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AMERICAN MORNING

Markets Rally Worldwide; Republicans' Advice to John McCain: Win the Economy Issue; Obama Outlines Rescue Plan; Crucial Key States Up for Grabs; One-on-One Interview with Senator Hillary Clinton

Aired October 14, 2008 - 07:00   ET

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


KIRAN CHETRY, CNN ANCHOR: Well, we're coming up right now on 7:00 here in New York. A look at the top stories this morning. The stock markets around the world rallying big time overnight. Japan's key index posting its biggest gain ever after the Dow gained 936 points, Monday. The biggest point gain ever. It's also looking to be another up day. In fact, Dow futures right now up more than 100 points.
North Korea starts dismantling its nuclear reactor again today. U.N. nuclear inspectors were allowed back at the facility less than a week after North Korea said that they are no longer welcome there. Letting the inspectors back in is part of the deal with the U.S., which on Saturday removed North Korea from its list of nations sponsoring terror.

A Russian rocket docks at the International Space Station this morning. On board, one Russian cosmonaut, a U.S. astronaut and an American video game developer, Richard Garriott. Garriott reportedly paid $30 million to become the sixth space tourist.

Southern California wildfires could get worse as strong Santa Ana winds fan those flames. Three major fires are burning, putting residents on alert from Los Angeles down to just north of San Diego. Two deaths are reported right now. More than a dozen homes destroyed. And thousands have been forced to evacuate and there are many more who are on alert that they may have to leave as well.

Back to our top story right now. A major rally for stocks around the world underway this morning. In Japan, the Nikkei gained nearly 1,200 points, up 14 percent. It's the biggest gain ever.

Hong Kong saw a gain of more than 500 points. And in the U.K., the FTSE right now up about 200. And that comes after the Dow's record day gaining 936 points, the biggest gain in its history by more than 400 points over the previous record.

And President Bush this morning announcing the first phase of the bailout plan. It will be $250 billion being used to invest in private banks.

For more on that, Christine Romans joins us now "Minding Your Business." So we talked about the $700 billion plan.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Right.

CHETRY: And it actually has sort of been a work in progress, changing as it went along.

ROMANS: It really has.

CHETRY: Now, what are we seeing with this $250 billion?

ROMANS: In the beginning, we were talking about the toxic assets...

CHETRY: Right.

ROMANS: ... and that's still part of the whole plan, the whole $700 billion. But now, the shift has really refocused here. The focus has re-shifted here, I should say.

You've got the government talking about a direct investment into nine major banks, an investment that could be up to $250 billion. The president asking for another $100 billion of that 700 billion has to notify Congress. And then, it looks as though the rest of the last $3 billion to $50 billion, just $350 billion will be left to the next president.

So let's talk a little bit about all the elements of this. You've also got FDIC insurance for non-insured bank deposits unlimited. That's good for businesses. You've got FDIC insurance on non-interest accounts, FDIC insurance on also some senior bank debt, rules on CEO compensation.

A whole host of things are coming out. We're going to know within the half-hour exactly what this whole plan is going to look like. But I can tell you that free markets around the world are cheering government intervention, the biggest government intervention we've seen in our lifetime, maybe since the Great Depression on a huge scale.

And, Kiran, one thing that's interesting about this is that this whole game has been changing, as you pointed out. I mean, it just changed several times from the pulling of the toxic assets off to now actually investing in the banks. This would be, we presume, non- voting shares. It would be minority stake, raises the hackles of people who are concerned about nationalization of industry. You would hope that the government has a bailout -- some kind of an exit strategy so that they can get back out of it and allow markets to be markets eventually. But we are in really historic times and it's taking historic intervention to fix it.

CHETRY: And are we seeing this thing mirrored overseas? And Britain is going through a similar situation.

ROMANS: It's almost rear mirroring them.

CHETRY: Right.

ROMANS: I mean, we have had to shift. The U.S. government has had to shift its focus several times that are some are saying that maybe the Europeans had this a little more right on than we did in the very beginning. I mean, the history textbooks are going to go back and are going to decide what kind of policy mistakes were made along the way and what kind of time might have been lost. We can only hope now that as they're shifting gears they're finding the right mix.

And we're going to hear an awful lot more about this. But I can say that stocks seem to really, really like finally what they see as the right kind of mix of global intervention. So the stock market is just an incredible rally in stocks.

CHETRY: I mean, if you didn't look at your 401(k) last week, things don't look as bad this week.

ROMANS: Yes. But if you bailed out last week, as everyone kept saying to bail out now, you lock it at a loss. Well, sure did.

CHETRY: All right. Christine Romans, thanks.

Three weeks to go until the election and some in the Republican Party have some advice for John McCain. They say that he needs to make major changes to win the race and, of course, it all comes down to the economy.

Our Jim Acosta joins me now from Washington and the McCain camp is going to be unveiling a new economic plan this morning just a few minutes from now on AMERICAN MORNING.

JIM ACOSTA, CNN CORRESPONDENT: Kiran, that's right. And we're starting to see some of John McCain's new economic plan today. It's aimed at seniors caught off guard by the financial crisis, struggling homeowners and oh, yes, a growing chorus of Republican doubters who worry there are no more comebacks left in the Mc (ph).

(BEGIN VIDEOTAPE)

ACOSTA (voice-over): While supporters were cheering him on in Virginia --

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: We have 22 days to go. We're six points down.

ACOSTA: Conservative heavyweights were piling on John McCain in Washington.

MCCAIN: The national media has written us off.

ACOSTA: But to this group of supporters, he neglected to mention the jitters in his own party. Former Speaker Newt Gingrich, "Either McCain wins the argument over the economy or he loses." Neocon Bill Kristol, "It's time for John McCain to fire his campaign."

With friends like these, McCain doesn't need enemies. Still the Arizona senator likes the odds.

MCCAIN: We've got them just where we want them. ACOSTA: For McCain, it seems there is no shortage of campaign advisers and they're all pointing to the economy so says Republican pollster, Whit Ayres.

WHIT AYRES, REPUBLICAN POLLSTER: It's not important for John McCain to give a 17-point plan in a speech. It is very important that voters believe he has a plan for making the economy better.

DAN MITCHELL, SENIOR FELLOW WITH CATO INSTITUTE: I don't know that there's a game changer on the economy that he can come up with.

ACOSTA: But some conservatives believe McCain blew it when he joined Obama in supporting the president's bailout of the financial markets.

MITCHELL: If you're John McCain you're behind in the polls, how do you differentiate yourself from Barack Obama?

ACOSTA: But as the polls show a bailout bump for Obama, Ayres says there could be a similar bounce for McCain should the markets continue to recover.

And if the markets don't stabilize?

AYRES: Well, it's going to be a tough row to hoe for John McCain. But one thing I've learned, you don't count out John McCain prematurely.

(END VIDEOTAPE)

ACOSTA: And consider what McCain told supporters in Virginia, "We cannot spend the next four years as we have spent the last eight waiting for our luck to change."

In these last three weeks, Kiran, it appears John McCain has made the calculation that he, too, needs to run against President Bush's record. And we heard John McCain yesterday saying that Barack Obama is measuring the drapes in the White House. If you listen to some of these Republicans out there, it sounds like they're saying John McCain should consult Al Gore on a new beard. So it doesn't sound good if you listen to the Republicans out there this morning, Kiran.

CHETRY: Ouch. All right. Well, we're going to hear from Rudy Giuliani, a McCain supporter, coming up, former New York mayor in just a little while.

Thanks, Jim.

ACOSTA: You bet.

JOHN ROBERTS, CNN ANCHOR: Coming up now on seven minutes after the hour, Barack Obama is also focusing on the economy outlining key aspects of his plan to help out the middle class.

Our Suzanne Malveaux joins me now.

What's the offering up here?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Barack Obama has been talking a lot about the economy, his own plan. It was just yesterday in Toledo, Ohio, where he unleashed a more detailed plan.

He's urging Congress and the Bush administration to adopt within weeks. It includes $105 billion in tax cuts, but Obama says the times are not going to be easy for Americans, that we are in a deep hole, that it's going to take a while to dig out and that voters are going to have to set some priorities as never before. One of the things Obama wants to do is to make it easier for Americans who are financially struggling to tap into the retirement savings.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: Since so many Americans will be struggling to pay the bills over the next year, I propose that we allow every family to withdraw up to 15 percent from their IRA or 401(k) up to a maximum of $10,000 without fine or penalty through 2009, just to help tie folks over.

(END VIDEO CLIP)

MALVEAUX: Obama's plan also includes providing a tax credit for businesses that create jobs, $3,000 per job. Creating a 30-day moratorium on foreclosures for responsible homeowners to restructure their loans, temporarily eliminating taxes on unemployment insurance and again allowing taxpayers to withdraw up to $10,000 from their 401(k) and IRA plans without any penalty.

Now, Obama's plan also calls to cut taxes for 95 percent of working families. McCain says that raising taxes for the other five percent, the wealthiest Americans, is not necessarily a good idea because a lot of those folks are the ones who are investing in the economy, providing the jobs that make this whole financial system work.

ROBERTS: He's also got another little provision buried in there. He wants to change the treasury guidelines that demand people of retirement age to convert some of their 401(k) from stocks...

MALVEAUX: Allow.

ROBERTS: ... allow them to defer that a little bit so they don't lock in those losses. But immediately, he's preparing for tomorrow night's debate. What's he doing to get ready?

MALVEAUX: It's kind of typical. He has a routine here. I spoke with Linda Douglass (ph), the spokeswoman, this morning who says that he is working with the team at the family-style resort just outside of Toledo. He's also staying in close touch with the economic advisers. Generally speaking, when he gets closer to debate time he gets kind into a calm space. He gets into his zone and then turns off that cell phone three hours ahead of time and just focuses. But obviously, we're all going to be paying very close attention to this final face- off.

ROBERTS: All right. By the way, we're going to be hearing more about John McCain's economic plan coming up here on the "Most News in the Morning."

Suzanne, thanks so much for that.

And again, John McCain and Barack Obama meet tomorrow night for their final presidential debate. Join the best political team on television, including Suzanne, for your front row seat live from Hofstra University in Long Island, New York, 9:00 p.m. Eastern right here on CNN.

CHETRY: Well, a major reversal of fortune on Wall Street. There are new details of the government bailout as well. And a man who just won the Nobel Prize in Economics weighs in on the current crisis and whether a new plan to fix the mess will work.

ROBERTS: Crucial count. Bill Schneider with the latest on who is winning the swing states that hold the key to the White House.

You're watching the "Most News in the Morning."

(COMMERCIAL BREAK)

CHETRY: Welcome back to the "Most News in the Morning." We want to let you know in just a couple of minutes John Roberts goes one on one with Senator Hillary Clinton.

But first, we're talking about the race for the White House with just 21 days to go until Election Day. We're looking at some of the key swing states. According to CNN's electoral map, Senator Obama has 264 electoral votes while Senator McCain has 174. That leaves some crucial states up for grabs.

Joining me here in the studio to break it all down for us is CNN senior political analyst Bill Schneider. Good to see you this morning.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Glad to be here.

CHETRY: Let's start with the state of Florida. Of course, we all remember how crucial it was back in 2000.

SCHNEIDER: Oh, yes.

CHETRY: Twenty-seven electoral votes and a key battleground state. Senator Barack Obama has the slight edge. What are some of the factors we're looking at?

SCHNEIDER: Oh, Florida -- this is the state of hanging chads. Could be again. One of the big factors in Florida?

This has the largest proportion of seniors of any state. Now seniors ought to be voting for John McCain. Older voters tend to like John McCain. They're his peeps (ph). And -- but, they are worried about Social Security, particularly ideas that McCain has floated about, private investment of Social Security given the state of the stock market. So seniors are split right now.

Hispanics in Florida, they are different. A lot of them are Cuban Americans who have often voted Republican. So they are more divided than they are in any other state. And finally, the big mortgage crisis has hit Florida hard. They've had a big problem there and that's producing a big economic squeeze on Florida.

CHETRY: Let's talk about Ohio. A big toss up state again. President Bush beat John Kerry by only two points in 2004 in this state. And the latest poll shows that Obama also has a lead here but by three points.

SCHNEIDER: The economy. If the economy hits anywhere, boy, has it hit Ohio. They've had a terrible loss of manufacturing jobs in Ohio.

CHETRY: Two hundred thousand or something along those lines.

SCHNEIDER: Exactly right. And the trade issue, the voters there believe has hurt them badly. The union vote is important in Ohio because the question is, can the unions deliver voters for Barack Obama?

And it's also a state with a lot of white working class voters. They did not vote for Barack Obama, Ohio didn't and those voters didn't in the primary. They voted for Hillary Clinton. So the question is, can he reclaim the white working class vote in Ohio? It's crucial there.

CHETRY: All right. Virginia, another toss up. It was a state that was safely in the Republican column for years. In fact, a Democrat has not won Virginia in 44 years but it is close this time around. Why?

SCHNEIDER: Virginia is changing fast. Democrats doing very well in statewide elections. They may elect their second Democratic senator this year.

Why is it tilting Democratic after all those years? Well, the Washington suburbs are the key. That's where you find a lot of new voters, a lot of young voters, and a lot of Democrats up there in northern Virginia.

Virginia also has a lot of white rural voters in the western part of the state...

CHETRY: Right.

SCHNEIDER: ... who often vote Republican and Barack Obama has paid a lot of attention. He's gone to the Hill Country in Virginia, the Appalachian areas, to try to capture those voters who have so far been strongly for John McCain. And finally, African-Americans, a key factor. They turned out in such huge numbers that they produced a big surprise victory for Barack Obama in the Democratic primary.

CHETRY: Yes. Very interesting. Can you quickly just answer this one? So we -- if we say that our map shows Senator Obama has 264 electoral maps...

SCHNEIDER: Right.

CHETRY: ... and you only need 270 to win, that seems like he's almost at the finish line.

SCHNEIDER: Right. He almost is at the finish line. Yes. Right now, he's way ahead but he's not quite there. He needs 270 to win. He's got 264.

One other interesting thing about these three states, Virginia, Ohio and Florida, all of them voted for Bush in the last election. So they're the most competitive states but the big competition is in Republican territory. It shows that Republicans this year are on the defensive.

CHETRY: All right. Bill Schneider, thanks for breaking it down for us.

SCHNEIDER: OK.

ROBERTS: Seventeen minutes after the hour. Does Hillary Clinton think that the election is a lock for Barack Obama? I'll ask her that in a special one on one interview coming up.

Economic expert. The man who just won the Nobel Prize in Economics tells us why he believes the world financial crisis may have reached a turning point.

You're watching the "Most News in the Morning."

(COMMERCIAL BREAK)

ROBERTS: Twenty-one minutes after the hour. You know, the other day when we had Sir Richard Branson on, I asked him where he was headed after the interview. He said to the Caribbean, which would probably put him somewhere right about there in the Virgin Islands. Looks like he's had a little bit of bad weather over the last couple of days.

Our Rob Marciano checking in for us. Rob, what's going on there in the Caribbean?

ROB MARCIANO, AMS METEOROLOGIST: Well, vacations this time of year are relatively cheap for good reason. You run the risk of running into some tropical weather. And this is the tropical depression. It's number 15. Certainly some of the northeastern rain bands and moisture heading off towards the Virgin Islands and Puerto Rico. It's not really moving all that much. It could become our next tropical storm. We all dive in there with a plane (ph) again.

And then this thing is flaring up as well. This could be our next tropical depression. That's close to Honduras. That may very well head west. Hopefully this one will head north and east and that would leave the U.S. in the clear. That would be, of course, the ideal scenario.

Other action weather wise, cool air across parts of the Rockies. Warm, in some cases, record warmth across the northeastern third. That cool air across the Rockies really forcing some of that air through the valleys and we've got serious winds out west.

Mount Wilson, California, 87 mile-an-hour wind gusts. Malibu, similar stuff. So we've got extreme fire danger again today with winds potentially gusting to 80 miles an hour.

Some quick pictures of some of the fires that are being fanned by these flames out west. Three fires, thousands of acres burned and thousands of people have been evacuated. There's one fire down near San Diego, just north of San Diego, and there's two just north of Los Angeles.

And when you have measured winds like we had yesterday, up to 80 miles an hour, and a similar situation setting up for this morning, that is a serious, serious situation, John. Things will improve somewhat tomorrow but the next few hours out there are certainly going to be a battle for those firefighters. Back up to you.

ROBERTS: Fall always a touchy time in that part of the world.

Rob, thanks so much. We'll check back with you soon.

MARCIANO: Sounds good.

CHETRY: Well, Gerri Willis has logged on. She's taking questions about your money right now.

Hey, Gerri.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Hey, guys, good to hear from you.

Marcus (ph) is asking us, "Can my credit card issuer cancel my card even if I'm up to date on the payment?" More AMERICAN MORNING coming up next.

ROBERTS: He's up in the polls. But can Senator Barack Obama close the deal in the final weeks of the campaign?

(BEGIN VIDEO CLIP)

SEN. HILLARY CLINTON (D), NEW YORK: Three weeks. That could be a lifetime in politics. And so, he has to keep doing what he's doing.

(END VIDEO CLIP)

ROBERTS: Senator Hillary Clinton on the election and those 18 million cracks in the glass ceiling.

You're watching the "Most News in the Morning."

(COMMERCIAL BREAK)

ROBERTS: Twenty-five minutes after the hour. Senator Hillary Clinton has launched a campaign blitz in blue collar America on behalf of her former opponent Senator Barack Obama. In a special one-on-one interview, I asked Senator Clinton if she wants to make a prediction about what will happen in 21 days time.

(BEGIN VIDEOTAPE)

SEN. HILLARY CLINTON (D), NEW YORK: Well, John, I feel very good about this election. I think we're going to have a really good victory for Democrats. Obviously, Barack and Joe are going to win. We're going to win some more Senate seats and some House seats.

Obviously, I'm going to keep working as hard as I can because I don't want to take anything for granted. But I think that the country's attention being focused on the real problems that we face has raised the value and importance of leadership, and I think Senator Obama has, you know, demonstrated great leadership qualities.

ROBERTS: Do you think that there is any way Senator Obama can lose it at this point? Has he closed the deal with voters?

CLINTON: Well, I don't want to jinx what is going on because it is very promising and I'm really optimistic. But, you know, in three weeks, that could be a lifetime in politics.

And so, he has to keep doing what he's doing. He has to campaign hard. He has to explain what he's doing to the American people. He has to keep talking about the solutions he has for our economic woes and, you know, really give people who are not yet decided the confidence that by voting for him their lives will be better.

ROBERTS: You spent an awful lot of time out there on the campaign trail some 50 or more events. Your husband noted the other day that you have done more to support a nominee not only than any runner up that he has ever seen in his lifetime, but all of the runners up put together. But there are many analysts, senator, who say, that's what you have to do if you have any hope of running in 2012 should Barack Obama happen to lose this race?

CLINTON: Well, that's sure not the way I see it. I'm doing this because, number one, I love my country. And number two, I spent my entire adult life not just the last two years talking about him, working toward the changes that I think would make us even better than we are.

And there isn't any doubt in my mind that the McCain/Palin ticket would take us backwards. And we can't afford that, John. I'm very enthusiastic about the leadership that Senator Obama and Senator Biden offer our country on every issue that I care about as a senator, as an American.

ROBERTS: Now I haven't had a chance to ask you this question, but it was said that you put 18 million cracks in the glass ceiling and that Governor Sarah Palin actually shattered that glass ceiling. As a woman, and not to say that women vote for women just because of gender, but would you not like to see the very first woman in the White House?

CLINTON: Well, I would like to see the very first woman in the White House who I agree with and who I think has policies that would really fulfill the goals that I have for our country.

Of course, it's exciting to have a woman on the ticket. The Democrats had a vice presidential candidate as a woman back in 1984 and the Republicans did it this year. But that in and of itself is not enough reason. And really, no one will shatter that ceiling until we have a woman serving as president or vice president. But I am going to be supporting women and men with whom I agree, who I believe have the right policies and the right ideas about what's best for America.

(END VIDEOTAPE)

ROBERTS: And in half an hour from now, former New York City Mayor Rudy Giuliani joins us to talk about John McCain's plans to turn around the economy.

CHETRY: Twenty-eight minutes past the hour. A look at the top stories now.

Stock markets around the world soaring overnight. This just a day after the Dow gained 936 points, the biggest point gain ever. Dow futures are also pointing higher again right now.

Well, gas is the lowest it's been since last winter. AAA says the national average for a gallon of regular is now $3.16 a gallon. That's down 69 cents in a little under a month.

And quick cash and lots of it to save the credit markets. Here's new video of Secretary of the Treasury Henry Paulson. He's arriving at the White House this morning. President Bush is going to be speaking just about a half an hour from now about this plan. The first part of it being unveiled to invest $250 billion in the nation's biggest banks. The money would come from the $700 billion bailout plan approved by Congress.

ROBERTS: It's being called the Treasury Department's boldest move yet. In just half an hour, the president is expected to announce a $250 billion plan to unfreeze credit markets by infusing cash directly into U.S. banks. So is it the right move to get the economy back on track?

And joining me now from Princeton, New Jersey, "New York Times" columnist and Princeton University Economics professor, Paul Krugman. Just yesterday, Krugman was awarded the Nobel Prize in economics for his work on international trade.

Paul, good to see you. Congratulations. Got to be a great feeling.

PAUL KRUGMAN, "NEW YORK TIMES" COLUMNIST: It's still - I'm just stunned. It hasn't sunk in yet.

ROBERTS: This bailout plan, let's get your take on this first of all. This $250 billion to recapitalize banks with the first trench of money going to the number of biggest banks in America. Is this finally going to be the plan that works?

KRUGMAN: Well, it is what the doctor ordered. It's what a lot of economists have been calling for when Britain did this last week, announced a similar plan. Many of us cheered saying that's the way to go. A lot of the European countries have agreed to do something like this and now the United States is doing it. So, you know, no one is sure. This is - these are crazy and scary times. But this is our best shot at this point so it's the right thing.

ROBERTS: Right. You know, a fellow Nobel Prize winner from 1987, Robert Solos said he's as puzzled as anyone by what's going on. Is there a chance that what we could be seeing right now is just a little bit of feel good euphoria that a plan is coming and then at the same it will last for a day or two and then the markets start to go back down again?

KRUGMAN: This has happened before. You might remember when the initial now discarded $700 billion plan was announced there was a brief surge in the markets and then people thought about it and said I don't understand how this is going to work. This one is a lot better thought out. But look I'm waiting. The stock market is not your gauge. The stock market is not going to tell you whether this works. You got to look at the credit markets. So far there are just hints that they are starting to unfreeze. But as of this morning I can't say, point to a number and say there's the evidence that this plan has already worked.

ROBERTS: You were warning about all of this back in 2005. You wrote "these days Americans make a living by selling each other's houses paid for with money paid for by China. One way or another, the economy will eventually eliminate both imbalances." It seems to be doing but looking forward, Paul, does America fundamentally need to change the way that it operates? We're a country and a nation of individuals that operate on credit. Do we have to start living within our means?

KRUGMAN: Well, more so. I mean, you know, we're always going to have credit and a market economy needs a lot of credit. That's the lubricant but we have gone crazy with it. We lived as individuals beyond our means. We lived as a country beyond our means. And we've also sort of forgotten. We did forget for a while that there's risk. There was just enormous amount of stuff was taken on faith. People borrowed up to the hilt and leveraged themselves. Sorry about the jargon and that has come crashing down. So we got return to a more sober way of living, a more sober way of living, a more sober way of doing business.

ROBERTS: Right. You have been quite critical over the course of your career both as an economist and a journalist of the Bush administration. Some people said you crossed the line from economics to politics. You have inflamed your critics for it. Donald Luskin, chief investment officer of Trend Macrolytics says of you, "he is not in the same category as John Maynard Keynes, he is in the same category as Oprah Winfrey. To give this Nobel Peace Prize to him is to dishonor the Nobel Prize." What do you say to such criticism?

KRUGMAN: Look, I mean, there's politics. There were a lot of people who were outraged that I would criticized Bush when he had an 80 percent approval rating. Everybody thought he was wonderful and I said, you know this guy is not actually wonderful, he's pretty bad. And you know, at this point I guess about 80 percent of the public agrees with me on that. You know, but the prize is not about that. Right, the prize was about analytical work in economics that is looking back at it is astonishingly non-political.

ROBERTS: Well, congratulations on your win. I mean, to win a Nobel Prize, it's quite an accomplishment.

KRUGMAN: It's amazing. Thank you.

ROBERTS: Paul Krugman of Princeton University and "the New York Times," thanks for joining us this morning. Appreciate it.

KIRAN CHETRY, CNN, ANCHOR: Well, Gerri Willis is working her blog. She's answering your money questions for us this morning. A lot of people are wondering in these turbulent times what the right move is. So what are they asking you this morning.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: We have so many questions. One comes from Marcus in Florida who writes, "I have a couple of credit cards with zero balance and excellent credit score. But I haven't used those cards in a long time, and have now received letters that the accounts made will be closed due to inactive status. Will that hurt my credit score? Should I object?"

Well, Marcus, I got to tell you. We started to think of credit cards as a right not a privilege. The opposite of course is true. And yes this can hurt your credit score, especially if those credit cards were old and sort of established your credit history over decades not years or months. So call and try to get them reactivated. You definitely want those cards active.

Chris in Virginia writes, "I'm 30 years old. I have two rental properties and my primary home. I have rented my homes to young folks who are just starting out. I am not a big time investor but I did buy into the American dream. I keep hearing that everyone is against helping investors in real estate. Will the bailout plan help me? Well, Chris, the short answer is no.

But I do want to mention a program that's out there right now for folks who are under water in their mortgage, in their primary home, in the home that they live in. Hope for Homeowners is a program that the Department of Housing and Urban Development is running. If you are underwater in that mortgage, you owe more than the house is worth, and you definitely want to think about this, go to hud.gov for details. They got some $300 billion to give away here. It could it help you.

Bri in Illinois writes "can recent college graduates consolidate and renegotiate Sallie Mae student loans?" Bri, the short answer is no. Guess what. Sallie Mae is not doing that right now but the Department of Education is. Check out their web site. It is loanconsolidation.ed.gov. And if you have credit student loans, you should know there are only about eight lenders who are still consolidating those loans. Go to finaid.org for details on how to consolidate those private loans. But I got to tell, you got to have a great credit score to do it.

CHETRY: All right. Some great advice this morning. Thanks, Gerri.

WILLIS: My pleasure.

ROBERTS: Relieving your economic stress. With sex. We're "Paging Dr. Gupta" with that and some other ways to get money off your mind.

(BEGIN VIDEOTAPE)

ROBERTS (voice-over): Voter fatigue.

UNIDENTIFIED MALE: I am worn out by this presidential election. I want it over it.

ROBERTS: Carol Costello on how the long road to the White House is taking an emotional toll on voters. You're watching "the most news in the morning."

(COMMERCIAL BREAK)

ROBERTS: Coming up now to 21 minutes to the top of the hour. Welcome back to the most politics in the morning. Just three weeks to go now until the election and there are signs that election fatigue may be setting in. AMERICAN MORNING's Carol Costello joins us live from Washington. Have people had enough? I mean, it's not like it's a long process.

CAROL COSTELLO, CNN CORRESPONDENT: Oh, come on. I mean this election, it seems like it's gone on for a century now. You know at first voters were excited, yes, it's a historical election. Now election 2008 is starting to get on voters nerves.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: Will the real Sarah Palin please stand up?

DAVID LETTERMAN, HOST "THE LATE SHOW WITH DAVID LETTERMAN": The bridge to nowhere.

JAY LENO, HOST, "THE TONIGHT SHOW WITH JAY LENO": And Barack Obama has bought a half-hour of air time.

COSTELLO (voice-over): Just 21 days until the big day, election day and the political noise is inescapable. Ads, news, capable, the web, even entertainment shows like "The Insider."

UNIDENTIFIED FEMALE: Is Sarah Palin getting her own prime time show?

COSTELLO: And "Access Hollywood" is covering the McCain-Palin- Biden-Obama drama.

MIKE MOCERI, MICHIGAN VOTER: I am worn out by this presidential election. I want it to be over with.

UNIDENTIFIED MALE: People are tired.

COSTELLO: 2008 may go down as the most emotionally draining election of all time. Political observer say it's forced voters to think about racism, sexism and ageism. At a time Americans are standing on the edge of an economic cliff wondering if they'll fall off.

So when you go into that voting booth on November 4th and you pull the lever how will you feel?

UNIDENTIFIED MALE: Relieved.

COSTELLO: For that voter, O-b-a-m-a will spell relief. But for some conservative voters it will spell d-o-o-m.

UNIDENTIFIED MALE: I'm mad. I'm really mad. It's time that you two are representing us and we are mad.

COSTELLO: Analysts say his anger is in part fear. Republicans have either held the White House or controlled Congress since 1994. Drew Westin is author of "The Political Brain" and a democratic consultant.

DREW WESTIN, AUTHOR "THE POLITICAL BRAIN": What we're seeing on the right right now is a mixture of fear and anxiety. The fear is is Obama really someone we can trust? And the anger and the hatred that got elicited are really about, he is really not one of us.

COSTELLO: In Detroit, Michigan, some African-American voters feel fear too. This voter told me she's undecided and is afraid to talk about it because of ugly rumors.

UNIDENTIFIED FEMALE: I don't want to say because I heard about someone getting sacked over their presidential choice.

COSTELLO: Other voters desperately want to hear how the candidates will solve the country's problems. But with all the noise, it's hard.

HENRY KRZYSTOWCZYK, MICHIGAN VOTER: You can't determine what's fact or what's rhetoric. I feel that if when I do vote I won have that feeling that I voted for the right candidate. There will always be a doubt because I don't know.

COSTELLO: Analysts say election 2008 will only get more intense. Three weeks to go. Can you handle it?

(END VIDEOTAPE)

COSTELLO: I don't know. You know, what the biggest nightmare will be, John. If the election really isn't over after election day. I mean what if there's voter fraud, lawsuits filed and election 2008 drags into 2009.

ROBERTS: And what if when they are splitting up the electoral college they hit that magic 269 to 269 number.

COSTELLO: Don't even say it.

ROBERTS: Then it goes to Congress to decide who is the president of the United States. I mean, one way or another, regardless of your politics, let's not have another 2000. How about that?

COSTELLO: Oh, I think everyone would agree with that, John.

ROBERTS: Carol Costello for us this morning. Carol, thanks so much more that.

COSTELLO: Sure.

CHETRY: Dealing with the economic stress. Is the prescription sex? We're "Paging Dr. Gupta." You're watching "the most news in the morning."

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

LETTERMAN: Ladies and gentlemen, the stock market today closed up 962 points.

(APPLAUSE)

LETTERMAN: 962 points. You know what that means? Neither do I.

(LAUGHTER)

(END VIDEO CLIP)

CHETRY: Yes. Sometimes you got to look twice at the big boards when the Dow closes because you're not exactly sure what it means. The economic ups and downs made for some great late night material. They are also making many people sick. In fact, a study says that eight out of ten of us are stressed out by the financial crises and the answer may be to escape from it for a little while. We're "Paging Dr. Gupta" live from the CNN Center this morning.

You were talking about a study this morning that focuses on meditation to relieve stress. For some of us easier said than done. What are you supposed to do?

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Well, you know, it's interesting. And as a neurosurgeon I have always looked at these studies very carefully to find out just exactly what meditation can offer. This was a new study as you pointed out looking specifically on something known as compassion meditation.

Here's the deal with that. Basically you think about someone or something you don't like as a typical rule and then think good thoughts about them. That is the best way of distilling down what compassion meditation is. It does several things for you. It tends to decrease your stress hormone levels. Decreases your distress scores overall. And it really tends to help people get sort of relief from their anxiety.

Now it's worth pointing out that I sat down and spoke with his holiness, the Dalai Lama, specifically about this type of meditation. This is a type of meditation that he practices. Again, compassion meditation and he credits it with his health, his wellness, his overall sense of well being. Now to your point, Kiran, how do you do it if you're someone who has never done this before? There's two things that I sort of learned about this.

One is sort of focusing specifically on breathing techniques. People will talk about breathing techniques, being in a room that's quiet, breathing through your nose and out your mouth and focusing on nothing but that for several minutes. Also, there's something known as visualization technique. Think of a non-threatening image. It could be a forest. It could be a sunset. It could be the beach, something that's really non-threatening.

And just focusing on that and just sort of stripping away all those other things that you worry about away from your mind for about 20 minutes a day, four to five times a week. It really does seem to work. And you know, this is something people have talked about for some time. There's a lot of science behind it now as well. Kiran.

CHETRY: Other things that you talk about that can help overall mood improvement. Exercise, laughter and sex.

GUPTA: Yes. You know, and again, I think that this is a surprise to some people where maybe it should not be. When you talk about all those things you just mentioned, when it comes to sex you tend to release a lot of these feel good hormones, if you will, called endorphins. These are hormones that people have been studying for some time. But we can measure them.

We know they go up, for example, after you exercise, you get that runner's high, same thing after sex. And it can lasts for several hours. Even just laughter and it doesn't even have to be genuine laughter, just fake laughter. If you do that, not even if there's a joke or a prompt or anything that can really change your overall immune levels, increase your immune system, increase those endorphins we just talked about and decrease your overall stress hormones.

There's about 5,000 laughter clubs all over the world, several of them here in the United States. We visited one. That's what they do to try to relieve some of their anxiety.

CHETRY: All right. Just don't let people videotape you because you look silly.

GUPTA: But you can't help laugh when you watch it.

CHETRY: I think so. You're right. All right. Sanjay, thanks.

GUPTA: All right. Thanks.

(BEGIN VIDEOTAPE)

ROBERTS (voice-over): Don't write off McCain just yet. Three weeks and counting. Rudy Giuliani live on how the candidate can turn things around. You're watching "the most news in the morning."

(END VIDEOTAPE)

(COMMERCIAL BREAK)

ROBERTS: 10 minutes now to the top of the hour. Skeptical generation of older Jewish voters are all of a sudden getting surprised visits from their grandkids with 21 days to go until election day. Young Jewish voters are heading down to Florida in a movement being called "The Great Schlep," hoping to sway booby on Barack Obama. CNN's John Zarrella has got more on what it's all about.

(BEGIN VIDEOTAPE)

JOHN ZARRELLA, CNN CORRESPONDENT: John, Kiran, all of these people behind me came to hear about the "Great Schlep." What exactly is a schlep? Well, I will explain.

ZARRELLA (voice-over): Mike Bender is a schleper, and proud of it. The Los Angeles writer answered a YouTube challenge.

SARAH SILVERMAN, COMEDIAN: I'm making this video, to urge you, all of you, to schlep over to Florida -

ZARRELLA: The organization, Jews Vote enlisted comic Sarah Silverman to pitch their Great Schlep. The plan, get young Jews to schlep meaning to drag themselves to Florida and sell their grandparents on voting for Barack Obama.

MIKE BENDER, SHCLEPPING FOR OBAMA: And their reaction was as they said I am a little masuga I think is the expression that they used.

ZARRELLA: There are about 650,000 Jews living in Florida. Generally most vote democrats but many specially seniors are unsure of Obama's commitment to Israel.

Bender's grandparents Tany (ph) and Selma Furst.

SELMA FURST, HAD DOUBTS ABOUT OBAMA: Oh gosh, this is wonderful. ZARRELLA: Had other reservations as well.

FURST: And somebody said what do you object about him? And I said, well, truthfully, our colors are different.

ZARRELLA: But what Mike didn't know was his many phone conversations advocating Obama had paid off before he walked in the door.

Do you think you are going to vote for Obama now?

TANY FURST, HAS DOUBTS ABOUT OBAMA: Not think, no.

ZARRELLA: You're convinced now?

T. FURST: I'm convinced.

S. FURST: I'm kind of changing my mind and saying to myself, you know, people are people. His grandparents now on board, Mike moved on to their friends. First, the beauty salon where his grandma does nails. Here, too, the issue was race.

UNIDENTIFIED FEMALE: I head to the poll and I hear all the gossip, and a lot of it is we don't want a black president. I said, you don't want a senile president.

ZARRELLA: The schlep was the talk of his grandparents' retirement community. So much so that a crowd of more than 100 packed a ballroom to hear his pitch.

BENDER: His love for the United States is similar to that of a generation of Jewish immigrants.

ZARRELLA: By the time he was done -

UNIDENTIFIED MALE: Yes, we can!

ZARRELLA: For Mike Bender, schlep accomplished.

(END VIDEOTAPE)

ZARRELLA (on-camera): Organizers say 100 schleppers made it to Florida over the holiday weekend, and another 100 went to other battleground states. There are now even plans to translate the schlep video into Spanish. John, Kiran.

(BEGIN VIDEOTAPE)

CHETRY (voice-over): Grand old panic.

UNIDENTIFIED MALE: If you're John McCain and you're behind the polls, how do you differentiate yourself -

CHETRY: 21 days to turn it around, and John McCain is forced to sell himself to his own voters. Plus, Senator Hillary Clinton on what John McCain may be able to learn from her battle with Obama. SEN. HILLARY CLINTON (D), FMR. PRESIDENTIAL CANDIDATE: He has to decide what is best for him to do.

CHETRY: On the most politics in the morning.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

CHETRY: A live look at the White House this morning. We are waiting to hear from President Bush. In fact in just a few moments, we're going to hear from him live from the Rose Garden where he will announce details of the new bank rescue plan.

And later today, Senator John McCain is going to unveil specifics of his new economic plan. A plan to buy up $300 billion of bad home loans. And with three weeks to go until the election day, the economy certainly front and center. In fact, the latest CNN poll of polls shows Barack Obama with an eight-point lead over John McCain.

Joining us now with the details of Senator McCain's economic plan is McCain supporter and former candidate, Rudy Giuliani.

Thanks for being with us this morning. Great to see you, Mr. Mayor.

RUDY GIULIANI (R), FMR. PRESIDENTIAL CANDIDATE: Nice to be with you.

CHETRY: Now, under John McCain's plan that he's unveiling today, he suggests purchasing mortgages directly from homeowners and from mortgage servicers and then replacing them with a fixed rate mortgage. How do you decide who qualifies and who would be determined to be a responsible buyer under this plan?

GIULIANI: Well, I mean, you do it the same way that you're going to do it from the point of view of putting money directly into the banks. You do it with the banks. You did it uniformly so that people who are under water are able to get above water and you help them through that.

And the reality is, a plan like this ultimately, over a three, four or five year period should make money, because these values are going to come back. They may come back in the short term. They may come back in the long term, and while you are helping the banks, which President Bush will be talking about today which I think is very important, you also want to make sure that people aren't losing their homes.

Secondly, I think private money will follow this. If you see the government coming in and helping people out, I think you're going to see the private money following it. Because they will see the possibility that the markets are going to rise.

CHETRY: Is it, I mean, literally buying up mortgages for people who are going into default. It seems to really turn heads the notion of fiscal conservatism. Is that dead? Will it turn that page?

GIULIANI: No, I don't think so. I think the idea is to help every level of society. That's only part of the program. It's also going to allow seniors to take money out of their 401(k)s, out of their IRAs and allow people to take up to $50,000 out without significant penalty. It's going to lower the capital gains tax.

John is going to announce lowering the capital gains tax, which is important to stimulate investment, including foreign investment in the United States. But when you look at the full range of proposals, it's a comprehensive plan, particularly in combination with what the president and Hank Paulson are going to talk about later.

CHETRY: What about the notion of letting the markets correct themselves. I mean, if you are going to go buying up mortgage to mortgage around the country for people that are possibly going into default, where does it end?

GIULIANI: I think you need over the course of the next year or two, I think people need help as the market corrects itself. I think otherwise we're going to see the kind of thing we saw over the last couple of weeks. They need a bridge. They need a bridge from where we are now to a situation in which the markets correct themselves.

We put a whole set of new rules in place, which I think John is also going to talk about that. So that there's correct capitalization. So that mortgages aren't extended on irresponsible terms, and that people are not taking advantage of but to get from where we are now to let's say a year or two years from now, it could be a tough time. You have to help people through that.

CHETRY: Some conservatives are voicing some serious concerns about John McCain's campaign and where it's headed right now. In fact, Bill Crystal wrote yesterday in an article that McCain should fire his entire campaign staff. He went on to say that what McCain needs to do is junk the whole thing and start over, pull all the ads. They're doing no good anyway. Use that money for televised town hall and half hour addresses in primetime and let McCain go back to what he has been good at doing in the past, running as a cheerful, open accessible candidate. Is that a good idea?

GIULIANI: I think John - John has to be himself, and he is himself, and he will be tomorrow. I think he has been throughout the campaign. Campaigns go through peaks and valleys. I have seen other campaigns, you know, like this, and John has been down before. I don't even think that he is as far down as he has been, and he has come back from before.

And remember President Bush was behind by six percent on election day, according to all the networks and all of the exit polls. Ronald Reagan was behind by six to eight percent three weeks before. I think John McCain has to do a campaign in which he emphasizes what he will do for the economy. He's got to remind us about national security. In our concern about the economy, we can't forget about the fact that we're still involved with the threat of terrorism. We've got a lot of national security challenges. And then he's got to contrast himself with the lack of experience with the other side.

I mean, Barack Obama is the least experienced candidate in the last hundred years.

CHETRY: Should he be --

GIULIANI: -- John has a wealth of experience.

CHETRY: -- bringing up things like William Ayers?

GIULIANI: He should be bringing up Barack Obama's background, not just William Ayers. But, ACORN, Barack Obama's involvement with ACORN, including the $800,000 that Barack Obama's campaign gave to ACORN. They're under investigation in 13 states for -- I think it's 13 states -- for voter fraud. Some of their people have been indicted. That's part of it, but that can't be the only thing. It's got to be the economy, national security and then a contrast with the least experienced candidate for president.

CHETRY: All right. We got to leave it there because we're expecting to hear the president live, in just a moment here.

Great to talk to you. Rudy Giuliani, thanks for being with us, this morning.

GIULIANI: Good to see you. Thanks.

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