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American Morning
Markets on Rollercoaster Ride; McCain and Obama Trade Jabs Ahead of the Presidential Debate; In Search of Joe Six-Pack; What the Candidates Plan to Do to Fix the Economy
Aired October 07, 2008 - 07:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JOHN ROBERTS, CNN ANCHOR: It's coming up to the top of the hour and here are this morning's top stories. Global markets sending mix messages after yesterday's rollercoaster ride on Wall Street. Numbers across Europe are holding steady, but Tokyo's Nikkei closed down three percent. Dow futures are up right now.
Christine Romans is smelling rally this morning.
Both the president and the Fed Chief Ben Bernanke speak to the public later on today trying to ease America's economic fears. The president is expected to talk about the economic bailout bill, something he also addressed yesterday in San Antonio, Texas.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: It's going to take a while to restore confidence in the financial system. The one thing people can be certain of is that the bailout sign is a big step toward solving this problem.
(END VIDEO CLIP)
ROBERTS: And Tropical Storm Marco is bearing down on Mexico's Gulf Coast this morning. Right now, the storm is relatively small with winds only extending up to 30 miles from the eye but it is nearing hurricane force, 65 miles an hour right now.
Workers from at least four offshore oil platforms have been evacuated. And tonight from the campus of Belmont University in Nashville, Tennessee, John McCain and Barack Obama go toe to toe in a town hall debate live 9:00 p.m. Eastern. CNN, of course, is the place to watch tonight's debate with the best political team on television.
Well, Christine Romans joins us now and the Fed taking even more drastic action to try to prop up the markets.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: That's right. The Fed and the Treasury using every tool they have to try to restore confidence in lending, and they're using tools we didn't know they had, John. There are some reports out this morning citing government sources that the Fed and Treasury together working on a really bold plan to buy up these short-term unsecured company debt, called the commercial paper market. Without getting too nitty-gritty in there, too geeky in the details, what it means is, it could free up lending among companies, investors lending to companies so they can do things like pay your salary.
This is important stuff so it might be another move. If it happens, it would be another move to restoring confidence in the market. And confidence is something we certainly needed yesterday.
The Dow Jones Industrial Average down 3.6 percent yesterday. Ouch! The Nasdaq down more than four percent. The S&P 500 down almost four percent. We're talking 20 some percent losses across the board for the year so far.
And it was a wild, wild ride. The Dow by 10:44 in the morning was down something like 500 points. Then by the early afternoon, it was down 800 points. We have never seen the Dow down 800 points before. And then it rallied sharply to close down just 369, but we'll take it because 369 was a great improvement over what we had seen earlier in the day.
And with Dow futures pointing higher this morning, you know, you never want to predict this market because it is so wild and crazy. But we'll see if the moves by the Fed or talks of the Fed is doing absolutely everything that it can, that that will somehow help the market today.
ROBERTS: I think the tools they really need to get out of the hemostats (ph).
ROMANS: Yes. Exactly.
ROBERTS: Clip the bleeding arteries.
ROMANS: Exactly.
ROBERTS: Thanks, Christine.
ROMANS: That's right.
ROBERTS: Well, when they aren't taking potshots at each other, Barack Obama and John McCain are talking about America's economic crisis and it's no surprise that both men are making the case that they are the right candidate to fix our financial system.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: The action that Congress took last week to address our financial crisis was a tourniquet but not a permanent solution. 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, the price of gas, keeping their jobs and paying their mortgage. Further action is needed, it must be done. We need to restore confidence in our economy and in our government, and I have the leadership and the experience and the knowledge and the judgment to do that. SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: I think it's still critical for to us move forward on an economic stimulus package that can provide people some relief from high gas prices, food prices, help states and local governments maintain their payrolls. I think we have to extend unemployment insurance after the statistics showing that 159,000 additional jobs were lost just last month. And we're going to have to then move on an aggressive plan to deal with some of the underlying structural problems in the economy including the continuing decline in the housing market.
(END VIDEO CLIP)
ROBERTS: But as the economic crisis drags on, Barack Obama's national lead appears to be holding. In the very latest CNN poll of polls, Obama remains six points in front of John McCain nationally, 49 to 43 percent. The poll was taken between Friday and Sunday after the Senate passed the economic bailout bill.
KIRAN CHETRY, CNN ANCHOR: Thursday's vice presidential debate ended up being rather tame but after a nasty weekend on the campaign trail, things could get ugly when John McCain and Barack Obama face off. It's happening for a second time. It's tonight in Nashville. And Suzanne Malveaux is here in New York today with the preview.
And this is going to be a town hall. So the nature of the town hall, who does that tend to benefit?
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: It could really get nasty here, though, Kiran, so be prepared for anything to happen here. It's really going to be very different.
The town hall setting is good for John McCain. Essentially he does perform better interacting with some folks. We don't expect that we're really going to have the kind of back and forth that we had before just because of the nature of this debate. It's going be two minutes to respond to questions and then one minute follow up here.
And so, if they are going to get their licks in here, they've got to do it very quickly. Interestingly enough, this could be kind of the home court advantage for both national, largely Democratic Tennessee, largely Republican. So both of them kind of looking to this audience for support.
But the audience is independent and that is really the group that they're going after now. So it will be interesting to see what kind of questions come from that group and then whether or not anybody makes up their mind afterwards.
CHETRY: What are they both bringing to the table tonight?
MALVEAUX: Well, John McCain's group, essentially, their goal here is to knock Obama off his cool, basically, to somehow change the equation here. They cannot have a draw. And so, what you see is that they're going after his character. They're going after things like patriotism or whether or not he's opportunistic, whether or not he puts country first. You're not going to hear so much those detailed prescriptions about the economy from John McCain because he really believes that he has to, in some way, lower Obama's approval rating. It's much, much harder at this point because he has so little time to up his own approval.
Barack Obama is exactly the opposite here. He basically has to stay cool and that's what they plan on doing. And if he's going to go on the attack, it's going to be over the economy. He's going to hit him really hard because he feels that that is his benefit here. That's his advantage.
CHETRY: All right. Well, it will be interesting to see as you said, it could get ugly.
MALVEAUX: It's going to be good.
CHETRY: Yes.
MALVEAUX: A lot of people are going to be watching.
CHETRY: Thanks a lot, Suzanne.
MALVEAUX: Sure.
CHETRY: Well, another quick debate reminder for you. The next presidential debate tonight. The candidates and the best political team on television are all in Nashville and we'll have coverage all day long leading up to the debate. Again, it's at 9:00 p.m. Eastern time right here on CNN.
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? The people who drink six-packs of beer?
(END VIDEO CLIP)
CHETRY: You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
ROBERTS: It's coming up now at 10 minutes after the hour. Welcome back to the "Most Politics in the Morning."
Today, our Carol Costello is starting a four-part series titled "The Voice of the People." We sent her out on the road to find out who Joe six-pack is. Carol joins us now with that live from Washington this morning.
So we're all interested to know, Carol.
CAROL COSTELLO, CNN CORRESPONDENT: You know, I know it sounds ridiculous, John, but I was having dinner in a restaurant last night and a group of people were talking about Sarah Palin's use of the term Joe six-pack. They were heatedly discussing who the heck that was. And as a woman from middle America, I wondered too.
(BEGIN VIDEOTAPE)
COSTELLO (voice-over): Politicians love to you labels, and Sarah Palin is a champ. Her hockey mom label scored big and her latest is causing quite a stir.
GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: Let's commit ourselves, just every day American people, Joe six-pack, hockey moms across the nation.
COSTELLO: Joe six-pack. It refers to someone who buys beer and not champagne, right? But it is a loaded moniker. To some, it conjures up images of rather unattractive fictional slobs like Al Bundy, or the sexist football obsessed Hank from "King of the Hill."
(on camera): So who was Sarah Palin addressing when she mentioned Joe six-pack? I mean, who is Joe six-pack anyway?
UNIDENTIFIED MALE: Joe six-pack?
UNIDENTIFIED MALE: Right here.
COSTELLO (voice-over): At Lincoln Financial Field where the Philadelphia Eagles play and fans party, there were plenty of Republicans willing to say that on football Sunday they become Joe six-pack, loud, kind of drunk.
UNIDENTIFIED MALE: There's nothing in that can.
COSTELLO: And in love with Palin.
UNIDENTIFIED MALE: She's definitely hotter than Barack Obama, I think.
COSTELLO (on camera): But is that a great reason to vote for someone?
UNIDENTIFIED MALE: I think so.
COSTELLO (voice-over): Other Republicans were more thoughtful, delighting in Sarah's "Palinism."
UNIDENTIFIED FEMALE: It makes her seem like more of a person that would come out to an event like this instead of somebody who's too busy tied up in Washington.
COSTELLO: But Democrats I talked with have grown tired of "Palinisms." Joe six-pack was the last straw.
(on camera): Does that resonate with you at all?
UNIDENTIFIED MALE: No, I don't really know what that means. Is that the vote she's looking for? The people who drink six-packs of beer?
COSTELLO (voice-over): He says the question we should be asking is not who is Joe six-pack but do we really want Joe six-pack in the White House?
"Newsweek" magazine put it more bluntly calling Palin's campaign style mindless populism. Still, analysts say Palin's Joe six-pack shout-out resonates with, well, Joe six-pack.
PROF. TERRY MADONNA, FRANKLIN AND MARSHALL COLLEGE: Sarah Palin in a sense being herself articulating the needs and the desires and the wants and the problems of average Americans, that's probably her strongest suit.
(END VIDEOTAPE)
COSTELLO: So, who is Joe six-pack? Well I found out in my unscientific survey the definition itself is fiercely partisan. Republicans think he's a down to earth guy who works hard and plays hard. And Democrats think Joe six-pack is irresponsible and not so smart.
ROBERTS: So what was your sense from being out there at the tailgates on Sunday? Is Tom the tailgater really Joe six-pack or just for a day?
COSTELLO: I think just for the day. Although, as I said, the Republicans I talked to there found Joe six-pack to be an endearing term and the Democrats are getting pretty tired of the "gotcha" and the "betcha" and the Joe six-pack.
ROBERTS: I got to say one thing, too, Carol. I have never seen an on-camera stand up shot from inside a beer can. That was really --
COSTELLO: It's amazing. I could sit in there.
ROBERTS: Incredible. Carol, thanks so much for that. Good to see you this morning.
COSTELLO: Sure.
ROBERTS: The next installment of our "Voice of the People" series "Race and the Election," Carol is going to have that for us tomorrow on AMERICAN MORNING.
CHETRY: And taking the gloves off. John McCain and Barack Obama going after one another on the campaign trail. But will they bring their attacks into the debate hall tonight? We're going to take a look at what each candidate needs to do.
And with the economy in a tailspin, what do the candidates really plan to do to fix it? We're talking to financial advisers from both campaigns.
You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
(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)
CHETRY: Welcome back to the "Most Politics in the Morning." You know, it's been a bruising few days out on the campaign trail with the tax and counterattacks being launched from both sides of the presidential debate. So will we see more of it at tonight's debate as the candidates square off on the economy?
Joining me now, CNN contributor, Republican strategist Ed Rollins and Democratic analyst Julie Menin, who also works for the Women's Campaign Forum. Thanks to both of you for being with us.
JULIE MENIN, DEMOCRATIC ANALYST: Thank you.
CHETRY: You know, we're waking up to the new CNN/"Time"/Opinion Research polls that show really a changing electorate. In fact, what we saw, Julie, was 90 electoral votes now in terms of Barack Obama expanding this lead. What does Obama need to do tonight at the debate?
MENIN: Well, tonight, he really needs to focus on what he's been focusing on which is the economy. And what Obama is really telling the American people is he empathizes with their concern. He empathizes with the fact that people are facing foreclosure.
They're facing job loss. They have rising health care cost, and he needs to stay on point and on message about that. I don't think we're going to see him go negative because he doesn't need to go negative on that.
And I think what we're seeing with John McCain is these negative attacks are really just a distraction. McCain seems to be running away from the issue of the economy, and he's running away from that issue because fundamentally he's a deregulationist. And it's very hard for him now to pivot and say OK, on this government bailout, that yes, we're going to accept more government intervention in the economy.
CHETRY: Ed, what would you do if you were advising John McCain tonight? Should he come out there with, you know, an economic plan stacked up on the side of a desk. Or should he just start raising questions about Barack Obama?
ED ROLLINS, REPUBLICAN STRATEGIST: I think he has to make -- force voters to take a second look at him, one, both as a commander in chief, which is still not totally off the arena. And secondly, about the economy and how he can move it forward.
I think he has to make people take a second look at him but equally as important take a second look at Barack Obama. And I think the key thing there is, do you want this young man who's inexperienced in this time of crisis to be the commander in chief or to be the economist in chief?
CHETRY: Even states like North Carolina that have gone to President Bush and have been Republican for decades, you see his support eroding. Is that the economy or culture issues?
ROLLINS: It's really the economy. I mean, basically, the last two weeks, the floor has dropped on us and I think to a certain extent unless he gets people to take another look, this thing is going away from us. And it's, you know, victory is still possible but it's getting less and less probable.
MENIN: But I think one of the things we're seeing is we're seeing with McCain that he doesn't really have a strategy on the economy. He's been very erratic. He said the fundamentals of the economy are strong then he wanted to fire Chairman Cox. Then he swooped into Washington, suspended his campaign.
And even, we saw a stark contrast of the candidates on the floor of the Senate when Barack Obama gave an impassioned speech in favor of the bailout, really carousing the American public behind the bailout and Senator McCain stayed silent. He didn't even make comments on the floor of the Senate which I found really shocking.
CHETRY: Let's hear what John McCain said about that, in fact, about blaming Barack Obama for the problems that we're in when it comes to what's going on with the economy. Let's listen.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Why didn't Senator Obama work to pass this bill from the start? Why did he let it fail and drag out this crisis for a full week before doing a thing to help pass it? I suspended my campaign. I went back to Washington, my friends, because I was --
(END VIDEO CLIP)
CHETRY: He may be getting cheers out there on the campaign trail for saying that, but it appears at least some of the analysis of the polls show that people did not feel that him suspending his campaign actually was the right thing to do.
ROLLINS: It didn't work, and obviously that's a Republican audience...
CHETRY: Right.
ROLLINS: ... that's not credible beyond that. I think the bottom line is the quicker he gets what he did pre-debate and post-debate behind him and get into this debate and moving forward is it will work for his benefit.
MENIN: You know, I think that's absolutely right. I mean, this gambit of suspending the campaign did not resonate at all with the American public. People want to see solutions. They want to see leadership, and they also want to see someone who is calm and steady in a crisis, which Barack Obama has shown. John McCain has zigzagged from position to position. It's very unclear really what his strategy is to heal the economic woes that we face.
CHETRY: All right. Well, we're going to have to see tonight whether it goes all negative or whether we hear some specifics from both the candidates about this crisis.
ROLLINS: It will be a fist fight.
CHETRY: All right. We'll be watching every minute of it.
Ed Rollins, Julie Menin, great to see both of you.
MENIN: Thank you, Kiran.
ROLLINS: Thank you.
ROBERTS: It's 22 minutes now after the hour. A large part of the country got a sick feeling in the pit of its stomach yesterday when the Dow Jones index was down as much as 800 points. How will the candidates fix the economy? We'll hear from the economic advisers for McCain and Obama. Stay there.
Wall Street woes. Investors wondering what to do with their money.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: They want to know when the pain will stop.
(END VIDEO CLIP)
ROBERTS: We talk with the experts and get you some answers on what to do about your 401(k).
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I had a very difficult conversation with a couple last week. It's a very difficult conversation to have.
(END VIDEO CLIP)
ROBERTS: You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP, "THE LATE SHOW WITH DAVID LETTERMAN" CBS/WORLDWIDE PANTS)
DAVID LETTERMAN, HOST, "THE LATE SHOW WITH DAVID LETTERMAN": Talk about your rollercoaster drop 800 points.
Whoa. So, thank you bailout rescue plan.
(END VIDEO CLIP)
ROBERTS: Welcome back to the "Most News in the Morning." The economy, issue number one with voters as the country faces a major financial crisis. So we wanted to know what the candidates would do to fix the problem, and we're bringing both campaigns together this morning to find out ahead of tonight's town hall debate.
Joining me now from Chicago is Senator Barack Obama's chief economist adviser, Austan Goolsbee, and from Arlington, Virginia, McCain economic adviser Douglas Holtz-Eakin.
Gentlemen, good to see both of you this morning. I know that you haven't seen it. We've talked about this off camera. In "The New York Times" today, there's a joint editorial features, Joseph Stiglitz, 2001 Nobel Prize winner for Economics, Glenn Hubbard, who is the chair of the president's Council of Economic Advisers back in the early part of the Bush administration. They post a couple of questions that they like the candidates to answer. So I thought I'd post those to you this morning.
First one comes from Stiglitz who is pretty pessimistic about this economic bailout, the Wall Street bailout. He says, "When this bailout fails, will your candidate propose a new one? How big should it be?
Douglas, you want to handle that one first.
DOUGLAS HOLTZ-EAKIN, MCCAIN ECONOMIC ADVISER: Well, first of all, we got to see how this plays out. To be honest, they haven't even begun implementing the purchases. But I think the real key will be to make sure there is a strong foundation of actual economic growth underneath the financial sector. We're not going to cure these problems unless we create jobs in America, put people and the ability to make the payments on their mortgages and get the housing market fixed up. That's the key and that's what John McCain would focus on.
ROBERTS: Austan, if this bailout fails, would your candidate propose another one? Have big would it be?
AUSTAN GOOLSBEE, OBAMA ECONOMIC ADVISER: Well, look, you can't answer that because you don't know what's happened. As Doug said, they haven't even started buying up securities and they won't until November. But this is a crisis. There's no question about that.
You got people's life savings at risk. You got millions of people at risk of losing their jobs. If this thing did not work, then absolutely Barack Obama would be for moving on to the next thing to restore the confidence in our markets.
ROBERTS: And do you have any idea what you would do? What the next thing would be?
GOOLSBEE: Well, look, it depends. If this thing fails, this is a pure hypothetical. It would depend on what form it would take. What Obama has concentrated on from the outset is calling for a housing program, calling for additional stimulus. And he's really been, if this were a movie, Obama has sort of been the steady hand in the storm and McCain has been the storm. So, what we certainly don't want to do is compound the uncertainties of the market by flipping from position to position.
ROBERTS: And what I really like to do in this segment, gentlemen, if I could, is get away from the name calling, stick to the facts and the plans here. Other question comes from Glenn Hubbard.
And, Doug, let me get you to take this one. Do we need more regulation or is it a problem that the current regulation is poorly focused? What would your candidate do in terms of regulation?
HOLTZ-EAKIN: A little bit of both. And quite frankly, we have a system in which the same economic transaction is regulated differently depending on where it occurs and it doesn't make much sense. So the first thing you have to do is make sure that you get a uniform set of regulations so that you face the same consequences regardless of where you undertake a trade. And in the process, we could get rid of a bit of the alphabet soup of regulatory agencies and clean it up. So John McCain is committed to finding the facts and working in a bipartisan fashion to get effective financial regulation for the 21st century.
ROBERTS: Austan, more regulation or just better focus the current regulation?
GOOLSBEE: We need more, clearly more robust oversight. That's one of the critical problems that caused the situation we're in and Senator Obama has been talking about the need for more oversight and regulation for more than a year.
ROBERTS: All right. I got to ask this question, Douglas. Senator McCain to help pay for his health care plan wants to cut Medicare and Medicaid. What would he cut?
HOLTZ-EAKIN: That's a "Wall Street Journal" article that I think mischaracterized the plan itself. There's an enormous potential to lower the cost of health care in America. The research indicates that we can provide better care at lower cost if we focus on prevention, treat chronic diseases using the best practices that are available. And Medicare is a great place to start. Those seniors deserve to get the benefits they're currently promised but not have their premiums go up so fast. And that's what he promises in his health care plan.
ROBERTS: Right.
HOLTZ-EAKIN: But to take advantage of the opportunity to pay for coordinated care, pay for medical home, get prevention, treat the chronic disease, and lower the overall health care bill.
ROBERTS: All right. And, Austan, in terms of, you know, that the amount of money that the federal government is taking on, added deficits, added debt, people are wondering if the presidential candidates are going to be able to make good on some of their campaign practices. With the extra debt load that this federal government has taken on, will you be able to afford your health care plan which costs out, by some estimates, at about $65 billion?
GOOLSBEE: Yes. Look, Senator Obama has been quite clear as he's gone through with the health plan of how it would be paid for. And as Senator Obama says, you can't afford not to deal with the health care crisis.
Obama and Senator McCain's vision are completely different on the health care system. Where Obama is putting the focus on ending the discrimination against people that are already sick and getting the cost down, where Senator McCain's version of the health plan is going to involve giving you a credit, taxing your healthcare benefits and pushing you in the individual market.
JOHN ROBERTS, CNN, ANCHOR: Do you want to respond that quickly, Douglas, since he took a shot at you?
DOUGLAS HOLTZ-EAKIN, MCCAIN ECONOMIC ADVISER: Well, I mean, that's a complete mischaracterization of the health care plan. John McCain will in fact give everyone $5,000, every family towards their health insurance cost and he'll deliver a fairer system one where you get assistance regardless of your income level, regardless of whether you get your insurance from your employer or not and indeed even if you're uninsured. So that will take 25 to 30 million people out of the ranks of uninsured and give them a chance to better access to care.
ROBERTS: It's great that when we keep the name calling to a minimum we actually get some facts out there for the American people to be able to mull over.
Austan Goolsbee, Douglas Holtz-Eakin, good to see you this morning. Thanks.
GOOLSBEE: Thank you.
KIRAN CHETRY, CNN, ANCHOR: 30 minutes past 7:00 now. Some of the top stories this morning. Tonight is debate night in America. Barack Obama and John McCain are going to be meeting in a town hall setting. It's in Belmont University in Nashville, Tennessee. The debate will start at 9:00 p.m. Eastern and we'll have of course complete coverage all day from the best political team on TV here on CNN.
We also have our eyes on the markets today. Boy, what a wild ride yesterday. Stock futures though this morning set to open flat. That's after the Dow closed below 10,000 for the first time in four years. Stocks across Europe are mixed in today's trading. And investors sick of riding the stock market's roller coaster are trying to get off. But is now the time to pull your money out? Our Deb Feyerick went looking for answers and she joins me now. Hi there, Deb.
DEBORAH FEYERICK, CNN CORRESPONDENT: Hi there, Kiran. Well, we can tell you this is a conversation that is taking place all over the world as investors look at their statements, do the math and realize that they don't know as much on how the market works as they thought.
(BEGIN VIDEOTAPE)
FEYERICK (voice-over): As the Dow dropped below 10,000, everywhere brokers and financial advisors were fielding calls from thousands of investors.
UNIDENTIFIED MALE: ... transfers from those banks.
FEYERICK: Getting messages like this one.
GREG OLSEN, PARTNER, LENOX ADVISORS: I know it's the wrong time to sell he just said, but I have to pull the money out because I can't take this any more.
FEYERICK: Greg Olsen is a partner with Manhattan's Lenox Advisers.
People who you wouldn't think of who would panic are now calling you.
OLSEN: Sure.
FEYERICK: They're worried. They are saying what?
OLSEN: They want to know when is the pain going to stop? And the answer to that question is I don't know.
FEYERICK: Are they saying I can't do this, pull me out?
OLSEN: Yes, some clients that are very upset because they thought they had a higher level of risk tolerance than they actually did. They're making the decision to pull out because they want to sleep at night knowing there can't be any more losses.
FEYERICK: Olsen said his advice depends on how much time and how much money clients have.
OLSEN: It's the person that has the lesser amount of money to invest that we're worried about because they can't afford to have these types of losses. Anybody who has a long term time horizon, a 10, 20 year horizon, at this point it's not the time to make any rash decisions.
FEYERICK: As for investors nearing retirement -
You're actually telling people that they may want to consider putting off their retirement.
OLSEN: I have that - it's a very difficult conversation with a couple last week. And it's a very difficult conversation to have.
FEYERICK: I think a lot of people are rethinking just how good of a bet the stock market is. What is your advice? OLSEN: Well, long term the stock market has always between best place to be. It's also to pull the money out today, you don't lose anything.
FEYERICK: As for when it will stop that's something even the best advisors can't answer.
(END VIDEOTAPE)
FEYERICK: Now Olsen tells me that some people are willing to accept the losses even at 20 percent or 30 percent. And instead they are looking to buying Treasury bills which are definitely safer but at one percent or two percent return, that's not a long term strategy since it really doesn't even keep up with the cost of inflation. Kiran.
CHETRY: It is different depending where you are in your life. Telling people though that you have to put off retirement is very, very difficult as he said.
FEYERICK: Absolutely. It really is. And the number of calls that they are getting we're talking about dozens of calls. They are spending much of their day hand holding. That's what they are trying to do. They're trying to calm people and say let's see where this goes before we really do anything.
CHETRY: All right. Well. thanks, Deb.
ROBERTS: Gerri Willis has logged on and taking your questions about the economy this morning. She joins us now with a preview of what's ahead. Hey, Gerri.
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Should I buy or should I rent, should I save for college, is my bank safe? Those are the kinds of questions we're getting. Log on to cnn.com/am with your question. More answers after the break.
(COMMERCIAL BREAK)
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ROBERTS: Coming up now at 37 minutes after the hour. Here to help you with your questions about your money is CNN's personal finance editor Gerri Willis. You're getting all kinds of questions.
WILLIS: Unbelievable. We're just being inundated. Let's get right to them. Delores writes "is now the time to buy a house or keep your money in a money market and continue to rent?" All right. Here's the bad news about buying a house right now. I'm pro buying a house. Prices are down. It would be fantastic if you could but lenders are really stingy now. They don't want to lend to people right now. So it's very difficult to get a loan for a house. What you should be doing right now is getting all the information together you need to buy that house. You would understand days on market, is the market slowing or is it speeding up, are prices where they need to be for you to buy? Do some research first and then go out and try to get that loan. Sara writes "curious to know if we should suspend contributing money into our two year old's 529 plan? We only put in $50 a month." OK. 529 plan, in case you don't know, it's a savings program for college. It's fantastic. You save before taxes so your money grows fantastically well. Do not stop investing in your child's college savings. Your kids are going to go to college someday. Today's market tumult has nothing to do with that so keep saving.
ROBERTS: I got a 529 for my daughter and it's so great to know it's paid for.
WILLIS: Yes. See precisely so. So you don't have to worry about that right now. I think that's where everybody wants to be.
CHETRY: Can I ask you one question about that too as well? When you take a look at that long term, you're right, if you have 2-year-old you got 16 more years before it's taken out. But is there a time when you need to rethink whether or not you're putting that money in something else that's a little bit safer.
WILLIS: Well, if you're using a good 529 plan, it does it for you. It reallocates as you go and as you get closer to college. So that's what you want to do, make sure you reallocate over time, just like you do with our own retirement. It's the same thing.
ROBERTS: Next time submit your question, you're jumping ahead on the line here.
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WILLIS: All right. Let's get the one from Ed in Minnesota who writes "is the new FDIC limit of $250,000 in effect now is there some future date when it becomes effective? Is there similar coverage for credit unions?
Yes. It's in effect. 250,000 coverage, insurance coverage for bank accounts. I get a lot of questions, am I safe in my bank. If you have FDIC coverage yes you are, up to $250,000. Credit unions as well. so I know people are worried out there, that's what you need to know. Guys?
ROBERTS: Can I ask a question? Thank you, Gerri.
WILLIS: My pleasure.
CHETRY: He wants to know what the hot stock is today.
ROBERTS: I don't know if there is one.
CHETRY: Exactly. Good digging (inaudible). Thanks, Gerri.
Well, tonight's debate night in America. So can we expect the candidates to stop attacking each other and actually reveal how they are going to help attack the economic crisis? We'll talk about that. Also in tough economic times laughter is still free. We're going to go looking for Joe six-pack with two guys who should definitely know where to find them. Jackie and Dunlap, the red state update guys. They held a town hall last night. We'll see how that went. You're watching "the most news in the morning."
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CHETRY: 42 minutes past 7:00. Rob Marciano joins us now with some extreme weather news for us this morning. Hey, Rob.
ROB MARCIANO, CNN, METEOROLOGIST: Hey, Kiran. We got tropical storm Marco. This thing popped out of seemingly nowhere yesterday afternoon. It's got winds of 65 miles an hour. Southern parts of the Gulf of Mexico in the Bay of (inaudible). This thing is tiny. It has winds extending out from the center of tropical storm force of only 10 miles. I mean this is an odd one. For sure, it could become a hurricane before it makes landfall later on today in Mexico.
All right. Strong line of thunderstorms heading through southeast Texas. This system brought some bad weather to eastern Texas just to the north of Houston yesterday near Tyler, Anderson county. Check out some of the video coming in just this morning from the damage last night from what was likely a tornado that went through there. They had a number of tornado warnings out. It was sighted by storm spotters and law enforcement and certainly exchanged some of the damage there. So we'll go out and assess the situation and see how strong that tornado was but it certainly did a fair amount of damage.
There is a slight chance of seeing similar action today but all in all these systems as it heads towards Memphis across the Tennessee Valley are weakening just a little bit. Certainly, some cooler air behind this system, some warmer air ahead. That's the time of year where we get the action. And that's what we're seeing today. 70 in Chicago. 65 in New York. 78 in Dallas. And another storm coming into the Pacific northwest with a high of 58 degrees in Seattle. Kiran, back to you.
CHETRY: All right. Rob, thanks.
MARCIANO: You got it.
ROBERTS: And tonight's presidential debate, John McCain and Barack Obama should expect a lot of questions about the economy. But so far neither candidate has laid out details of a plan to fix the current financial crisis. Allan Chernoff joins me now with more on this. Good morning, Allan.
ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Good morning, John. And you know, the nation right now teetering on the edge of a perilous financial cliff, the presidential candidates though have been criticizing each other and blaming Wall Street. But are they really ready to lift the nation out of this crisis?
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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 that are 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 S.E.C. Chairman Christopher Cox. A day after word that Treasury Secretary Paulson's plan leaked, John McCain proposed a mortgage and financial institution 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 economic ideas the 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.
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CHERNOFF: At a time of crisis, neither candidate wants to act like an economic back seat driver and the situation is so unprecedented and moving so rapidly even the Treasury Secretary and the Federal Reserve chairman are essentially tweaking their own game plan on a daily basis. But in just 3 1/2 months the remains of this crisis will be in the hands of either John McCain or Barack Obama.
ROBERTS: Hard to think that anybody can say anything at this point to make things worse than they are. But I guess they could/
CHERNOFF: Yes, just by opening your mouth you could make things worse. So you got to be careful.
ROBERTS: As you said we're teetering at the edge of the cliff, just a little shove and you'll go over. Allan, thanks so much for that. 46 minutes after the hour now.
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CHETRY (voice-over): Hollywood conservatives. They are the silent minority now but is tinsel town getting a bit more red?
UNIDENTIFIED MALE: They're starting to realize that there are strength in numbers and still figuring out to find each other.
CHETRY: You're watching "the most news in the morning."
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CHETRY: Welcome back to "the most news in the morning." If Hollywood were a state it would definitely be a blue one. But as our Brooke Anderson reports there are plenty of Republicans and more and more they are willing to wear it on their sleeve.
BROOKE ANDERSON, CNN ENTERTAINMENT CORRESPONDENT: John and Kiran, the majority of Hollywood stars speaking out politically support Barack Obama but there are a surprising number of celebrity conservatives. Some vocal, others afraid to admit they support John McCain.
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ANDERSON (voice-over): In terms of politics, Hollywood is bluer than blue. But there are a few streaks of red.
DAVID ZUCKER, FILM MAKER: If you do identify as a Republican, you whisper it.
ANDERSON: High-profile John McCain supporters, like film maker David Zucker, producer Jerry Bruckheimer, and actors Robert Duvall, John Voight, Sylvester Stallone and Kelsey Grammar are so established their standing in the entertainment industry won't change with this admission.
KELSEY GRAMMER, ACTOR: I am a Republican.
UNIDENTIFIED MALE: I believe John McCain is the better man for the job.
ANDERSON: Other conservative stars choose to keep their politics underground perhaps fearing a backlash.
ANDREW BREITBART, PUBLISHER, BREITBART.COM: I highly recommend that they don't come out until they fully understand the ramifications.
ANDERSON: Andrew Breitbart who helped develop the Drudge report and the Huffington Post is now creating a website for conservative voices in Hollywood.
BREITBART: If you are a person who thinks that Wal-Mart isn't bad, that thinks that George Bush isn't the devil, you are going have a hard time getting a job in this town.
ANDERSON: But to the executive director of the Creative Coalition, a citizen activist group that boasts a long list of Hollywood A-list members rejects that claim telling CNN, "great actors are great actors and they are going to work." Actress Holly Robinson-Peete and outspoken Obama backer John Legend feel industry conservatives are hesitant to speak out.
JOHN LEGEND, SINGER: There probably is a little bit of pressure on those few conservative entertainers out there.
HOLLY ROBINSON PEETE, ACTRESS: I know there are a lot of John McCain supporters who are in the business who are very hush-hush.
ANDERSON: Adam Sandler gave money to former New York mayor Rudy Giuliani during his presidential run. And Gary Sinise donated to McCain and narrated a video played at the Republican national convention but neither regularly advertises his politics. Unlike a wealth of Hollywood democrats. But Breitbart feels the tide is turning for celebrity conservatives.
BREITBART: They're starting to realize that there are strength in numbers and the figuring out how to find each other.
ANDERSON: A possible find that change is coming, not just in the White House.
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ANDERSON: For now, Barack Obama is clearly the main beneficiary of Hollywood dollars. According to the Center for Responsive Politics during this election cycle, the entertainment industry has given $23 million to Democrats and $8 million to Republicans. John, Kiran.
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CHETRY (voice-over): Young, worried, and ready to pick a president.
UNIDENTIFIED MALE: They are scared. And they are scared for the first time in their lives.
CHETRY: Students on edge over the economy. Signing up to vote. But will they actually show up on election day? Plus, the presidential debate pregame. Red-state style. We are live in Nashville with Jackie and Dunlap. The morning after their big town hall meeting with voters. Questions, answers and their take on Joe six-pack. You are watching "the most news in the morning."
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CHETRY: Welcome back to "the most news in the morning." Another gut wrenching day on Wall Street. The Dow at one point dropping 800 points. A lot of people thinking it had to be a typo. Now, tonight's second presidential debate couldn't happen at a more critical time. It also comes as Barack Obama opens up some new leads in polls against rival John McCain. Joining me now CNN contributor Bill Bennett in Arlington, Virginia. Thanks for being with us this morning, Bill. Good to see you.
BILL BENNETT, CNN CONTRIBUTOR: Thanks, Kiran, as always.
CHETRY: So you know tonight's debate is this town hall-style setting and format. And really it's going to focus a lot on the economy. John McCain pushed for the bailout package. We saw Wall Street tumble even more yesterday. What is the economic message that John McCain needs to deliver tonight?
BENNETT: Great question. First of all, there's talk that the McCain campaign is saying they want to change the subject. I don't know whether that's true or not but they can't change the subject, Kiran. This is the subject everybody is talking about. This is the reality we are all in. John McCain shouldn't try to avoid the subject or change it. He should embrace it and talk about his ideas, his plans, how he differs from President Bush but most important, how he differs from Barack Obama. He's got a plan. I think it is a very good plan. They need to go offense on it.
CHETRY: A little bit of perspective and maybe some unsolicited advice from "The Wall Street Journal." I'd like to get your thoughts on this. They wrote today in an article, today reminds people of the 1992 election. You can draw many similarities or Bill Clinton won after his - I feel your pain moments at the debate. And also, vowing not to raise taxes on the middle class. But then after he was elected with the Democrats in Congress, the middle-class tax cut actually vanished. A massive tax hike was approved.
This article today said McCain can do this, can win with this if he begins to direct his fire they say as much against the democratic establishment on Capitol Hill as against Mr. Obama for one thing, Congress is even less popular than the president. For another, the need for a Republican check on a Democratic Washington is a good potent argument.
BENNETT: Yes, look. He opened it up yesterday, Kiran, in Albuquerque. He talked about Barney Frank. He talked about Chris Dodd. He talked about Barack Obama. He talked about how the failure to regulate, something he wanted to do, the regulation of Fannie Mae and Freddie Mac. How that was stymied by the Democrats. What he has to do is look the audience in the eye and say do you really want liberal Democrats running the entire country? I know that this is an attractive man who gives a great speech and has a wonderful demeanor but if you want a liberal House, a Senate, and president, taking charge of your money and the government, this is not a liberal country. He has to make it plain that this is what we are going to get and hope that people understand that and see that whatever problem we're in could become worse if free spending and high taxing liberals are in charge. That's the argument he needs to make.
CHETRY: Right. But Barack Obama had a lot of success with his message which is do you like what's been happening under George W. Bush? Because this is what John McCain will do if elected to four more years. How does he combat that?
BENNETT: Yes, that's another great question. I will stop commenting on your questions. Of course you ask good questions. That's why you have your job. Listen, that's why I started by saying he needs to differentiate himself from Bush. And the main way is to say spending, spending, spending. Everybody knows John McCain is a hawk on spending and everybody knows that George Bush spent like crazy.
Also talk about the differences. John McCain was opposed to that Medicare prescription and drug bill. John McCain is in favor of a flat tax. You haven't heard George Bush talk about that. So he needs to give a large pitch -
CHETRY: That's interesting because I haven't heard John McCain talk about that either. We seem to be hearing on the stump from John McCain the same speech - that frankly seems a little bit stale about the earmarks. I don't hear a lot about flat taxes.
BENNETT: The master of economics tonight. He has got to be the captain of economics. He has got to make it plain that he doesn't want to avoid this issue. He wants to embrace it. Because his ideas are better and better for the country than Barack Obama's ideas. And that the good ship liberal is not what this country needs. That's not what this economy needs right now. That's got to be his message and he has to look like he knows what he is talking about and strongly in favor of those (nostrums) that he is suggesting, not changing the subject.
CHETRY: All right. Well, if he ever had an American electorate that's all ears. It's certainly the time and the climate right now. So we'll see how they do tonight. Thank you for joining us. Bill Bennett, always great to see you.
BENNETT: Thank you.
ROBERTS: Coming up now to one minute to the top of the hour. And here are this morning's top stories. The (Pepto) will be out in force on Wall Street. Right now, Dow futures pointing to us to a slightly higher opening. Investors still reeling after yesterday's whirlwind ride. The Dow was down 800 points for a time before closing down about 370 points which literally speaking was pretty good. The Nasdaq and S&P 500 also plunged in all but about half a trillion dollars in values was wiped out yesterday.
Just 13 hours away now from the second presidential debate. Exactly four weeks to election day. All eyes will be on John McCain. The polls show him slipping and Barack Obama nearing the 270 electoral college votes needed to win. McCain is more comfortable with tonight's format in Nashville, town hall style with questions from the audience. Both men will be targeting the undecided vote.
And Iraq's foreign minister said bold political decisions are needed to finalize the deal to keep U.S. troops in the country next year but the minister said they are close to an agreement. The deal is needed to replace the United Nations mandate that expires this year.
CHETRY: And back to our top story right now. As the Dow opening this morning at its lowest point in four years, just under 10,000, the Wall Street slump quickly spread near the global market this morning and is selling fast and furious. In Asia, Japan's Nikkei closing down more than three percent. London where trading is already underway shows stocks are up slightly. And right now, Dow futures flat. For a time now, the Dow has been headed to its worst point loss in history. A lot of people say will take flat at one time sinking 800 points. It did turn around, rallied more than 400, still closing though before the 10,000 mark again at 9,955 points.
