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ANDERSON COOPER 360 DEGREES

Market Meltdown; Warren Jeffs Convicted of Sexual Assault; Living Large in Lean Times

Aired August 4, 2011 - 23:00   ET

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


(COMMERCIAL BREAK)

ANDERSON COOPER, CNN HOST: We've got to begin tonight with the breaking news on the story being felt around the country and the world: today's market meltdown, right now, early signs of what might tomorrow -- tomorrow might bring here.

Japan's Nikkei stock index down, though sharply when it opened. Right now, it's down more than three percent, the share is down as well all across Asia. That's on top of today's plunge in New York; the Dow Industrials is down more than 500, the worst single-day point loss since the economy collapsed three years ago and the ninth-worst ever.

The S&P and NASDAQ each down heavily as well; investors turning shares into cash, gold into cash, commodities into cash.

The Dow Industrials have now lost more than 1,300 points over the last two weeks. It's been brutal. They've now erased all of the gains for the entire year; eight months of gains gone.

Now, when it comes to anxiety, long-term losses, that's one thing, a plunge like the one today is something else. Here is how it looked and sounded from the market floor.

(BEGIN VIDEO CLIP)

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Yesterday's gains, they were just a mirage. We're watching stocks plunge, chipping away at investor confidence. We are seeing the pace of selling for the Dow pick up steam.

POPPY HARLOW, CNNMONEY.COM: This is a market that you need to pay attention to when you have a steep decline like we're seeing right now.

BROOKE BALDWIN, CNN ANCHOR: Three hundred and 70 points, plunging here -- 407, massive plunge continuing to take this massive plunge.

HARLOW: We're close to two times as bad as the worst day we've had this year.

BALDWIN: You can see the people standing up there applauding. I imagine a lot of people looking at these numbers at home not applauding at all.

(END VIDEO CLIP)

COOPER: Oh, man, it was a rough day. I stopped watching it after a while. It seems in part because investors are worried about conditions in other places. Today it was Italy and Spain. But tomorrow, the focus snaps back to the U.S. economy.

The Labor Department comes out with new jobless numbers and concerns about Washington's debt deal are lingering, with some experts saying now is a lousy time to cut government spending and others saying the cuts just don't go far enough.

Here to lend some perspective: chief business correspondent Ali Velshi; Chrystia Freeland, global editor at large for Reuters; also David Walker, former comptroller of the United States, currently he heads up the Comeback America Initiative.

Ali, there were people who said that today's sell-off was a reaction to -- to the debt ceiling deal. And you actually disagree.

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: I do disagree. Markets don't take four days to respond to a deal. This was about the European Central Bank trying to prop up the euro by buying bonds back. It sent the wrong message and it ended up having folks in Europe end up panicking.

The issue there is that Italy, the eighth largest economy in the world, has now got a very serious debt problem. And Europe, it is too big to fail. Let's put it that way. They can't let Europe go. They can't let Italy go. And Europe doesn't have enough money to back it up and Spain up.

The bottom line is you identified it well. Every day, it's a different problem and everybody gets to own it every day. Tomorrow, it will be back to the United States and unemployment. But today was about Europe.

But generally, it's just this whole mix of international global concern that's adding to this confusion. And it all came together and just built and created this momentum today; very unusual and a little bit weird. But that's what did it.

COOPER: Chrystia, what message do you think the markets were sending?

CHRYSTIA FREELAND, GLOBAL EDITOR-AT-LARGE, REUTERS: Well, I think Ali is absolutely right that sort of the immediate trigger was Europe. And the European Central Bank handled things very badly.

But I think the bigger message here is America has spent the summer debating exactly the wrong issue. The markets are not principally concerned about the credit-worthiness of the United States. They are not principally concerned about the deficit.

And evidence of that is right now the 10-year Treasury bill is at about 2.5 percent. That means people are lending money to the U.S. at 2.5 percent. I don't know about you, Anderson, but I would be happy to take out a loan at 2.5 percent.

COOPER: Right. Yes.

FREELAND: Right. There's not a credit-worthiness issue. The real worry is the whole world is concerned that the industrialized West has not recovered from the economic crisis of 2008.

COOPER: Right.

FREELAND: And that there is this generalized economic weakness in the United States, in Europe, that we are still incredibly frail. And I think there is a real danger of a double-dip recession.

COOPER: Yes, David, we're hearing a lot of people now talking about a double-dip recession. Do you think those fears are justified?

DAVID WALKER, FORMER UNITED STATES COMPTROLLER GENERAL: I think there's a chance we could have it. I hope we avoid it. And I believe right now it's possible, but not probable.

I think there's two things that people are concerned about. First, a very weak economic recovery, high unemployment; you know, personal income is barely growing at all. Consumption is very weak. Consumer confidence is also very weak.

And then you've got Spain and Italy with their own debt problems. And quite frankly, we've got more time than they do. But when you look at our ratios of debt to GDP, we're in the same neighborhood they are. So we need to do things to get the economy going and deal with unemployment. But we're going to have to start putting our own finances in order, or else we're going to have bigger problems down the road.

COOPER: Ali, I didn't even want to look at my stocks today or my 401(k). I mean for folks who are obviously worried about that, what's your advice?

VELSHI: Look, it's -- it is tough. I almost agree with you that there wasn't much you were going to be able to do about it today, anyway. You know, you're --

(CROSSTALK)

COOPER: Not that I would know what to do about it anyway. I have no idea.

(CROSSTALK)

VELSHI: Well, there you go. Year-to-date stock returns on the Dow have been erased. But you know what? We're still actually up from a year ago. The S&P is still up from a year ago.

As serious as this seems, it's actually -- it was triggered by a little bit of irrational thought and irrational behavior. I'm not sure this is a long-term trend. I think there have been a lot of things that have caused people to sell their stocks in the last two weeks. I think you're going to start to see people saying maybe this is overdone.

COOPER: Chrystia, you're saying there are actually some positive developments in the market.

FREELAND: Well, I think depending on where you are in the economy, one positive signal to come out of this is, it looks like interest rates are not going to go up for a long time.

And in fact, what the markets are counting on right now is Ben Bernanke to bail them out. And people are talking about QE3, you know, yet another round of quantitative easing. So if you don't have a house, if you want to borrow money, if you're a company, a small business or a person, it's looking like interest rates are not going to go up any time soon.

COOPER: David, it does seem though like a lot of businesses have cash on hand. They're just holding on to it, right? Doesn't something need to spur them to -- to start spending? Or is -- am I totally off base?

WALKER: There's trillions sitting hanging on corporate balance sheets. I mean they need more certainty with regard to what the tax environment is going to be, what the regulatory environment is going to be.

I mean one of the things we ought to think about is we need comprehensive tax reform. Maybe we ought to think about allowing a deduction for corporate dividends, so that therefore shareholder pressure will be there to say, you're either going to invest it for growth and for jobs, or you're going to distribute it for growth and jobs. Right now, we're at a stalemate.

COOPER: Do you guys agree with it?

FREELAND: Sure. I think it's a good idea. I mean, I would like a little bit to push back against something that David said earlier that in the medium term, that the U.S. still needs now to be focused on deficits -- that that is the message of Italy and Spain.

I think the message of this week is that the whole world, starting with the United States, needs to be focused on job creation and doing what you were referring to, Anderson, persuading companies, stimulating them, coming up with creative ideas to get companies investing that money they have on their balance sheets.

COOPER: But you know, David, politicians have been talking about job creation now for the last couple of years. I mean, just -- even right before they all took off for five weeks, they were all talking about focusing now like lasers on jobs, jobs, jobs.

And yet how much can government really do?

WALKER: Government doesn't create jobs that will last for the long-term. But they can do things that will help create an environment, both from a tax policy standpoint, a regulatory policy standpoint, and everything else that will help encourage others to create jobs.

Let me be clear. Right now, we need to focus on making sure we don't have a double-dip recession and to make sure that we can get unemployment down. At the same point in time, we also need to start taking steps to deal with our structural deficits. We don't want to significantly cut spending now, because that's contrary to the first objective.

But we need to do things with regard to entitlement programs, defense and other spending, as well as our tax policies that will put us on a prudent and sustainable fiscal path. We need to do both, one now; the other steps that we take now that will be phased in over time. Or else we're going to have bigger problems down the road.

VELSHI: The problem -- and David knows this better than anyone, the problem is, what David's saying makes sense. But there were a whole lot of people who voted against raising that debt ceiling because they don't think you need to increase or even keep spending at the level that it's at now to create jobs.

So I don't know how, given what we just went through with the debt ceiling debate, we would get any agreement whatsoever in Congress to do any of the stuff that you're talking about, David, or the stuff that Chrystia is talking about in terms of a quantitative easing, more spending from the government, because unlike during the financial crisis, the Federal Reserve can't do that anymore on its own. It needs congressional approval.

So the danger we have right now is we're probably headed for, between now and the election, for complete gridlock and inability for the government to do anything that would create an environment for people to invest and create jobs.

FREELAND: The only thing I would say, Ali, is I think shocks like today have to get politicians thinking. And Anderson pointed to the fact that we've heard a lot of rhetoric about we're going to be laser-focused on jobs.

We have seen very little concrete action. We could see an extension of the payroll tax break.

VELSHI: That would help, yes.

FREELAND: We could see things like Yale economist Bob Shiller has suggested, that a pot of money be set aside to give businesses tax incentives. He suggested $5,000 for each new person who is hired. Let's see the politicians talking about stuff like that.

COOPER: David, I want to give you the final thought.

WALKER: Well, we need to focus on economic growth and jobs now.

And we need -- there are -- we have to look at it not just from a tax standpoint. We have to look at it from a regulatory standpoint. And frankly, the time may be -- come to consider either a significant revision to the Affordable Care Act or a repeal of the Affordable Care Act, because that's a big overhang as well.

And the Center for Medicare and Medicaid Services has reaffirmed what I've been saying for a while. That bill is going to cost us a tremendous amount of money. And it's going to exacerbate our deficit and debt problems. We ought to nip it in the bud before it's a reality.

COOPER: Ali, appreciate it. Chrystia Freeland thanks very much. David Walker, we'll talk about that coming up.

More next on how the sell-off could affect President Obama's chances next year. Some stunning new job approval numbers as well, or more accurately disapproval numbers for Congress. It goes directly to what Ali just said about gridlock.

We'll also tell you how lawmakers today agreed finally to finance the FAA. Remember, we talked about this last night. They all went off on vacation. Thousands of airport and construction jobs are on hold while Congress bickered. Airline safety inspectors were being told to use their own personal credit cards to pay expenses.

Let us know what you think. We're on Facebook or follow me on Twitter @AndersonCooper. I'll be tweeting tonight.

Later, "Crime & Punishment": judgment day for the polygamist leader and self-proclaimed prophet Warren Jeffs on child rape charges. His bizarre defense and closing argument with Gary Tuchman and Mike Watkiss; his last remaining lawyer joins us as well.

(COMMERCIAL BREAK)

COOPER: Well, breaking news tonight, Asian markets now tumbling after Wall Street's dive today. We're talking about that and what both the upcoming jobless numbers may mean to President Obama's chances next year. Also what voters and investors are saying about Washington's failure to get their act together.

The only bright note, the House and Senate reached a compromise today on funding the FAA, but only after totally screwing things up in the first place. It's getting to be pretty much of a pattern.

(BEGIN VIDEO CLIP)

GOV. JERRY BROWN (D), CALIFORNIA: We are a very powerful if not the most powerful country in the world. And if the country cannot make decisions about how it spends money or how it deals with its basic problems, but instead squabbles with the scapegoating, finger- pointing and blaming, I think that is an ominous sign going forward.

(END VIDEO CLIP)

COOPER: Well, California Governor Jerry Brown. New polling from "The New York Times" and CBS News reflecting that sentiment; just 14 percent approve of the job lawmakers in Washington are doing, 14 percent; athlete's foot polls higher than Congress. And in that same poll, President Obama's job approval rating stands at 48 percent, which is actually slightly better than last fall.

But separate polling in the pivotal state of Florida now shows President Obama in a dead-heat with GOP front-runner Mitt Romney.

And again we get new numbers tomorrow on job creation. And the economic forecast hardly looks good.

Joining us now: chief political analyst, Gloria Borger; Democratic strategist and Obama 2008 pollster, Cornell Belcher; and Erick Erickson, editor in chief of RedState.com.

So Erick there has been so much focus on the long-term spending problem because of the debt ceiling fight. It's like everyone just woke up and realized, wait a minute, our problem right now is a weak economy, it seems like.

ERICK ERICKSON, EDITOR-IN-CHIEF, REDSTATE.COM: Yes. You know, Anderson, it's been really frustrating for me during some of the conversations of the debt ceiling in the past two weeks, with journalists in Washington focused on the stock market as if the debt ceiling had everything to do with it.

For example, last Friday the stock market fell and the reporting out of Washington was, oh, my God, it's the uncertainty over the debt ceiling. Well, no, the growth numbers came back horrible. They were expecting 1.6 percent growth. It was 1.3. They revised last quarter down to 0.4 percent growth. That's why the stock market was tumbling.

But there's this sense in Washington that everything revolves around Washington. And it's always been about the economy. And it's going to keep being about the economy. But if there's a bright lining here, a silver lining -- and there's not really one -- it's that most of the problems reflected in the stock market are about Europe and other places.

COOPER: Cornell, obviously, for President Obama, this is a huge issue. He has been talking about a big job push. How much can he really do? I mean where -- where do you see him going with this?

CORNELL BELCHER, FORMER OBAMA CAMPAIGN POLLSTER: Well, I'm going to agree with my friend Erick before I attack him.

The thing is that we've been focused for the last month on deficit and cuts. And we did that prime and Joe Blow Middle America, they scratched their head if I would go out there and talk to them about sort of the ups and downs of the market, because they're worried about putting gas -- putting gas in their car.

However, we've been focused completely on the deficit and not jobs and the economy because of the Tea Party element sort of used the debt ceiling as a hostage-taking maneuver in order to focus us on the deficit. And the bottom line is the deficit hasn't laid-off one worker. The deficit hasn't -- hasn't closed one factory and shipped it overseas. The deficit hasn't -- hasn't foreclosed on one house. And that's why you see those disapproval numbers the way they are right now, because Washington isn't focused on -- on jobs right now. They have been focusing like on the deficit like an obsession.

(CROSSTALK)

COOPER: Gloria -- go ahead, Gloria.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: I think that Washington was focusing on the deficit because when you look at all the polling numbers, and this goes for the White House as well as Republicans in Congress and Democrats in Congress, people said they cared about the deficit.

And so what you saw and -- and -- the -- the last election was a reaction against the perceived big spending of Barack Obama, right, and the stimulus. So then they do a pendulum swing back. And they start talking about, ok, we're going to cut the deficit and we're going to have some stability in the economy, so that Wall Street will react.

And of course, as Erick pointed out, Wall Street had essentially discounted it because they figured when they woke up one day we would raise the debt ceiling.

So it was a miscalculation.

BELCHER: Well, I've got to push back on you a little bit, Gloria. Quite frankly, I haven't seen any polls where the deficit ranked higher among -- among for voters than -- than the economy and jobs. That's not just now, but going back even -- even before -- even before the elections.

(CROSSTALK)

BORGER: Right. Number two.

BELCHER: So I think Americans have been focused on -- on -- on jobs and the economy like a laser beam. But Washington has not. They have been focusing on the deficit and spending.

COOPER: Erick, when you hear politicians on both sides talking about, we're now focused on jobs, do you believe that -- I mean do you believe that they can create jobs?

ERICKSON: No. And I think that's a lot of what plays into this.

I remember election night in 2010. Most of the Democrats on CNN that night were saying that they believed they got the policy right and the message wrong, which ironically is what a lot of Republicans are saying right now.

But there was a reaction I think among the voters. And the exit polls show that, that people thought the policy was wrong. And Washington spending was part of the problem.

And when I hear politicians on both sides of the aisle say what government can do for you, I grab my wallet and run. I don't believe Washington can create jobs. And if people do think Washington can create jobs, look at the two years where the Democrats controlled Congress and the White House and passed the stimulus plan. It didn't create jobs. It killed jobs in the private sector, according to a bunch of economists and a study out of the University of Ohio.

BELCHER: Well, Anderson, I've got to push back on that a little bit. I mean -- I mean, it is standard economic policy, this ideal that if you cut out -- take money out of the economy right now, you're going to slow growth.

I mean, it's the same sort of thing we saw back under the Great Depression with FDR. They took money out of the economy and it slowed down. And they had -- and they had to rebound and sort of and -- and try to fix that.

Right now, the markets are reacting because they know very well we're slashing and we're taking a lot of money out of the economy right now for an ideological purpose. And the -- and the economy's going to slow down because of it.

BORGER: Well, but that's Barack Obama --

(CROSSTALK)

ERICKSON: But we're not taking a lot of money out.

(CROSSTALK)

BORGER: -- that's Barack Obama's political problem, though, isn't it? Because on the one hand, he wants to be pro-growth; on the other hand, he's embraced fiscal restraint. So, can he now turn around and say, well, ok, we have to give money for payroll tax holiday, unemployment insurance, infrastructure bank, et cetera, et cetera, maybe business tax credits.

It's very difficult because the public will say, well, which -- which side of this fight are you on, right? And he's always tried to walk that fine line down the middle, saying, we've got to restrain spending, but also, we have -- we have to spend in order to grow.

And so, it's not a clear message.

ERICKSON: But there's a bigger problem here as well. And, I mean not to quote Jeremiah Wright, but the chickens are coming home to roost for both parties right now.

If you were to take 100 percent of the income of everyone who makes $250,000 a year or more, 100 percent of their income, you would get $1.3 trillion. The budget deficit this year is $1.6 trillion. Unless we're going to go after the middle class and find some money there as well, we're going to have to make cuts. Or if we're not going to make them now because it will hurt the economy, are we going to rebound?

President Clinton's former chief of Council of Economic Advisers Laura Tyson is saying she's afraid we're headed to a lost decade because Washington can't get its act together one way or the other.

BELCHER: So well, that's interesting, because you're going -- you're going to quote a Clinton economic adviser. I'm now going to quote a Reagan economic adviser who said, you know, it's ridiculous. Ronald Reagan would do today exactly what he did back then and raise revenues, because you cannot get to this problem -- you cannot get at this problem without raising revenues.

(CROSSTALK)

COOPER: Are you talking about David Stockman?

BELCHER: Yes. You cannot cut this problem away. You've got to raise revenues.

BORGER: Ronald Reagan would have raised the debt ceiling, too, by the way, pretty quickly.

BELCHER: Well, he did.

COOPER: Erick, do you believe that Ronald Reagan would have -- would have raised revenues?

ERICKSON: No, I don't think he would have raised taxes, not in a situation like this, no. Remember, he jump-started the economy headed in '84 by those big tax cuts that everyone blamed things on, but revenue came in through the tax cuts.

(CROSSTALK)

BELCHER: But, Erick, he did raise revenues.

(CROSSTALK)

ERICKSON: The problem here though is, even if you did this, though, we're at $14 trillion in national debt now. And if this plan goes into effect, as designed, will add another $12 trillion. At what point are we bankrupt?

BELCHER: But he did raise revenues.

And here's my question to Republicans. What was so wrong with going back to the tax-and-spending policies of Bill Clinton? You remember peace and prosperity? Those weren't bad --

(CROSSTALK)

ERICKSON: Well, if you remember -- here is the problem, I actually have the answer to this --- I've got the answer to this one, Cornell.

BELCHER: Ok. (CROSSTALK)

ERICKSON: Let's say we go -- let's say we go back to Clinton's tax breaks. Let's say we go back to Clinton's economy, by the way, which brought in more revenue into the government than any other time in American history. That was still only 21 percent of gross domestic product.

And the government is spending right now 27 percent of gross domestic product. So the government is going to have to cut five percent to equal the tax revenue.

(CROSSTALK)

BORGER: Well, but when the economy -- when the economy grows, you get more revenues, right?

ERICKSON: Exactly. But historically, Gloria, from the moment the income tax was implemented in the early 1900s until now the most the government has ever seen in tax revenue has been 21 percent. The most ever in this country's history has been 21 percent. We're spending 27 percent of gross domestic product.

COOPER: Cornell, I've got to give you the final thought, then move on.

BELCHER: Well, here's the thing. We've got to have a balanced approach to this.

We certainly can't cut -- cut away, cut -- cut ourselves to a solution here. And certainly we can't cut away our future, which is what we threaten to do when we start cutting things like Pell Grants and lunch programs and all these things that build our future. We have to be able to win the future. We can't cut that away.

COOPER: All right, Cornell Belcher, Gloria Borger, Erick Erickson, good discussion. Thank you. Interesting. Thanks.

(CROSSTALK)

BORGER: Sure.

COOPER: Just ahead, breaking news. The jury in Warren Jeffs' sexual assault trial reaches a verdict after one of the strangest closing arguments in legal history. We'll get the firsthand details from Gary Tuchman and Mike Watkiss, who were in the courtroom.

Plus what the verdict and possible life sentence means for the future of Jeffs' polygamist sect.

Also tonight very disturbing reports, that the military clampdown in Syria is reaching a new level of brutality.

(COMMERCIAL BREAK)

COOPER: Coming up: breaking news, a verdict in the sexual assault trail of polygamist sect leader Warren Jeffs, after a bizarre closing argument from Jeffs himself.

Excuse me -- first Tom Foreman joins us with a "360 Bulletin" -- Tom.

TOM FOREMAN, CNN NATIONAL CORRESPONDENT: Hey, Anderson.

Another deadly day in the Syrian city of Hama, a local activist group says at least 109 people were killed in and around the city on the fourth day of Ramadan. Hama is the center of the anti-government movement there. And there have been days of deadly crackdowns during demonstrations.

One of the most despised members of Hosni Mubarak's inner circle was in front of the judge in Cairo today. The former interior minister faces charges of killing anti-government protestors during the Egyptian uprising. He could be executed if he's convicted.

And a vial of serial killer Ted Bundy's blood could help solve some cold cases dating back as far as the 1960s. The vial has been recovered from an evidence lab in Florida and will be entered in the FBI's DNA system. Bundy was executed in 1989 for three murders. When he was convicted, DNA typing was not --

(CROSSTALK)

COOPER: Wow.

FOREMAN: -- widely used -- Anderson.

COOPER: Interesting. I would have thought they would have had his blood in the storage -- storage or something.

FOREMAN: Well, you would think. I think old evidence like that in a closed case --

(CROSSTALK)

COOPER: Yes.

FOREMAN: -- sometimes it gets pushed aside. It's good they found it.

COOPER: Well, it's great they were able to find some. Yes, definitely.

Breaking news tonight Tom, we're following: a Texas jury has found polygamist sect leader, Warren Jeffs, guilty on two counts of sexual assault on a child. They reached the verdict in less than four hours after a closing argument from Jeffs that was -- basically reset the bar for bizarre.

He spent most of his allotted 30 minutes completely silent. It was just the latest jaw-dropping moment in a trial full of them. One of the most disturbing came yesterday when jurors heard an audiotape of Jeffs allegedly having sex with a 12-year-old girl. The charges Jeffs was convicted of stem from a 2008 raid on a ranch his church operates in El Dorado, Texas. You probably remember the raid. It got a lot of press coverage. Hundreds of kids were removed in that raid but later returned. Jeffs who maintains he's a prophet, represented himself in court. And at one point, he threatened that God would strike down everyone involved if the trial continued.

The jury clearly ignored his threats. The same 12 jurors who convicted Jeffs will also sentence him possibly to life in prison. The penalty phase has begun and is expected to last two or three days.

Let's talk now to Gary Tuchman and KTVK investigative reporter Mike Watkiss, who has been covering Jeffs for years. They've been in the courtroom every single day.

Gary, was the closing argument -- argument probably the most bizarre moment in this most bizarre of trials?

GARY TUCHMAN, CNN NATIONAL CORRESPONDENT: Yes, a strange trial. And it was the strangest part of the trial, Anderson. Warren Jeffs got up there and was told by the judge, you have 30 minutes for your closing argument. He had said all along that his religion has been violated; he's never denied the sexual assault charges.

He got up for his 30-minute closing arguments and was quiet for the first minute. And he was quiet for the next four minutes. And the judge said you have 25 minutes left. Well, he's then quiet for five more minutes, five more minutes and never said a word.

There were 200 people in the courtroom. And we were all just looking at each other. The jurors were looking at Jeffs. It was completely quiet -- dead quiet, for 24 minutes. And then, Warren Jeffs turned to the right. That's where the jury was sitting. And he slowly moved his head and looked at every juror in the eye, completely crept the jurors out.

And then, he turned his head back to the judge. And he had this four-word quote. "I am at peace", and then sat down. Now, it's unlikely he would have been found not guilty in this case. But I will tell you, looking at the jurors like that, with that look, didn't help his case at all.

COOPER: You know, Mike, I was curious about your thoughts. Because I mean, you've been following this -- I mean Gary has been reporting this for us for years. But you've been following it for years before that. What did you think when you -- when you finally heard the verdict?

MICHAEL WATKISS, INVESTIGATIVE REPORTER, KTVK: Well, I'm not a bit surprised in watching Mr. Jeffs' performance in the court today. I heard one of his standby lawyers say that he meant no slight to the court with his silence. And I would strongly beg to differ.

I think that it showed his utter contempt and disdain for this entire process. His disdain for the charges, the jury, certainly the judge, Barbara Walther, who I think has shown extraordinary patience and really exemplary judicial wisdom in handling this difficult matter. This is a woman that he threatened and belittled.

And then what did he say? He said, "I am at peace." He's at peace, like he's still the only person that matters here. Never once while I was sitting in that courtroom did I ever hear him refer to the two young girls that he raped, the charges against him. And so, you know, I just think it's another little window on the soul of a totally self-possessed man.

COOPER: And Mike, you have sources who say that for the penalty phase, we should strap in our seat belts. What are you hearing?

WATKISS: Well, the source very close to this case has told me that they have much greater latitude in the sentencing. Basically, they could open up all the issues, the myriad of wrongdoing that Mr. Jeffs has committed to his own followers.

And bear in mind, his victims are the people who worship him, breaking up families. Men had their families taken away and killed themselves. The boys cast aside. So they really had to focus on the charges involving these two young girls. But now, they have much greater latitude.

And -- and this source tells me that you haven't seen nothing yet if you think this trial was gut-wrenching and bizarre, because they have a lot greater -- greater flexibility to introduce a lot more evidence.

COOPER: Gary, what do we know about the victims at the center of this case?

TUCHMAN: Yes. The two victims -- and this is a very interesting part of this case -- did not testify. They got guilty verdicts without the victims testifying. They're now 16 and 21 years old in real life.

They did not testify because they're too scared to. They don't want to because we believe they're still members of the FLDS. And you may be wondering, so how are they doing?

We asked the attorney general of Texas who was here today how are they doing. He says, we have reason to believe they're safe, which means to me there's a lot of good people in the FLDS who are not like Warren Jeffs. And it appears to us that the authorities know they are with reasonable people, reasonable family members within FLDS.

COOPER: And Mike, what happens to Jeffs now. There's the penalty. Are there other trials elsewhere?

WATKISS: Well, there's five more men who are going to be tried here in the state of Texas. Four more men -- excuse me. They've already convicted seven. Mr. Jeffs is now the eighth. They're all serving very significant prison terms.

And the attorney general here in Texas, Greg Abbott, said today this is very much an ongoing investigation. And, you know, for somebody who's been doing it as long as I have, I'm hoping that everybody sort of wakes up and recognizes that these are chronic and systematic abuses. And that when the cameras go away and the satellite trucks go away, these guys will go back.

And Gary's right. I met some of the smartest, nicest people inside that community. But they have a real bad leadership. And they have always had bad leaders.

I don't think there was a nuance or an utterance in that court that was new. This stuff has been going on for years. And hopefully, we have reached critical mass, and people are going to start holding these men accountable.

COOPER: And Gary, I mean, you know, we've watched you over the years being chased off their territory, having doors slammed in your face. What did you think when you heard the verdict?

TUCHMAN: Yes, no surprise about the verdict. The surprise was that he represented himself and he came off looking very foolish and stupid.

I mean, the fact is, when you represent yourself and all you keep saying over and over again -- it was like watching the movie "Rainman", with Dustin Hoffman. He just kept repeating over and over again, "This is assault on my religion, assault on my religion" -- never mentioning these girls.

One very important thing, Anderson; we speculated for years, you and I together, how many wives Warren Jeffs has. We don't know for sure. Well, today, in the beginning of the sentencing phase, we finally found out the answer. Prosecutors revealed that they believe Warren Jeffs has 79 wives; one legal wife and then one wife -- 78 celestial wives. In addition to that, more importantly, the prosecutor said 24 of his wives, 24 of his 79 wives, he married when they were under the age of 18.

COOPER: Wow. Gary, appreciate it.

Mike Watkiss, as well, thanks so much.

More on the breaking news, though, ahead. Gary takes us inside a town where loyalty to Warren Jeffs runs so deep that even the local police look the other way when the FLDS crosses the line. A lot of them are members.

Plus, Warren Jeffs' lawyer joins me. She didn't represent him in court, but she is still -- he is still her client.

Also ahead, four masked men who stormed the house of a Florida couple learn their fate for their role in the grisly double murder.

(COMMERCIAL BREAK)

COOPER: Gary Tuchman, talking to one of Warren Jeffs' followers. We were talking to Gary earlier. She expects to get married and to share her husband with sister wives, however many she can get. Her devotion to Jeffs is typical of his followers.

More now on tonight's breaking news. A jury today found the polygamist sect leader guilty of child sexual assault. The penalty phase has begun. Jeffs could get a life sentence. What that might mean for his estimated 10,000 followers is uncertain.

Gary has been covering this story, as we talked about earlier, for years. And his reporting has shown that Jeffs has continued to lead his church, the FLDS, even while in prison. Gary learned, for example, that while awaiting trial, Jeffs has used thousands of dollars worth of phone cards to stay in touch with church members.

His followers are spread across several states in America, isolated by choice and hostile to outsiders. Now, in towns like Colorado City, Arizona, even local law enforcement is loyal to Jeffs and his sect.

Here's Gary Tuchman, once again.

(BEGIN VIDEOTAPE)

SAM BROWER, PRIVATE INVESTIGATOR: I've never seen it like this before. I've been here for seven years, and I've never seen things so unstable and so lawless. I consider this the most lawless town in the country.

TUCHMAN (voice-over): Sam Brower is a private investigator and writer who's been following the polygamist sect closely for nearly a decade and has written a book about the FLDS, called "Prophet's Prey".

(on camera): Do you think there are comparisons to be made to, like, the Taliban or the Mafia?

BROWER: Absolutely. I mean, even the Utah attorney general has stated that the FLDS, this community is run Taliban-style. And that's -- and that's really all the FLDS church is, in my opinion, is an organized crime family.

TUCHMAN (voice-over): Attorneys for the breakaway sect say that kind of assertion is nonsense, that the polygamist leaders and their followers who live here simply want to be left alone, to practice their religion as they see fit.

But real violence, according to some neighbors, has crept into the community. This burned-out patch of grass in the town of Colorado City, Arizona is evidence of what authorities say is a very disturbing example. Arizona state investigators say FLDS leaders burned dozens of books here, rather than let an open library be built. Why -- because they believe those books were collected by infidels.

STEFANIE COLGROVE, FORMER FLDS MEMBER: They burnt things that didn't belong to them. They broke and entered the building.

TUCHMAN: Former FLDS member Stefanie Colgrove says she worked for more than two years to collect books for the new library, a library independent of the church.

(on camera): And what did they do with the books?

COLGROVE: They hauled them out of the building.

TUCHMAN: And then what did they do with them?

COLGROVE: We assumed that they were burnt. We saw a massive bonfire and assumed all of this was on the pile, because we saw books in the burning pile.

TUCHMAN: The library invaders certainly didn't worry about covering their tracks. This is the remnants of one of the charred books. Looks like a medical textbook.

(voice-over): County investigators say the local police in Colorado City are all members of the FLDS and have ignored the arson. Those local police have not returned our calls. It's the county authorities who have worked to crack down on the church.

(on camera): So you're with the county. And they're the local police. And normally 99.9 percent of the time, police all work together. You don't work with these guys, do you?

GARY ENGELS, MOJAVE COUNTY CHIEF INVESTIGATOR: Not at all. Can't even get them to talk to me most of the time.

TUCHMAN (voice-over): That's because, according to Mojave County chief investigator Gary Engels, police here obey the religious leaders first, civilian leaders second.

(on camera): In your eyes is their allegiance more to the Constitution of the United States or to Warren Jeffs, their prophet?

ENGELS: I believe that their allegiance is probably more to the church. I know they were required to swear allegiance to Warren in one of their church meetings here not too long ago.

TUCHMAN (voice-over): When we asked local police for a comment, they did not respond.

Gary Tuchman, CNN, Colorado City, Arizona.

(END VIDEOTAPE)

COOPER: As we said, Warren Jeffs acted as his own lawyer during his sexual assault trial. He dismissed his defense team. Emily DeToto was on that team and remains Jeffs' lawyer. She joins me now, along with Flora Jessop, a former member of the FLDS, who is with us by phone.

Flora, you suffered at the hands of the FLDS for years. What was your reaction today to the verdict?

FLORA JESSOP, FORMER FLDS MEMBER (via telephone): I am elated. I am happy for all of his victims. And for the many that he didn't get a chance to abuse because he has been in jail for five years. And I'm just looking forward to moving forward and trying to help as many of these women and children that we can.

COOPER: Emily, today, Jeffs stared down the judge and each jury member during his closing arguments. Do you know why he did that?

EMILY DETOTO, LAWYER FOR JEFFS: First of all, good evening.

JESSOP: Of course. He --

COOPER: Sorry. Sorry. I was talking to -- to his attorney. I'm sorry. Just hold on there, Flora.

JESSOP: OK. Sorry.

COOPER: That's OK.

DETOTO: First of all, good evening, Anderson.

COOPER: Hey.

DETOTO: You stated that he stared down the judge and the jurors today. While I was not in the courtroom during his closing argument, I've spoken with several people who were, in fact, in the courtroom during that, during his closing argument. And I would have to disagree with your characterization of the fact that he stared them down.

Having spent as much time as I have with Mr. Jeffs, he is a very quiet person. And he actually thinks deeply before he speaks. And so --

(CROSSTALK)

COOPER: Well, he raped two children. And he's been convicted of raping two children. So, I mean, whether he stared down or -- he stared at the jurors for a significant amount of time in silence. Do you know why he did that?

DETOTO: Well, I understand -- well, if we want to -- he is not a skilled trial lawyer, first of all. He has never given closing arguments before; never given opening statements before. Never direct --

COOPER: But he chose to act as a juror. And you just said he's a smart man and a well thought-out man. He's clearly thought this out. Do you know why he thought it out to stare at the jurors in silence?

DETOTO: Well, I believe that he -- I can't go behind his reasoning for looking each juror in the eye. But I can tell you, as a skilled trial lawyer, what I do when I approach closing arguments is I engage each individual juror before I speak to them to acknowledge them and to make sure that they have my attention.

Now, Mr. Jeffs is not a trial attorney. So I can't speak to why he would look each juror in the eye. But I can tell you that he's a man who thinks deeply before he opens his mouth. And, yes, he did choose to represent himself. That choice was knowingly, voluntarily undertaken. It's a choice I support -- supported and do continue to support. But to characterize him as staring down the judge or the jury, I would disagree.

COOPER: Do you think he deeply thought it out when he -- basically, when he seemed to make a threat or a veiled threat to the judge, or at least kind of mocked her medical condition, the fact that she had had polio, he referred to a wasting disease that would descend upon her? Was that wise?

DETOTO: While I -- while I cannot -- I did -- while I cannot speak to his reasoning behind those choice of words, I would direct you to various religious readings where people who choose to persecute others, inevitably, are stricken with diseases and/or death. That is all I will say on that topic.

COOPER: So what -- I don't understand what you just said.

DETOTO: Well, what I'm saying is I did not write the motion to recuse, the one you're referring to where he allegedly threatened to bring down a disease on Judge Walther.

But what I can tell you, is that, in my interaction with -- through my investigation with this case, and my exposure to different readings, religious readings, it has been shown throughout time that those who do choose to persecute others, inevitably befall something -- something. And I'll leave it at that.

COOPER: You're saying, based on your religious readings, you've discovered that people who persecute others get wasting diseases?

DETOTO: No. What you're asking me is to speak behind Warren Jeffs' choice of words. I cannot do that, because I was not privy to the writing of that motion.

COOPER: But you seem willing to speak for him as a man who thinks things out. I'm just wondering. You seem to know about his thought process by your own words. I'm just wondering if you knew his thought process. You clearly don't.

Flora, do you understand what he was trying to do in court, by remaining silent? By staring down or at the jurors? By, you know, suggesting that the judge was going to get a wasting disease, a judge who had experienced polio earlier in her life?

JESSOP: You know, I found that to be very disturbing, Anderson, and the quote -- the comments about Judge Walther.

And as far as staring down the judge and the jury, you know, he is used to having 10,000 people do his bidding and bow at his feet. And I think that he kind of maybe thought that, with his sermonizing and reading of his scriptures, that with his witness on the stand, that he maybe was thinking maybe he had convinced these people that he was just doing his sacred, religious beliefs. And he needed to -- they needed to send him on home and quit this nonsense.

And just the fact that there were ten women on that jury and the judge was a woman was the greatest of insults to Warren Jeffs.

COOPER: Emily, do you think he plans to appeal?

DETOTO: Well, he certainly has the right to appeal. I cannot foresee any reason why he would not choose to exercise that right to appeal. Having been there from the beginning of this litigation, which began -- well, the beginning of my involvement, which was the second recusal hearing, which occurred on July 18. Said motion was denied on July 19. I believe that there's enough issues there in the record that would certainly merit an appeal.

COOPER: Emily DeToto, I appreciate your time. Thank you.

Flora Jessop, as well, thank you very much.

Still ahead, a security scare at Virginia Tech four years after a gunman killed 32 people at the university. Police issue a campus alert, warning a man may be on campus with a gun. We'll tell you what happened.

(COMMERCIAL BREAK)

COOPER: Tom Foreman joins us with the "360 News & Business Bulletin" -- Tom.

FOREMAN: Hey, Anderson.

A tense day on the Virginia Tech campus; an alert was issued this morning after a report that a man was on campus, possibly carrying a gun. Summer school students were told to stay indoors and classes were eventually canceled. After several hours of searching, though, no gunman was found, and the alert was dropped.

In 2007, as you may recall, a gunman opened fire at Virginia Tech, fatally killing 32 people before killing himself.

In Florida, four men were sentenced for their role in the deadly raid of that couple's home a couple of years back. They each face prison terms ranging from 17 and a half to 24 years. In 2009, the masked men stormed onto the property of Byrd and Melanie Billings. The couple was murdered while their nine adopted special needs children were at home.

Chrysler is recalling almost 300,000 minivans because the air bags may deploy unexpectedly. The recall affects the 2008 models of the Dodge Grand Caravan, Chrysler Town and Country, and Grand Voyager.

And scientists have found possible evidence that salt water exists on Mars during its warmer months. That is raising chances that life exists on the Red Planet. They examined images from NASA's spacecraft orbiting Mars that show dark lines in the terrain that grow and shrink, depending on the season. That could indicate some kind of salt water there. This is very big news, Anderson -- very exciting.

COOPER: Yes. It's very cool.

We'll be right back.

(COMMERCIAL BREAK)

COOPER: There's a chance you're starting to worry about your 401(k) and other investments after today's massive losses on Wall Street. As we mentioned at the top of the hour, the Dow plunging more than 500 points, wiping out all gains for the entire year. With the markets in (INAUDIBLE), the public increasingly wary of how the government is managing its finances, there's renewed focus on what Americans can do to make the most of their bottom line.

Clark Howard is a consumer advocate, author of the new book, "Living Large in Lean Times". He's also host of the HLN show, "CLARK HOWARD" which this weekend begins a new series, "Joplin, a Special Report".

I recently spoke to Clark about his new book and how America can get its fiscal house in order.

(BEGIN VIDEOTAPE)

COOPER: When you see this debt ceiling drama going on, I mean this is kind of a perfect time for you to come out with a book because it is -- I mean everybody wants to know how to live large in these lean times.

CLARK HOWARD, HLN HOST: Right. And you know, we're dealing with this at every level of government in people's own lives. We went through a long time period in America where we over-obligated ourselves as individuals. Government at all levels really over- promised. Now, the bills are coming due.

And just as we saw the struggle in Washington, to try to figure out who's going to take the hit, the reality is, it's so much easier in your own life because in your own life, when you change how you handle money, there's a direct reward to you.

COOPER: Right.

HOWARD: Obviously, when Washington changes something, it doesn't work like that.

COOPER: Well, years ago, someone said to me or I read somewhere that, you know, not spending money is also saving money.

HOWARD: It's powerful.

COOPER: It actually changed the way I thought about it. And I enjoy not spending money on things.

HOWARD: What I've tried to do this time is lay out steps that are like beginner steps. How do you start to stretch every buck you have with little, everyday things.

COOPER: What are some of those things? HOWARD: First, with every day, when you're walking around, if you have no idea where your money goes through, a pay period cycle, get a little, teeny, three-ring notebook. The find you can put in your pocket or women in their purse. Write down everything you spend money on --

COOPER: I did that. And it's shocking.

HOWARD: It is stunning.

COOPER: Yes.

HOWARD: Because money vanishes that you don't even realize. And if somebody can't seem to get control and they think they've solved the problem by getting a debit card instead of a credit card and they still don't have a sense of control, what I want people to do is go to cash.

Figure out -- let's say you get paid twice a month, so 15th and 30th of the month. On the 15th, you take out a certain amount of cash that you have decided you're going to live on for your walking around money for that next two weeks or so. And that has got to last you.

COOPER: Because on TV now, especially on all these reality shows, we see all these people who are literally living large. I mean --

HOWARD: Right.

COOPER: And it's like "The Real Housewives," you know --

HOWARD: All flash, no cash.

COOPER: Right. I mean "The Real Housewives of Beverly Hills" are the only ones who are really rich, I think. The other ones I think are kind of living that life.

HOWARD: Right.

COOPER: They have chefs and stuff. I'm like how does that person afford a chef?

HOWARD: Well, because they're not paying the mortgage because the mortgage -- your house is getting foreclosed because they're paying for the chefs.

COOPER: But when people see that, they think, I want that. That's attainable. And it's not really attainable. It's not sustainable.

HOWARD: No. It's not real life.

COOPER: I was a moron. For the first three years or four years I worked at ABC News, I did not have -- I did not do the 401(k). And it was as simple as signing my name on a piece of paper. But it seemed somehow complicated to me. And I didn't want to figure out how -- and I didn't do anything about it. I lost a lot of money for that.

HOWARD: That's right.

COOPER: Like a moron.

HOWARD: Don't feel like a moron. Because the deal is people learn when they learn and they start doing it when it's right for them in their lives. The younger somebody starts, though, the better.

COOPER: Right.

HOWARD: I am always excited when a 20-something says to me, I've been listening to you since I was in elementary school. And I have my 401(k) or I have my Roth account. I want someone to have that sense that they can take charge of their future.

COOPER: Clark Howard, I love -- I'm a huge fan of yours.

HOWARD: Thank you.

COOPER: So thank you for being with us.

"Living Large in Lean Times" is the book. Thanks.

HOWARD: Thank you.

(END VIDEOTAPE)

COOPER: I'm a big fan of his. You can see my full conversation with Clark Howard on ac360.com.

That does it for 360.

Thanks for watching.

"PIERS MORGAN TONIGHT" starts now.

I'll see you tomorrow.