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NEWS STREAM

Phone-Hacking Scandal; Julian Assange's Appeal; Assassination in Afghanistan

Aired July 13, 2011 - 08:00:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


KRISTIE LU STOUT, HOST: Welcome to NEWS STREAM, where news and technology meet.

I'm Kristie Lu Stout, in Hong Kong.

The British prime minister hits out at Rupert Murdoch's News International, saying the company needs to clean up its mess instead of seeking a merger with BSkyB.

And lawyers representing Swedish prosecutors make their case for Julian Assange's extradition in a British court right now.

We've been watching British Prime Minister David Cameron speaking in the House of Commons, and it comes as no surprise that the phone-hacking scandal at "News of the World" has dominated this question session. Now, Mr. Cameron is standing with opposition leaders against media mogul Rupert Murdoch's bid to take over British broadcaster BSkyB. The motion will call on Murdoch's News Corp to abandon its multibillion-dollar bid, and the prime minister made it clear that the company should have different priorities.

(BEGIN VIDEO CLIP)

DAVID CAMERON, BRITISH PRIME MINISTER: There needs to be root and branch change at this entire organization, and I think it has now become increasingly clear that while everybody, to start with, wanted in some way to separate at News International and what is happening with BSkyB, that is simply not possible. What has happened at this company is disgraceful, has got to be addressed at every level, and they should stop thinking about mergers when they've got to sort out the mess that they've created.

(END VIDEO CLIP)

STOUT: Now let's remind you of the key players in this long-running scandal.

Now, Mr. Cameron's former press secretary, Andy Coulson, was arrested last week in connection with phone-hacking allegations. Coulson served as editor of "News of the World" from 2003 to 2007, and he resigned after a reporter was jailed for listening to the voicemail messages of royal aides.

Now, Rebekah Brooks, she preceded Coulson at "News of the World." She held the top job there from 2000 until 2003. And like Coulson, she reportedly has close social ties to Prime Minister Cameron. Brooks is currently the chief executive of the paper's parent company, News International, and there are increasing calls for her resignation.

James Murdoch, son of Rupert Murdoch, he closed "News of the World" last week. He is the chairman and chief executive of the Europe and Asia arms of News Corp, and before that he was CEO of BSkyB. And he is seen as the heir to his father's entire media empire.

And then we have Rupert Murdoch. He was born into the newspaper business in Australia. The 80-year-old now has American citizenship and media enterprises in multiple countries. Now, Murdoch, his son James, and Rebekah Brooks have all been asked to testify before British lawmakers.

Journalists working for the Murdoch media empire could also face scrutiny in the U.S. for alleged hacking, but let's focus on the current action in Britain, where the prime minister has laid out details of an inquiry.

Dan Rivers is standing by in London. He joins us now from outside parliament.

And Dan, there was quite the showdown there in the House of Commons. What did the prime minister say? How is he faring in all this?

DAN RIVERS, CNN SR. INTERNATIONAL CORRESPONDENT: Well, a fascinating hour or so inside the House of Commons, completely dominated by the broad issue of phone hacking and what should be done about it. But particularly, the prime minister came under sustained attack about his decision to hire former "News of the World" editor Andy Coulson as his director of communications. Specifically, the suggestion that he was in some way warned, or that there were suggestions way back, earlier, that Andy Coulson had links to illegal activity and that the prime minister was told about that and refused to get rid of him.

Let's just have a listen to how the prime minister dealt with that suggestion that he had warnings about Andy Coulson's alleged involvement in illegal activity. And watch out for Ed Miliband, the leader of the opposition's reaction as the prime minister is answering those questions. Take a look.

(BEGIN VIDEO CLIP)

CAMERON: This was not some secret stash of information. Almost all of it was published in "The Guardian" in February, 2010, at the same time my office was approached. It contained no allegations directly linking Andy Coulson to illegal behavior. It didn't shed any further light on the issue of phone hacking, so it wasn't drawn to my attention by my office.

And once more, Mr. Speaker -- once more, let me just make this point. I met the editor of "The Guardian" the very next month, and he didn't raise it with me once. I met him a year later. He didn't raise it then either. Indeed, I would ask, if this information is so significant, why have I not been asked one question about it?

(END VIDEO CLIP)

RIVERS: So the prime minister trying to say, basically, that he wasn't warned, that he didn't receive those warnings, that no one asked him questions about it in press conferences, that he didn't know of the suggested links between Andy Coulson and illegal activity at the "News of the World."

Check out the reaction in return from Ed Miliband, the leader of the opposition.

(BEGIN VIDEO CLIP)

ED MILIBAND, BRITISH OPPOSITION LEADER: He just doesn't get it.

(CHEERING)

MILIBAND: He just doesn't get it. I say this to the prime minister -- he was warned by the deputy prime minister about hiring Andy Coulson. He was warned by Lord Ashtown (ph) about hiring Andy Coulson. He has now admitted in the House of Commons today that his chief of staff was given complete evidence which contradicted Andy Coulson's previous accounts.

The prime minister must now publish the fullest account of all the information that was provided and what he did, and why those warnings went unheeded.

(END VIDEO CLIP)

RIVERS: This is just so politically awkward for David Cameron. This accusation coming back time and time again from the opposition, who are making hay with this. You know, basically, that he hired Andy Coulson, the allegation is, knowing full well that he was in it up to his neck at News International in terms of knowing about hacking, knowing about corrupt policemen, knowing about bribes and so on.

All suggestions that Andy Coulson himself has always denied. But Andy Coulson is now out on police bail after having been arrested. And the prime minister now just desperately trying to say that he wasn't aware of those allegations, of those warnings from other senior members of the House of Commons, from his own deputy prime minister not to take on Andy Coulson, because it was going to come back to haunt him. And boy, is it coming back to haunt him now.

STOUT: Yes. And it was such a fiery exchange, wasn't it, a hot-tempered exchange between the Labour leader, Ed Miliband, and the British prime minister? And it seems that Miliband was out to highlight the divisions between the two parties, and yet the two parties are set to unite to get News International to drop its bid for BSkyB.

So, just how much political agreement is there?

RIVERS: Well, it's incredible. The beginning of the prime minister's questions, it was as if they were all on the same side. They were all basically agreeing that the BSkyB takeover by News Corp should not go ahead.

This is the proposed buyout by News Corp of the 60 percent of a satellite broadcaster here that they don't already own. That's always been controversial here, a feeling that Murdoch already has four big national newspapers -- three now, because one is closed -- but he's already got too much of a chunk of the U.K. media market, and allowing this extra chunk to be sold to the Murdoch empire is not good news.

Now all sides seem to be agreeing in the House of Commons, yes, that's right, that shouldn't go ahead. The problem is it's not really in their gift to make that decision. It's being referred to an organization here called the Competition Commission, which decides whether things will become a monopoly or not, basically.

It's now gone to this Competition Commission, which can take 24 weeks to deliberate about it. They will deliberate and then pass their recommendations back to a government minister, who will then have to make the ultimate decision.

The problem is for the government, this is not going to go away. It just keeps coming back, whether it's about the BSkyB takeover, whether it's about Andy Coulson, whether it's about the continuing stream of revelations about who was hacked, corrupt police officials, and so on.

It's terribly bad news for News International, of course. They're facing having to come before some of these politicians who are all furious and effectively testify, give their account. Now, they can't be forced, Rupert and James Murdoch, but it's going to look pretty embarrassing if they don't turn up.

STOUT: Yes. And thanks for staying fixed on this story for us. It's pretty safe to say that we will probably be speaking again to you live here tomorrow on NEWS STREAM.

Dan Rivers, joining us live from London.

Thank you, Dan.

Now, the scandal is shining a light on what some say is the seedy side of journalism, from bribery and bugging accusations, to claims of hacking and blagging.

Phil Black walks us through some questionable practices.

(BEGIN VIDEOTAPE)

PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT (voice-over): Long before the "News of the World" was killed off, another phone-hacking scandal inspired global debate about media ethics. It became known as "Camillagate."

In the early 1990s, news publications in Britain and elsewhere published transcripts of an alleged mobile phone conversation between Prince Charles and his then-mistress Camilla Parker Bowles.

WENSLEY CLARKSON, FMR. TABLOID JOURNALIST: I think it made a lot of journalists believe that they could use and abuse technology in a way that, before "Camillagate," we never even thought about.

BLACK: Though not directly involved in that story, Wensley Clarkson worked for British tabloids during the '80s and '90s and later wrote a book about his adventures. He believes phone hacking is the result of falling circulations in this ferociously competitive industry.

CLARKSON: I think that pressure from above from editors and publishers, those become as increased with the decline of papers.

BLACK: Clarkson says he never hacked phones because the technology didn't exist then. But he did practice many of journalism's dark arts.

CLARKSON: The things that I was doing in the '80s which involved bugging people's houses, admittedly to prove crimes, and following people and paying police -- we all did it, and it wasn't seen as a bribe. It was seen as paying a contributor to the newspaper.

BLACK (on camera): And there's another tabloid tool which is now being publicly scrutinized here. It's known as blagging. It's definition is pretty broad, but basically it's when a journalist says whatever is necessary to get access to private information. At its extreme is when a journalist pretends to be someone else.

CLARKSON: We're journalists. Blagging is part of our job. You know, whether we're on the front in Libya, or on a side street in south London, door-stepping -- a vicar has had a sex change, we're going to do a bit of blagging.

BLACK (voice-over): Blagging may be common, but it's illegal unless journalists can argue it's really in the public interest. Analysts say recent tabloid stories don't even come close to passing that test.

PROF. STEVEN BARNETT, UNIVERSITY OF WESTMINSTER: These are the kinds of standards that seem to have got lost, actually, in British journalism at the moment. And that's what's emerging, and that's what we need to regain.

BLACK: The public outrage is not just about British journalists lying and steeling. It's because they were doing it only to sell more newspapers.

Phil Black, CNN, London.

(END VIDEOTAPE)

STOUT: Now, you're watching NEWS STREAM on CNN.

Afghan President Hamid Karzai's half-brother is laid to rest as the United States and others wonder who will fill the power vacuum left by Ahmed Wali Karzai's death.

We'll explore that.

And in the United States, mounting pressure as debt ceiling talks go on.

And we'll head all the way north until we hit snow, as part of our special "Going Green" series.

(COMMERCIAL BREAK)

STOUT: Welcome back.

Julian Assange is back in court for a second straight day in London. The WikiLeaks editor-in-chief is asking an appeals court to block his extradition to Sweden. A lawyer representing Swedish authorities is at today's hearing, making the case for extradition. Assange faces allegations of sexual misconduct there, but has not been charged with any crime.

On Tuesday, Assange's lawyers argued the warrant he's being held on is flawed. They say it is not a fair description of facts in the case.

Our Atika Shubert is live outside the court, and she joins us now.

Now, Atika, Assange's legal team, they wrapped up their legal arguments. Tell us more about what was said.

ATIKA SHUBERT, CNN INTERNATIONAL CORRESPONDENT: Well, basically what we've been hearing from now is the Swedish authorities' lawyers. And they're arguing that there's nothing wrong with the European arrest warrant that's been issued, that it follows procedure, that it's an accurate description of the allegations against Julian Assange. And they've gone further to say that -- argue against Assange's lawyers' contention that there's a "mismatch" between Swedish law and British law, that these allegations in Sweden wouldn't have been criminal here in Britain.

Instead, the Swedish authorities' lawyers are arguing that, in fact, this is an issue of consent, and that these allegations of sexual misconduct could certainly be considered crimes here. So this is the argument that they are presenting to convince the judge to go ahead with this extradition.

We do expect this to go on now. They're just taking a lunch break now, but to go on for a few more hours, and then it's likely to end. But we probably won't get a decision by the end of the day. It's more likely the judges will wait for a few days, possibly weeks, to come up with a written decision then.

So even if we do come to the end of the hearing today, we're not likely to get a decision on extradition.

STOUT: OK.

Now, Julian Assange, he was unusually quiet during this latest hearing. Is this new, more silent Assange part of a new, softer defense strategy?

SHUBERT: Well, that's a good question. I mean, he's always had a rather impassive look when he's actually in the hearing. He's always listening rather intently. But he hasn't made the kinds of long statements that he has in the past coming out of a hearing.

He may make a statement later today, once this hearing is over. We'll just have to wait and see.

But what is clear is he has a new legal team, and both legal teams really - - it seems to be much more conciliatory, much more low key. They made a point to say at the very beginning that they're not trying to in any way discredit the accusers of Assange. They say they may well have felt he was discourteous or disturbing. What they're looking as is the legality of the charges, whether or not they were criminal here in Britain.

So it's clear that the legal team has taken a new approach. We'll have to see whether or not Julian Assange says anything new when he comes out of this hearing today.

STOUT: All right.

Atika Shubert, joining us live in London.

Thank you for that update.

Prosecutors in Japan are demanding a life sentence for the man accused of raping and murdering a 22-year-old British teacher. Lindsay Hawker was found dead near Tokyo in 2007. Her body was in a bathtub filled with sand on Tatsuya Ichihasi's balcony.

Ichihasi managed to avoid arrest for more than two years, going so far as to have plastic surgery. Now, he admits he raped and killed Hawker, but says her death was an accident.

A verdict is expected on July the 21st.

Afghan President Hamid Karzai attended funeral services today for his half- brother, Ahmed Wali Karzai, who was shot to death Tuesday at his home in Kandahar. As Chris Lawrence reports, his death is raising new concerns in Washington.

(BEGIN VIDEOTAPE)

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT (voice-over): People called President Hamid Karzai's brother a corrupt gangster. But the CIA's former head of counterterrorism says the U.S. may miss him.

ROBERT GRENIER, FMR. CIA COUNTERTERRORISM OFFICIAL: It's quite likely that what follows Ahmed Wali Karzai is going to be something that will not work to our interest.

LAWRENCE: An Afghan official says Ahmed Wali Karzai was gunned down in his own home, shot in the head and chest by his own guard. The Taliban took credit, but it's not clear if the shooter was really working for them.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: The United States condemns in the strongest possible terms the murder of president Karzai's half-brother in Kandahar.

LAWRENCE: Ahmed Wali was a conduit between tribal leaders, drug dealers, the Americans, and even the Taliban. WikiLeaks released an American diplomatic cable in which a U.S. official said, "While we must deal with Ahmed Wali Karzai, he's widely understood to be corrupt and a narcotics trafficker."

The State Department and U.S. military were trying to build trust in the Afghan government. They frequently criticized Ahmed Wali, but the CIA worked with him.

GRENIER: I think often parts of the U.S. government were working at cross purposes where Ahmed Wali was concerned.

LAWRENCE: But as the U.S. lowered its expectations for Afghanistan, that criticism subsided. And Bob Grenier says Karzai did the one thing at the end of the day is most important to the United States.

GRENIER: We can call him a warlord. He's our kind of warlord. He is somebody who, in an area that he controls, is not about to allow international terrorists, or even the Taliban, to operate with impunity.

LAWRENCE (on camera): A Defense official says it's too early to tell what the fallout is going to be in Kandahar, where Ahmed Wali Karzai held power. But he acknowledges it could lead to an increase in violence as other players try to fill that power vacuum. And that could end up affecting U.S. troops as they start to draw down, but at the same time, try to keep the peace in southern Afghanistan

Chris Lawrence, CNN, the Pentagon.

(END VIDEOTAPE)

STOUT: Belfast, Northern Ireland, is calm now, but this is what part of the city looked like on Tuesday, as police faced off with scores of nationalists for the second straight night. Now, the riots seen here and in other areas came as the Protestant Orange Order marching season reached its peak.

Police say at least 22 officers were injured as rioters threw petrol bombs and stones. Officers responded with water cannons and plastic bullets.

And for the latest, we go now to journalist Peter Taggert, who's been following this story for us from Belfast.

And Peter, what is the situation there today?

PETER TAGGERT, JOURNALIST: Well, this is the calm after the storm, a beautiful, sunny day her in Belfast. What a contrast with last night's rioting in Belfast and other parts of Northern Ireland.

Sixteen police officers were injured in last night's trouble. Twenty-six arrests have been made since then.

Fifty plastic bullets were fired, water cannon was used. It was serious rioting. It was eventually brought under control in the early hours of this morning, but there are fears that there could be more trouble tonight.

STOUT: And a question about the Orange Order parade. Have these clashes - - and they've happened before this time of year -- have the clashes prompted a rethink about the event and whether it should be held in another area?

TAGGERT: Well, you know, it's very, very difficult. It's a difficult decision to make.

This was a march by Protestant Orange men, effectively through a Catholic area. So the Parades Commission, they make the decision -- it's an independent body called the Parades Commission -- have to decide, will the march go ahead? In which case they would likely have rioting from Catholics. Had they banned the march, had they stopped the march going ahead, the Protestants would then have rioted.

So they took the decision that it was less likely, that there would be less disorder if they let the march go through. So that's the decision they've made, but as you can see, it resulted in very serious trouble.

STOUT: We've been looking at these very frightening pictures of the riot as it was under way. Tell us more about the aftermath of these clashes. A number of people were injured. What more can you tell us?

TAGGERT: We had 16 police officers, for example, who were injured. Many of them were set on fire by petrol or gasoline bombs. But, luckily, they had protective clothing. They were not seriously injured. One police officer, for example, his helmet was set on fire, but he only sustained minor burns.

Also, some of the rioters were hit by plastic bullets. A press photographer was hit by a plastic bullet. Luckily, he just sustained a leg wound and he's OK.

But, yes, a number of injuries as well.

STOUT: Peter Taggert, joining us live from Belfast.

Thank you very much, indeed.

Now, up next, the visit of America's top military officer to China has opened a small window on China's famously secretive army. Ahead, we will show you a perspective the public rarely sees.

(COMMERCIAL BREAK)

STOUT: Coming to you live from Hong Kong, you are back watching NEWS STREAM.

Now, this weekend we're starting a "Going Green" special event. Environmentalist and CNN Special Correspondent Philippe Cousteau takes us to a remote part of the world -- the Arctic Circle. That's where scientists battle subzero temperatures to conduct experiments on climate change.

Check it out.

(BEGIN VIDEOTAPE)

PHILIPPE COUSTEAU, CNN SPECIAL CORRESPONDENT (voice-over): As the morning sun brightens the horizon, the team works together with well-oiled machines.

HELEN FINDLAY, CATLIN SCIENTIST: Today's job is to build -- or dig a hole through the sea ice. And the sea ice is about a meter, 70 centimeters thick here, so we have to use a drill to make a series of holes. And the drill is pretty heavy and it's quite hard work. So you kind of try to concentrate on just making sure that it goes straight down and doesn't get caught on anything. It can be fairly dangerous.

COUSTEAU: It's as if they were drilling into a vast bank vault looking for scientific treasure. It's hard work, enough to make them break a sweat underneath their snowsuits.

Slowly, they work their way down 20, 40, 60 centimeters into the ice that measures about a meter and a half thick. Remember, these scientists are not on land. They're floating on top of 300 meters of ocean below. Souvenirs of this excavation decorate the frozen landscape.

FINDLAY: They will keep going until we get to the bottom of the drill, which is maybe a meter, 20 down. We also don't want to go too far down, because if we pop free to the seawater below before we're ready to do that, then we'll flood holes that we've made already. And it's quite a big hole. This is one of the biggest ones I've ever had to drill.

(END VIDEOTAPE)

STOUT: Philippe Cousteau there with a preview of our "Going Green" special. It's called "Extreme Science." You can see it right here on Saturday night. That's at 9:00 p.m. in Hong Kong, 5:00 in Abu Dhabi.

Now, White House talks on the U.S. debt were supposed to speed up a deal, but now those closed-door talks are turning ugly. We'll look at the very public back and forth.

(COMMERCIAL BREAK)

STOUT: I'm Kristie Lu Stout, in Hong Kong.

You're watching NEWS STREAM, and these are your world headlines.

Now Sweden is making its case at Julian Assange's extradition appeal in London. The WikiLeaks founder has not been charged with any crime, but faces allegations of sexual misconduct in Sweden. His lawyers are fighting extradition. And they argue the European warrant under which he's being held is flawed.

Now the president of Afghanistan has attended the funeral of his half- brother Ahmed who was shot and killed Tuesday by one of his own bodyguards. Now the Taliban claimed responsibility for the assassination.

In Belfast, Northern Ireland police faced off with scores of nationalists on Tuesday. The Protestant Orange Order Marching Season reached its peak. For two straight nights rioters threw petrol bombs and stones. Officers responded with water cannon and plastic bullets. And the police say calm has not been restored.

Now Britain's main political parties are uniting against media mogul Rupert Murdoch's takeover bid for broadcaster BSkyB. Lawmakers are expected to vote today on a motion opposing that bid. The move comes in response to the phone hacking scandal engulfing the Murdoch empire. Now Mr. David Cameron also announced a broad public inquiry into media ethics.

(BEGIN VIDEO CLIP)

DAVID CAMERON, BRITISH PRIME MINISTER: The people involved, whether they were directly responsible for wrongdoing, whether they sanctioned it, or whether they covered it up, however high or low they go, they must not only be brought to justice, they must also have no future role in running a media company in our country.

(END VIDEO CLIP)

STOUT: Now the phone hacking scandal, it started with News of the World. The paper folded under the weight of the allegations, but it's safe to say that the publication will have a lasting legacy. Nick Glass takes us back 168 years from the final addition to the first.

(BEGIN VIDEOTAPE)

NICK GLASS, CNN INTERNATIONAL CORRESPONDENT: The News of the World was the oldest of the British popular newspapers. Thank you and good bye was the safe, uncontentious headline on Sunday's final addition. An instant collector's item. Some 4 million copies sold, well over a million more than normal.

When you heard it was closing, how did you feel?

ROY STOCKDILL, FORMER NEWS OF THE WORLD REPORTER: Immensely sad. Shocked to start with. I couldn't believe it.

GLASS: So this is where it all began. This is the first addition of The News of the World from October 1, 1843, 168 years ago. Price, 3 pence. Advertising on the front. And on the inside pages, the lead story foreign news is, revolution in Greece.

The Times, The Sunday Times, and the Observer all started earlier. But this was the cheap paper for the masses. At its peak in the 1950s, it was selling over 8 million copies. Only Pravda, it's said, sold more. The cocktail seemed irresistible, sex and crime, and preferably a Tory politician.

STOCKDILL: "Confessions of Christine by the girl who is rocking the government."

GLASS: Christine Keeler, a call girl involved with the Tory War Minister John Profumo, sold her memoirs to The News of the World in 1963. Profumo resigned. And the Tory government would soon lose power.

STOCKDILL: "Tory Boss Archer Pays off Vice Girl."

GLASS: 1986, another Tory politician, another call girl.

STOCKDILL: There was hugely (inaudible), because of course -- and then, of course, as we all know, Tiffany Archer subsequently went to jail for lying, basically. I think there was even more glee then.

GLASS: Of course, the paper's modern history is largely about Rupert Murdoch. The first British newspaper he acquired in 1969. Within months he made it onto the cover of the satirical magazine Private Eye.

IAN HISLOP, EDITOR, PRIVATE EYE MAGAZINE: I can't shed a huge amount of tears. Private Eye has referred to Murdoch as the dirty digger throughout his long career. And I mean it's not an accident. He does dig up dirty and puts it in papers and then sells it. This legendary figure, Rupert Murdoch, flies into down to clear up. It's a bit like the Wizard of Oz, this very, very old man appears and is in charge of Rebecca Brooks who looks a bit like his career really.

And the joke here, is it's the wrong red tops been got rid of.

GLASS: Do you feel the red tops, the tabloids, have lost their way?

STOCKDILL: Yes. Yes. Frankly. I'll be honest with you, I -- after I left The News of the World I stopped reading it. I personally am not so interested in bonking footballers and you know druggy pop stars and models basically. I preferred the old elements.

GLASS: The phone hacking scandal and the public revulsion to it is certain to have repercussions. It seems the tabloids will be forced to change. The journalistic culture of anything goes, anyone is fair game, is under intense scrutiny.

Everyone assumes that once the dust settles, Murdoch will launch a new Sunday tabloid. He's been talking about the Sun on Sunday for over 20 years.

Nick Glass, CNN, London.

(END VIDEOTAPE)

STOUT: Now as expected, China's economy grew at a slower pace last quarter. China's GDP grew 9.5 percent a year in the second quarter. That is down slightly from the first quarter of this year and a major falloff from last year.

Now the government has been battling rapid inflation and has hiked interest rates five times since October. But China's inflation still hit a record high recently.

Now Italy's debt woes are leaving bond investors uneasy and the IMF says Italy needs to make a decisive move to get its budget deficit under control. The Italian parliament is working on a hefty austerity plan to rebalance its budget.

In the U.S., the stalemate continues in the debate over whether to raise the debt ceiling. And as CNN's Kate Bolduan reports, White House talks is on to speed up a deal are turning into a battleground.

(BEGIN VIDEOTAPE)

KATE BOLDUAN, CNN CORRESPONDENT: Despite continued talks inside the White House, outside prospects of a deal appeared grim Tuesday with little sign of progress and both sides hardening their positions.

JOHN BOEHNER, SPEAKER OF THE HOUSE: But the president talks good game, but when it comes time to actually putting these issues on the table, making decisions, he can't quite pull the trigger.

SEN. CHUCK SCHUMER, (D) NEW YORK: Protect millionaires and cut Medicare benefits instead. This approach is not balanced, it's not fair, it's not moral, and it will not be accepted.

BOLDUAN: And with little time left before the debt ceiling deadline, the top Senate Republican offered a pessimistic prediction.

SEN. MITCH MCCONNELL, (R) KENTUCKY: After years of discussions and months of negotiations I have little question that as long as this president is in the Oval Office a real solution is probably unattainable.

BOLDUAN: Now Mitch McConnell is pitching his own so-called back-up plan, a complicated proposal that would give the president authority to request a debt limit increase without any required spending cuts.

MCCONNELL: Legislation would authorize him to get to the amount he says he needs based upon the advice of his secretary of the Treasury in three traunches. The first traunch $700 billion. The second traunch $900 billion. The third traunch $900 billion.

BOLDUAN: But that authority comes with a catch, it would mean three politically tough votes before the 2012 election. And if lawmakers voted against those increases, the president would be forced to veto the measure, pinning on him the responsibility for the new debt.

MCCONNELL: I'm not happy, and I hope we don't have to go to this option. I still want to cut spending.

BOLDUAN: At the very same time, the top Democrat in the Senate, Harry Reid, is floating his own back-up plan of sorts. It would at least in part reduce the debt by more than a $1 trillion without requiring any tax increases or any cuts to entitlements, another sign of the growing concern up here that they may not cut a deal in time.

Kate Bolduan, CNN, Capitol Hill.

(END VIDEOTAPE)

STOUT: Now one of the world's biggest video game makers is getting even bigger. Electronic Arts is buying Pop Cap Games for $750 million in cash and stock. Now Pop Cap, they make so-called casual games like Bejeweled and Plants versus Zombies.

Now what are casual games? Let's take a look at the state of the gaming industry. When we talk about video games, we're usually referring to hardcore games. Now these are games made for dedicated consoles like the Xbox 360, but as the industry has grown games like these aren't the only major money maker anymore.

Now Pop Cap are considered one of the leading makers of casual games. Now casual games tend to be simple, easy to understand and to play like puzzle games. And they're usually cheap or free and are playable on mobile phones and web sites.

And they are closely related to one of the fastest growing segments of the industry: social games. If you're on Facebook you know all about social games, they're the games that have links to social networks like Farmville, where inviting your friends to take part earns you a reward.

Now Zynga, its' the company behind Farmville, expects to raise up to $1 billion in IPO later this year.

Not everyone gets to go inside a Chinese military jet, but America's top military man gets to see one up close. Our Stan Grant will give us a rare look at a Chinese air force base next.

(COMMERCIAL BREAK)

STOUT: Welcome back.

Now America's top military officer is on a rare four day visit to China. U.S. Admiral Mike Mullen was in the pilot seat at an air force base in China's Shandong Province. And for the foreign press in tow, the tour, it provided an almost unprecedented look at China's secretive army. Our Stan Grant was there.

(BEGIN VIDEOTAPE)

STAN GRANT, CNN CORRESPONDENT: This is as close as you get to the secretive Chinese military, a display of firepower to send a message to the United States, a special show for the benefit of the chairman of the U.S. Joint Chiefs of Staff Admiral Mike Mullen.

Normally, this is a no-go zone. Today, China's People's Liberation Army is throwing open its doors. For the traveling media, including CNN, that means rare access up to a point.

UNIDENTIFIED FEMALE: We have to get on the bus.

GRANT: We have to get on the bus now?

UNIDENTIFIED MALE: Yes. Yes.

GRANT: This is a Chinese jet fighter. And in the background you can see Admiral Mullen who is just coming down the stairs here now. This is really very controlled, this trip. This is as close as we have been to him. Every move has been scripted. And we have been kept a good distance away from him.

Finally, a break with protocol, on the way to lunch a chance to get up close to Admiral Mullen and ask him about China that he now calls a world power.

Admiral Mullen, if you had to identify one area, major area of concern, what would that be in this relationship?

ADMIRAL MIKE MULLEN, CHAIRMAN JOINT CHIEFS OF STAFF: The major (inaudible) we haven't had one.

GRANT: That you haven't had a relationship or a concern?

MULLEN: That we haven't had a relationship. It's been cut off. So...

GRANT: On board a PLA plane deployed especially for the occasion, there were plenty of smiles, but also reminders of what divides them. China bristled at U.S. war games off its coast and American arms sales to Taiwan. The U.S. is concerned about North Korea and potential flashpoints in the hotly disputed South China Sea.

And how important is it to get that relationship right in the region?

MULLEN: I think it's important to the world as well as the region. And it's vital for two countries that have growing responsibilities, both believe in security and stability and the military is a big part of it.

GRANT: Admiral Mullen's Chinese counterpart, General Chen Bingde, says when it comes to this region China puts China first.

GENERAL CHEN BINGDE, CHINA'S PEOPLE'S LIBERATION ARMY (through translator): Our sole purpose of developing weapons is to ensure our territorial integrity, national security and to prevent the secessionist forces from Taiwan from separating Taiwan from the country.

GRANT: To some observers, China's new found might put it on a collision course with the U.S. Today was a chance for Admiral Mullen to look China's military in the eye. For China, it was a chance to stare right back.

Stan Grant, CNN, a Chinese air force base, Shandong.

(END VIDEOTAPE)

STOUT: Now summer, it usually brings a break from football action, but right now Don Riddell has his eye on the Copa America and the Women's World Cup. And he's managed to tear himself away to bring us the latest on both tournaments. Hey there, Don.

DON RIDDELL, CNN SPORTS CORRESPONDENT: Hi there, just tearing myself away for a couple of minutes. The quarterfinal lineup at the Copa America will be completed today. And Brazil are by no means guaranteed a place in the last eight. The South American giants are up against Ecuador and are still looking for their first win of the tournament. They want to win, but a draw would be enough to see them through.

Meanwhile, both Chile and Peru have qualified following the completion of Group C's games on Tuesday. This one looked like being a goalless draw. Alexi Sanchez was close here in the 82nd minute. And in injury time, Sanchez was again on the attack and in a very dangerous position. He spotted an unmarked Humberto Suazo at the far post and -- but his defender's intervention, that would surely have been a goal.

Chile sensed a victory was there for the taking and they got it from the ensuing corner. And it was heartbreaking for Peru whose Waldo Ponce bundled the ball into his own net. 1-nil to Chile. They topped the group, but Peru advance as well as one of the best third place teams.

Now Uruguay's fans enjoyed seeing their team reach the World Cup semifinals last year and they're through to the quarterfinals here thanks to a win over Mexico, a decisive goal in as early as the 14th minute. And the Mexican goalie will not enjoy seeing that again. Alvaro Pereira gifted his second goal of the tournament.

Mexico's defending was questionable. Diego Forlan surely wasn't expecting a challenge here. And Mexico were lucky that the post saved them from falling further behind.

You'll recall that Forlan had a great World Cup last summer, but he's still looking for his first goal in this tournament.

Yet another chance in the second half, but he couldn't keep it down.

Mexico riding their luck.

By this stage, El Tri must have known their tournament was over. And even they thought they've scored, they haven't. Raphael Marquez denied by an offside flag there. Three straight defeats, (inaudible) for a miserable tournament for them. Uruguay go through in second place.

There have been some terrific performance and some wonderful stories at the Women's World Cup. And let's hope the entertainment continues in the semifinals today. Fresh from what some call the biggest upset in Women's World Cup history, Japan take on Sweden in Frankfurt. That one kicks off at 8:45 Central European Time. Japan knocked out the hosts Germany in the previous round.

But before then, the USA are up against France in Monchengladbach. The Americans sensationally knocked out Brazil in the previous round.

(BEGIN VIDEO CLIP)

PIA SUNDHAGE, USA COACH: We need to pick up the rhythm and dictate the tempo. That means we need the midfield to get involved as much as possible. We don't want to make this a stretch game and we don't want to make it a fight or a battle. We need to be smarter than that. And I think it's about to be patient and make the right decision out there.

(END VIDEO CLIP)

RIDDELL: Now this time tomorrow, the Open Championship will be well underway at Royal St. Georges. And Rory McElroy is all set to be the star attraction following his record breaking victory at the U.S. Open last month. McElroy is the favorite to win his second major and the Claret Jug for the first time.

Now he hasn't played since winning at Congressional three weeks ago, but he's been practicing at the course. And he says that after all the hoopla following his U.S. Open victory he's looking forward to getting back to what he does best.

(BEGIN VIDEO CLIP)

RORY MCELROY, GOLFER: The way my life seems to be going at the moment, golf is the -- golf is the easy. Golf, you know, you go out and you get away, you're inside the ropes and you've got five hours to yourself out there. It's quite nice.

So I love getting right on the golf course and really, you know, I feel refreshed. And I'm really looking forward to getting out there and playing again, because it's been three weeks and, you know, feel as if I'm pretty much ready to go.

(END VIDEO CLIP)

RIDDELL: We're looking forward to it too, Kristie. The Open Championship is always a great event.

STOUT: All right. Don Riddell there, thank you so much and take care.

Now this, it might look like a map of the world, but it's not. I'll tell you what makes this so unique after the break.

(COMMERCIAL BREAK)

STOUT: Welcome back.

Now this might look like a map of the world at night, but it is not. You're looking at a map of the world through social media. Now Eric Fischer created this visualization of global Twitter and Flickr activity. Now every blue dot on this map is the location of a tweet, every orange dot is where a photo on Flickr was taken. And the white dots? Well, that's a place where there's a tweet and a photo.

Now the different is clear in this map of New York. Now most of the city is full of blue dots, it's tweets, but this island of orange that you see right here? That is Central Park.

And here, in this map of the United States, you can clearly see the cities lit up as bright dots with bright lines marking the highways connecting them, which leads us to the unsettling revelation that there are plenty of tweets on U.S. roads. Let's hope that all tweeting is done from the passenger side of the car.

Now, let's get the global forecast for you. Pedram Javaheri is at the world weather center for us today -- Pedro.

PEDRO JAVAHERI, CNN WEATHER CORRESPONDENT: Yeah, Kristie, the maps are lighting up across Europe as well, but it's not the tweets, it's severe thunderstorms that have been popping up across that part of the world in the past 24 hours. And wind gusts, would you believe, near tropic force -- tropical storm winds there, 102 kilometers per hour out of portions of France.

And working your way a little farther to the south we had hail stones as big as 5 centimeters, that's about 2 inches. And again, winds up to 100 kilometers per hour as you traverse farther to the east of border of Germany.

And some of those thunderstorms here are serious in the past 12 hours. And you look it through, you can see the strongest storms working their way towards portions of Switzerland, northern Italy not out of the question certainly, and work your way into southern portions of Germany on into the Czech Republic going to be looking at some severe weather and only a handful of times.

A couple of times -- three, four times a year, do you see something like this where we have a probability of severe weather for say large hail in the forecast once again for areas highlighted. Strong winds going to be a probability. Heavy rainfall also in there. And an isolated possibility of tornadoes for northern portions of say Italy working your way on into portions of southern and southeastern Germany.

As far as the travel delays, a few of them out there. Looking at areas around Munich. Going to see 15 to 30 minutes with some of the more severe ones up to 45 minutes. Of course with just the forecasted showers in an and around Berlin, Germany.

The temperatures, oh yes, they're going to be a little cooler. 21 to 22 degrees, a few degrees warmer than what it has been in the past couple of days, but the hottest temperatures further to the east Vienna at 27 work your way towards Bucharest, temperatures going to be close to 30 degrees out there.

But, you know, speaking of Germany, a lot of big events taking place out there in the last couple of days. And mainly here going out towards portions of where we have France and Team USA World Cup finals -- semifinals. The temperature is going to be in the teens, but thunderstorms in the forecast. And in Frankfurt, similar story.

Japan and Sweden, game time, a few scattered thunderstorms and winds going to be blustery. These are trained professionals. They should be OK. But again, if you're going to be going to the game there, it's something to keep in mind over the next few hours of these storms popping up.

How about the United States? Severe heat. We had 23 states as of Tuesday that had areas with excessive heat in the forecast. That has diminished down to 12. Areas around, say, Oklahoma City, temperatures have been well into the hottest temperatures they've seen all season, 30, 35 degrees, 40 degrees Celsius. And you factor in how humid it's been outside of CNN center all the way out towards eastern United States, then you know we're talking about an extreme situation out there.

But right now, I want to take a look at your forecast. Take a look at that.

Kristie, we've talked about the drought situation in Africa, namely in Nigeria. But just want to share with you some photographs coming out of Lagos, Nigeria. The population there it is one of the largest cities in Africa, 15 million people calling it home. But we've had torrential rainfall in the last couple of days. The rainy season typically from April on into September, but just looking at some of the NASA based estimates there for how much rainfall may have fallen in the past couple of days and again the color contours here in the dark red and purple indicating upwards of 200 millimeters of rainfall in an area that's been parched. And we know this is one of the wettest events they've seen so far in 2011 in and around Lagos.

And isolated thunderstorms in their forecast. And water levels coming up to people's knees and causing a lot of problems out there in a city that is very populated. So this is a story we're going to be following as they transitioned just like China have gone from drought conditions to heavy rainfall in the past couple of days -- Kristie.

STOUT: Yeah, Pedram, thank you for keeping an eye on that very important story there for us. Pedram Javaheri there.

And now here on NEWS STREAM it is time to take you over and out there. Now according to a UK pet insurance company 1 in 10 British pets have their own online profile. So we thought we'd bring you some of the pet world's online power players.

Now on Facebook, Boo the Dog runs the pack. Now Boo has been liked by more than 1.3 million humans. And that puts Mark Zuckerberg's dog Beast to shame.

And on Twitter, cat Sockamillion edges out Boo's people count with nearly 1.5 million followers.

Now Sock updates his fans with basic cat shenanigans and occasional hatred. But in the online pet world, Maru the cat is the ultimate celebrity. Now he is the Brangelina of the animal kingdom. Now Maru has more than 9 million views for just one of the videos on his YouTube channel. And in case you're keeping track, he's had two book deals.

And that is NEWS STREAM, but the news continues at CNN. "WORLD BUSINESS TODAY" is next.

END