could see the dow fall further. stu varney of the fox business network joins me now to put things in perspective. stu, let's start with the credit downgrade as we await the president. he has yet to speak to this although it happened friday night. to what extent has his silence impacted what we're seeing on the markets today? >> reporter: it has not helped the markets, that's for sure, because many people were expecting some kind of leadership position to be established by the president following that friday night downgrade. over the weekend we heard nothing from the president. he put out his surrogate, the treasury secretary, his senior adviser, to attack standard & poor's for making that downgrade, an attack of the tea party and other republicans for the debt mess and the talks thereon. however, the president until now has said nothing directly, and that has not done the markets very much good. megyn, there are three tumultuous headlines in today's news on money. the first is the downgrade, the second is the reaction on the

stock market which, as you point out, has been, indeed, tumultuous. the dow industrials are down 300 points, that puts it down about 14, 15% in many just the 11 last days. and we have the price of gold going literally through the roof. $1,720 per ounce as we speak be, that is up nearly $70 an ounce just today. and a third headline is what's happening in europe. there is a huge bailout in progress bailing out not just banks, this time whole countries. italy and spain. the bank, the central bank in europe there is literally printing money to buy the bonds of italy and spain, propping them up when they're in danger of default. three huge headlines, the market responding down. megyn: speaking of, you know, the first one, the downgrade that we suffered on friday night and the aftermath, now today we see fannie and freddie downgraded as well. you know, stu, how is that such a big deal?

you've got two other ratings agencies, they're still giving the united states the aaa rating. how can standard & poor's have this great an effect on this country and those who invest in it? >> reporter: because it's cascading down. you start with the downgrade on friday afternoon of american treasury securities. uncle sam itself. today come down a notch, and you have downgraded what's called agency debt, fannie and freddie, housing agency debt. they've been downgraded. that's a cascade coming down the food chain. is the next step going to be towns and cities across america? could we see bankruptcies emerge because of that original downgraded treasury debt? that's the concern, that it ripples throughout the debt market, takes a lot of people down with it, slows the economy, makes the debt even worse. that's how it effects you and i. megyn: you know, stu, we've been seeing a lot of kill the messenger in the wake of this announcement by standard & poor's, and a lot of criticism

of that entity because it said the housing market and the mortgage debt was a-okay, and we all know now it wasn't, and it led to a big financial meltdown, so people are saying, why do we listen to them? they gave us the wrong warning on the housing investments, and now they're trying to tell us the united states of america deserves a downgrade. what's your take on it? >> reporter: that is a valid criticism. they made such a mess of it in if 2008, how come we now allow them to downgrade the united states treasury? that is a valid criticism. another criticism is that standard & poor's employed subjective political criteria to make an objective judgment of our debt situation. standard & poor's said, look, you haven't got your political house in order. it doesn't appear that you have the political will to rein in entitlement programs. that is a subjective judgment. so the critics say you have no the right to employ subjective criteria in an otherwise objective situation.

you see what i mean? is. megyn: yeah. but did they speak specifically to entitlements, or was it the overall financial picture? one of the guys who runs standard & poor's came out today on fox and said, look, it's both the debt situation and the political situation in washington. and so does that mean it's the entitlement -- the lack of willingness to tackle entitlements, or is it the lack of willingness to keep taxes low? >> reporter: it is primarily the entitlement situation. standard & poor's has said very clearly it is america's deteriorating debt situation that led to this downgrade. they have said, look, you are going to raise the debt by ten trillion, so now you're only going to raise it by seven trillion. that is not a good performance. another $7 trillion added on to the $14 trillion we already owe? so standard & poor's is saying very clearly it's the debt, it's the debt. it's not so much revenues, it's not so much the politics, it is the debt. come out with a clean-cut plan

to end entitlements, and that's at the heart of the whole debt situation, and then maybe you can avoid another downgrade 6-24 months from now. megyn: before i let you go, any ripple effect going on with the other two ratings agencies? >> reporter: moody's has reaffirmed that america is on negative watch, in other words, they too may downgrade at some point in the future. megyn: it's like double secret probation. >> reporter: not good news. megyn: stu, thank you. we are told that the president is running a little late. he was supposed to speak at 1 p.m. coming up within the next 20-25 minutes. ed henry is live on the white house lawn. ed, by the way, welcome to fox, i wasn't able to say that to you because i was on maternity leave -- >> reporter: i'm happy to be here. welcome back, by the way. megyn: thank you very much. it's a pleasure to be back, especially on a busy knews day. surprising that the president is just coming out to speak to

this? >> reporter: he was going to have to come out. he was at camp david over the weekend. it's now been three days since the downgrade. the markets are a little bit concerned, americans around the country wondering what's next. when you listen to stu's reporting, this may not be the only downgrade. there could be another downgrade down the road. i think there's an opportunity for this president, nevertheless, to come out and explain whether or not he feels some responsibility for this. as you say, over the weekend most of it was finger pointing from the administration about s&p and certainly there are questions to be raised about s&p, its handling of this matter and previous matters in the financial crisis as you also noted. the white house believes there was a math problem where, basically, s&p overcounted $2 trillion in extra debt that the white house doesn't believe should be part of the equation. but i think, also, this president believes -- and we're going to hear this from him -- that both parties have some blame to go around in terms of adding to the debt. certainly, he inherited a large debt, but he has added to that

debt over the last two and a half years or so. and i think all eyes now turn to not just his leadership, but the leadership of that supercommittee on capitol hill we've heard so much about. they have a deadline of thanksgiving to come up with a plan, and can then they have until christmas to actually vote on that up or down. and i think s&p is looking at it, but the entire country and the entire world is looking to see whether or not both parties really have the will to come together and cut this debt, megyn. megyn: yeah. a lot of doubts about that one, ed. let me ask you before i let you go, does the president, do you anticipate, take any political shots in the these remarks? because they sent david axlerod out on the sunday shows to blame this on the tea party. it would be quite another thing if we heard that from the president himself. >> reporter: yeah. i'd be highly surprised if president mentions the tea party. he never mentions the tea party, in fact, in public, but his surrogates do, saying this was a tea party downgrade. and i think you heard republicans like senator lindsey graham fire back immediately on some of the sunday talk shows

saying, wait a second, it wasn't the tea party that piled on this debt. as i mentioned, the bush administration certainly piled on a lot of debt with two wars they didn't afor and other programs, but this president has added a lot to the debt in just two and a half years. megyn: indeed. ed henry, thank you. breaking new information coming in right now on the u.s. military helicopter that was shot down in the afghanistan. we're going to get back to the white house as soon as the president comes out, but this is another big story and an important one. the pentagon is now confirming that the helicopter carrying 30 american troops was likely brought down by a rocket-propelled grenade fired by the taliban. among those troops, 22 members of the elite navy seal unit. eight of them seen right there on your screen. now, this is the -- over on screen right. this is the deadliest single incident for american forces in the history of this war. lieutenant colonel oliver north is a fox news military analyst and also host of "war stories" on the fox news channel as well

as author of the book, "american heros in special operations." thank you so much for being here with us. this is just such a tragedy, and americans are wanting to know why and how. you have some information you believe on how this could have happened. >> well, first of all, megyn, welcome back. it's a grim day in many respects, but certainly for the families and loved ones of the 30 americans who were killed out there, 22 of them u.s. navy seals, and my prayers for those families and loved ones are there. it's a sober reminder about how dangerous this is and how brave these remarkable young americans are. many of these 22 seals are men with whom we have been embedded, in fact, every time i go out there, megyn, they always ask for you. megyn: ah. >> it's touching to see the kinds of fans that you see out there in harm's way. megyn: it is. >> now, the outcome of losing so many of these special operators at once. first of all, there is a complete review of every aspect of this operation.

they'll review the uav, the unmanned aerial vehicles, the predators and reapers over the top of it, the forensics of what happened on the ground, the communications, and they'll determine whether the ch-47 was shot down or whether it crashed. it's not a finger-pointing exercise, and that was reaffirmed to me today. what they want to do is help prevent a tragedy of this magnitude from happening again. was it the helicopter? was it the qrf that's unusual, the quick response, quick reaction force being sent out in this size of a package. all the tactics, techniques and procedures that went into this operation will be analyzed with the goal of making sure this kind of thing is less likely. you can't guarantee it ever because it's war. here's something else that i was told. there are going to be many more of these kinds of operations rather than fewer. there's usually about a dozen a night that are conducted by u.s. special operations forces, many of which we've gone along on.

these kinds of operations are generally very rapid, very quick, and they're being forced now to an increasing extent by the forced withdrawal schedule set by mr. obama. that means fewer conventional forces. that equals more special operations that are going to have to be conducted. there's some good news. the afghan national security force commandos who were on this operation, every single unit now is partnered with an an saf unit, and the commandos are the best of what they've got. the last operations we were on just a few weeks ago, there was commandos and afghan national security forces on every one of them, and they are getting better every day. megyn: that's what we want to hear. i thought it was interesting that you had some questions about how they could have pulled this off and whether perhaps these taliban insiders were getting some help from other countries. >> well, one of the countries that's being asked is, are they being provided with night vision equipment that we've had at night? are they being provided with

missile technology that's coming in from iran? in both cases the suspicion is that it could be iran. the bad news in the all of this is we don't have enough human intelligence of what's happening on the ground. the ch-47 that went down is an old helicopter. are the defense cuts going to delay replacements for those? are the iranians or others giving the taliban night vision equipment or surface to air launch missiles? those kinds of things are going to change the dynamic in this war. it's not going to change the strategy which has been set by the decision to withdraw as many conventional forces as are now being pulled out. and some of the units we were with just a few weeks ago have not been replaced. megyn: wow. you know, it's so easy to go about your life over here and forget about the service these men and women are doing for us and for this country, and the fact that they are laying their lives on the line for us every day. god bless them all.

>> megyn, i say this to you as a young mom, there are now 40 youngsters who don't have a dad anymore. megyn: god bless them and their families. thank you, colonel. this has been an historic loss, and if you'd like more information on the navy seal community or how you can help that community, you can log on to foxnews.com and there you will find a link to the navy seal foundation. you can make a donation or find other ways to support these heros. while we await remarks from the president right now, house speaker john boehner and others are saying it's time for u.s. treasury secretary tim geithner to go. lou dobbs is on that next. and the head of the rnc joins me live to respond to the president's comments. plus, an attack on mothers' maternity leave and me! specifically coming up, you don't want to miss my one-on-one with the man who had this to say while i was out. >> and she does a good job.

she really -- and megyn's still on maternity leave, right? >> what do you mean, are you complaining? she's bonding with her baby. >> what a racket that is. i mean, men don't get to bond. ♪ let me entertain you ♪ let me make you smile

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megyn: fox news alert, we are now less than 15 minutes away from remarks from president obama on america's credit downgrade. but we are hearing a loud chorus already today from gop leaders who are urging treasury secretary tim geithner to step down. house speaker john boehner and others are saying geithner should be held accountable for the s&p's decision to downgrade america's top-notch credit rating. so should he go? lou dobbs is host of the lou dobbs tonight program on the fox business network. lou, welcome. >> reporter: great to see you. welcome back. megyn: thank you very much. so do we blame it all on geithner? geithner's responsible for the debt problem we have? >> reporter: no, i don't think we blame it all on geithner. i've only been blaming him and this president for the past

several months for politicizing the treasury department and the role that it has played in this entire process of raising the national debt ceiling. this treasury secretary's indulged in extraordinary hyperbole by any standard, but certainly by a treasury secretary. megyn: when you think geithner, do you think extraordinary hyperbole? >> reporter: well, i do. and the other part of it is that this treasury secretary right now, megyn, has less creditability than s&p. that's how bad it is. megyn: how do you pin it all on him? >> >> reporter: i didn't. megyn: i'm just saying the administration has policies -- >> reporter: i'd like you to identify those policies. megyn: they like spending. they believe that was the way out of the crisis that we suffered a couple of years ago and, arguably, are still in. how is it on geithner's shoulders, or is it on the shoulders of the -- >> reporter: the treasury secretary and the president, as i said, the president and this treasury secretary, but this man, the treasury secretary, is supposed to rise above this

nonsense. he has, i mean, he's been talking about economic catastrophe and disaster for months. this is not the role of a treasury secretary. a treasury secretary, megyn, if anything, if he's going to talk about the markets or this economy, he's to talk it up not down. megyn: okay. he did that in this clip from fbn which happened in april. watch this. watch what he said back then to try to tamp thing down. watch. >> is there a risk that the united states could lose its aaa credit rating, yes or no? >> >> no risk of that. if you listen carefully now, you see the leadership of the united states of america, the president, the republican leadership in both houses and the democrats recognizing now that this is the right thing to do for the economy, that we have to put in place reforms that bring down our long-term deficits in ways that'll help strengthen future growth, and that's incredibly important recognition by people, and we'd like to put something in place as soon as we can so we can begin that process. >> so standard & poor's is

wrong, the united states will keep its aaa credit rating. >> you know, people -- absolutely. megyn: so he tried to, you know, tamp down the tempers and the concerns. it turned out to be wrong. >> reporter: he's been utterly wrong on every one of his pronouncement pes. this man has been an absolute disaster as treasury secretary. first of all, we have not heard from him during the course of 48 hours after the downgrade. we did not hear from him as the market lost last week. i mean, over the course of the past two weeks, megyn, our equities markets have lost $2 trillion. that's the tame mathematical error that standard & poor's made that had to be resolved friday night. i mean, we're talking about -- megyn: what would happen -- >> reporter: -- seriously incompetent officials. megyn: for folks sitting at home, how much power does geithner have? >> reporter: he's in the charge of this country's fiscal policy. he has immense power. megyn: if we got rid of geithner, who would we get in his place? >> reporter: there are a host of highly qualified people, i'm

not going to presume to tell the president which, but i would look to the debt commission, for example, that he put together but then ignored for a host of highly talented people who could step into that position. there's no -- unless, unless he is, remember, the last man standing in the economic -- megyn: yeah. >> reporter: austan goolsbee left friday. it doesn't appear anybody else wants the job. megyn: the president has specifically asked him to stay on, and he says he will. lou, thank you. >> reporter: great to see you. welcome back. megyn: thank you so much. "lieu dobbs tonight" airs week weeknights, 7 p.m. eastern time. he is accused of stabbing at least two women, both prostitutes, but 55-year-old corey white is back on the job as a state transportation worker in washington. up next, the union rules you have got to see to believe. and who did jackie kennedy blame for her husband's murder? is for the first time ever we

will hear the former first lady discussing jfk's assassination in her own words. we've got the details on the bombshell tapes next. >> the kennedys in massachusetts. [ male announcer ] this...is the network -- a network of possibilities. in here, the planned combination of at&t and t-mobile would deliver our next generation mobile broadband experience to 55 million more amecans, many in small towns and rural communities, giving them a new choice. we'll deliver better service, with thousands of new cell sites... f greater access to all the things you want,

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megyn: fox news alert for you out of london now. police are fighting a major outbreak of looting. these are live pictures of north london. the chaos started on saturday night when people were protesting the police shooting and killing of a man last week. then the protests turned into a rampage, the rioters burning police cars, buildings, even a double-decker bus. about 35 officers were injured in the violence. more than 160 people have been arrested so far, police say the looters are simply taking advantage of the chaos now.

there's new music, they've been adding new music since my departure. i don't know how i feel about it. what do you think? well, i'll get back to you. new outrage in washington state where 55-year-old corey white, this guy, is returning to his job at the state's department of transportation this week despite accusations that he stabbed two prostitutes. all this comes after he served jail time earlier after he admitted to sexually assaulting a 16-year-old girl. what? trace gallagher live in the our west coast newsroom with this. trace? >> reporter: hey, megyn. great to see you. corey white has been with the department of transportation now for 27 years, and in january he was accused and charged with raping a 16-year-old prostitute. those charges were lowered, dropped to third-degree assault which is a felony. white pleaded guilty and served two days in jail. the department of transportation found out about it, placed him on paid leave for three months. while he was on leave he is then

accused of stabbing and wounding two other prostitutes. one of those prostitutes told police, quoting here, he looked like it satisfied him. here's a television station in seattle confronting white. watch. >> reporter: hey, corey -- >> yeah. >> reporter: joe marino with channel 4 television. >> i'm not interesting, thank you. >> reporter: we're working on a long-term piece, and i'm hoping that i can speak with you just a brief amount of time. >> not without going through my attorney first. >> reporter: who is that, sir? >> jerry cohen. >> reporter: and you ready for this? the department of transportation says it did not know about the new charges until it was informed by a local television station that he'd been accused of stabbing two other prostitutes, and the response from the department of transportation, put it on the screen, is this:

>> reporter: they did end up demoting him and giving him a 10% pay cut. the department of transportation in washington state says it is now investigating these other charges to see how it responds to them, but if it's not in collective bargaining or in state law, not much you can do. megyn: and just so our viewers know, the guy was making 70 grand a year, now he's making 63 grand after pleading guilty to sexually assaulting a 16-year-old. >> reporter: by the way, i love the hair. it's great you're back, and i'm not big on the music either. megyn: thank you so much for the hair. some single chord at the end kind of disturbs me. >> reporter: it's not powerful enough. bam! megyn: it's like bad tv from the early '80s. okay, somebody's going to yell at me now. see ya, trace! that part's got to go. 90210, that's what it sounds like. [laughter] >> reporter: exactly. good luck to you. welcome back.

megyn: thank you. well, strong words about maternity leave from a regular guest and friend who comes on this show about yours truly. >> what a racket that is. i mean, men don't get to bond -- >> what a racket? >> >> well, how much time does she get off? >> probably three months. >> that's unbelievable to me. megyn: questioning maternity leave. what slackers we new mothers are. mike gallagher is here live to talk about that one. and talk about a road block, investigators in minnesota are stumped after discovering this mysterious dead animal in the middle of the road. why do they have of investigators investigating roadkill? and as we wait for the president to talk about our credit downgrade in just moments, the white house this weekend did speak out and blamed both the tea party and the s&p. is that fair? we report, you decide. >> the fact of the matter is

that this is, essentially, a tea party downgrade. the tea party brought us to the brink of a default. that, clearly, is on the backs of those who were willing to see the country default, those very strident voices in the tea party. [ male announcer ] it's a fact:

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on the projects that let us fix, make, and do more... that just makes the stories even better. more saving. more doing. that's the power of the home depot. right now get this vanity and matching mirror for just $99. when they taste the food that you cooked, it does something to your heart. i think what people like most about the grilled food is the taste. the flavor comes from that oak wood. the shmp, the fresh fish, the steaks. it locks in the flavor, it seals in the juices so that when you put the fork in it, it just goes through it like butter. megyn: fox news alert, president obama set to address the debt downgrade any moment now. we were told it would be 1:00, now we're told 1:30. now it's 1:33, we expect us

momentarily to speak to this since the downgrading. the downgrading of the united states credit rating for the first time in history, sending shock waves through the global markets. the dow down, ouch, 341, that hurts. both republicans and democrats were quick to point fingers. the white house has very definite ideas on who was responsible for the downgrade. take a listen. >> the a&p has shown really terrible judgment, and they paint themselves very poorly and they show a stun i can lack of knowledge about basic u.s. fiscal budget math. >> this is essentially a tea party downgrade. >> they played brinksmanship with the united states. >> you say this was all the fault of the other side and the president bears no responsibility for this. >> what i said, bob is review the history of what happened

here. people are less concerned about that than where we go moving forward. megyn: joining us now to discuss it paot dick harpootlian chairman of the democratic party and pwrald blakeman. >> we don't agree on much, both of us said and agreed it was going to be good to have you back and we are glad to have you back. megyn: thank you very much. that is sweet. i'm full of warm fuzzies with all my good friends coming on the show and saying good things. i'm going to reboot it. dick, since you gave me such a nice compliment i'll start with you. the question is, it's not that unexpected that they are going to come out and blame s&p, what axelrod said is a little bit more incendiary. was it fair to try to pin this on the tea party? >> i think to some extent we have of our six congressman in south carolina, five identify

themselves as tea party folks. they are pledge politicians, they took a pledge not to do anything about the taxes, they took a pledge, and apparently all five went in the house chapel and prayed together on whether or not to increase the debt ceiling. you know, it's shocking to me,ee elect people to go to d.c. and make decisions based on the circumstances occurring at that point in time. if i got hired to drive somebody from charlotte to columbia and said i would go 70 miles an hour and i saw a raft or thunderstorm or authored i'd have to vary from that. these folks are unwilling to vary from the speed no matter what the circumstances are. the tea party has some of the blame but congress in general, and you and me for expectations that the federal government can't realize are just as to blame as the tea party. megyn: it wasn't me. i've been off the radar, home with my baby. i'm definitely not to blame, i know that. let me ask you, brad. today the guy, you know, from the s&p came on fox & friends and said, it's obviously the

debt, but it's also politics. that is also the reason why we did it. and does that not fuel david axelrod's assertion that it's the gridlock in washington, and so the democrats are going to say that means the tea partiers that won't give on this budget mess, and then the republicans are going to say it's the democrats? does it not at least fuel the fire that it is the political break down and the parties warring that led to the downgrade. >> there is enough blame to go around certainly, but the fish rots from the head. our president has failed to lead our country@a critical time. when he came into office he didn't concentrate on the economy, he concentrated on healthcare. people keep scratching their heads, what good is affordable healthcare if i don't have a job to pay for it? we are spending too much and taking in too little. the president deserves all the credit for the horrible job he's done on the economy. there is certainly enough blame to go around in the house and the senate, ultimately the president is the leader of our country, it's his obligation to

have th a plan, he failed to do it. he's going to come on tv scolding us and lecturing us about how disappointed he is in everybody else except his own administration. megyn: the "wall street journal" had an interesting article on who is to blame for this. and who is responsible for the debt and their point is that president obama is a spender and has been a spender in the beginning and has got even us to levels of spending that are really dangerous and that the s&p were taking note of. our debt to gdp, our output, productivity, our debt versus productivity level is 72%. debt is 72% of the gdp projected to be for 2011. it was 62% and about that high the year before. how do you respond to that, that it's the spending that has got even us to these levels of debt? and the answer is not to tax people more. >> well, i think that everybody realizes, including the president, that the spending is

unsustainable. remember now we have two wars going. >> three wars. >> three wars i'm sorry, i stand corrected, three wars going. we're at a period of time where people demand that we fight these wars for national security purposes but are unwilling to pay for them. that combined with the meltdown of the mortgage industry has put us in a precarious position skwraoeu don't think anybody will argue with you on that. why doesn't axelrod come out and say that, why does he say it's the tea party's fault? >> the tea party in my mind is like a bunch of rabid chihuahuas running around anyplacing at the heels of the president. megyn: you expect to be invited for tea soon. >> they are yapping, anyplacin nifping. all they say is know. they have to have a plan to the to take people off of medicare -- >> we were spending too much and

we weren't responsible in our spending currently, and the deficit entitlements. nothing would have been done if it wasn't for the tea party. megyn: would it be better if we had a increase in the debt limit and no -- >> the president demanded quick action so that we wouldn't have this downgrade that we've got even from standard & poors, because the political sis teem that is in gridlock. we could address then all the issues which we are going to address. by the way we now have a failsafe mechanism that cuts go into effect unless this commission recommends something specific. also the tax -- bush tax cuts go away in january of 2013, unless we do something. so we are on a course to get it done, even if gridlock lasts. megyn: dick wants us to believe that wao we had done nothing, there had been no negotiation in washington, brad, things would have been okay. president obama actually proposed additional spending in his initial proposal for our

budget. he wanted to spend more, and then there was a propose afl cuts and he saidproposal of cuts aefrpb said no. president obama seems to think we ned to spend more to get our way out of this crisis, and the republicans disagree. i still don't see how it's the tea party's fault under the axelrod theory. >> when he first took office what did he do he put together a bi-partisan commission on the debt. he got the report, didn't like it, put it on the shelf. if the president had led when he got it we won't be in the mess we are today. megyn: dick, brad, good to see you a california man gets caught driving drunk and now wants his conviction thrown out because his ex-wife he says set the whole thing up. how did she do it? well, it involves two women, four breasts and an offer he couldn't refuse. that's in today's kelly's court. and a manhunt is underway for

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at 90 calories, the only thing between you and chocolaty brownies is a nicely designed package. ♪ now you can have brownies again. new fiber one 90 calorie brownies. in the granola bar aisle. megyn: fox news alert as we await remarks from the president investors are now hammering the dow index. the market falling below the 400 mark. look at that. 402 down. bret baier anchor of special report joins me now. good to see you. this is not the direction anybody wanted to see the dow go in and yet it happened thursday and rebounded and recovered all the losses the very next day, so what do you make of it? >> well first of all welcome back. it's a busy time, it's good to have you back in the chair. megyn: thank you very much. >> reporter: i tell you what, this is a major event, and there are a lot of things happening,

as you've talked about on the show already. you have the situation in europe where there is concern about spain and italy. you have the european central bank buying bonds to try to shore that up. there is a global gitteriness about the world economy that goat beyond the s&p downgrade here in the u.s. obviously that factors in. this is the market's first reaction, chance to react, and you've seen a roller coaster ride, but right now we are on the downside that of roller coaster, as the president gets ready to speak. and the thing is, is that right now this administration is not in a position where it has many arrows in the quiver as far as what to do about it. it will be interesting to see what the president has to say. megyn: what do you make of the fact the president has not addressed it so far. this news broke friday evening, 9 and 10, i was watching this.

here we are at monday, 1:45 and we have yet to hear from him. >> reporter: i think it's interesting, i think it's telling. i think the administration was trying to get its messaging right. you had the two different kinds of messages, one was that the s&p made a major math error and that they are just wrong, and then two was blaming the tea party for bringing us up to this default crisis, as they describe it. you've discussed that here. i think the president is going to have to go above that to talk about what possibly could be a solution down the road, and i'm not sure that there is one. there is a fed meeting this week, and there is a lot of speculation whether there will be another quantitative easing three, essentially pump billions into the economy again. megyn: print it. >> reporter: that means print money. megyn: there is a long list of criticisms about what that will do to the economy if they choose

that route. i think for the average person speaking at home. i can speak to this because i've been the average person sitting at home for four months. it's like, debt downgrade, standard & poors, i don't live my life immerse ned this stuff. what i want to know is if it's going to affect me negatively then i guess i want to know whose fault it is and how to fix it. you're not the economic guy but politically how does president obama combat the perception of some sitting at home this he's the top guy, it's happening on his watch, and he'd better fix it if it's going to affect our credit ratings. >> reporter: that is a great point. as you watch these markets nine out of the last eleven sessions take a hit, a pretty significant hit it is affecting people. their 401ks become 201k, if you want. you can talk about how it's affecting somebody at home. as the market slides it does have ann affect for everybody. as far as the politics, it's a great question. this president owe far in all of these speeches has mentioned a number of different things, the

tsunami, and earthquake in japan, the arab spring and the affect on the oil prices, and now his administration has said that the tea party in pushing up against this default crisis, as they describe it is another issue. you're right, people are look for solutions, and how to turn this around. if he gets political and starts going after republicans in this speech today it will be quite something. megyn: not going to happen, right? >> reporter: i don't think so. megyn: i don't think so either. all right, we'll watch you break it down this evening. in the meantime we have another hour and ten to go right here as we await the president. bret baier on monday through 5, 6pm eastern time. now fanny mae and freddie mac downgraded today. how much could all of this cost you? what about your credit cards? your mortgage loans, your car loans? also, what is this? what is it? it's the case of the road kill that now has animal experts

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megyn: and here we go to the president, remarks in progress. let's listen. >> in fact, warren buffett, who knows a thing or two about good investments, said if there were a aaaa rating, i'd 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. and we didn't need a rating agency to tell us that the gridlock in the 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 enormous damage to our economy and the world's. that threat coming after a string of economic disruptions in europe, japan and the middle east has now roiled the markets and dampened consumer confidence and slowed the pace of recovery. so all of this is a legitimate source of concern. but here's the good news: our problems are imminently solvable, and we know what we have to do to solve them. with respect to debt, our problem is not confidence in our 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 spending cuts with two additional steps; tax reform that will ask those who can afford it to pay their fair share and be modest adjustments to health care 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 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 is 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 supercommittee, 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 a 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's out there looking for a job, you can get the unemployment insurance that your tax dollars contributed to. that will also put money in 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 who have been without a job for the last few years can get a paycheck again. that will also 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 two and a half years. i know a lot of people are worried about the future. but 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 entrepreneurs on earth. and what sets us apart is that we've always not just had the capacity, but also 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. and 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. and they've done it with grace. and they're working so hard to raise their families. and 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. and, 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 their willingness to shoulder the burdens we face together as one nation. one last thing. there is to one who embodies the qualities i mentioned more than the men and women of the united states armed forces. and this weekend we lost 30 of them. 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 the so many others, they were also joined by afghan troops, seven of whom lost their lives as well. so i've 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 stronger afghan government and insuring that afghanistan is not a safe haven for terrorists. we will press on, and we will succeed. but now's 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, and their backgrounds and beliefs reflect the rich diversity of america. 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 responsibility is to insure that their legacy is an america that reflects their courage, their commitment and their sense of common purpose. thank you very much. megyn: and there you have it, president obama now two and a half days after the news that standard & poor's was downgrading the u.s. credit rating from aaa to aa plus speaking to that issue for the first time and also speaking on camera about the loss of 30 u.s. troops in afghanistan, expressing his condolences and thanks to those brave men. on the economic front, if you are just joining us, this is the first we have heard from the president on this issue, although we heard from his surrogates over the weekend. welcome, everyone, to a brand new hour of "america live" on a business monday. i'm megyn kelly.

already republicans are reacting to president obama's remarks on the credit downgrade which you may have found rather surprising if you saw the segment i did with bret baier moments before the president spoke. joining me now to react is reince priebus, the chairman of the republican national committee, and my guest now. sir, thank you so much for being here with us. when bret baier was on, we had speculated about whether the president would make these remarks in any way political, taking a shot at the tea party whether veiled or not veiled. he seemed to blame the s&p move, in part, on what we saw in washington over the past month. and the length of time it took to get the debt ceiling issue resolved. before i get your reaction, i just want to play the sound bite for our viewers who didn't hear it. let me listen to the president, then we'll get you to weigh in. >> 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 war gaining chip, could do enormous damage to our economy and the world's. that threat coming after a string of economic disruptions in the europe, japan and the middle east has now roiled the markets and dampened consumer confidence and slowed the pace of recovery. megyn: your reaction, sir. >> well, first of all, welcome back, megyn -- megyn: thank you. >> and it truly is sad, the loss of life over in afghanistan, there's no doubt about it. which makes what we're talking about here in america just all that much more important, that we're in a battle for freedom for this country, and we have a president who we just saw is continuing this charade of blaming every person and every entity and everything under the sun for the situation that we're in. we have a president who has not been serious about the promises that he made to the american

people which was, number one, he said that he would cut the deficit in half by the end of his first term. what did he do? he introduced the biggest structural deficit in the history of america. when it's come to a budget, have the democrats introduced a budget in the past 840 days? no. the democrats haven't introduced anything. the republicans are trying to lead, megyn, in this country. we passed not one, but two bills to address this debt issue. we passed a budget, and what did they do? the they vilified paul ryan because he's trying to make medicare sustainable for future generations while tackling head on the real issues in this country affecting our debt and our deaf sates. and what did he do? now he comes back, and he's begging the secretary of the treasury, tim geithner, to stay on the job after tim geithner promised america and the world that what s&p did would never happen. he did that in april, and now the president is begging him to stay on. this is a president, megyn, who

is in love with press conferences, speeches, he's in love with campaigning, he's going to fundraisers tonight, and he can get on tv just as he just did right now, and he can deliver a very good press conference, very good remarks. but when he's not good at is following through for the american people and being the leader of the free world which is what everybody is begging from this president, to start leading america to the promised land again. and look what he's doing -- megyn: is it that he's not leading, or is it he's not leading in the direction you like? because, you know, standard & poor's made clear that one of the issues that led to the downgrade was the political gridlock in washington. they didn't like what they saw, and they don't think the parties can get along and resolve it. is that an unfair conclusion by standard & poor's, and if it is not, aren't both sides to blame? >> >> well, i mean, certainly, you know, over the years no one is

blameless. but certainly over the past two years it's the policies of barack obama. now, this is not just political partisanship, this is not just, look, the economy's in the tank and, therefore, it's all barack obama's fault. we're not saying that. but it's the policies that barack obama has put in place, megyn, that has launched us into this direction. no one -- not no one, but 65%, 70% of americans didn't want obamacare. they didn't want a $2.5 trillion down payment for government-run health care. they didn't want a stimulus bill that cost a trillion dollars. now, we've lost two and a half million jobs since that program. it's the policies of barack obama, it's his inaction, it's his obsession with campaigning instead of getting things done, and it's the democrats not delivering a budget, playing this game of rope a dope which means every time the republicans try to address these issues they try to vilify every single republican. they're launching an ad today,

as you know, in iowa trying to vilify paul ryan and any republican that tries to do anything to get our medicare and our entitlements under control. and what does the president do now after we're heading toward under 11,000 points on the dow? now he's saying, well, maybe we need to do something about medicare. well, no kidding. we've been talking about that for, now, three years, and instead -- megyn: how does this play politically going into a year in which, you know, we're in a countdown to the next presidential election. this, obviously, happened on president obama's watch, and people will argue about whether you can pin it on him and democrats in general or not. obviously, you have an opinion on it, but what do you plan on doing with this politically? >> well, i mean, first of all, this is serious. i mean, this is not about political games. but i think the people in charge need to be held responsible. we've got a president who's not engaged. he's engaged with press conferences and speeches, but i'd remind your viewers that

press conferences and speeches don't create policies that the congress can actually vote on. now he's said i'm going to come up with some ideas, i'm going to present them. he said that at a speech two months ago, and nothing came out of the white house. we still haven't seen any specific bees from this president, so how it plays out, people are going to be asking themselves a question, megyn, and that is are we better off today than we were three or four years ago? and the answer to that is, heck, no, we're not. and has this president fulfilled his promises to the american people when it comes to the debt, the deficit, jobs, the economy? the answer to all of those questions are, no. and, you know, for the sake of our economy, for the sake of our country we need to make barack obama a one-term president and start getting this, our country back in shape again. megyn: reince priebus, thanks so much for coming on. we appreciate it, sir. >> with thank you, megyn. megyn: this downgrade is having a ripple effect, and while the president is speaking -- can we get this news on, actually? we didn't get to this.

something happened on wall street that hasn't happened in the better part of ten months, and that is the dow dipped below 11,000. that's, well, there it's at 11,025. but it was down as low as 10, 994 at one point while the president was speaking. and the last time the dow has fallen below the 11,000 mark was about ten months ago, october 19th of 2010. what is the significance of that? you heard the president citing numerous factors globally, nationally, pretty create and so on to explain some of what we're seeing, not just from standard & poor's, but on wall street with respect to our 401(k)s and so on. but we're going to have more on exactly what we're seeing and how it effects you and your wallet in about 20 minutes at the bottom of the hour, our power panel on the fallout for main street. and, folks, we'd love to hear from you on this. after the s&p downgrade, are you changing your investment strategy? do you still believe in investing in the good old us of a? are you going for gold like so

many are now? that's our you decide question today. log on to foxnews.com and tell us what you think. well, he met up with two women at a bar, had a few drinks, then hit the road with them. he wound up on the business end of a breathalyzer test, folks, and now he says it was all a big setup, and you won't believe who he's blaming. an unbelievable kelly's court. it's back. and a horrifying accident, watch this on live television. oh. the dance move that sent a supermodel to the emergency room. plus, a few months of maternity leave? apparently, over the top. according to our friend and frequent guest right here on the program, mike gallagher. the man behind the mic answers to me for these comments live right after this break. >> and she does a good job, she really -- when is -- and megyn's still on maternity leave, right? >> what do you mean, are you complaining? she's bonding with her baby. >> what a racket that is.

i mean, men don't get to bond.

megyn: this is a fox news alert, president obama moments ago saying the united states always is and always has been a aaa country despite its rating agency debt downgrade. he is also sticking by treasury secretary tim geithner asking him to stay on as calls grow from republicans for the treasury secretary to step down, and i should mention to you that our last guest, reince priebus, who's the chairman of the rnc, is also joining in calls for geithner to step down, something he does not plan to do. joining me now, mike gallagher. [laughter] syndicated radio talk show host. >> oh, no. megyn: all right, we're going to get to the maternity leave comments in just a minute. first, let's stay on the news. and then we'll make the news. [laughter] let's talk about geithner because the other thing i didn't

get to is the fact that the president is doubling down on geithner and made clear he's sticking by him. he doesn't want geithner to go, and he doesn't think that's necessary or justified. your reaction. >> well, first, welcome back. i will meekly say before you start to smack me around for my ill-advised meants on my -- comments on my radio show with chris wallace. to tim geithner, if america was being run by a business, there's no way he stays in this position. megyn, it's inconceivable that for the first time in our nation's history to have our credit rating downgraded like this is not met with any sort of consequence. i'm disappointed in the people on my side of the aisle, people on the right who are blasting the messenger, s&p, for their decision to do this when no one disagrees with the reasons they've stated to downgrade our credit rating. so, i mean, everybody's to blame. the democrats and the republicans, but the republicans have one-third of the government right now, and for a democrat president to defend a guy like timothy geithner is absolutely

inconceivable. but it shows, it speaks, i think, megyn, to the objection nance, to the stubbornness, to the sort of tone deafness of the obama administration as a whole. megyn: what about the stubbornness on the right? if you really want to get serious about cutting into this debt, then what you hear from the left over and over again is you have to have increased revenues in addition to entitlement spending cutbacks. you've got to have revenues. and that's why they continue to point to the right saying the right also won't cooperate. and by the way, let me just point out the dow is now down 500 points. the dow is down 500 points. >> oh, my gosh. here we go again. megyn: it was down last thursday, it rebounded the next day, but i call it to your attention. >> well, i wonder if markets don't react to president obama standing by his guy, timothy geithner. business people are seeing right through this. i talk to entrepreneurs and business owners all the time. listen, in the midterm election you heard this over and over

again, megyn, these freshmen congress were given a mandate: no increase in taxes. now, there can be a debate, and your question is a fair one. it's all right to debate, you know, the role of taxes, do we need to reform the tax code, is it fair that 51% of the american people don't pay any federal income tax whatsoever? i would say resoundingly that's not fair. but, ultimately, it still is up to this president to have a plan, any plan. there has been none offered. it's a sheer failure of leadership, and i think, i really do think this debt, this credit rating decline is the beginning of the end of the obama administration. it was my first thought friday, i read today online -- megyn: all right. no more stalling. >> he's finished. megyn: no more stalling. here's what you said on your radio show, stand by. >> and she does a good job. when is -- and megyn's still on maternity leave, right? >> what do you mean, are you complaining? she's bonding with her baby. >> what a racket that is, i

mean, men don't get to bond finish. >> what a racket? >> how much time does he get off? >> probably three months. >> how much time did you get off when your kids were born? >> let me tell you, one week was all i could stand. megyn: nice, chris. would you care to explain those remarks, mr. gallagher? maternity leave, it's a racket? >> well, first of all, everybody on your show, they're rats and traitors. i kept saying when this first hit the fan i said, please, tell me, i want to get to megyn, did she hear it? no response. it was crickets. megyn: i gave a couple of interviews over the summer to some publications, and the reporters all asked me about it saying, how about this pinhead, mike gallagher? and i said, right, he is. what a moronic thing to say. >> well, are you going to disagree -- again -- megyn: are you doubling down? no, no, no the, no, are you not taking those remarks back? is maternity leave, according to you, a racket?

>> well, do men get maternity leave, megyn? megyn: guess what, honey, they do. it's called family medical leave act. if men would like to take three months off to take care of their newborn baby, they can. >> all right. let me give you an explanation. i was drinking that day -- megyn: now you're more along the path i expected. [laughter] just in the case you didn't know, just in case you didn't know, mike, i want you to know that the united states is the only country in the advanced world that doesn't allow pay, doesn't require paid maternity leave. now, i happen to work for a nice employer that gives me paid maternity leave,. >> yes, you do. megyn: but the united states is the only country that doesn't require paid maternity leave, and what is it about getting pregnant and carrying a baby nine months that you don't think deserves a few months off so bonding and recovery can take place, huh? >> i even think one of the people on your staff said, oh, mike, she didn't even notice. megyn isn't even aware you said

this. i said, let's not bring this to her attention. megyn: you can't answer the question because there is no answer, my friend. >> i'm just so glad you're back. megyn: women who spend less time are more likely to be depressed. >> well, you should be happy then. you should be a happy camper. megyn: i'm happy with my baby and my employer. with you, not so much. >> i am too. i'm sorry. welcome back. i'm glad you're back. megyn: taking your e-mails on it at kelly@foxnews.com. we've got this alert coming in on the rioting in london which is now seeming to ramp up again. seemed to be quiet, now not so much. we'll go to london in the three minutes. and next 20 minutes, kelly's court.

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megyn: fox news alert, folks, live pictures coming in to the

newsroom from london, this is southeast london, where businesses are now being set on fire. we've seen in some of this video. we go now live to amy kellogg who has been following the developments in london. >> reporter: it's very unsettling. it seems people are trying to piggyback on to this rage that we saw erupt saturday night in community after community to riot and to loot, particularly to loot in many neighborhoods of southeast and northeast london. and you're looking at this car fire which has spread to buildings now and businesses in the neighborhood of peckham. things started up in the neighborhood of hackny just before 5:00 here local time. and be there's certainly, it would appear, a lot of pent-up anger at police in some of the less advantaged neighborhoods of london. again, the latest going on in peckham, but we're hearing that unrest is breaking out in several other neighborhoods as well, mostly northeast, again, and southeast london. last night saw brazen looting in several communities.

people were so confident and the police so overwhelmed that looters even took the time to try on sneakers and clothes before they made off with the merchandise. the scenes quite different than we saw on saturday night when protesters were initially simply demanding answers to the killing of 29-year-old suspected gang member mark duggan by police. those protests suddenly turned violent, and now they're saying it's believed there's the equivalent of nearly $400,000 in damage. in these tough economic times, that is not good, and from this point it's all turned into a viability looting spree. the -- violent looting spree. the circumstances surrounding the death that set this all off in the first place remain unclear. he was shot during an attempt to arrest, and the police are not saying very much about it. so far there's been at least 215 arrests, the youngest an 11-year-old boy for burglary. but as you see from those pictures of that fire that just broke out this evening, there is so much concern about how far

this will all spread and not just this one fire, how many days this will go on and where the riots will hit next. that's the latest from london, megyn. back to you. megyn: amy kellogg, thank you so much. another fox news alert now, the markets now dropping like a stone. we could be down 600 points shortly if things keep going in this direction. it is now down 554 points. if you have a 401(k), it means you may have lost a little money today. but it may come back. we're going to detail the more important fallout from the credit downgrade in three minutes. plus, tight ropes and hot air balloons seem to be the perfect ingredient for disaster. more of this dramatic video and how it all ends. ♪ [ male announcer ] this is lisa, who tries to stay ahd of her class.

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when they told me these plans were endorsed by aarp... i had only one thing to say... sign me up. call the number on your screen now... and find out about an aarp medicare supplement insurance plan. you'll get this free information kit... and guide to understanding medicare, to help you choose the plan that's right for you. as with all medicare supplement plans, you can keep your own doctor and hospital that accepts medicare, get help paying for what medicare doesn't... and save up to thousands of dollars. call this toll-free number now. megyn: a fox news alert for you, the markets are now dropping and in the wrong direction. we were down 600 points a little while ago, now it's down 535. again, that's not what we want to see on the monday after this announcement, although what's behind it? joining me now, neil cavuto, who is our, basically, managing editor of everything financial here at fox and has the answers to this. neil, we saw something scary

like this happen last thursday, made it up by friday. out this in perspective. >> reporter: i do find it odd that you return and the markets fall apart. megyn: can i just point out when the market went down precipitously a year ago, do you remember that? >> reporter: yeah. you're one nut to avoid -- megyn: is it me? go up, go up! >> reporter: it's not happening. but welcome back, megyn. megyn: thank you. >> reporter: you're quite right, we're getting very near bear market territory, megyn. you probably heard a lot of that today. we're within a few percentage points of what would be officially a bear market certainly for the dow, more than half the issues that trade within the s&p 500 are well into that territory. but i only say it because for some of these guys that would be a seminal development and maybe a reason to cool it off that. but when you're down 20% from highs reached little more than about seen weeks -- seven weeks ago, you are in bear market territory. between 10 and 19% is considered

a bear market correction, so we are into, i guess you'd call it a heavy correction. there is a bright spot, and that is the fact that a lot of money has been idly pouring into the very same treasury securities we thought were going to get walloped -- megyn: the ones that got downgraded. >> reporter: right. that might still happen, but right now it's the slowdown, stupid, and the slowdown is what's dictating the course of interest rates. they are moving down the price of our treasuries, notes and bonds has been moving up -- megyn: i have to jump in because i only understood about every third word. the bottom line of what you're saying is people are buying the u.s. treasuries even though they got downgraded and that we are in potential correction territory which basically means bad, bad, correction is bad, the stock market took a real hit. >> reporter: right. megyn: so those are two points that you made. but for ma and pa sitting at home, what does it mean, panic? 401(k)s being wiped out? is. >> reporter: i think you just

step back from these moments and realize markets have lots of them. we had one in 1987, another one in '39, we had it with the asian contagion in '97, the russian devaluation in '98. we had it, of course, just a few years ago, the financial meltdown. in the moment they're painful and awful, but i think what people should realize citizen well is money invariably finds a home, and as buffetted as we are in this country by concerns that our debt isn't pristine anymore, when push comes to shove, a lot of players on earth don't know where else to go, so they invest it in our treasury securities, those same ones that were supposedly going to be bashed by these downgradings. and that says something to me, at least, that though things may stink here, they stink more elsewhere. we are still a haven, we are still a very big, liquid market and a safe place to park cash for now. that is hardly a reason to get arrogant because gold is soaring as well, a lot of commodities as well, but the fact of the matter is we do remain a safe haven

even when it looks like we're far from a secure one. megyn: neil cavuto, thank you, sir. >> reporter: thanks for coming back. nice rally, way to go. megyn: joining me now with more on this, elizabeth macdonald, stocks editor for the fox business network, james freeman of "the wall street journal," and georgia knew green, fox news contributor. i want to pick up where neil left off. it's scary the watch your 401(k) take this kind of a hit, but maybe it comes back. let me ask you this, to what extent do we relate this to the s&p downgrade? i'll start with you, james, on that. >> it is related, and the effect is mainly psychological right now and what did not help was the president announcing he was going to speak at 1 p.m. and then changing it to 1:30 and then changing it to 1:45. what was happening at least in wall street trading floors was people staring at that empty podium saying, what's going on? is it even worse, or is this a lack of leadership?

he finally spoke, and the market kept dropping. i think there's not anything automatic that happens in the financial system when this rating goes down, but, so people shouldn't freak out. it's a psychological issue mainly. megyn: but there are potential consequences to folks sitting at home in the downgrade, liz. what are they? what will they feel? >> reporter: when you see this, you feel like you've fallen through the looking glad when you hear all these headlines crossing. how will it effect my 401(k)? james is right, right now it's a confidence issue in the markets, and the markets need confidence. megyn, there's $8 trillion sitting on the sidelines in savings accounts and money funds. people are waiting to buy stocks, but they don't feel confident enough to do that. so that's number one. megyn: this is not going to be incentive for them to get in. >> no, not just yet. we've got to wonder, you don't want to try to catch a falling knife or buzz saw -- megyn: but you'd like to get it. >> it's hard to time the market bottom, it really is. you've got to find the good blue

chips that pay dividends, have solid cash flows. but as for your borrowing costs, there's a real serious debate on the how you will get hit in a downgrade. it usually takes a year or two, it takes time for the banks to start raising interest rates. megyn: when i go to get a car loan -- yeah. that's right, or a mortgage. if you already have a fixed mortgage, you're okay. your home equity loan if it's variable and tied to treasuries, that could get hurt. megyn: i want to ask you this because there's been a lot of folks pointing to the debt and president obama's policies, the stimulus bill and so on. saying he shouldn't be pointing the finger at republicans, and you say to that what? >> well, i think it was really great to hear a voice of reason from neil because we have had so much finger pointing in a way that's just irresponsible. this fall today is because he was late as most presidents are for their press conference -- megyn: but wall street is a

jittery place. >> the reality is a part of this s&p decision, they were very clear, is because our politics are broken. and they pointed very clearly, i feel, at the tea party. this is the tea party downgrade. we had many members in the u.s. house of representatives saying it would be okay for us to default. we had the president -- >> i didn't realize the tea party has credit rating agency status -- >> but the president -- >> it's not the tea party downgrade at all. yes, but it's not a tea party downgrade because that's misleading to the american people. republicans were awful with spending under president bush. >> right. >> both sides. this is a bipartisan creation. this is a downgrade that was years, decades in the making, megyn. so the issue is how do you get out of it? economic growth is the whole ball game. economic policy is the whole ball game. megyn: that's right, but president obama and the republicans have different philosophies on that, so who's to say what's right and what's wrong? it's just for the american people to decide at the ballot box, right, james?

>> you were hoping he would move towards tax reform, and he said tax reform, and it was exciting, and then he said, he basically defined it as raising taxes on rich people which is the talking points he's been giving for a long time now. so i think if you were hoping you got a positive economic growth message out of this, you were disappointed, and that's one reason probably the markets kept dropping. megyn: last word. >> the best thing for deficit reduction is going to be a strong economy, and the president has been saying for months it has to be a balanced approach. you have republicans in the tea party holding boehner's hand hostage saying, absolutely not, we're not going to have -- megyn: they don't want tax hikes. >> i was in san diego this weekend with 3,000 women bloggers, most of them mommies, and i was like i'm going to take this opportunity, ask them about the debt ceiling debate, and they solely put the finger on the tea party and the republicans because they were -- >> well, that's a compromise,

and that's misleading. you know what? they're getting the wrong information. again and again people blame the tea party for raising the red flag, and that is wrong to tag the tea party with this as a tea party downgrade. it is absolute, habitual spending out of washington d.c. and you know what? wall street's not buying it, wall street doesn't believe it, and wall street's been saying for years you've got to get spending under control. even going back under the clinton administration. megyn: no question, bipartisan factors. okay. gotta go, but i do want to say to those mommy blockers, mike gallagher is a good guy and a friend. pleads, don't send him any hate mail. [laughter] thank you. thank you, all. well, he looks like he's about to fall, but he is a professional, right? all of a sudden, the unthinkable happened. 300 feet in the air. the shocking end to some sky-high drama. we'll show you what happens after this. not good. plus, he set out for a night on the town with some female companionship and wound up at

the police station charged with dui. now he says it was all a setup by his ex-wife in kelly's court. ♪ ñíoz6ooñtñíy

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megyn: kelly's course is back in session again. on the docket today, boobs, babes and a breathalyzer used as weapons in divorce. he thought he hit the jackpot when a sexy single asked him out. she shows up at the bar with a female friend, and they all party like it's 1999. then one of the women flashes the 49-year-old soon to be divorcee and says, hey, let's get outta here and, quote, continue things in the hot tub. but dapper dave didn't make it very far. you see, moments after he

decided to get behind the wheel of his car after drinking, lights and sirens appeared in the rearview mirror. now after being charged with driving under the influence, dutcher claims his ex-wife and a private i set the whole thing up to give her an advantage in the custody battle over their children, and now he wants that custody deal thrown out! joining me now, former prosecutor arthur aidala and be defense attorney mark. panel, welcome back. >> welcome home, your honor. >> great to see you back. megyn: great to be back on the bench. >> i like your haircut. looks a little familiar. megyn: that's right. less is more, arthur. does mr. dave have a case? >> i think he definitely has a case. i mean, i know -- megyn: how does he have a case? if i read the whole thing, he chose to drink and get behind the wheel. >> okay, yes. he doesn't have a case against his own dui. i mean, that's not -- that's not a defense to that. but regarding the divorce

proceedings, his wife and her private investigator have admitted they set him up -- megyn: they admitted that they hired the pi, but they don't acknowledge -- >> but the pi acknowledges that he did it, he acknowledges he videotaped them, the women were supposed to get him drunk. megyn: so the woman was for hire, for sure the woman that was offering to show the breasts and have the hot up tub, she wos for the pi. >> yes. megyn: okay. >> there is a tremendous difference in our courts of equity regarding a father who goes out drinking with children in the car and a guy who's now single who meets a hot woman and uses poor judgment and goes drinking and driving with her. he shouldn't be doing that. but it is not the same thing as having three kids in the car -- megyn: but no one ever thought he had three kids in the car at the court. the court never convicted him of driving with three kids in the car while drunk, mark, i realize the guy was a victim because he was set up, that's not good.

but who made him drink and drive? is. >> absolutely right. arthur's argument has zero merit. i've waited months to debate with arthur again, and he's supporting his client's theory? >> you puritanical guy, you. >> entrapment? entrapment? megyn: the prosecutor said something like this is the worst, he says this is one of the most deplorable legal practices i've ever heard of. this is a senior deputy da down there. >> i don't know all of the facts like the prosecutor does, but what i'm reading is that nobody forced this guy to drink, and his argument that it's entrapment has to be that he committed some offense, he was induced to commit an offense that he otherwise wouldn't commit. >> so? >> why does that not have any merit? he has been drunk driving in the past with arrests, his own children complained that he's driven drunk, there were l alcohol containers in his vehicle. i don't know, arthur -- >> okay, mark, let's break it down to the bare bones here.

a woman, a young, attractive woman showing her breasts, admitteddedly showing her breasts -- >> you love to say that word, don't you, arthur? >> >> let's go to the hot tub. megyn: what man could resist! what red-blooded american man could say, you know what? i want to see more of those breasts in the hot tub. damn the drinks i've had, no american male has the power to say no. >> everyone admits it was their idea. megyn: but he did. >> that's why, megyn, he's guilty of dwi. he's guilty of -- megyn: and the dwi is what hurt his custody arrangement. >> but the judge at the time did not know he was set up for the dwi. i would want to know that. [inaudible conversations] megyn: go ahead, mark. >> what does it matter, arthur? nobody forced him into that vehicle, nobody -- >> come on. >> this is a former law enforcement officer. megyn: mark, what about the argument it was just unfair, it just makes you feel gross, right? like the guy -- can we allow that?

mark, can we allow that to keep happening? so, like, spouses in divorce agreements are allowed to do this, and there's no penalty to the spouse who, she denies it, but if she did it, did a very bad thing to him. >> judges are free to consider the way that things went down, and if that's the judgment that the other parent is using -- >> but that's the point here, mark, is that the judge didn't know that when he made the custody -- >> he needs to accept responsibility for what he did. >> and he will in criminal court. but the judge didn't know that he was set up by the pi and his wife, and if i'm a judge, i want to know that because that doesn't mean he's acting of his own free will. >> if you're a judge, arthur. megyn: got to leave it at that. the prosecutors also offering for him to open up the criminal matter as well, so i don't know that prosecutor's even easier on him than you are, mark. gotta go, thank you. one final word for our viewers, the pi made him get drunk, get behind the wheel? right. because no normal red-blooded american man could possibly resist, quote, continuing things

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megyn: from the category of very close calls, this man in china was trying to cross between two hot air balloons hundreds of feet in the air. suddenly, he stumbled, nearly falling off the wire. fortunately, the guy managed to hang on with his arms and legs. after a few moments, he regained his composure, pulled himself back onto the wire and completed his journey. oh! >> well, months of fighting in

wisconsin comes to a head tomorrow. six republican lawmakers who supported wisconsin's collective bargaining law recall votes tomorrow. two democrats face votes next week. governor walker signed the bill back in march despite fierce protests. it limits union worker raises and increases how much employees must pay for their own pensions and health care, and peter doocy has the details live from our chicago bureau now. peter? >> reporter: yeah, megyn. as you said, tomorrow in wisconsin six republicans are going to have to put their fate in the hands of badger state voters. if democrats can pick up just three of those seats, democrats will be the new majority in the wisconsin state senate. this is how republicans are feeling on the eve of that possibly happening. >> i think the possibility of all of the senators being recalled is very unlikely. but, certainly, what we've seen is just millions and millions of dollars being dumped into our

state by the national public employee unions as well as some of the private unions, and i think because wisconsin was at the forefront in both february and march nationwide, this is kind of their line in the sand. >> he also said we should expect presidential election-size voter turnout tomorrow. democrats think that's going to help them out. they describe the resistance against republicans as a grassroots movement. listen here. >> it's a very energized, wonderful movement that wants to take our state back not just from a total one-party rule, but also from the corporate interests that have been given, basically, unlimited and unprecedented power in the our state. >> reporter: so, again, six republicans being recalled tomorrow, possibly next week two democrats, and we will be following it all. megyn: thanks, peter. up next, baby pix. [ male announcer ] do you have questions about medicare?

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