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Bloodbath on Wall Street; Iffy Economy; FAA Funding; Syrian Government Crackdown; Interview With Susan Rice

Aired August 4, 2011 - 19:00   ET


JOHN KING, HOST: Thanks Wolf and good evening everyone.

Up first tonight a bloodbath on Wall Street and sharp declines in financial markets around the world, stoking fears tonight of a major global slowdown, even perhaps another recession. The Dow dropped more than 500 points or 4.3 percent, the industrial's ninth biggest point loss on record.

When the closing bell sounded today, 512 points was the exact drop, a decline that wiped out all of the markets gains this calendar year. Maybe if you'll like me anyway, you find it a little hard to follow when a currency intervention in Asia or Europe causes a global domino effect that sends America's blue chips to free fall, but this market lesson is sadly painfully easy to follow.

If you have a job, your 401(k) is taking a hit, a big hit. And if you don't have a job, the outlook is bleak. Part of the malaise in the markets is the expectation a government report due out in the morning will show stagnant job growth in July and dash any hope the unemployment rte will begin dropping steadily. Alison Kosik is live in New York to get us started tonight -- Alison, wow, the market started down and just (INAUDIBLE) kept going.

ALISON KOSIK, CNN CORRESPONDENT: Wow is right and you know what I noticed today is that fear really gripped investors today and it really just didn't let go. You know, the worries are that you know what, we could be headed for a new global recession. And also there are new worries that the euro zone debt problems could spiral out of control. What really set stuff into motion today was when the head of the ECB, that's kind of the equivalent of the Federal Reserve, the head of the ECB came out and said, you know what, we're going to go ahead and pump more money into those euro zone economies to try to shore them up, remember Greece?

Well now Italy is now worried that it's going to be the next shoe to drop. It's got its own debt problem, so that is really what set stocks into motion. Because if we see problems in Greece and in Italy, they're having debt problems of their own. That could easily certainly filter down to the U.S., because we're all interconnected. And then, of course, besides those issues, you know, we've got our own problems here at home. We have weak economic growth. We got those weak GDP figures from Friday, weak manufacturing, weak service sector. It goes on and on, and not to mention housing and jobs as well -- John. KING: So, Alison, what are the markets looking for? What one piece of data or two pieces of data do the markets need to try to reverse this slide?

KOSIK: You know what, the big jobs report comes out tomorrow, expectations are anywhere from 50,000 to 75,000 jobs added last month, sure it's not much, but what the market is looking for is that number to come out and meet or beat. And if it doesn't do either of those, we could see yet another sell-off tomorrow -- John.

KING: A maddening day on Wall Street -- we'll keep track of it tomorrow as well and Alison Kosik will help. Alison, thank you.

KOSIK: Sure.

KING: Let's take a closer look at what happened today, what's happening more broadly and you what can do about it, I'm joined (INAUDIBLE) by Dave Ramsey. He's the nationally syndicated host of "The Dave Ramsey Show". He's also a "New York Times" best-selling author and CNN chief business correspondent Ali Velshi with us as well.

Ali, I want to come to you first on this. Down 512 points, 4.3 percent, a lot of people out there are going to say, whoa, my 401 is taking a huge hit. People have been telling me we're going to start to grow soon, it's going to get better soon. What is happening?

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: This is the proof, again, that we had in 2008, we have now that we're connected to the entire world. What happened this morning is a couple of central banks in the world, one in Japan and one in Europe, attempted to intervene to help out their currencies. In Europe it was an effort to help Italy, because Italy's in dire straits and is a pretty big economy.

Well it backfired, instead of reassuring investors what it did is it triggered a sell-off from investors who think well maybe the problems in Europe including in Italy and Spain are too big to be contained by the central bank and maybe we're headed for another leg down. They started selling powerfully.

The European markets closed. It wasn't done, so it continued in U.S. markets. This actually has more to do with the global economy and the threat of a slowdown, the challenge of debt that it has to do with U.S. politics right now. It's just been a continuous streak for the last 10 days and longer of sort of bad news somewhere around the world. Basically this is the equivalent, John, of global investors taking their money and sticking it in their mattress.

KING: Sticking it in their mattress. And Dave, it proves that like it or not, we are interconnected, this global economy now and if you're investing here, you're affected by what's happening there. There are people talking of quote "total fear, total fear" in the markets. Are these decisions being made based on fear or is this the reality?

DAVE RAMSEY, HOST, "THE DAVE RAMSEY SHOW": Well, I think there are two things going on. The fear is the reality just to turn a phrase, but always fear drives the market. The market's kind of bipolar if you will. She's either manic and she's buying like crazy, almost irrationally or she's depressed irrationally and so the trick for the -- you know the viewer at home and Ali and I said this a lot back in 2008 through 2009 --


RAMSEY: -- when the Dow slid from 14,000 all the way down to 6,500, we were trying to convince people that that is a temporary thing based on temporary conditions. It is not a permanent condition. Now, if you think that the entire global economy is going to collapse, then you don't need to be in the stock market in the first place. But these profit taking or this fear-based thing is based on short-term traders, not based on you and I, regular folks anyway, doing 401(k) investing.

KING: But, Ali, this is a new one for me. The market actually has a gauge of fear. I was not aware of this, it's called the VIX (ph) and it surged --


KING: -- 30 percent today, the 30.5 which means by the judge of the VIX that means a high degree of fear. Does this become a snowball rolling down the hill?

VELSHI: Well VIX is a short form for volatility index and it's really a measure of how volatile, if you look at a chart of today, it's really remarkable to see the ups and downs. We closed a lot lower on the Dow and the S&P 500 but there were really times where there were people getting in there and buying stocks and then there were others selling stocks. This is -- remember, this is exactly, and Dave writes about this endlessly -- this is what you as an investor are trying to avoid, right, you want a steady return without volatility.

So you do need to think about the fact that -- the company -- when you look at the stock market it is a combination, a basket of stocks, of companies. Those companies are actually strangely enough remarkably profitable including here in the United States. They sell most of their goods elsewhere in the world and you are dealing with countries like China, India, countries like India, continents like Africa, all of which are high growth, so, you know, there's a lot of trading and that's what motivated this market.

If you're an investor, this was not your day. But investors actually try and moderate their income. And I have to tell you the people who do best overtime are investors as opposed to traders.

KING: But, Dave, if you're watching at home and you're nervous, maybe the value of your home has dropped, maybe you are un or underemployed or somebody around you is and you're worried about your job and you're saying you know what, I don't think I can trust the smart people anymore and I've lost a lot of money this year, but I'm going to pull it out. I'm going to pull it out because you know what, I'm just getting nervous. Is there help them, help them, you say stay on the roller coaster. Why?

RAMSEY: Well, again, the Dow, let's take it all the way back -- the TARP mess and all of that was a much more real and bigger crisis than we're facing today.


RAMSEY: It took the Dow all the way from 14 down to 6,500, where did it go, by April 29th of this year it was almost back to 13,000.


RAMSEY: And so if you panicked based on the move then, you lost half or three-quarters of your money. If you panic on this, you're going to lose your money. Listen, Home Depot and McDonald's and Alcoa are not worth considerably less than they were yesterday, today, that's absurd. They are not worth less. Translation, you're at Kmart and the blue light's on. These things are on sale today!

KING: These are on sale today, OK, that might be a hard message to sell but I understand the logic of your point. Ali, help us understand what this means to the broader economy. We're waiting for businesses to spend all that capital they've been holding. We're waiting them to hire people.


KING: Are they more likely or less likely to do that at a time of such high market volatility?

VELSHI: Well listen, every -- uncertainty always makes people hold on to their money, right? It's the very same reason people pull their money out of the market today, but what's unusual is usually you see money going from one asset class to another, right, so if stocks are down you usually see it benefiting somewhere else, maybe commodities, maybe gold. Everything was down today. Commodities were down. Gold was flat. Oil was down substantially. This is one of those examples if everybody pulled out, they're going to put that money back in. We just don't know when and we don't know where.

So for the global economy, uncertainty is the enemy and what we've had for the last month whether it's been Greece and those riots in the street or the U.S. debt debacle or what's going on in Europe is just messages of uncertainty. That ends at some point, and the problem and what Dave was saying is very smart, if you got out of the market in fall of 2008 because everything was going down, you know, you wouldn't have reinvested your money probably between then and March of 2009, but if you were invested at the beginning of March in 2009, you would have had one of the best years in history in the stock market. If you're smart enough to get out, you'd better be smart enough to know when to get back in otherwise you just lock in your losses.

KING: And as Ali talks, Dave, about this will end at some point. How big of a factor is -- we are talking tonight on the eve of what everyone expects will be an anemic jobs report, and you shouldn't base anything based on one jobs report, but we've had a lot of these. The unemployment rate is high. We're expecting another stagnant report. How much will that -- do we -- should we expect another bad day tomorrow if that report is, as all the experts say, it will be?

RAMSEY: Well I'm no stock market analyst. I work more with folks' money over long periods of time, but I think it's a fair guess that more bad news in the middle of this is not going to help the market tomorrow. That's probably not rocket science to figure that one out. And I think the good news is, is that the consumer at home needs to remember things like, for instance, 64 percent of Americans work for businesses that have 500 people or less. Small business is the backbone of our economy. It's the backbone of our jobs and it's not affected by the stock market, because the small business isn't publicly traded.

KING: Two smart guys to help us get us through a wild day on Wall Street. Let's hope it starts to get better soon. Dave Ramsey and Ali Velshi appreciate your help tonight.



KING: Let's take a closer look at just what a 500-plus point drop means. Look at that. That's what the day was like. All of the markets gains this year wiped out in one four-plus percent drop on the market today. That hardly the birthday present that the president wanted on his 50th birthday here; (INAUDIBLE) economy complicates both his policy agenda and his re-election strategy.

Let's look just again growth, GDP and the economy. This is what has happened, 2.8 percent growth, people started to think OK we're coming back, bang; this is where we are now. Here's "The Wall Street Journal" survey of economists. Here's what they projected. So they were right here, but then look at this.

Actual growth half of what top economists predicted, the prediction is 3.0 percent for 2012, the presidential election year. The president would like it higher than that. He would take that. The question is will we get there? That's one way to look at it. Here's another way to look at it as we await tomorrow's unemployment report. This was the projection, 9.5, 9.5, 9.2, this is actual -- I'm sorry -- 9.2.

Here's what was projected by the economists, so they projected higher here, but they thought by now we'd be coming down, 8.8 percent is what is projected in the 2012 presidential election year. Remember not since FDR has anybody won, an incumbent won with an above 7.2, so again, not a great birthday gift for the president.

Our chief White House correspondent Jessica Yellin is here with us and Jess, you know White Houses always say we don't comment on any one day in the market. However, when they see this continued volatility, both from a policy and now increasingly from a re-election political perspective, they got to be pretty worried. JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Worried and you hear them focusing on jobs and the economy. I mean they've made it explicit we're now going to do that. There's only so much the challenge is. There's only so much a president, as you well know, can do. For a Democrat their motivation would be generally to invest as much as possible.

There is no political environment in this country for massive investment. You cannot start a jobs program right now. So, what are they pushing for? An extension of this two percent payroll tax cut, an extension of unemployment insurance that gets cash into the economy. The question is can they get it through this divided Congress right now and some of these other priorities we've heard the president talking about?

KING: And so how do you do the messaging, again, both as a president, as a candidate for re-election, you can say, hey look, GM had a pretty good year. Well I'm the guy who helped get them that bailout money, but more broadly, nationally, it's pretty hard to run, even if you can make the case, and they think they can that it would have been worse if not for what we've done.

YELLIN: Also I didn't start the fire is kind of (INAUDIBLE) I didn't start the fire. I've been trying to fight it. And that's kind of the scene you hear from them over and over. He didn't create it and this is what we've done. We've taken the steps over and over to try to tamp it down.

We're going to see him going to these -- tomorrow he has an event with veterans trying to do jobs retraining. He's going to do a jobs event. He'll take a bus tour going to the Midwest. Over and over and over you will hear him say this is what I have done to try to stop this crisis.

KING: I know you talk to his top economic team quite a bit and I know one of the president's frustrations from talking to people close to him is for months he's been asking, why, why are we not coming out of this recession like historically you do. You hit bottom, then you bounce, and you come out with a pretty good boom when you bounce. This one has no bounce yet.

YELLIN: But you also hear people say these -- if you look historically over the long term, it's a long hard slog and there are periods of growth and then retraction and then growth and retraction, over time it takes a while, though, to get all the way out. It's about building that patience in. It's hard when you're actually unemployed to say patience.

KING: It's hard for people watching at home and we should always make note, though. We talk a lot about politics in Washington. It's how it affects you at home that matters most, but it also does affect the decisions in the re-election strategy for president. Jessica Yellin thanks for being here tonight.

Still ahead Syria deploys snipers and tanks as it escalates a crackdown in Hama and the Obama administration now looking for new ways to ratchet up sanctions.


UNIDENTIFIED FEMALE: It's horrific. It's appalling. He's massacring his own people who are coming out simply to express themselves peacefully.


KING: And next there's a deal tonight to get the FAA back running at full steam. We'll tell you how that deal came about and show you how some of the crisis rhetoric used by the politicians, well, it doesn't quite pass the truth test.


KING: Even though Congress has gone home, turns out lawmakers aren't quite done making deals. Late today the Senate Majority Leader Harry Reid announced there's a bipartisan compromise to fund the Federal Aviation Administration. Remember we told you last night there was a logjam there. Basically under this deal the Senate will accept a temporary spending bill that House Republicans already passed and Transportation Secretary Ray LaHood will consider using his powers to block some of that House bill spending cuts that target small regional rural airports.

More importantly, the deal sends about 4,000 government employees and a debatable number of private contractors -- get to the debatable part in a minute -- back to work. CNN chief political analyst Gloria Borger in touch with her sources on Capitol Hill -- this was sort of a silly squabble between Republicans and Democrats; the best thing is these 4,000 inspectors, the construction workers go back to work. How did they bring this one about?

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Well, because the Transportation Secretary Ray LaHood kind of stepped in and said I'm going to settle this squabble and the issue that you're fighting over right now, which is these rural airports, I have the authority to decide whether we cut funding for some of those or not, so leave it up to me. He didn't commit, John, whether he was going to do it or not, but as you know, on Capitol Hill sometimes fights are about the things they look like and sometimes they're about bigger issues. And this is really a longer, larger fight about collective bargaining rights.

KING: And let's talk about that. Let's talk about that. First, though, I said debatable number of workers. If you've been following this debate in recent days and even in striking the deal the Senate majority leader in announcing this agreement he said this.

"I'm pleased to announce that we've been able to broker a bipartisan compromise between the House and the Senate to put 74,000 transportation and construction workers back to work." I'll stop there. The statement goes on -- 74,000, right, 74,000. That's from the top Democrat in the United States Senate. You should be able to believe his numbers, correct? Well, let's listen here, listen here, in recent days as those who have been arguing to settle this dispute, listen to the numbers.


UNIDENTIFIED MALE: Laying off 70-plus thousand people is not my idea of putting people to work.

REP. STENY HOYER (D-MD), MINORITY WHIP: Almost 4,000 federal employees and some 70,000 workers for contractors around this country are being held captive.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: He and obviously members of his administration are actively engaged in trying to find a solution that will put 70,000 Americans back to work.


KING: Seventy thousand, got it, got it? You heard it several times there, 70,000? Well, not exactly. A hyperbole you might say. Here's a little fact check for you, the breakdown. Four thousand FAA workers were furloughed, 24,000 construction workers, not 70, 24,000 construction workers are directly affected by this. That's 28,000 workers not 74,000 workers. That's 28,000 workers. Still a lot, mind you, and we want those workers to get back to work and get their paychecks, but that's 28,000. Now where does the 70,000 number come from?

The Associated General Contractors of America, they're the ones who say this association that hires these people, they said 24,000, they say another 11,000 workers in related service and supply industries could be impacted. A little bit of a domino effect there and they also say as many as 35,000 other jobs like the guy who pulls his cafeteria truck up and the construction workers come out, could be them, truck dealerships, but the big number is 24,000, little hyperbole by the politicians.

And Gloria just mentioned that there's a dispute about labor rights. This is the short House term bill right here, the House Republican bill. It went over to the Senate. Listen to some of the Senate Democrats saying why they didn't want this to become law.


SEN. HARRY REID (D-NV), MAJORITY LEADER: This issue has nothing to do with essential air services, everything to do with a labor dispute between airlines and the American worker.

SEN. JAY ROCKEFELLER (D-WV), COMMERCE, SCIENCE & TRANSPORTATION CHMN.: You cannot have in an FAA bill -- you cannot take it up a union contract with a private company. You can't do it. It doesn't belong in a bill. It can't be in a bill. Please understand that.


KING: It isn't in the bill. This is the short-term bill. You can go to our website, This is the short term bill Senate Democrats refused to consider. The labor dispute is not in this bill. It is in this bill. This is the longer bill that they will fight about when they come back and that the Senate Democrats have made clear they would not consider, so Republicans do want to do some business in here, you may like it, you may not. That's a debate that will happen. But it was not in the short-term bill the Senate Democrats refused to consider, politics.

BORGER: Total -- total politics and it is all about collective bargaining and that is why the FAA has not been able to have a large spending authorization approved since 2007. Because they have been arguing about collective bargaining rights for airline workers, and that argument has not been decided, and that argument will come back again in September. So, we've just essentially put a patch on that until the next time they have to put a patch on it. Until they resolve it.

KING: But why --

BORGER: I know.

KING: It's a pox on both parties.

BORGER: Right.

KING: I just cited two examples here where Democrats were using hyperbole. I can go back downstairs and I'm sure people at home are saying there he goes again. We'll find plenty of examples of Republicans doing this too. It's a pox on both parties, but why can't they argue about here -- here's what in this bill. Why can't they argue or pass this bill --


KING: -- and say when we come back we're going to --

BORGER: Well here's the interesting thing on the smaller you know spending bill. Some of those airports that were targeted, the Democrats got really mad about them. Do you know whey? Because guess where they were targeted, oh, could it be in Nevada where Harry Reid is? Could it be in Montana where Senator Max Baucus is? So, they -- they sort of felt like they had kind of been -- something had been shoved in their face that they didn't like, you know how that happens?


BORGER: And so they're reacting. So it's like little kids in a schoolyard, can we say?

KING: Little kids in a schoolyard. Gloria, thanks for being here. When we come back, Syria presses its crackdown and Arwa Damon is going to join us to help us sift through reports of at least 100 dead -- the latest crackdown on dissent and we'll ask the Obama administration's ambassador to the United Nations if there's anything the world can do to stop this horrific bloodshed.

(COMMERCIAL BREAK) KING: Despite fresh condemnations today by the White House and by international human rights organizations more than 100 people reported dead tonight in the Syrian government's ongoing crackdown in the city Hama, which has been a hotbed of protest activity against the regime of President Bashir Al-Assad. One medical source tells us many of today's dead were shot in the head or at very close range. And while CNN cannot independently confirm the death toll, we've heard from a Hama resident who says after three days of attacks by government troops and tanks the situation only getting worse.


UNIDENTIFIED MALE: The (INAUDIBLE) of the city are being felt. Nobody goes out. Nobody gets in. Anybody that is being in the streets are being (INAUDIBLE). We are -- we are getting in the streets but by the rules. Snipers are all -- are being spread all -- in all the city. I have been told that there were genocide in an area called (INAUDIBLE) have been -- have been burned.


KING: CNN's Arwa Damon is on top of this story from Beirut. Arwa, we hear of escalating attacks, escalating violence and escalating killings, but on this day it has been very hard to get new images, amateur videos and the like. Explain to our viewers why.

ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT: Yes, and I think that's what's made what's happening especially disturbing. When we've been talking to activists they quite simply are petrified as to what eventually is going to emerge about what has transpired inside Hama. The city has been cut off. Communications have been shut off ever since this offensive by the Syrian military began on Wednesday morning.

We had been able to reach individuals fairly regularly on Wednesday. Again, talking to us on satellite phones, and doing so at great risk to their own lives. They have to go outside, find a safe place to make a phone call. They're only to stay on the line for a few moments. But then there had been for a period of a good 12 to 16 hours something of a blackout. We weren't able to get through to anyone.

The activists weren't able to get through to anyone. We haven't seen YouTube videos emerge pretty much in the last 24 hours, and normally we would be seeing videos emerging on a fairly regular basis. And so part of it is because of this government crackdown, but exactly because of this media blackout is why people are so terrified of what sort of atrocities are potentially going to come out.

KING: And when you can talk to activists, you're hearing increasingly reports of food shortages, shortages of key medical supplies. Any sense, best you can, of the state of siege?

DAMON: Well, it does seem as far as what we're able to determine that the military still controls and does maintain positions inside the city. There are still tanks as far as we can gather positioned in that main square where we used to see those massive demonstrations take place. The one resident of Hama who we were able to reach said that in his particular neighborhood, for example, there were no troops on the streets, but he said there were snipers on rooftops. And he was describing to us how he had to sneak out of his house, snake across the walls, try to avoid detection by these snipers, and he was telling us that two people who he knew personally had tried to venture out of their homes to go get food and they were shot.

KING: And, Arwa, any sense at all -- any sense at all that this international condemnation, the escalating condemnation will convince President Assad to pull back or is he heading forward with what most believe is an attempt on his part to deliver a decisive blow to the insurgency?

DAMON: John, it would be extremely surprising if these ongoing condemnations were to have any sort of impact whatsoever on the regime. The activists will tell you that the only way to truly force the regime to change the course of its behavior would be to impose the type of economic sanctions on the energy sector, for example, that would truly pin it into a corner.

KING: Arwa Damon for us tracking the story from Beirut -- Arwa, thank you.

Susan Rice is the U.S. ambassador to the United Nations. She's with us now from the White House.

Ambassador Rice, I know finally, a presidential statement from the Security Council yesterday. I'm holding it up. It's eight paragraphs long. You call it long overdue.

Isn't it also fair, though, to call it long on words and short on actions? There's no call for an investigation. There are no new sanctions. Why should President Assad care about this piece of paper?

SUSAN RICE, U.S. AMBASSADOR TO THE U.N.: Well, John, first of all, it was long overdue, but unanimous condemnation in clear-cut terms by the Security Council and all of its members of the violence perpetrated by the Syrian government against its own people. It took a long time to get this, in part because countries like Russia and China and others had been protecting Assad and making it impossible for the council to speak with one voice. That changed in the wake of the most appalling violence that we've seen today, and Assad who had been counting on the fact that his friends would protect him saw his friends, in fact, defect and join in a very forceful and strong condemnation.

KING: As you mentioned, the reluctance of China, the reluctance of Russia, you them agreed to this statement. But is this not a reflection of the limits of the powers of the Security Council, in the sense that, yes, they came around, yes, they agreed to this condemnation, but this statement calls for a Syrian-led political process to get to a resolution. Isn't that the fox guarding henhouse, you don't have any --

RICE: No. KING: -- confidence Bashar Assad is going to fix this, do you?

RICE: No, it doesn't say a Syrian government-led process. It says Syrian-led and that was quite deliberate because we agreed within the Security Council that indeed the people of Syria are the ones that have to chart their own future. By making the statement that we condemn the violence, that we condemn the actions of the government that it has to stop, that there has to be accountability, which was also a core element of the statement, we're making it clear that the people of Syria are in the driver's seat.

We have been very plain in the U.S. government that Assad has lost all legitimacy, that his time has passed. He is a man of the past, and that a future will be charted in Syria without him, and it will be the Syrian people who will do that.

KING: You say he is a man of the past. You have those words there. I want to listen to the White House Press Secretary Jay Carney who echoes them, and then I want to ask you a question on the other side. Let's listen.


JAY CARNEY, WHITE HOUSE PRESS SECRETARY: Assad is on his way out, and as Ambassador Ford said, we all need to be thinking about the day after Assad, because Syria's 23 million citizens already are.


KING: That is a hope. It's an aspiration, not only for Ambassador Rice and President Obama, but for as Jay noted there, Syrians who have been bravely standing in the streets that are now being shot and run down by their own government.

Is there any evidence, Ambassador, any evidence at all, that President Assad feels enough heat to even think about stepping aside?

RICE: Well, he's certainly feeling more and more heat, John, with every day. The heat is coming in various forms. The economy is crumbling. The people of Syria are rising up in city after city, day after day, night after night, making plain that they are determined to forge a future of freedom and democracy and that that does not include Bashar Assad.

KING: And help us understand what additional sanctions you have at your disposal, the Europeans would have at their disposal. I want to read you -- one "New York Times" editorial today suggests this, "One idea is for the top consumers of Syrian oil, Germany, Italy, France and the Netherlands to stop buying it. The exports are small enough that a suspension would have little effect on world prices but would have a big impact on Damascus. There would be no new investments -- there should be no new investments in Syria's energy sector."

Can you convince your friends in Europe to do that? RICE: We think the financial sector, the energy sector, all forms of investments ought to be on the table for sanctions. We in the United States, as you know, John, already have a broad range of sanctions on Syria that, in fact, preceded the latest developments. We've intensified our sanctions and targeted them now so that Assad and those closest to him are among those facing the sanctions.

We added another major player today to our list of sanctions. He and his company, a Syrian parliamentarian and a major businessman is now -- a financier of the regime is now also on the sanctions list. But, yes, we are in conversations with our partners in Europe and elsewhere about the full range of additional measures that are at our disposal.

KING: What's the right word for it, Madam Ambassador, when you listened to the gentleman who braved even calling CNN to report what's going on -- snipers on the roof, tanks in the streets, three days of shelling before the tanks even come in, people being assassinated for simply standing up and saying I would like to have the right to free speech? What's the word for what President Assad is doing to his people?

RICE: It's a horrific. It's appalling. He's massacring his own people who are coming out simply to express themselves peacefully. It's absolutely unacceptable, appalling behavior and it deserves not only the condemnation but the full force of the international community, the pressure that it stop.

And what Assad is going to find out sooner rather than later is that these oppressive tactics don't work. They only inflame further frustration and aggravation and will only turn his people further and faster against him.

KING: Ambassador Susan Rice, appreciate your time tonight.

RICE: Thank you, John.

KING: Thank you.

Still ahead, more on the Syria crisis. Secretary of State Clinton adds her voice with tough new words for the Syrian regime. And as we map down the crackdown, we will take you and show you some graphic images inside Hama.


KING: Back to the Syria crisis in a moment, but first, some other news you need to know right now.

This afternoon, a Texas jury convicted the polygamous leader Warren Jeffs on two counts of sexual assault on a child. The trial's penalty phase is next.

Also in Texas, the state's power authority warning that rolling blackouts are possible because of record demand for electricity due to that unrelenting heat wave. Tropical storm Emily degenerated in a low-pressure system today although still expected to cause heavy rain over Haiti and the Dominican Republic tonight.

This afternoon, Virginia Tech officials lifted a campus alert after getting no additional information about reports of a possible person carrying a gun on campus.

NFL training camps will stay open late today. The league's web site announced the players ratified the new collective bargain agreement.

When we come back, Secretary of State Clinton speaks out on the crisis in Syria and as we map out the crackdown, we will show you, we need to warn, some graphic images of the violence inside Hama.


KING: Take a peek here. It's the president's 50th birthday, suffice to say a noticeably grayer President Obama than on the day he took office. It's also -- to be fair to this president, he does not stand alone here. The job ages you.

Let's take a look back through time. First, a little Jimmy Carter back in the day. Jimmy Carter, you remember, served four years as president. He looks a bit older, not horribly older, but a little bit older there when he wrapped up his term there.

Ronald Reagan -- eight years as our president. You see the President Reagan at the beginning and end of his term there.

Here's one here jumps out a bit at you here when you close this one down. George H.W. Bush, just a one-term president -- but you can see the wear and tear on the office on President Bush back in the day.

I got a lot of gray hairs covering this guy, I can understand why this happened I guess. Bill Clinton at the beginning, Bill Clinton at the end of his presidency, an eight-year presidency, a two-term presidency here.

And George W. Bush, excuse me, as well. You can see again, a big wear and tear.

Let's come back to our current president. He looks right up here. You see then 47, now as he turns 50, politically -- as I bring in my guests here, Ron Brownstein of "The National Journal," Lynn Sweet of "The Chicago Sun-Times."

Politically, guys, I want to come over here for a minute, because the years have not been so good to our president.

If you look at 2009 and now you look at the president today, come on up, Mr. President, there you go, make that work. If you pull up the numbers, the unemployment rate when he took office, 7.8 percent. His approval rating, 76 percent, disapproval, 23 percent. Unemployment now, 9.2 percent, approval, 45 percent. Look at that -- 45 percent approve, 76 percent when he was just getting started disapproval. Now, a majority of Americans say they disapprove.

Ron Brownstein, as the president has his cake tonight and thinking about a re-election campaign, ouch!

RON BROWNSTEIN, NATIONAL JOURNAL: The presidency is marked in dog years, John. I mean, it's -- you know, it ages everyone, but especially when you're governing in times in difficult and tumultuous as these. I mean, these have been extraordinary years, extraordinary decisions that he faced in the first months of his presidency, and an extraordinary reversal he suffered at the midpoint in 2010.

Now, as he's looking toward 2012, the single best predictor of how an incoming president is going to do is his approval rating. And when he's looking at 45 percent or below, he is looking at an uphill climb.

KING: And by history if you go back, I was looking through this the other night, whether it's approval rating or right track/wrong track, whether it's unemployment, economic statistics, they would all tell you looking at history, hard if not impossible. But these guys look at it they made history once and they can do it again, right?

LYNN SWEET, CHICAGO SUN-TIMES: Well, they can. And, John, I think the biggest number for the Obama White House is not his approval ratings, but it's the jobless rate that has always been the big issue for him.

KING: Unemployment rate.

Before -- I want to move on more shall we say campaign politics, real politics. But, Lynn, I, first, want to bring up a picture. I think Lynn has a picture she posted on her blog here, a chef grilling outside the White House.

Can we bring that up and show it?

Now -- OK, there's a chef at a grill outside the White House. This is your exclusive sneak peek at?

SWEET: At the Obama birthday party tonight, I guess.

KING: Where are our invites?

SWEET: Not only did they not invite us, and I say this because the Obama White House probably doesn't even want us to be talking about this right now, this is an event in the Rose Garden. People are already there. You have entertainment. Herbie Hancock is over there, who played at last night's fund-raiser in Chicago.

This is a birthday party that was left off the official schedule. Though, we were told -- I was told by the White House that the Obamas are paying for it themselves. They would rather you not know and not talk about his barbecue tonight.

I think the reason why is after this long, grueling debate over the debt and deficit, the mess over the FAA, they don't want to have pictures of Obama partying.

KING: He's paying for it himself. That's an important point to make.

I want you to listen, Ron, to something the president said. He was in Chicago last night as Lynn noted, Herbie Hancock performed. He was raising money, a lot of money for his re-election campaign. And the president understands it's hard to say re-elect me when times are so tough, listen.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: When I said change we can believe in, I didn't say change we can believe in tomorrow. Not change we can believe in next week. We knew this was going to take time, because we've got this big, messy, tough democracy. And that's a great thing about America is, is that there are all these contentious ideas that are out there. And we've got to make our case.


KING: As the president prepares to make his case, Mitt Romney, one of the Republicans who would like to be his opponent had a little fun, but also made an important point with a video posted up making clear that the president was going home to Chicago, take this, was Mitt Romney's message.


OBAMA: Change has come to America -- America -- America.



KING: It ends with the tag line that said Obama isn't working.

Now, we don't know -- we don't know if Mitt Romney will be the Republican nominee. But that will be the Republican message, right? Obama isn't working?

BROWNSTEIN: Absolutely, look -- I mean, the president I think himself understands that he is running more against the economy and his record on the economy than he is against any individual Republican. The history of presidential elections is that involving an incumbent is they are not fundamentally a choice. They are fundamentally a referendum on the incumbent and only secondarily a choice between the incumbent and the opponent.

And really, what, as you see in those remarks in Chicago, what he needs above all before 2012 is not to say we're all the way back, but to be able to say we're moving in the right direction. And without that it's hard to structure an argument for him.

SWEET: One other thing that you'll see that Obama says and has been saying on the campaign trail on that clip, that's what the way to use that -- change, that theme that got him elected, John, people will say, where is it? He's reminding people he never said it would happen in the first term.

KING: So, the second term. It was hope and change. Now, it would be hope and patience.

SWEET: Yes, four more.

KING: Lynn Sweet, Ron Brownstein, thanks for coming in. We're just kicking off for 2012.

Up next, we're going to return, though, to one of our top stories today. The bloody crackdown in Syria. New images inside Hama and new tough words from the secretary of state.


KING: We need to warn you, some of these images could be a bit graphic, are a bit graphic. But we want to the best we can, the best of our ability, to take you inside the bloody Syrian crackdown in the city of Hama.

I want to bring up some of these videos. This is gunfire. This is, again, an amateur video posted on YouTube. Listen closely.


KING: You hear gunfire there. Also, it sounds like a heavier gunfire.

Here, images of tanks in the streets. Again, remember, this is the Syrian regime track cracking down on its own people.


KING: You can hear machine fires.

This image here is the one I want to warn you about. This one is graphic. And what we don't know is who is throwing whom off the bridge. This is an amateur posted.

Are these demonstrators throwing Syrian forces off the bridge, or are they Syrian forces throwing civilians in Hama off the bridge? We do not know that. But you see bodies being hurled off the bridge.

It is a horrific crackdown of a regime against its own people. Let's discuss it and dig deeper.

Fouad Ajami is a senior fellow at the Hoover Institution at Stanford University, our national security contributor, Fran Townsend, also with us, from the Bush administration homeland security adviser and a member of the CIA external advisor board.

Professor Ajami, to you first. Earlier in the program, Susan Rice called it a good thing, a long overdue thing that the presidency of the Security Council produced this. And, yes, finally China and Russia have agreed to criticize Assad but they haven't agreed to do anything about it.

FOUAD AJAMI, SENIOR FELLOW, HOOVER INSTITUTION: John, what's interesting about this whole -- what happened in the Security Council is there wasn't a Security Council resolution, because the resolution would not pass because the Russians and the Chinese would veto it. So, there was a presidential statement that was issued and there's very little comfort to the people being subjected now to three or four days to brutal shelling to an assault on the city.

I think the international response has been downright embarrassing.

KING: Embarrassing, Professor Ajami says, Fran. Listen to Secretary Clinton here. In addition to once again today saying Assad has no legitimacy. She put the United States -- the stamp of the United States behind a specific number. Let's listen.


HILLARY CLINTON, SECRETARY OF STATE: We think to date, the government is responsible for the deaths of more than 2,000 people of all ages, and the United States has worked very hard to corral and focus international opinion to take steps toward a unified response to the atrocities that are occurring.


KING: Perhaps belatedly, but the secretary has been out there, Fran, has been outspoken. But President Obama has not flat out said, he has said he lost legitimacy but he has not said Assad must go. And some of the European allies of the United States still won't impose the harshest economic sanctions, like give up Syrian oil. Why?

FRAN TOWNSEND, CNN HOMELAND SECURITY CONTRIBUTOR: Well, that's right, John. And I'll tell you, you know one of the things that Arwa Damon said in her report tonight is the most important thing that neither Secretary Clinton nor Secretary Rice addressed in speaking to you. That is when the crackdown happened in Egypt and there was a shutoff of media access, whether it was the Internet or cell phone and satellite access, the United States was very vocal about the need to turn that on.

John, we heard from Arwa Damon that she has not postings in the last 24 hours. That she can't contact the opposition and they can't contact her.

If Secretary Clinton and Secretary Rice want to say something important that will save lives of opposition leaders in Syria tonight, then they need to demand that that Internet access, that there's transparency, so those people can communicate, so you can have those pictures.

Those are the pictures that will galvanize the international community to do better, to take more actions like we've discussed, for example, in using oil and using financial markets to restrict Syria's access to financial markets and their oil revenues. KING: And, Fouad, we did at CNN hear from a resident, the gentleman who braved death, risked death to call us earlier in the day, to talk about people are even afraid to go out, if they could find an open market, if they could find an open gasoline station. They're afraid to go out because there are snipers on the roofs and they're afraid they will be shot.

Why is it taking so long? Or maybe is there anything the world can do? Is that perhaps why it's taking so long to have a unified front?

AJAMI: Well, look, John, I think you're absolutely right. The protesters in Hama named last Friday, they gave last Friday a name -- your silence is killing us. There's a silence in the world about what's happening in Syria.

And I think Bashar al-Assad has now played his hand. We now know him for what he is. And I think he's hoping for a Tiananmen Square, Syrian-style. And he is emulating his Iranian patrons, his Iranian allies, what they did in the summer of 2009.

So, I think he's dug in for a fight. He took the fight to the city of Hama. He violated the sanctity of the holy month of Ramadan. He's all in. He has reached the point of no return.

KING: And, Fran, if he has reached the point of no return, if you were still in the West Wing and you could walk into the Oval Office and say, Mr. President, do this one thing -- what would it be?

TOWNSEND: Oh, it's got to be: you need to strengthen the -- you know, Secretary Rice mentioned the financial sanctions. What you need to do is deny the government of Syria the access to the international financial system, whether that's dollarize -- the ability for them to turn and dollarize their oil transactions.

You really have to make this heard. It's one thing to target individuals with sanctions. You really have to move against the Syrian regime, the government, and deny them access.

KING: Professor Ajami, Fran Townsend, I appreciate your help in this story. We'll stay on top of it. Also the big jobs report.

We'll show you tomorrow night.

"IN THE ARENA" starts right now.