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Bush Attempts to Ease Economic Fears; Obama Talks on Tough Times in Ohio; GM Shoots Down Bankruptcy Rumors
Aired October 10, 2008 - 10:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BETTY NGUYEN, CNN, ANCHOR: It is Friday, October 10th. Heidi is off today. I'm Betty Nguyen. You're in the CNN NEWSROOM.
Well, you're looking at the intersection of Wall Street and Pennsylvania Avenue. Minutes from now, President Bush is speaking out again about the economy and his message coming in the middle of the morning's harrowing plunge on Wall Street. So what does all this mean for you?
Well, CNN's money team is in place to break it all down for you. Overseas we have CNN's Max Foster in London and in New York CNN's Christine Romans and Ali Velshi. So let's begin there. And as we saw the markets open today, it took a huge plunge.
But it seems like things are coming back, Christine. What is that telling you?
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Well, it's telling us it's not as bad at all as people thought when Dow futures were down 414 points just 20 minutes before the market opened. It's not as bad as Japanese market which is down 9.6 percent overnight. Why is that significant because that's the second largest economy in the world and it's seen as a leading indicator for the global economy. And it's been twice this week that the Japanese stocks have had such a horrible, horrible night -- you know their day, our night obviously.
You know, and Ali and I are just hearing that there was a little cheer recently on the floor of the stock exchange. Apparently the traders there are pleased it's only down 191, and the financial stocks aren't in the tank today which is a -- we'll take 199 points lower. That is seen in the market that we've had, and in the bear market we've had for a year now. That we could take as a little bit of solace which just shows you how twisted and crazy it's gotten around here.
But $2.3 billion of value lost in the Dow just this week, the first four days this week, down 17.4 percent. It is a record breaking historic week by a lot of different measures for stocks. If you are a stock investor, you have seen your stock portfolio decline significantly. If you have a stock portfolio say invested in roughly the S&P 500, well then that $100,000 investment at the beginning of the year, say if that was your retirement account significantly in stocks, would be worth about $62,000 today. So it hurts. It's really money and it hurts.
And so people are looking for some sign that this selling, these just body blows are going to stop and at least things are going to stabilize.
And you know, Ali, I guess it's too soon for us to make that call but 8,300 --
ALI VELSHI, CNN, SENIOR BUSINESS CORRESPONDENT: Yes, you can never -- as we know, we can make the call a month after it happens very accurately.
ROMANS: Yes, there's no press release, right?
VELSHI: Let me tell you why this looks like it could have been the beginning of capitulation. First of all, it was forceful and right at the beginning of markets. We saw that drop. The Dow futures called for 400 points and more. And we saw more than 500 points within the first few minutes of trading, more than 600 points within the first few minutes of trading. So it was forceful and it was at the top. The second thing that's important is European markets have dropped further than this. But U.S. markets seem to have resisted now. They've come back to being down around 225 points. Now, that's still a lot and still very, very early in the day.
But let me just tell you one thing. You look at the 30 stocks that make up the Dow, and at least 10 of them are in positive territory. And some of them quite positively. Bank of America, Citigroup is trading higher. JPMorgan Chase is trading higher. The banks, now the banks are largely where this problem has been. You look at the stocks that are down on the Dow, they're consumer stocks. You're looking at Johnson & Johnson, Home Depot, Kraft, those companies that will still continue to suffer a little bit if the economy slows down.
So this might be the sense that there are people getting into this market who think the prices are starting to go low enough. Now that doesn't mean the bottom has been established. But when you saw this market go down below 8,000, it quickly came back up. 8,000 was thought to be one of those support levels to look at. There are support levels lower than that, that are worth looking at as well.
But at this point we seem to have hit some resistance. Now how do we know when we look back in history that we've hit a bottom in the market? It's because it went to these levels and bounced back. And then it tries it again and it goes to those levels and bounced back and then maybe it tries it another time. This could happen several times. But that's how you establish the base of where your market is. So this doesn't mean that from here we go up necessarily. But what it means is there's some sense that maybe, maybe just possibly we're establishing a base to --
ROMANS: You can break a lot of bones, you know, coming across the bottom of the market. And that's something that people should really keep in mind. That it's never really clean and easy. It's usually painful.
VELSHI: Right.
ROMANS: And we have seen a lot of pain in this market. Global stocks here in this stock market you know the Nasdaq down sharply. The S&P down sharply. It's been happening since a year ago yesterday when the market hit record highs. The Dow was above 14,000. And since then it's been a steady, slow erosion. And a lot of people I think are trying to figure out how to trace all of this back to that mortgage crisis, right, Ali? I mean, this is something that has sort of ballooned, it caught a lot of people by surprise. I mean, it was a year ago our policymakers were saying the subprime crisis would not spread into the rest of the housing market.
VELSHI: Yes. It wasn't even a year ago. I mean, that's the part that is surprising to people. This, in the last 12 months, this is where it hits. Twelve months ago, Christine, the Dow was at the highest point, as you know, it's ever been. What reason was there to believe things were going to get this bad in one year?
ROMANS: Well, that's absolutely right. And then along the way you kept hearing people say well the global and business environment is very, very good. You know the American exports are doing well. And then one thing after another just started to kind of unravel. The problem with this situation when the veterans really try to compare it with other situations, other bear markets in history, is that this is the banking sector where the problem is. And that is the backbone of the economy. And we are in such an integrated global economy that the problems in banking have spread all around the world very quickly.
NGUYEN: Yes. But look at the markets right now though. It's really make a comeback as we talked about, down 90 points, as we talked about earlier, right out of the gates, within minutes it went down below 8,000. So maybe we are nearing that point, Ali, which you talked about, at the beginning of the bottom. But you got to be careful because you can't time it.
VELSHI: Key point, Betty. Beginning.
NGUYEN: Beginning. Absolutely.
VELSHI: This thing doesn't go like a V where it drops and shoots up all of the sudden.
NGUYEN: It's a bumpy ride there.
VELSHI: As Christine said, you can break a lot of bones crawling along the bottom.
NGUYEN: Well, let's hope people invest very wisely. OK. Thank you both. We do appreciate it.
We do want to take you to now to Chillicothe, Ohio, where we do see right now Senator Obama is speaking. Let's take a listen.
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SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: ... One of the finest gentleman that I know. He is thinking about you each and every day. He's got so much energy focus and grace He is just a wonderful man. Please give Ted Strickland a big round of applause. (APPLAUSE)
OBAMA: So I don't think I have to tell all of you, we meet at a moment of great uncertainty for America. In the recent weeks we've seen a growing financial crisis that is not just threatening banks, not just threatening big businesses. It's threatening you, your economic security. It's getting harder and harder to get a loan for a new car or for that start-up business or the college you've dreamed of attending. Yesterday millions of Americans lost more of their investments and hard-earned retirement savings as the stock market took another significant plunge.
So we need action now. The Treasury Department must move as quickly as possible to implement the rescue plan that passed Congress so we can start easing this credit crisis that's preventing businesses and consumers from getting loans. We also have to recognize this is not just an American problem. This is a global economy. Financial markets have no boundaries. The current crisis demands a global response.
This weekend finance ministers from the world's major economies will meet in Washington. And they must take coordinated steps to restore confidence and to maintain our financial markets and our institutions. There are many causes of this crisis. And it's important that we respond using all the tools that we have. I'm encouraged that the Treasury is considering more dramatic steps to provide more capital to our financial institutions. So they have money to lend. This is not the time for ideology. This is a time for common sense and politics of pragmatism.
And the test of an idea must not be whether it's liberal or conservative, whether it's Republican or Democrat. The test should be whether it works for the people of Chillicothe, the people of Ohio and the American people. That should be the test. That's what we should be focused on.
All of us, in the days and weeks ahead. I know these are difficult times, and I know folks are worried. But I believe we can steer ourselves out of this crisis because I believe in this country. This is the United States of America. This is a nation that's faced down war and depression, great challenges and great threats. And in each and every moment we have risen to meet these challenges, not as Democrats or Republicans, but as Americans, with resolve and with courage. We've seen our share of hard times.
The American story has never been about things coming easy. It's been about rising to the moment when the moment is hard, about having steel nerves when things are fearful, about rejecting the panic division for purposeful unity, about seeing a mountaintop from the deepest valleys. That's why we remember some of the most famous words ever spoken by an American, came from a president who took office in a time of turmoil. He said the only thing we have to fear is fear itself.
So now is not the time for fear. Now is not the time for panic. Now is not the time to turn Americans against each other. Now is the time for resolve and steady leadership. We can meet this moment. We can come together to restore confidence in the American economy. We can renew that fundamental belief that in America our destiny is not written for us. It's written by us. That's who we are, and that's the country we need to be right now.
(CHEERS AND APPLAUSE)
OBAMA: Remember, America still has the most talented, most productive workers of any country on earth. You know this Ohio. We're the home of the workers who built the largest middle class in history. We're the home to workers who work two or three jobs, some of them take the last bus home or drive that old car at night because they want something more for their children. They're willing to put off immediate gratification to make sure that the next generation is better off.
We're the home to innovation and technology. Colleges and universities that are the envy of the world. Some of the biggest, brightest ideas in history have come from our small businesses, from our research facilities, from somebody's backyard or garage. So it won't be easy. But there's no reason why we can't make this century another American century. Yes, we can. There is no doubt.
But I also know this. It will take a new direction. It will take new leadership in Washington. It will take real change in the policies and the politics of the last eight years, and that's why I'm running for president of the United States of America, to move us in a new direction.
(CHEERS AND APPLAUSE)
OBAMA: Even as we face the most serious economic crisis of our time, even as you are worried about keeping your job or paying your bills or staying in your homes, my opponent's campaign announced last week that they plan to, "turn the page on the discussion about our economy so they can spend the final weeks of this election attacking me."
Senator McCain's campaign actually said, and I "if we keep talking about the economy, we're going to lose." So in the last couple of days we've seen a barrage of nasty insinuations and attacks. And I'm sure we're going the see more of that in the next 25 days. We know what's coming. We know what they're going to do. But here is the thing, Ohio, they can try to turn the page on the economy. They can try to deny the record of the last eight years. They can run misleading ads. They can pursue the politics of anything goes. It will not work, not this time. I think that folks are looking for something different this time. It's easy to rile up a crowd -- nothing is easier than riling up a crowd by stoking anger and division.
That's not what we need right now in the United States. The times are too serious. The challenges are too great. The American people aren't looking for someone who can divide this country. They're looking for somebody who will lead this country. Now more than ever it is time to put country ahead of politics. Now more than ever it is time to bring change to Washington so it works for the people of this country that we love. I know my opponent is worried about his campaign, but that's no what I'm worried about. I'm thinking about the Americans who are losing jobs and homes and their life savings.
We cannot afford another four years of the failed economic theories that say we should give more and more to millionaires and billionaires and hope that prosperity trickles down on everybody else. We can't afford four more years of less regulation, that no one in Washington is happening what's happening in Wall Street. We've seen where that leads us, and we are not going back.
It is time to turn the page on eight years of economic policies that put Wall Street before Main Street but ended up hurting both. We need policies that grow our economy from the bottom up, so that every American everywhere has the chance to get ahead, not just the corporate CEOs, but their secretaries, too. Not just the factory owner, but the men and women on the factory floor. Because if we learned anything from this economic crisis, it's that we're all connected, all of us, black, white, Hispanic, Asian, Native American, young, old, rich, poor, management, labor. It doesn't matter. We are all together and we will rise or fall as one nation, as one people. That's why I'm running for president of the United States.
And my opponent has a fundamentally different view of things. Recently he proposed a plan that would hand over $300 billion to underwrite the kind of greed and irresponsibility on Wall Street that got us into this mess. It punishes taxpayers, rewards banks, won't solve our housing crisis. At first he said the spending would come from the rescue package that's already passed. But the rescue package included taxpayer protections that prevent exactly the kind of scheme that he's proposing. We're not going to solve the immediate crisis by going back and changing the law we passed last week to push forward a plan that would take months to implement.
So I have a different view from Senator McCain. Yes, we need to help innocent home buyers. That's why I insisted the rescue package give the Treasury authority to buy and rework mortgages. We have given the Treasury a broad menu of options that should be pursued. But we should not put taxpayer money at unnecessary risk. Taxpayers should not have all the downside without any of the upside. That's a principle I fought for, that's a principle that I will maintain. That's a principle that I will stand up for as president of the United States. That's a choice in this election.
(CHEERS AND APPLAUSE)
OBAMA: Let me repeat we have to do more to help innocent home buyers. If we can help stabilize the housing market, that will help solve the financial crisis. So I've worked on a series of proposals over the past two years to do just that. But we need to do it in a responsible way. That means making sure we're not overpaying for mortgages that we're purchasing, that we're not rewarding the very lenders whose recklessness helped cause this crisis. It means giving taxpayers a share of the benefit when our housing market recovers. It means cracking down on predatory lenders by treating mortgage fraud like the crime that it is.
We also have to make sure that if the Treasury moves forward with its plan to put more money into struggling banks, that taxpayers will be able to get their money back, and that the CEOs who contributed to this crisis will not get rich at our expense. Some of you heard what happened with this company AIG, the insurance company. You give them help. Next thing you know they're taking $400,000 to go on a junket. They should be ashamed of themselves. They better write a check back to the Treasury and we should fire all those executives.
That's not what we're expecting out of people who are responsible. Now, let's be clear, Ohio. The rescue plan that passed Congress last week isn't the end of what we need to do to strengthen our economy. It's only the beginning. Now we need to pass a rescue plan for the middle class, a plan that will provide every family some immediate relief to cope with rising food and gas prices.
Save one million jobs by rebuilding our schools and our roads, help states and cities avoid budget cuts and tax increases. And we should extend expiring unemployment benefits to those Americans who have lost their jobs, are working hard trying to find a new one. But it's tough out there. We need to make sure they've got a little bit of help. I've been fighting for this for months while my opponent said nothing. That's one of the choices you've got in this election.
If we're going to rebuild this economy from the bottom up, it has to start with our small businesses on Main Street. I see some of them right along here. Not just the big banks on Wall Street, small businesses employ half the workers in the private sector in this country. They account for the majority of jobs, but we know that with a credit crunch that's dried up capital, that puts more and more pressure on small businesses and puts the jobs of these small businesses at risk.
Shops like these on this street, they're going to have trouble financing their inventories. Small firms are going to have trouble making payroll. It's harder to get an idea off the ground. It's harder to provide health care for your employees. So if we don't act, we're going to be looking at scaled-back operations, shuttered shops, laid off workers. That hurts everybody. And that's why we need a small business rescue plan so that we're extending our hand to shops and restaurants, the start-ups, the small firms that create jobs and make our economy grow. Main street needs relief and you need it now.
And to help these small businesses, we don't have to grow our government. It doesn't have to be a big bureaucracy. We can work within the small business administration to keep folks afloat while providing tax cuts to lift the tide. That's what we did after 9/11. We were able to get low-cost loans out to tens of thousands of small businesses. That's one of the many steps we can and should take to help stop job losses and turn this economy around. It's going to start with a nationwide program to provide affordable fixed rate loans to businesses throughout the country. We can run it through the SBA Disaster Loan Program which provides loans to businesses and small business owners to get the help they need to maintain their inventory and meet their payroll. We'll also make it easier for private lenders to make small business loans by expanding the SBA's loan guarantee program. But temporarily eliminating fees for borrowers and lenders, we can unlock the credit that small firms need to move forward, pay their workers, grow their businesses, keep shops open.
And just as we make more lending available, we need to relieve the tax burden on small businesses to help create jobs. That's why I propose eliminating all capital gains taxes on investments in small businesses and startups. And today I'm going to impose an additional temporary business tax incentive through next year to encourage new investment because it's time to protect the jobs that we have and to create the jobs of tomorrow by unlocking the drive and ingenuity and innovation of the American people. And that's what I will do as President of the United States of America.
(CHEERS AND APPLAUSE)
OBAMA: Now, small businesses, they need customers, which means that we've got to help everybody. Bottom-up growth depends on a tax code that doesn't just work for folks at the top. You've heard a lot about taxes in this campaign. Here is the truth. My opponent and I are both offering tax cuts. The difference is he wants to give $200 billion in tax cuts to the biggest corporations in America. He wants to give the average Fortune 500 CEO a $700,000 tax cut. But he'd give nothing at all to over 100 million Americans.
I have a different set of priorities. I will give a middle class tax cut to 95 percent of all workers in America, 95 percent. If you make less than a quarter million dollars a year -- let me see a show of hands. How many people make less than a quarter million a year? All right, that sort of looks like most of you. And by the way, that also includes 98 percent of small business owners. Most small businesses don't make over a quarter million a year. So if you make less than a quarter million a year, you won't see your taxes increase one single dime, not your payroll taxes, not your income taxes, not your capital gains taxes, nothing. You are going to -- the vast majority of you will see a tax cut because in an economy like this, the last thing we should do is raise our taxes on the middle class.
Now, I just want to -- by the way, I just want to mention, I know that some of you will see these ads that says Obama wants to raise taxes and the assumption is always that Democrats are going to be raising taxes. That's the assumption. But I was in Georgetown in a small diner the other day buying some pies. This was yesterday. Me and Strickland, we decided we were going to go get some pie. I got coconut cream, he got lemon pie. And it was very delicious pie, by the way.
And we were in the shop, and a couple of the employees said, we want to take a picture with you Senator Obama, because the owner of this store, he's a die hard Republican. So we want to show him this picture... NGUYEN: All right. As we've been listening to Senator Barack Obama speak. We are watching right now the president as he is walking up to the microphone in the Rose Garden where he is going to be talking about the economy. We don't expect any policy decisions, but we do expect him to, in fact, try to calm the market. Let's take a listen.
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GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: ... In the past two days we have witnessed a startling drop in the stock market, much of it driven by uncertainty and fear. This has been a deeply unsettling period for the American people. Many of our citizens have serious concerns about their retirement accounts, their investments and their economic well-being. Here is what the American people need to know. That the United States government is acting.
We will continue to act to resolve this crisis and restore stability to our markets. We're a prosperous nation with immense resources and a wide range of tools at our disposal. We're using these tools aggressively. The fundamental problem is this. As the housing market has declined, banks holding assets related to home mortgages have suffered serious losses.
As a result of these losses many banks lack the capital or the confidence in each other to make new loans. In turn our system of credit is frozen which is keeping American businesses from financing their daily transactions and creating uncertainty throughout our economy. This uncertainty has led to anxiety among our people, and that is understandable.
Anxiety can feed anxiety. And that can make it hard to see all that is being done to solve the problem. The federal government has a comprehensive strategy and the tools necessary to address the challenges in our economy. Fellow citizens, we can solve this crisis, and we will.
Here are the problems we faced and the steps we're taking. First key markets are not functioning because there's a lack of liquidity. The grease necessary to keep the gears of our financial system turning. So the Federal Reserve has injected hundreds of billions of dollars into the system. The Fed has joined with central banks around the world to coordinate a cut in interest rates. This cut will allow banks to borrow money more affordably and should help free up additional credit necessary to create jobs and finance college educations and help American families meet their daily needs.
The Fed has also announced a new program to provide support for the commercial paper market which is freezing up. As the new program kicks in over the next week or so, it will help revive a key source of short-term financing for American businesses and financial institutions.
Second, some Americans are concerned about whether their money is safe. So the Federal Deposit Insurance Corporation and the National Credit Union Administration have significantly expanded the amount of money insured in savings accounts and checking accounts and certificates of deposit. That means if you have up to $250,000 in one of these insured accounts, every penny of that money is safe. The Treasury Department has also acted to restore confidence in a key element of America's financial system by offering government insurance for money market mutual funds.
Thirdly, we're concerned that some investors could take advantage of the crisis to illegally manipulate the stock market. So the Securities and Exchange Commission has launched rigorous enforcement actions to detect fraud and manipulation in the market. The S.E.C. has focused on preventing abusive practices such as putting out false information to drive down particular stocks for personal gain. Anyone caught engaging in illegal financial activities will be prosecuted.
Fourth, the decline in the housing market has left many Americans struggling to meet their mortgages and are concerned about loosing their homes. My administration has launched two initiatives to help responsible borrowers keep their homes. One is called hope now. And it brings together homeowners, and lenders and mortgage servicers and others to find ways to prevent foreclosure. The other initiative is aimed it easier for responsible homeowners to refinance into affordable mortgages, insured by the Federal Housing Administration. So far these programs have helped more than two million Americans stay in their home.
And the point is this, if you're struggling to meet your mortgage there are ways that you can get help. These actions to help prevent foreclosures, we're addressing a key problem in the housing market. The supply of homes now exceeds demand. And as a result home values have declined. Once supply and demand balance out, our housing market will be able to recover, and that will help our broader economy begin to grow.
Fifth, we've seen problems in the financial system are not isolated to the United States. They're also affecting other nations around the globe. So we're working closely with partners around the world to insure our actions are coordinated and effective. Tomorrow I meet with the finance ministers from our partners in the G-7 and the heads of the International Monetary Fund and World Bank.
Secretary Paulson will also meet with finance ministers from the world's 20 leading economies. Through these efforts the world is sending an unmistakable signal, we're in this together, and we'll come through this together. And finally, American businesses and consumers are struggling to obtain credit because banks do not have sufficient capital to make loans. My administration worked with Congress to pass a $700 billion financial rescue package.
This new law authorizes the Treasury Department to use a variety of measures to help bank rebuild capital including buying or insuring troubled assets and purchasing equity of financial institutions. The department will implement measures that have maximum impact as quickly as possible. $700 billion is a significant amount of money. And as we act, we will do so in a way that is effective. The plan we are executing is aggressive. It is the right plan. It will take time to have its full impact. It is flexible enough to adapt as the situation changes, and it is big enough to work.
The federal government will continue to take the actions necessary to restore stability to our financial markets and growth to our economy. We have an outstanding economic team carrying out this effort led by Secretary of the Treasury Hank Paulson, Federal Reserve Chairman Ben Bernanke, S.E.C. Chairman Chris Cox and FDIC chair Sheila Bair.
I thank them and their dedicated teams for service during this important moment in our country's history. This is an anxious time. But the American people can be confident in our economic future. We know what the problems are. We have the tools to fix them, and we're working swiftly to do so. Our economy is innovative, industrious and resilient. Because the American people who make up our economy are innovative, industrious and resilient. We also share a determination to solve this problem, and that is exactly what we're going to do. May God bless you.
NGUYEN: There you have it. The president talking today in the Rose Garden about the economy and the step-by-step process that is taking place right now to help shore up some confidence. He did manage to - well, the question is did he manage to soothe the nerves of a worried public?
Well, our money team is ready to break it down for you right now. In New York CNN's Gerri Willis, Ali Velshi and Christine Romans. There you all are. OK.
So Ali and Christine, let me talk to you first and foremost. We were waiting for this announcement today. What do you think? Do you think the president was able to maybe shore up some of the nerves out there?
ROMANS: Well you know, he laid out exactly what they've done today and that's a real long list of things that the federal government has done to date. And he says that a flexible, comprehensive plan and is big enough to work. He talked about that $700 billion bailout package.
I mean, many people in America are scratching their head, saying well what good did it do if the Dow is down some thousand points since it came out -- at least a thousand points, at least the passage of it? He said that they you know they have some flexibility there. They can buy or insure troubled assets, but they can also purchase equity in financial institutions. And that's a big debate that's happening right now.
VELSHI: That's as close as he got to specificity. The problem with these speeches that are almost daily now is that we know all of that already. And continuing to say it doesn't do anything. What Americans want right now is an answer to the $700 billion and exactly how it's going to solve the problem.
ROMANS: And when -
VELSHI: And when and what exactly they are working through. I understand THAT they have trouble telling us what they're working through because they probably have a lot of things that they're trying to figure out. None of this goes any further to explaining, to answering the question that people have -
NGUYEN: So you didn't hear a single thing that was new today?
ROMANS: Well I have never heard a president come to the American people and talk about the commercial paper market. I tell you that.
NGUYEN: I was going to ask about that support of the commercial paper market.
ROMANS: It tells you what kind world we're in right now when the President of the United States is talking to people about the commercial paper market and our viewers are learning what the commercial paper market is. And that is the market where companies, good companies borrow for their very short-term needs. And that market is frozen, and that means companies can't do things --
VELSHI: Right. By the way, these investment house at all were failing and now Morgan Stanley and Goldman Sachs, that's what they exist in large part to do. A company like Caterpillar or AT&T would go to one of them and say we need a billion dollars to borrow for two months to finance some daily operations. They would then -- that investment house would go and find an investor, maybe overseas, maybe a big hedge fund or pension fund and match the two together.
Those deals aren't getting done. That's the commercial paper market. And that's what the Federal Reserve is now saying it will lend companies money. But again, it's good that we're explaining to the American people on an on-going basis what's going on. It does not advance the cause, the solution to the problem yet.
NGUYEN: Well, you know therein lies the problem, too, because consumers are watching and they're thinking what do I do now. So let's bring in Gerri Willis. Gerri, we've listened to the president as we're hearing from Ali and Christine, we're not hearing anything new.
So what do consumers do right now?
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, you know, I think the president sounded the theme's anxiety fear. That's what consumers are feeling and he said anxiety feeds anxiety. You know some of the sell offs yesterday afternoon was said to be mutual funds having redemptions, cashing out of stocks to give consumers money. So what do you do?
Is that the right move right now? Well I have to tell you we've seen bear markets in the past. We know what they look like, how much they typically rob from our wealth, about 33 percent. We've seen 16 bear markets since the Great Depression. I know it's a big number. But we've been here before at the point. And we were here very recently during the dot com crash. That was another market move of 40 percent down. If you've been investing for retirement any time at all, you've seen this. Now, I want to tell you a little about what I've been getting from my e-mail from folks, their worries, their concerns. And let's take some of those concerns off the table right now. I'm getting questions about whether Treasuries are safe. This is the debt from Uncle Sam. This is the federal government. And it's backed by the full space and credit of the federal government. This is a safe investment. Money market mutual funds. The federal government has said they will stand behind that. That is safe. Corporate pensions also safe. There's an insurance program for those as well.
I have to tell you people, the fear is starting to grow to a point that it's really not making any sense. So today, as you're analyzing your own situation, and that's definitely the first step you should take, think about the things that are OK, Treasuries, money market funds, pensions, corporate pensions. You don't have to worry about those. There are some things that will continue the same even when the market is down 200 points.
NGUYEN: Well, that's some good news, too because when you think about the money market funds, you can get a little bit of interest, not that much these days, but it has that money on the sidelines. So when we do see perhaps a bottom, a beginning of a bottom, you can start reinvesting and maybe make some cash.
WILLIS: That's right. And you know I think people need to start looking forward and stop obsessing over what's happened over the last month. I think Ali and Christine have both been talking about is this the bottom or are we coming to a bottom? The reality is you won't know, you won't be able to tell. And you won't want to miss on those two, three, four, big moves up that will make all the difference in your retirement account. Miss those big turns, and you know it hurts you as much as pulling out at the wrong time. So I just want to advise people to you know not get upset, pull their money out of the markets willy-nilly, particularly if you have decades to retirement.
The people who really need to be thinking about what they're doing now, analyzing their mutual funds, deciding if they're going to sell anything or not are people who are in retirement right now or on the cusp. Those people are doing some serious analysis. But the rest of us need to be focus on other things, like maybe our jobs right now.
NGUYEN: So essentially you're saying sit tight if you can afford to and let this thing play out?
WILLIS: Well, you have to let the stock market play out. I think there are more important things for most of us to be worrying about right now. And that is the economy and what's going to happen to the economy and the impact of the economy on our jobs, on our families. I think that's the most important thing right now.
NGUYEN: All right, Gerri Willis, Ali Velshi and Christine Romans, as always. We do appreciate your insight especially on a day like this where we see the market going up and down.
And now it's just down 231 points. That's a lot better than we saw a little bit earlier this morning. Thank you all. VELSHI: OK.
NGUYEN: Well, their shares have fallen to a half century low. General Motors taking a hard hit on Wall Street. How is that playing on the assembly line? Well we are talking with workers.
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NGUYEN: Let's take a look at the markets. It's already been a roller coaster day. And the Dow has only been open for what a little over an hour now, down 299 points but at one point at 10:00 a.m. Eastern time, the Dow did turn into positive territory there for a short while and there was a lot of clapping there at the New York Stock Exchange. But as you see it right now, back down to 299. We'll be watching it very closely.
In the meantime though General Motors says no to bankruptcy even though its shares are out at their lowest levels since before the Korean war. CNN's Brooke Baldwin is at a GM plant in Warren, Michigan.
Brooke, you know, the company took quite a hit yesterday.
BROOKE BALDWIN, CNN CORRESPONDENT: They did. Can you believe that? Before the Korean war, Betty, three months before the Korean war, the year was 1950, the stocks were selling at a share of $4.76. That is what GM closed at yesterday. So it's been 58 years since it hit that kind of low. Part of the story is Betty all about the astounding numbers we're talking about. The other part of the story really is about the people, the workers.
We're in Warren, Michigan, we're just a couple miles outside Detroit, Michigan, we're at a transmission plant where about 1200 GM workers are here working every single day. A lot of them are lifers. And I want to show because the key word that keeps popping up here at the cover of the "Detroit News," that middle word there, the word fear as we talk to a couple of different workers going into this plant right around 6:00 this the morning. And we were asking them you know what is the mood inside of this plant? They're concerned their fears over the future, over of course their job, over pensions. We talked to one worker, he has been here, he is hoping to celebrate his 30th year with General Motors next year. I asked him what the mood was inside the transmission plant. Here is what he said.
(BEGIN VIDEO CLIP)
DARYL DAVIS, GENERAL MOTORS EMPLOYEE: Tense, you know, but people just going about their business just to maintain. But you hear people whispering or you hear people not doing as much. You know in the plant you don't have people saying they're going here or going there as much. You know people mostly staying at home and counting their pennies.
RICK BROWN, GENERAL MOTORS EMPLOYEE: All we can do is tie a knot and hand the rope and hang on because you know it's going to come back. This happens. You know they go in different cycles for years. They'll be doing real good. Then they'll do bad. But I think we'll be all right. I think we'll come back.
(END VIDEO CLIP)
BALDWIN: So Rick Brown trying to stay positive. He's been with this plant for 16 years, with General Motors for 23. He told me, you know what, I'm still making my house payments. I'm still getting my paycheck. So until they hand me that pink slip, I'm going to just keep on keeping on. But again, Betty, to reiterate your point. We did hear from GM this morning, they came out with a statement saying bankruptcy is not an option. The question now is what is the option to keep this company from bottoming out.
NGUYEN: Yes, a lot of questions out there today. No doubt. CNN's Brook Baldwin, joining us live. Thank you for that. And you know, a lot of questions on Wall Street. Where are the markets going today? Are we at the beginning of a bottom? Well, we'll check in with CNN's Susan Lisovicz.
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NGUYEN: We are keeping a close eye on Wall Street today. The Dow takes on the week by falling below 10,000. And now the blue chips are ending the week by plunging below 8,000. Susan Lisovicz is on the floor of the New York Stock Exchange, to look at the turmoil, down 273 points right now.
But you know, Susan, the Dow has been all over the map today.
SUSAN LISOVICZ, CNN CORRESPONDENT: That's right. You know, Betty, we are living in historic times here coming off the worst stretch for the Dow industrials ever. But there was more selling to be done at the open, and the selling was feverish basically continuing that kind of free fall we saw in the last hour of trading yesterday, continuing, but to just really underscore the volatility, the emotion that's in the marketplace, the Dow snapped back from a nearly 700-point decline to actually stage a recovery.
Not for long, but enough to actually go into positive territory. The three major averages were briefly in positive territory. There was a huge roar from the trading floor about 37 minutes into trading. Lost it. We're still selling off. I think what you're seeing, a lot of pros will tell you, is that basically investors are looking for a bottom here, looking to find the value that everyone will know that things are so over done that we can establish some sort of bottom. After all, we have been through a lot of selling in the last week alone, Betty.
NGUYEN: And people look very cautiously for this bottom, I mean, if you knew the answer to this, we'd all be rich. But any idea how lower things can go?
LISOVICZ: Well, you know, there are certain things that you're looking for. You're looking for tremendous volume. And we really haven't seen that yet, not today, but we're still early into the session, we're looking for you know obviously a big, big point move. We're looking for a big magnitude of selling, that is advancers just getting completely drowned out by decliners. We have been seeing that. We're also watching certain levels here, Betty.
For instance, right now, the Dow industrials are above 8300. A lot of folks are telling me watch Dow 8,000. That is going to form some sort of resistance because that is so low, or even 7400. I know it's just kind of mind blowing when you think that the Dow was 10,000 at the beginning of the week. But it did actually show some resistance, and that's when you started to see the Dow had gone below 8,000 and then it bounced back a little bit.
But there's a lot of uncertainty. Why is that? It's the same old story that we've been talking about for days on end now. The credit markets are frozen. There's real concern about solvency of companies. You now, we're talking about short-term financing here, and these are for basic things. We're not talking about long-term projects. We're talking about as simple a thing as making payroll.
There was a lot of concern about GM yesterday. For instance, GM coming out today and saying bankruptcy is not an option.
NGUYEN: Not an option. Right.
LISOVICZ: You know, and GM, in fact, the last time I looked, there was some buying on GM. But GM shares yesterday in that frenzied selling had reached a level that we hadn't seen since 1951. So every trader that I've talked to, every analyst I've talked to has said uniformly we've never seen anything like that before. But one thing they all agree on is at some point there will be a bottom, that there is value in these companies. And historically the stock market has served us all very well. It will take some time, of course, to make up the losses that we've seen now.
NGUYEN: Well, hopefully that bottom is soon because, boy, there's been a lot of blood letting on the markets already this week alone, not to mention all the previous weeks ahead of that. OK, Susan Lisovicz joining live. Thank you for that.
We do have some breaking news to tell you about today in Albuquerque, New Mexico. We understand that a balloon basket has actually caught on fire causing it to separate from the balloon. Here is a live picture right now from our affiliate KRQE. You can see the smoke right here. So here is what we understand has happened. This balloon basket caught on fire, separated from the balloon which then caused it to crash near Rio Rancho. And this happened during the Albuquerque's annual international balloon fiesta.
No word on how many people were in the balloon basket which is called a gondola or their conditions. But again, just what a horrendous situation there, supposed to be a really fun festival, balloon festival. And then you got one of the baskets catching fire and then dropping to the ground. Of course, we'll stay on top of that and bring you the latest information as soon as we get it.
You're in the CNN NEWSROOM.
(COMMERCIAL BREAK) NGUYEN: I want to get you another look at the big board today. Look at the Dow, down 282 points now. But you know what? It's a lot better than it was after the opening. The Dow got below 8,000 today. So that is not a good sign. But it's back up, and even though we're looking at negative territory, it's a lot better than it was. We'll stay on top of it for you.
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NGUYEN: What a morning it has been already. Yes. Everybody, I'm Betty Nguyen. Heidi Collins will be back Monday morning starting at 9:00 a.m.
But for now, Tony Harris, you have a lot on your hands, my friend.
