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The Dow on the Rise Again; Bush's Remarks about the Government Bailout Plan
Aired October 14, 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: Speaking of flair, investors feeling good this morning. The Dow on the rise again. Reacting to the new bank bailout plan unveiled by President Bush a couple of hours ago. But will the good times last?
And Los Angeles on fire. Thousands of people flee their southern California homes. A state of emergency as Santa Ana winds continue to fan deadly wildfires. I'm Heidi Collins. It is Tuesday, October 14th. You're in the CNN NEWSROOM.
Markets rally, thanks to new developments that unfolded while you were sleeping. Before dawn the economy's top decision makers gathered at the White House. And a short time ago they unveiled new details in the $700 billion rescue plan. Today's announcement, the government will spent $250 billion of taxpayer money to buy shares in banks.
(BEGIN VIDEO CLIP)
PRES. GEORGE W. BUSH, UNITED STATES OF AMERICA: We agreed on a coordinated plan for action to provide new liquidity, strengthen financial institutions, protect our citizens' savings and ensure fairness and integrity in the markets. Yesterday leaders in Europe moved forward with this plan.
HENRY PAULSON, TREASURY SECRETARY: We are acting with unprecedented speed, taking unprecedented measures that we never thought would be necessary. But they are necessary to get our economy back and on an even khiel and secure the confidence of the future of our markets, our economy and the economic well-being of all Americans.
(END VIDEO CLIP)
COLLINS: Quickly I want to let you know about the big board. We have mentioned this earlier today. Having a little trouble at the New York Stock Exchange. Apparently some of those numbers have been locking up. It looks crazy right now, too. So where you need to be watching is the lower right-hand side of your screen, the smaller numbers there where the time is. Those numbers are correct. We've got the Dow, the Nasdaq and the S&P there if you want to watch that, quickly, of course, we will do the same.
Christine Romans is standing by and I think laughing a little bit. What the heck is going on? It's just too much activity from the big board.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Tech support problems into the whole matter. I mean how much more can we take, right?
COLLINS: Exactly. All right. Let's talk about this. Because as we have already mentioned, certainly a lot went on overnight. We had the president come out this morning. Several other meetings taking place. What should we take away from everything what went on if it's at all possible to say in a sentence or two?
ROMANS: We can away that governments around the world are buying shares in banks. There are nine banks in this country that are going to get a cash infusion of together about $125 billion. It's $250 billion that's slated for this.
COLLINS: Completely unheard of?
ROMANS: Unheard of. Well, there is a basis in history for recapitalizing the banks. And when we first started talking about taking the toxic assets off the books, there were economists who were saying if you look at trouble in the banking sector, the quickest best way to do it is to recapitalize the sector. But there was an ideological - most Americans don't like the idea of the government owning their banks.
ROMANS: I mean, this is a democracy, this a free market. But we are really in kind of unheard of times here. And so now people are saying that this is democracy and capitalism at work when the government can step in temporarily and right things and then you know get out of the picture as quickly as possible. So we're still at the beginning stage of this. So that's part of it. And you heard the Treasury Secretary talk about claw back provisions and CEO compensation.
If you're a bank that's going to have a major shareholder that's the United States government, you're going to have to agree to some of their terms. And that includes some things that people had really wanted. There's a populous outcry against some of the CEO compensation, some of these people who when their company went out of business, so claw back provisions, that means if you make a lot of money and then you end company up your company going down the drain, maybe you have to give some of that money back. And caps on golden parachutes and the like. So there's some things in there that should please some of the constituents who have been angry about this.
And also the FDIC stepping in, Heidi, and expanding some guarantees for loans and deposits and the like. And so, the FDIC really doing a lot of things. We keep talking about this tool kit, you know.
ROMANS: This tool kit is bigger and bigger and bigger and bigger. And Susan Lisovicz and I joke there's tools in there, there's also like big weapons in there, too. There are all kinds of stuff in there to have the, you know, to completely expand things to expand this metaphor, what they're doing to try to right things. A couple of points to make as well is that the European and the British authorities have started, jumped out and sort of started doing this right away or talking about this right away. The U.S. has had a sort of an evolving approach to this. First we were just talking about toxic mortgages and a few other things, toxic gas that's getting off the books. Now we're talking about that, that program still being written, but now we're talking about pumping billions into the banks and then the FDIC expanding the deposit and loan guarantees and the like.
So to the bailout over the past 10 or 11 days, hasn't it changed almost hourly in some cases -
ROMANS: AS the realities on the ground have changed. The reality of the big board today, despite what appears to be a technical problem, those stocks are up and the banking stocks are up. And it looks as though around the world there is a sigh of relief that there is this global coordination and it's going to include capitalizing the banks. We'll have a long, long, tortured discussion later about nationalization of banks and how far we're going. Have we gone too far? What policy mistakes we've made. But at least form right now, we're trying to put the fire out. There are some signs that the credit market, Heidi that - and I'm not going to check on you but those indicators - yes, they're showing some improvement, some improvement, a little bit.
COLLINS: Everybody sees you know the Dow Jones industrial averages go up 936 points yesterday. They feel better. Maybe shouldn't go that far just yet. We got to watch the credit obviously.
COLLINS: Christine Romans, thanks so much. And just a reminder to everybody, the Dow now up about 211 points. It looks like while we wait for the big board to be fixed. I don't know.
Overseas markets rally and hopes rise. Overnight big gains in Asia. Japan's Nikkei soared 14 percent to its biggest single day gain ever. Over two days, Hong Kong's Hang Seng gained more that 13 percent. And markets in Europe also rallying for a second straight day now. Early gains in London, Paris and Frankfurt. One exception, though, Iceland which has been flirting with national bankruptcy. We told you about this story, after a three-day halt, Iceland's market did reopen, but then plunged nearly 50 percent.
So have we turned a corner on the economy? Is the worst now behind us? At the bottom of the hour we'll be checking in with CNN's Allan Chernoff on that.
I want to get to this story now, two deadly wildfires raging in southern California. Look at those flames. Both of them in San Fernando Valley, both whipped up by strong Santa Ana winds. At least two people are dead. More than 10,000 acres scorched. The biggest of the wildfires has charred 5300 acres in the Angeles National Forest. And destroyed several structures including 30 mobile homes. The other fire has burned about 5,000 acres. It's in the Porto Ranch area in the west end of the valley. At least 19 structures there have been damaged or destroyed. It's not clear right now how many of them were homes.
We're watching that story for you obviously. The weather certainly a part of it, the Santa Ana winds we've been talking about. We always seem to be talking about, Rob Marciano, when we're talking about the fires out in California.
ROB MARCIANO, CNN, METEOROLOGIST: Yes, especially this time of year. This is when they get them. This is primetime. And the fires are being fanned by these winds, that's for sure. All right. Let's go into SoCal, we've had fires all over the state but the ones that are a little bit more dangerous right now are the ones just north of Los Angeles. So there's two that pretty much straddled the i-5 corridor. You've got the Marek fire and the Sesnon fire.
Neither of which is contained and as a matter of fact, zero to five percent containment is about what you have. And the ones just to the west, I think this is the Marek fire. That one is one that is precariously close to homes. So as we get live pictures into the CNN Center here throughout the morning, we'll be able to see some of that. This one up in the hills, obviously in well developed neighborhoods down here. And when you have winds blowing north to north easterly or out of the north-northeast, that would be blowing flames towards these homes. So I would gather that these are the areas under evacuation orders.
All right. High pressure and control over the inter-mountain west. It's what kind of pushes those flames down. And it happens more so at night than it does during the daytime hours when that air cools. It then sinks and gets forced down into the canyons. Look at some of these numbers. Mount Wilson, that's the elevation, but still 87-mile-an-hour wind gusts, near Malibu, just northeasterly of Malibu, over 70-mile-an-hour winds.
So you're talking about serious situation. Vegas 77. Live picture for you from Vegas. Actually Lake Meade has a lake wind advisory out. So it will be breezy around the deserts as well. KBVC, the sun coming up here on the strip, sunny skies with high of about 77 degrees. All right. Heidi that's the latest from here. Tomorrow should be a better day as far as the winds go. And then Thursday, much more calm.
COLLINS: OK. Very good. Look forward to that for the people out in California certainly. Thank you, Rob.
Three weeks to election day. And the presidential hopefuls are gearing up for their final match-up. Senator Barack Obama is prepping in Oregon, Ohio. Senator John McCain is in Pennsylvania where he plans to unveil a new economic strategy. That will be coming your way the next hour. His running mate, Governor Sarah Palin is in Scranton and her rival for the vice presidency, Senator Joe Biden, rallies voters at Ohio University.
Senators McCain and Obama debate one last time. It's all happening tomorrow. Our Ed Henry is all set up Hofstra University in Hempstead, New York. So how is it shaping up there Ed. Are you setting up the chairs and so forth?
ED HENRY, CNN WHITE HOUSE CORRESPONDENT: well, absolutely. It's just beginning, people are trickling in. I'm from Long Island. So it's pretty exciting to be here. And you know, Heidi, what's interesting is the challenge for both men. Obviously Barack Obama mostly has to avoid a big gaff of some kind as the front runner. Obviously, he doesn't want anything to trip him off. He could emerge in a pretty strong position in the final days if he emerges unscathed from this third and final debate.
For John McCain, obviously the challenge is much greater. Not only is he trailing in a lot of these battleground states that we've been going through line by line from Ohio to Florida, but also, if you walk through the first debate, was on national security. That was supposed to be a strong suit for John McCain. Instead, a lot of people sort of graded it as a draw. The second debate was a town hall format, again, supposed to be a strength of John McCain. In the end, most of the post game polls including CNN gave the edge to Barack Obama.
Now he goes into the third one. It's really all about the economy. We're hearing that on the campaign trail but also on this debate with a focus on domestic issues, what's going on here at home more than national security. That's why it's all about the economy for both of these candidates, but especially for John McCain as he tries to come back, Heidi.
COLLINS: Well, I wonder, is there a change in tone for McCain on the campaign trail?
HENRY: Certainly. He got a little blow back as you saw late last week. His campaign facing charges that some of these town hall meetings, the events were getting a little hot, a little angry. Some of the sort of die hard Republicans getting angry at those meetings, and you saw John McCain push back a little Friday at one of his own supporters saying, look, you know, don't be so harsh in how you're attacking Barack Obama.
And so yesterday we saw a new beginning sort of for John McCain where he's tried to turn the page and make it more about himself in his final closing argument to independent voters and say, look, I'm a fighter. And not be quite so harsh on Barack Obama. He's still raising a lot of questions about Obama's readiness for office. But trying to turn it more on himself. Because that's the sale he's trying make to independent voters.
But as you know, even some republicans have been frustrated that McCain has been sort of bouncing from one message to another. He's a maverick. He's a fighter. Obama's not ready. Obama is risky and obviously a lot of republicans hoping that John McCain is finally going to stick to one message, Heidi. COLLINS: All right. CNN's Ed Henry standing by there for the debate tomorrow night. Thank you, Ed.
Again, the final face-off for John McCain and Barack Obama Wednesday in Hempstead, New York. You can join the best political team in television for debate night in America.
Too fat to die? Well both according to the top court in the nation. This information just in to us here at CNN. Last hour the Supreme Court denied an appeal by a double murderer on Ohio's death row. Richard Cooey argued that he was too fat to be executed. He says his obesity, 5 foot seven, 270 lbs., would make it too difficult to find a suitable vein for the lethal injection. Cooey is now set to die this hour.
Also cleared for execution, Georgia cop killer Troy Davis. His lawyers say seven of nine witnesses that testified against Davis have since recanted. Just minutes ago the Supreme Court denied that appeal. Just two weeks ago justices halted his execution to consider his appeal.
Well as we mentioned, just three weeks to go until election day. And one key swing state is dealing with voter registration questions. People saying they were paid to sign on the dotted line more than once.
COLLINS: An elections board in Ohio has asked the county prosecutor to investigate a group known as ACORN for voter registration fraud. It comes after testimony from residents who say they were pressured to fill out dozens of new voter registration forms.
Duane Pohlman has the story, he's with our affiliate WEWS.
DUANE POHLMAN, WEWS REPORTER (voice-over): Freddie Johnson registered to vote a lot.
(on camera): How many times did you sign registration applications here?
FREDDIE JOHNSON, REPEAT REGISTRANT: 73 times.
POHLMAN (voice-over): The Cayuga County Board of Elections produced page after page of Johnson's registration applications. The reason? Johnson says the advocacy group, ACORN, kept asking ask him. So he signed an signed again.
JOHNSON: Some of the individuals that worked at ACORN, gave me, you know, cigarettes for a signature, or you know, a couple of dollars for a signature.
POHLMAN: Johnson's numerous registrations brought him before the board as the nation watched. And he was not alone. Three others were subpoenaed as well.
Christopher Barkley admits he filled out 13 registrations for ACORN, some with different addresses and middle names. I caught up with Barkley after detectives questioned him.
(on camera): Do you think you did something wrong here?
CHRISTOPHER BARKLEY, REPEAT REGISTRANT: No, I don't know. I don't think I did.
POHLMAN (voice-over): While Barkley and the others are in the spotlight, the real focus is on ACORN and how it gathered some 70,000 newly registered voters in Cayuga County alone.
KATY GALL, OHIO ACORN DIRECTOR: It's just absolutely ridiculous to take somebody like a Mr. Barkley, and try to make him a Boogeyman for trying to quote, unquote, trying to steal the election.
POHLMAN: Ohio ACORN director, Katy Gall denies widespread wrongdoing. ACORN worked with BOE, Gall says, and fired employees who registered Barkley and Johnson so many times.
GALL: Issues involving voter registrations are not voter fraud.
COLLINS: At least a dozen states have accused ACORN of turning in fake voter registration forms over the past four years. As to whether federal officials are also investigating, the FBI and the Department of Justice are not commenting.
More information now on ACORN the name stands for the Association of Community Organizations for Reform now. On its web site, the group describes itself as a grassroots community organization of low and moderate income people. It boasts 400,000 member families and chapters in 110 cities. The group says it has helped more than 1.7 million people register to vote since 2004.
In Nebraska, officials say a Michigan mom abandoned her 13-year- old son at a local hospital under the state's unique safe haven law. It makes it legal for parents to abandon any child under 18 years of age. The boy is the second teenager from outside the state to be dropped off. Now some want the law reworked.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: This law needs to be changed and get back to the intent.
BILL AVERY, NEBRASKA STATE SENATE. I have previously opposed the special session, saying it's too early. If we see a deluge of children from out of state being dumped on Nebraska, then I think I might change my mind on that.
(END VIDEO CLIP) COLLINS: Nebraska officials say they are not sure why the Michigan teenager was abandoned. But they say he does not appear to have been in immediate danger.
Unsuspecting people crushed by a run-away car. The crash caught by a convenient store surveillance camera in Phoenix, Arizona. You saw the red car plowing into that bus stop there, pinning two people. Both of the victims were taken to the hospital. The driver meanwhile just walked away without even moving the car. The owner of the convenience store ran out and pushed the car off one of the victims.
Stressed out by the economy. Well, we are all feeling it. There are easy ways to offset the effects. We'll tell you all about it coming up.
COLLINS: If you are stressed out about the economy, you are certainly not alone. Did you know meditation, a good laugh and even sex may help to take the edge off? Medical correspondent Elizabeth Cohen joins us now with more on that. All right.
ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: You laughed when you said sex.
COLLINS: I did.
COHEN: You realized that you laugh while you said sex.
COLLINS: I did.
COHEN: You should be stress-free right now.
COLLINS: (INAUDIBLE) like a 12-year-old, I guess. But we want to focus first on the new study about meditation. This does not surprise me.
COHEN: Right. It's called compassion meditation. So not only are you meditating, but you are thinking good thoughts about people you do not like.
COHEN: And this works. They had some students do it. They found it really helped them de-stress. And of course, the less stress you have, the less likely you are to get terrible diseases like depression and even cancer and heart disease.
So let's take a look at what happens when people did compassion meditation for 20 minutes a day, four to five days a week. The level of cortisol, a stress hormone went down, and their distress score, the test that they give you, those scores went down as well.
So again, that is thinking good thoughts about people you don't like and trying to maybe understand why it is that you don't like these people, and if you want to learn more about how to get rid of stress and how to do compassion meditation, you can go to CNN.com/tips. We have tips there and we also have things like freeways to download relaxing music and a free stress diary, all sorts of good stuff on that.
COLLINS: OK. Great. Now let's get to the sex. Does it really help? I mean, we have heard this before, too. But yes, it can relieve stress.
COHEN: Yes. Studies have actually shown your endorphin levels go up after stress, after sex rather, and that is a good thing. They don't say if you have to actually like the person you're having sex with but -
COLLINS: We are not advocating that at all.
COHEN: We're not advocating it. But I just want to be clear about it. Sex can actually help to de-stress.
COLLINS: OK and then the laughing, this can also be good. We've heard this for a while that laughter is the best medicine.
COHEN: Yes. Laughter is the best medicine. Absolutely. It can be good. It also sends endorphins up. It also sends cortisol, that stress hormone down. You can laugh like these people.
COLLINS: Wow. This is laugh therapy, right?
COHEN: Well, you know what's interesting is that fake laugher even works. Like you don't have to actually think something is funny. You can just pretend laugh.
COLLINS: I've seen my seven-year-old do that the other day. It's the first time I've ever seen him do that, where he laughed at a coach. It was so clearly a fake laugh but even that may help.
COHEN: That made him feel better. Absolutely.
COHEN: So go to a beach and laugh like this these people.
COLLINS: OK. I love it. All right. Elizabeth Cohen. Thanks so much. A lot of people are really looking for ways to kind of distress about the situation. So -
Take it off the shelves. Store owners in China are ordered not to sell liquid milk or milk powder before September 14th. That's the day government wants to test those products first for melamine. Milk tainted with the chemical turned up last month, as you know. It has now been blamed for the death of four babies. Tens of thousands of other children have gotten sick.
A business plan for the little guys. Barack Obama unveiling his plan to help with disaster loans, but not everyone is sold. (COMMERCIAL BREAK)
COLLINS: Strong Santa Ana winds fueling two deadly wildfires burning in the Los Angeles area right now. Our Ted Rowlands is in the San Fernando Valley this morning where many people are just waking up getting ready for work. It is about 7:30 Pacific time now. Ted, boy, we can tell just from the shot immediately that the winds are certainly pretty strong.
TED ROWLANDS, CNN CORRESPONDENT: Yes, Heidi. A lot of people getting ready for work in areas that aren't their homes because thousands of people were evacuated under mandatory evacuation order, even overnight. The Santa Ana winds kicked up overnight once again and created more havoc around southern California.
Several fires burning at this hour. We're near the Porter Ranch area. You can see where a fire ripped through this canyon and lapped up against the back side of a number of homes in this area. Firefighters were able to make a stand here, save these homes. But a number of homes were lost in this fire fight. The number is at about 20 now and is expected to rise dramatically.
We haven't received a new briefing yet this morning in terms of homes lost overnight. The problem is the winds. Right now the firefight and this one is just over the hillside there. They're attacking it by air this morning but overnight because the winds were so intense they couldn't use their air asset. It was just too dangerous.
And that's been the case over the last couple days. Bottom line here as forecasters say these winds are expected to diminish at around noon Pacific time, so just a few more hours of this intense situation. And at that point firefighters are hoping that they can get the upper hand here and put a stop to this. But right now the fire is winning a lot of these battles because of these winds.
COLLINS: Boy, you can certainly tell. All right. Ted Rowlands staying on top of the story for us from the L.A. area.
Thank you, Ted.
Meanwhile Rob Marciano is standing by in the Weather Center to talk about this. So, yes. Certainly we are looking forward to tonight, I think you said, and tomorrow for the winds to die down a bit. But today is going to be a tough day.
ROB MARCIANO, AMS METEOROLOGIST: Yes. What's you know, kind of ominous about these Santa Ana winds is that they kick up during the overnight hours when it's dark and it's obviously spooky. And then fan those flames. So, that's what's happening right now. And it will last for another couple of hours before they die down.
But, today could be just as strong as yesterday. Yesterday we had winds gust over 80 miles an hour.
All right. Check out the high resolution satellite picture from NASA. This was taken yesterday. Here's L.A. Obviously go up the I-5 here, there are two fires that straddle it. The Sesnon (ph) fires, the 7,000 acre fire that is zero percent contained and i's near some of those homes that likely were burned. North, to northeast winds taking that plume of smoke and fanning it out as it gets out into the Pacific.
So you can just imagine how hot that's burning and how much fuel it's going through to get that sort of smoke and ash up in the air. So, Santa Ana winds will continue today. High pressure and cool air across parts of the inner mountain west. And that forces the winds off shore. Dries it out, compresses it. It heats it up. And that's not a good scenario as far as trying to fight these fires today.
So, it may not be until tomorrow before they can really get all their air assets up and put a good dousing on this. But when you have winds gusting to 80 miles an hour, that is dangerous for just about everybody involved in that.
All right. Switching gears quickly. Tropics -- we got your TD number 15 right here. It's not doing much at the moment. It is south of Puerto Rico, but getting a little bit better organized. Also getting better organized is this potential tropical depression just to the east of Honduras and Nicaragua. That may very well be upgraded later on this morning.
Heidi, that's the latest from the weather department. Back over to you.
COLLINS: All right. Very good comprehensive look there.
Thank you, Rob. We're check back later on.
You are also helping us tell this developing story. Here are the new pictures of the emergency sent to us by some of our iReporters. Obviously, talking about the L.A. fires here.
This photo taken by Pamela Rogers. You can see the fire spreading along the ridge there right near Los Angeles. And then this one, from Terry Wunderm shows the smoke on the Ronald Reagan Expressway, that's near Sherman Oaks, California. He says people abandoned their cars when they were overrun by that incredibly thick smoke there.
And this one From Ryan Rembrow, shows plumes of smoke visible at Camp Pendleton, near San Diego. That's another one of the fire lines in the area.
So, when the weather does becomes the news, please remember to send us your iReports. Just go to ireport.com or, type ireport@CNN.com right into your cell phone. But remember, stay safe when doing so.
Hey quickly, I want to tell you one thing that we have been sort of keeping our eye on here today regarding the big board. Of course, everybody's talking about stock market, money and the credit freeze. So, right out of the gate this morning, a little trouble at the New York Stock Exchange. The big board was freezing every now and then.
We have since been told, according to the people at the NYSE, that the system has now been refreshed. It is working. So, if you look at those numbers there now on the screen, I have been directing you to the smaller numbers down on the bottom right-hand side of the screen because the big ones were not working. So, now they are. There you see the Dow Jones Industrial averages up about 134 points.
And your wallet's on another wild ride. Of course, Wall Street rallying again after yesterday's record one-day gain of more than 900 points. Much of the reason for today's surge, new details on that $700 billion bailout plan. The government now says it will spend more than a third of that money to buy ownership stakes in troubled banks. That money could help thaw the frozen credit markets.
The big question and everybody's asking, does this big rally signal that the worst is over? Is Wall Street turning the corner? CNN's senior correspondent Allan Chernoff is in New York to offer perspective.
Let me guess, no, right?
ALLAN CHERNOFF, CNN SENIOR BUSINESS CORRESPONDENT: Heidi, we have turned the corner. No doubt about that. But, we certainly could turn back because in this market anything is possible.
CHERNOFF (voice-over): Monday's record point gain for the Dow Industrials came after the worst week in its history. There was the Wall Street roller coaster ride. Ready to rest? Don't bet it on it.
Many traders say the market crashed last week, the Dow losing 18 percent. And after the crash, the market always rebounds. Monday's gain was an 11 percent jump. Analysts say if Friday marked a bare market bottom, there will be more big gains to come. Problem is, no one knows if the market really did hit bottom.
SAM STOVALL, STRATEGIST, STANDARD & POORS: I call it a Moses movement. Because basically in 40 days, you recoup about a third of what you lost in the prior bear market.
CHERNOFF: In September 2001, when the stock market reopened after the 9/11 terror attacks, the Dow tumbled 14 percent in a week. The following week it bounced back 7 percent. In 1987, the Dow plunged nearly 23 percent on Black Monday, October 19th. The following two days, it rebounded 17 percent.
FRANK GRETZ, ANALYST, SHIELDS AND COMPANY: When you get to that kind of point of decline where fear feeds on itself, I mean, that's an ending phase. Crashes come at the end of a bear market, not at the beginning.
CHERNOFF: There still may be tough times ahead though. The bank lending freeze has to thaw. And forecasters warn, the economy is probably headed for a serious recession. After stocks rebounded in late 2001, they sank to a new low a year later as the economy fell into recession.
CHERNOFF: So, what should investors do? Well, it all depends upon your time frame and your risk tolerance. If you had trouble sleeping last week and if you need the money that you have in the market pretty soon, investment advisors say sell some stocks on rallies.
But if your money is long term, meaning if you have it in the stock market, planning for at least five years and if it's in the market, it should be there for that amount of time. Then investment pros say most people should generally just ride this out -- Heidi.
COLLINS: Yes. We've been learning, this is obviously a very different situation for people who are retired or who are close to it.
So I wonder, a lot of people thinking about which stocks could be vulnerable in all of this because it's been so up and down and all over the place.
Have an answer for that one, too, Allan?
CHERNOFF: Heidi, what happened yesterday was that the biggest gainers were the stocks that got beaten up the worst over the prior eight trading days. And a lot of those were stocks that depend on the economy, so-called cyclical stocks.
Now, as we move forward, it's going to become clear that we are going to experience a serious recession. So stocks that depend upon the economy at least in the coming weeks, the coming months, there's certainly a good chance that some of those stocks could be very vulnerable even if they're bouncing back very strongly right now.
COLLINS: All right. CNN's senior business correspondent Allan Chernoff.
Thank you, Allan.
In about an hour from now, Senator McCain is expected to unveil a new economic plan. This one aimed at workers, homeowners and seniors. CNN's Dana Bash talked with him about the recent economic downturn and his subsequent downturn in the polls.
(BEGIN VIDEO CLIP)
DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (on camera): You said yesterday that because of the economic crisis, that has contributed to your fall in the polls. But if you believe that, obviously I know you do, that you have the right policies, the right ideas, why should a bad economy be a negative politically thing for you?
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Well, I think it's a negative for all of us who are in elected office. But I have a positive plan. We'll bring the economy back. I'm campaigning all over this country. And I see people reacting very positively to my proposals.
BASH: Why is Barack Obama, obviously he's in elected office, his poll numbers seem to have gone up. And confidence in him with regard to the economy seems to have gone up while you have had the opposite?
MCCAIN: Well, you know, what seems to be to some is what seems to be to others. We're doing just fine. I'm happy where we are. We're -- as I said in my statement, we've got him just where we want him. We're going to be just fine. I have been written off, Dana, on so many occasions by political pundits that it's hard for me to count. I think it's more lives than a cat. But the point is we're doing fine. I'm happy with where we are. We're fighting a good fight. That's what it's all about.
(END VIDEO CLIP)
COLLINS: We're going to take you live to Blue Bell, Pennsylvania, next hour for Senator McCain's announcements. So make sure you stick around for that.
Meanwhile Senator Obama also been talking economy. Yesterday in Toledo, Ohio, he called for more reform including certain tax breaks.
CNN's Chris Lawrence with details and reaction.
CHRIS LAWRENCE, CNN CORRESPONDENT (voice-over): This small business owner would normally be opposed to Barack Obama's plan.
ROB LORANGER, SMALL BUSINESS OWNER: Because I'm not a big government guy. I don't like government involved at all in business.
LAWRENCE: But Rob Loranger needs credit. And banks have stopped lending. What High-Tech Plastics is building now, it won't get paid for until next spring. Bank loans help bridge that gap in cash flow. Under Obama's new plan, the small business administration would guarantee more loans that banks make to small businesses.
LORANGER: What it says to the banks, it's not going to be as risky, therefore, I can give you a little more. And sometimes that incremental amount is all you need to get over the top.
LAWRENCE: Obama's plan would also expand the government's Disaster Loan Program, which bypasses banks altogether and offers lower interest rates over longer terms.
LLOYD CHAPMAN, PRES. AMERICAN SMALL BUSINESS LEAGUE: I think he's trying to reinvent the wheel.
LAWRENCE: Lloyd Chapman is head of the Nonpartisan American Small Business League. He says new Obama's plan ignores a series of federal investigations that found the government guilty of giving billions of dollars in small business contracts to huge Fortune 500 companies. CHAPMAN: If he would reaffirm his commitment to stop the flow of government small contracts to corporate giants as he said, that would have a much bigger impact on the middle class economy than anything he's proposed so far.
LAWRENCE: At High-Tech Plastics, a few dozen workers fill orders for the military and other contractors. But if nothing changes in the next two months, some of them may be laid off by Christmas.
LORANGER: I don't want to do that. But I'm just saying that you know, if you don't have cash, you've got to still make a payroll.
LAWRENCE (on camera): So what's the price tag? Senator Obama's team says $4 billion would go to fund those disaster loans, another $1 billion for the guarantee programs.
Chris Lawrence, CNN, Chatsworth, California.
COLLINS: When oil prices were surging earlier this year, airlines repeatedly raised fees and cut back on capacity. But now oil prices are down and the economy is weak. And that's leaving air fares literally up in the air.
CNNMoney.com's Poppy Harlow has our Energy Fix from New York, this morning.
POPPY HARLOW, CNNMONEY.COM: Hi, Heidi. You know, I was looking for a ticket yesterday and it was just as expensive as it was in this summer.
But, what's the deal, right? We're seeing oil prices way down. We talked to an expert about it, Farecompares Rick Seaney. He said, this is the strangest time ever for airlines. They're all trying to figure it out, trying to predict the bottom for the stock market. Trying to figure out where demand is. What travelers want though, is lower air fares right now.
So far, though, sharply lower oil prices don't mean lower air fares. It could be because lower demand for premium seats like first and business class tickets. That might help out a little bit. Guess who buys a lot of of those tickets? Wall Street.
The International Air Transportation Association estimates Lehman Brothers bought $115 million in tickets last year. Lehman went bust. Merrill Lynch and AIG still operate. But, you can bet they've cut back on travel. Combined they bought about $140 million worth of air tickets last year. Farecompare says missing business travelers may leave the airlines with empty seats. That could mean prices would drop a little bit. But again, Heidi, it has certainly not happened yet.
COLLINS: Well, why not? HARLOW: The airlines -- they're waiting to see how this all shakes out. Look what happened on Wall Street yesterday. Look what's happening today. They have no idea where the economy is going to go or where oil prices are going to go.
Farecompare.com says the airlines will start to cut about 200,000 seats by mid December. That would put us at about 70 million seats for all of 2009. That sounds like a lot, but that's really back to the capacity of 10 year ago, back to 1998. So there will be fewer seats to fill.
A lot of airlines, also keep in mind, they locked in their oil cost this summer when we saw oil hit that record high. So, they're paying more than the market price for oil right now. The advice for all of you out there looking for holiday tickets, if you see a reasonable price, you want to grab it. Don't count on lower fares in the future. Check back a lot. Things are changing pretty quickly. The cheap flights are where there's a lot of competition, right? (INAUDIBLE), those are good ones. Southwest, AirTran, JetBlue, check those out.
But, if you're looking to fly into a small airport, no luck there. There's not a lot of competition. The fares are very high. And remember all of those fuel surcharges. Shouldn't they go away? We asked the airlines. No comment from Delta, no comment from United. We're waiting to hear back from the rest, Heidi. We're on it.
COLLINS: Yes. Paying for the peanuts and every single bag and pillows and blankets and all of that, right?
HARLOW: Yes. What gives, huh?
COLLINS: Poppy Harlow. Thank you.
HARLOW: You're welcome.
COLLINS: We of course, are keeping an eye on Wall Street. President Bush unveiled his bank bailout plan before today's opening bell. So, how are the markets reacting? We are live at the New York Stock Exchange.
(BEGIN VIDEO CLIP)
RICHARD KIDD, TRUCK LINE WORKER: The job cuts, the layoffs, what vehicles they're going to keep, what vehicles they're going to get rid of. So, that's like a diamond. Don't nobody knows what's going on.
JUDY VELA, TRUCK LINE WORKER: It's everybody's job. So, who's going to get laid off? is it going to be the GM workers, or is it going to be us?
(END VIDEO CLIP)
COLLINS: Uncertain times in Motor City. The reason, a possible merger of two struggling automakers. Chrysler and General Motors held talks this weekend. But, more bad news came yesterday. 2,700 GM workers lost their jobs with the closure of factories in Michigan and Wisconsin.
COLLINS: Speaking out. Knowing what happens in the U.S. could very well affect them.
(BEGIN VIDEO CLIP)
ANDREW YANG, STUDENT: UNIDENTIFIED MALE: Stop sending weapons to Taiwan.
LIU LI, STUDENT: They should remember that they are not the policers of the whole world.
(END VIDEO CLIP)
COLLINS: Strong words for the next president of the United States from halfway across the world.
COLLINS: We've been hearing a lot about what the presidential candidates would do if elected. And American voters have been telling them what they expect. This morning words of advice from young people in China.
CNN's Emily Chang with that.
UNIDENTIFIED FEMALE: In China, everybody knows the names of the candidates. It's really a miracle.
EMILY CHANG, CNN CORRESPONDENT: This is one of China's top universities. The students, some of the country's finest.
YANG: If the next administration is going to do something to improve the policies with China, I think Taiwan is the issue.
UNIDENTIFIED FEMALE: And what would you like to see from --
CHANG: And they have informed views about how the next president should shape U.S. policy on China.
YANG: Stop sending weapons to Taiwan.
CHANG: And stop complaining that China is taking U.S. jobs.
CLAIRE MA, STUDENT: If it is not China, India or Philippines or some Latin American countries will take the labors.
CHANG: What about China's human rights record? What should Obama or McCain do about that? LI: They should remember that they are not the policers of the whole world.
CHANG: And remember that China is not an enemy or a threat, but an inevitable competitor.
PAUL GU, STUDENT: China's peaceful rising is irreversible.
CHANG: Strong words from some of China's young elite for the future U.S. president.
UNIDENTIFIED FEMALE: How many of you would vote for John McCain?
One, two, three. OK.
How many of you would vote for Barack Obama?
CHANG: A clear winner in this classroom. Though they think McCain may let China develop more freely, they like Obama's social policy and see him as young and different.
UNIDENTIFIED FEMALE: Eighteen to three --
CHANG: Emily Chang, CNN, Beijing.
COLLINS: A reminder, the final face-off for John McCain and Barack Obama tomorrow in Hempstead, New York. Join the best political team on television for debate night in America.
One more quick check of the big board now, which we understand is back to working, up to par. There you see double digit gains this morning, down quite a bit from the original open, around 300 points to the positive, now resting at 27 points up.
We're back right here in a moment.
COLLINS: I'm Heidi Collins. Join us again tomorrow morning beginning at 9:00 a.m. Eastern.
For now CNN NEWSROOM continues with Tony Harris.