Wall Street Fights Back; Euro Zone Rattled Again
ANDERSON: You're back with CONNECT THE WORLD here on CNN, the world's news leader. At this point, let's get you a check of the headlines this hour. Arab media call it the trial of the century. Ousted Egyptian president Hosni Mubarak appeared in a Cairo courtroom today on a stretcher locked in a cage. He pleaded not guilty to all charges against him, including murder. The UN Security Council has condemned Syria's crackdown on demonstrators. The -- this comes as there are reports that a crackdown is getting carried out ever more intensively in the city of Hama. Residents say tanks have moved in and communications are now cut off. The United Nations confirms what aid agencies feared in Somalia. Famine has now spread to three new regions of the country. They include sections of Mogadishu and the world's largest camps for displaced persons. And a dramatic bomb scare put a wealthy suburb of Sydney, Australia on edge earlier. Bomb squad officers spent ten hours at a house and finally freed an 18-year-old woman. Police have not confirmed reports that a bomb was attached to her body. And Wall Street felt like a fight tonight, and battled for a comeback. At one point, the Dow was close to extending its longest losing streak in more than three decades, then it all turned around. My colleague Alison Kosik is watching from Wall Street for us from the New York Stock Exchange. Alison?</s>ALISON KOSIK, CNN CORRESPONDENT: Hi, Becky. Stocks clawed their way back from a steep sell-off on Wednesday. The Dow managed to snap an eight- session losing streak after falling triple digits earlier in the session. The S&P; 500, that's back in positive territory for the year. But the concerns about the economy remain. We now have some economists ringing the alarm bells about a possible new recession, and data released on Wednesday didn't do much to calm fears. Reading factory orders and the services sector, that's where 80 percent of Americans get their paycheck, both fell. Another report showed that layoff announcements surged 60 percent in July to a 16-month high, and payroll processes or ADPs as companies added 114,000 jobs last month. It's slightly better than expected, but still a slowdown from June. Thursday, we're going to be getting a reading on weekly jobless claims, those are expected to tick back above the 400,000 level, so that could raise more concerns about the job market. And worries about the US credit rating, they haven't completely disappeared, either. Many traders and investors still think a downgrade is possible despite the debt ceiling deal. Becky?</s>ANDERSON: Alison, thank you for that. I want to get you to Italy, now, where the prime minister says, and I quote, "We do not deny we are facing a crisis." Silvio Berlusconi waited until the European markets had closed before he made his speech to Parliament earlier today over fears that the euro zone debt crisis may be spreading to Italy. Now, that is a very big deal, because Italy is the third biggest economy among the single-currency nations, and Mr. Berlusconi blames speculators for at least some of the uncertainty. Have a listen to what he said.</s>SILVIO BERLUSCONI, PRIME MINISTER OF ITALY (through translator): It is clear to everyone that the emergency that we had to tackle recently is the direct consequence of a confidence crisis that has hit the international markets. Uncertainty regarding the euro and uncertainty regarding the financial speculation. This crisis needs to be tackled with determination, without any panic, in order not to worsen the situation.</s>ANDERSON: Lest we forget why all of this is important, I want to show you something here. Borrowing costs for Italy are soaring to new highs at 6.1 percent. Italian bonds have jumped dangerously close to what would be a sort of magic number, as it were. It's a 7 percent mark. Let me just take you through, here. Say we get this mark just about here, it's significant, about 7 percent. That is unsustainable, as far as many economists are concerned. The yield on bonds Rome is having to pay is near that level, as you can see. And that level is the level that tipped Greece, Portugal, and Italy into this crisis. Let me -- sorry -- and Ireland into this crisis. Let me just bring those numbers up for you so you can see. How does this compare? We've got Greece, D-day, 23rd of April of last year, its 10-year bond yield jumped to a whopping 8.03 percent on that date. Yields in Italy soared above 8 percent one day after Dublin -- sorry, I was going to say it again. Why am I saying Italy? Ireland. Yields in Ireland also soared above 8 percent one day after Dublin asked for help on November the 21st. That was, of course, a Sunday. And Portugal's borrowing costs shot to 8.5 percent. That was back on April the 6th, 2010. Well, does the surge in bond yields raise a giant question over the whole euro project? Well, Silvio Berlusconi says he's confident Italy can weather this crisis. Just before coming to air, I asked my colleague Jim Boulden whether he bought what Berlusconi is saying. Listen to what he said.</s>JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Italy can survive this if growth returns to the economy, because they need to be able to do -- for people to bring in more money, like any country does. But the problem is is that he's got very ambitious targets for growth, he's got very ambitious targets to balance the budget by 2014 and, frankly, a lot of analysts just don't believe that can happen.</s>ANDERSON: What's the bigger picture here?</s>BOULDEN: Well, we talk about contagion, don't we? And a lot of people thought Spain was next, and then Italy after that. Well, they've all skipped Spain. We've gone right to Italy, haven't we? Just pushed them aside, Italy is such a big country. But in some ways, because it's such a big country, I think it has -- it's export-led, it's got potential to do things that other countries, Greece and Ireland, couldn't possibly do. And because it is so big, I think you're going to find that their -- that the rest of the euro zone is going to have to build up that war chest because they don't even want to get close to a fear that Italy could fall.</s>ANDERSON: Because, of course, this is a G7 or 8, as we call it these days --</s>BOULDEN: Yes.</s>ANDERSON: -- country, and when you get to the point at which we're away from the European periphery, here, and really into where it counts --</s>BOULDEN: Yes.</s>ANDERSON: -- this is a problem.</s>BOULDEN: It is. Because it is -- it is the third largest in the euro zone. That's why it has so much debt, of course, as well, because it's such a bigger economy. So, it has a huge amount of debt, but analysts keep telling us, wait a minute, they have a very manageable way to pay off debt at a very low rate, the one -- the debt that's already out there, over the next couple of years. So, that should be OK. It's the fear that's in there. It's the -- it's what could happen, which seems to be causing the problem. So, when Mr. Berlusconi went before Parliament on Wednesday, looking very bold and very prime ministerial, not looking like a man who's about to step down, he said we need to not panic, but we've already put measures into place, and this is enough for now that should calm the markets. But nothing has calmed the markets in the last couple of weeks.</s>ANDERSON: And keep an eye on those markets, of course. Europe closed at the moment, Asia opening up right about as we speak in the hours to come, Europe back in business on Thursday. Do keep an eye on those global markets, particularly those debt markets. Coming up, a major child pornography bust that's got global implications. But is it just the tip of the iceberg? We're going to examine the scope of the problem and what can be done to keep kids safe. That is in two minutes from now. Stay with us.