock values go up and somebody else sells their stock. this sort of last minute trading is always what we look at. the momentum going into the closing bell,errin does say a lot about what we're going to see tonight and tomorrow. if we stem the momentum, this might be the worst of it. if we don't, we have another busy day tomorrow. >> brooke, it's interesting when you look at the close, there's been an incredible aversion among the big investors out there to hold stocks overnight. that's because, as ali said, it's a global market. you hand it over to the asian markets after hours close. theirs will open again. people are worried about an event happening where they see another drop down, they don't want to go to the end of the market buying. they would rather buy at the

open than buy at the close. that's why you tend to see over the past couple of weeks, it's been one of the most negative characteristics, this lack of people jumping in to buy when the market closes. >>. the dow hasn't closed below that mark for a while. i was sitting in this same spot thursday and friday, we saw the market whiplash, if you will, thursday the dow closed down 512 points. friday we saw all the same, sort of back and forth, but it closed up 60. i'm just confused. what is the tipping point to make a market close so far down or in the green? >> well, i guess it goes to show investors are well, purely or -- they're human, right? they get nervous and scared. that's what you're seeing now. it doesn't mean it's going to go up because it's oversold. but these are the moments, j.p. morgan, i thought, i have it next to me, did great analysis today where they really looked at how the stock markets in

countries that had lost that coveted aaa rating performed and a year after all of them lost it, all but one were up by about 12%. so that's not necessarily great. it doesn't mean we'll go the same way. but that is just a good thing to look at. as everyone said. in a lot of this is a symbolic downgrade. it's more that what it did was force us to look in the mirror. sometimes you look the in mirror and you don't like what you see. and it's forcing us to see things about the borrowing and debt. that's what people are frustrated in dealing with today. if we're saying the economy really matters a lot of analysis out of the big investment banks today is noting -- and we're halfway through the third quarter here, if we're starting to look a what we're seeing there, the economic data has been much better according to their analysis. that ultimately is going to be

more important than where stocks go. >> as you mentioned, so many different factor, everyone is human. buying, selling, et cetera. this is an alarming late-day selloff. you can read the latest at cnn.com. stand by. we're back in a moment.

we're six minutes away from the closing bell on wall street. if any of you have your hearts in your throats looking at these number, as we're in the final moments, what's your read? reflections, moments before this bell? >> oh, me? >> you, you, go. >> my reflection is i'm looking at that number, 10, 891. i'm looking for 10,812. that's the low of the market. if we penetrate that as we go into the closing bell, we have the impression this selling wasn't done and this is isn't the end of what started last night in asia. if we're still charging through into lower numbers then i've got to worry about what we're doing at 8:00 tonight and what we're looking at overnight and whether we have another rough day tomorrow. if we start in the next few minutes to see that number two

higher, that 10, 883 go higher, there might be some sense we've broken some of the momentum. it's a technical thing, but in the last five minutes of trading, that's pretty much all you can do. we've offered the psychological and fundamental analysis, at this point, we're waiting to see what the traders and what the computers do in the last few minutes of trading. >> so we're looking for 10,812, because the last time we saw that was when? >> it was just moments ago. >> that was the low of the day? >> about ten minutes ago. that was the low of the day. exactly. we're looking at a 4.86% dow. that's 30 companies. the s&p 500 is what's reflected in your 401(k) and your mutual funds. the losses are substantially higher than they are if the dow. i'll calculate where we stand on all of this. but these are not -- you know, this is half the loss or gain that you could take in an average year in the stock market in one day. >> and erin burnett, let me bring you in, as you very well

know. these numbers not just reflecting what's happening in washington and all the part stan bickering awe also in countries like italy. you look at spain. fears of default very much so pervasive in the numbers with we're looking at here in new york. >> it's true. and i think when you look at our numb fwhaerks's what a lot of people are worried about. no tot s not to say the worries aren't justified, but when you think about it, it is true that we can't default, so long as the dollar is still the king ku currency of the world and it is. that's why we have the ability to print money and pay our debts. we may not like that solution, but we do. there's no danger the u.s. is going to default. i think that's important just to emphasize for people who are justifiably concerned watching what's happening today. there's no chance that is going to happen in this scenario. >> three minutes away from the closing bell. let's talk about, erin, who owns

our debt. you have china, you have japan, you have the uk, who else? >> well, it's interesting, china, japan, the uk. the oil exporters. why? because they sell oil, a lot of it to the united states. oil trades in dplarps thollars. where do you put dollars? u.s. treasuries. so those are the big owners. and if you want to determine whether our interest rates are going to go up, you have to say are any of those holders of treasuries going to choose to sell them. and the answer to that is not likely. you look at china, they're the ones grumbling and complaining about the united states. they're the single biggest holder of treasuries. i'm looking at their holdings over the past year, almost every month there has been an increase. so it's not even that they've been holding flat. they've been increasing their holdings. if they were to change that, we could see a dramatic rise in interest rates. but we have not seen that so far. if we really want to see this in our own hands, the thing to do would be buy a lot more treasuries ourselves.

have american households buy them. we have our own best interest at heart. >> isn't that always the safe bet, you put money in a treasury bond and it's traditionally a safe way to put your money, put your savings? >> yeah, and it is still a safe place to put your money. what's interesting, though, you look in japan, 95% of japanese debt is held by japanese invest f investors. their economy has been in a recession for decades. if we wanted to change this, we would buy a lit bit more of our own debt. it would be a more patriotic thing to do. >> aaron, ali, you mentioned the number 10,812. we're moving precipitously closely. >> the good news is we're above it. that's helping me. i need two calculations to get a sense of how it's ending. one i don't have just yet, and that's the volume. the combinations of the volume and velocity gives you a sense

whether there's a break in the momentum. this bell is still a minute away before it rings. at this point, 5.35%, that loss is the biggest loss since november 20 of 2008. you'll recall back then in the fall of 2008 as erin said, those were dark days for us. >> remind us. >> that was right -- it was between september 14 when lehman brothers collapsed and october 3 when t.a.r.p. was finally approved. those three weeks were the worst of it, but beyond that, we started -- and those were massive, mass i have losses in the stock market. then things started to level off a lit bit. by november 20, remember it was after the election, there was still a lot of panic. the talk of a stimulus had already set in. we were still very uncertain. on that day, we closed 5.56% lower on the dow. so it's been a long time since we had two in a weekdays like this? this is very, very unusual for us.

bottom line is we're now close to that 10,812. it will take a few minutes after the bell rings to start to settle, but the bell will ring in one second. >> let's listen. [ bell ringing ] >> here we go, top of the hour. you just heard the closing bell on wall street. this was the first full day of trading since the s&p downgrade, down from that perfect aaa now to a aa plus. that happening friday night. we see the markets responding for this first day. the number, as ali pointed out, it still takes a number of minutes for the numbers there on the big board to settle, but you can see the down down down 630 .

ali, i know these numbers continue to charng but you mentioned the lowest we had today, 10,812. the last time we saw just a drop in the dow, november 2008. >> we're pretty much there. 10,812. when i woke up this morning, this is not what i expected to see. there's no good news in this. by my rough calculation, this is definitely one of the top ten worst performing days in the dow from a percentage. i always calculate the percentages. that's how you calculate your 401(k) and ira. we're at the low of the market now. it's never good news. what that means is we have to look at what happens overnight on asian markets to see whether the selling continues.

if you log into your 401(k) or ira, you'll have taken a bigger loss. it looks like it's 5.8% on the dow, and it looks like we're setting -- on the s&p 500, it looks like we're settling right at the low of the market. again, bad, bad news, brooke. a stock is what somebody will pay for it. but this downgrade was supposed to have an effect on debt markets, credit, cost of borrowing for the united states. it's not had -- it's had the opposite affect on the debt market which tends to be more sophisticated than the stock market. but the stock market is the stock market. people didn't believe at it again today. there it is, we're closing at the low of the market. >> let's go to erin burnett. down 632 points as it continues to settle. i mean, this is all unsettling.

>> tomorrow you're going to have a regularly scheduled meeting for the fed. talk about timing. you've got ben bernanke, we all know he's giving those periodic press conferences. that statement that goes along with the interest rate decision could be significant. you don't want to see policymakers whether at the fed or in washington jump too quickly to react to something like this. you want the market to get on its feet on its own. if you see the authority jump too quickly that in aend of itself could hurt confidence. this is the kind of day if the fed was going to do something extraordinary, in terms of extraordinary measures, you would perhaps see that tomorrow.

they could do something before the market opens or tomorrow afternoon. >> iej a lot of experts, a lot of economists predicted we would see this will downgrade. you broke the news a coup of weeks ago that the s&p, we were in potentially negative territory. and now we have this aa-plus rating. explain why that's significant? who looks at the moody's, pitch, s&p? >> it's a tough -- it's a double-edged question. in a sense i could say that nobody looks at them. they all got a lot wrong in the mortgage crisis so they could have been discredited. that's essentially what this rating means. the highest rating means you ear going to pay it back and the rating goes lower. this downgrade would mean our

interest rates go up. and obviously they haven't. they went down. and the reason for that is that we are going to pay the money back. in the sense, this is a symbolic downgrade more than anything el. because everything is denominated in dollars. so that's an important thing to keep in mind. we're not going to default, as i've been emphasizing, but this is a big wake-up call for us. and right now you're seeing rates go down. when people are afraid, they sell stocks. they sell everything, right? we've got to put that money somewhere. and as ali has been saying, that place is still u.s. treasuries. we've seen interest rates go down for the united states today, which seems a bit counterintuitive, but that's why with eeve seen that. it's not something that you can expect to last forever. >> so let's just take this another step forward. we realize this downgrade is unprecedented, right? we also don't know ultimately what the full impact will be, but i read today, this also means hundreds of downgrades are coming as a result of s&p's

action, fannie and freddie, some municipalities, some insurances. >> that's right. >> how does that affect us america americans? >> about 75% of all the top rated, aaa rated debt in the world is linked to the u.s. government. that means treasuries, fannie m mae, freddie mac and other entities like that which we refer to as government agencies. so that -- or agency debt. fannie and freddie was very much expected. those companies are linked directly to the u.s. government. if the government got downgraded, by virtue to be consistent they need to be downgraded as well. you could see individual securities backed by treasuries downgraded, but it's unlikely, at least according to analysis i've seen that we're going to see a tsunami of those sorts of downgrades, but ironically, we're now in a position where you have some companies in the united states, like microsoft, johnson & johnson that are now

rated as better managed and better assets than the united states itself. which is an ironic situation. >> erin burnett, i want you to join me in this next interview because i have a feeling you have some smart questions for jay lupp, the president of the grubb and lsus reality income fund. ali, velshi, you jump in here, too. you made the point, when the market zigs as an investor, you're supposed to zag. do you still stand by that? >> i do. i think it's very counterintuitive, but really the best time to be selling stocks is when the market looks best. often times that's a good time to take tom ships off the table and sell some 06 your ideas trading at high valuations and

put some cash in your back pocket to take advantage of times like we saw on thursday, like we saw on friday. and like we are seeing today. we're seeing great valuations now. to reiterate what erin was saying earlier, despite this downgrade which really was telegraphed for several weeks, there's really no risk of the u.s. defaulting on its debt. in theory, it should make it more expensive. the opposite is happening right now, which is not unusual. it's time to really sit down, focus on your best ideas and take advantage of very attractive valuations that we're seeing today. >> i'm of the same mind as you. at some point to the average viewer out there, tell me why that makes more sense than getting out of the market and finding a bottom on it. i know that means you hold your losses in there and i know that means you wait too long to get back in and those are always my argument which is why it's

easier not to get out because it rides itself back out. but what do you say to people who say it doesn't make sense, it's upsetting my stomach and stopping me from sleeping. >> sure, it goes back to really selling at the wrong time. when it's the most painful, that's true think, and almost always the best time to be buying stocks as opposed to selling. it hurts, don't get me wrong. i mean, we manage three mutual funds and obviously they're down on days like today, but these quite often and history really justifies this, these are the best times to be buying. keep some cash on the sidelines. and leg into your investments. by 10% or 20% of a total position on one day and sdo it again for the next two or three or four days so you're not fully invested and you still have actually some cash to use to take advantage of your best ideas on a day like today. >> erin, hop in. >> i just wanted to ask you, and

obviously we get the fed decision tomorrow. ben bernanke not scheduled to hold a press conference. should he just go business as usual, rates aren't going anywhere, stick with the plan? or is tomorrow the day that he needs to announce further monetary easing, you know, in those extraordinary measures referred to as quantitative easing, while the fed would come in and try to get involved. would that signal confidence to you or not? what do you want to happen tomorrow? >> that's a good question. i think they could make their own commentary on the u.s. government's ability to pay its. i think they should reiterate their view that they say a slower economy, but they don't foresee a recession.

>> all right, thank you very much. we're all trying to figure out what to do for those of us who certainly have invested and have our hearts in our throats looking at these numbers again here, again looking at down 634. jay, thank you. got to get a quick break in. breaking news here of the markets down once again, continues after this. i remember the days before copd. my son and i never missed opening day. but with copd making it hard to breathe, i thought those days might be over. so my doctor prescribed symbicort. it helps significantly improve my lung function,

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[ male announcer ] time to check your air conditioning? come to meineke now and get a free ac system check and a free cooler with paid ac service. meineke. we have the coolest customers. >> welcome back to the cnn news room. we continue the coverage of the markets, the last time we've seen them down this far was the fall of 2008, i have both chief business correspondents, both cnn anchors helping me along. ali velshi and erin burnett.

joining me now, republican congressman of georgia. nice to have you here in person rather than always in washington. we have never quite seen a debt fight to raise the ceiling. and it's been raised many, many times in the past 60 years than we have recently. do you think we would be in the same shape, though, as we are now with regard to markets. >> i think the same thing would have occurreded if we had not had this fight and we just had an clean increase. you can not sustain this.

you've got $60 trillion unfunded liabilities in med car and social security program. so you've got to do something. even though we came together and did the budget reduction act, and they said it was insufficient, it didn't reach the $4 trillion threshold, i think they were downgrading us -- they said it in the report, they didn't have confidence that washington could get its job done and come together in a compromising way and get the job done. >> he led with the downgrade, the s&p downgrade off the top. >> 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 in the country ahead of self-interest or party or ideology.

that's what we fleed to change. >> the ideologies, the drawing the lines in the sand. you work up there. you feel that? >> is he talking about the speck in my eye or the plank in his? drawing lines in the sand. the president had an opportunity to not raise taxes at a time when unemployment rates were 9.2 and 15 million or so out of work, 44% of them more than six months. >> didn't congress also have a chance to do that as well? >> we think it's not that we tax too much, it's we spend too much. >> a lot of people say the tea party held these negotiations hostages, and it was the issue with the revenue increases, the tax increases that was part of the grand bargain when he had been talking to mr. boehner and also the gang of six solution, and also the bowles-simpson.

it was all part of that. and therefore they could get that larger number in cuts. why not? would you at all going forward, as they name the members of this super committee be willing to compromise on that? >> well. >> we, speaker boehner said there was no deal until it was a deal. what they were talking about was $800 billion worth of revenue enhancement. not tax increases, but tax code -- >> rewriting the tax code. >> absolutely. and cutting out a lot of these loopholes and, you know, big oil, ethanol, $6 billion here. but then the president came back, maybe right after the gang of six issued their report and said now we need another $400 billion. and that's when that broke apart. so who knows. i wasn't in the room, you weren't in the room, but i think it's time. honestly, brooke, i think we ought to go back. >> would you go back early? >> absolutely. >> you would? >> we have two to three weeks of work that we could do this

august. we could open up the marcellus shale, we could drill off the coast, we could solve our energy problem. >> what about this number -- >> repeal dodd-frank would help. >> what about the $1.2 trillion, the super committee, the bipartisan, 12 of congress, they're supposed to cut $1.2 trillion. do you think that should be the starting point and not the end game? >> i think it should be the starting point and not the end game. i was for cut, cap and balance. i was of the 66 members who voted against this budget reduction act of 2011 because it didn't go far enough. it. co-s short of what the standard & poor rating agency was asking for. they're cutting the percentage of spending per gdp and getting that balanced budget amendment.

we desperately need that. you can't say it was the tea party that held us hostage. we held ourselves hostage. >> i want to yield to my colleague erin burnett who has a question. erin, to you. >> i just wanted to throw in one question, brooke. i'm curious, obviously entitlements are three-quarters of our future obligations. we all know it, but going to the constituents and telling them you're not going to be able to retire for up to five years, you have to work five more years longer than you thought you would, the your price indexing is going to change. are you supportive of all of the cuts that we're going to have to make and entitlements to really deal with this problem? or are you in the camp where you're going to keep them off the table? >> erin, we absolutely have to address that. that's part of the reason we got downgraded. we have something like $62 trillion worth of unfunded liability going forward going forward to 2050 in the medicare

and social security programs. you know, paul ryan was criticized, but he had the courage to at least put a budget out there. we voted on it in the house, we passed it, to look at the medicare program and make some changes that would save it for our children and our grandchildren and to protect it for those who are currently on it or who will be in the next ten years. we protect medicare as we know it, but save it for the future. that's the bold kind of steps that we need to take on both sides of the aisle and we need to do the same thing quite honestly with social security. but members, of course, this third rail of politics, you always worry about the next election, but we really should be -- i know it's trite to say, but concerned about the next generation. >> erin, thank you. i do just want to end with this -- we conducted a poll, cnn research opinion poll. and here's what we ask.

do you think the bill benefits all americans fairly or do you think it benefits the rich at the expense of the poor and the middle class? 62% say it benefits the rich. where do you fall, do you fall in the 62%? >> no, i don't fall in the 62%. i truly believe the job creators, those people making $250,000 or more a year create the jobs and ultimately will help the middle class and the poor. you know, a rising tide lifts all boats and you have to start with job creation. we'll never get there in physical we replace all these jobs that have been lost. >> you're willing to go back to work early and you think the $1.2 trillion should be a starting point. good to have you here. >> great to see you. still to come, take a look at some of these pictures. we've been watching out of london. all this rioting. today was the first day they actually had riots in the middle of the day. all of it stemming from this shooting of a father of four in

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we're less than four hours from now away from the opening of the markets in both asia and usaustrali australia. erin, i know that asia fennished down today. also europe did as well. but looking ahead, 8:00 eastern when those markets open, what will you be looking for? >> well, it will be very interesting to see what happens in asia overovernignight whethe say this has gone too far too

fast and you see stabilizing or not. but the next thing to look that that could change the mood is what the fed does tomorrow afternoon. if there's anybody looking at the tv screens saying i need to turn them off, it's got to be ben bernanke. if you're an investor, jay was saying you've got to see, is the fed going to come out tomorrow and say look, we're seeing the economy getting a little better. we're one of the largest olders of u.s. treasuries 'and we're not selling. they don't have to announce more effort, but if they come out and say will that be enough, everybody is going to be looking for leadership, if in any one individual or entity, it's going to be from the fed tomorrow out of washington. >> so perhaps a har binger of things to come. and speaking of things to come, it's monday. i'm sitting here thinking it's monday, the dow is down 630 points. what do i think about tuesday, wednesday, thursday, friday. >> you try not to think about it, i guess. this is where it comes into,

when will investors put their money where their mouths have been. the biggest investors are saying this is overdone, oversold. if you look at when this has happened before, the markets have a brief dip have tended to go up. i'm talking about stocks. will you start to see investors put money back in. a lot are saying it's the right thing to do. the question is whether they will actually throw that money in there tomorrow. but we are in a new period of volatility. i was just looking at a story that says markets fall 512 points. oh, that's right. that was last week. volatility surged today. that's just a measure of investor nervousness. so you're not going to see it fix and become a very calm market anytime soon. >> even though some of us would not like to look at the rst of the week, we cannot put on our blinders. what are you looking at this? . >> i looked up and i thought oh,

my god, it's only monday? it's thursday, it can't be monday. ben bernanke is the u.s. economy's most improved student. he was up with president bush and paulson saying there's no recession, everything is under control. they were all so wrong when all of the evidence proved that we were definitely in a recession. i mean, you didn't have to be an expert to know that. he was so strangely off on that for such a smart guy because he's an expert on recession or the great depression. he's been the most improved student. he's been the one stalwart in this economy. they resisted sharing information with the public. they had to be forced to do that by the courts, but generally speaking, i think erin is right, we need to listen to what the fed says tomorrow. they certainly have a better handle on this with pe complain about the stm lus and how it didn't work. the fed put way more money into the economy than the stimulus

ever came close to. and they needed to and it was important. i think that's a very, very important point erin makes. if i am a really smart investor and i look at this dow and i say it's a 10,809 right now. and i think that is underle vaed and i think it should be, just putting a number out there. let's say i think it should be 12,000 or higher. if i'm a good investor, i'll invest in this market. i might put a little bit of money tomorrow. i might put more money in in a week or two weeks. aaron is right. we need to be careful, other than erin and me who look at markets all the time, not be obsessed about whether it happens tonight or tomorrow or yesterday, but to know whether or not we believe there's a shared view that this market is undervalued. if there is, you make that decision on your own or with your financial adviser, or after

researching the company to get back into this market or as the gentleman we spoke to from san francisco said, to get further in this market. it's the most counterintuitive thing in the world to decide you're buying stocks now or tomorrow morning. >> it's like something on fire, you don't want to get burned but hey, maybe not a bad idea to keep some cash on hand. so says jay lupp. erin burnett, thanks for coming on. i know you have a busy night ahead of you, watching the asia markets open up in a matter of hours. we'll be watching you. we're going to continue conch of this story. also with our kol colleague richard quest. probably seeing a lot of long faces leaving the no stock exchange as he is sitting there perched right across the street in new york. back in just a moment. [ jon ] we don't just come up here for the view up in alaska.

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it's all visual. intuitive. and it's available free, wherever the web is. this is how trade strategies are built. tradearchitect. only from td ameritrade. welcome to better trade commission free for 60 days when you open an account. >> breeking nouz, you see the numbers ahead of my shoulder. it is this number that has many people panicking, the dow down 634 points today. folks, this is certainly an echo back in the fall of 2008. the dow has not been down that far. you see these traders out of the

building. wlar you seeing? long faces after such an abysmal day. >> on a day like this, it's not so really long faces. it's more like what happened? what hit me? good afternoon to you, mike. >> well, this is a case of what happened today. >> what happened today is i think a lot of people were blind sided over the weekend with the s&p downgrade of the u.s. debt. we're back in a period like 2008. '. >> inside and in the markets could you feel that fear today do you think? >> yeah, there was a lot of people rushing around, a lot of people trying to get orders done.

>> were they selling or were they just stand on the sidelines? >> i think in general people were net southeasterlies today. i think going forward that's the position a lot of people are taking. you know, sell first and buy second. >> now, a single downgrade by one notch from s&p, albeit on the u.s. dealt does not justify this sort of problem. >> fundamentally, the credit market is locking up, you know? i think that's what everyone's biggest fear is. you know, borrowing money is going to become a very, very difficult task and it's going to freeze up, you know, a slowing economy already. >> now, if that happens and brooke and ali, ali knows this certainly well. if the credit markets freeze up,

then we are heading back to 2008 when a simple loss of a bank caused the crisis. >> that's right, we will be heading back to 2008 if the credit markets freeze up. >> do you see any evidence of the freeze up yet? >> no, i haven't seen any evidence, but based on the way the prices of stocks are moving, i would say that there is a big concern with that. >> finally, and for viewers watching, i want to know, these people want to know, everybody wants to know, is this serious? or is just a wall street manufactured crisis? >> this is not a manufactured crisis by wall street. this is serious. you know, the country faces a lot of on stbstacles going forw. we seem to not have a lot of leadership in washington. they seem to be three steps behind the 8-ball always. at a time when we need everyone

to get together and come up with a plan, it's politics as usual in washington. >> mike, thank you very much. i appreciate it. you know in that one sentence, mike has summed up beautifully, perfectly, more el kwebtly exactly what i could have done. it's a serious crisis and when people had to make decisions, people didn't step up to the plate. >> yes, it's very so mump serious. and it's also surreal today. richard, you, because you're in europe, you are following this debt and credit situation more closely than americans are. the international debt question is much bigger. has anybody said anything to you about going in the direction of credit freeze? we've got remarkable liquidity

and lower interest rates being paid for u.s. bonds. we're certainly not -- we don't have anything that looks like we're going in that direction, right? >> no. no. two different type of credit seize here. and yes, u.s. ten-year came down several basis points. i'm looking at mike in case he thinks i'm getting it wrong. if i understand what mike is talking about, the money markets. the markets where banks lend to each other overnight. they all have a refinancing it's like me saying can you lend me $100, sometimes i borrow, sometimes you borrow. but all of a sudden, you say hang on, brook is not good for the money. i'm not going to lend richard anything. >> and that's what happened in

the fall of 2008. >> correct. and my cut gut feeling is tonight, the ecb, the bankover england are all plotting and planning how to flood the market with cash and liquidity if need be. >> that's what happened last night. no one wants to see us get close to anywhere around 2008. >> we want to take you back to london. there have been riots, there have been fires. look at this. looting, all of this connected to violence. a shooting debt of a 29-year-old man. now we learned that david cameron has been vacationing in italy. because of this, he's coming home.

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the dow down 634 points today. lows we haven't seen since 2008. i hear you have some news on the dollar? >> yeah. well, i've got some numbers on the dollar value of what we lost in the markets. now, i want to be specific about this. we use a measurement, the wilshire 5,000. the biggest grouping of stock values we can bring you. and these are paper losses. it doesn't necessarily -- you lost money in today's market, you didn't sell your stock, you didn't necessarily lose that money. you might stay in the market and it comes back. but the paper loss today, $1 trillion. was lost in paper capitalization

today. so if this was lost and everybody had sold out and didn't get in the market, $1 trillion is what it is. the 10th time in 11 days the market has been down. some people do take the loss. as you go through the course of the day and you sell those stocks a enyou decide you're not going to buy in, you lost that money and that ability to gain. these are real roz r losses for average people. i think that's important to remember. these aren't just numbers, these are people's savings for retirement and college and who knows what. >> absolutely. many people nodding their heads and listening to you. gangs of youth attacking a police car. shops looted.

this is all linked to the shooting death of a 29-year-old man. his name was mark dugan. all of this happening within london. this man was shot to death inside of a cab on thursday. dan, to you? >> yeah, it looks like police are about to slowly move forward. you can see the dog handlers and police dogs are here. at the end of this road where there are blue lights flashing. i don't know if you can see down there. there are a lot of people gathered. a lot of looting was going on. people are walking out with tvs and so on. it does look like the police are about to move in.

let's swivel this way and you see the police coming out with lawn shields. their training is incredibly realistic with this kind of stuff. they do it fairly regularly with this kind of training. with petrol bombs they will use those to keep this as real as possible, the training that they do. the reality on the ground is so blud. >> he's in southeast london as these riots continue. first time, broad daylight. all linked to the shooting death of this 29-year-old father of 4.

the prime minister leaving his vacation in italy to be part of this investigation into what is going on in london. we have more news op the markets in new york in just a moment. introducing the schwab mobile app. it's schwab at your fingertips wherever, whenever you want. one log in lets you monitor all of your balances and transfer between accounts, so your money can move as fast as you do. check out your portfolio, track the market with live updates.

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and dan, just set the scene for me. tell me what you've been seeing. and just put this in perspective. what started all of this. . >> there's a team of dog handlers who have come in to secure this supermarket. you can see all the windows smashed out here. we're told the staff clearly must have been terrified. took refu on the roof. we' seen sustained rioting really with bottles and stones coming over. every so often the police are charge forward and try and retake a piece of territory. but this isn't just the only place that this is happening in london. happening in a number of hot

spots around london. all originally triggered by the shooting of a man, a young man in -- up in tottenham on thursday. in a predominantly sort of ethnic minority area. this is just people taking a chance to go in. taking tvs and dvds out of this supermarket. just helping themselves really because there was november one to stop them for quite some time. you can see the place is just littered with broken glass and so on. and one can only imagine if you're a resident living around here, you must have been absolutely terrified. the most bizarre thing in all of this, there's a bag of rice that someone has even taken out and em tid on tptied out on the flo.

there's young kids 5 or 6 years old in the middle of all of this. goodness know what is they would have made of all of this. now it looks like it's calmed down and the gang is dispersed. i don't know what the situation is on the main highway. but we've seen gangs roaming the streets in hoods and so on. very, very strange indeed. >> it does look varily calm where you are. guys, were those live pictures of that fire? it was tape. so it was moments ago. but still, we're seeing these images playing out. this could be just copycat. this is not at all linked to the shooting death that you mentioned on thursday. >> they're struggling.

in the area we're in in south london, they have just been trying to hold ground. they've just been outnumbered really where we are. by a considerable margin. this is the worst public order i've seechb ever in london. but this is something different. this isn't a political protest. this is really just pure vandalism and looting really. and it is pretty depressing to see. lots of different areas in london. whether they're getting twitter feeds and people are telling

them to congregate or they're watching it on tv and say we'll do the same thing, i don't know. it's a very sad day from london, just a year out from the olympics. >> it is a sad day and just odd to look at images and think this is london, a world class city and it almost looks in parts like a war zone. dan river, i fthank you so much. now, some news just in with regard to a tragic story that unfolded over the week. we learned about those 30 americans killed in the chinook helicopter over the weekend in afghanistan. let's go to barbara starr at the pentagon. >> we just heard word that two transport military airplanes left a short time ago carrying the remains of all 38 people from the helicopter. there are 30 american personnel, a civilian interpreter and seven afghan troops. you might ask why all of that, all of those people, their

remains are coming back to the united states? well, what we have also learned is very sadly, very difficult to speak about, the remains are in such poor shape due to the catastrophic nature of the helicopter being shot down that basically they removed all the remains from the heck. they are bringing them back to dover air force base, they will identify all of them formally and the afghan remains, of course, will be returned then to their families. so the planes are in the air, 30 u.s. military personnel making that final journey home. their families expected to meet them at dover air force base sometime tomorrow when they land. >> 38 souls gone. barbara starr, i thank you very much. think about their families and the people at dover as well. wolf, such tragic news over the weekend. tragic news there. tragic news when you look at the

numbers on new york stock exchange. >> the s&p 500, the nasdaq, the percentage diop drop was even more significant. if you add up brook all of the equity that was lost just today, equity, people's 401(k)'s, their iras, their stock market account, portfolios, probably just in the united states, $1 trillion. that f you add that to the $1 trillion that was lost in the last two weeks before the s&p downgraded the u.s. from aaa to aa, plus another $1 trillion, so people are losing a lot of money. these are not just numbers that we're throwing out, brooke as you know. not just 600 points down in the dow, these are people's life savings for a lot of people. they're losing a lot of money. it's going to take a long time. if you're getting closer to

retirement, hopefully you haven't had that much money of your portfolio invested in just the stock market. you've got it diversified so you can sustain these kinds of horrendous losses. we're going to be all over this story in the situation room. what's happening in afghanistan and what happened in after math of the 30 american troops. we'll also go to kenya and somalia and see what's happening. starvation there. sanjay gupta will report live in "the situation room." we'll have it all in "the situation room." >> this is the beginning of that. wolf blitzer, see you in a coup of minutes on "the situation room." thank you. we'll check in with my colleague alison kosik. we'll have a unique look on how the day unfolded next. i realized i needed an aarp... medicare supplement insurance card, too. medicare is one of the great things about turning 65,

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alison, this is essentially a time collapse of the dow. final thoughts here? talk about volatility, we talked about it last week. it's just monday, alison. >> yes. and you know what drove the trade today, brooke, it was all about fear. fear gripped investors and it would would not let go today. you saw the vix jump 50%. it doubled just today. it shows you the fear that's out there about where the economy is headed, knowing we have weak economic data coming out. credit, borrowing rate, it's got everybody scared. that's really what you saw. you saw fear driving the trade today, brooke. >> a lot of people have been tweeting me in this show.