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CNN LARRY KING LIVE

Global Stock Shock; Interview With Oliver Stone

Aired October 6, 2008 - 21:00   ET

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


LARRY KING, HOST: Tonight, global stock shock wave -- worldwide alarm triggers a historic sell-off before the markets rally and then rebound.
Should we brace ourselves?

Is rock bottom yet to come?

And the political campaign -- how low can they go?

On the eve of the candidates' debate, Sarah Palin attacks Obama.

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: I'm afraid this is someone who sees America as imperfect enough to work with a former domestic terrorist, who had targeted his own country.

(END VIDEO CLIP)

KING: Obama says it's a scare tactic.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESUMPTIVE NOMINEE: I think it's not what the American people are looking for.

(END VIDEO CLIP)

KING: And Tina Fey has a field day with all of it.

(BEGIN VIDEO CLIP FROM "SATURDAY NIGHT LIVE," COURTESY NBC)

TINA FEY, ACTRESS/COMEDIAN: We are not afraid to get mavericky in there...

(LAUGHTER)

(END VIDEO CLIP)

KING: Plus, Oliver Stone talks about "W" and what he thinks of the two guys running for president.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: All right, hold it down. Let's ask the filmmaker what he thinks. (END VIDEO CLIP)

KING: It's all right now on LARRY KING LIVE.

Good evening.

The Dow way down today -- 800 points -- before it bounces back, closing at 369 in the hole. It got pretty hairy there for a while, as the dire economic situation worldwide forced Wall Street's hand.

To talk about all this, in New York is Ali Velshi, CNN's senior business correspondent, the host of "YOUR MONEY."

In Nashville, Tennessee, Dave Ramsey. We always love to call on Dave. He's a personal finance expert and the "New York Times" best- selling author of "The Total Money Makeover."

All right, Ali, what's your read on today?

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Well, Larry, if you bought stocks at 3:00 in the afternoon, by 4:00 you were up 400 points, if you want to look at it that way.

Look, this was not what we had expected to see, particularly after that bailout. And the questions we've been getting all day from people is what happened?

We thought $700 billion would solve the whole thing.

Well, no. In fact, the $700 billion was directed at this credit freeze that you and I have talked about several times. It was actually never going to go directly to the stock market.

The stock market operates on a basic principle, Larry. It makes money when the companies in the stock market make money. Those companies make money when Americans spend money. And Americans spend money when they have money.

There's only three ways you really feel like you have money. And that is your wage goes up, you know you've got a good job and you're -- the price of your value goes up. None of that's happening right now. And what happens is you've got a real realization from investors today that, all right, the bailout is out of the way for now. We have a pretty bad economy.

KING: So, Dave, when it goes up and down like that, what is the investor saying?

DAVE RAMSEY, PERSONAL FINANCE EXPERT: Well, it really runs on emotion in the short-term. On the long-term, the stock market actually reflects real value inside of the companies.

And so, when you take a company like a Microsoft or a Wal-Mart apart, and you say well, this company is profitable, it has certain ratios. On the long-term, the stock will reflect that value. But on the short-term, it answers to rumors, it answers to emotion. And honestly, on the short-term, it's a spoiled child. You don't know how it's going to act.

KING: Eighty-five percent, Ali, of Americans polled say economic conditions are poor and 59 percent think another depression is coming.

Do you share that view?

VELSHI: I think -- I agree with the 80 percent who think the economy is poor. I don't think a recession is coming. I think there are some things about our economy today that are very different than they were in the '20s and '30s. Number one, your money is safe in banks. And we've made a good point of letting people know that.

Number two, there's a lot of information from you and Dave and other people and the Internet that lets people prepare themselves for that sort of an economy.

And, number three, businesses can prepare better. So, for instance, we're heading into the holiday shopping season and there is no company that should be overstocking for this Christmas. They know not to. In the old days, you would have been stuck with all this inventory that didn't sell that was then worth nothing. Now you save that a little bit, and maybe after Christmas things look better and you can start hiring people again.

So there are reasons why it won't be a depression.

But a deep recession is a possibility. And it all comes down to jobs, Larry. If we keep losing jobs, that's what puts us into a recession.

KING: Dave, President Bush said today that the financial rescue plan is going to take time to work.

If that's right, how long and how will we know if it's working?

(LAUGHTER)

RAMSEY: Well, it's going to take a while because, obviously, they've got to take the seven hundred thousand million and go borrow it from the market, in the form of Treasury notes and Treasury bills, and inject it into the market by starting to actually buy these bonds -- these junk bonds that we -- the taxpayers are now going to own.

And it takes a little while for all those transactions to take place. It may take a year for the infusion -- if they do it quickly. And the federal government is not known for efficiency. And so if they do it quickly, a year we could see some turn on that part of it.

But the big thing was the psychological reaction that they were hoping for, they did not get today.

KING: So, Ali, the next president inherits this?

VELSHI: Absolutely, 100 percent. It might be a good idea for the president to stop all that bickering that you're about to talk about and outline their economic plan, maybe even with their economic team, and tell people these are the people who are going to help me get through this. Because there is zero chance that the next president of the United States does not inherit a full recession.

KING: All right, Dave, what's the biggest financial mistake an ordinary person could make?

RAMSEY: To panic. You don't want to panic right now. You want to just be calm. We've -- Ali and I have been telling people on your show several times a week for the past several weeks that same message over and over, because it is true. Again, it's kind of a politically charged term, but the fundamentals of these companies that represent our economy are actually OK. It's not a great time, but Wal-Mart is not going to close and McDonald's is not going to close and Coca-Cola and Microsoft are not going to close.

So long-term, we'll work our way through this. And so if you panic and pull your money out of the market right now, you've jumped off a roller coaster on the down side and that's silly.

VELSHI: I mean, Larry, you know...

RAMSEY: (INAUDIBLE)...

VELSHI: Sorry, Dave. I didn't mean to interrupt you.

RAMSEY: That's OK.

VELSHI: But we are -- none of us are smart enough to know when it's too late to get out or when it's too late to get in.

RAMSEY: Right.

VELSHI: And that's part of the problem. You can't time this market if you don't do this for a living.

RAMSEY: Exactly. And even those that try to do it for a living -- I lost money today fooling around with it. So, it's a pretty scary thing on the short-term to try to guess when to jump on or jump off. Ali is exactly correct.

We've had 10 times since 1970 that the market has gone down more than 10 percent. Every year, following the -- wherever the bottom is -- the market has recovered, the following year, an average of 33 percent. All but one time in nine years -- and all but one time out of those 10 times -- nine out of 10 of them, in other words -- it recovered that following year all that it lost except once.

KING: Ali, what do you make of the spread to Europe?

VELSHI: Well, listen, there are two ways it spreads to Europe. One is major European investors were invested in these mortgage-backed securities -- you know, the one person's mortgage that got sold to their bank, that got sold to Fannie and Freddie, that got sold to major investors. So they're hurting on that end.

The second way they're hurting is that the U.S. consumer has been the diving force of the world for so long. When the U.S. consumer is weak, that affects the entire world's economy. So it's spreading into their banking system and it's spreading into their system that manufactures and sells things to us. They're getting it really hard.

And the bottom line is the rest of the world was supposed to rescue us from this recession because they were healthy. At the moment, it looks like we've all got a bit of a cold.

The question is, does the cold become something more serious or is it contained?

And right now, it's all got to do with confidence from banks, from investors and from consumers around the world. It's just not looking great this week. I tend to be an optimist and say things turn around. But we have to acknowledge it is serious.

KING: We thank you, Ali Velshi and, as always, Dave Ramsey.

Give us your thoughts right now. Comment at our blog by going to CNN.com/larryking.

Next, we're talking politics.

And still to come, Oliver Stone. He's got that new movie "W."

Stay with us.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Fool me once, shame on you. But fool me twice and -- and -- and -- you can't get fooled again.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KING: OK. We're back.

Let's meet our outstanding panel. In Austin, Texas, Karen Hughes, former counselor to President George W. Bush.

In Washington, Jamal Simmons, communications adviser to the Democratic National Convention.

Also in Washington, Terry Holt, national spokesperson in the past for the 2004 Bush/Cheney re-election campaign.

And in San Francisco, Joan Walsh, editor-in-chief of Salon.com. She's a supporter of Barack Obama.

Gang, on the eve of the second debate, harsh words from John McCain. At a rally in New Mexico. He branded Obama liar and framed it this way.

Watch.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: What has this man ever accomplished in government?

UNIDENTIFIED SUPPORTERS: Nothing!

MCCAIN: What does he plan for America?

UNIDENTIFIED SUPPORTERS: (INAUDIBLE).

MCCAIN: In short, who is the real Barack Obama?

(APPLAUSE)

MCCAIN: But, my friends, you ask such questions and all you get in response is another angry barrage of insults.

(END VIDEO CLIP)

KING: All right, Karen, before this campaign began, John McCain told me he would never get personal, that it would be just issues.

What's going on?

KAREN HUGHES, FORMER COUNSELOR TO PRESIDENT GEORGE W. BUSH, SUPPORTS MCCAIN: Well, I think -- I think that Senator McCain believes that there are fundamental questions about Barack Obama's record and about his associations, and that those were out of the mainstream and that those offer a window into how he would handle the challenges of the presidency, Larry.

And I think one of the most interesting things that Senator McCain did, and perhaps the most important thing in that speech, was he began to talk about the crux of the economic problem. And I think that's important, because I believe Barack Obama has fundamentally misdiagnosed the reasons for the economic problem. And if you misdiagnose a problem, you can never fix it.

Barack Obama has been talking about deregulation. The primary deregulation bill was signed by President Clinton in 1999. And President Clinton, I believe, told you that he would sign it again. And so they have a fundamental disagreement there.

But the real issue is what happened -- also in 1999 -- was that Fannie Mae and Freddie Mac launched a new program to begin giving -- encouraging banks to give home mortgages to people who...

KING: All right...

HUGHES: ...otherwise couldn't afford them. And that rippled through the system. And that's the crux of our problem today.

And Senator McCain and others tried to reform that problem in 2005 and 2006. And Barack Obama did nothing. He stood on the sidelines.

And so I -- I think that was the most important line of attack that he took on in his speech today, Larry.

KING: Got you.

Jamal, is the campaign getting dirty?

JAMAL SIMMONS, DNC ADVISER, SUPPORTS OBAMA: Well, yes. You heard directly from the McCain campaign, from some unnamed adviser in the McCain campaign, who said we have to talk about -- we have to change the subject. We can't talk about the economy because we're losing.

And you just heard Karen sort of give this revisionist history about what happened to get us to this point.

But we know one of the reasons we got here is because of Phil Graham and his effort at deregulation. We know one of the reasons that we got here is because Phil Gramm was one of McCain's advisers. Because of John McCain and his 26 year history of supporting deregulation. And then because of an SEC that was not actually enforcing the regulations that it is -- that existed on the books. And they kind of had this hands-off approach toward American business.

So that got us here. But the reason why we're talking about all these other issues -- and you heard in the clip, someone yelled out, when John McCain said, "Who is Barack Obama?," someone yelled out "terrorist."

UNIDENTIFIED FEMALE: Right.

SIMMONS: And John McCain said nothing -- said nothing to reprimand that person and or say that's not what we believe here, we're going to move on.

He has started -- he's lit a fire that is going to come back and bite him, because I think people are taking this too far and they are ignoring the fact that Barack Obama is somebody...

KING: All right...

SIMMONS: ...who's an Ivy League graduate. He's been in the United States Senate.

Do they really think that Barack Obama has been palling around with terrorists?

I mean...

KING: Terry...

SIMMONS: ...is that really what they're trying to say?

KING: Terry Holt, do you think tomorrow night is going to get -- for want of a better term -- rough?

TERRY HOLT, SUPPORTS MCCAIN, SPOKESMAN, 2004 BUSH-CHENEY CAMPAIGN: I hope not. I hope that Senator McCain will demonstrate that he can be a firm and steady leader, that he can make a connection with the American people -- the mainstream of America, that are looking at what's going on in the economy with a lot of anxiety -- and touch a nerve that makes sense to them.

And I also think he needs to demonstrate that his experience means a lot in terms of a commander-in-chief role, in terms of a dangerous world and all of the anxieties we have. He's got to make a connection with the American people. It's much more about him doing that than it is attacking Barack Obama, although there's plenty to say about Barack Obama.

KING: OK.

We'll take a break and come back. And we'll have a question for Joan Walsh, we'll mingle with the panel. A lot's going on.

Keep blogging, by the way, at CNN.com/larryking.

We'll be back in 60 seconds.

(COMMERCIAL BREAK)

KING: We'll be right back with the panel.

"Saturday Night Live" continues to have fun with Sarah Palin.

Let's take a look at Tina Fey's take on the vice presidential debate.

(BEGIN VIDEO CLIP FROM "SATURDAY NIGHT LIVE," COURTESY NBC)

TINA FEY, ACTRESS/COMEDIAN: Senator Biden, your closing statement?

(LAUGHTER)

UNIDENTIFIED MALE: My goal tonight was a simple one -- to come up here and at no point seem like a condescending, egomaniacal bully. And I'm going to be honest, I think I nailed it.

(LAUGHTER)

UNIDENTIFIED MALE: Sure, there were moments when I wanted to say, hey, this lady is a dummy.

(LAUGHTER)

UNIDENTIFIED MALE: But I didn't, because Joe Biden is better than that. I repeat, Joe Biden is better than that.

(LAUGHTER)

FEY: I'm happy to be speaking directly to the American people, to let them know if you want an outsider who doesn't like politics as usual or pronouncing the G at a word she's saying, I think you know who to vote for. Oh, and for those Joe six-packs out there playing a drinking game at home -- maverick. (LAUGHTER)

(END VIDEO CLIP)

KING: We'll get insight from Hughes, Simmons, Holt and Walsh -- it sounds like a legal firm -- after this quick break.

(COMMERCIAL BREAK)

KING: Coming up, we'll talk to Oliver Stone about his new movie, speaking of which, here's our Quick Vote tonight -- should movies with a political agenda be released right before an election?

Vote now at CNN.com/larryking or you can interact live right now. Blog.

Barack Obama is trying to push back against the McCain campaign.

Joan Walsh, here's an example I want you to comment on.

(BEGIN VIDEO CLIP)

OBAMA: Senator McCain and his operatives are gambling that they can distract you with smears rather than talk to you about substance. They'd rather tear our campaign down than lift this country up. That's what you do when you're out of touch, out of ideas and running out of time.

(END VIDEO CLIP)

KING: All right, Joan, is that the right way to handle this?

JOAN WALSH, EDITOR-IN-CHIEF, SALON.COM: I think it is, Larry. I mean he's also talking about substance. He's talking about, you know, keeping people in their homes, ending foreclosures. He's talking about his health plan versus John McCain's. So he's not just talking about the tenor of the campaign.

But, you know, the Republicans deserve credit for transparency in the last week. They told us in "The Washington Post," we're absolutely going to run a fear and smear campaign. They told us, as Jamal said today in the "New York Daily News," if we talk about the economy, we're losing.

And so it's clear that they're going to go to great lengths to really make people afraid of Barack Obama. And I think Democrats all over the country -- and Independents, frankly -- want to see him talk back, want to see him be strong.

I was really interested in something Terry said before the break. I like to give my Republican friends credit when they tell the truth, which I appreciate. Terry said some interesting things.

John McCain really did not seem like a reliable, trustworthy steward of our economy and our government...

HOLT: I didn't say that.

WALSH: You...

HOLT: I beg your pardon, ma'am. I never said that.

WALSH: You said...

HOLT: I never said that.

WALSH: You said that you needed to act...

HOLT: I spoke to what John McCain should be. Do not characterize my statement...

WALSH: You...

HOLT: ...because you've got it wrong, lady.

WALSH: You made great -- lady?

You made great reference, Terry, to the fact that John McCain scared the heck out of the American people in that first debate.

HOLT: I did not.

WALSH: And Barack Obama...

HOLT: I did no such thing.

WALSH: And Barack Obama seemed steady, compassionate, calm...

HOLT: I spoke to what he needed to do (INAUDIBLE)...

WALSH: ...and had a plan.

KING: All right. All right, hold it.

(CROSSTALK)

KING: Hold on.

WALSH: So I think John McCain does -- should take your advice.

KING: All right. Let Terry respond and we can go on.

HOLT: Sure.

KING: Terry, you want to respond quickly?

HOLT: I spoke about John need to talk to the American people about the anxiety and fears that they have about the economy, to demonstrate that he can be a good commander-in-chief. I made so such allusion to the last -- to the last debate.

WALSH: It sounded like it.

KING: All right, Karen...

WALSH: My mistake...

HOLT: I beg your pardon...

WALSH: ...Terry.

KING: Sarah Palin has been playing GOP attack dog, no doubt, in the last few days. And here's on the glove off attack, as she puts it.

Here's an example from today. And we'll have Karen comment.

(BEGIN VIDEO CLIP)

PALIN: Today they're saying for the first time that Barack Obama didn't know back then about Ayers' radical background.

(BOOS)

(END VIDEO CLIP)

KING: Is he -- is this...

(BEGIN VIDEO CLIP)

PALIN: But it was only a few months ago that Barack was saying that Ayers was just a guy in my neighborhood.

But wait a minute, he didn't know a few months ago that he had launched his political career in the living room of a domestic terrorist?

(END VIDEO CLIP)

KING: Hey, Greg -- right, Greg.

I'm sorry.

Karen, is this -- is this a fair issue?

-- is this HUGHES: Well, Larry, I think the real issues, obviously, are the economy. And -- but there are also issues of character and judgment. And, you know, it's interesting that traditionally in these campaigns, the vice presidential candidates are usually the one who throw the sharpest elbows. And that's been the case with Senator Biden, as well. He's had some very sharp things to say about -- about Senator McCain.

But in this case -- you know, I've known a lot of candidates who've run for public office. I've been to a lot of fundraisers. I'm not aware of anyone else of either party who's had the first fundraiser of their political career in the living room of a domestic terrorist who has refused to apologize for his past actions.

WALSH: That's not confirmed.

HUGHES: (INAUDIBLE)...

SIMMONS: Well, Larry, Larry, Larry...

WALSH: That's not confirmed.

SIMMONS: Yes, Larry. Actually, in the "New York Times" story that ran on Sunday, there was a retired 80-year-old rabbi...

WALSH: Right.

SIMMONS: ...who said that he thinks he and his wife had the first fundraiser for Barack Obama.

WALSH: There were a series of meetings.

HUGHES: Well, it was the first or second...

(CROSSTALK)

KING: One at a time.

SIMMONS: Hold on. This is important.

KING: One at a time.

SIMMONS: This is important because this is the problem with the way these stories develop. There are so many holes in this story. They say that Bill Ayers got him on the Annenberg Center board. Well, this woman named Deborah Leff, who said that she's the one who recruited Barack Obama into the Annenberg Center board.

WALSH: Right.

SIMMONS: So there are a lot of holes in this story.

The reality, though, is the only reason we're talking about this is because John McCain doesn't want to talk about the fact that 159,000 people lost their jobs last month. I was in Virginia over the weekend, where 40,000 people have lost their jobs since George Bush has been in office and where tuition costs have doubled in public universities.

People have real problems here...

KING: Yes. I think...

SIMMONS: ...that they're trying to get addressed. And that's what

This campaign ought to be about.

KING: Terry, do you think...

UNIDENTIFIED FEMALE: Larry, that's...

KING: Do you think a candidate for president would be a deliberate friend of a terrorist? HOLT: Yes, I mean...

KING: (INAUDIBLE) your wildest concept (INAUDIBLE)...

HOLT: Not if he could help it. But I think that, you know, the circle...

KING: Obviously. Right. I mean come on.

HOLT: Obviously not. But, look, when you're talking about judgment, you should at least say I was wrong to be friends with a domestic terrorist. He's never said that.

In John McCain's case, where Barack Obama is attacking John McCain for being part of the Keating Five, John McCain said it was the worse mistake of his life. He's been contrite. And, you know, he's changed his entire political career as a result of that mistake.

Barack Obama hasn't said one word, except dodging and saying that nothing happened...

WALSH: That's not true, Terry.

(CROSSTALK)...

HUGHES: And, Larry, that's really the issue here...

WALSH: That's not true.

KING: Joan?

HUGHES: And it also goes to the heart...

KING: It's Joan's turn.

WALSH: Thank you, Larry.

You know, he's called Ayers' past career reprehensible. They are not friends, they're colleagues. I met Bill Ayers. I lived in Chicago. Like it or not, he has become a respected member of the kind of liberal educational reform circles...

HOLT: Liberal establishment that Barack Obama is a part of.

WALSH: Let me finish, please, Terry.

HOLT: Sure.

WALSH: His father -- thanks to his father's wealth and his father's connections, that really helped him rehabilitate himself in Chicago. And they are not friends. They do not pal around. They do not have dinner together. They were certainly on a board. And I don't feel that Obama has tried to hide that. He's spoken about it. Other people have tried -- what Sarah Palin said was despicable. She said he thought the country was imperfect enough that he wanted to pal around with a domestic terrorist, implying that he thinks terrorism is the answer for our country's problems, which, of course, is the farthest thing from Barack Obama.

He's known in some circles as kind of a liberal, namby-pamby guy, when he was a Harvard. He was never radical enough for the radicals.

So it's just such a smear...

KING: All right, let me get a break.

WALSH: ...that has no basis in reality.

KING: Let me get a break.

Still ahead...

(CROSSTALK)

KING: Still ahead, Oliver Stone. He'll talk politics and his new movie, "W."

Stay there.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Come here. I'd like for you to meet George Bush, Jr. .

UNIDENTIFIED FEMALE: Oh, well.

UNIDENTIFIED MALE: You can call me anything but Junior.

(COMMERCIAL BREAK)

KING: We're back.

By the way, Karen Hughes, are you going to see the "W" movie?

HUGHES: I don't know, Larry. Probably not. I don't think I'll like much of it.

KING: I think you might be surprised.

HUGHES: Is that right?

KING: Yes. There's a lot -- well, see it and let me know.

HUGHES: But I have a program idea for "Saturday Night Live." I think we ought to put Governor Palin on "Saturday Night Live" with Tina Fey. Now, that would be great television.

WALSH: I agree.

KING: If she'd do it. If she'd do it, that would be great.

All right, Karen, watch this. This is a McCain ad -- a new TV ad calling Barack Obama dishonorable and dangerous.

Watch. Give me a thought.

(BEGIN VIDEO CLIP FROM JOHN MCCAIN FOR PRESIDENT CAMPAIGN AD)

UNIDENTIFIED FEMALE: Who is Barack Obama?

He says our troops in Afghanistan are...

OBAMA: Just air raiding villages and killing civilians.

UNIDENTIFIED FEMALE: How dishonorable.

(END VIDEO CLIP)

KING: Is that dishonorable, Karen?

HUGHES: Well, Larry, I don't know the context of that ad or the context of that statement. So I would want to look at the complete context of the quote. At this point in the campaign, both campaigns have launched some words that -- I know Senator Obama's campaign called Senator McCain dishonorable. This is choosing time. The rhetoric will become more strident.

But fundamentally, I think tomorrow night's debate is a chance for the candidates to really connect with the voters. This is the peoples' debate, tomorrow night. Unfortunately, Senator McCain asked for there to be ten town hall meetings across the country. This should have been the 12th get together of the two candidates because of the first debate. I actually think conventional wisdom is usually that the first debate is the most important.

I actually think tomorrow nights may end up being the most decisive point in this bait. It's been a difficult couple weeks for Senator McCain. The polls show Senator Obama in a slight lead. Voters are anxious and nervous about the economy. I think a lot of people will tune in tomorrow night. And they will want to hear directly from the candidates about the issues that affect their lives, starting with the economy.

KING: OK, by that way, that ad, apparently, was taken out of context, we are told. Obama brought up the total Afghanistan statement was, "we have to get the job done there, and that requires us to have enough troops so that we are not just air raiding villages and killing civilians" --

HUGHES: That's why I said, Larry, that I -- I did not comment on that because I wanted to see the context. I was not familiar with the context of that quote.

KING: Jamal, the Obama campaign unveiled a new ad about the economy. Watch.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Three quarters of a million jobs lost this year, our financial system in turmoil, and John McCain erratic in crisis. (END VIDEO CLIP)

KING: Is all of this John McCain's fault, Jamal?

SIMMONS: Well, the way he responded to it is certainly his fault. I think what we have seen out of McCain over the course of the last few months is he had the sort of surprise pick a Sarah Palin, who he had only met one time before he offered her the job. Then the economic crisis happens. He decides I am going to suspend my campaign, and, not only that, we should push back the date of the first debate, and I'm going to go to Washington and solve the problem. He goes to Washington and the problem blows up, and fails in the House of Representatives.

Then John McCain is now out on the trail, and his own campaign people are saying they have to go negative because they can't talk about the economy. They are throwing stuff up against the wall. Stuff is the polite word I will use. They are just throwing stuff up against the wall, and trying to see what will stick. And so this campaign has got to get back to where Barack Obama is. He is strong, he's steady, he's reasoned, he's rational. And John McCain, frankly, is a little erratic and is kind of trigger happy. It's sort of ready, shoot, aim.

KING: Terry, what do you expect tomorrow night?

HOLT: Well, I expect that because it's a town hall setting that the people will get to decide the tone and way this thing plays out. And John McCain has done thousands of town hall meetings. He is really good in this setting, but he also has got everything on the line. Karen was right about this time in the campaign. It's choosing time. I think we need to make sure that our supporters are there, that there is an aggressive effort to get everybody thinking about supporting him to definitely support him, and focus on those swing voters, those undecided who are still looking for a place to go ultimately in the campaign.

I think those folks need to hear who is going to be the steadier leader in tough economic times, in a global war on terror. That's really what is going to make the difference tomorrow night.

KING: Joan, do you think that there is still people who don't know who they are going to vote for, Joan?

WALSH: That's what the polls tell us, Larry. I can't understand it. The four of us here have our minds made up clearly, and there is lots of evidence, you know, on both sides to help you support your candidate. But I think it is such a time of economic uncertainty for people that, you know, there are people who maybe wouldn't give Barack Obama a look because he is newer, who are looking at him, you know. I have been hearing that from people who are walking precincts for him, that these economic issues --

You know, Larry you have always been my role model. I never want to retire either, but now I can't. So there are people who don't have the jobs we have that we love, who really were looking forward to retiring, to spending time with their grandchildren who literally cannot. And that's creating a climate of uncertainty that I think is bad for John McCain, because I think some of those undecideds are going to break for Obama in this crisis.

KING: I'll come right back to you, Karen. We're going to take another look at "Saturday Night Live," keeping us laughing all the way to election day. Watch after we come back.

(COMMERCIAL BREAK)

KING: Karen, here is another moment from "Saturday Night Live" last week, and then your thoughts.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: John McCain is one of my dearest friends. At the same time, he is also dangerously unbalanced. Let's be frank. John McCain -- and again, this is a man I would take a bullet for -- is bad at his job and mentally unstable.

QUEEN LATIFA, ACTRESS: Governor Palin, would you like to respond to Senator Biden's comments about John McCain?

FEY: No thank you, but I would like to talk about being an outsider. You see, while Senator Biden has been in Washington all these years, I have been with regular people, hockey moms and Joe Six Packs. I would also like to give a shout out to the third graders of Gladys Woods Elementary who were so helpful to me in my debate prep.

(END VIDEO CLIP)

KING: Karen, that's funny.

HUGHES: It is funny, and I'm glad we can all still laugh about our politics, even as we still have respectful differences of opinion. One of the things I wanted to disagree about is that I think these economic times call for precisely the type of reformed that John McCain has proven himself to be. I don't mean to sound mean about this, but during his three years in the Senate, during his years in Chicago politics, Senator Obama never proved himself. He really never reformed anything or passed any major legislation. Senator McCain has always tried to take on the status quo, to do what is right. I think that is why he is exactly the person we need in these difficult economic times, when obviously a lot of fundamental systems are going to need to be reformed.

KING: Jamal?

SIMMONS: Larry, you know that Barack Obama passed an ethics that neither Democrats or Republicans were very happy about in the United States Senate. In the end, it passed by a huge margin, because who is going to vote against an ethics bill. But in the process, people fought against it. He also passed a bill to deal with conventional weapons with Dick Lugar. Barack Obama has been working since he has been in Washington. He also has been going around the country for the last couple years, talking to people and hearing about what they really care about. And what they really care about is the fact that country is headed in the wrong direction after eight years of Bush and Republican politics. I know we've got a couple of Bush folks here who are not going to be happy to hear about that, but people are tired of it. And they are ready to get on a new path. And Barack Obama is offering them that. I think we are going to see a strong victory for him in November.

KING: Terry, we didn't have a great audience for the first debate. Do you expect a big one tomorrow?

HOLT: I hope so because there is a lot on the line. There is a lot at stake. We have an untested candidate that people, frankly, are so urgently needing change in their life that they may be grasping for a straw and they may have the rug pulled out from under them if they are going to vote for Barack Obama. But we need to know more. We need the details. We need to see what the clear choices are, the number of times people have cut taxes versus the number of times they have raised them.

KING: Thank you all very much. Karen Hughes, Jamal Simmons, Terry Holt, and Joan Walsh, we'll be calling on you again. Oliver Stone joins me next. We're back in 60 seconds.

(COMMERCIAL BREAK)

KING: Welcome back. Oscar winning director and screen writer Oliver Stone is our guest. His new movie is "W." It opens October 17th. Take a look.

(BEGIN VIDEO CLIP)

JOSH BROLIN, ACTOR: What do you do, Laura?

UNIDENTIFIED FEMALE: I read. I smoke. I admire.

BROLIN: You admire what?

UNIDENTIFIED FEMALE: People who read. I'm a librarian.

BROLIN: Uh oh.

UNIDENTIFIED FEMALE: Uh oh?

BROLIN: No, actually, I'm reading something right now, a very engaging book.

UNIDENTIFIED FEMALE: What is it?

BROLIN: Barry Goldwater's "Conscience of a Conservative."

UNIDENTIFIED FEMALE: Damn.

BROLIN: Don't tell me.

UNIDENTIFIED FEMALE: I worked on Gene McCarthy's campaign and voted for LBJ. BROLIN: No, no, no. Well, it looks like we're hitting it off like grease hits a skillet, huh?

UNIDENTIFIED FEMALE: Well, I think politics should define you and me. There's more to people than just how they vote.

BROLIN: I like that. I like that. You're open minded. Much more so than me, I have to say.

UNIDENTIFIED FEMALE: I read in the paper that you're running for Congress.

BROLIN: Yes, ma'am. I am. I don't believe in forcing myself on people. So that's why I'm just going to ask for your phone number and not your vote.

UNIDENTIFIED FEMALE: You're a devil, devil in a white hat.

(END VIDEO CLIP)

KING: Is that a good idea of what happened, Oliver? Or do you know that happened that way?

OLIVER STONE, DIRECTOR, SCREEN WRITER: We know they met at a barbecue in Texas. They were of that age. He was about 30, 32 and she was 29, a librarian in Austin.

We followed -- you know the dialogue -- who knows what they really talked about? But we know that they were introduced by this person. She did say, I smoke, I admire, later on, so we put that dialogue here.

KING: Very well done.

Oliver Stone is here. We'll get his take on all the day's political news and more on the movie. Don't go away.

(COMMERCIAL BREAK)

KING: Before we talk about "W," one of his most interesting films that Oliver Stone has ever made, I must say -- we'll get to it in a while -- what are your thoughts on this current campaign?

STONE: Larry, I'd rather talk about the movie. But you know -- look, whoever wins -- I'm a private citizen. On my side, I've been -- it's no secret I'm supporting Obama, but that has nothing to do with this movie. Whoever wins this, Obama or McCain, it's going to be living in the shadow of W. I think he changed the world. I think we're going to be with him for a generation.

He's a young man, Mr.Bush. He's not -- he's not leaving the scene. He may have low polls, but he's going to be around.

KING: A couple other things, though, and then we'll move to him. What do you make of Sarah Palin? STONE: I think she's -- she's along the lines of Dubya a bit. That same kind of folksy, common man approach. And she -- it got Dubya elected. He did very well with that.

KING: So you see her in his vein?

STONE: Very much so come to think of it.

KING: But McCain and he never got along before.

STONE: As I said, I think whatever -- whoever becomes president, it doesn't matter. The system is -- we're in two wars, we have a policy, a military policy of preemption, we have had tremendous disasters in this country, we're -- are morally and spiritually, I think, we're depressed. I think -- I think Dubya is the cause of it, for the most part.

KING: The cause.

STONE: Not the only cause, but he has -- his mindset took over in this country in 2000 and -- as opposed to Mr.Gore and we -- we've started two wars, really three wars if you include the war on terror. That's a third war. We have Afghanistan, we have Iraq. We're buried under obligations and policies that are just going to haunt the next generation, the next president.

KING: Who researched this -- the film?

STONE: Stanley Weiser, my writer, and myself. We did extensive research. We read everybody we could. I think we owe a great debt to people like Bob Woodward and James Risen and Ron Suskind. They penetrated -- they got -- they're investigative reporters. And they really got in there.

But, Bush's administration was hidden from view for the first few years. From 2000 to 2003 we didn't know much. It was Paul O'Neill who deserves some credit. He did break first. And then we had William Clark writing the book on the 9/11 --

KING: When you put scenes together like in -- in the operations room and you see all the principles --

STONE: Yes.

KING: -- the verbiage comes from your imagination? Or from Woodward books? Or --

STONE: It comes from pieces, but you know they never probably spoke so quickly and so -- in a simplified manner for 11 minutes about the state of the world. But it's a great scene because it really is the essence of their policy, which was preemption. Cheney and the pack for the New American Century -- you remember in 1998, Pearl, Wolfowitz, all these guys, they said America must dominate. After the Soviet Union fell, there was a clear policy that we had the right to preempt, militarily, any military or economic rival that might emerge. That was their language. It's very harsh language. And it's still in place, Larry. You know, there's two wars -- three wars -- but we might be in four or five if Venezuela or Iran comes up.

KING: "W" will go into release October 17th. We'll take another look at a clip from the scene. This is Bush getting advice from a brilliantly -- who is the actor who plays Karl Rove?

STONE: Toby Jones.

KING: Watch this guy in action.

(BEGIN VIDEO CLIP)

BROLIN: Truly, deep down inside, you know I'm a guy like you, a guy you can trust.

TOBY JONES, ACTOR: Fabulous. Fabulous. What it all comes down to is who Joe Voter wants to sit down and have a beer with. Guess who that is.

BROLIN: Just remember to make mine non-alcoholic.

JONES: Anything about the issue, you come to me first. I'll tell you what to say.

BROLIN: You're not going to tell me what to say, Karl. I'm going to tell you what I want, because you're the word man. This campaign starts and ends with me and what I think.

JONES: You got it W. I'm just a little fairy, putting down a little magic dust for you.

BROLIN: Karl, this time I'm going to out-Texas Texas.

(END VIDEO CLIP)

KING: There is the assumption -- if Oliver Stone did it, it's anti-Bush. Yet, having seen this movie, I would say it's kind of balanced and he comes off sympathetic.

STONE: I would say empathetic.

KING: Or empathetic.

STONE: I think I'm a dramatist in this regard and I wanted to understand the man because he's been with us for eight years and it's a tremendous story. The guy came from, you know, an alcoholic, not an alcoholic but a bum at the age of 40 years old, he turned his whole life around and through evangelism and through his faith and his family and he became president in an extraordinary -- it's almost Preston Sturgis, if you remember him --

KING: Sure.

STONE: -- or Frank Capra time here. It's a great fantasy and it happened. It's bigger than fiction. So how can I -- I couldn't make a movie with hate or malice. There is none in this movie. I see the guy as more like John Wayne, which is to say I don't like his politics but he's endearing in a strange, goofy, awkward way and he did capture the imagination of the country.

KING: We're back with Oliver Stone. "W" opens October 17. Don't go away.

(COMMERCIAL BREAK)

KING: OK. We've discussed -- just one other thing on one of the candidates that we haven't discussed. Your thoughts on McCain. Now he, like you, a war hero. You went to war. Same war.

STONE: Big difference, though. You have to remember, John McCain, he's decorated, he was a hero, but he was a pilot. But he himself said at one point that I never really saw the results of what we did on the ground.

I was a ground pounder, I was infantry.

KING: A grunt.

STONE: A grunt. And we saw the effects of bomb, napalm, bodies all chopped up, villages destroyed. It's a big difference -- different perspective. And I'm surprised that McCain, after having been through Vietnam, he's an older man, would want to go back to war. It seems to me like his reaction to all situations is us versus them, and aggressiveness and a call for war. He seems like a warmonger. Let's call it the truth.

KING: You made "JFK", you made "Nixon." Is this your role now, the presidential director?

STONE: I didn't make a movie on Clinton, who was charismatic, I didn't make a movie on Reagan. No, this is it. I'm -- Bush is for me, he changed the world, it's not going to be the same and we can't go back to 2000.

KING: How did you draw on his father?

STONE: His father is a crucial contrast in this story because he's --

KING: They don't like each other?

STONE: -- more of a diplomat -- no, the father, by comparison turned out to be far more diplomatic and he was -- he avoided -- as you know, we went to war in Iraq and he did not go all the way.

So that becomes a big issue in the movie. He didn't get rid of Saddam then and the son has to be -- feels that he has to act stronger than the father because of emotional reasons and there's a lot of father-son sub-current in the movie. He is challenged by his father and he wants to outdo him, he wants to be stronger than him.

KING: The rivalry and with his brother.

STONE: Yes, Jeb Bush in the movie is the designated heir, George is the black sheep and don't forget mom, played by Ellen Burstyn is very much -- Ellen has very much the same temperament as Bush Jr.

KING: You and Bush graduated Yale together, did you not?

STONE: I didn't graduate, Larry, I went to Vietnam. But he did graduate in the same class. I started with him freshman year.

KING: Did you know him?

STONE: I met him years later. I never knew he was there but I know that type of character because it was an all boys' school then. And the fraternity life, it was different -- he was retro. I would say George Bush was more the 1950s. He came from an entitled family, a very rich family, not rich but entitled and I think he represents a point of view that was almost 1960s as opposed to the progressive '60s.

And the thing about George Bush is that frankly, it's in the movie, you never see him examine his ideas intellectually, you don't see any curiosity about -- he accepts his father's political point of view and then he goes further to the right.

KING: Much. Do you like him?

STONE: You know, a dramatist empathizes. When I did Nixon, which you liked --

KING: I sure did.

STONE: -- in 1995 they said I was going to do a hatchet job on Richard Nixon and everybody said it was an empathetic movie. You understood Nixon, you walked in his path. I really feel strongly that's my job with Bush, it's not to make judgments.

He speaks for himself, Cheney speaks for himself, Rumsfeld, they all speak for themselves. They don't need me to embellish what they did.

So frankly, all I want you to do is empathize with them. Understand them. And I think you feel something. Josh Brolin gives him the benefit of the doubt.

KING: He's some actor.

STONE: Josh makes him care about him -- Josh is better looking like in movies and he's also charming and charismatic but I think he lets you see the flaws and the defects.

KING: Also as the movie goes on he looks more and more like him.

STONE: He grows into him.

KING: Grows into the character. STONE: Listen, I don't know, nor do you, really, who George Bush is. He has managed to veil his presidency to a large degree. He's a mystery to some degree but I feel that the movie feels like George Bush.

KING: By the way, we have a couple of minutes left.

Do you think your 1987 film "Wall Street" with Gordon Gekko about greed was prophetic?

STONE: It wasn't prophetic. It was accurate at the time. Greed was considered good. You have to make that judgment yourself. But I think it got way out of hand. I'm shocked. I thought it was going to end in the 1990s and they kept going bigger and bigger.

The numbers in the 1980s were enormous, you remember? Compared to the '50s. My dad was a stockbroker, '60s, '70s. It got huge. And then I thought it was going to -- it kept going. That's what amazes me. The fatter the pig, the more danger he is in.

And Gekko is small fry compared to what Solomon Brothers -- I mean, what Goldman Sachs and these people did.

KING: Do you think it's getting worse?

STONE: God, I hope not. If it does, Bush has a lot to do with deregulation and his policies. But if it gets worse, it may not be such a bad thing. Because if we're supporting two wars and paying $600 billion to the Pentagon, maybe we won't have the money to be so aggressive.

KING: Thanks, Oliver.

STONE: Thank you. Larry.

KING: Oliver Stone proves again he's one of the greatest directors alive. The latest, "W," opens October 17.

No matter what your politics see this movie. There's still time to weigh in with our quick vote. Should movies with a political agenda be released right before an election? Go to CNN.com/larryking and tell us and while you're there, go to our new interactive feature, click on blog and have your say, during the show.

Your thoughts may wind up on the broadcast.

Michelle Obama is our guest Wednesday night. She'll talk about the debate of tomorrow night, the tone of the campaign and what she's thinking as Election Day draws closer.

That's LARRY KING LIVE Wednesday. Now Anderson Cooper and AC 360.