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Frantic Friday; GM on the Skids; John McCain Campaigns in La Crosse, Wisconsin
Aired October 10, 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: Good morning everyone, I'm Tony Harris. And you are in the CNN NEWSROOM.
First up, and for much of this hour, the financial crisis gripping world markets. The CNN money team is in place this morning. Susan Lisovicz is at the New York Stock Exchange. Allan Chernoff is on Wall Street. Brooke Baldwin is at a GM plant in suburban Detroit. And Veronica De La Cruz will join us from New York.
Susan, let's begin with you.
Out of the gate this morning Dow stocks were falling at the rate of about 100 points a minute. Where are we now?
SUSAN LISOVICZ, CNN BUSINESS CORRESPONDENT: Well, you know, we pared a lot of those losses, but, I mean, that's really not an apt description of what's happened in the last 90 minutes, Tony, because the Dow, yes, was in a free-fall, basically continuing the collapse you saw in the final hour of trading yesterday. It was out right liquidation.
You all know what a liquidation sale is like when you see it on Main Street. Well, that's what was happening on Wall Street. Everything was getting purged out of the system, and that can be optimistic. That can be a bullish sign if, in fact, you try to rally back.
What happened? The Dow down nearly 700 points very early on, and then eventually slowly rallied back, prompting a huge roar from the trading floor about 35 minutes into the trading session.
So many folks really want to see a floor established. But it couldn't hold it. And right now you're seeing the three major averages down at least 2 percent -- Tony.
HARRIS: And there was a moment, wasn't there, when in this roller-coast ride this morning, stocks actually turned around losses and were -- well, for a moment -- in positive territory? And then there was a big reaction on the floor, wasn't there?
LISOVICZ: There was. And it really goes to show the emotion that is driving the train, Tony. I'm hearing it right now.
HARRIS: Yes, and that's it.
LISOVICZ: And you know, when it was happening, Tony, I'm paying attention to you, I'm talking to your colleagues, and things are happening so quickly, I'm not even aware of it. When I hear those kind of cries, I look to the screen and I see how quickly things are unfolding.
There's so much emotion. There's a lot of fear obviously that's been going on. Everybody still waiting for some tangible sign that the credit markets will free up a little bit.
HARRIS: Yes.
LISOVICZ: In the meantime, we're in the cusp of earning season, as you know. And there have already been some disappointments.
Also, we have the G-7.
HARRIS: That's right.
LISOVICZ: We've already heard from the Treasury Department, the Federal Reserve, Congress. What will the G-7 do? And we're expecting some sort of move from them as well. What we need is clear signs that the credit market is freeing up.
HARRIS: There you go. All right, Susan. We will see you a little later in the hour.
Susan Lisovicz at the New York Stock Exchange.
You know, Alan Greenspan talked about irrational exuberance in the 1990s. Some say we've got the flip side now, irrational despair.
Let's talk with Senior Correspondent Allan Chernoff. He's on Wall Street. And that man right there, Allan Chernoff, with the line of the morning so far.
You know, when the Dow was plummeting at the NYSE, Allan was reaching for something of a reassuring note. And he said, you know what? The building is still standing.
And as I look behind you, the building is still standing, Allan.
ALLAN CHERNOFF, CNN SR. CORRESPONDENT: That's true, Tony. And you know what else is still standing? The economy is still standing.
What's going on right here is that investors have been panicking as if the economy were on its back. And I'll tell you, if this panic continues, the economy will be on its back.
What this nation needs right now is for people to have a little confidence to say, hey, there's some opportunity in here. Stocks have gotten slaughtered, prices are dramatically cheaper than they were just a month ago. We need bankers to regain some confidence as well, stop hiding behind a financial rock and say, hey, there is some opportunity here.
Tony, this is a head game.
HARRIS: Yes.
CHERNOFF: It's all about psychology for business people, for investors. And that's what's going to turn this thing around.
HARRIS: Got to tell you, it's so interesting, because I'm trying to rally my team this morning to jump into the markets. You know, look, let's see if there's an opportunity here at minus 263, 274. There have got to be some opportunities here, good companies that are being undervalued right now. So, I'm going to work on my team a little bit on that confidence game you were just talking about.
Allan, good to see you this morning. Thank you.
You know, an iconic American brand is on the skids and actually could crash, if you can imagine this. General Motors stock stumbling to its lowest level in 58 years. The company worth less in today's dollars than it was in 1929.
The bottom line, you can't sell cars if customers can't get financing. And, you know, General Motors closed at about 476 yesterday. And you can see the stock price is actually limping along, trading now at 491.
CNN's Brooke Baldwin is at a GM plant in Warren, Michigan.
And Brooke, good morning. I know you're talking to plant workers. And what are they saying to you?
BROOKE BALDWIN, CNN CORRESPONDENT: Tony, bottom line, they are very nervous. And as I've just learned, they have reason to be.
The Associated Press is reporting that General Motors has announced that as early as next week, that they will be shutting plants, doing some work stoppages. We don't know which plants, we don't know how many workers will be affected, but we are getting that from The Associated Press.
So, Tony, as you can imagine, people here at this plant -- I'm at the transmission plant, about 1,200 workers here. But there are about a dozen plants here in Warren, Michigan, just outside of Detroit. And this whole news from the stock market yesterday, down, as you said, down to 476 a share, it affects not only the people here in these plants -- and there are Ford, Chrysler, General Motors -- but it affects their families, it affects this entire community, the mom and pop shops, the restaurants. Everyone is feeling the economic pinch here in Motor City.
I mentioned Ford. Ford was down yesterday as well, closing at 208. That was down 58 percent on the day.
It is clear the automotive industry overall is taking a hit. I did talk to a couple workers this morning as they were heading into their 6:00 a.m. shift. One worker, a 23-year veteran of General motors, told me he's trying to stay positive.
(BEGIN VIDEO CLIP) RICK BROWN, GM EMPLOYEE: I don't know if I'm going to be working or I'll be laid off, or I'll be in the jobs bank or I'll be in the 85 percent where they let you go and they'll pay 85 percent. So I don't know. Right now it's starting to get scary.
(END VIDEO CLIP)
BALDWIN: I think it's important to keep in mind from the 1950s, when Dwight Eisenhower was in the White House. And the saying with this is, as goes General Motors, so goes the nation.
General Motors, the automotive industry, the first sort of indicator of how Wall Street is affecting Main Street. And we now just have to wait and see how the rest of this has a trickle down effect throughout Detroit and throughout the country -- Tony.
HARRIS: OK. Brooke Baldwin for us.
Brooke, good to see you. Thank you.
And our Veronica De La Cruz joins us now with the news from our affiliates and the Web this morning. She has been monitoring the effect of the economy on the job market.
Veronica, what do you have for us?
VERONICA DE LA CRUZ, CNN CORRESPONDENT: I just want to preface it by saying I don't have good news, Tony. That is the unfortunate thing.
We're going to start with job cuts at the Whirlpool plant in Amana, Iowa. Our affiliate TV 9 reporting a company spokesperson confirming 440 jobs, Tony, to be eliminated starting October 13th. The spokesperson blames it on the downturn in the economy. More than 2,000 people work at that plant.
And the boating industry, Tony, also taking a hit as well. This next story from our affiliate KIRO in Washington.
Boat maker Brunswick announcing that they will lay off an additional 1,400 employees as it shuts down four of its plants in Washington, Minnesota, Oregon and North Carolina. The company says it's laid off about a third of its marine workforce since the beginning of the year.
And our last story from "Fortune" and CNNMoney.com, Tony. "Fortune" saying Barclays will cut 3,000 jobs after its purchase of Lehman Brothers. Many of those jobs expected to come from areas where Barclays and Lehman have a lot of overlap.
And you know, Tony, this year has been an extremely brutal one for the financial industries overall. More than 65,000 jobs have been lost in the first eight months of 2008 -- Tony.
HARRIS: All right, Veronica. Appreciate it. Thank you.
Very quickly now, we want to get you to La Crosse, Wisconsin. John McCain with an event there, a rally. Let's listen in.
(JOINED IN PROGRESS)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: ... And we need your help.
(APPLAUSE)
And I appreciate you all standing in line on a cold Midwestern morning, and I appreciate this warm welcome to the great city of La Crosse, Wisconsin.
(APPLAUSE)
There are many wonderful people here behind me, there's many people who are here. And I'd like to recognize you one by one if I could. But I would also like to mention won who is here who has been a great governor of the state of Wisconsin, the smartest guy on health care in America, one of the great friends that all of us have in America, Governor Tommy Thompson.
(APPLAUSE)
I'm here this morning to ask your help in a tough and hard-fought election. And it's tough, and we're the underdogs, and we're going to come from behind like we have every time in the past.
How many times, my friends, have the pundits written off the McCain campaign? We're going to fool them again. We're going to fool them one more time.
(APPLAUSE)
When I said I supported the surge and 30,000 additional troops because we could not afford to lose the first war of the 21st century, then they said I was finished. And my friends, I said then, I would much rather lose a political campaign than lose a war, and I mean that today. I mean that today.
(APPLAUSE)
So, my friends, we have 25 days until the time of choosing. Are you ready to help me and Sarah Palin carry the state of Wisconsin?
(APPLAUSE)
You know the stakes couldn't be higher not only for our nation's security, but for our economy. We need to get the American economy back on the path of recovery and growth, and job creation for American workers.
Times are tough. This is a time of crisis. We must go to the heart of the problem, and right now that problem is the housing crisis.
And so in the debate this week with my opponent, I proposed a plan to help homeowners across America. Under my orders as president, the secretary of the treasury will carry out a homeownership resurgence plan. The United States government will support the refinancing of distressed mortgages for homeowners and replace them with manageable mortgages so people can stay in their homes. You have to realize the American dream...
(APPLAUSE)
... the American dream of owning a home.
The funds aren't new, but the priorities will be when we put the financial strength of our government back on the side of working families. With so much on the line, the moment requires a government act, and as president, I intend to act quickly and decisively.
My friends, we have to protect investors, especially those relying on their investments for retirement. Current rules mandate that investors must begin to sell off their IRAs and 401(k)s when they reach age 70 and a half. To spare investors being forced to sell their stocks at just a time when the market is hurting the most, those rules should be suspended.
(APPLAUSE)
In so many ways Washington is still on the wrong track. We need change. We need change, and I know how to deliver it.
The status quo is not on the ballot. We're going to see change in Washington. The question is in, which direction will it go?
Will our country be a better place under the leadership of the next president, a more secure, prosperous and just society? Will you be better off in the jobs you hold now and in the opportunities you hope for? Will your sons and daughters grow up in the kind of country you wish for them, rising in the world and finding in their own lives the best of America?
And which candidate's experience in government and in life makes him a more reliable leader for our country and commander in chief for our troops?
(APPLAUSE)
In short, who is ready to lead? In a time of trouble and danger for our country, who will put our country first?
AUDIENCE: John McCain!
John McCain! John McCain! John McCain! John McCain! John McCain!
(APPLAUSE)
MCCAIN: In 21 months, during hundreds of speeches, town halls and debates, I've kept my promise to level with you about my plans to reform Washington and get this country moving again. 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.
(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 will get the rising cost of food and gas under control. I will help families keep their homes and help students struggling to pay for college.
(APPLAUSE)
I will make health care more accessible and affordable. I will impose a spending freeze on all but the most vital functions of government.
I will review every agency of the federal government, improve those that need to be improved and eliminate those that aren't working for the American people. I will confront the $10 trillion debt that the federal government has run up and balance the federal budget by the end of my term in office.
(APPLAUSE)
This is the agenda I have set before my fellow citizens, and the same standards of clarity and candor must now be applied to my opponent. We have all heard what he's said, but it's less clear what he has done or what he will do.
Rather than answer his critics, Senator Obama will try to distract you from noticing that he never answers the serious and legitimate questions he's been asked. You know, my friends, he has even questioned my truthfulness. And let me reply in the plainest terms I know. I don't need lessons about telling the truth to the American people, and were I ever to need any improvement in that regard, I probably wouldn't seek advice from a Chicago politician.
(APPLAUSE)
What was my opponent's actual record in the years before the great economic crisis of our lifetime? This -- present, 120 times.
This crisis started in our housing market in the form of subprime loans that were pushed on people who could not afford them. Bad mortgages were being backed by Fannie Mae and Freddie Mac. And it was only a matter of time before a contagion of unsustainable debt began to spread.
At the time, I called for tighter restrictions on Fannie Mae and Freddie Mac that could have helped prevent this crisis from happening in the first place. My opponent was silent on the regulation of Fannie Mae and Freddie Mac, and his Democratic buddies in Congress opposed every effort to rein them in. Barack Obama's most notable involvement -- his most notable involvement with the housing issue was to be taking money from executives of Fannie Mae and Freddie Mac, the very people who were causing the problem.
My friends, on health care, Barack Obama has been misleading on two fronts. Under the plan he has proposed, he will fine employers who do not offer health insurance and put their employees in government health care. What he doesn't say, and nobody has asked, is how big his fine will be.
You deserve an answer. And you sure didn't get one in Tuesday night's debate. So let me give it another try.
Someone needs to ask Senator Obama to please specify the amount of fine he will impose on the employers of America. And while you're at it, ask employers how these new orders and fines from the federal government are going to help them create a single new job in a struggling economy.
(APPLAUSE)
Again on taxes, we see a difference between what Senator Obama says today, what he said yesterday, and what he's actually done.
During the Democratic primary, he promised to double taxes on every American with a dividend or an investment. He promised to raise payroll taxes. He promised higher taxes on electricity. He voted for the Democratic budget resolution that promised to raise taxes on people making just $42,000 a year.
And now...
AUDIENCE: USA! USA! USA! USA! USA!
MCCAIN: And now, all of the sudden, Senator Obama claims he'll give 95 percent of Americans tax relief. What he hasn't told you, that he would seek and he would tax half of the income of small business in America.
These are the people who have actually added 350,000 jobs at a time when America lost 700,000 jobs. They're the backbone of our economy and our best hope to get America back on track. When I'm president, their taxes are going down instead of up, and we're going to help them create jobs for Americans.
(APPLAUSE)
On spending, Barack Obama will increase government spending by over $860 billion. That's on top of the trillions in debt that we've already burdened our children and grandchildren with.
He claimed in our debate that somehow he'll still end up with a cut in spending. Only Barack Obama could sell an $860 billion federal spending increase as a net reduction in federal spending.
When I'm president, the spending reductions will be real. And I'll cut the size of government, I'll put the government back on the side of America's working families, and I'll get this country moving again. (APPLAUSE)
And then there's the matter of earmarks and pork barrel spending. In his three short years in the Senate, he's requested nearly a billion dollars in pork barrel projects for his state, nearly a million dollars for every day he's been in office.
In our debate, I mentioned the example of the more than $3 million he sought for a new projector at a planetarium in his hometown. Do we need projectors for planetariums paid for by you?
I could have mentioned his vote for that Bridge to Nowhere, but the planetarium is in some ways a more interesting case. I guess it was sheer coincidence that the chairman of that planetarium pledged to raise more than $200,000 for Senator Obama's campaign. Even the appearance of this kind of insider dealing disgusts Americans. I'm going to put a stop to that, my friends, if I'm president.
(APPLAUSE)
Washington is on the wrong track, and I'm going to set it right.
The American people know my record. They know I'm going to change Washington because I've done it before. They know I'm going to reform our broken institutions in Washington and Wall Street because I've done it before. They know...
(APPLAUSE)
They know I'm going to deliver relief to the middle class because that's what I've done.
You don't have to hope that things will change when you vote for me. You know things will change because...
(APPLAUSE)
... I've been fighting for change in Washington my whole career. I've been fighting for you my whole life. And that's what I'm going to do as president of the United States, fight for you and put the government back on the side of the people.
(APPLAUSE)
I'm honored that all of you are here this morning. I'm grateful. I'm always even more grateful, if that's possible, for the veterans who are here and those who have served this country.
Could I ask our veterans who are here to raise their hands so we can all recognize them and thank them for their service to our country?
(APPLAUSE)
We have in the rallies we've had across the country veterans from all wars, those from the greatest generation up to those who have recently returned from conflict. And I am so happy to tell you that this generation of Americans that is serving America in uniform is the best equipped, the best trained, the most patriotic and the best generation ever this country has ever produced.
(APPLAUSE)
HARRIS: On that note, we would all agree with John McCain.
Boy, John McCain in La Crosse, Wisconsin, raising the temperature on the debate, for sure right now. A raucous crowd there for him.
Barack Obama in Chillicothe, Ohio, last hour. Both candidates, for the most part, on the stump today, focusing in on issue #1. And issue #1 one is the economy right now.
As you take a look in the lower right-hand portion of your screen there, the Dow down 390 points about two hours into the trading day.
You know, from Wall Street to your street, everyone really feeling the impact of these difficult times. Got to tell you, I got invited to dinner this week with a great family.
(BEGIN VIDEO CLIP)
HARRIS: I was already caught taking a piece of chicken that I shouldn't have taken because the food had not been blessed.
(END VIDEO CLIP)
HARRIS: OK. So I stole a piece of chicken because I was a little hungry. But yes, the meal had not been blessed. But then we got down to some real talk about their bills, mortgage and family struggle.
That's next.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
DONNA NGUETCHANG, IREPORTER: My dream of buying a home is over, you see? All the rich people are the ones that get to buy the houses, and I'm the one that gets to be stuck here. I'm very thankful for my mobile home that I live in, but it would have been nice to have a small house. But I see right now the economy is too bad to be able to buy a house now.
(END VIDEO CLIP)
HARRIS: Boy, isn't that a common sentiment that we've heard throughout this whole financial downturn?
Take a look at the Dow right now. Again, about two hours into trading day, and the Dow is down 415 points. There was a brief rally -- if you recall -- at the very outset of the trading day, the Dow just plunged close to negative 700 points. There was a nice strong rally. We were actually in positive territory for a while. But, boy, there was a lot of selling pressure on the markets right now, reflected here in the Dow. Again, down 415 points two hours into the trading day.
With stocks in slide and some panic selling sets in, many people are wondering where the lifeline is coming from. What else can government and governments around the world do to get us out of this mess? CNNMoney.com's Poppy Harlow joins us from New York.
Maybe one thought here, Poppy, would be for these governments to set a really example in slowing down a bit on some of this deficit spending. Boy what a different world it would be if the governments actually lived within their means. Just a thought from this corner.
POPPY HARLOW, CNNMONEY.COM: It's a thought a lot of people have, Tony, including the Republican nominee for president. John McCain wants to cut a lot of spending, Barack Obama does as well. President Bush, though, this morning trying to shore up confidence in what Congress has done, and that's passing a $700 billion bailout plan. We have not seen that money do anything. The market was in positive territory for about one minute today. It's now down about 400 points. It has not had the intended effect.
But what he's saying is you have to wait, you have to have patients. This morning President Bush being very aggressive in his plan, saying it's the right one, it's going to take time. But he says it's big enough to work.
A lot of people, though, Tony, say it's not doing its job. We need more. One option is to insure all bank deposits. That means any amount of money you put in the bank would be backed up and insured by the federal government. The "Wall Street Journal" this morning saying to make that happen, though, a lot of different government agencies would have to come together. They'd first have to agree that there is a systemic risk to the economy. I don't think many people would argue with that at this point, though. Then they'd have to invoke, Tony, a rarely used legal power. Whether we're going to see that happen is the big question, Tony.
HARRIS: Let's talk about the FDIC. It already insures deposits of up to $250,000, correct?
HARLOW: Yes, that's right. It used to be $100,000, now it's $250,000. That was included in the bailout bill. The move being talked about, though, would make an unlimited ceiling, meaning if you didn't want your money in the stock market, you wanted it in a bank account making 2, 3 percent interest, all of that money would be insured by the FDIC.
That's a big burden to bear, though. The idea is this would be a big attempt to stop any kind of run on a bank.
This morning I spoke with British billionaire, Richard Branson, he is an entrepreneur who knows a lot about the world markets. He's proposing we do that, and he thinks we should take it one step further. (BEGIN VIDEO CLIP)
SIR. RICHARD BRANSON, FOUNDER, THE VIRGIN GROUP: In America, banks will not lend between each other. If the government could step in and guarantee the loans between the banks, then they could get that flow of money going.
(END VIDEO CLIP)
HARLOW: It's not just about having liquidity, that flow of money; it's about having confidence in our system. What that means, what he's saying -- the federal government would essentially be a back stop, Tony, for all the banks. Britain right now, Tony, is doing something similar.
HARRIS: Boy, OK, Poppy, I know there's more to talk about in this area. We'll get to it maybe next hour.
The Dow can only fall so far in one day. The big board put circuit breakers in place after the 1987 crash. The Dow would have to tumble 1,100 points today to trigger an automatic one-hour time-out on trading. If the market kept free falling it could force traders into an automatic two-hour recess. If it falls far enough, the market actually closes for the day.
Overseas markets are feeling this upheaval as well. And just like you and me, a lot of people are watching their spending. Three views now from India.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: For me, I'm OK. But definitely the buying capacity of a person, that has come down for me.
UNIDENTIFIED FEMALE: Definitely have to cut down on so many things because the way the prices are going up, it's exorbitant prices, even if the daily commodities that you see, you definitely have to compromise on so many aspects now.
UNIDENTIFIED MALE: The middle class and the lower middle class is positively affected where, I think, to make the ends meet at the end of the day, to meet the family budgets, there must be a cut in their budgets and tightening of belts.
(END VIDEO CLIP)
HARRIS: I want to introduce you now to the Johnson family, a middle class family until this crisis hit. I met up with them over dinner this week to talk about their struggles.
(BEGIN VIDEOTAPE)
HARRIS: We have got a feast today.
Knock, knock, knock, Johnson family. Hey, hey, hey.
WAYNE JOHNSON, STRUGGLING WITH BILLS: How are you doing?
HARRIS: Wayne.
W. JOHNSON: Tony.
HARRIS: Wayne.
W. JOHNSON: Tony. I'm Wayne.
HARRIS: How are you, man?
W. JOHNSON: All right.
HARRIS: All right. Beautiful. Beautiful. We're going to do a feast.
(CROSSTALK)
Sarah (ph), can I take the salad in? The salad is all good?
UNIDENTIFIED FEMALE: The salad is ready.
UNIDENTIFIED MALE: Amen. Father we thank you for allowing us to come together to share this blessing.
HARRIS: All right, look, I want to get down to some brass tacks here. And you're a family right now going through some things. Is that correct?
SANDY JOHNSON, STRUGGLING WITH BILLS: Yes.
HARRIS: Can we say that?
S. JOHNSON: Yes, yes.
HARRIS: So what's happening with your business right now, Sandy?
S. JOHNSON: It slowed up. It has slowed up tremendously, especially with the gas prices.
HARRIS: You have a cleaning business.
S. JOHNSON: I have a cleaning service. And we do cleaning -- we clean houses.
HARRIS: So have you actually lost clients?
S. JOHNSON: Yes. They're not letting me go because I'm not doing a good job, but it's because of the economy.
HARRIS: You had to let go some of your people?
S. JOHNSON: Yes. That's one of the reasons why Sandrika (ph), once since she graduates -- she was supposed to start school, but she's going to hopefully start in the fall because I had to cut back on people so that she could help me. And I kind of -- give her a little lower pay.
HARRIS: Well, Sandrika, that's not what you had planned for your life.
UNIDENTIFIED FEMALE: Oh, no. But I don't mind. That's my mom.
HARRIS: Well, and Wayne, how long have you been driving trucks?
W. JOHNSON: Since 2000.
HARRIS: 2000. So what's the last -- say -- year been like for you?
W. JOHNSON: We're on call six days a week, but with the economy like it is, we're only working like four days a week.
HARRIS: We're talking about at least a good year, 18 months, where the economy really has been sliding.
W. JOHNSON: Well, with the prices of fuel going up and trickle that down. When fuel goes up, food prices go up. And -- you know -- medical bills and all the other added-on expenses, it's just made it really hard.
HARRIS: Are you behind in your bills right now?
S. JOHNSON: Yes.
W. JOHNSON: Yes.
HARRIS: Talking about behind in the mortgage? Or are we talking about behind in the car payments?
S. JOHNSON: The car payments. And because our -- we decided that the house was more important because we needed to have somewhere to stay, can't stay in the car. So I told my husband, I will be willing to let my truck go back because we've got to continue to pay the mortgage to make sure it's paid on time.
We actually got caught up in the adjustable rate issue.
HARRIS: No. You had one of those ARMs? That inflated --
S. JOHNSON: Yes.
HARRIS: Reset to a higher rate?
S. JOHNSON: Yes, and it actually --
HARRIS: What did it reset from? And how much of an increase in the reset?
S. JOHNSON: Well when we first got our house in 2005, it was -- the percentage was 7.5. Now the -- because we have an 80/20 -- we have two mortgages. The 80 now is -- it went up to 11.5.
HARRIS: 11.5. Excuse me -- geez, 11.5? Which is a difference of how much a month?
S. JOHNSON: We were paying at first like 700 something. So now it's like up to -- the first mortgage, was the 80, is at --
W. JOHNSON: 982.
HARRIS: To what extent do you fault yourself for not ultimately making the right call on that?
W. JOHNSON: Well, like I say, I was --
HARRIS: Did you put any money down?
S. JOHNSON: No.
W. JOHNSON: No.
(CROSSTALK)
S. JOHNSON: Can I answer, honey?
I think because we were excited, and it was our first home. We had just got married, so we were excited. We were excited.
W. JOHNSON: But even with being excited, I'm not going to enter into a loan that I can't pay for. We're talking about something you're going to be paying on the next 30 years of your life.
HARRIS: So.
W. JOHNSON: So you want to make sure that that is right. OK -- what they told us -- that we were in a fixed rate. But they did not tell us and they did not make it clear that it would start adjusting after two years. Because I would have stopped it at that point and said hold up, we need to do something else.
HARRIS: So what are you going to do about the truck? Are you going to let it go?
How far behind are you?
S. JOHNSON: Four months.
HARRIS: Four months. Are they calling you?
S. JOHNSON: They're calling, and I think somebody showed up today.
HARRIS: Don't you need your truck for your business?
S. JOHNSON: Yes, for my business I do.
HARRIS: So what kind of debt are you looking at now?
W. JOHNSON: I would say $50,000.
S. JOHNSON: I'd say a little more.
W. JOHNSON: A little more?
S. JOHNSON: Yes.
W. JOHNSON: A little more than $50,000 in debt.
HARRIS: And that's excluding the house right now.
W. JOHNSON: That's excluding the house.
S. JOHNSON: That's excluding the house.
HARRIS: That's a big, big number for this family right now.
S. JOHNSON: It is, it is.
(END VIDEOTAPE)
HARRIS: So things have gotten tougher for Sandy since we shot that piece. The repo man took her truck away yesterday. She had to borrow 600 bucks from her brother-in-law just to buy a used van to keep her cleaning business going.
Now coming at 12:30 p.m. Eastern time, the Johnsons talk about how the stress is affecting them and what they think of the government's bailout plan.
(BEGIN VIDEO CLIP)
W. JOHNSON: We can work and pay our bills. Then at that point the government or the leaders of this country ought to be able to back us up and help us out on their end.
(END VIDEO CLIP)
HARRIS: More dinnertime conversation with the Johnsons, plus CNN finance editor Gerri Willis weighs in on their problem and has some tips to help the rest of us avoid the same fate.
(COMMERCIAL BREAK)
HARRIS: The simple truth here is most Americans have never seen a week like this one. Anxiety and confusion over the financial crisis obvious in your e-mails to CNN's personal finance editor. Gerri Willis is here to answer some of those questions.
Gerri, great to see you again.
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Good to see you, Tony.
HARRIS: Got a busy couple hours for you.
Let's start with an e-mail from Cynthia: "My husband and I lost our jobs. We have fallen behind in our credit card bills, have obtained "payday loans" -- uh-oh -- "and have a car payment place that is stressing us out so much that we don't want to even answer the phone."
Any wisdom you can offer us, Gerri?
WILLIS: Well Cynthia, first off, my heart goes out to you. That's a tough situation to be in. But you have to take some dramatic action here. You need a credit counselor. You can sit down face to face with somebody who will give you direct advise on managing your debt.
Now, credit counselors can negotiate a payment plan or lower rates -- interest rates that is -- with creditors. You may be able to work out a debt management plan where you work with a counselor to become debt-free. You have a plan that lasts three to five years. At the end of it, you have no debt. But your situation is so dire you may just want to investigate bankruptcy. Talk to the credit counselor about that.
And to find one of these folks go to the National Foundation for Credit Counseling at nfcc.org. I just got an e-mail from them. They're adding more counselors right now because of the problems we're seeing in the marketplace.
And payday loans -- can I just say --
HARRIS: Please.
WILLIS: Don't take out payday loans. It's a real monkey on your back. Literally the real interest rate you pay on this money is in the hundreds of percent. It's unfair. You shouldn't take this money. It's not a good place to get money if you need it. You've got to pay that down as quickly as you can. It's really going to strangle you -- keep you from doing anything good -- for several years if you don't get rid of it.
HARRIS: So well said there, Gerri.
Ron from Florida writes: "I am three years away from retirement and have seen my portfolio take a big hit during this crisis. Some experts say that I should get out of the markets right now. And others say that I should ride it out. I am confused and would like to know what to do" -- Gerri.
WILLIS: Ron, Ron, Ron, I hear from a lot of people who are in this very situation. Now, three years away from retirement, and that's when you're going to tap this thing, draw some money down. You really have a short-term horizon here. For people like you and people who are on the other side, already in retirement, I'm hoping you've already started to switch your asset allocation. Less and less and less of stocks. More and more and more of bonds, and other safe investments that don't move with the kind of market moves that we've seen today. You want to start doing that if you haven't already.
So, you need to analyze those mutual funds in your portfolio. Find out what you own and start thinking about, OK, how do I get the right asset allocation? I know what you're asking. But how do I do that? What is asset allocation? CNNMoney.com has a great retirement tool, cnnmoney.com/retirement can help you figure out what the right allocation is for your age.
HARRIS: Gerri, time for one more?
WILLIS: Sure.
HARRIS: OK. From a concerned parent -- actually two concerned parents in Nevada who write: "We have a child, freshman in high school, who will be going to college in four years. Do we cash out of her 529 and place those funds into a savings account" -- Gerri?
WILLIS: That's a toughy, because in four years you're kind of on the cusp there of long term and short term. If you're invested, though, in what they call a life cycle 529 plan, that kind of plan is already making the changes you need to keep your money safe, putting you in more and more conservative investment options as you get closer to his or her start date in college. So if that's what you have, I wouldn't worry. I'd leave the money standing pat.
Otherwise, I would investigate what I own and make sure that you're not 100 percent stocks at this point. You do want to become a little more conservative, start moving that asset allocation around.
And I just want to tell anybody with money in the market right now, I know you just want to take it out willy-nilly. But you would be well advised to go to morningstar.com and understand what is in those mutual funds. So many people have no idea what they're invested in. You want to make sure you understand what it is you hold and whether it's doing a good job for you, Tony.
HARRIS: Well that's terrific advice, great tips, great e-mails.
And Gerri, just another note, you're going to be back with us next hour.
WILLIS: Right.
HARRIS: We will run the second part of our dinner table conversation with the Johnsons.
WILLIS: Right.
HARRIS: We will analyze their problems. And maybe you can offer them some tips and kind of -- generically -- tips that will be helpful to anyone going through a similar situation. Next hour you're with us?
WILLIS: That's right.
And just to give you a little tease on what I might say here, Tony, I think difficult times call for big solutions. So it may take some big changes for this family to steer their way out of it, navigate their way out of this problem. So we'll be talking about it in the next hour. In the meantime, if you do have questions, send them to us at toptips@CNN.com. We love to hear from you. And we answer those questions right here every Friday.
HARRIS: Terrific, Gerri. See you next hour. Thank you.
WILLIS: Thank you.
HARRIS: CNN's top 10 heroes of 2008 have been revealed. And you can go online right now to choose which one of them you want to be the hero of the year.
We've also asked some familiar faces to share the spotlight and introduce us to their heroes. Today, Grammy award winner Cyndi Lauper tells us about a human rights activist fighting for all Americans.
(BEGIN VIDEOTAPE)
VOICE OF JAMES EARL JONES, NARRATOR: This is CNN Heroes.
CYNDI LAUPER, GRAMMY AWARD WINNING ARTIST: Hate crimes send terror through a community.
UNIDENTIFIED MALE: Shepherd left for dead.
UNIDENTIFIED MALE: I've never been attacked like this.
UNIDENTIFIED FEMALE: Twenty-two swastikas were found --
UNIDENTIFIED FEMALE: Just a random act of ignorance and violence.
LAUPER: You could die just because of who you are. I'm Cyndi Lauper. And my hero is Cathy Nelson because she fights for the rights of all people. Straight and gay.
CATHY NELSON, COMMUNITY CRUSADER (voice-over): Lesbian and gay; bisexual and transgender equality is really the civil rights issue of this generational.
(on camera): I'm a lesbian and see the issues very personally.
(voice-over): In 1989, I went to work for the human rights campaign.
(on camera): This looks great. I really like it.
(voice-over): Events are a vital part of what we do. It's raising the visibility of the issues that we're working on.
MARGARET CHO, COMEDIAN: Please welcome Cyndi Lauper!
NELSON: Cyndi's 2007 True Colors tour was an amazing opportunity to educate about the upcoming hate crime bill in Congress.
LAUPER: She had this whole idea of we could take a postcard and send it to your Congressman.
NELSON (on camera): Becoming an activist starts with one simple step.
LAUPER: We've got to erase hate. It's a (INAUDIBLE) situation. It opens your eyes and lets you know about things that are going on right now. that we could change.
NELSON: And what drives me is fighting for fairness and quality.
LAUPER: Cathy has helped a lot of people and don't take any vows for it. And that's a hero.
EARL: Vote now on CNN.com/heroes.
(END VIDEO CLIP)
HARRIS: And as you just heard James Earl Jones say, you can go to CNN.com/heroes right now to vote for the hero who inspires you the most. They will be honored at an all-star tribute hosted by Anderson Cooper Thanksgiving night, right here on CNN.
And do you think your wallet is half empty or half full? One man says having a positive outlook will bring you good health and wealth. Boy, do we need that message right now. I'll talk to him, next.
(COMMERCIAL BREAK)
HARRIS: OK. Let's take a look now at the New York Stock Exchange, in just a moment you can see it right there in the lower right-hand corner of your screen. The Dow down 468 points and you can see sort of the cloud hanging over traders right now. Investors and everyday people from around the world here reacting to what's going on. Now, the negative financial news has almost everyone in some kind of a slump. Again, the market down 460 points, better than 460 points right now.
But you know what our next guest says you need to actually figure out a way to turn that negative into a positive to get the best out of life. Michael Bernard, back with us is the author of the new book, "Life Visioning." And joins us from Los Angeles.
Michael, boy, we need a positive message from you today. But I have to ask you, you know, what is it that you're hearing from the people that you're working with right now? How stressed out are people over what is going on now in the financial markets?
MICHAEL BERNARD BECKWITH, FOUNDER, AGAPE INTL. SPIRITUAL CENTER: Thank you, Tony. There are many people that come to my congregation and my services that are you know, engaged in a lot of fear and doubt and worry, anxiety. Projecting the fear into the unknown.
And so the idea is to begin to understand that fear is misdirected interest. It's placing all of your attention and all the things that have gone wrong and all the things that could possibly go wrong. And when you're in that kind of fear, you block your own creativity and your ingenuity and your own inner guidance that would move you into positive directions.
HARRIS: Boy, that's so interesting. But it's hard -- it's hard to do what you suggest. It's hard not to be bottled up. It's hard not to jump on the fear train. Give us some ideas of what we might think about to turn so much of the negative energy that's out there into something that's positive.
BECKWITH: Absolutely. It is a little difficult. And we're not talking about magical thinking here.
HARRIS: Yes.
BECKWITH: Most people are placing their attention on what they have lost or what they could possibly lose. And the idea they have the ability to put your attention on what you have right now, to move into a feeling of gratitude about what you have and how things are working for you in some area of your life. And if you begin to do that, your whole neurological system begins to change. You become available to insight, you become available to guidance.
HARRIS: Yes.
BECKWITH: That you're not going to get if you're addicted to the bad news. So most people are glued to the bad news. And you want to the stay informed. But at the same time, you want to give yourself enough time to begin to listen as to how you can reorder your priorities, how you can serve and how you can develop yourself so you can be of some good here.
HARRIS: I've got so many more questions but we're flat out of time. Michael, thanks for sticking around for us because we wanted to get some notion of a positive outlook on what's going on right now.
Michael Beckwith from Los Angeles with us. Michael, appreciate it. Thank you.
BECKWITH: Thank you, Tony.
HARRIS: "Fortune" magazine has named its Top 50 Most Power Women in Business. Here is a doctor who made the cut. But, before we tell you who she is, here's your chance to guess.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I was very motivated by my father's experience as a pharmacist.
UNIDENTIFIED FEMALE (voice-over): She pursued a career in medicine and became a scientist destined for the executive suite. She now has product development for one of the world's leading biotech companies. Who is this doc who thinks out of box? Stay tuned for the answer.
(COMMERCIAL BREAK)
