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CONNECT THE WORLD

U.S. Markets Plunge; England Riots; Markets Sink in Europe

Aired August 8, 2011 - 16:00:00   ET

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


MAX FOSTER, HOST: I'm Max Foster.

You're watching CONNECT THE WORLD on the day that markets died across the globe, as investors seized their first chance to sell since Standard & Poor's historic downgrade of the U.S. credit rating on Friday.

Stocks fell sharply as soon as markets opened in New York. Within an hour, more bad news added fuel to the fire when S&P announced a downgrade of U.S. mortgage giants, Fannie Mae and Freddie Mac, citing their reliance on the U.S. government. It's all linked up, this.

By the end of the trading day, just moments ago, all three major indices had plunged 5, 6 percent. It was a similar story in Europe. Markets initially opened higher, but quickly fell back.

The London FTSE closed down more than 3 percent.

The CAC 40 in Paris, more than 4 percent.

Germany's DAX, a staggering 5 percent down.

In Asia, more bad news. Markets in China, Hong Kong, Japan, they all plummeted by 2, 3 percent.

We've also been watching another story for you on CNN today, this time coming out of London. Sporadic violence across the city following a riot on sty night. Ever since that riot in North London, there have been copycat instances across the city. This is Croydon. So actually outside London for the first time, a major fire taking place. The police reporting looting at various incidents across the city today. You saw shops being attacked. You saw all sorts of products being stolen and time after time, buildings set on fire. The worst one so far was on Saturday. But this looks pretty serious coming in from just south of London in Croydon.

We're also getting reports that some violence may have spread to the English Midlands and Birmingham.

We'll bring you much more on that as we follow it through the program and through the night here in London.

Back to economics now, though.

The U.S. president, Barack Obama, has spoken publicly about the debt downgrade for the first time today. He's tried to assure -- reassure investors, if he can, and the markets alike, as he called the country's problems imminently solvable.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: This is the United States of America. No matter what some agency may say, we've always been and always will be a AAA country. For all of the challenges we face, we continue to have the best universities, some of the most productive workers, the most innovative companies, the most adventurous entrepreneurs on earth.

(END VIDEO CLIP)

FOSTER: A little pep talk there from the U.S. president.

But can anything calm these jittery markets?

Richard has been at Wall Street all day -- first of all, Richard, we've just the close of the -- of the market behind you.

What does it mean, down 5 percent, down 6 percent?

RICHARD QUEST, HOST, "QUEST MEANS BUSINESS": OK, well, the first thing to note is that although it was 630 points off, that's the sixth worst point loss on record. But the 5.5 percent loss doesn't even rank in the top 10 or even the top 15.

So it's a serious loss and it certainly is a dramatic loss -- loss of confidence by investors today. The NASDAQ, in many ways, down 6.9 percent. And the S&P 500 off more than 6.5 percent. All, really, they tell a tale of investors deciding that enough is enough. They have been very patient while they've seen the fumes of the crisis beginning. They've seen economies slowing -- they've seen economies slowing down, the manufacturing numbers getting worse and now, of course, they've decided to head for the door -- but, Max, it's going to be seen in terms of the downgrade in the United States and the Spanish and Italian bond crisis in Europe, too -- Max.

FOSTER: Richard, in terms of what policymakers can do now, they seem to be doing what they can. You hear Barack Obama trying to encourage everyone, as well.

What's left for them in the store of actin?

QUEST: Another really good question. You've got short and you've got long-term.

In the short-term, you do things like you make it clear that liquidity is available. And I suspect that's exactly what the Fed is doing at the moment.

The Fed, and I would imagine the ECB, is making it clear to the banks that they need have no fear of counterparty risk, that there will be making as much money available to the market as and when it's needed.

But longer-term, that's the big, really difficult question. And, you know, Max, if it was easy, they'd have done it by now and they'd have done it after 2008. They didn't. You're reaping the rewards now.

FOSTER: OK. Richard Quest in Wall Street, thank you very much, indeed, for -- for that.

It's a -- it's a very big economic story.

We're going to keep coming back to you.

But we want to really take you to the other -- the other developing story, which is really happening this hour.

Over the last couple of nights here in London, there have been all sorts of violent incidents. Young groups, young gangs traveling around London, as we understand it from the police, setting fire to buildings, attacking shops and looting them.

Now, for the first time, the violence has gone outside London. And these pictures come to you from Croydon in Surrey, just south of London, on the borders of London. But a massive fire taking place there.

I was speaking earlier to a very senior police officer. He says he's confident he does have the resources to deal with more violence in London. He has six times as many officers on duty tonight as he did on Saturday night. But they've got their work cut out, because it's a big city and these things are happening all over the city, in far flung areas of it, as well, as you can see.

Back to economics. Markets sank in Europe on Monday, as I was telling you earlier, despite efforts by the European Central Bank to buy up Italian and Spanish bonds in an effort to calm the shaky markets. Previously, the bond buying had been limited to Greece, Portugal and Ireland. But bond buying in the bigger economies of Italy and Spain has sparked fears that the Eurozone's debt crisis is spreading. It would be pretty uncontrollable if it took in those economies.

CNN's Diana Magnay is in Rome for us tonight.

How bad is the economic situation in Italy?

DIANA MAGNAY, CNN CORRESPONDENT: Well, from people that I've spoken to here, they believe that, actually, it's speculation that has made the economic situation here much worse, that the fundamentals are nowhere sort of equivalent to what we saw in Greece, Italy and Portugal.

Italy has very high public debt, 120 percent of GDP. But its budget deficit is relatively low. And at the sort of regular borrowing costs, it would be able to sustain its debt. What we've seen over the last couple of weeks, and especially last week, is those borrowing costs spiraling out of control as investors really lost confidence not just in the Italian economy, but sort of more broadly across the board in Eurozone political leaders' ability to manage the Eurozone as a fiscal entity.

The ECB's intervention today did -- where they bought $2 billion euros worth of bonds, according to traders in Italian and Spanish bonds, did reduce the yield, so it had some impact on reducing Italy and Spain's borrowing costs, but didn't calm broader investor confidence in the markets, as we've seen from the closing numbers, very, very deep into the red. And, really, those numbers sank on the falls in Wall Street -- Max.

FOSTER: Yes, there is -- there's a lack of faith, isn't there, in what the policymakers are doing.

And if you look at that statement from the ECB, there's no wonder, really, is there?

They're basically saying they will buy those Italian bonds, but they're only doing it reluctantly, because that's what the markets want. So they're not being very convincing right now, are they?

MAGNAY: Not particularly convincing. And it seems that investors don't really believe this latest tool that they're pulling out of their toolbox. And I think that goes for the Eurozone political leadership as a whole. It also goes for investors' confidence in Silvio Berlusconi's ability to balance the budget here.

I mean if you look at what he's promised over the last few weeks, first of all, a month ago, he introduced or rushed through a new budget which essentially detailed fiscal cuts for 2013 and 2014. And considering there will be an election in 2013, and one can safely assume he won't be part of it after that, that is essentially relinquishing responsibility for any austerity off his hands.

Now, he's promised to speed up the whole process of budget and fiscal reform. But he hasn't really explained what he's going to do.

So markets have very little faith that he can put his money where his mouth is, especially when they don't really know what the cuts he promises to do are right now -- Max.

FOSTER: Diana, thank you.

A huge subject.

The global sell-off could continue when markets in Tokyo and Seoul open in less than four hours.

Who knows?

Stay with CNN for the latest developments in the hours and the days ahead.

You're watching CONNECT THE WORLD.

And now many more stories coming up in the show for you, but particularly violence raging across London, as rioters clash with police for a third day. Live pictures coming from just outside London this time. We're on the scene. We'll bring you the latest.

Then, in around 20 minutes, Syria's neighbors say enough is enough, stop the killing.

(COMMERCIAL BREAK)

FOSTER: Tonight, London is burning. Buildings have been set alight, police officers attacked, shops looted. These pictures show fire raging in Hackney, just a few hundred meters away, there are barricades in the streets. Reports of young people involved in running battles with police, which are still ongoing.

Tonight's violence began on the other side of the city in Peckham. Rioters smashed windows, hurled missiles at police and attacked vehicles.

Police say they have doubled the numbers on duty since last night and parents are being urged to keep their children off the streets.

There are also reports this evening of violence spreading to England's second-largest city, in Birmingham. That's the first sign of rioting beyond the capital.

We're also getting these pictures coming into us from Croydon, just to the south of London. A major fire taking place there, a huge incident for the police to deal with today and the firefighters, the police telling me that they have got the staff they need and the political support to take behind -- besides the fact that a lot of ministers are away on holiday right now, but they seem to say they're in control.

You can see the firefighters are certainly on the scene there, but that's going to take all night to put out.

I'm joined now by CNN's Phil Black, who's in Hackney in London, the scene of some violence earlier on -- but, Phil, huge amounts of police being sent to that area.

Are they coping?

PHIL BLACK, CNN CORRESPONDENT: Yes, indeed, Max. A big police presence here. They're certainly out in numbers. And I guess it represents the challenge that they're dealing with. In some ways, it's not just an issue of numbers. What we've been seeing in this area, in East London and those other areas, in South London that you've been talking about, have been small groups of young people moving quickly through an area, causing damage, breaking in, vandalizing and then perhaps clashing briefly with police before melting away to another location and starting that process all over again.

And it's been an effort for the police to essentially track them, to keep an eye on them, when they are and try and deploy their resources accordingly -- Max.

FOSTER: And, Phil, we're just referencing the pictures we've got here on the top left of the screen. We've got pictures of Hackney, where you are. On the bottom right, some live pictures coming to us from Surrey, a huge fire.

So what's the intention here of these young groups of gangs?

Are they just setting fire to things or what -- what are they trying to achieve?

BLACK: There's really the big question being asked across London today and for the last couple of days. The motivation of these groups has certainly become blurred. You'll remember that on Saturday night, that initial rioting in the northern area of the Tottenham. That seemed to break out in specific reference, if you like, a specific expression of frustration over the shooting of a local young man the previous week, Mark Duggan.

Then over the last couple of nights, we've been seeing what authorities are simply describing as copycats or really just examples of criminality. They believe that there is no real social reason nor any sort of genuine cause that these people are acting upon. They think they're just out there to really vandalize and steal what they can.

But they're also quickly being asked about whether or not this is a reflection of modern economic times, whether in this age of austerity, this is a reflection of the frustration that young people are feeling.

It's hard to say, it really is. But certainly, the intention and the motivation, as I say, it appears to have changed over the re--- over the days that this violence has struck London. We're now looking at a third consecutive night. And perhaps most worryingly about what we've seen today is that it really kicked off long before nightfall. So it's likely that the police here still have a long night of work ahead of them -- Max.

FOSTER: And we've got evidence of that on screen right now, Phil. On the left, the pictures from Hackney, where you are a little earlier on, the kind of people that are involved in this. It gives you a real sense of that.

But on the bottom right, a nighttime fire in Croydon, the sorts of scenes we've been seeing all along. And they're live pictures on the bottom right hand corner of the screen.

And this is a huge, huge operation for those firefighters down in Croydon. Look at the -- the hoses that they're spraying on that fire. It's having no impact whatsoever.

And there was a huge fire, as well, wasn't there, on Saturday night, Phil, in North London?

And the police constantly talking about how social media has been used to organize these events.

But why aren't the police across the social media?

Why aren't they getting the same information as the young guys we've seen on the screen on the top left where you are?

BLACK: Well, the police point to one particular frustration here, Max, and that is the use of inter-networking services on phones like BlackBerrys. They're saying that is something that they are -- they're not able to keep track of. They're not able to see those messages. They're not able to read them. And so therefore, they're not able to get that vital intelligence that will keep them a step ahead of what these groups are doing, where they're moving onto next.

And that is one reason, they say, why their reaction would seem to be so reactive, it's why they have to wait until these groups assemble in a location -- assemble in a location, start to do their damage and then only then can they accept it and catch up with the them and deploy the resources that they think are adequate -- Max.

FOSTER: OK, Phil Black.

We'll be back with you, because Hackney is certainly one of the scenes, but it's only one of the scenes of violence across London today. And for the first time, the violence reaching outside London to -- to Croydon and to Birmingham.

Let's give you a sense of where these hot spots are in London.

If we come over to this map that we've got here, Hyde Park and around Hyde Park, many of the tourist sites that you will know about. So, for example, you've got Westminster, you've got Buckingham Palace just there. Take that away. None of the violence is this area of West London, which many tourists will recognize. A lot of it is out here, in more residential areas. So you've got, today, for example, Hackney, where Phil was just now. That's north of the -- that's north of the river. And then you've got two instances in Peckham and Lewistown, south of the river. That's where a lot of the violence was today.

But we were hearing a little earlier on about the -- the violence taking place. You've got the pictures there, again, in Croydon. That's much to the south of London. But this is the total picture. If you've got -- if we widen out a bit further, it still doesn't take in Croydon. But it's a -- it's a map.

So down here, you've got Westminster again and you've got Buckingham Palace. And this is where it all started, up in Tottenham, where you had full blown riots, really, on Saturday night. The rest of the incidents around here. They tend to be copycat incidents, but on a smaller scale. And as Phil was saying, there's some confusion, really, about the motivation now, that they've gone beyond the Saturday night incident linked with that shooting of someone that lived locally up there in Tottenham.

But actually, outside London now, as well, up in Birmingham, Britain's second largest city.

For some residents, the riots have had taken -- have taken place in London over the past three days, they've really revived unhappy memories of -- of 1985. That's the last time that the British capital was shaken by such serious violence. But it was on a bigger scale.

Dan Rivers has this report.

(BEGIN VIDEOTAPE)

DAN RIVERS, CNN CORRESPONDENT: (voice-over): Scenes that have shocked Britain -- parts of London engulfed in rioting and looting, with the police apparently caught off guard, bearing the brunt of the violence. Tottenham has been trying to restore its reputation after similar riots 26 years ago. Then, it was provoked by the death of a local woman during a police raid. A policeman was hacked to death in the ensuing violence.

This time, it was the shooting of a local man, Mark Duggan, by the police on Thursday that sparked the protests.

The subsequent lack of information from the police agreed some locals.

Sharon Grant is the widow of former local politician, Bernie Grant, who represented the area in the 1980s. She blames the police for failing to stop the signs.

SHARON GRANT, COMMUNITY ACTIVIST: The past in Tottenham, all the ingredients were there. If you were running the Tottenham police, the alarm bells should have sounded and you should have triggered the community consultation arrangement. And you could -- you should also have had the manpower hanging around in the background waiting to nip any trouble in the bud.

RIVERS (on camera): Everyone is acutely aware of what happened here in Tottenham in 1985. But many people think these disturbances deferred in one crucial way -- they spread almost virally through London. And some people are attributing that to modern technology, in particular, BlackBerry instant messaging.

(voice-over): This is one example of am inflammatory message wrongly claiming there had been a second shooting of a black man. This one is even more sinister, calling on people to gather in another part of North London, apparently inciting looting.

Local people, though, think the troublemakers are from outside the area and have hijacked their concerns in order to stir up trouble.

UNIDENTIFIED MALE: It's a mixture of things now. And I feel some people are using excuses as to why they can go out and do that and then other people have a genuine frustration for the fact that there's no answers.

RIVERS: Mark Duggan's death is still being investigated by the Independent Police Complaints Commission. But some think the violence has more deep-seated causes amid sharp budget cuts and high youth unemployment.

UNIDENTIFIED MALE: You can't get work. You can't get housing. You can't do nothing. Even now, you can't go to school because you've got to pay for it.

RIVERS: With so many politicians away on holiday, it was left to the deputy prime minister, Nick Clegg, to visit Tottenham. Some blame the violence on austerity cuts, which have closed local youth centers.

REV NIMS, COMMUNITY LEADER: A lot of the young people and the families that are in this community need much more support than they've been given in the past.

RIVERS: By Monday evening, the trouble was still spreading, with those in authority struggling to contain it.

Dan Rivers, CNN, London.

(END VIDEO TAPE)

FOSTER: And it's gone to the ultimate authority. We've just had some breaking news that the prime minister is returning from his holiday in Italy early to -- overnight. And he's going to hold an immediate -- immediate Cobra meeting, which is the emergency grouping of ministers and senior police. And he's going to hold a meeting with the home secretary as soon as he gets back.

So some breaking news for you, the prime minister has obviously seen the pictures and realizes it's getting very serious here in London.

We can go to -- to Dan Rivers now, who's in Peckham, another hot spot today.

What's been going on there -- Peck -- Dan?

RIVERS: Max, it's been pretty awful the last couple of hours down here. We're right in the middle of the kind of main shopping area seeking sanctuary, sort of, really behind the police line here. Hopefully you can see this and our picture won't break up.

But there has been a massive gang of about sort of 200 or 300 youths who are now just all the way down the end of the street here, with huge amounts of disruption and destruction.

You can see a big broken window here. A lot of shops have been looted here.

And the police tactic basically seems to be sort of holding their line. So then if we can come down this way and have a look -- holding their line and try to hold back these huge numbers of -- of youth. But not actively sort of going out and -- and stopping them or -- or intervening in any way.

I think if we -- we've just been told there's a shop being looted down here, Max.

I don't know if we're still broadcasting OK. But I don't know if you -- if we just poke through here, you can see that there's -- on the other side of the police line, which we've just walked through now, there's lots of people hanging around on the street, very, very threatening.

We've been told that a number of camera crews have -- have had things stolen from them, cameras and so on. So we're going to have to be careful.

But just come over here, because there's a supermarket here that we're being told is -- is being looted as we speak. I don't know if we can put the camera over the top and you can see that there are people -- let's just have a look down here. You can see there are people basically in the Morrison Supermarket here in Peckham -- we have to kind of poke the camera through the bars surrounding it.

But people basically walking out with -- it looks like a television there that guy has got. Other people are just sort of helping themselves to anything they want. And the police are just really not -- not doing anything to stop it. And there's a big fight, you can see, breaking out there, with people struggling over a -- a TV or something.

Let's just walk along here and maybe we can get a little better view so that we're -- I think we're safe, because we're on the right side of the railings here. But, really, Max, the situation is complete anarchy down here in -- in Peckham. There is no sense of anyone intervening to stop this. Perhaps the police feel that intervening would make the situation worse or they haven't got the numbers. I'm not sure. But this is a supermarket that has basically just been completely emptied by gangs of kids.

And you can see the mirror (ph) handing out -- it's difficult to see what.

In terms of the situation on a wider basis, we know a number of hot spots like this have now cropped up around London. But certainly down here in the south, this seems to be one of the most volatile and unstable. And, really, no sign that the police are making any effort to go in and intervene and, for example, here, where this supermarket is being emptied, no effort at all to -- to stop these -- these youth going on the rampage.

FOSTER: I'm just interested, Dan. I mean you're someone who's got experience of war zones and you're wandering around what's often a -- a quite leafy part of London.

I mean is it surreal to you?

RIVERS: It's extraordinary, Max. I feel like I've just sort of woken up in a completely different city today. You can see here, they're -- you know, they're smashing stuff up. There is absolutely unashamed sort of vandalism and disruption. You can probably hear and see it right in front of us.

And no real attempts by the police to -- to go in and -- and stop this. And I think there is this kind of sense of impunity now with some of these kids -- and they are mostly kids, actually, a lot of them look very young -- that they know they're going to get away the it because no one is doing anything to sort of go in and -- and break this up.

FOSTER: Is there a problem with the numbers of police or the fact that there's some sort of strategy, that they don't want to be too aggressive, because they've been criticized back in the past, haven't they?

RIVERS: I would imagine that -- that it's probably a combination of the two. I mean don't forget, this has spread now over such a wide area in London. We were up in Tottenham earlier on today. But, you know, from -- from the east to the north right down here in South London, they are -- they must be stretched very thin. They -- they can't have possibly envisaged anything like this at all.

I'm just going to get out of the way of this car here.

Adding to that, maybe, it is a deliberate tactic. One -- one must think it is -- that, you know, they feel that by going in to -- to something like this, it's just going to provoke things even further, you know, and may result in the further damage, you know, things being set on fire and so on.

So they look like they've decided, right, we're going to hold our line behind us here. We're going to have to move, Max.

Things are being thrown up now.

I don't know if you can still hear me, Max.

We're just dodging a few bottles thrown at us there.

We're OK, though. We're OK.

Yes, I mean that -- that's the danger. You know, as soon as people stray down this road, it erupts in violence. So there's a -- a very real sense of just how dicey this is.

That was -- it looked like glass bottles and big hunks of concrete being thrown at us, and you can see the police, here, look like they're preparing, maybe, to run down the road.

Periodically, you'll see the police move down -- charge down, clear a road, everyone will disperse, and then it'll be quiet for five minutes, and then they all come back and carry on looting as before.

FOSTER: It's just extraordinary, unbelievable scenes in London. Dan, if we can ask, if your camera man's safe, if he can stick with the pictures, we want to stick with the pictures just for now, because we've been talking about that police strategy --

(CROSSTALK)

RIVERS: Yes. I'll step out of the way --

FOSTER: -- and I want to bring an interview --

RIVERS: -- and let you have a look at what's going on.

FOSTER: Yes. And whilst we do that, we're going to bring you an interview with a very senior police officer who's looking at -- overseeing a lot of this.

His name is Steve Kavanagh. He's the Deputy Assistant Commissioner of London's Metropolitan Police. Actually put a few of those questions that Dan raised to him. Let's hear what he has to say about this strategy which, in many ways, seems very odd.

(BEGIN VIDEOTAPE)

STEVE KAVANAGH, DEPUTY ASSISTANT COMMISSIONER, METROPOLITAN POLICE: These criminals, because that's what they are, who are targeting local businesses, targeting local people, effectively, are using modern information exchange, BlackBerrys, Twitter, using SmartPhones, generally, to try and communicate and organize themselves.

And we're having to adapt what we do to make sure we're there to see them.

FOSTER: And actually a step ahead of you because of that, aren't they?

KAVANAGH: Well they -- they will always be organizing themselves, and we need to make sure we get there as quickly as possible.

What we've seen tonight in Hackney, what we've seen in Lewisham, are large numbers of officers getting there very quickly, and we're going to get more effective at doing that, because I've seen businessmen crying because of their -- what's happened to their businesses. They deserve that protection.

FOSTER: But the technology -- you've got a greater -- you've got greater access to, in a way, but better resources. Why aren't you across the same sort of messages that teenagers across London are getting across.

KAVANAGH: Well, what they also have is these subset and they have pin number requirement access. We need to work through all that --

FOSTER: You're talking about the BlackBerry element of this, which is --

KAVANAGH: It can be BlackBerry, it can be tweeting --

FOSTER: Yes, so that's a problem, here.

KAVANAGH: It is. It's part of the challenge that we're facing. But what the Met's committed to doing is saying, if there's a young person out in London tonight, they're best off going home, because anything they loot will not be worth the prison sentence that they get at the end of it.

FOSTER: Obviously, television pictures only tell one part of the story. You've got a better idea of what actually went on on the streets.

But it seems from a lot of the pictures that a lot of this is allowed to carry on with the police standing back. You sort of see people looting shops and you don't really see across it. Is that a tactic, or are you generally struggling?

KAVANAGH: We're not struggling. What we have to do sometimes in the face of large scale public disorder is make decisions.

And you're absolutely right. In 26 years of policing, I've never once heard an assessment of public order police in being spot on. We've either been too hard or too soft.

And you're also right, there's a context. Usually behind that set of pictures are another street that is experiencing disorder, and sometimes officers need to hold a line.

FOSTER: Some groups overseas suggesting that you're not ready for the Olympics.

KAVANAGH: Well, that's totally untrue. The Met is read for the Olympics. It shows -- well, you can see around you now, we've got large numbers of officers in police minibuses, carriers, we call them, who are ready to move around London.

Let's not overrate this. This is a group of individuals who are using modern technologies to try and cause chaos. They're criminals, they're violent, and they are trying to make the most of a brief opportunity to try and fill their pockets, not caring about the local businesses or the local communities they're causing so much pain to.

FOSTER: One last question on the political support you're getting. The Home Secretary's been away, the mayor's away, the prime minister's away. Are you frustrated that you, perhaps, haven't had enough political support?

KAVANAGH: I'm conscious that community representatives, the chiefs of the local authorities, all the way through to the mayor's office, the GLA, and Home Office, have given them every support they need.

(END VIDEOTAPE)

FOSTER: Well, there you are, there's the view of the top policeman, but the cold face, as it were, we've got Dan Rivers, there, in Peckham in front of police, Dan, who seem to have lined up. What's going on?

RIVERS: Yes, it looks like the police are about to sort of slowly move forward. You can see the dogs -- dog handlers and police dogs are here at the end of this road where there are blue lights flashing. I don't know if you can see all the way down there. That's where there were a lot of people gathered.

And then, inside this supermarket just off to our -- to your left as you're looking at the screen, that's where there's been a lot of looting going on. We were seeing people walking out with TVs and so on and getting pelted from this direction that you're facing now by youths with -- look like bottles and bits of concrete and so on.

So, it does look like the police are about to move in. Let's just swivel around this way and you can see the police coming out with their -- long shields.

I, like a lot of journalists, have done the kind of riot training with the police. And it must be said, their training is incredibly realistic for this kind of stuff, and they do do this fairly regularly, this kind of training, with petrol bombs as well.

They will use real petrol bombs to keep this as real as possible, the training that they do but, obviously, nothing quite prepares you for what it's like in reality on the ground because it's so fluid and things come at you from all sorts of different directions.

But certainly earlier on there was a big, big crowd in Peckham High Road, and let's just have a look over here, because I can still see --

(DOG BARKING)

RIVERS: -- if we can just out of the way of the dogs here -- that there were people still looting over here. And you can, in fact, through the bars of this supermarket -- we'll get out of the way of the police here.

(DOG BARKING)

RIVERS: You're going to bear with us picture-wise a bit, Max. But you can probably see through here, this is a supermarket, Morrison's, where there is still a big gang of people who look like they're -- they're continuing to empty that supermarket of goods.

And the police, as you can see, are just a couple of hundred feet away. They're all running out, now, you can see a lot of people running out, now. You can see a lot of people running out -- and fleeing from that Morrison's supermarket, and now the police are going in behind us.

Let's just have a look around here. Here come the police, marching towards the main gate of Morrison's, trying to sort of reestablish order in this part of Peckham, and we'll hopefully follow them in, Max, as long as the signal allows us, and see what happens.

You can see they've got two different sorts of shields, long shields - -

(AUDIO GAP)

RIVERS: -- which they tend to, then, fought as serials, they call them, they can own a printing for serials, the police, and then, when they face resistance, they'll all come together with their shields. Let's wander along after them, Neil, and see if we can -- follow in and see what's happening here.

This is the entrance to the supermarket, here. And -- that's the problem with this, as soon as the police move in, the -- the criminals, and that's what they are, really, not protesters, they are criminals, just suddenly disappear and the place is empty.

But you can see from the smashed doors and windows at the front of this supermarket that they've gone in and basically helped themselves. And then, I think, they fled over the other side of the car park, now.

Yes, in fact, if you just come right here, over there you can see in the dim distance, there, there's still some people sitting on the wall fairly nonchalantly, not looking that bothered.

We'll just stay with this for a second, Max, and see what happens as the police move across the car park, here, with the dogs.

Obviously, we're quite restricted in how close we can go because, as we found out, anytime we get too close to these crowds, a volley of missiles comes over at us. They're obviously -- see the camera.

And we've been told, as well, some journalists here have been rushed by a group of people and had their camera taken. We'll stay with the police, because I think it's the safest place to be in some senses.

This -- I think it's happening not just here, Max, not just in Peckham, but similar scenes, according to reports that we were watching before we left in Hackney and in a number of other places around London.

And it is pretty perplexing. Everyone you talk to is slightly at a loss as to why suddenly -- OK, we had this shooting on Thursday, but no one could have possibly anticipated the breadth and scale of the public disorder that has followed.

Down here in Peckham is quite a long way from Tottenham. It's on the complete other side of London. We're in South London, here. So there is nothing really, on the surface of it, to connect this part of London to Tottenham. Yes, it's a poor area of London, inner city London.

But I think the general feeling is that this is completely opportunistic and copycat violence that has followed events in Tottenham, and people just seem to be thinking this is their chance to help themselves to free goods and to steal things from people.

We've heard of carjackings, people talking on the radio here about cars being stolen. So a broad kind of spectrum of crimes and disorder.

But I think there is a feeling in the last ten minutes or so that things have calmed down a bit here. The big group of people that were here have been pushed right back into this estate, and the police seem to have at least secured this one premises.

And the problem is, where do they stop? London is a huge city of 10 million people. You can't have a policeman on every single corner. But here, at least, the looting seems to be over.

FOSTER: Dan Rivers, there, in Peckham. Dan -- I mean, what you've basically just shown us is an extraordinary piece of reporting, where you've been on the inside of a police operation. On a typical incident, I would probably say, during this last few days that we've had in London.

I'll let you keep your wits about you, but my impression is that you've -- all you've seen is a bunch of kids stealing stuff who don't really want a conflict, just want to buy the -- nick the stuff and run off. Is that right?

RIVERS: Yes, I mean, that's exactly it. There is no suggestion of any sort of protest about the shooting. No sense to it or rhyme nor reason about where they're targeting.

It's purely opportunistic, it's purely coming in here because they've seen there's a supermarket here that they can break through the windows and steal some goods and so on.

It's difficult to see how they could -- the people down here could claim that this is an issue about police brutality or violence or anything. This has nothing to do with Peckham, the incident in Tottenham. It's completely on the other side of the city.

And I think they've just decided that -- gangs of kids, here, that this is a great opportunity to go and steal something.

And there was this social networking dimension to this, as well, where -- because people were seeing things on Twitter, on BlackBerry messaging, it's created this momentum. A bit like in the Arab Spring. I mean, I don't want to overplay this, but there's that kind of sense of a momentum being created.

We're going to have a look over here, Max. While our signals is still working, you can see they've kind of cornered some people in the corner of the car park, here. Let's go and have a look, see what's happening.

Now, I don't know whether these people were involved with the violence at all. They may have just been in the wrong place at the wrong time. But this gives you an idea of what kind of things the police are dealing with all over London.

(DOGS BARKING)

RIVERS: The dogs are here, as well, you can see.

(DOGS BARKING)

RIVERS: So, we'll just follow this through.

(PEOPLE SHOUTING)

RIVERS: You can see, they're just trying to push these people away, basically, get them away from --

(DOGS BARKING)

(PEOPLE SHOUTING)

RIVERS: Just come in -- come in a bit closer, Neil, we're OK here.

So, you can see that people are pretty resistant to moving. As I say, I have no idea what these people have been doing, but they clearly have been told to go. Some of them have got bottles of alcohol -- and they're being pretty abusive to the police over here as well.

UNIDENTIFIED FEMALE: What about our (expletive deleted) human rights?

RIVERS: A lot of -- a lot of rather coarse language, so sorry about that. But this is an unvarnished view, I'm afraid, of what's going on in London at the moment in August 2011, complete and utter anarchy in pockets of London where the police are just really struggling to push these crowds back. And every time they disappear from one place, they pop up somewhere else.

And on the way down here, we saw another bus that had been burnt out. We've seen gangs of men in balaclavas roaming the streets with complete impunity. Very, very menacing, very scary for us.

Lots of missiles being thrown, and a general feeling of sort of insecurity and a sense that we just don't know which way this is going, really. You just don't get the sense of whether the police have got this under control or whether, any minute now, a huge gang of 300 people can come around the corner.

FOSTER: Dan Rivers in Peckham, extraordinary reporting, and great work by Neil, the cameraman, as well. Thank you so much for bringing us a unique insight into what's going on in just one hotspot in London right now.

Let's show you the map. Peckham is where Dan is. And we can also take you across to Hackney, because that's another area of London where we've had -- where we've had problems today, as well. As you can see, Hackney to the north of Peckham.

Hyde Park, just so you know, we just put that in there just so you get a sense of where the main tourist sites are around London. So, a lot of this is happening in the residential areas to the east and to the north and to the south.

But let's go to Phil Black. He can give us a picture from Hackney, because Phil, there are an extraordinary numbers of riot police heading your way, riot horses as well, so what's happened since then? Have they managed to contain it?

PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT (via telephone): Well, Max, I'd describe the mood here as certainly a lot more calm than it was, but still considerably tense.

There are large numbers of people on the street, here. It's difficult to determine if any have just come along for a bit of a look or how many are here to actively participate in that violence we're watching here through the afternoon.

But I'm currently walking down a major street here in Hackney, and it is littered with the aftermath of the violence we've been watching all afternoon, broken glass everywhere. I've actually passed at least a dozen burnt-out vehicles so far.

And the police are very much taking a softly shuffling approach at this point. They're attempting to contain the crowds somewhat. They're holding lines at a distance, but they're not seeking to actively provoke them or confront the crowds.

It would seem a major goal of what they're trying to do is not cause any further provocation, but at the moment, as I said, there are still massive numbers of people on the street. I'm looking at hundreds, here, right now, but at the moment, there is no active violence, although the police are still holding the lines in the distance and the police helicopter is still hovering quite low overhead.

It looks like, what I can see here, there are some people at this moment looting a local convenience store. I'm pretty sure that's what I'm seeing.

It's maybe half a dozen or so people have broken into a convenience store. They somehow got through the shutters that were protecting it, and they're carrying out what appears to be cartons of drink, some food.

Difficult to make out but yes, no -- basically getting away with what they can. It appears to be basic foodstuffs, large bottles of water, potentially alcohol, difficult to see. But certainly maybe a group of about half a dozen or so looting this local convenience store.

And this is the sort of violence that has been taking place here through the day. And as I say, I am on the street surrounded by hundreds of people. You've got this group of people at this very moment breaking into this convenience store maybe six meters away from me. There's not a police officer within sight.

It is, as I say, it appears to be that technique or that strategy that they're using to try and not confront these lads straight out, to try and not fire them up or give them any reason to see any further violence here, Max.

FOSTER: OK, Phil Black in Hackney in London.

Anarchy, it seems, in pockets of London, today. Extraordinary scenes for this city, but also extraordinary scenes on the markets, and that's affecting a lot more people right now, so we're going to bring you the latest on Wall Street after this short break.

(COMMERCIAL BREAK)

FOSTER: Markets have been diving across the globe today. Investors seized their first chance, really, to sell since Standard & Poor's made that historic downgrade of US credit ratings on Friday.

Stocks fell sharply as soon as the markets opened in New York and, within an hour, more bad news added fuel to the fire sale, when S&P announced a downgrade of US mortgage giants Fannie Mae, Freddie Mac, citing their reliance on the US government. It's logical, really, but caused more damage.

By the end of trading, just shortly before the program came to air, all three major indexes had plunged five, six percent on the S&P and the NASDAQ as you can see there, so a dreadful day, plummeting markets.

Similar story in Europe. Markets initially opened higher, but quickly fell back. The London FTSE closed down significantly, the CAC in France down nearly six percent, as you can see -- or five percent, rather, I'm sorry. The Xetra DAX down more than five percent today. This is a truly global story.

After months of standing on the sidelines, Arab leaders are now breaking their silence on the bloodshed in Syria. A big political story unfolding for us today in the Middle East.

Regional powerhouse Saudi Arabia is at the forefront of new efforts to turn up the pressure on President Bashar al-Assad. Jim Clancy now tells us about an extraordinary rebuke broadcast on Saudi television.

(BEGIN VIDEOTAPE)

(GUNFIRE)

JIM CLANCY, CNN INTERNATIONAL CORRESPONDENT (voice-over): Sounds of gunfire in the eastern Syrian city of Deir al-Zur. As the military cracked down on protests intensifies, a new sound is echoing across the region. The sounds of Arab nations finally standing up and condemning the violence.

On Sunday, Saudi Arabia's King Abdullah called on Syria's President Bashar al-Assad to, in his words, "stop the killing machine and end the bloodshed." Analysts contend it is the severity of Syria's crackdown that is prompting the reaction.

SHADI HAMID, DIRECTORY OF RESEARCH, BROOKINGS INSTITUTE: The stories of brutality that are coming out real really quite shocking. Mass rape, mass torture. In one day in Hama, more than 100 people were killed. So, we're talking about a scale of violence from the regime that we haven't seen in quite some time.

CLANCY: Saudi Arabia is also recalling its ambassador from Damascus, a move followed by Kuwait and Bahrain on Monday.

Over the weekend, the Gulf Cooperation Council, a union of countries on the Arab peninsula, pushed for Syria to stop the violence against anti- government demonstrators.

In Damascus, the Syrian government repeated claims it is protecting people from armed gangs. Activists contend more than 2,000 people, most of them unarmed protesters, have been killed since the uprising began back in March.

It is not just Arab governments issuing new warnings to Syria. Hacktivists are as well. The group "Anonymous" got into the Syrian Defense Ministry website and posted a message supporting the demonstrators and calling on the military to overthrow the government.

Jim Clancy, CNN.

(END VIDEOTAPE)

FOSTER: Arab leaders have been hesitant to criticize Syria's president not necessarily because they support him but because they're afraid of the power vacuum that might develop should he be overthrown.

Now, earlier, I spoke with former US ambassador to Saudi Arabia, Robert Jordan. He explained the kingdom's tense relationship with the Syrian president and predicted that Bashar al-Assad's days are numbered.

(BEGIN VIDEOTAPE)

ROBERT JORDAN, FORMER US AMBASSADOR TO SAUDI ARABIA: You have to have a historical context for it, and it goes back to the assassination of Rafik Hariri in 2005.

Hariri was a dual Saudi-Lebanese citizen who was the prime minister of Lebanon and also a very accomplished Saudi businessman.

He was assassinated and King Abdullah, then Crown Prince Abdullah of Saudi Arabia, actually held Bashar al-Assad responsible for this. He summoned Bashar to Riyadh and he said to him, "Your father promised me that he would protect Rafik Hariri, and he kept his word. You promised me you would protect Rafik Hariri, and you broke your word. Now, get out."

And it was just about that abrupt, and it was then leaked to the press, which was a very un-Saudi-like thing to do. So, there's been tremendous animosity toward Bashar ever since.

The only surprise, in a way, is that it took the Saudis and the Arab League this long to condemn what Bashar has done, in contrast to their rapid movement with respect to Libya.

So, Bashar's atrocities, I think, have finally gotten the attention of the Saudis and the Arab League. They have been quietly behind the scenes trying to encourage Bashar to stop the violence, to stop the brutality. They were clearly ignored, and so they had no choice but to take this action.

I think it's also quite important to understand that Saudi resistance to the influence of Iran is also behind this, because they view Syria as a client state of Iran. They had tried for the last four or five years to wean Syria off of Iran's orbit unsuccessfully. And so, this is now the result.

FOSTER: So, when the Saudis would have normally supported the status quo in Syria, they can't really be seen to be doing that anymore because actually the relationship has broken down to such an extent with Iran they're worried about Iran filling the vacuum in Syria?

JORDAN: They're somewhat worried about that. They did not originally want a destabilized Syria, even though it was run by a small, 10 percent Alawite minority who are, essentially, Shia split-offs.

But once a vacuum is created, it gives Iran a greater chance to insert its influence. It also could put in play a Sunni nominated Islamist faction that might be less inclined toward regional stability.

FOSTER: So, the crucial question, here, is that with the Saudis speaking out in such an unusual way, will that have an effect on President Assad?

JORDAN: Well, it certainly puts the Saudis on the right side of history and gives them preeminence within the Sunni Arab block, which I think is also probably a design of the Saudis.

It also unifies that block in a way that will provide, I think, more effective resistance to any incursions by Iran. It will also, of course, play well on the West.

So, whether it's effective in deterring Bashar, I think, is less certain. If I had to guess, I would guess that Bashar will go down as a consequence of this and his regime will not survive.

FOSTER: His days are numbered?

JORDAN: I don't know what the number is, but I would say his days are numbered.

(END VIDEOTAPE)

FOSTER: Quite a thing to say but, certainly huge changes in the way politics is working in the Middle East right now, certainly diplomacy.

Now, in tonight's Parting Shots, taking the plunge to fulfill a lifelong dream. Endurance swimmer Diana Nyad set off from Havana on Sunday evening in a bid to become the first person to swim over the Florida Straits.

It's no easy feat. A journey of 166 kilometers. On top of that, though, the crossing is known for its shark-infested waters. But the 61- year-old isn't inside a cage. Instead, she's relying on special equipment that surrounds her with an electrical current strong enough to keep most sharks at bay.

Before Diana took to the water, she explains her motivation.

(BEGIN VIDEO CLIP)

DIANA NYAD, AMERICAN SWIMMER: We are a younger generation than the 60 that went before us. And I want to be there to say we have many, many years of vitality and strength and service left in us.

(END VIDEO CLIP)

FOSTER: Well, good luck to her. She certainly needs it. CNN is tracking her big swim live with progress updates, do head to cnn.com/thechart. You can follow her every stroke.

I'm Max Foster, thank you for watching. The world headlines and "BackStory" will follow this short break. We're keeping across the markets for you and also the chaos -- the anarchy, some say -- across London.

END