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President Bush Talks Economy with President of Slovakia; Obama Addresses Holds Rally in Dayton, Ohio; Tornado Watch in Parts of Georgia
Aired October 09, 2008 - 11:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TONY HARRIS, CNN ANCHOR: -- from days of frenzied selling. Well just a breather. Positive territory for about an hour and then this. Retirement plans losing staggering amounts of money. This hour, your pension plan, is it safe? 26 days and counting, Obama and McCain blanket a pair of battleground states today. Live candidate coverage this hour. Good morning everyone, I'm Tony Harris and you are in the CNN NEWSROOM.
You know, I was all prepared to tell you investors on Wall Street seem to be chilling out a bit today, but a moderate rally on the Dow did not hold. You know, it was one year ago today the Dow hit its record high of above 14,000. Blue chips have fallen almost 5,000 points since then. CNN's Susan Lisovicz is at the New York Stock Exchange. Susan, we're thinking back on a year ago. Heck, we're thinking about an hour ago. What happened to my rally?
SUSAN LISOVICZ, CNN CORRESPONDENT: Well, it's really the same issue that has plagued the markets for some time now because we are deep into a bear market and there's a lack of confidence. Despite everything that we have seen and heard in recent days which are nothing short of extraordinary, we are seeing a lack of confidence in the marketplace. One trader was just telling me that there's -- you just don't know which financial company is going to become insolvent, despite this landmark legislation that was passed a week ago, nearly a week ago, I should say.
And talk that there may be new measures that will come as a result of it. It's just something we're riding through right now. I think that until we see some tangible signs of life in the credit markets, we're going to have to ride through it. And, of course, from a year ago it's a loss of, Tony, 4800 points. That is the kind of ride we've been through. First it was really just sort of an economy in decline as a result of the housing market and then the paralysis in the credit markets.
You know, you've seen some companies try to do their part, like IBM announcing its earnings early because it had good news to tell. No assistance from the government. It reported quarterly profit up 20 percent from a year earlier. It got big exposure to financial services. And this was a stock that was up several percent in the very early going. Right now, IBM is down about a third of a percent. Those are the times we live in --
HARRIS: Don't leave us because look at what's happening to the Dow right now, so please stay on that post. I know you will. If you get some breaking developments on this, will you please let us know, Susan?
LISOVICZ: I'll let you know and you know it's been very volatile.
HARRIS: It really has.
LISOVICZ: 90 minutes into the session is very early, very early in the day.
HARRIS: All right Susan, appreciate it. Thank you.
LISOVICZ: You're welcome.
HARRIS: Trying desperately to crack the frozen credit markets, reports now say the treasury department is considering buying ownership stakes in many U.S. banks. The move would inject capital directly into the banking system.
Treasury officials say that's exactly what the newly passed $700 billion bailout bill authorizes them to do. The plan is still, we understand, in the discussion stage. But according to "The New York Times," the proposal is emerging as one of the most favorite new options being considered in Washington and Wall Street. You know everyone is asking, pleading for an answer. When will the turmoil end? Personal finance expert, Suze Orman sounding a bit of a pessimistic note. She talked with our Anderson Cooper.
(BEGIN VIDEO CLIP)
SUZE ORMAN, HOST, "THE SUZE ORMAN SHOW": People feel like they need some medication because they are panicking right now. So as I was saying to you, it's as if the economy right now is in the ICU unit of a hospital. We are in intensive care and they are throwing every type of medication at us to cure what's going on.
And they're panicking because why? Nothing is working. They tried this, it didn't work. They tried that medication, it didn't work. They are running out of prescriptions to give it. So we're going to be in the ICU unit here for a while, eventually, and I don't know when that will be, it will probably be six months, a year, year and a half. We will get out. We will be in the hospital then. We'll stay in the hospital for about a year or two.
After another year or two of that, we'll end up in rehab for a few years and then we'll be OK. So this is a long stretch. People actually have to stop panicking and they should get used to this because this is here to stay, if you ask me, for a long time.
(END OF VIDEO CLIP)
HARRIS: Suze Orman's view of where we are right now. You know we want to hear from working people from around the world, people just like you about this financial frenzy. What better place to roll our cameras than outside banks.
(BEGIN VIDEO CLIP) UNIDENTIFIED FEMALE: I've stopped spending money, yeah, making my own clothes, stuff like that. Making packed lunch, just try not to spend money where it's not necessary basically.
UNIDENTIFIED MALE: We'll be more conscious about how we spend our money, given all these global recessions coming on. I guess there's actually a lot of people anticipate more tough times to come. So, you know, I guess a lot of people like myself will probably think we have to actually stabilize it now and see what the market will look like and whether jobs are secure or actually keep a lot of cash and when the time comes and maybe we can pick up some good value on stocks.
UNIDENTIFIED MALE: I'm still confident in the government and the finance industry, but I will spend my money wisely because maybe the - (INAUDIBLE)
(END OF VIDEO CLIP)
HARRIS: Boy, you can hear it in the voices, the fear factor. It is certainly the commodity driving Wall Street and other markets these days. Take a look at the Dow down over 200 points now. CNN's Brian Todd with more.
(BEGIN VIDEOTAPE)
BRIAN TODD, CNN CORRESPONDENT (voice-over): First the government bails out the mortgage industry. Then it decides to lend money directly to companies. Then it slashes interest rates, all moves designed to build confidence. Still, U.S. stocks tank over the past few days. European markets follow suit. And financial anxiety is felt across the world.
UNIDENTIFIED MALE: You have to wonder if this is going to get better before it gets worse or if it's going to do the opposite.
UNIDENTIFIED MALE: People start selling. It's like a panic. People just might jump on a bandwagon.
TODD: Georgetown law professor Donald Langevoort studies investor behavior. He says greed and fear are the two most prominent emotions on Wall Street and fear is far more powerful. Langevoort says this is at least partly a fear market because of uncertainty about whether these government efforts to shore up the economy will really work.
PROF. DONALD LANGEVOORT, GEORGETOWN UNIVERSITY: The more we come to the conclusion, if I don't get my investment decisions right, my kids don't go to college, I can't live out my retirement without being a burden on my family. Those hot button things, they can very much influence somebody to buy or sell emotionally rather than sensibly.
TODD: Experts say once fear sets in, the herd mentality takes over. Even professional investors see others fleeing the markets and simply join in. How to turn it around? From financial analysts to psychiatrists, experts say don't sell just for the sake of selling. DR. GAIL SALTZ, PSYCHIATRIST: If you can hold on to the fact that historically we always come out of these things, we always come out and that what you need to do is get yourself in as conservative a stance as you can and then know you've done what you can do.
TODD (on camera): But that also doesn't mean do nothing. Financial analysts say you should look at your 401(k) statement, look at the investments you have in there, get advice on what's prudent to hold on to or sell, just try to have some balance in there until the markets turn around again. Brian Todd, CNN Washington.
(END OF VIDEOTAPE)
HARRIS: Take a look behind me, it's on the screen and it's behind me as well, what's happening with the Dow right now, down 158 points. It was down a lot lower than that just a couple moments ago, it was down over 200 points you'll recall. So a bit of a fight back for the Dow. We watch that number a lot.
We're going to talk to Diane Swonk in just a couple of minutes here, she's a fantastic financial analyst. I believe one of the things she's going to say in total agreement with our money team is that while we watch this number a lot, that is just basically a snapshot. What we really need to be concerned with are the credit markets and loosening up the credit markets and getting those markets working again. We'll talk to Diane in just a couple of moments.
We want you now to meet the $700 billion bailout chief. No, we're not talking about treasury secretary Henry Paulson here who has been pushing the government's financial plan. I'm actually talking about a 35-year-old former Wall Street exec who is actually running the program. Here is our Susan Roesgen.
(BEGIN VIDEOTAPE)
SUSAN ROESGEN, CNN CORRESPONDENT (voice-over): He's armed with a $700 billion line of credit. His mission, to start buying bad debt. Treasury official Neel Kashkari has been named to spearhead the Wall Street rescue plan.
Kashkari is a 35-year-old who has been working over the last year on mortgage and foreclosure issues, including contingency planning if banks are crippled by bad mortgages. He is also a former vice president of investment bank Goldman Sachs. That makes him the third top administration official to come from that Wall Street firm alongside his boss, treasury secretary Henry Paulson and White House chief of staff, Josh Bolton.
While some analysts say the number of Goldman alums involved raises the possibility of a conflict of interest. The White House spokesman says Secretary Paulson is simply trying to bring in the best talent he can. Others say the bailout team will need people with Wall Street experience.
STEPHEN POPE, CANTOR FITZGERALD: There have to be people who understand what is the heart and soul of the instrument's concern. And secondly are they able to try and imply a value that the market might think is acceptable upon each individual instrument.
ROESGEN: And the treasury department won't handle all the buying itself. Private firms will also play a role.
HENRY PAULSON, TREASURY SECRETARY: We're looking at a number of asset managers with good experience, very good experience and expertise from --
ROESGEN: But here, too, is the potential for conflict of interest. Since some of the best asset managers who would be helping the government also work for Wall Street clients.
Susan Roesgen, CNN, Washington.
(END OF VIDEOTAPE)
HARRIS: We are just getting started this morning, giving you the financial advise you need to keep your car, your home and put food on the table.
(COMMERCIAL BREAK)
HARRIS: Twelve minutes after the hour. Welcome back everyone to the CNN NEWSROOM I'm Tony Harris. The long arm of the law giving some homeowners a pretty big break.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
JENNIFER BOLDUC, CANCER PATIENT FACED WITH FORECLOSURE: Having a premature baby and then finding out I had breast cancer. And actually realizing that you have to swallow your pride and try to get the help you need. When you actually go to get it, it's very difficult because no one wants to help.
(END OF VIDEO CLIP)
HARRIS: Boy, a family of five facing double jeopardy in this tough economic climate, foreclosure and cancer. Jennifer Bolduc of Rockland, Massachusetts has been going through chemo and is unable to work. Her husband laid off just two weeks ago.
Four years ago when they bought their house they each had a job. He is searching but they have accumulated, listen to this, $75,000 in debt. $40,000 of that owed an attorney. They have filed for bankruptcy and fear losing their home but admit to being stumped as to what to do next. Family and friends are lending a helping hand. They're planning two fundraisers next month.
Let's double back to Wall Street right now for a quick check on the Dow. OK, we're moving back into some more positive territory when compared to where we were just minutes ago. We were down over 200 points, fighting back a bit. We're down still in negative territory, triple digit losses now. 113 points, and Susan Lisovicz is following all of this for us. The Dow has been in kind of an October free fall. But again, down 100 points. We'll check in with Susan in just a couple of minutes. >
The financial crisis hitting Main Street with lightning speed. Many people trying to close on a house or finance a car today are running head first into the credit freeze. Diane Swonk is a chief economist at Mesirow Financial in Chicago, Diane, you superstar, good to see you again. Thanks for your time.
DIANE SWONK, MESIROW FINANCIAL: Good to see you, too.
HARRIS: I was saying a moment ago that I believe you're of the opinion that we watch the Dow a lot but that is just a snapshot. What we really need to be concerned with is what's happening with the credit markets.
SWONK: You're absolutely right on that. The Dow is sort of the side show. It gets all the attention but the reality is what's going on, how easy it for not only individuals, but companies to get credit. What's going on in these weird rates that nobody knew what they are called LIBOR today. It's actually up higher again today despite the global intervention of yesterday. These are things we really worry about because it means that the credit that people need on Main Street is not getting there.
HARRIS: OK, so LIBOR, it's up and that's not good?
SWONK: That's not good. It's not good especially in the face of -- we should see it as close to the fed funds rate which is now 1.5 percent. It's up over 4 percent right now. It means that -- it basically is a measure, that difference between the fed funds rate and where it is. It's sort of a fear measurement of how unwilling banks are to lend to each other, let alone to anybody else.
HARRIS: OK, LIBOR, I don't get it. But if it's up, I understand from you now that it's not the best --
SWONK: You can type it in your Google or your search engine and it will come up. Just knowing that will tell you where the markets are.
HARRIS: That's good. I want to double back just a bit to yesterday. We've got at least the latest guidance from treasury secretary Paulson on where we are in this situation right now, Diane. Have a listen to a bit of what he had to say and then let's talk about it.
(BEGIN VIDEO CLIP)
HENRY PAULSON, TREASURY SECRETARY: A root cause of this situation is a housing correction and a lack of confidence in mortgage assets as well as a lack of confidence in many of the financial institutions that hold these assets. Because of this widespread uncertainty, investors are hesitant to commit capital to financial institutions. Investor confidence is critical to restore liquidity and enhance the stability of our financial system.
(END OF VIDEO CLIP) HARRIS: OK, Diane. You know I love to ask you to do this for us. Break that down and what is the secretary saying?
SWONK: Basically he's saying we've got a panic out there. We've got to stop the panic. At the end of the day we're willing to go the whole nine yards and put money directly into these institution if that's what it will take to shore up investor confidence to say we're willing to buy it, why don't you?
HARRIS: Let's get back to what we're calling Main Street and what folks are dealing with every day now. If you have a contract pending on a home right now, what are you facing? Are you in a situation where it is a possibility that you could have a deal in place, you go to close and the terms have changed and now the credit that you thought you had available, the loan options that you thought you had available are no longer available to you or have changed?
SWONK: That's exactly right. What we're seeing is in our own business lines many people are -- we're not a bank but we do use real estate transactions. In many of the deals that we thought we had done, people are all of a sudden showing up to closing and the bank saying we want more equity now, we thought we gave you a deal at one price or we're going to charge you more points now. And all of a sudden as you're ready to sign on the bottom line, the deal has changed in front of you. It's very important to look through and read those documents because you may sign on to something you don't even know what the deal is.
HARRIS: Diane, the deal changes for folks who have lousy credit. I'm sitting here at the table, I've got a great credit score, I have 750 -- I'm sorry I have an 800 score, I'm in good shape, right?
SWONK: No, you're not and that's what's been so incredible. We're seeing even people with the highest credit scores, only about 21 percent of those with the highest scores unable to get auto loans. Just incredible. They're using almost any --
HARRIS: Wait a minute, if I'm sitting here with an 800 credit score and I can't get a loan, where are we headed with this?
SWONK: There lies the rub. There's no escaping the fact that we've got to undo some of this damage before we can even heal. Remember, this all happened against the backdrop of a deteriorating economy. We added insult to injury I've never seen in my career or in history such a rapid deterioration on Main Street from a situation on Wall Street, happened so quickly. In three weeks' time adding insult to injury. We can't escape things getting worse before they get better.
The good news is we are seeing now a holistic approach, not only the U.S. government sort of finally figuring out what it needs to do. The Federal Reserve doing everything in its power it can do. But also foreign economies and foreign financial ministers finally getting together and coming up with, we're all in the same boat together, let's get those ores in the water.
HARRIS: Diane you're terrific, Diane Swonk with us again this morning, good to see you. We'll have you back real soon Diane, thanks.
SWONK: Thank you.
HARRIS: Fortune magazine is out with its list of the 50 most powerful women in business. Here is a television executive who is no stranger to this list. You probably know who I'm talking about already, but before we tell you who she is, here's a chance for you to guess.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: When I was younger, I thought about being a teacher because my parents are educators.
UNIDENTIFIED FEMALE: But instead she went from the classroom to the board room to run a media empire. Who is the woman keeping people tuned in? Find out after the break.
(END OF VIDEO CLIP)
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Taking the number 12 spot on Fortune magazine's most powerful women list is Anne Sweeney of Disney ABC Television Group. A key player in giving Disney ABC an extreme over, Sweeney believes taking risks can put you at the top. And equipping your team with the latest gadgets, keeps you there.
ANNE SWEENEY, DISNEY-ABC TELEVISION GROUP: Don't just talk about technology. Don't just talk about the future, experience it. I know my team. When I put something new into their hands, I can count on them coming back with big ideas.
(END OF VIDEO CLIP)
HARRIS: All right, this just in. We've been following the AIG story pretty consistently here at CNN. We have some news. You'll remember earlier in the week in congressional testimony it was revealed that just days after AIG received a federal bailout, it spent $440,000, remember this story, on a posh California retreat for its executives complete with spa treatments, banquets and golf outings. That really raised the temperature in that hearing room.
We've since learned that there was a second retreat scheduled for October 20th for brokers who sell AIG product. This retreat, we understand, has now been canceled. We just received a statement from the director of public relations at AIG that the event scheduled for October 20th at the Ritz Carlton Half Moon Bay, that's in California has been canceled in light of new circumstances we re-evaluated the cost of operations and the need to repay the fed while still serving the needs of our policyholders. So the second event scheduled for California on October 20th has been canceled.
Still to come in the NEWSROOM this morning, ready to retire, well some thoughts on how to protect your 401(k) and pension.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
VIDEO BY PETER CABRERA, ST. LOUIS: Both my parents did everything the right way, you know. They worked hard their whole lives. They saved, and now my father is -- he's retired early after working so hard his whole life. He's watching his 401(k) disappear.
(END OF VIDEO CLIP)
HARRIS: Tough times, really tough times. No doubt about it. Financial turmoil is squeezing retirement plans, $2 trillion have evaporated from 401(k)s. We talked about that yesterday. Today we want to focus on pensions. Personal finance editor Gerri Willis has tips for those fretting about the future. There are a lot of folks out there Gerri doing just that. Good to see you this morning. First of all, I guess the very basic question here, let's cover this territory, are pension funds safe?
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: It's great -- I am really surprised to be getting these questions. E-mail from folks worried about their pension. Is it safe, yes it is. The pension you've earned today can't be taken away from you no matter what happens. Pension plans give you a guaranteed annual payment when you retire.
It's calculated based on your salary, how long you've been working, your company puts up all the money or most of the money. Your benefits are not affected by what goes on in the stock market. Here are the rules, corporations must keep their pension funds funded. If you are completely vested, you have a right to a payout.
Now if your company discontinues the plan or you leave your job, you have a right to the money. Of course you may have to wait until retirement to collect it. But a pension is not a 401(k). You're not worried about what the market is doing. It's there when you need it.
HARRIS: What if the company I've worked for my entire life, my entire adult life goes bankrupt?
WILLIS: That's a different kettle of fish. You still collect your pension. Companies are required to pay premiums into what's called a pension benefit guarantee corporation, a big insurance company really run by the government. So your money is protected up to certain amounts. There's one thing that you may be vulnerable to with a pension and that's whether your company will freeze the plan. They do this all the time. A lot of companies have already done it. If this happens, you're entitled to the pension benefit you've earned to date but you don't accumulate benefits moving forward. Typically what they do they freeze a plan, they start a 401(k).
HARRIS: Let's talk about the 401(k)s for just a moment if we could. What's the advice to folks who are worried today about their 401(k)s?
WILLIS: I'm getting questions from people who think that somebody is going to take their 401(k) money from them. Look, your money is held in a separate trust. Even if the company that you work for goes out of business, your assets are still there. Now that doesn't mean that you're protected against investment loss. The best thing you can do if you have a long term horizon is to make sure you know what you're invested in and hey, stop watching the daily machinations in the stock market. Now is not the time to be obsessed with losses. It's better to really know and understand what you own. Tony?
HARRIS: Hey Gerri, you're going to talk about some of these on the big "OPEN HOUSE" show this weekend?
WILLIS: Indeed we are. You know we have some great stuff on winterizing your home, saving some money there. Scoring the deal on the best new car, lots of deals out there for people who are shopping and we're talking about protecting your money. We'll even help you explain what's going on with today's economy to your children. So we are all over the story. Helping you protect your money and informing your kids.
HARRIS: Gerri, appreciate it, great to see you. Thank you.
WILLIS: My pleasure.
HARRIS: Hey, we want to get everyone over now to Rob Marciano in the Severe Weather Center. Rob is getting so new information.
What do you have, Rob?
ROB MARCIANO, AMS METEOROLOGIST: I mentioned a couple of the thunderstorms that were rolling across southeast Texas. One was -- had this deep purple indicating some hail. Now, we've got another cell that kind of split off of the main flow. There's that one that's got some hail in it. That's headed towards Maken (ph). But, the southern expanse of this complex, is creating a little bit of a spin, east of Valdosta, and just south of Waycross (ph).
This has now been indicated by Doppler radar at the National Weather Center that we've got a tornado warning out of Clinch and Ware counties here in southeast Georgia. This is radar indicating, meaning it hasn't been reported on the ground. But nonetheless, if you live in those two counties, and along Fargo Highway, north of Fargo, this very well may be heading your way.
So, moving to the east at about 20 miles an hour. That's the one -- we'll get through this one real quick. This is the one heading towards Maken, that's got some big time hail. Although that looks to be weakening just a hair. And this is one that -- east of Valdosta that has a tornado warning out. Watching that carefully for potentially seeing a tornado drop out of that.
We have a severe thunderstorm watch. That's out for the rest of this afternoon for northern parts of Florida and southeast parts of Georgia, and just a smidge, including Hilton Head, of South Carolina. So some rough weather here as this system moves off towards the east.
All right. Let's talk quickly about Hurricane Norbert. This is the latest out of the National Hurricane Center. It has weakened somewhat as of the 11:00 advisory. Down to 115 for sustained winds, that's still a Category 3 storm, still a strong storm, still a major hurricane. And it's forecast to make this northwesterly and northeasterly turn over the next day or two, coming on shore. Now it looks like they want to bring it on shore as a Category 1. That's good news for folks in Cabo and just north of Cabo. It's still a hurricane rolling in there later on towards the weekend, and then being sucked up into this big storm that's heading into the Inner Mountain West. That will be a big player for a good couple of days.
So, watching this complex here, Tony, again, it's only a tornado warning out for those two counties, just east of Valdosta. We'll let you know if we get any --
HARRIS: Appreciate it.
MARCIANO: -- on the ground.
HARRIS: Mark (ph), can you just give me a quick heads up. Do we have the comments from the president? OK. We've got some comments coming in from the president about the economy after a meeting this morning with the president of Slovakia. As soon as we get that, we'll turn that around for you.
Another quick check of the markets. Of course we're going to stay on top of the markets throughout the morning. As you can see, the Dow is trading down now. But we are coming back. So we're looking at 90 points, negative 90. We were looking at a bit of a really.
Let's listen now to President Bush...
(JOINED IN PROGRESS)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: -- the president of Slovakia to the Oval Office. Slovakia is an ally and friend of the United States. And as my time as president, I've come to admire this president.
He's an easy man to talk to. He's got good strong opinions and I appreciate his values. We talked about a variety of subjects. I assured him that the United States will take strong action in dealing with the current economic situation. And I also talked about our common desire to have a -- to work with our European friends to develop as best as possible common policy.
During my presidency I was pleased to support Slovakia's ascension into NATO.
HARRIS: OK. There you have it. President Bush making a few comments on the economy, some thoughts, at least, in his meeting with the president of Slovakia. With the struggling economy right now, many Americans are feeling the squeeze when it comes to their wallets. Our Veronica De La Cruz has been watching the web this morning.
And Veronica, you know the fact is a lot of us are simply sort of trying to get to the end of the month, paycheck to paycheck.
VERONICA DE LA CRUZ, CNN CORRESPONDENT: Yes, that is absolutely right, Tony.
And you're right, Americans are surely feeling the squeeze. We want to go ahead and tell you about this story at CNN.com, Tony. It's in the living section. And like you had just mentioned, a new survey by careerbuilder.com, that's a job opportunities Web site, says almost half of all workers, Tony, just like you said, are living paycheck to paycheck. A quarter of those, Tony, say they don't put any money into savings. And then, Tony, those who are able to save, 34 percent say they're only able to stash away less than $100.
So check this out, Tony. Some advice from the experts. They say try brown bagging your lunch, cutting back on transportation costs. And listen up -- don't skimp on necessities like health insurance and your retirement fund.
But, i-Reporters, like Rick Seno (ph), say it's just too scary of a time to be investing in the stock market right now. Watch this, Tony, as he shares his thoughts on the current state of the economy.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: People tell me that at my age I should be starting to worry about my retirement and making investments. But I don't know what to do. When I go to my parents for advice, they're freaking out. They're saying that their 401(k)s are shrinking and they're starting to worry that their home values are declining.
What's someone to do? Even today the Dow is dropping almost 700 points. And I don't want to lose any money by investing money in the stock market.
(END VIDEO CLIP)
HARRIS: Boy, we certainly understand that sentiment.
DE LA CRUZ: Yes, we really do.
And Rebecca Stokes, this is an i-Report that she sent us, Tony. These are her two sons. And listen to this, she writes: "I'm a single mother laid off from work with two kids. My son is away at school with no money in his account. I had to give up my son's car that I bought for him to use in college. No more eating out. We are barely paying bills."
So Tony, we are continuing to ask the question -- how are you faring in this economy? Have you had to change your lifestyle? Go ahead and share your stories by logging on to ireport.com. And unfortunately, Tony, those stories continue to come in. And so many of them are so similar.
HARRIS: Well, I've got to tell you, we visited the Johnson family a couple days ago, Douglasville, Georgia, about 20 minutes or so outside of Atlanta. And this is a family that was firmly middle class for a long time, about $40,000, $45,000 a year. Struggling right now. And the matriarch of the family runs a little cleaning business. And she can't keep her business going because folks are cutting cleaning as -- looking at that as a luxury. And her business has literally evaporated in this time span of a couple months.
So we're going to bring the Johnson story to you in greater detail tomorrow.
DE LA CRUZ: Tomorrow, right?
HARRIS: Yes, and Veronica, we appreciate it. See you again next hour.
OK, Veronica, thanks.
And live on the air right now, our senior business correspondent, Ali Velshi, taking your calls on CNN radio and CNN.com. We will check in with him too in just a couple -- hey, doctor -- we'll talk to you in just a couple of minutes.
(COMMERCIAL BREAK)
HARRIS: With just 26 days to go, Barack Obama is campaigning in the crucial state of Ohio today. He holds a rally in Dayton. That's right, Dayton this hour, focusing on jobs. We will bring you that event live when it happens.
Suzanne Malveaux is in Dayton with a preview for us.
And Suzanne, Barack Obama in Dayton? Doesn't he know that a Democrat running for president can't win in a place like Dayton, can't win in a place like Cincinnati, Ohio? come on.
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: You know, Tony, they believe that they're going to win Ohio. And the polls actually show that he's ahead in Ohio. But you're right, Dayton and Cincinnati, that is really McCain country. And they're really trying to win over some of those socially conservative Democrats, the Independents and even some Republicans who may be going on McCain's side.
I have to tell you the mayor of Dayton said just moments ago that 33,000 people have lost their jobs in this area over the last seven years and Ohio has the sixth largest unemployment rate in the country. So a lot of people here are focused on the economy, the economic crisis, and who has the better solution here.
What do we expect to hear from Barack Obama? Well this is called an American jobs tour in Ohio. So he is going to be outlining his plan beyond the $700 billion bailout plan. He's talking about the need for an economic stimulus package, he is talking about tax cuts for 95 percent of working families, and he is talking about his energy and health policy. We'll hear all of those things.
We're also going to hear him take on John McCain over McCain's idea of using $300 million to buy up those bad mortgages directly. Barack Obama is going to take him on, saying that he thinks that's a risky idea, tat it's not a good idea.
So obviously both of these candidates fighting really hard not just for Ohio, but for Dayton. You may recall that this was actually the place where we saw McCain announce his running mate, Sarah Palin. So every single vote in this particular city counts. And obviously Ohio, no Republican has ever gotten in the White House without winning Ohio. So no mistake, no accident, that Barack Obama is here, and McCain was here just yesterday.
HARRIS: Suzanne Malveaux for us in Dayton, Ohio.
Suzanne, great to see you. It's a great looking day there, and awfully loud. It should be that way, I suppose. It's a rally.
Thank you, Suzanne.
Cutting government waste and helping the middle class, promises from Republican presidential candidate, John McCain on the campaign trail. Here's McCain in his own words at a rally in Ohio.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: As a senator, I've seen the corrupt ways of Washington and wasteful spending and other abuses of power. As president, I'm going to end these abuses, whatever it takes. Whatever it takes.
(APPLAUSE)
I will propose and sign into law reforms to bring tax relief to the middle class and help to businesses so they can create jobs. I'll get the rising cost of food and gas under control. I'll help families --
(APPLAUSE)
-- I'll help families keep their homes and help students struggling to pay for college.
(APPLAUSE)
I'll make health care more accessible and affordable. I'll impose a spending freeze on all but the most vital functions of government.
(APPLAUSE) I'll review every agency of the federal government, improve those that need to be improve and eliminate those that aren't working for the American people. I'll confront the $10 trillion debt that the federal government of your money has run up and balance the federal budget by the end of my term in office.
(END VIDEO CLIP)
HARRIS: McCain and running mate, Sarah Palin, hold a town hall meeting in Wisconsin just over an hour from now. Check out our Political Ticker for all of the latest campaign news. Juts log on to CNNPolitics.com, your source for all things political.
Live and on the air right now, there he is, in the air chair, our senior business correspondent, Ali Velshi, takes your calls at CNN radio and CNN.com. And we'll check in with him, too.
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HARRIS: Ali Velshi is back on the air this morning answering your money questions on CNN radio. Ali is on the air for two solid hours today. So give him a call. There's the number. We'll put it up here for you.
Hey, Ali, we'll put the number up --
ALI VELSHI, CNN SR. BUSINESS CORRESPONDENT: Very good.
HARRIS: -- and the e-mail address so that folks can reach you. Because again, you're on the air for two solid hours today.
VELSHI: Two solid hours today. We're -- we got an hour and 15 minutes left. The number there -- 877-266-4189.
Tony, thank you for popping in.
I was just on the phone with Matt from Philly. We are getting a -- and he's still waiting for us to finish our conversation -- we are getting a lot of phone calls and a lot of e-mails, excellent questions. I'm hearing from American business owners, for instance, who are describing how the credit freeze is affecting them. I'm hearing from people with mortgages, who owe more on their mortgage than their house is with and wondering how this bailout plan affects them.
And I'm getting that age old -- wasn't this thing supposed to solve the problem? Why is the Dow all over the place? Why aren't markets going up? So Tony, the very same questions that you and I have been discussing, that people e-mail you, that people send to Rick Sanchez on his Twitter, we're getting here. Here is the trend change since last week -- I'm getting fewer people who are furiously mad about the bailout because we probably accepted that that has gone through now. Now they want to know, how long does it take to work before it gets to me, before it gets to my bank account, or my mortgage, or my ability to get a loan? How are we stopping -- HARRIS: You don't know the answer to that, do you?
VELSHI: No. But I can tell you that those three things that we have thrown at this, the three biggest ones, the bailout is going to take somewhere from a month to 14 months to work. The decision by the Federal Reserve to loan companies money that came on Monday morning, loan companies that need money directly --
HARRIS: Right.
VELSHI: -- that's going to take anywhere from a week to maybe six months to work. And a Federal Reserve interest rate cut that you and I talked about yesterday, they are not instant medicine. They take sometimes nine to 14 months to work.
So there's no instant medicine. There's a lot of medicine being thrown at this, none of which should solve the problem today.
HARRIS: Let me ask you a quick one here. There's a lot of reporting this morning suggesting that the Treasury Department is thinking about buying an ownership stake in some of these banks, some that are struggling, some that are healthy frankly. What are you hearing on this?
VELSHI: All right. Well we talked to Treasury, and they said that there may be some sort of announcement this afternoon. They have been hinting that there are -- they want to do anything they can do to shore up confidence right now. This is a big confidence game.
Here is the issue. Under the bailout law there are restrictions and if the government gets involved in a bailout, or helping out a company, there are executive compensation restrictions. Which means that they're buying out banks, they're going to be having to have conversations with those banks about what their CEOs are getting paid and whether they need to be replaced. And maybe those conversations are on going right now.
The deal here is that the government, in exchange for giving these banks some money to free up liquidity, they'd get a stake in the company, they'd have shares in the company, maybe full ownership, maybe part ownership. The idea is that, No. 1, it's collateral, Tony. And No.2, if the banks start to make money, the taxpayer gets a piece of the action --
HARRIS: I just want everyone to know that since you've been on the air, we're reversed the negative trend, we're now in positive territory --
(CROSSTALK)
HARRIS: We are up -- what is that? Marginally we're up --
VELSHI: Bouncing around.
HARRIS: All right. Just another indication of how volatile the markets are. Ali, great to see you. Thanks for your time.
VELSHI: All right.
HARRIS: And again the number right there on the lower third, and the e-mail address as well.
Need to get to Rob Marciano very quickly here.
Rob, I know you have some additional news to what you were reporting a short time ago.
MARCIANO: Yes, we talked about that cell that had a tornado warning out by -- indicated by the Doppler Radar in southeast Georgia. Now they've seen it on the ground. Trained weather spotters have reported a tornado six miles west of Stephen Foster State Park. So the counties involved here with the cell that is rolling eastward at about 30 miles an hour -- there you see a little purple in there, too, so it's probably some hail. The counties are Charlton County, Clinch County and Ware County.
And it's this cell that's heading to the east at about 30 miles an hour. This box is a severe thunderstorm watch box that's in effect for the remainder of this afternoon. So, severe thunderstorms and certainly the potential for seeing tornadoes embedded in these thunderstorms like we've seen with this particular cell that's heading to the east.
Again, Charlton, Clinton, Clinch and Ware counties in southeast Georgia. Tornado spotted on the ground and headed east at 30 miles an hour. If you live in any of those counties, you certainly want to take cover, get inside, get away from windows. We'll keep you up to date on the on the rest of this scenario as the afternoon progresses.
HARRIS: OK. Let me just make a quick note of that. Tornado on the ground in south Georgia.
MARCIANO: Southeast Georgia.
HARRIS: -- You had a sighting. OK. All right, Rob, appreciate it. Thank you.
Going to try to put a -- and squeeze a story in here that will bring a smile to your face. A pair of high school football players making history in South Carolina.
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