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World Leaders to Meet about Economic Crisis; Stock Markets Continue to Plunge; Is Now the Time to Invest?

Aired October 10, 2008 - 13:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

TONY HARRIS, CNN ANCHOR: Oh, there you go. OK. So obviously, Tina Fey, spot-on as Sarah Palin. Someone else who's spot-on, here she. CNN NEWSROOM continues right now with Kyra Phillips. Enjoy.
KYRA PHILLIPS, CNN ANCHOR: I was getting heat from my caller there, saying it was too Sarah Palin. I'm like, "Hey, OK. That's all right. I like her suits. I'll take her jackets."

HARRIS: Good show.

PHILLIPS: Hall and Oates, by the way, hello.

HARRIS: That was great.

PHILLIPS: That takes us way back.

HARRIS: Way back, '80s.

PHILLIPS: "Peaches and Herbs" starts right now.

HARRIS: Yes.

(BEGIN VIDEOTAPE)

PHILLIPS (voice-over): Panic selling. Bargain hunting. Fear and despair. Surprise and opportunity. All that and more as Wall Street grapples with a global reversal of fortune.

UNIDENTIFIED MALE: When a ship is sinking, you send out the lifeboats. You don't argue about who has steered it into an iceberg.

PHILLIPS: But that's not stopping Europeans, top Americans, friend and foe alike, from blaming the U.S. for the worldwide crisis.

And get out the vote, but play by the rules. CNN investigates a voter registration drive that looked too good to be true.

UNIDENTIFIED FEMALE: All the signatures look exactly the same. Everything on the card filled out looks just the same.

PHILLIPS: Accusations against ACORN. Drew Griffin on the story, this hour.

(END VIDEOTAPE)

PHILLIPS; Hello, everyone. I'm Kyra Phillips live in the CNN headquarters in Atlanta, and you're live in the CNN NEWSROOM.

If you ever wanted to see the Dow shoot up 700 points in a matter of minutes, and who hasn't, today was your day. But if you blinked you missed it, and the bears are back in control.

This would make eight straight days of losses on Wall Street. The first seven cost blue chips more than 20 percent of their value. If it's any consolation, and it's not, markets overseas are hurting just as badly, down another 6 to 8 to almost 10 percent.

All eyes on a meeting this weekend of G-7 finance ministers and central bankers in Washington.

GM stock holding steady a day after falling more than 30 percent to a 58-year low. And this morning the automaker went out of its way to stress that it's not considering bankruptcy. It's also denying reports of new cutbacks.

And in his 27th comment on the economy in less than a month, President Bush says we're a prosperous nation with immense resources, but he says anxiety can feed anxiety, even when problems are being addressed.

We're going at the story from four directions. CNN's Brianna Keilar is at the White House. Max Foster is in London. Ali Velshi in New York, and Susan Lisovicz on Wall Street, where she's probably going to hit us up for hazardous pay duty after those long hours.

Brianna, let's go ahead and start with you. Tell us about the president's working weekend.

BRIANNA KEILAR, CNN CORRESPONDENT: Well, this weekend, yes, he is going to be busy working. And this comes on the heels of some remarks that he gave just a short time ago in the Rose Garden, basically all about reassuring Americans, reassuring the financial markets.

Talked about a myriad of things, the SEC, that the Fed, that his administration are doing, including making sure that markets aren't manipulated while they're in their fragile state, including increasing the amount of money, something we've seen the FDIC insurance cap increase, so the if -- so that the amount of money that's in your bank account is insured to the tune of $250,000.

Also talked about programs to help homeowners avoid foreclosure or to refinance their homes. All of these things, President Bush listing them off, saying that it is a difficult time for the economy, but at the same time saying a lot of the tumult that we're seeing in the markets belies a lot of solutions that are, indeed, in the works as we speak.

Here are some of his remarks.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: 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. But anxiety can feed anxiety, and that can make it hard to see all that is being done to solve the problem.

(END VIDEO CLIP)

KEILAR: And as you said, Kyra, it is very much a working weekend for President Bush. He's invited the finance ministers of the so- called G-7 countries, industrialized nations, to have a meeting and talk about the economy. We're also expecting after that tomorrow to hear some comments from him, Kyra. PHILLIPS: All right. We'll be paying attention. That's for sure.

We also know that Wall Street pays attention. Let's go to the trading floor and Susan Lisovicz.

Susan, you actually heard cheering today?

SUSAN LISOVICZ, CNN CORRESPONDENT: I did. And it really does sound contrarian, Kyra, but we did hear very loud cheering a couple times. And that was because the Dow, even after a feverish bout of selling yesterday, a real sign of panic, just "dump 'em" selling that went right to the closing bell, there was more to be done at the open. And within the first seven minutes, the blue chips, after a seven-day streak that was the worst in its history, still sold off another -- nearly another 700 points.

Within 30 minutes it had -- it had pared back all of those losses and actually went into positive territory, and there was a huge eruption from the floor, because this has been very painful. It's like death by 1,000 paper cuts. You know, the crash of '87 was 22 percent in one day. Over the last seven sessions, it's been 20 percent, what the "Wall Street Journal" calls a slow motion crash.

I'm reminded of a quote that I read yesterday, a trader saying there -- there is a rip-your-face-off rally in there somewhere. We haven't gotten it yet. The fact that it was tested, couldn't hold it, but that it was tested, shows that a lot of investors think that we're close to a point where you can make a bottom. But apparently not yet, because it's been down most of the session, clearly.

PHILLIPS: All right. We'll be talking a lot this hour. Susan, thanks so much.

So why not just turn out the lights and just go home? Well, a few stock markets overseas have halted trading. In Moscow, the markets are closed until further notice. Wall Street can pull the plug under certain conditions, and that brings me to Ali Velshi.

Ali, we were talking about this, this morning. Remember 9/11 and how trading stopped.

ALI VELSHI, CNN SR. BUSINESS CORRESPONDENT: Yes.

PHILLIPS: Everything went dark.

VELSHI: Right.

PHILLIPS: So how bad does it have to get before that decision is made?

VELSHI: That was a special circumstance. They stopped trading because they were evacuating the New York Stock Exchange. That wasn't as much to do with -- with trading the way we're talking about now, big losses in the market. They just didn't -- didn't continue on doing business for the day.

Now, in this particular case, what happens is, four times a year the New York Stock Exchange sets a number. And it's based on what the average was and 10 percent of that. So the idea is that the markets were to drop 10 percent before 2 in the afternoon, it would halt for one hour. If it were after, between 2 and 2:30, it would be half an hour. And if it were in the last part of the day, it wouldn't stop at all, at that level.

Then it would have to go up to 2,200 points to stop it after 2 p.m. Then the market would close. And if the market were to drop by 30 percent in any one time in one day, the market would close for the day.

Now, part of the reason for this is, as you say, just to take a breather. Just hold on, and just stop and let's collect our thoughts. It's dangerous, because the market depends on people knowing they get in and out of it easily.

One of the problems is we have so much computer trading these days, Kyra, that sometimes when the market starts to go down, it triggers computer selling programs to start selling stocks, and then the whole situation feeds on itself.

So these are called circuit breakers, and they work like the circuit breaker in your house. If the system starts to get overloaded, it calms it for a little while.

But the number to trigger the first one would be 1,100 points. And we got to 777 a week ago Monday. And you know, even then it's in the last hour of the day, so it wouldn't have -- it wouldn't have halted trading.

PHILLIPS: OK. Ali Velshi, just quickly, when trading was halted, and that, of course, is because everyone had to evacuate that day...

VELSHI: Yes.

PHILLIPS: ... what -- and I can't remember, and I'm looking to you for this.

VELSHI: Yes.

PHILLIPS: What kind of benefit did it have? What did it do? And if, indeed, that's what happens on Wall Street during all this, if the numbers do tank really, really badly, what could it do? I mean, could it help?

VELSHI: It gives everybody a couple minutes to think about things for a couple hours, or the night to say, "OK, let's just -- let's not panic. Let's not act in rage or fear. Let's actually think about the right decision."

The difference is we are so interconnected with world markets that at 8 p.m. Eastern Time we start to see the Asian markets open. So you know, a lot of these stocks are listed on different exchanges. So if it can't trade on one, what happens? Does it then tank in Japan? Or Frankfurt?

So it's not a great thing. It's a circuit breaker. It's to just get everything to calm down, to have everybody take stock for a few minutes, and make sure that the system is working carefully.

But again, we'd have to wait for a very big drop to actually halt trading on any given day. It's just meant to say, "Slow down, in case there's something here in play that we don't know about," if panic has taken over the market. Just slow down and back off for a few minutes.

PHILLIPS: Got it. We've all been on that floor. Talk about panic.

VELSHI: Yes.

PHILLIPS: All right, Ali, thanks.

Well, here's one way to look at it. Somebody has to be buying all those stock that other people are selling, which means that somebody sees opportunities. We're going to get the glass half full perspective in this half hour and the other side, too.

So who's to blame for this mess? Around the world a lot of people blame, well, they're blaming the U.S. That story now from CNN's Robin Oakley at the bottom of the hour.

And if want to see a stock that's really taking a beating, check out General Motors. Things are so bad that the company has issued a statement assuring investors that bankruptcy is not an option being considered.

GM stock lost nearly a third of its value yesterday, hitting levels not seen in half a century. Forecasters predict that both U.S. and worldwide sales of new cars and trucks will continue to decline into next year.

Well, we may soon know what Alaska lawmakers have decided in the ethics investigation involving Republican vice-presidential candidate Sarah Palin. A hearing on the matter getting underway right now in Anchorage.

(COMMERCIAL BREAK) PHILLIPS: Dead people showing up on voter registration forms. That's just one instance of some -- were some new fraud concerns just 25 days before the election.

(COMMERCIAL BREAK)

PHILLIPS: Back in familiar territory, with 3 1/2 weeks before election day, John McCain and Barack Obama are still focusing on a handful of states where they've already spent a lot of time. McCain's in Wisconsin and Minnesota today.

And at a rally this morning in Lacrosse, the Republican candidate threw some barbs at Barack Obama.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: Rather than answer his critics, Senator Obama will try to distract you from noticing that he never answers -- answers the serious and legitimate questions he's been asked.

He's even -- 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.

(END VIDEO CLIP)

PHILLIPS: And despite trailing in the polls in Wisconsin, the McCain campaign is still putting a lot of time and effort into the state. In our latest CNN/"TIME"/Opinion Research Corporation survey in Wisconsin, Obama leads McCain 51 percent to 46 percent. Other polls show Obama with an even bigger lead in the state.

And Barack Obama is spending another day in Ohio. The big toss- up state, with its 20 electoral votes, may once again be critical in deciding the presidential race. Right now, Obama is getting set up for a rally in Columbus. Earlier at a stop in Chillicothe, Alabama -- Obama, rather, accused the McCain camp of dirty politics.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL NOMINEE: So in the last couple of days we've seen a barrage of nasty insinuations and attacks, and I'm sure we're going to see more of that in the next 25 days. We know what's coming. We know what they're going to do.

But here's 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.

(END VIDEO CLOP)

PHILLIPS: The latest CNN poll of polls in Ohio shows the race there is still extremely close. Fifty percent of likely voters back Obama. Forty-six percent support McCain.

Two days ago Obama had a five-point lead in the Ohio poll of polls, with an average of three different surveys.

Like McCain and Obama, the vice-presidential candidates are also in some key states today. After stumping with McCain in Wisconsin, Sarah Palin has a full schedule as she campaigns in Ohio and Pennsylvania. Joe Biden is campaigning in the toss-up state of Missouri. Live pictures right now as he's up at the podium. He kicked off a rally in Springfield just a short time ago, as you can see right here.

Alaska lawmakers are meeting this hour to consider what to do about an ethics investigation involving Republican vice-presidential candidate Sarah Palin. The case centers around Governor Palin's firing of a state public safety commissioner. That commissioner had refused to dismiss a state trooper involved in a nasty divorce from Palin's sister.

Critics say that it was a case of settling scores, but Palin says the commissioner was let go because of budget issues.

A legislative panel could recommend closing the case, sending it to another committee for further investigation, or referring it to criminal investigators.

One investor's burden is another's bargain. Is now the time to scoop up stocks on the cheap? A bull and a bear fight it out, right here in the NEWSROOM.

(COMMERCIAL BREAK)

PHILLIPS: "Fortune" magazine has named its top 50 most powerful women in business. Here's a doctor who made the cut, but before we tell you who she is, here's a chance to guess.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I was very motivated by my father's experience as a pharmacist.

UNIDENTIFIED FEMALE: She pursued a career in medicine and became a scientist destined for the executive suite. She now heads product development for one of the world's leading biotech companies. Who is this doc who thinks outside of the box? Stay tuned for the answer.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: No. 13 on "Fortune" magazine's most powerful woman list is Susan Hellmann of Genentech. Hellmann is the doctor Genentech appreciates having on call. Under her direction many groundbreaking drugs have hit the market, including Avastin. SUSAN HELLMANN, GENENTECH: When we made a drug for the most difficult type of breast cancer, I literally never thought that I would see something like that. So any time that I hear that we've helped someone's mom, sister, wife, I'm thrilled all over again.

(END VIDEO CLIP)

PHILLIPS: Dow Industrials taking yet another tumble today, falling nearly 700 points out of the gate. After weeks of huge losses, there's no doubt we're in the throes of a bear market. But how does this one compare to previous ones?

Susan Lisovicz on the floor of the New York Stock Exchange with the details to try and hammer it out for us.

Hey, Susan.

LISOVICZ: Hey, Kyra.

Well, you know, the fact is that bear markets happen. They've happened repeatedly. There have been 15 of them, according to Standard & Poor's, since 1929.

And, of course, a bear market is a 20 percent decline from the most typical -- the most recent high. And that is something that we saw a year ago. Believe it or not, last year in October, when the Dow was over 14,000.

What we've been seeing since is the Dow, the S&P, the NASDAQ, all down about 40 percent, which is a little bit more acute than average bear markets. Right now, $7 trillion in shareholder value for basically all U.S. stocks. That's according to the Wilshire 5000.

And we're seeing more selling today. Kyra, the Dow right now down 384. The NASDAQ, meanwhile, is down 68.

And one thing I haven't been mentioning much: oil is down $7. It's trading below $80 a barrel, and that is actually a good thing in these times, where it's almost like an extra stimulus check, because we won't be paying as much, presumably, at some point for gas and heating oil -- Kyra.

PHILLIPS: So Susan, how long does it typically take for stocks to break even? And can we even judge that right now, considering how volatile everything's been?

LISOVICZ: Well, one would hope that we're going to see a bottom soon. And yes. I mean, we can go by the last bear market. We're not even through this decade, and we've had two bear markets.

The last bear market ended in 2002. It took the Dow and the S&P 500 more than five years to recoup the losses. And, of course, kept advancing after that. The NASDAQ has never come back. The NASDAQ high was 5,000, and, of course, though, that was where the trouble lie. It was in all those dotcoms. This bear market is rooted in something much bigger, affecting much -- many more of us, because it was rooted in the housing sector and then credit. And that's why there's so many concerns and so many interested parties coming together to fight it. It's not just a national problem anymore; it's a global problem, Kyra.

PHILLIPS: All right. Susan Lisovicz there on the floor of the New York Stock Exchange. Susan, thanks so much.

Well, it sounds so easy: buy low, sell high. Lately, though, investors have sold, sold, sold and sold, driving stock prices down, down and further down. And yet the selling goes on, but somebody has to be buying. Right?

So is now the time to seek safety at any cost, or should we all just go bargain hunting?

Peter Schiff is president of Euro Pacific Capital and author of "Crash Proof: How to Profit from the Coming Economic Collapse." He's not optimistic. Jeremy Siegel is a finance professor at the Wharton School of Business and a bull among the bears. I think I'm going to name Peter Schiff "Dr. Doom" and Jeremy Siegel "Joyful Jeremy." OK? So now we know who's positive and who's negative here.

Where do we start? Let's try and start -- well, let's be general, see what you both say about, do you buy now? Is this a time to get and go for it, no matter your financial status?

Jeremy, let's start with you.

JEREMY SIEGEL, FINANCE PROFESSOR, WHARTON SCHOOL OF BUSINESS: Oh, I think most certainly. Now, there may be some more downside pain. I don't want to minimize the extent of this crisis. I think the Federal Reserve has more it can do and -- and will do to stop it.

But once you're down 40 percent from your high, from that point, the two bear markets of the post-war period, the maximum was 50. So that's 10 percent from -- from the lows. We can't guarantee that that will be a low, but I think one thing is very important to keep in mind.

Two weeks ago Warren Buffett put money in U.S. financial firms. He is the world's smartest investor, the best investor. He had faith in the financial stocks. He had faith in the economy. And I don't think there's many times when Americans have a choice -- have a chance to actually buy stocks cheaper than Warren Buffett, and I think that that is a great opportunity to pick up equity.

PETER SCHIFF, AUTHOR, "CRASH PROOF": Well, remember...

PHILLIPS: OK. Dr. Doom, do we believe in the Buffett -- the Buffett belief?

SCHIFF: Well, first of all, they're not getting them cheaper than Buffett, because he bought preferred stock with a 10 percent coupon. The average investor can just buy the common. And I would stay away from the financials, period.

But you know, I think we've been in one bear market that began in 2000. You know, there's a lot of inflation, so it's hard to see it. But if you price the Dow in gold, we're now down 75 percent in the last eight years, and we're continuing to fall.

So I don't think there's any bargains out there. I still think U.S. stocks are expensive. I think, however, there's a lot of bargains overseas. I mean, believe it or not, I'm actually buying stocks right now around the world at two and three times earnings with 30 and 40 percent dividend yields. That's a bargain. We're nowhere near that in the United States.

PHILLIPS: But shouldn't we be investing in America right now? Shouldn't we be...

SCHIFF: No.

PHILLIPS: Why?

SCHIFF: America's a bad bet. I mean, unfortunately, what happened is we just had the biggest credit bubble in our history, fueled by the most irresponsible monetary policy in history. We've borrowed trillions of dollars from the rest of the world to buy overpriced homes, to send our kids to overpriced universities, to buy all sorts of consumer goods that we really can't afford. And now the bills are coming due, and we can't pay it back. And this whole phony economy is collapsing.

And unfortunately, everything the Fed is doing right now, everything the government is doing right now, is throwing gasoline on the fire. We're digging ourselves into a deeper hole. And I'm afraid we're laying the foundations for an inflationary depression.

PHILLIPS: Oh, my gosh. Jeremy, do you agree with that?

SIEGEL: No.

PHILLIPS: Do you think we should be patriotic? Do we need to buy overseas and say, you know, "We're all phony, forget about it"?

SIEGEL: We don't have a phony economy. And as far as inflation, I know Peter has been looking about at what's happening to commodities around the world. The prices are going down. And the biggest collapse, actually, the dollar has actually risen over the last four weeks in the world financial markets.

And as far as valuations is concerned, the average valuation, you're buying two and three. The average valuation in U.S. stock market over the last 100 years is 15 times earnings. We're well below that right now.

SCHIFF: Yes, but Jeremy, the earnings are going to disappear. I'm looking forward. American economies are not going to have earnings. SIEGEL: Right. Well, in recessions, earnings -- in recessions, earnings goes down. And we've gotten out of every recession that we've had.

SCHIFF: But we've never had one like this. Believe me, Jeremy, this is not business as usual. This is the end of this gigantic credit bubble.

And I know what's happening in the commodities and the dollar recently, that's not going to last. And you know, commodity prices, if you look at commodities versus stocks, they've all gone down by about the same amount. It's assets that are losing value right now, because there's so much selling going on by highly-leveraged institutions and hedge funds. This dollar rally is not going to last, and I don't think this falling commodities is going to last either.

PHILLIPS: Jeremy, final thoughts. Final thoughts.

SIEGEL: Let me put it -- let me just -- well, first of all, talking about inflation. I mean, you talk about the 1972-74, that was inflation. We had inflation of 12 and 14 percent.

SCHIFF: We've got that, Jeremy. The government's lying about it.

SIEGEL: Let me finish, Peter, please. We had inflation of 12 and 14 percent. We had unemployment that went to 10.8 percent. We had the ability to buy U.S. treasuries at 14 percent, 15 and 16 percent.

PHILLIPS: Gentlemen -- all right, gentlemen.

SCHIFF: Jeremy, the government is lying about the numbers now. The inflation is a lot worse than you think. The numbers are phony.

PHILLIPS: I'll tell you...

SIEGEL: Well...

PHILLIPS: Jeremy Siegel and Peter Schiff, I'll tell you what, we're going to bring you back. We're going to lose that window there. We apologize. We've got to move on to a live Barack Obama event right now. But you know what? We just got started. So I promise. I'm going to bring you back. We will talk about this again. I promise we'll monitor it daily.

Gentlemen, thank you so much.

SCHIFF: Thank you.

PHILLIPS: Quick break right now. We're going to take you live to Missouri, where Barack Obama is speaking.

(COMMERCIAL BREAK)

PHILLIPS Barack Obama now, speaking live at a rally in Columbus, Ohio. I apologize. I had said he was in Missouri. He's in Columbus, Ohio.

Let's go ahead and listen in.

(JOINED IN PROGRESS)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: I don't like to yell. I will try to speak up and if you can't hear me then you can holler some more. How's that? All right.

Now, there are many causes to this crisis. Can you hear me? Can you hear me way in the back? All right. Now, here's the only deal, though. I can't have you all hollering and then say I can't hear you. Some of you, you can't hear me because you're talking. All right. But I'm going to speak up.

There are many causes of this crisis. And it's very important that we respond using all the tools that we have. So I'm encouraged that the Treasury is considering dramatic steps to provide more capital into our financial institutions so they have money to lend the businesses, large and small.

This is not a time for ideology. This is a time for common sense. This is a time for the politics of pragmatism. The test of an idea can't be whether it's liberal or conservative. The test should be whether it works for the American people and for American business.

(APPLAUSE)

That's what we should all be focused on in the days and weeks ahead. I know these are difficult times. I know folks are worried. But I believe that we can steer ourselves out of this crisis because I believe in this country. Because this is the United States of America. This is a nation that has faced down war and depression, great challenges and great threats. And at each and every moment, we have risen to meet these challenges. Not at Democrats, not as Republican, but as Americans.

(APPLAUSE)

With resolve, and with courage, we've all seen our share of hard times. The American story's never been about things that came easy. It's been about rising to the moment when things are hard. About rejecting panicked division in favor of purposeful unity. About seeing a mountain top from the deepest valley. That's why we remember some of the most famous words ever spoken by an American, came from a president who took an office in the time of turmoil. He said, the only thing we have to fear is fear itself.

Now's not the time for fear. Now is not the time for panic. Now is the time for resolve and steady leadership. Columbus, 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 is written by us. That is who we are. That's the country we need to be right now.

(APPLAUSE) CROWD (chanting): Yes, we can! Yes, we can!

OBAMA: America still has the most talented, most productive workers of any country on earth. You know this, Ohio. We're home to workers who built the largest middle class in history. We're home to workers who work two, three jobs; take the last bus home at night because they're willing to sacrifice for their children's future. We're home to innovation and technology, colleges and universities like Ohio State, that are the envy of the world.

(APPLAUSE)

Some of the biggest, brightest ideas in history have come from our small businesses. From somebody starting a new company in the back of a garage, from our research facilities. So, it won't be easy. But there's no reason why we can't make this century another American century.

But I also know this -- it will take a new direction. It will take new leadership in Washington. It will take a real change in the policies and politics of the last eight years. And that's why I'm running for president of the United States of America.

(APPLAUSE)

CROWD (chanting): Obama! Obama! Obama!

OBAMA: We can't keep on doing the same old thing. You know, even as we face the most serious economic crisis of our time, even as you're worried about keeping your jobs or paying your bills or staying in your home. My opponent's campaign announced last week that they plan to -- I'm quoting them now -- turn the page on the discussion of our economy, so they can spend the final weeks of this election attacking me instead.

PHILLIPS: Barack Obama speaking in Columbus, Ohio. We heard from John McCain earlier in the day in LaCrosse, Wisconsin.

Now with the election just 25 days away, big concerns now about voter fraud. Election officials in several states now investigating possible voter fraud by a community organizing group.

Drew Griffin with the CNN Special Investigations Unit reports on the problems uncovered in just one state, Indiana. We'll have that in a second, but first a quick break. We'll be right back.

(COMMERCIAL BREAK)

PHILLIPS: Now, more of those allegations of possible voter fraud by a community organizing group. Drew Griffin with the CNN's Special Investigations Unit reports on the problems uncovered in just one state. The state of Indiana.

(BEGIN VIDEOTAPE)

DREW GRIFFIN, CNN SPECIAL INVESTIGATIONS UNIT (voice over): There are 5,000 of them.

(on camera): These?

RUTHANN HOAGLAND (R), LAKE COUNTY ELECTIONS BOARD: These.

GRIFFIN: These.

HOAGLAND: Those.

GRIFFIN: And these.

(voice over): They are new voter registration applications turned in by the community organizing group ACORN, which has launched a massive voter registration drive.

And with 5,000 applications in this one county dumped on just before the October 6th deadline it looked to elections board administrator, Ruthann Hoagland, like ACORN was extremely successful, until her workers began finding problems.

(on camera): A lot of them?

HOAGLAND: 50 percent. We had close to 5,000 total from ACORN, and so far we have identified about 2100.

GRIFFIN: So roughly half of them...

HOAGLAND: Roughly half.

GRIFFIN: ... are bad.

HOAGLAND: Correct.

GRIFFIN: Registered to a dead person, registered to a person who lives at a fast food...

HOAGLAND: Yes.

GRIFFIN: Shop?

HOAGLAND: Yes.

GRIFFIN: Or just all of them, amazingly, in the same hand?

HOAGLAND: Yes. Yes. All the signatures look exactly the same. Everything on the card filled out looks just the same.

GRIFFIN: Ruthann, fraud?

HOAGLAND: We have no idea what the motive behind it is. It's just overwhelming to us.

GRIFFIN (voice-over): It's not that some are bad. Once they started going through them, every one they looked at was bad. Hoagland decided to stop the review altogether, work on other apparently legitimate registrations and get back to the other half of what she now calls the fake pile later.

HOAGLAND: It's frustrating. It's very frustrating.

GRIFFIN (on camera): Here's another ACORN filled out registration form. It's for Jimmy Johns, 10839 Broadway in Crown Point. Jimmy Johns. We decided to track him down. Here he is.

Is there anybody here that's actually named Jimmy Johns? Nobody registered to vote here named Jimmy Johns?

This could really -- I mean there's been no fraud yet because people haven't voted yet, right?

HOAGLAND: Correct. We'll find out on Election Day.

GRIFFIN: But it certainly sets up a potential.

HOAGLAND: The potential, I suppose, is always there, it's just that -- the volume. The volume is just incredible.

GRIFFIN (voice-over): The elections board is run by both Republicans and Democrats.

It is fraud, says the Democrat director Sally Lasota.

SALLY LASOTA (D), LAKE COUNTRY ELECTION BOARD: Well, if you look, it's the same signature for all three voters. It's -- so the one individual tried to -- did three separate applications but put -- you know you can tell the signature, we're not handwriting experts, but what's obvious is obvious.

GRIFFIN: ACORN's voter registration drives are under investigation or suspicion in several states. Just yesterday, local authorities raided this ACORN office in Las Vegas where ACORN workers allegedly registered members of the Dallas Cowboys football team.

Over the last four years, a dozen states investigated complaints of fraudulent registrations filed by ACORN and complaints of fraud by ACORN have exploded nationwide in just the last few weeks.

We tried to contact the ACORN director in Gary, Indiana, but when the phone messages went unanswered, we went to the office. It's abandoned. ACORN told us the state director for Indiana ACORN is actually based in this office in Milwaukee. But today we found it empty, too.

ACORN's attorney in Boston told us allegations his organization has committed fraud is a government attempt to keep the disenfranchised from voting.

BRIAN MELLOR, SENIOR COUNSEL, PROJECT VOTE: We believe their purpose is to attack ACORN and -- and suppress votes. We think that by attacking ACORN that they are going to discourage people who may have registered with ACORN from voting.

GRIFFIN: Brian Mellor says ACORN has its own quality control, has fired workers in the past, including workers in Gary.

Despite its past, the Obama campaign gave $800,000 to ACORN to help fund its primary registration drive, and ACORN has endorsed Barack Obama for president.

The Obama campaign reacted this afternoon saying, it is committed to protecting the integrity of the voting process, and said it has not work the with ACORN during the general election.

Drew Griffin, CNN, Crown Point, Indiana.

(END VIDEOTAPE)

PHILLIPS: A closer look now at the group known as ACORN. Its official name, the Association of Community Organizations for Reform Now. ACORN operates in 110 cities, in 40 states. It has 400,000 families who are members. And over the last two years ACORN says it has signed more than 1.3 million new voters in its nationwide voter registration drive. The group calls itself the nation's biggest community organization of low and moderate income families working for social justice and stronger communities.

Now, in our next hour in the NEWSROOM, should you be worried about your vote? Is there a chance it wouldn't get counted? We're going to hear what Michael Waldman, with the Front and Center for Justice, has to say about that.

But, when you're in the commander in chief position you also become patient in chief. And with the U.S. president's health a worldwide concern, medical privacy is often hard to come by. Chief medical correspondent Dr. Sanjay Gupta took a look behind the scenes for a CNN SIU report.

(BEGIN VIDEOTAPE)

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT (voice-over): When it comes to the president, there's no such thing as a minor medical matter.

ARI FLEISCHER, FORMER BUSH PRESS SECRETARY: Every day is a crisis. And so if every day is a crisis, a crisis is normal at the White House.

GUPTA: January 14, 2002; President George W. Bush is eating pretzels and watching football. His spokesman gets a call from the White House chief of staff.

FLEISCHER: Well, we've got a little incident and the president choked on a pretzel, fainted hit the table and the doctor (INAUDIBLE) right now and you have to tell everybody.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: My mother always said, when you're eating pretzels, chew before you swallow. Listen to your mother.

GUPTA: The fact is, you couldn't miss that bruise on his face. FLEISCHER: There are some areas where the president is entitled to medical privacy. There are some areas where he's not, where the country is entitled to know fully everything.

GUPTA (on camera): You know, it's been said when the president sneezes, the stock market catches a cold. There's no question that his health is of international concern. So when something goes wrong, when the news hits, alarm bells go off around the world.

(voice-over): September 15th, 1979; President Jimmy Carter collapses while running a 10k race near Camp David. Jody Powell was White House spokesman.

JODY POWELL, CARTER PRESS SECRETARY: Frankly, it wasn't as bad as I thought it was going to be. Unfortunately, there was a picture.

GUPTA: The press was alerted.

SAM DONALDSON, ABC NEWS: By the time we heard anything about the incident, they'd ruled out heart attack, they'd ruled out something really terrible.

GUPTA: Turns out, it was just heat exhaustion.

POWELL: You're not a private citizen. You're the president of the United States. And health matters is something people kind of have a right to know about.

GUPTA: A right to know, especially when there's a picture.

Dr. Sanjay Gupta, CNN, reporting.

(END VIDEOTAPE)

PHILLIPS: And don't miss a CNN Special Investigations Unit report, Fit to Lead: The Challenges of the President as a Patient, hosted by Dr. Sanjay Gupta. That's tomorrow night and again, Sunday night, 8:00 and 11:00 Eastern.

October is National Breast Cancer Awareness Month and all across the country there are different programs and initiatives that are going on. But for sure, this one of my favorite. Check out the bra art contest going on in Pocatello, Idaho. A woman's health clinic told employees to grab a bra, a glue gun and get going. Well, the staff will pick a winner at the end of the month. Tough job, since they're cups are clearly overflowing with talent.

Well, America's critics and even some allies are having a field day with the financial crisis. The blame game gets cranked up overseas and it's open season on Wall Street.

(COMMERCIAL BREAK)

PHILLIPS: Well, all this attention on the economy and the financial markets is casting a long shadow over the presidential race. CNN Election Express is on the road, though, and our Josh Rubin wants to hear what you have to say.

(BEGIN VIDEOTAPE)

JOSH RUBIN, CNN ELECTION EXPRESS PRODUCER: The second presidential debate is history. So we are asking, which candidate do you think is best able to handle the economy?

UNIDENTIFIED MALE: No one has seemed to talk sense about the economy for probably the past 20 years.

UNIDENTIFIED MALE: I'm not sure I can say who that is going to be. I don't have a lot of confidence in either candidate at this point in time. I don't have a lot of confidence in the economy.

UNIDENTIFIED MALE: I think McCain is.

RUBIN: And why is that?

UNIDENTIFIED MALE: Well, I just like his experience.

UNIDENTIFIED MALE: Definitely Obama.

RUBIN: Why is that?

UNIDENTIFIED MALE: He's just better -- well-rounded. McCain does not really seem to care too much about -- it's more of military for him.

UNIDENTIFIED MALE: Neither candidate really wants to address the issues that are out there. I personally feel that the economy is in some serious trouble, and that it's going to get much worse before it gets better.

UNIDENTIFIED FEMALE: I don't really know. I don't know that I have seen either one of them address it properly that we can tell yet.

(END VIDEOTAPE)

PHILLIPS: Now back to our money and the U.S. markets taking a hit, so does America's image as the world's economic powerhouse. You'll be surprised to learn who is pointing fingers at Wall Street for sparking a global selloff.

(COMMERCIAL BREAK)

PHILLIPS: Let's take a look at the numbers right now. The Dow Industrials down 600 points, dipping below 8,000 for the second time today, by the way.

Well, the global money crunch has given traditional U.S. rivals and even some allies a chance to join the crowds pointing fingers at Wall Street. Some are even reveling in America's current crisis.

Here is our European political editor, Robin Oakley.

(BEGIN VIDEOTAPE) ROBIN OAKLEY, CNN EUROPEAN POLITICAL EDITOR: Banks and savings institutions have gone under with bewildering repetivity (ph), chaos on the world's stock exchanges has cast the grim shadow of worldwide recession. So bad has it been that in some parts of the world normal political hostilities have all but ceased, as a prime ministers' question time in the British Parliament.

NICK CLEGG, LEADER, LIBERAL DEMOCRATS: When the ship is sinking, you send out the lifeboats. You don't argue about who has steered it into an iceberg.

OAKLEY: But while the politicians enjoy their sport as the much as the rest of us, there is one game they enjoy above all others -- the blame game. And there is little doubt about the No. 1 target at the moment. Enemies of the United States are exalting.

PRES. HUGO CHAVEZ, VENEZUELA (through translator): Let's penalize those who responsible, let's put the president of the United States on trial. He is one of the main people responsible.

OAKLEY: Others are rushing to exploit the political possibilities.

VLADIMIR PUTIN, RUSSIAN PRIME MINISTER (through translator): Trust in the United States as the leader of the free world and the free economy and confidence in Wall Street as the center of that trust has been damaged, I believe, forever.

OAKLEY: Even America's traditional ally has been ready with the pointing finger.

GORDON BROWN, BRITISH PRIME MINISTER: The banking system has been overwhelmed by the fallout from the subprime market in the United States. It has become a problem for the whole banking system. We have got to deal with it.

OAKLEY: European criticism, though, has been comparatively muted, for European banks have been just as greedily careless as those in the U.S. who started the get-rich-quick stampede. An irony not lost on those in poorer countries forced to listen for years to lectures on the virtues of Western capitalism.

PRES. MICHELLE BACHELET, CHILE (through translator): The countries that have been telling us how to handle things, how to handle finances, how the be transparent, how to modernize, now they find themselves in this complex situation. Not only the U.S., but now also Euro.

OAKLEY: The U.S. is seen as the villain of the peace. Europe is squabbling over credit guarantee limits, which could see flights of capital from one EU country to another. It could be a fair while before economists and politicians in either can readopt those high moral tones about how the less developed should conduct their affairs.

Robin Oakley, CNN, London.

(END VIDEOTAPE)

PHILLIPS: Oh, the gentle sounds of freedom. So much power and yet so graceful. The blue angels right here.

(COMMERCIAL BREAK)

PHILLIPS: This year's Nobel Peace Prize has been awarded to a former president of Finland. Martti Ahtisaari watched the announcement at home in Helsinki, his wife right there by his side. The Noble committee sited his role in mediating numerous world conflicts. Ahtisaari heads the group Crisis Management Initiative, and he has worked to resolve problems from Namibia to Kosovo to Northern Ireland. At the Nobel ceremony in December, Ahtisaari will pick up his medal and $1.4 million.

The blue angels turning into five blue streaks in the sky right there over the skies of San Francisco. Well, the Navy team is practicing for its Fleet Week air shows which start tomorrow. The Marines and Coast Guard also take part in Fleet Week events, everything from parades to festivals, ship tours to concerts.

This hour of CNN NEWSROOM starts right now.