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Kashkari Says Guidelines Are Being Worked Out to Buy Bad Assets; Overseas Markets and Stock Market at Home Rebound Sharply; Biden Stumps in New Hampshire
Aired October 13, 2008 - 10:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
HEIDI COLLINS, CNN ANCHOR: Sparks on Wall Street. The Dow numbers shining light on the nation's dim financial situation. But will this glow fail? We're keeping our eyes on the big board.
Also, Joe Biden in New Hampshire right now. Who's ahead? Who is struggling? In fact, the latest polling numbers. And we'll take you live to the site of the last presidential debate.
I'm Heidi Collins. It's Monday, October 13th, you are in the CNN NEWSROOM.
Wall Street, a new day. Take a look at that. Dow Jones Industrial Averages up about 351 points at this moment. Maybe a new direction. 30 minutes after the opening bell now. And there you have it. 353. Kind of all over the place. At one point we were above 400. So we are watching closely those numbers.
Overnight markets overseas rebounded sharply from last week's big losses. In fact, Hong Kong's Hang Seng stock index closed up more than 10 percent. The Shanghai composite gained 3.7 percent. Investors apparently feeling pretty good. Weekend efforts by world leaders, they are scrambling to stabilize their own financial system and diffuse the threat of a global recession.
So let's look at the big picture first. CNN's Christine Romans is in New York this morning.
So Christine, we've got our stock market looking a little bit better. And overall the world's financial crisis. Tell us how they all tie together.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Well, let's talk a little bit about what we learned over the past few days. The weekend and then overnight about the global effort. You talked about that briefly, the global effort to try to restore confidence in the system and try to shore up the architecture of the financial system. And that is the banking system.
We know that the United States is leaning towards actually making direct investments into the banks and taking preferred shares. We're going to be learning more about that this week. We know the fed has offered unlimited cash to three central banks, the Bank of England, the European Central Bank and the Swiss Central Bank to let them go ahead and then loan those out on 24 day, 48 or 80-some day basis. That's all part of trying to loosen up this credit crisis. The U.K. is going to invest billions into three British banks. We know that European leaders have this big emergency meeting in Paris this weekend where they pledge to protect bank depositors and to guarantee lending between banks. These are just the latest in a series of moves aimed at restoring confidence in the system. The G-7 had an announcement saying that it was going to take strong measures as well. So we have seen an awful lot of coordinated global efforts to try to fix this thing.
Now, there are three things to look at here. There's the stock market which is having a bounce back today. Because the real economy with we're expecting to have more job losses and more worries ahead for that. And there's the credit market which we're still trying to see if it can come unthawed. If it can thaw, sorry, unfrozen, if you will, so many metaphors to try to explain what's happening in the credit market.
COLLINS: I know.
ROMANS: But these are all things that we're watching. We'll take this rally here today but we need to put it into perspective here. The Dow lost 18 percent last week. The S&P 500 lost 18 percent. The Nasdaq was down 15 percent. It was a horrible day on Wall Street. Sometimes when you see big moves you can often see a bounce back. A relief rally is the Wall Street terminology that they use for it.
COLLINS: Yes.
ROMANS: A lot of people were saying it's a relief rally. Don't get too excited. We're watching all these global efforts. And we'll see if in the days and weeks ahead if they don't start to work.
COLLINS: Yes, we'll certainly be watching very closely because I think you're absolutely right. People get really excited when they see those triple digit gain.
ROMANS: Well, it's just a horrible week. You know, you can see how everyone is very relieved that we're not coming in to another huge, huge selloff. Yes, I mean there is definitely relief over that.
COLLINS: Just a little bit too much on a Monday, on top of all that. All right. Christine Romans, thank you.
ROMANS: You're welcome.
COLLINS: The world's financial crisis saw European leaders have banded together to fight it. And that unprecedented effort is getting strong approval now from the International Monetary Fund, which of course, overseas the global finance system. The head of the IMF concedes the overall cost for the 15 nations is staggering but predicts it will soothe anxious global markets.
This morning a progress report on the bailout plan and your $700 billion that's funding it. We heard from Neel Kashkari who is overseeing the rescue plan. He told the Institute of International Bankers, the guidelines are now being developed for the buying of bad assets from banks.
(BEGIN VIDEO CLIP)
NEEL KASHKARI, ASST. TREASURY SECRETARY: The Treasury is implementing its new authorities with one simple goal, to restore capital flows to the consumers and businesses that form the core of our economy. Achieving this goal will require multiple tools to help financial institutions remove illiquid assets from their balance sheets as well as attracting both private and public capital. Our tool kit is being designed to help financial institutions of all sizes so they can grow stronger and provide crucial funding to our economy.
(END VIDEO CLIP)
COLLINS: Kashkari also said he's consulting with legal experts on how the government will take partial ownership of troubled banks. He offers few details on how the overall rescue plan will actually be carried out.
On Capitol Hill today, your money and the prospect of new relief, a new stimulus package aimed at providing the same help to you as the nation's troubled financial system. Kate Bolduan is on Capitol Hill for us this morning. So what is it $150 billion that we're talking about here, Kate?
KATE BOLDUAN, CNN CORRESPONDENT: Yes. We only deal in the hundreds of billions of things right now, doesn't?
COLLINS: Sure.
BOLDUAN: Well today we have House Democratic leaders meeting with economists. Some very prominent economists this hour to talk about the possibility of a second stimulus package. And Democratic aides say this time the package would have heavy emphasis on help to state and local government, so many of which face serious budget concerns.
(BEGIN VIDEOTAPE)
BOLDUAN (voice-over): Tennessee is looking to cut the state workforce by at least 2,000 employees. Nevada, coping with a drop in housing values and tourism is asking state agencies to reduce spending by 14 percent. Virginia's Governor Tim Kaine announced he's laying off almost 600 employees to deal with a $2.5 billion shortfall.
GOV. TIM KAINE (D), VIRGINIA: We're not like the federal government when there's a big gap between revenue and expenses, we just crank up the debt machine.
BOLDUAN: Pointing to harsh realities like these, congressional leaders are renewing the call for another economic stimulus package. Likely hauling Congress back for a vote right after the election next month.
REP. NANCY PELOSI, HOUSES SPEAKER: We have some very harsh decisions to make. And some of them cannot wait until January.
BOLDUAN: A spokesman for House Speaker Nancy Pelosi says the package could cost as much as $150 billion. The first stimulus package approved in February cost $170 billion. It focused on kick starting the economy through rebate checks to consumers. But Democrats say they need to do more. The focus this time, help for struggling states and money for infrastructure like roads and bridges to spur job creation.
PELOSI: A package that creates good paying jobs in our country, by investing in our infrastructure. A package that recognizes that many people have lost their jobs in this period of time and we need unemployment insurance.
BOLDUAN: While many republicans have supported unemployment assistance, Republicans were largely opposed to a smaller economic aid effort Democrats pushed in September. Republican congressman Tom Davis is skeptical of Democratic motives.
REP. TOM DAVIS (R), VIRGINIA: It's just politics and throwing money at the problem is the way they want to do it. If it's so important to stimulate and they've got the plan, they ought to come forward with it now.
(END VIDEOTAPE)
BOLDUAN: But aware of how concerned so many people are about the economy right now, many Republicans who already supported with their vote the $700 billion rescue plan, they're not outright voicing opposition to the plan. They're simply saying right now, Heidi, they want to see more details. We could find some of those details a little later this morning.
COLLINS: All right. Very good. Kate will let us know. We need to come back to you on that. Kate Bolduan for us this morning on Capitol Hill.
A new banking giant is born. The Federal Reserve board has approved Wells Fargo's multi-billion dollar acquisition of Wachovia. The buyouts still, of course, needs to be approved by Wells Fargo. Shareholders in less than two weeks since the deal was first announced, Wachovia shares lost more than one-fourth of their value. That alone $4 billion off the value of this merger.
22 days now until Americans will elect a new president, and the candidates are campaigning hard in four states today. This hour, Joe Biden in Rochester, New Hampshire. We're going to be listening live. John McCain and Sarah Palin had a rally in Virginia Beach during the 11:00 hour. McCain then heads to North Carolina. Barack Obama addresses a rally in Toledo, Ohio, coming up in the early afternoon. Senior political analyst Bill Schneider, part of the best political team on television. He is tracking the candidates and has a preview of this week's presidential debate and that will be coming up in just a couple of minutes here.
A red flag day in California. Boy, it's obvious from those pictures anyway. Santa Ana winds are blowing again through the canyons near Los Angeles. And a large wildfire, mostly quiet overnight, is now starting to flair back up close to 1,000 firefighters are scrambling to surround it in fact and in San Francisco Bay, fire crews are being ferried to Angel Island, a fire there out of control. The strong winds of course not helping. Those pictures coming in from our affiliate there.
Rob Marciano is standing by to give us a better idea of what exactly is happening in the area. We talked about the wind obviously it complicates things
ROB MARCIANO, CNN, METEOROLOGIST: Yes, they got the wind. They got dry, I mean, not quite to their wet season. That will come in another month or so. So October is the time where the Santa Anas get going. It's the end of their dry season. So this is why fires in southern California specially a particularly dangerous and remember it was around this time last year when we had the real devastating ones across San Diego.
So fire danger, the critical mass here. Critical fire danger in effect today. Probably it will be extended to tomorrow as well. Red flag warnings are posted also. So we've got a cold that's going to settle into the mountains. And at night especially that cold air wants to drain and kind of accentuate it with these Santa Ana offshore winds and compressed heated and that's what we've got. So red-flag warning in effect today. Probably for tomorrow as well. These are not Santa Ana related warm air that's ahead of that cold front.
87 for a high in Louisville. Ft. Wayne, Indiana, 87. Chicago, 85. We got a live shot of Chicago. That tied a record yesterday. Got a shot? I'm looking at it right now. The Magnificent Mile there. Live picture?
COLLINS: Beautiful shot. There we go.
MARCIANO: How about that? They may still be crying in their beers after that visit to Atlanta yesterday. That was a tough loss. Great game if you saw it. And not too bad a day there. They're getting the front that's going to be pressing through there. And once the temperatures reach say mid 80s, they'll cool off tomorrow. Look at the difference in temperatures between what's ahead of the front to 83 in Chicago today and what's behind it, 46 degrees in Denver.
So there's your cold air. And this is the time when your weather gets pretty interesting because we're in a transitional month, especially in October where cold air from the north wants to kind of fight the last gasps of summer. And things do get a little poppy.
All right this pop yesterday. Tropical storm Nana. Not to big of a deal. It's out there in the middle of nowhere. I'm not quite sure why they named it. But it's probably going to go away today. This one looks more promising and it's closer. And they're sending a plane out there this afternoon. It's probably going to be a tropical depression, Heidi, before the end of the newscast. Well actually it's 50 minutes away. I shouldn't be talking that confidently. More likely by the end of today. They're looking at this thing pretty intently. And it's much closer to the U.S. and the island. So as well as south. So we'll be watching it very carefully.
COLLINS: Very good. Appreciate that, Rob.
MARCIANO: You got it.
COLLINS: Thank you.
Joe Biden taking the Democratic campaign to New Hampshire. You see him there getting ready to come to the podium. Live rally. We're just two days away from the last presidential debate. Of course, you know that by now. I'm not going to be telling you what the latest polls are saying about the crucial battleground states coming up shortly. We'll go to Joe Biden at the rally.
(COMMERCIAL BREAK)
COLLINS: Barack Obama's running mate Joe Biden working the crowd in Rochester, New Hampshire. The Delaware senator had to cancel this campaign swing one week ago after his mother-in-law passed away. Let's go ahead and listen in now to the senator again in Rochester, New Hampshire.
(JOINED IN PROGRESS)
SEN. JOE BIDEN (D), VICE PRESIDENTIAL CANDIDATE: ...he's doing a great job in the United States Congress. And it's important you send her back. Ladies and gentlemen, you know, someone said when I first stood on the stage, give 'em hell, Joe.' Well, I want to tell you, I guess you know me. I'm reminded of that expression. I used to hear my grandfather used quoting Harry Truman. When somebody said to Harry Truman, actually much before I could vote. Believe it or not. They said to Harry Truman, at the end of his campaign, they yelled "give 'em hell, Harry." And he looked out and said, no, I'm going to tell you the truth today. And they're going to think it's hell.
Well, folks, I'm going to tell you the truth today. Let me begin by saying Happy Columbus Day. I may be Irish, but I was smart enough to marry Italian. So I'm all right today. This beautiful lady in front goes, yes. Look, I know there are two big worries for people in this area right now and quite frankly all over the country. But the first is unique to hear. The first is Josh Beckett's arm. So I understand that. My Phillies didn't do well last night. You know, we had a rough night but I understand we get our priorities first. Josh Beckett's arm and direct order secondly the economy.
But, folks, all kidding aside. I don't know what to tell you about Josh Beckett's arm, but I do have a few thoughts about the second issue, the economy. You know it all begins with understanding that for much, much too long this economy didn't start collapsing for a lot of people, you know, a week ago. It didn't start collapsing a month ago. It didn't start collapsing a year ago or two years ago. This economy started collapsing six, seven, eight years ago.
For too long, families have had questions as simple as they are profound here in this state, and my state as well. Will I have a job? Am I going to be able to keep my job? Can I afford to go see the doctor? Can I fill up the gas tank? How are we going to pay the mortgage this month? Literally, how are we going to pay the mortgage this month? Are we going to be able to heat our home this winter? You know, issues being discussed I suspect by some of you right now.
Mary is in college. Are we going to be able to send her back to second semester? And you know, just how in the Lord's name am I going to retire? Look at my 401(k). Beyond that, I've never had one of those, I had some equity in my home. I don't have that anymore. My mortgage exceeds the value of my home in this market. So what are we going to do about all those? These are the things people in your state and my state sit around the kitchen table and they talk about. These questions aren't going to be answered by negative political attacks that are going on. These questions aren't going to be - you know answered by attacks on Barack Obama that are coming out of the McCain campaign. That's why it's so disappointing.
And I really mean this literally. I've known John McCain for a long, long time. It's so disappointing that his campaign, as recent analysis has shown, literally 100 percent of the McCain's campaign advertisements are negative. 100 percent. Now look, I guess when you vote with a president 90 percent of the time in the past eight years, you can only attack 100 percent of the time.
I mean, there's not a whole lot to talk about. But look both senators Obama and John McCain are giving big speeches today. You go read about it in the press. You go home and you turn on CNN and the other news stations, and you're going to hear - and you're going to hear - you're going to hear that each gave a major speech today. Well if the excerpts from Barack is going a major speech on economic policy. It's going to further outline what he's going to do and how he's going to deal with it.
As you look at least the excerpts released so far, it looks like John McCain's entire speech is going to be attack, attack, attack. Now look, by contrast, it seems it couldn't be clearer to me, it couldn't be clearer to me what's going on here. John McCain wants to attack Barack Obama. Barack Obama wants to tackle the problems that face America today. So, folks - if there's any political audience in America that's not likely to be distracted by the tactic is the people here in the state of New Hampshire, probably the most sophisticated group, I mean this sincerely, on both sides there the most sophisticated group of political observers in the country.
And so I doubt whether the attacks are going to distract you very much. But around the country they're hoping they'll be able to do it. But here's the bottom line. These attacks don't hurt Barack Obama. These attacks don't hurt me. Every single false charge, every single baseless accusation that comes forward is an attempt to get you to focus on something other than what's going on in your family, other than something what's going in your neighborhood, in your state.
Beyond the attacks, and I mean this literally, beyond the attacks, what is John McCain really offering? What about the past eight years? What did he do? What about the past eight years would he change in the next four years? I mean, tell - ask your undecided friends. Name me something fundamental that John McCain would do in the next four years that are different, different than the major policies of President Bush in the last eight years. Folks, look, you can't change the next four years if you stood with George Bush in calling of the privatization of social security for the last eight years.
Imagine if social security had been in the stock market right now. imagine that. Now for real. I mean, if this were a movie they would think we were making up the script here. But Literally, seriously. You can't change the next four years if you stood with George Bush and helped block the efforts to ensure another 3.8 million children on the C.H.I.P. program for the last eight years. What are you going to change in the next four years about helping kids? Look, you can't change the approach to global warming.
If my opponent in our debate, I think it was a debate, our debate that we had. I mean, look when the moderator asked us do you think man is the cause of global warming - I mean, to paraphrase here, I mean, maybe, not sure. Look how are you going to solve global warming when you have no idea where in the hell heck is causing global warming? How do you change it? You know, it would be - folks, it would be funny if it weren't so deadly serious. You know, I mean, look, you can't change the next four years if you simply continue George Bush's shoot first and ask questions later foreign policy.
And you can't change, folks, you can't change the next four years if you believe that we should continue to spend $10 billion a month in Iraq when the Iraqis have a $79 billion surplus. Ladies and gentlemen, you know to quote the elder Bush, the first president Bush, read my lips, we will end this war. We will end this war. We will transfer responsibility to the Iraqis. Enough is enough.
Folks, you can't change the lives of the middle class when there's absolutely no difference, none, between what George Bush has already done and what you're proposing to do. To paraphrase a good friend of mine, a great new senator from my birth town of Scranton, Pennsylvania his name is Bob Casey, senator from Pennsylvania. He said, and I wish I had thought of this, I wish I had thought of this first, but he had said you can't call yourself a maverick if all you've been is a side kick.
Folks, that's why you're seeing John McCain's campaign become so erratic relying on political stunts instead of offering sound solutions. Look at how John responded to the current economic crisis. At 9:00 a.m. on Monday morning, September 15th when the bottom started to fall out of the market. John McCain said at 9:00 this morning, he said the fundamentals of the economy are strong. At 11:00 a.m. that morning, at 11:00 a.m. that morning, he said, "we've made -- there's a great economic crisis we have on our hands." Paraphrasing it.
Now ladies and gentlemen, that's what we Catholics call an epiphany. And folks, the irony is the whole notion of what the fundamental responsibility of a president is to provide steadily leadership in times of challenge. And lurching from one view to another in a matter of hours is not what presidents do. In those two hours, did John McCain realized that the median income of American families have dropped over $2,000 in the past eight years. Did all of a sudden, John he realized here in New Hampshire you folks have lost over 26,000 manufacturing jobs in the last eight years. Did John figure out in those two hours that the premiums you pay for your health insurance have doubled in the last eight years? Did he realize in that two-hour span that this economic crisis is the final verdict on the failure of George Bush's economic policy?
What happened? What happened? What happened? Well the problem with John's epiphany is not that he saw the light, John saw the presidency receding from his grasp. That's what John saw happened. And now, look, I know John spent a lot of time here in New Hampshire. John is fond of calling this his second home. He's even called it his second state. The problem is, the problem is, that just in the past quarter, 1,400 folks from New Hampshire have lost their homes. 1,400. Thousands more, many people you know, are living on the verge of whether or not they're going to lose that home.
The financial crisis has now wiped out $2 trillion in peoples' retirement funds, from their 401(k) plans and other investments. People are worried some even angry. Guess what? They have every right to be. They have every single right to be. But here's what I want to emphasize to you today. We can't lose sight of this. This is what Barack and I believe or we would not be running.
We've been through tough times before, folks. We've been through difficult times before as a nation. And in every circumstance we've emerged from these tough times, not only intact, but stronger. Every single time. And the Obama-Biden administration is going to pull together the leaders of both political parties. Why? Because we have a long history of actually doing it. Actually doing it. Not talking about it. Actually doing it. And because we understand the values of international relationships, we're going to provide the necessary leadership internationally to get other nations to follow.
Ladies and gentlemen, I once said that President Bush said was, Joe, I'm leading. I said, Mr. President, with all do respect, turn around. No one is following you. No one is following.
COLLINS: There you have Senator Joe Biden in Rochester, New Hampshire, today. Also we're going to let you know about the other side of things if you will. Senator John McCain will be appearing in Virginia Beach, Virginia along with his running mate, Sarah Palin. That will be happening in the 11 o'clock hour, about 30 minutes away from that. We'll take some of that sound for you as well.
A heads up for parents this morning. Listen to this now, are your kids getting enough vitamin D? Doctors now saying the benefits go beyond just strong bones.
(COMMERCIAL BREAK)
COLLINS: Parents, listen up. Doctors say your children aren't getting nearly enough vitamin D. The American Academy of Pediatrics actually says kids need twice what's being recommended.
So what's the deal with this? CNN's medical correspondent Elizabeth Cohen is joining me now to talk a little bit more about this. Boy, when you hear that, you feel like, well, why was I not told about this?
ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: You know why you weren't told? Because the studies are relatively new that say, that when kids gets 400 international units of vitamin D, they lower their chances later in life of getting things like heart disease, diabetes and cancer. This is all very new research. But, the thing is, it can be tough to get 400 international units of vitamin D into a kid. And that's why the American Academy of Pediatrics says, you know what, millions of kids are going to need to take supplements.
COLLINS: Yes. Because some people might be saying, I don't even know what 400 international units means.
COHEN: I certainly didn't until I looked it up. Absolutely. So let's give a daily menu of what a day's worth of food would be that would give you that much.
First of all, if a kid drank, let's see, about two glasses of milk, plus a -- milk is fortified with vitamin D; a tuna fish sandwich, which has vitamin D naturally; a cup of cereal, also fortified; and a tablespoon of margarine; also fortified. That would get you enough vitamin D. But again, concerns that kids don't always eat as healthy as that menu either.
COLLINS: No, no. Especially with the cereal might be Lucky Charms, or something.
COHEN: Well, but that is fortified. That is fortified. So, it's what they put into it that matters.
COLLINS: OK, very good. So when we think of vitamin D though, we think about the sun.
COHEN: Yes.
COLLINS: So, how does that play into it all?
COHEN: The sun will help you get enough vitamin D. It helps your body make vitamin D. But it's a little bit tricky. They don't know how long to tell you to spend in the sun and they also don't -- it kind of depends where you live, it depends on the color of your skin. And plus, spending time out in the sun without sunscreen is not something pediatricians like to tell parents to do.
So, that's why they're emphasizing the foods. So, yes. If you spend time in the sun without sunscreen, you're getting vitamin D in your body. There is no question.
COLLINS: Yes. It's kind of darned if you do and darned if you don't, though.
COHEN: Yes, it's a little tricky. It's hard to give a description for how much time you should spend in the sun to get the vitamin out of vitamin D and not get skin cancer. Hard to do. COLLINS: More milk.
COHEN: Right. Milk and other fortified things and fish. Because you know, we all know kids love fish, right?
COLLINS: But the thing is, be careful of the mercury.
COHEN: That's true. But that amount --
COLLINS: We could go on and on.
COHEN: And the (INAUDIBLE) today, isn't going to hurt you.
COLLINS: All right. Elizabeth Cohen, we sure do appreciate it.
Thank you.
Well, here's something that a lot of people are wondering in these crazy financial times. How do you know when the stock market actually crashes? We're going to be getting a lesson in the psychology of the sell.
(COMMERCIAL BREAK)
COLLINS: Let's get another look at the big board, how about. We're a little more than an hour into the trading day, and now, this is the highest point I think that we have seen so far. Up to the positive there. 450 points or so. We're watching the Dow Jones Industrial average along with some of the other industries and we will keep our eye very closely on that.
But, before today's more promising open, of course, Wall Street endured brutal losses over the past eight trading days. The Dow suffered a staggering loss of 22 percent. And many people were left asking, are we actually facing a crash? It's a word we don't say lightly here. And we tread lightly when we do. And so, CNN's senior business correspondent Allan Chernoff is here now to talk a little bit more about exactly what that means.
Hi there, Allan.
ALLAN CHERNOFF, CNN SENIOR BUSINESS CORRESPONDENT: Good morning, Heidi. You can in a way describe the stock market crash to pornography. The way Justice Potter Stewart did years ago when he was asked to basically describe hard core pornography. He said, quote, "I know it when I see it."
There's no one definition of a stock market crash. But when the market is just tumbling, when people are really just throwing stocks out the window, saying get me out, I don't care what the price is. And the market just tumbles and tumbles with no end in sight, that is pretty much a crash. And we may not have seen that to an extreme on any single day last week, but all together you better believe it. That decline of 18 percent last week can certainly qualify as a crash. Stock market analyst Frank Gretz says this is all a result of pure panic. (BEGIN VIDEO CLIP)
FRANK GRETZ, SHIELDS & COMPANY: It's not so much about the degree of the selling, it's about the psychology of the selling. A crash is where fear really feeds on itself. So, you get this kind of waterfall decline that we've seen recently, where every day the market just can't pick up its head. Every day we're down and we close poorly on the day. It's really about that psychology. And I would add, too, that when you get to that kind of point of a decline where fear feeds on itself, I mean, that's an ending phase. Crashes come at the end of a bare market, not at the beginning.
(END VIDEO CLIP)
CHERNOFF: The market becomes just like a rubber band, stretched to its very limits. and it bounces back. After a crash you always get a bounce back. We're seeing some of that today. This is, of course, is by no means a guarantee that we've necessarily hit the bottom. But, when the market is stretched like a crash, it bounces back.
Let's have a look to see what happened after the crash in October of 1987. A lot of us remember that awful day. October 19th, the Dow plummeted 22 percent. More than 22 percent that day. The following day it bounced back. And the day after an even bigger bounce back of more than 10 percent -- Heidi.
COLLINS: So I have so many questions, Allan. We also hear a lot about the word capitulation. Something that we should also probably explain, just briefly. And then, when you mention panic, you know, we talk about the media, too. And how all of that plays in to the possible panic that may be out there.
CHERNOFF: Well, certainly. I mean, the media is supposed to be reporting just what's happening, what the experts are saying, what the investors are doing. So, the media is the messenger.
And there is no doubt there was plenty of panic last week. People just not seeing a bottom. People seeing their net worth just disappearing. It was an extremely scary week for all investors. And we can't be sure it's over just yet. But, as I said, after you have a crash you always do get a bounce back, but it's certainly very possible that as the market analysts would say, that we could retest the bottom. That's their euphemistic term for saying, it may not be over.
COLLINS: Yes, absolutely. All right. Allan, we will continue to watch that alongside you.
Meanwhile, something else that we are watching. I want to get back to quickly here in the CNN NEWSROOM. Happening right now,
These are live pictures coming into us now, from this fire that we've been telling you about in the Los Angeles area. Thanks to our affiliate there, KTLA. This has apparently burned more than about 2,000 acres. And as you can see now, certainly a major concern about some buildings that are on fire.
Unfortunately, we don't know exactly what those buildings are at the very moment. But we do know -- your can't quite see it from these pictures, but a little while ago, that is one of the buildings that has obviously been completely engulfed.
You see a lot of vehicles nearby, as well. Usually, of course, vehicles have gas in them. So, clearly a volatile situation. A whole lot of firefighters are there trying to get control over this. So we will continue to watch that for you, just as soon as we get more information we'll let you know exactly what's going on. We do know about evacuations that have taken place in this area. So, we will keep our eye on it. As you can imagine. Once again, those pictures out of KTLA, Los Angeles, today.
It's a bad situation that could get a lot worse. The economic crisis combined with higher heating costs could mean a lot of people will have a hard time paying their energy bills. CNNmoney.com's Poppy Harlow has our fix now from New York.
Good morning, to you Poppy..
POPPY HARLOW, CNNMONEY.COM: Good morning, Heidi.
Well, this summer it was all about those record gas prices.
COLLINS: Yes.
HARLOW: This winter the Energy Department says heating costs are going to be about 15 percent higher than last year. The rise, that can be even worse for people that live in the northeast, across the Midwest, where they rely on home heating oil.
The good news from this economic downturn, oil prices have fallen sharply. But today, they are on the rise again. Up about $4 right now. Lot of energy companies are worried that they're going to see consumers fall behind on their bills this winter.
One good example of that comes out of Duke Energy. Now, they say the number of people in South Carolina who are disconnected by nonpayment rose significantly by 13 percent, from Q2, the second quarter of 2007, to the second quarter of 2008.
And Heidi, these are just second quarter numbers. Right before all of the economic turmoil really settled in. Before those job losses were mounting. So as you can imagine, there is a lot of concern out there right now.
COLLINS: Yes. What about an energy fix then? What can people really do in this situation?
HARLOW: Right. That's what we're here to do. Help you solve the problems. There's a few steps you want to take. First, you want to prepare. Right? Expect higher costs. Put a little more money aside this winter. Step two, you want to conserve. You should seal up your house. You'd be surprised just how much that can save you. Turn down your thermostat. Conserve hot water, etc. Thirdly, get in touch with your energy company. See if they'll work with you on their bills. Surprisingly, a lot of them will.
And finally, see if you qualify for energy assistance. The amount differs from state to state. But there are certainly a lot of resources out there. Just Google it, you can find it on the web. Also, this is interesting. Some charities offer assistance for your energy bills and your energy company can tell you what those charities are in your area.
And if you want to do an energy audit, it's a good idea. It does not cost a lot of money. We showed you how to do one last week. You can see that on CNNmoney.com -- Heidi.
COLLINS: All right. We sure do appreciate it.
Poppy Harlow, thank you.
Cross your fingers now, America. Look at this. Wall Street's numbers are up and they're up big time in comparison, of course, to last week. That's for sure. But will that mood really spark a buying phase? We're talking to you live about the trading floor. Up 460 points now.
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PHILLIPS: On Wall Street, a lot of ground to cover, certainly, to make up for the worst week ever for the Dow Industrials. And look at that now, it is up about 433 points or so. We could snap an eight- session losing streak if a rally like this holds. Susan Lisovicz is on the floor of the New York Stock Exchange with details.
So what's the term that we've been hearing, relief rally -- maybe?
SUSAN LISOVICZ, CNN CORRESPONDENT: Yes, I think this is a relief rally. And I think it's bringing a lot of relief to people who have been watching the stock market incessantly, don't you think, Heidi?
COLLINS: Yes.
LISOVICZ: We're wiping the slate clean. It's a new week. Maybe there's new sentiment. Whatever the case, we're seeing a global rally.
And that's really -- I think the word here is global because we've seen a lot of ad hoc, very dramatic -- very dramatic responses to what's been going on. But it has been ad hoc and now what we're seeing is more of a coordinated effort.
Over the weekend, for instance, we had President Bush, leaders of the G-7, G-20, the IMF, taking steps to unfreeze credit, which is the root of the problem. The Fed temporarily offering unlimited dollars to three central banks -- the Bank of England, the European Central Bank, the Swiss National Bank, those central banks then will theoretically loan that money to financial institutions. The British government is taking control of three of its largest banks to help them get on its feet. In any case, it's all translating.
We've seen big gains overseas, and we're seeing big gains on the big board. Check it out, after the Dow's worst week ever, and the most volatile day ever on Friday, we're close to the highs of the session. Blue chips right now up 448 points. The Nasdaq is up 91, Heidi.
COLLINS: Wow. Well certainly a better picture than last week that's for sure.
We know that it's just sort of one side to this whole story, of course. But when you talk about the global markets, some people I'm sure are wondering what more world leaders can do.
LISOVICZ: Well you know it. There's a sense that more will be done. More needs to be done. In fact, the director of the IMF says more will be necessary in coming weeks. In fact, you're talking about leaders of the biggest industrialized nations -- but this is a global economy. There could be other parties as well.
Listen to what Jeffrey Sachs, the noted economics professor from Columbia University said on our air this morning.
(BEGIN VIDEO CLIP)
JEFFREY SACHS, DIR., EARTH INSTITUTE AT COLUMBIA UNIV.: I think it's starting to have an effect at least of probably putting a floor under the complete collapse. It's not going to turn around this crisis. It's not going to stop a recession in the U.S., but it could stop the collapse.
(END VIDEO CLIP)
LISOVICZ: And that's a good thing, obviously.
And obviously what's going on continues to be unprecedented. But Heidi, I'm not going to be outdone by Allan Chernoff. I know that when he was talking about what defines a crash a few minutes and he used that old comparison with pornography, you know, when know it when you see it --
COLLINS: Your ears perked up when he said that?
LISOVICZ: Oh it did. And I said, you know, I'm going to outdo that. There's a quote from James Grant, who is an authority on the credit markets. And he says this on how we got into all this trouble, he says -- quote -- "money, like sex, brings out some heavy breathing but little knowledge." He says that we are destined to repeat our mistakes -- well anyway, I could go on. But it brings out a lot of heavy breathing and you can --
LISOVICZ: I'm going to give the point to Allan. I'm so sorry, Susan. You know I love you.
Susan Lisovicz, we sure do appreciate it.
And again, the Dow Jones Industrial Averages --
LISOVICZ: I couldn't do it last week, but today the mood is better. And we could have some comic relief as well.
COLLINS: Very good. Love that.
All right, Susan, thank you.
Dow Jones Industrial Averages up about 444 points at the moment.
Meanwhile, we are looking at the live picture coming in to us from the White House, because in just a few short minutes President Bush will be welcoming Italian prime minister, Silvio Berlusconi. They are going to be holding a joint news conference. It's going to be happening in the Rose Garden. We will bring you a couple of those statements coming up shortly, right here in the CNN NEWSROOM.
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COLLINS: From tragedy, a new start. You may remember the tornado that tore through a boy scout camp in Iowa four months ago. Four boy scouts were killed. Now families, and the camp, are trying to move forward.
Marla Rabe with affiliate KETV has the story.
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MARLA RABE, KETV REPORTER: The home to the Little Sioux scout ranger and his family, torn to pieces by a tornado. That was then --
UNIDENTIFIED GROUP: Two, three! Whoo!
RABE: -- this is now. A new home for Ranger Nathan Dean, his wife, and their three children.
TAMMY DEAN, LIVING IN HOME: It's unbelievable.
RABE: After losing everything, a new beginning.
T. DEAN: We just can't wait to get in and start our lives again.
RABE: A new kitchen and laundry room, for each of the boys, their very own bedroom.
(on camera): And in the basement of the home, you'll find this room with poured concrete walls. It's actually the family's very own storm shelter.
(voice-over): While they hope to never use it, reminders of why it's there. From the kitchen window, a flag pole bent by the strength of the storm. And from the deck, a forest of mangled trees. But this is a day for moving forward, something the parents of Ben, Petrizilka, one of the four scouts who died, are happy to see.
ARNELL PETRIZILKA, BEN'S MOTHER: It's nice to see things starting to heal. And when -- if nothing would be done, and the camp wouldn't be rebuilt, that would be more sad for us.
RABE: The Petrizilkas say they wouldn't have missed the opening of the Deans home. They take every chance they can to get back to the camp.
A. PETRIZILKA: Just to see how it's changing and just to be where Ben is.
RABE: A place the Petrizilkas, the Deans and all of the boy scouts will always call home.
(END VIDEOTAPE)
COLLINS: Boy scout officials say building the new house at the camp was a community effort. Once started, it took only 27 days.
President Bush today in the final 100 days of his presidency. His most pressing issue -- rescuing a damaged economy. He'll keep talking about it and working to resolve it. He will also oversee the $700 billion buyout of the devalued assets from banks.
And speaking of money, President Bush will leave behind a national debt of more than $10 trillion.
A reminder now, President Bush and Italian prime minister, Silvio Berlusconi spending time together at the White House today. The global financial crisis likely to be part of their conversations. They're going to be delivering a joint statement from the Rose Garden coming up live in just a couple of minutes. We of course will bring that to you right here on CNN.
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COLLINS: Quick reminder now. We are awaiting President Bush and Italian prime minister, Silvio Berlusconi to come out to the two podiums that I'm seeing on my monitor here. In the Rose Garden -- they're going to be giving a joint statement so we will be going to that very, very shortly here.
In the meantime, everybody, I'm Heidi Collins. Join us again tomorrow morning beginning at 9:00 a.m. Eastern.
For now, CNN NEWSROOM continues with Tony Harris.
