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American Morning
Global Markets Sputter, Dow Futures Flat; Candidates Zero in on the Economy; What the Candidates Will Do to Fix the Financial Crisis; One-on-One Interview with Sarah Palin; Electoral Map Changing: Key Swing States Favor Obama
Aired October 07, 2008 - 06:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEO CLIP)
KIRAN CHETRY, CNN ANCHOR (voice-over): Prime time face-off. This morning, cutting through the crossfire.
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Why didn't Senator Obama work to pass this bill? Why did he let it fail and drag out this crisis?
CHETRY: And counting down tonight's high stakes presidential debate.
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: I've got news for the McCain campaign. The American people are losing right now.
CHETRY: The strategy needed to score and the brand new polls giving one candidate a pre-game advantage.
Plus, money tips. Wall Street takes your investments for another downhill ride. When will it end? We're taking your questions and calling in the experts for an economic pulse check.
You're watching the "Most News in the Morning."
(END VIDEO CLIP)
CHETRY: If you're not worried enough, that sound effect sure was the final nail in the coffin.
JOHN ROBERTS, CNN ANCHOR: You're just waiting for that final (beep).
CHETRY: Hopefully not. Hopefully things will turn around. But, boy, we have a lot to talk about today, a lot of fresh new concerns in this financial world this morning on this Tuesday, October 7th. Glad you're with us.
ROBERTS: Yes. It's a big day as well because, you know, we got the big political debate tonight as well.
First of all, though, no relief this morning in the global sell- off markets in Asia, again, in strong negative territory. Comes after yesterday's meltdown on Wall Street. The Dow down again more than 800 points at one point. That's where we thought we're going to hear that flat line beep. But a late day rally kept the day's losses to 370 points, which was good in comparison of its $500 billion managed from portfolios and 401(k)s.
Dow futures were strongly up. They're now starting to point down, though, as we get the results in from the Asian markets.
The second presidential debate as we mentioned just 15 hours from now and exactly four weeks before Election Day, and the attacks are flying with both Barack Obama and John McCain questioning the other's character and ability to lead the country. But the Obama camp finds itself up in the polls 49 percent to McCain's 43 percent.
And in just a moment, new numbers from the battleground states. It could decide the presidential race. The electoral vote map is changing. We'll have it here for you first in the "Most News in the Morning."
And the Boston Red Sox one step closer now to defending their World Series title. They beat the Los Angeles Angels last night 3-2. Boston now has a date with the Tampa Bay Rays in the American League Championship series.
CHETRY: And back to our top story now. The Dow opening at its lowest point in four years. It closed yesterday 9,955, below the 10,000 mark. Wall Street slumped quickly spreading to the global markets. This morning, the selling was fast and furious in Asia.
In Japan, the Nikkei closed down more than three percent. In London, where trading is already underway, stocks are about even. And right now taking a look at our Dow futures, they are flat. But for a time yesterday, the Dow was headed for its worse point loss in history. At one time sinking 800 points then a turn around and a rally back more than 400 points.
And President Bush pleading for patience. He told Americans the massive bailout, which he signed into law last week, is a big step towards solving the financial crisis.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: A lot of people here in Texas and around the country are not pleased with the government having to take the steps they took. Their question is, "I pay my bills, I pay my mortgage, why are you helping Wall Street?" And the answer is because had we not done anything, people like the folks behind me would be a lot worse off.
(END VIDEO CLIP)
CHETRY: Later in the speech, the president said he believes the economy will be just fine in the long run. But in the short run, what do you need to do to keep your money safe in this financial storm?
Christine Romans "Minding Your Business" this morning, joins us now with more on Wall Street's whirlwind markets. You know what I did, Christine? I did what we talked about yesterday. CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: What?
CHETRY: I looked at my 401(k).
ROMANS: And --
CHETRY: I should not have done it. Down 25 percent since the beginning of the year.
ROMANS: Yes. That's right.
ROBERTS: You're lucky.
CHETRY: Really?
ROBERTS: Yes.
ROMANS: A lot of people -- 25 percent is pretty much what the S&P has done. Actually 29 percent I think the S&P has done so you might be actually --
CHETRY: Well, I just looked today. Maybe it's worse.
ROMANS: You might be hitting the markets a little bit, but that's ugly and people are rightfully concerned when they open up their statements in the mail. Look yesterday. Yesterday we said buckle up and look, we had a wild ride.
The Dow down 3.6 percent yesterday, as Kiran pointed out, closing below 10,000. The Nasdaq down even worse. The S&P 500 down 3.9 percent.
I want to just -- let's just relive it all together. Shall we? Look at what the day looked like yesterday.
By about 10:45 in the morning, the Dow was down some 500 points. By the middle of the afternoon, it was down 800 points. We had never seen a look at the big board with an eight in front of the Dow Jones Industrial Average for how much it had lost. And then by the --
CHETRY: It was shocking even by -- even on the street.
ROMANS: I'm going to tell you, if people were really -- they couldn't believe it. And then it closed down 300 and some making it a wonderful rally at the end of the day. So there's the good news. It would have been just on its own, a fantastic rally from the worse of the day to the best of the day. The thing that we keep watching as the market, you know, rides like this is, you know, is this heavy, heavy selling or is there an absence of buyers? And I keep hearing it's really an absence of buyers.
People are afraid to buy stocks. It's not that they're piling on there and selling like crazy. They're just afraid to buy stocks, which in a strange way is a good sign about the market.
Another good sign is crude for November delivery. Actually, look at that, down six bucks yesterday to $87 a barrel. It's the first time we've seen crude below $90 a barrel in some eight months. This is because there are concerns about the U.S. economy and the global economy and that is actually driving down crude oil prices.
And the dollar is strong. So there's my little kernel of strength there. The dollar is strong. Crude oil prices have been weak. We'll watch to see through this other kind of attendant fallout effects are of this global turmoil.
CHETRY: All right. Christine Romans, let's check in with you throughout the morning on this. Thanks a lot.
And we also want to let people know that later in this hour, personal finance editor Gerri Willis will be answering your questions about the financial crisis. You can send her e-mails as well. Go to our Web site, CNN.com/am.
ROBERTS: And the economy is expected to be at the center of tonight's presidential debate. It's an issue that both candidates zeroed in on while on the campaign trail yesterday.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Today, we're seeing the stock market fall and the credit crisis spread to other parts of the world. Our economy is still hurting. Working families are worried about the price of groceries, price of gas, keeping their jobs and paying their mortgage. Further action is needed --
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: Not only are we seeing the stock market go down, but there's still a great danger of the credit markets locking up and we've seen that the contagion is spreading to all parts of the globe. It is a reminder that the rescue package that was passed last week is not the end of our efforts to deal with the economy, it's just the beginning.
(END VIDEO CLIP)
ROBERTS: And this morning, the stakes could not be higher for Barack Obama and John McCain. We've got some brand new polls released just minutes ago from five of the key battleground states here. Take a look at this.
Starting in Indiana, McCain leads Obama 51 percent to 46 percent. Obama is up by eight points now in New Hampshire but in North Carolina a dead heat 49-49. In Ohio, Obama is ahead 50 to 47 percent and he also has a five-point advantage in Wisconsin.
All of this is going to change the look of the electoral map, and we're going to have that for you in just a few minutes. It's not looking good for John McCain at this point, we can tell you that.
CNN's Suzanne Malveaux joins us here in New York this morning looking ahead to tonight's presidential debate. As we mentioned, John McCain, things are not looking good for him. A lot of these battleground states are beginning to break Senator Obama's way. The town hall format tonight, a strength of his. Can he actually begin to turn things around or can he maybe at best try to stem the bleeding?
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: John, I hope you have body armor tonight, because this could get very messy between these two candidates. Obviously, John McCain does well in a town hall setting, connecting to voters here. But what he needs to do, this cannot be a draw. This has to be a game changer and that is why we're hearing from John McCain and his aides going after Obama trying to sow some seeds of doubt here. Who is this guy? What do we know about him?
It has now become more of a character issue not so much about the economy, although he does need to deal with the detailed prescription for the economy. But listen for the things he says tonight. What he really is going to do is draw a contrast. He's going to say this guy is so liberal that he is out of the mainstream.
This is because they want the conservatives who may not be excited about Sarah Palin so much to still be on board, and they want to appeal to the independents here who still might have some doubts about him and say, look, this guy is not the guy who really, I guess, shares your philosophy, shares the kind of policies that we're pushing.
ROBERTS: Now, on the campaign trail yesterday, Senator Obama was talking about this idea of the McCain campaign going negative, going on the attack. Let's listen to how he put it yesterday.
(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: I cannot imagine anything more important to talk about than the economic crisis and the notion that we would want to brush that aside and engage in the usual political shenanigans and smear tactics that have come to characterize too many political campaigns.
(END VIDEO CLIP)
ROBERTS: So he's saying you need to drop the negativity but at the same time they put out a 12 to 13-miunte video tying John McCain to the Keating Five scandals.
MALVEAUX: Absolutely.
ROBERTS: So, everybody is going negative. And on this point of trying to go after character and that sort of thing, remember that town hall debate, 1992, between Clinton and Bush, and that guy with the ponytail stood up and said hey, it's all well and good for you guys to be fighting each other and tearing each other down, because it satisfies your campaign, what are we supposed to do? Cross our hearts and hope for the best? Can you make a commitment to us? People want solutions out of these things.
MALVEAUX: Right. And you know, it's interesting, too, because both of these candidates they say we're not going to go negative here. But Barack Obama yesterday, very interesting in the Tom Joyner morning show, said, "We're not going to throw the first punch but we're going to throw the last. We're not afraid to go negative." So what we plan -- what we actually will hear from him is going negative, but negative on the economy. He's actually going to talk about how John McCain has these tax breaks for big businesses and then you can hear a prescription, very detailed about the kinds of things that he wants to do.
He has already said that McCain is erratic in how he has dealt with the economic crisis. That is how you're going to hear Barack Obama go negative. John McCain obviously trying to make something stick here, trying to make something work. This is going to be a really important debate tonight.
ROBERTS: Yes. Meantime, I think when voters see their life savings going out the window in the market meltdown, they're looking for solutions not rhetoric.
MALVEAUX: Absolutely.
ROBERTS: All right. Suzanne Malveaux for us, thanks. It'd be interesting tonight, no question about that.
Join CNN and the best political team on television, 9:00 p.m. Eastern for complete live coverage of tonight's presidential debate in Nashville.
CHETRY: And this morning, there is a major shift in the presidential horse race. John is going to show us how it's affecting the electoral map with just four weeks to go before the election.
Also, we're going to hear what Sarah Palin is saying about how John McCain and her will help hockey moms and Joe six-packs all across the country.
You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
ROBERTS: Welcome back to the "Most News in the Morning." John McCain and Barack Obama will face off tonight in a debate that will likely include plenty of questions on the economy. CNN's Allan Chernoff looks at what the candidates have and have not been saying about issue number one for voters.
ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: John, Kiran, while the nation teeters on the edge of a financial cliff, the presidential candidates have been criticizing each other and blaming Wall Street. But are they ready to lead this nation out of this crisis?
(BEGIN VIDEOTAPE)
CHERNOFF (voice-over): The presidential candidates have been long on empathy.
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: The American people are losing right now.
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: There are people in this room, they're having trouble getting a loan.
CHERNOFF: But their primary reaction to the economic crisis has been to blame Wall Street and put it on a tight regulatory leash.
OBAMA: This financial crisis is a direct result of the greed and irresponsibility that has dominated Washington and Wall Street for years now.
MCCAIN: We have to stop the damage to our economy done by corrupt and incompetent practices on Wall Street and in Washington.
CHERNOFF: Senator McCain even called for firing SEC Chairman Christopher Cox. A day after word of Treasury Secretary Paulson's bailout plan leaked, John McCain proposed a mortgage and financial institutions trust to rescue troubled firms.
MCCAIN: This trust will work with the private sector and regulators to identify institutions that are weak and fix them before they become insolvent.
CHERNOFF: That idea is now essentially part of the bailout. Senator Obama called for updating financial regulation in March. During this crisis, he says, he was instrumental in adding oversight to the Treasury's bailout program.
OBAMA: I demanded that this plan include some specific proposals to protect taxpayers.
CHERNOFF: But on the campaign trail, audiences are mostly hearing ideas that candidates have been pushing for months, the need for jobs and tax relief.
LAWRENCE J. WHITE, NYU STERN SCHOOL OF BUSINESS: A candidate could well be leery of making, taking a strong stand on something that might be seen as undercutting Secretary Paulson's plan and then the market drops and the candidate is blamed for the market drop.
(END VIDEOTAPE)
CHERNOFF: At a time of crisis, neither candidate wants to act like an economic backseat driver and the situation is so unprecedented and changing so rapidly that even the Treasury secretary and the Federal Reserve chairman are essentially changing their playbook on a daily basis. But in three and a half months, the remains of this crisis will be in the hands of either John McCain or Barack Obama -- John, Kiran.
CHETRY: All right. Well, Allan Chernoff, thanks so much.
And we're going one on one with Sarah Palin. The Alaska governor talks about how she's ready not only to be vice president but president. Plus, she addresses how she's being treated in the media. We'll have some of that interview coming up. ROBERTS: He's the guy Sarah Palin is talking to when she reaches out to voters.
(BEGIN VIDEO CLIP)
GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: Let's commit ourselves to every day American people, Joe six-pack.
(END VIDEO CLIP)
ROBERTS: But who is Joe six-pack? We went out in search of him and to see what he thinks of the Republican vice presidential candidate.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Definitely harder than Barack Obama I think.
UNIDENTIFIED MALE: Is that the vote that she's looking for, the people who drink six packs of beer?
(END VIDEO CLIP)
ROBERTS: You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
CHETRY: Welcome back to the "Most News in the Morning." Out on the campaign trail, John McCain's running mate, Sarah Palin, is taking direct aim at Barack Obama. During a campaign stop in Florida, Palin sat down for an interview with CNN affiliate WFLA and talked about Republicans plans to help Americans who need it most.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: What is it that John McCain and Sarah Palin will do for the economy that's going to be great for the middle class Americans?
GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: Well, for one, John McCain and I have the only track record out there in this race with proof of reform and making change happen. I've done that in my city as a mayor, in my state as governor. John McCain, of course, is known as the maverick, ready to turn things around and call out even his own party when he must in order to effect positive change. And you know, the other side is good I think in talking about change but not having that track record of reform.
What we're going to do is allow that child tax credit to kick in. What we're going to do is reduce taxes on Americans, cut our business tax. It's the second highest in the world that's driving jobs elsewhere out of our country. We need to reign in the growth of government, reign in spending there, earmark reform.
We need to absolutely revitalize opportunity for health care coverage for more Americans because it's so unaffordable now. And also, we have got to make our country become energy independent and not see these massive dollars being spend elsewhere overseas in countries some that don't like America very much to purchase energy supplies from them. We should be supplying from our domestic resources here and that's going to create jobs, too.
UNIDENTIFIED MALE: And here we are down to the last few days and you still have critics who have come at you and say things like, she's not ready to be vice president let alone president of the United States. Reassure those people, if you can in this interview, why you are not only ready to be vice president but if called upon, ready to be president of the United States.
PALIN: Yes. Absolutely. And it's not just my executive experience that will be put to good use as a mayor and a governor and a business owner and an oil and gas regulator, and that will be put to good use in an administrative position that I'm seeking. But even more importantly is a world view that is shared with John McCain, a world view that sees America as a source for good in this world, an America that is a nation of exceptionalism, so much to offer and so much opportunity here and hope here. And what we need to do is allow that opportunity to be seized by the people who live here.
Government not getting in their way, government being put back on their side so that our families and our businesses can grow and prosper and thrive and John McCain and I so sharing of that world view and how we're going to get there. It's going to be good for this nation.
UNIDENTIFIED MALE: Do you feel you got an unfair shake by the media and the critics who say you're not qualified for this job?
PALIN: The hits that I take from the media, you know, I can handle that now. You know, I shouldn't be seeking office. And the hits I take too are nothing compared to some of the hits that some are facing across this nation today when you consider folks who are worried about losing their home or worried about how they're going to pay for their child's health care. Perhaps a family losing a loved one over in the war zone. Those are the shots that matter. So what I'm taking, it's nothing in comparison.
(END VIDEOTAPE)
CHETRY: Well, Governor Palin also said that she watched Tina Fey's portrayal of her on "Saturday Night Live and called it a hoot -- John.
ROBERTS: All right.
Well, we're counting down the hours until tonight's presidential debate. And this morning, we have big changes in CNN's electoral map. First of all, let's take a look at where the lay of the land is right now.
Barack Obama currently leads, according to CNN projections in the electoral college count. John McCain 250 to 189, but those projections are going to change based on our latest CNN/"Time"/Opinion Research Corporation polls of three key battleground states. And let's take a look at those right now. We'll put them up on the full screen for you.
In the state of Wisconsin, which was within three percentage points, Barack Obama leading. He's now stretched that out to five points, 51 to 46 percent over John McCain. Let's take a look at the battleground state of New Hampshire with its four electoral votes. That one was very close. Barack Obama now extending an eight-point lead, 53 to 45 percent over John McCain.
And take a look at this. North Carolina, which has been a solidly Republican state, has not voted Democrat since 1976 when it went for Jimmy Carter, 49-49. So it's all completely even up in the state of North Carolina.
Now why is this all-important? Let's take a look. Here we are back in 2004. Results of the election there. State of Wisconsin -- John Kerry beats George Bush by one percentage point. So John McCain is now eight points behind there or five points behind in Wisconsin. Eight points behind here in New Hampshire which was won by John Kerry by one percentage point.
And take a look at this. State of North Carolina was won by George Bush by 12 points in 2004. So for that state to be even really shows that things are changing up here in 2008.
Now, how is this going to affect the electoral college map? Well, first of all, we have eight battleground states that are in the toss up category. Because of the numbers in Wisconsin, this is now going to lean Barack Obama, adding to his electoral college total. State of New Hampshire is also going to lean Barack Obama.
And take a look at this. The state of North Carolina is now going to go into the toss up category. So where does that leave us in our electoral college projections? At the moment, 264 for Barack Obama to John McCain's 174 with, of course, 270 to win. A win in any state like Florida, Ohio, even Virginia, smaller states, even Colorado could take him over the top.
Things getting very close now for Senator Obama, but, again, these are only projections based on the latest poll. It's a snapshot of a moving picture. Things could change a lot in the next month. We'll be right back.
CHETRY: Dangerous territory.
(BEGIN VIDEO CLIP)
NARRATOR: He says our troops in Afghanistan are --
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: Just air raiding villages and killing civilians.
(END VIDEO CLIP)
CHETRY: In his latest campaign ad, John McCain paints Barack Obama too risky a choice for a country at war. Fair representation or does the ad distort Obama's comments about the military?
The "Truth Squad" gets answers. You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
CHETRY: Welcome back. It's a new shift in the electoral map this morning that's really changing the landscape of the election. Four battleground states are now favoring Barack Obama. There's a look right now. And it's a dead heat in North Carolina which is a Republican stronghold traditionally.
Joining us now from Washington, Patricia Murphy, the editor of Citizenjanepolitics.com. And also in New York, John Avlon, a registered independent and a contributor to "Politico." Thanks to both of you for being with us this morning.
PATRICIA MURPHY, EDITOR, CITIZENJANEPOLITICS.COM: Good morning.
JOHN AVLON, AUTHOR, "INDEPENDENT NATION: Thank you.
CHETRY: So when you break this down based on the polls, John, we have John McCain 90 electoral votes behind Barack Obama right now. What's going on? Is it all because of the economy that John McCain seems to be really be falling behind Barack Obama?
AVLON: That's got a huge amount to do with it. Independent voters are starting to break away from McCain towards Obama. And swing states, as you point out, are starting to break for Obama largely because of the economy. We're looking at another, "It's the economy stupid" election. And when angry voters go to the polls, they want to vote against the incumbent party in the White House. George Bush is holding back John McCain big time.
CHETRY: And, Patricia, the candidates, of course, will be talking about the economy tonight. This is their second debate. This is the town hall style. What do they need to talk about? How do they, in a town hall style, lay out their economic plan and solutions for people watching at home?
MURPHY: Right. Well, you know, the best example I think we ever saw of this was Bill Clinton and his town hall debate where he had his "I feel your pain" moment. This is a very intimate setting. Both of these candidates have to relate their policies to people's actual lives.
Barack Obama has been better at that. When John McCain talks about his policies, it's very jargony. He needs to do things like if he's talking about S&L subsidies, to say that's going to bring down the price of food that you put in your family's table. Drilling, instead of saying drill, baby, drill, you can say we just want to bring down the price of gas until we move to something cleaner and better. So, you know, they need to connect these policies to what's going on in people's every day lives or he is not going to win this election. CHETRY: You know, it's interesting you're bringing up a good point, Patricia, and it's because we hear a lot of these stump speeches. They are canned and the candidates seem to say the same thing over and over again on the campaign trail.
John, how, in a town hall style debate, where it's more informal and they will be able to have a little bit more back and forth with the people there should John McCain try to shape his message?
AVLON: Well, I think he's got an opportunity and an obligation to really connect with people, as Patricia said, and show empathy for their own lives, for the middle class squeeze that's occurred during the Bush years and to show he really gets it and to try to elevate the debate. I think it's a big mistake if he tries to go negative against Barack Obama in this town hall format because it could backfire big time.
CHETRY: You say that. And, Patricia, I want to ask you about this because when you read what the Republican pundits are saying, they're saying his only hope is to raise questions or raise the specter of doubt against Barack Obama. Other than that, John McCain doesn't really have much of a plan. Do you agree with that, or do you think that's a wrong tack to take tonight?
MURPHY: Well, I think that's a tack that he can take if he raises questions about Obama in terms of his fitness to be president to solve the problems of the economy. Barack Obama really has no more economic credentials than John McCain does. Those are the types of doubts I think he can raise about Barack Obama.
But to go after Jeremiah Wright and Bill Ayers, I think that's a strategy that is frozen in 2004. That is the last election. I think they need to be looking forward and really dealing again with people's real lives. This is the crisis in America and they need to get real and recognize that.
CHETRY: Patricia Murphy and John Avlon, great to talk to you this morning. We'll see you back here a little later. Thanks.
MURPHY: Thanks.
ROBERTS: We are just crossing the half-hour now, and here are this morning's top stories. We're getting our first look at how Wall Street will open this morning after the Dow closed down below 10,000 for the first time since 2004. Dow futures are flat this morning. They were positive than negative now flat. Most European markets are mixed. And in Asia, Japan closed down more than three percent.
Iraq's foreign minister citing progress in a deal to keep U.S. troops in Iraq through next year. He said, quote, "Bold political decisions still need to be made on a number of issues including immunity for American soldiers but that the two sides were close to an agreement." A United Nations mandate allowing American troops to legally remain in Iraq expires at the end of the year.
And a new study says simply putting a fan in a baby's room can dramatically reduce the risk of Sudden Infant Death Syndrome or SIDS. Researchers say by improving room ventilation, the risk was reduced by 72 percent. What it seems to be is that when babies sleep they start to pool carbon dioxide around their mouth. And so they keep on breathing in exhaled air. So if you put the fan in there, it increases the circulation. It's gets more oxygen to them because SIDS is believed to be caused by babies sleeping on their stomachs and not getting enough oxygen.
Well, back to our top story now. The vicious downward spiral of the world's market so far no signs that the panic gripping Wall Street is about to let up. So, what does all of this mean for your money? Here to break it down for us this morning, Lakshman Achuthan. He is the managing director at the Economic Cycle Research Institute. He is in Washington for us this morning.
Lakshman, you're usually here in New York. It's interesting to see you in my wall this morning. Hey, the "New York Times" had an interesting way of putting this today. It said that this crisis is not wearing you down over time; it's hitting you over the head with a two by four literally every day. Many people were close to panicking yesterday when the Dow was down 800 points. Where is all of this heading?
LAKSHMAN ACHUTHAN, MANAGING DIRECTOR, ECONOMIC CYCLE RESEARCH INSTITUTE: Well, look. We've been getting kind of these little body blows all year in terms of the economy because we've been in a mild recession. What's happened is that all of this drama that we've seen in the last few weeks, and the seizing in the market, these downward plunges and the equities that we were just talking about, this is all resulting in a mild recession taking a serious jerk down.
We are going in to a more severe recession. We're seeing this in the leading indicators of the economy which have really fallen apart, and part of that is the psychology of what's going on. This kind of fear factor that is gripping not only the markets but, you know, just every day people on the street.
ROBERTS: Right. People are looking in to markets, and they're saying when is all of this going to end. When is this bailout plan going to kick in and stop the bleeding? When will that happen?
ACHUTHAN: Well, it's happening. I mean -- but it's not happening in a way that is going to result in any change in the way people are feeling or the economy outside your window soon. This is going to take months because, essentially, you've got a wildfire going on. You have the housing downturn and the credit crisis. That was joined by a recession this year and the combination is even too big for the Treasury as we're seeing to deal with or the European banks or whatnot.
ROBERTS: OK. So what do you do if you're a small investor? You've got a 401(k). You're looking at your value evaporating every day. It's probably too late to bail out, or it is?
ACHUTHAN: No, it's probably too late to bail out in the sense that you've taken a big hit already and when the recovery comes it will be a sharp move in the markets. You've already seen the markets quite volatile. I think individuals, the main thing you can do, the things that are under your control are your job and your spending. And so, you do everything you can to, you know, say hello to your boss in the morning and just be present. And then also, you're seeing already in the spending numbers people are putting off things that they don't have to have today.
They are saving it for a rainy day. The same thing that businesses are doing, by the way. Big banks and stuff. They're all gathering up money and saying we're going to weather this downturn so that we can be in a good position on the upside.
ROBERTS: And what about for people who need home mortgage or they want to refinance, or people who want to buy a car. They're looking for a car loan. Students who are looking for some money to go to college? What do they do?
ACHUTHAN: They are in a really tough time for at least the next few months. Probably a couple of quarters. I don't have an easy answer there. And this is probably something that we'll be asked for example in the town hall debate tonight to see, you know, what kind of ideas are there for helping people through this. Next couple of quarters is going to be rough no matter how you slice it.
ROBERTS: So, just hang on for dear life?
ACHUTHAN: Yes, hang on for dear life, and control the things that you have some control over -- your job and your spending.
ROBERTS: Lakshman Achuthan, it's always good to see you. Thanks for coming in this morning. Appreciate it.
ACHUTHAN: All right. Thank you.
ROBERTS: And stick around because in just a few minutes time, our personal finance editor Gerri Willis is going to be answering your questions about the financial crisis. Still time to send one in. Head to CNN.com/am. She'll have that for your coming up in just a few minutes.
CHETRY: Well, John McCain launching a withering attack on Barack Obama calling him dishonorable and dangerous. But is his new ad fact or fiction? The "Truth Squad" is here to break it down.
In search of Joe six-pack.
(BEGIN VIDEO CLIP)
GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: Let's commit ourselves, just every day American people, Joe six-pack.
(END VIDEO CLIP)
CHETRY: Who is he? And what does he think of the Republican vice presidential candidate?
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Definitely hotter than Barack Obama, I think.
UNIDENTIFIED MALE: Is that the vote that she's looking for. Those people who drinks six packs of beer?
(END VIDEO CLIP)
CHETRY: You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
CHETRY: Welcome back to the "Most News in the Morning." There's a new McCain ad that attacks Barack Obama. Our Alina Cho is keeping the candidates for president honest. And she joins us now with today's "Truth Squad."
(CROSSTALK)
ALINA CHO, CNN CORRESPONDENT: 28 days until the election. You know, it's getting heated up there, Kiran. Good morning. Good morning, everybody. And today, we are looking at that ad. It was released just this week by the McCain campaign against Barack Obama. The name of it says it all, "Dangerous." It paints Obama as too risky a choice for president in a time of war and terror threats.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE NARRATOR: Who is Barack Obama? He says our troops in Afghanistan are --
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: "Just air raiding villages and killing civilians.
UNIDENTIFIED FEMALE NARRATOR: How dishonorable.
(END VIDEO CLIP)
CHO: All right. Did Obama really mean what he said that American troops in Afghanistan are just air raiding villages and killing civilians? Well, that clip in the ad is from August of 2007. Obama spoke, apparently off the cuff to voters in New Hampshire. He took questions from the audience on several topics including the war in Afghanistan. Listen to the complete version that we found on YouTube.
(BEGIN VIDEO CLIP)
OBAMA: We've got to get the job done there. And that requires us to have enough troops that were not air raiding villages and killing civilians which is causing enormous problems there.
(END VIDEO CLIP)
CHO: All right. So as you just heard in the complete version Obama said we need enough troops in Afghanistan so we're not just air raiding villages and killing civilians. The McCain ad left out the word not, and we went a step further. CNN tried to find any evidence that Obama repeated the remark somewhere else and we could not. And we asked the McCain campaign, for examples and did not get a response.
In fact, nearly a year after the remark, Obama was quoted before leaving for Afghanistan saying, quote, "I want to thank our troops for the heroic work they've been doing."
So again the question, does Barack Obama think that American troops in Afghanistan are simply air raiding villages and killing civilians, as stated in the McCain ad? Well, pretty easy on this one. The verdict from the "Truth Squad," false. And as always we're watching both sides.
Kiran, coming up at 8:00, we're going to be taking a closer look at a Web site from the Obama campaign that goes after John McCain for his role in the Keating Five scandal. Remember that from the 1980s? It touched off a financial crisis not unlike the one we're seeing today. So we're going to be "truth squadding" that one, coming up
CHETRY: All right. Alina, we look forward to it. Thank you.
CHO: You bet.
ROBERTS: 20 minutes now to the top of the hour. Growing concerns as stock prices plunge around the globe. CNN's Gerri Willis is logged on and answering your questions next live on air.
(COMMERCIAL BREAK)
ROBERTS: We are "Minding Your Business" this morning and answering your questions with CNN's personal finance editor Gerri Willis.
What are you hearing now?
CHETRY: We need your help.
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, listen, we're getting all kinds of questions. You cannot believe the number of questions we're getting.
Let's take one. This is from anonymous in New York, writes, "This economic crisis is getting a bit scary and I'm not an alarmist by nature. Last week, when pundits were predicting a 1929 depression, hey, I brushed them off as overly pessimistic. Today, I'm not so sure anymore."
Well, I got to say to you, anonymous in New York, guess what? It's not time to panic. I know this may sound Pollyanna to you, but you can't worry about things you can't control. You have to work on those things that you can control.
And here I want you to think about paying down your debt. This is what got us in this crisis in the first place. If you have a lot of high-interest credit card debt, I want you to think about that. Putting together some emergency savings. Look, the biggest threat to you right now is probably losing your job. So, you need some money on the sidelines to help you out if you do lose that job.
Another one, another question, another anonymous viewer writes in, "My 401(k) has been taking some hard hits over the past year and I am really starting to be concerned. I am 37 and still have many years left before retirement. Should I change how I invest my money?"
All right. I got to say to you guys. You guys have probably seen this. There are a lot of pundits out there right now saying take all your money out of stocks. I think that is sheer folly and I know a lot of financial advisers tell me just this. Look you have to be invested in the stock market if you're 25 years way from retirement. You have plenty of time to make up what's happened over the last couple of years. You definitely want to keep investing a little bit at a time. That is the best way to do it.
And finally, Sue in Texas writes, "Our investments have dropped precipitously and they're all in stocks. We're in our mid 60's. Should we move some of what we have left to bonds?"
All right, Sue, we got to have a conversation here. You don't want 100 percent allocation particularly in you're in 60's in stocks. You really want to mix it up, 60-40, 70-30. You've really got to change how you're investing. And the best way to understand how to do that, go to money.com. They have a great asset allocation tool -- cnnmoney.com. It will tell you exactly how much you should have in bonds and stocks, make little changes at a time and pretty soon you'll have a portfolio more appropriate to your age.
CHETRY: Can I ask you one quick question about that? If you're already in that boat, in your 60s and you're already in 100 percent stocks, do you take it out now or do you leave it?
WILLIS: No. You got to do it a little at a time. Look, if you sell everything now, you're locking in these lows. You know, the stock market is going to come back sometime but you do want to make that change over time as stocks start to move higher.
ROBERTS: All right. Gerri Willis for us this morning.
CHETRY: Thanks.
WILLIS: Thank you.
ROBERTS: Don't forget, get your questions into Gerri, CNN.com/am. She'll be answering them all morning. 46 minutes after the hour.
The winks that have America talking.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: She's a nice fresh face and she seems very honest.
UNIDENTIFIED MALE: It's totally fake.
(END VIDEO CLIP)
ROBERTS: Jeanne Moos hits the streets to see if Sarah Palin sold herself to voters with all those winks. You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
SARAH: She's a hoot. She's very talented. And you know what, looking at your monitor, too, dang it, I look like her. You know, she's going to wear blue next Saturday night.
(END VIDEO CLIP)
ROBERTS: Sarah Palin talking about Tina Fay's imitation of her on "Saturday Night Live". We will hear more of what Palin had to say in a new one-on-one interview. That's ahead on our next hour here on the "Most News in the Morning."
Well, perhaps no vice presidential candidate has received as much attention or scrutiny as Sarah Palin. During her debate last week with Joe Biden, all eyes were on her eye, wink, wink. CNN's Jeanne Moos has got a closer look.
(BEGIN VIDEOTAPE)
JEANNE MOOS, CNN NATIONAL NEWS CORRESPONDENT (voice-over): She may have earned the nickname "Sarah Barracuda," the pit bull of politics, the moose slayer herself teared up at a rally Monday.
PALIN: Man, some of your signs just make me want to cry. Thank you so much. I love you guys.
MOOS: Those who don't see eye to eye with Sarah Palin, sure seem to be keeping a close eye on hers.
ALEC BALDWIN, ACTOR: She did connect with the audience.
MOOS: From Alec Baldwin to Tina Fay, giving a shout-out to third graders.
TINA FEY AS SARAH PALIN: Who were so helpful to me in my debate prep.
MOOS: The Sarah Palin winked...
PALIN: How long had I been at this like five weeks.
MOOS: ...has eyelids fluttering.
PALIN: And I'm going to keep pushing them on.
MOOS: Pushing forward the great wink debate. (on camera): You don't think it might have been a tick?
UNIDENTIFIED FEMALE: Oh, no. Please, come on. You give her too much credit.
UNIDENTIFIED FEMALE: She's actually sexy, hot.
UNIDENTIFIED FEMALE: She's a nice fresh face. And she seems very honest.
UNIDENTIFIED MALE: It's totally fake.
MOOS: While liberals were rolling their eyes over winking, conservatives were raising eyebrows over Botox claims. The "New York Post" ran photos of Democratic V.P. pick Joe Biden a couple of years before the debate, then Biden at the debate asking, is Joe Hidin' facial work or Botox use? A Biden campaign spokesman called it completely untrue and completely stupid.
ELISABETH HASSELBECK, THE VIEW: The forehead did not move the entire debate.
VOICE OF TONY BLANKLY: And the forehead that looks like a baby's bottom. I prefer her winks to his Botox.
MOOS: The liberal "Huffington Post" put her four winks to music.
JAY LENO, HOST, "THE TONIGHT SHOW WITH JAY LENO": She kept winking all of the time. For a minute I thought maybe John McCain had been captured again and she was trying to send some kind of a signal.
MOOS: But when Rich Lowry, editor of the Conservative National Review seemed smitten by Sarah Palin, Bill Maher got laughs just repeating Lowry's word.
BILL MAHER, "REAL TIME WITH BILL MAHER": He said, I'm sure I'm not the only male in America who when she started dropping her first wink, sat up a little straighter in my couch.
MOOS: Which prompted a woman to write in to Andrew Sullivan's blog, "did she just wink at us like she was America's cocktail waitress?" Or better yet, Betty Boop?
BETTY BOOP: If you send me to Washington, I'll just divide the dough. Oh, when I'm the president --
MOOS: For a woman who said she didn't blink when asked to run for V.P., she sure is winking now.
BETTY BOOP: Now we'll have a perfect country --
MOOS: Jeanne Moos, CNN, New York.
(END VIDEOTAPE)
CHETRY: Wall Street mess. Markets dive and Washington jumps in. (BEGIN VIDEO CLIP)
OBAMA: I cannot imagine anything more important to talk about than the economic crisis.
MCCAIN: Senator Obama will try to distract you from noticing that he never answers the serious and legitimate questions --
(END VIDEO CLIP)
CHETRY: Details of each candidate's plan to save the nation's economy.
Plus, in search of Joe six-pack.
(BEGIN VIDEO CLIP)
PALIN: Let's commit ourselves just every day American people.
(END VIDEO CLIP)
CHETRY: Who is Joe six-pack? And is he the key to winning the election? You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
CHETRY: And welcome back to the "Most News in the Morning." We have brand new numbers this morning out of North California. Our CNN Time Research Opinion Poll was just release this hour and the state now has gone from leaning John McCain to now a toss up. Voters split, 49 percent each. North Carolina is 15 electoral votes could be crucial to winning the presidency. The state has not voted for a Democrat since Jimmy Carter back in 1976. So, what's changed?
Joining me now from Charlotte is Pam Stone. She's a liberal host of talk radio, "The Pam Stone Show" with a lot of conservative listeners. Last time we check in you said a lot of liberals were afraid to call in. Has that change for you over the past couple of weeks?
PAM STONE, HOST, "THE PAM STONE SHOW": They're e-mailing now, Kiran. And welcome to my home. We're currently standing in jungle room. Yes. We're having a lot of people calling, a lot of people e- mailing. And it's so interesting the fact that North Carolina would be tied up for a slight lead to Obama is like hello Ripley's you're not going to believe this. So, it's a pretty wild time.
CHETRY: Right. In fact, to give people some perspective, President Bush both in 2000 and 2004 won North Carolina by double digits. Now, today, with our new CNN poll, it's literally a toss up 49-49. What's changed?
STONE: Well, what has changed is in 2004, I think most people were scared to change presidents in the middle of a war. The other huge thing that's going on, obviously, is the economy, and Charlotte is a big banking center. You got Wachovia there that's been in the news. You have people that have moved to Charlotte to work in these banking establishments that may very well be losing their jobs. And if you go to Charlotte right now, you cannot believe the amount of condos and homes and McMansions that are at auctioning, going into foreclosure. So, it is absolutely the economy.
CHETRY: What I'm wondering, though, on a national level, we can take a look at why the incumbent party's candidate is having a tougher time. But in North Carolina, this is a place that has gone Bush two different elections. Why is that a perceived weakness for John McCain and not Barack Obama, the economy?
Well, I think -- well, it's interesting, Kiran, because just this past week in the "Wall Street Journal" had a poll out saying that independent voters were going towards Obama because they simply felt, quote, "more reassured." And I think what's going on, we're watching what's going on with the bailout and the corporate greed, and who does John McCain have as his top economic adviser but Carly Fiorina who drove Hewlett Packard into the ground resulting in the loss of 20,000 jobs, and she got a golden parachute of $45 million. And when John McCain was interviewed about this, just two weeks ago, he was unable -- he didn't even give the impression that he understood her package or knew that.
And the people that were advising Obama, I believe, the average American has a lot more faith in that. Plus the fact when McCain suspended his campaign and went for the first bailout, it was not successful for him at all. And I think Sarah Palin has been a disastrous, impetuous choice because from the beginning --
CHETRY: I want to ask you about that as well.
STONE: She -- go ahead.
CHETRY: What are your conservative viewers and listeners tell you about why they are nervous about John McCain and Sarah Palin?
STONE: Well, you have two groups of conservatives. You have people that are always going to vote conservative because of core values. So they don't care. They'll always vote. And then you have the true academics and intellectuals. And when they start reading erudite conservatives like George Will who were going on record calling John McCain unpresidential, who are not happy with the selection of Sarah Palin, I guarantee you if John McCain had chosen Mitt Romney who has a strong economic background these polls would be much tighter.
CHETRY: Very interesting stuff. Pam, great to talk to you as always. Pam Stone, the host of "The Pam Stone Show" on WLNK. Thanks for being with us this morning.
And one note we want to give to our viewers.
STONE: Thank you.
CHETRY: We're going to hear in just about an hour from now on AMERICAN MORNING, from former Education Secretary under President Reagan, and CNN contributor, Bill Bennett, we're going to get his thoughts on the morning's poll numbers and their impact on the race. Thanks Pam.
