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AIG Execs Under Scrutiny on the Hill; Palin Campaigns in Florida; Managing Your Finances During a Time of Economic Turmoil
Aired October 07, 2008 - 10:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
T.J. HOLMES, CNN ANCHOR: But hello there, it's Tuesday, October 7th. Heidi is off today. I'm T.J. Holmes. And you are in the CNN NEWSROOM.
Well there is a lot at stake right now in the economy and in politics. These two things are colliding right now. Right now live on Capitol Hill, lawmakers still trying to unravel this whole financial mess. Under the microscope today, the world's largest insurer, your money bailed out AIG. Now top executives need to explain to everyone why that was necessary.
Also, where are the markets headed today? 30 minutes ago the Dow faced its lowest open in years. Will you get some of that money back today? You see, we're 42 points up on the Dow but still below that 10,000 mark.
Also, presidential politics. Sarah Palin campaigns. We'll be listening in. We look ahead to tonight's presidential debate as well. Raising the stakes, shifting numbers in the latest polls.
Can you believe we are now just four weeks away to election day. 11 hours from now, John McCain and Barack Obama will face off again in the second of three presidential debates. Well, CNN's Ed Henry and our senior political analyst Bill Schneider are at debate central in Nashville, Tennessee, in Music City, both with insight on this high stakes match-up.
First we'll head over to you, Ed. A lot of undecided voters still out there. Some of them will be asking the questions tonight. So this is going to be a little different.
ED HENRY, CNN WHITE HOUSE CORRESPONDENT: That's right, T.J., totally different format than we saw the first time when these two candidates were behind podiums. A lot was made of the fact that John McCain was not looking at Barack Obama, a lot of focus on the body language. This time they're going to be in those chairs. Behind me, you see two chairs out there. And then there's a bunch of other seats, a sort of around them. Those will be filled with undecided voters from here in the Nashville area.
And what's interesting will be a heavy focus on the economy and domestic issues. And what's interesting about that, obviously, that could play to the strengths of Barack Obama. We've seen him really gaining ground in a lot of the key battleground states over the last couple of weeks in large part because of the financial crisis. On the other hand, the good news for John McCain, this format plays very well to his strengths. As you know, you see him all the time out on the campaign trail with just John McCain and a microphone pacing back and forth, kind of spinning out what he thinks on both domestic and international policy. It's not that he's perfect in that format.
We should point out, you remember that moment in New Hampshire at the beginning of this campaign when he made a comment about being in Iraq for a hundred years. He made clear that he was talking about a much smaller troop presence over a hundred years in Iraq, if necessary.
But it was certainly played up by Democrats for weeks and weeks, even to this day, as a bit of a gaffe in their estimation, that John McCain was suggesting he'd stay that long in Iraq. So it's not he is perfect in this format but his campaign is confident that this is the time for John McCain to stand up, get tough with Barack Obama about his readiness to be commander in chief.
But he's going to walk a very fine line, as you know, T.J., this is a lot different from going out on the stump, speaking to a red meat audience of your own people and going on the attack in front of these undecided voters and in front of viewers all across the country who are trying to make up their mind. You have to be very careful not to go too hard on the attack or it could turn off independent voters. To John McCain and Barack Obama walking a very fine line tonight. T.J..
HOLMES: And I'm sure as we all are aware that he is running out of opportunities to change this game. The economy changed the game against him, if you will, a couple of weeks back. And he has not really been able to recover yet. So is there a sense of desperation just yet that you're not going to have an opportunity to have this many eyeballs, this many voters tuned in?
HENRY: Not quite desperation for John McCain. But you're absolutely right. The clock is ticking and it's ticking fast. Back in the late summer John McCain had the momentum, when the crisis in Georgia popped up. He was very forceful in speaking out against Russia. Barack Obama seemed to be moving a little slower at that point when he was on vacation.
Then at the conventions Barack Obama got a little back with his big speech at Invesco Field. But then John McCain immediately seized it back and has had the momentum for some time because of his pick of Sarah Palin. And then as you know the economy, the financial crisis has seized that momentum back for Barack Obama. So you're right, John McCain needs a game changer of some sort. He's running out of chances. This is the second of there debates. If he doesn't get it done tonight, he's got one more debate to get it done. But that clock is ticking very fast. T.J..
HOLMES: Yes and that clock is literally ticking on our screen there, Time now is 10 hours 55 minutes 24, 23, 22 seconds until that debate kicks off. Our Ed Henry there for us at Nashville. Good to see you as always, Ed. Well, off the campaign trail and a bit off script, what are the candidates hoping to accomplish at that debate? We'll hear from both sides in our next half hour. Two surrogates will be here to talk about what their candidates need to do. And you can tune in to the debate right here on CNN. We're front and center from Belmont University there in Music City with the best political team on television.
HOLMES: Well, we got some new numbers for you this morning. Show a shift in some of the key battleground states. We'll get back to Nashville now with our senior political analyst Bill Schneider who is watching all things political and certainly watching all the polls.
We got some new things out, anything in those new polls to surprise us, Bill?
WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, I don't think it would surprise many people to hear that Obama is making progress in some important battleground states like, for instance, Indiana. Indiana hasn't voted for a Democrat since 1964. It voted for George W. Bush last time by 21 points. But our current poll of Indiana likely voters shows McCain leading, but only by five points. We have that state in the leaning McCain category. It's not exactly safe.
New Hampshire, New Hampshire is a state that went barely for John Kerry four years ago. Now it's going for Obama by eight points. That is a leaning Obama state. North Carolina, another state that shouldn't be in the Democratic category, it hasn't voted for a Democrat since 1976, voted for Bush last time by 12. Look at this. The latest poll in North Carolina, Obama 49, McCain 49, clearly a toss-up state.
And finally Wisconsin, Wisconsin is a very close win for John Kerry four years ago. But now Obama is ahead by five points, 51-46. We have Wisconsin in the leaning Obama category. So generally a trend in Obama's favor.
HOLMES: All right. So add it all up for us, for us Bill. What's leaning Obama's in a few states, what does that do to the all- important electoral map?
SCHNEIDER: It puts Obama ahead among in electoral votes, not quite to the finish line. He is at - that is Obama is at 264 electoral votes. That is just shy of the 270 he would need to win the election. McCain is 90 electoral votes behind at 174. We've still got 100 electoral votes in toss-up states. So it's getting close to the finish line, but we don't have a winner quite yet.
HOLMES: Not yet. But we will have one four weeks from today. Bill Schneider for us there in Nashville. Thank you so much, Bill.
All right. Let's turn now to Wall Street. You see, let's see what's happening here. We've been keeping an eye. The markets opened about 35 minutes ago. And now we see things are down about 50 points. Right now that's a lot better than where we were at this time yesterday. Around this time we were several hundred points down. So we'll see if we can hold steady. You know a lot of people take it remaining flat today.
Overseas though, a lot of those markets are under stress. A quick look at the world markets. See how they fared overnight. Another bad trading day in Asia. Japan's Nikkei index closed down more than three percent. Stocks in Europe climbed mostly out of the red and are hovering around the break-even point. The brightest spot overnight, likely Australia, stocks there surged after Australia's Central Bank announced its biggest interest rate cut in 16 years.
Well America's money crisis had a new program announced just last hour, this moved aimed at keeping companies in business and giving investors confidence. The government says it's taking its closest step yet to lending directly to businesses. Now this method, the government will buy up short-term debt. That's the money used to fund day-to-day operations for businesses like payroll, like supplies. Well the bottom line here, the Fed says that more companies will be able to survive now this credit crisis.
Well the collapse of a giant. Seems like a lot of giants have been collapsing these days in the financial world. This hour lawmakers will grill executives of AIG. It's the world's largest insurance company. Billions of your dollars bailed it out. CNN's Kate Bolduan now in Washington, keeping an eye on this latest hearing the we're seeing.
We'll be checking in with her. And there she is. It's just getting started.
I don't guess we can glean too much on this one yet, can we?
KATE BOLDUAN, CNN CORRESPONDENT: Well, they are just getting under way. I think you see the chairman Congressman Henry Waxman underway right now, giving his opening remarks. But the big question the lawmakers are asking today, T.J., is how did we get here? And to answer that the House Oversight Committee is questioning two of the former top executives of American International Group. That's the insurance giant that the federal government bailed out last month, loaning the company as much as $85 billion to avoid bankruptcy.
Now part of the focus will be specifically on CEO responsibility in the chain of events that led to AIG's rescue. Today's hearing is one of several planned to examine the causes of the financial crisis. Yesterday this same committee grilled the former CEO of Lehman Brothers over why that company failed. Now in the coming weeks, hearings are also scheduled to look at the regulation of hedge funds, the breakdown of the credit rating agencies and the role and responsibility of federal regulators in all of this, T.J.
HOLMES: All right. Just trying to learn from this necessarily and certainly we got to learn here. Kate Bolduan keeping an eye on that. A lot more are going to be happening. We'll be checking in with you throughout the day. Also, a lot of you wondering is it time to buy? Is it the time to sell? What about your 401(k)? You've got questions, we've got answers hopefully for you. Your e-mails coming up. Stay here.
(COMMERCIAL BREAK)
HOLMES: All right. Let's turn to the nightmare on Wall Street. The markets tank, your investments shrivel. What do you do? Where do we go from here? Well, we're going to go for some guidance. We turn to a couple of experts. Terry Savage, syndicated financial columnist for "The Chicago Sun-Times." Hello and Robert Shemin became a millionaire at the age of 32, and a "New York Times" best-selling author. The title of his book "How Come That Idiot's Rich and I'm Not."
Good to have you both. I'm getting some guidance here.
Actually, I want you all to stand by. Governor Sarah Palin right now is in Florida right now, has been campaigning down here. There she is in Jacksonville. Let's listen in to what she has to say. We'll get back to this financial mess in just a second.
(JOINED IN PROGRESS)
GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: ... So good to see all the kids here, also, all the students. Are you guys skipping school today? OK. You get yourself extra credit, OK, for being here today. All right. What a wonderful welcome. Thank you so much. And we had spent yesterday visiting with Floridians in Clearwater, in Naples and Fort Myers and all over the place. It was so wonderful. And when we got there, we knew that people in this state get it. You guys want the reform. You want the change.
(CHEERS AND APPLAUSE)
PALIN: It's so good to be here among friends. So when we were here last month, also, we traveled over to the villages which was a great place to visit. Tens of thousands of people came out to hear our message of reform and positive change. And they came like you today because the people of Florida are ready to send us to D.C. to make sure things there are shaken up.
(CHEERS AND APPLAUSE)
PALIN: It's just to great to be here in Jacksonville. And a good night last night for Florida. How about those Tampa Bay Rays? That was good. That was good. That's good for Florida. Big night. You know what that tells me? It tells me that the people in this area know a little something about turning an underdog into a victor. And we're counting on you to help us do that November 4th.
We know it's going to be a hard-fought contest here, especially here in Florida. It may come down to the wire. And that's why we're taking our cause of reform to every voter of every background in every region of America. And whether you're a Republican or a Democrat, maybe belonging to no party at all, just independent, we're going to ask for your vote because when it comes down to the wire, we understand how important it is, taking that message of reform across this nation for you to understand what the choices are on November 4th. It's so important for Americans to understand the tickets are very different. One ticket supports policies that will support jobs, job creation, getting the economy back on track and winning the wars in the other. And the other ticket does not.
So I had wanted to come to Florida earlier, a couple days ago, last week, and I had an appointment, though, that could not wait for me, and that was in St. Louis. Last Thursday night I had a little debate with Senator Joe Biden. Joe is a fine and he is a decent man. And I enjoyed meeting him for the first time. And I was so proud, though, to get to make the case for the next president of the United States, John McCain.
(CHEERS AND APPLAUSE)
PALIN: John offers us an optimistic vision for overcoming hard times. And he's offering us real and pragmatic solutions for moving this country forward. On the other hand, for a campaign that says it's all about the future, our opponents sure do a lot of talking about the past and pointing fingers backwards. They look to the past because that's where you find blame. We're looking to the future because that's where you find solutions. John McCain is the only man in this race who will solve our economic crisis and not exploit it. And as senator he's seen the corrupt ways of Washington and the wasteful spending and other abuses of power and as president I promise you I'm going to help him do this.
We're going to end those abuses. John and I will push for and will sign into law reforms that bring tax relief to the middle class and help our businesses so that they can keep more of what they produce and more of what they earn so they can hire more people. That's how jobs are created.
(CHEERS AND APPLAUSE)
PALIN: We will help get the rising cost of food and gas under control and we will help families keep their homes and help students struggling to pay for college. We'll complete the work of education reform to give every child in America a chance and more choices for our parents with their education responsibility that they have, too, for every child in America.
We're going to make health care more accessible and more affordable. And John McCain, what we're going to have to do, he'll lead this. We're going to impose a spending freeze in government to cover all - it will cover all but the most vital functions. We have to do this because we have to get in there and review every federal agency, every part of federal government and improve those parts that need improving and eliminate those parts that aren't working for the American people.
We will confront the $10 trillion debt that the federal government has run up and that we're going to be handing off to our children unless we do something about it today. We will balance the federal budget. Now, put it all together, and John McCain is the only man in this race that will actually help our working families and cut our taxes and get our economy back on track. He's got the plan. He's the only man in this race who talks about the wars that America is fighting, and unlike our opponent, he isn't afraid to use the word victory. See, our opponent voted to cut off funding for our troops. He did this even after say seeing that he wouldn't do such a thing. And he said, too, that our troops in Afghanistan are, just, "air raiding villages and killing civilians."
I hope Americans know that is not what our brave men and women in uniform are doing in Afghanistan. The U.S. military is fighting terrorism and protecting us and protecting our freedom. They're protecting our Democratic values and all that it is that we stand for. They're also building schools for children in Afghanistan so that there is hope and opportunity there, too. And for that and for so much more, our U.S. military men and women, they deserve our gratitude and they deserve our support. John McCain believes in them.
UNIDENTIFIED MALE: U.S.A., U.S.A., U.S.A., U.S.A.
PALIN: John McCain believes in our troops and in their mission and as a mother of one of those troops he's exactly the kind of man I want as commander in chief.
John McCain served our nation so honorably for 22 years in uniform. Remember five-and-a-half years as a P.O.W.. In fact, it was after graduating from the Naval Academy that he was stationed right here in Florida. It was in these skies where he learned and he trained, and Senator McCain is part of Florida's proud tradition of military service. And today all Floridians, I am sure who are here, are so proud, also. And I know your state being home to so many veterans and active duty soldiers and airmen, those of you who have served and are serving now, would you raise your hand and let us thank you.
Thank you guys. Thank you thank you guys.
(CHEERS AND APPLAUSE)
PALIN: Awesome. Thank you. Thank you. We thank you. We owe you. Thank you.
Florida, in just 28 days our nation will face that time of choosing, and here is how I look at the choices that we face. In politics there are some candidates who use change to promote their careers, and then there are those leaders like John McCain who uses his career to promote change. This is a moment when principles and political independence mean so much more than just a party line. And John McCain is his own man and he doesn't just run with the Washington herd.
John McCain is the that maverick. And he and I don't just talk about change. We're the only candidates in this race with a track record of actually making change happen. As mayor and as a governor here is what I have done. First reminding people that government is not always the answer. Too often government is the problem. So we put government back on the side of the people. We got back to basics, putting government back on the side of the people. As mayor here is a couple of things that I was able to do. I eliminated personal property taxes and eliminated small business inventory taxes and annoying little things like business license renewal fees, things that were just bureaucratic and got in the way of our private sector and our families, being able to grow and thrive and prosper. Property taxes were too high in my city. We had a self-tax already. Property reduced every year while I was in office. And then as governor I brought that same agenda of positive change.
I had come to office by promising to control spending, by request if possible. But by veto if necessary. I would use that veto pen. And today our budget is under control, and we have a surplus and I did put the veto pen to nearly half a billion dollars in wasteful spending.
UNIDENTIFIED MALE: All right.
PALIN: I didn't make a lot of friends doing that in the legislature. But you know, and we suspended the state fuel tax. And with the surplus that we have, I'm returning a big chunk of that right back to the people of Alaska. It's their money. Bottom line is, the people can spend their money better than government can spend it for them. I always knew who I was accountable to. It was the people who hired me. The people of Alaska.
And in a McCain-Palin administration, I can promise you we'll be there in D.C., never forgetting who we are working for. It will be you, the people of this great country.
(CHEERS AND APPLAUSE)
PALIN: So one mission in a McCain-Palin administration will be that we will set this nation firmly on a course towards energy independence. Across Florida, all across America, high gas prices, they are making a full tank at the pump seem like such a luxury. And the cost of groceries is going up all across the board. The cost of living is going up. Everything is. But the value of your paycheck is going down. And that's because of the high cost of energy.
HOLMES: You've been listening in to Governor Sarah Palin there, Senator John McCain's vice presidential pick there in Jacksonville, repeating some familiar themes and quite frankly a familiar speech. That stump speech she's been using for the past several weeks now. She's been campaigning in Florida, a very important state that shows the polls still tight. But McCain kind of lagging behind in some of those polls against Barack Obama. So certainly it's a state he's focusing on and certainly one that he needs to win.
We will get back here in just a moment and move from politics back to the economy. A lot of you all have been spending in your questions to us. We will pose those questions to a couple of financial experts. Stay with us.
(COMMERCIAL BREAK)
HOLMES: All right. Let's take a look. Hey, we are above 10,000 -- again, that psychological benchmark. Just makes everybody feel a little better. We were below that, closed for the first time below 10,000 yesterday, in four years -- first time we had seen that. But, the Dow up 46 points today.
Right now, people would take it being flat after dropping some 800 points at a moment yesterday during the trading day and then closing around 300 points down. So we will keep an eye on the markets today.
We've been asking you for your e-mail questions. A lot of people have their minds on their money and their money on their minds right now. So I want to talk to Terry Savage, a syndicated financial columnist for the "Chicago Sun-Times," and Robert Shemin, he became a millionaire at 32. Need to talk to you off line about that here in a little bit. He's a "New York Times" best selling author. His book is called "How Come That Idiot's Rich and I'm not?" Well put.
So let's talk about this. We will get right into the e-mails. Thank you both for being here.
I'll start with this one from Rhonda who says: "Over the past three weeks, my 401(k) has dropped $10,000. I have the money allocated in a mix of stocks and bonds. About a third is in my company's stocks, which has continued to go down." Her question: "Do I just leave my 401(k) alone? Or do I move my contribution percentages or money to the bonds which seem to be a bit more stable?"
Terry, please give Rhonda some advice here.
TERRY SAVAGE, SYNDICATED COLUMNIST, "CHICAGO SUN-TIMES": I'll give you a couple of different pieces of advice. I'm assuming you're still working and going to keep contributing for the next 15, 20 years. And that means you need to keep contributing and keep investing in stocks. Thirty percent in your company's own stock -- that's a little too much. I think you need to diversify out of that and the company should encourage you to do that.
The other point I'd like to make is bonds could be equally dangerous if, somewhere down the road, we have inflation and it brings with us higher interest rates. And that, admittedly, is down the road. Bond prices could drop, also. So you need to say balanced and more in stocks.
HOLMES: Robert, can you add to that?
ROBERT SHEMIN, AUTHOR, "HOW COME THAT IDIOT'S RICH AND I'M NOT": Absolutely. You know, Rhonda, it's an illusion. I know it doesn't feel good right now, but basically you only lose money when you sell and you make money in the markets and your 401(k) when you buy and when you sell. If your goal, just as Terry said, is five, 10, 15 years out, you're going to be fine because that's your goal. You always want to be diversified, don't have all your eggs in one basket.
But again, you haven't lost any money. Doesn't feel good. It's an illusion. And nine out of 10 times, the markets will bounce right back, just as you're seeing now. So hang in there with your plan. HOLMES: All right. I will turn to Liz now. This question came from her, and Robert I'll start with you on this one. And she writes: "I have an annuity with AIG. Is it safe? Should I take action?"
Of course, AIG needed some help. And their executives right now are testifying on Capitol Hill about this whole mess. So what advice would you have for her?
SHEMIN: Well Liz, it seems like it's safe. The government is in there backing everything up. But you want to educate yourself and absolutely take action, just as everybody should. Find out what you own. Call your agent, call your broker, ask them specifically what the risks are. But again, you're OK.
Again, don't panic. A lot of fear out there. Get the information, educate yourself about what's in your portfolio, what the risks are of your annuity, and then take educated action.
HOLMES: All right. Terry, can you add to that as we put up our live picture of those AIG executives actually testifying right now on committee?
SAVAGE: The government has put $85 billion behind AIG. Annuities are insurance company contracts not with FDIC insurance, but the government has sent a very strong signal that it's not letting any big insurance companies fail. So I don't think you have to lose sleep over that.
HOLMES: All right. No sleep for Liz to lose.
I'll turn to the next one. This one comes from a younger person. And Terry, I'll start with you on this one. It says: "Hey there" -- again this is from James, says -- "I'm a 19-year-old college student and last Monday I decided to put a couple thousand dollars in the market. Should I continue to put money in the market with stocks being so low, assuming I won't need it for three-plus years?"
James making a bit of a move there, Terry.
SAVAGE: Well James, three-plus years is too short a time horizon to be speculating in stocks. If you had said to me I'm going to start now and when I go to work I'm going to add $500 or $300 every month and I'll have a lot of money when I'm older, I would say go for it. But three years may not be enough time. People forget about the '70s when the market went from 1,000 to below 600 and stayed below 800 for an entire decade. So I'm not saying that will repeat itself, but if you need the money in three years, that's money that should be in a money market fund, I'd say.
HOLMES: And yes, that's James, a 19-year-old college student. He doesn't know anything about the '70s.
SAVAGE: Yes, right. But you need some history.
HOLMES: Robert what do you say to him? SHEMIN: James, too short a period of time to invest. If he would have said five, 10 years-plus, I'd say put it in there. Does he have the rest of his financial house in order? Does he have a cushion? Does he know what's coming in and out? And does he know what a lot of Wall Street people don't know, what's the risk that he's taking?
But I will say one of my favorite rich idiots is Wayne Odlin (ph) who during the Depression made millions. He said there's never a better time to buy -- made millions during the depression. So there are some opportunities out there.
HOLMES: You want to name any other rich idiots for us right now?
SHEMIN: I know a bunch of them.
HOLMES: I'm just kidding. Just kidding.
This is the last one we'll tackle, and Robert I'll start with you on this one. This is from Joe in Georgia, it says: "Since the Dow dropped 777 points a few days ago, if the market gains 777 points, does that mean that our stocks are theoretically back to where they started?"
So this is kind of a -- maybe one of those commonsensical things. You put it -- in its most common form -- we lost all these points, if we get them all back, is everything all good?
SHEMIN: Great question, Joe, but absolutely not. That's a very small index that is going up and down point wise. And your stocks in there, or your 401(k)s, could do drastically different. And also the thing is not to focus on points but on percentage. Yesterday even the 800 point drop, 777, was only the 19th largest percentage drop, although it sounds horrible. SO you want to concentrate on percentages and concentrate on what you own, not on just what some indexes say.
HOLMES: All right. And Terry, real quick for me.
SAVAGE: Yes, just a quick point -- our mentality now has changed from how rich am I going to get, to when am I going to get even? That's a big fundamental change. You need the long term perspective. There's never been 20 years where you have not made money in a diversified portfolio of large company stocks. So long-term horizon, keep investing.
HOLMES: All right. Terry Savage from the "Chicago Sun-Times," a columnist there, thank you so much.
Also, Robert Shemin, again was rich at 32. And now the book, "How Come That Idiot's Rich and I'm Not?" We'll get a list of those idiots from you later.
Thank you all so much for being with us. A lot of people really appreciate that advise you're passing along to them. Thank you so much. Have a good one. Well, under the mattress. A lot of people thinking that's the best place to put money these days. So what to do with your investments in these troubled times. Gerri Willis coming up, in the house.
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HOLMES: All right. Another bold move we saw today from the Federal Reserve announcing another bold move, kind of unexpected by some although we were getting reports of it this morning. It's another attempt to unfreeze the credit markets. Susan Lisovicz on the floor of the New York Stock Exchange with the details and look at how it's all affecting stocks.
They're looking to thaw things out a bit by continuing to make these moves. Our Christine Romans likened it to the pulling another tool from that tool bag.
So what is this new tool? Is it going to work?
SUSAN LISOVICZ, CNN CORRESPONDENT: I'm not going to say it's a tool. I'm going to say it's ammo. Because we were sticking with that metaphor yesterday, right? We were saying the Fed was using a bazooka to try to open up the frozen credit markets. But it's got a lot of ammo, so let's just say today it's using a rocket-fired -- rocket- propelled grenade. There it is. I wrote it down.
HOLMES: Oh, Susan.
LISOVICZ: I'm getting -- basically what I'm trying to say here, T.J., is that these are unprecedented times that we're living in. The Federal Reserve has been doing a lot of things that have never been done before. And what's happening today is that the Fed is going to buy massive amounts of this commercial paper. Commercial paper is short debt that lots of businesses use for everyday things, whether it's buying raw materials or meeting payroll. The Fed is going to buy it up in an attempt to try to get others to do so as well. That is what the credit crunch is all about.
And it made the difference, I'm telling you, T.J. We looked like we were going to have another selloff at the open. When that announcement was made 30 minutes before the opening bell, it looked like we were going to have a rally. And the rally -- well -- it's been kind of erratic. Right now, the blue chips are up modestly, up 38 points. Nasdaq, meanwhile, is up a couple points.
Oil is making a rebound as well today, too. It's up about 250 -- T.J..
HOLMES: So, apparently this made a bit of a difference. And the Fed, like we said, they're pulling out different weapons we haven't seen before if you will here. So, apparently a pretty important move for them to make right now.
LISOVICZ: I think I need to go back to my military lexicon and get all the weaponry language down pat, T.J. But yes, it does make a big difference. It could make the difference from business as usual and filing for bankruptcy. It is as simple as that. We have seen companies in very recent days, big companies like General Electric -- imagine that -- saying that -- assuring the market that its short term financing was completely intact. But in the same breath it said that it was also getting a cash infusion from Warren Buffett.
So, the Fed has already been helping out noncommercial banks earlier this year. It said it was also going to be funding -- helping out investment banks. And the Fed continues to do imaginative (ph) things to try to free up the credit markets.
We'll watch and wait. T.J., in the meantime, back to you.
HOLMES: Well certainly can't wait to get back to you after you read up a little bit on the weaponry. We appreciate you trying to make the analogies. We appreciate it, Susan. We'll check in with you again.
High stakes in Nashville, Tennessee, tonight John McCain and Barack Obama getting ready to face off and face an audience. The second debate is going to be a town hall-style debate. It's less than 11 hours away now. Pre-debate for you now with Nancy Pfotenhauer in Arlington, Virginia. She is speaking for the McCain campaign. And also, Bill Burton, national spokesman for the Obama campaign with us today Chicago.
Welcome to you both. My first question will be -- can you guarantee me that neither of your candidates tonight will utter anything with the name Charles Keating or Bill Ayers in it?
I will start with you, Bill. Can you guarantee me we won't hear that?
BILL BURTON, OBAMA NATIONAL SPOKESMAN: I can guarantee that Barack Obama is going to go out on that stage and make a forceful change for how Barack Obama and Joe Biden are going to bring about fundamental changes as it relates to the economy. They've got a plan for tax cuts for the middle class. John McCain does not. And so, I think what will be interesting to see is if John McCain answers some tough questions like, why does he cut $1.3 trillion from Medicare and Medicaid to pay for his bad health care plan?
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HOLMES: But Bill, you're telling me the whole Bill Ayers -- you're telling me might still be on the table tonight? And the whole Charles Keating thing -- the whole Charles Keating thing is on the table?
Are you talking to me or are you talking to Bill?
HOLMES: I will switch -- I will talk to you.
Nancy, can you tell me that we will not hear anything from your candidate's mouth about the whole Bill Ayers thing we've been seeing aired out in the campaign trail?
NANCY PFOTENHAUER, MCCAIN CAMPAIGN ADVISER: Well to be perfectly honest, T.J., I don't put words in Senator McCain's mouth. I think what you've seen, though, in the last couple of days is emblematic of where we're going to be going with -- for both campaigns for the next four weeks. Because we're going to be pursuing, very aggressively, our prescriptions for the economy and for the nation. And we're also going to be shining a light on the differences between the two men, the differences between these two individuals, one of whom will be the president of the United States.
And Senator McCain, I would disagree with Bill, has a much better plan for the economy. And also, he's been an open book about his past. And I think Senator Obama really has not been.
HOLMES: Well I guess I got the answer. And I hope the American people just heard it, too. It sounds like this old stuff is still going to be on the table tonight. But hopefully it won't.
So I will move on now. We will talk economy here. I will go back to you, Mr. Burton, about President Bush right now. The way he has handled -- let's not talk about what led up to the crisis, let's talk about since the crisis hit.
What is it Barack Obama likes that the president has done since this crisis hit? What would he have done differently since this crisis hit, if he was president?
BURTON: I would say we're in a better place because the bailout has passed and we're going to be able to get in there and strengthen these financial institutions. What Senator Obama would have done differently if he were president -- I think he would have sold it to the American people a little better than the president did. We were in a massive crisis. And I think that we needed a leader who would go out there and say, you know, look, this is something that -- this is a position we never want to be in, but we've got to do something or else it's going to have a massive impact on our entire economy.
And so that's what Senator Obama did from the campaign trail. He went out there, he did the work. He talked to Nancy Pelosi and Secretary Paulson, worked with both sides of the aisles to help to get this done. And also, he probably would not have put forth a bailout package that was nothing but a blank check for the administration. He would have had more oversight in it which is something that Senator Obama was able to get into the final package that passed.
HOLMES: OK. Nancy, let me get you in there.
How about Senator McCain? Are there some things he liked and didn't like about how President Bush handled this crisis since it hit?
PFOTENHAUER: That's right, T.J.. Senator McCain actually had his own plan out before Congress, before the White House, before even Secretary Paulson came forward. And what he would have done, I think, differently -- well some of those changes were made during the process, but like more oversight and things that would allow more of these monies to be transparent and how they're spent to be transparent and accountable to the American people, like his call for an independent oversight board.
But I think what we're seeing play out right now is what he had asked for at the beginning, and that is that a lot of these dollars need to be focussed not so much on the big banks and the big investment houses, but they need to go to our local communities that are struggling. Where you've got credit drying up, not just on Wall Street, but on Main Street. And that's starting to evolve at this point. But it's still pretty premature. None of this money has actually gone out. But you're seeing more emphasis now on local communities being served. So I think that's an important point.
And I would just stress that Senator McCain didn't say call me if you need me. Senator McCain put his campaign on hold and came back to the nation's capital to do the people's business.
HOLMES: Well, I see you --
BURTON: I think Nancy is probably the only person left who still believes that that --
PFOTENHAUER: You know what, Bill? You can spin it all you want. But he's made a career out of putting his country first. And Senator Obama said, call me if you need me. He phoned it in. He voted present like he has done so many times in his career when there's a political downside risk.
BURTON: Well let me just make one --
HOLMES: Your last word, Bill. You got the last word, Bill, go ahead.
BURTON: One thing that's encouraging about this discussion that we're having right now is that it's about the economy. And I know that the McCain campaign does not want to talk about the economy. They think if they talk about the economy, they lose. But I think that if tonight the discussion is about the economic crisis that we're in, who's got the better plan to get us out, I think it's better for the American people and hopefully that's what we'll be able to talk about.
PFOTENHAUER: Raising taxes in a recession has never been a good idea.
HOLMES: Nancy, Bill, both of you -- we appreciate it. We hope this debate tonight will be about the economy, exactly what people want to talk about. Nancy Pfotenhauer today, McCain campaign, Bill Burton, with the Obama campaign.
Good to see you both. We'll be watching tonight, as we know you all will.
BURTON: Thanks, T.J.
HOLMES: Let's turn to our Gerri Willis now. We've seen our investments shrink, optimism kind of out the door. So should you stay put in the market? Should you seek a safe haven for your cash? Should you run off and hide somewhere? CNN personal finance editor, there she is, Gerri Willis, with us.
What's the advise to investors here? We've been trying to get as much advice out there as we can, and we always appreciate yours.
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well thank you, T.J.
Yes, don't run and hide. That's my advice. Look, people have become obsessed with the stock market. Stop doing that. Look, if you're 10 years away, or more, from retirement, the biggest threat to your financial health is not the stock market right now; it's the economy. You could lose your job. So stop thinking about the stock market all the time.
Having said that, let's talk about -- let's look at this bear market we're in and make some comparisons so you know what to expect, you know what's happened before. We've had something like 23 bear markets in the 82 years from 1926 through 2007. This is when the S&P 500 posted negative returns. Hey, I realize the drops can be severe. They can be 50 percent, they can be 21 percent. But I have to tell you, bear markets generally last about a year, and this one started early in July. So we're a good three months into this thing.
It's something that happens over and over again. If you talk to any investors out there who have spent any time at all investing in the stock market, this is something that happens pretty routinely. And you just have to make your way through it and not get so freaked out by it that you sell everything you own.
HOLMES: All right. Well we're starting to hear more of that, if you will. At first everybody -- really, you can't help but get a little nervous, a little scared out there. But still I guess more of a calming effect is starting to stake place and so we are just starting to hear that advice from people who know what they're talking about, like yourself.
Well a lot of people out there who have money in college, these college 529 plans certainly, when you're talking about college and savings and money like that, people get nervous about that. That's an important investment. So what's the advice? What should you do there?
WILLIS: Well you know we've talked about 401(k)s, we've talked about 403(b)s, all retirement vehicles. But people are also really worried about their savings for college, for their children. 529 plans are a very popular vehicle. We talk about them all the time. They're fantastic. You set money aside pre-tax, it grows overtime. Do not be pulling your money out of your 529 plan right now. It's just as important, even though the time horizon is a little shorter.
If you still have five years until Junior gets to college, you want to wait this out. These plans typically, what they do, is they get more conservative, many of them, as you approach college. So just, you know, have some patience here, keep investing. T.J., I had somebody send me an e-mail today that said their child was two years old, they're contributing 50 bucks a month and they want to quit contributing to their 529. Your child is going to be going to college here. You definitely want to make sure that you are contributing to that fund.
And also, if you have any questions for us, we'll be answering them all day. Send in your questions to issue1@CNN.com. We love, love, love to hear from you. Send us your e-mails, we definitely want to know what's on your mind when it comes to your money.
HOLMES: All right. Gerri Willis, as always, good to see you. Thank you so much.
WILLIS: My pleasure.
HOLMES: And stay with us here. We are turning to a -- really a heartbreaking story about a woman who stayed with her friend, wanted to help protect that friend's home during a hurricane. But she ended up losing her own home. Really a heartbreaking homecoming to show you. Stay with us.
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HOLMES: Well, we got a storm a-brewing. There it is. Marco is doing something. Landfall.
What's going on, Rob?
ROB MARCIANO, CNN METEOROLOGIST: How about that? Just popped up yesterday, made a name for itself yesterday afternoon with winds already at 65 miles an hour. It pretty much maintained that right up until landfall, which happened just minutes ago.
National Hurricane Center said, yes, it's made landfall, about 90 miles away from Veracruz, Mexico. And if you look at this, you go, that's a storm? My goodness, it is just a little blob there on the satellite picture. Winds from this thing of tropical storm force only extend -- actually it's grown bigger, 50 percent bigger, up to 15 miles now from the center. This thing is a tiny little guy.
Marco -- Polo -- you're going to go bye-bye.
All right. Do I have the satellite picture? Let me get this thing going.
(WEATHER REPORT)
HOLMES: All right, Marco, already done. That's good news.
MARCIANO: Yes.
HOLMES: All right, we appreciate you.
Rescued from a burning car. We'll continue -- we've been showing you this video, it explains exactly what happened here and how police saved a woman's life.
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HOLMES: Five Indianapolis police officers credited with saving the life of a woman trapped in her burning car. You see the video of it here. The car had hit the bank of a tanker truck, catching the car's engine on fire. One of those officers used a baton to bash in a window. The car was actually locked. The driver was pulled out just before the vehicle exploded and she is OK. But wow, look at that car.
I'm T.J. Holmes. So glad you could be with us the past couple of hours. Again, I've been sitting in Heidi Collins.
Join us again tomorrow morning at 9:00 Eastern, right here in the NEWSROOM.
But CNN NEWSROOM continues now with my man, Tony Harris.
