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Nevada Could Switch from Red to Blue; Palin Addresses Supporters; San Francisco Voters to Decide Whether to Legalize Prostitution

Aired October 23, 2008 - 13:00   ET


KYRA PHILLIPS, HOST (voice-over): Put your money where his mouth is. Choose your investments the way you choose your candidate, and your vote for president could really pay off.

UNIDENTIFIED FEMALE: It will put out a welcome mat for people around the Bay Area, in particular, pimps and prostitutes, that you know, this is open market. Come to San Francisco.

PHILLIPS: Yea or nay on Proposition K? Voters in San Francisco aren't just choosing a president. They may just legalize prostitution. Talk about change.

And meet the king of Hollyville (ph) High.

UNIDENTIFIED MALE: Yes. They love me. I'm a king.

PHILLIPS: Cerebral palsy may slow Eric Cobb (ph) down, but it sure can't hold him back. He's an athlete, a scholar and the hero of homecoming.


PHILLIPS: Hello, everyone. I'm Kyra Phillips live in the CNN headquarters in Atlanta. You're live in the CNN NEWSROOM. We're going to start with a quick look now at what's going on with issue No. 1.

First, foreclosure filings, they were up 3 percent in the third quarter, compared to the previous quarter. But they're up a whopping 71 percent compared to the same period a year ago.

Meanwhile, the head of the FDIC told senators today that her agency and the treasury are working on a plan to help homeowners and lenders.

Well, the Department of Labor says that the number of people filing unemployment claims last week jumped by 15,000. The total number of claims filed, 478,000.

One of the Wall Street survivors, Goldman Sachs, announced that it will cut 10 percent of its work force.

And former Fed chairman Alan Greenspan tells Congress that stable home prices and a healthier market are months away, that more layoffs are coming and that the bears -- well, that he bears some blame.


ALAN GREENSPAN, FORMER CHAIRMAN, FEDERAL RESERVE: I made a mistake in presuming that the self-interest of organizations, specifically banks and others, were such as if they were best capable of protecting their own shareholders and the equity in the firms.

And it's been my experience, having worked both as a regulator for 18 years and similar quantities in the private sector, especially ten years at a major international bank, that the loan officers of those institutions knew far more about the risks involved and the people to whom they lent money than I saw even our best regulators at the Fed capable of doing.

So the problem here is something which looked to be a very solid edifice, and indeed a critical pillar to market competition and free markets did break down. And I think that, as I said, shocked me. I still do not fully understand why it happened.


PHILLIPS: And after all that, one has to wonder have we hit bottom yet or if the situation on Wall Street will only continue to get worse. Carrie Lee is at the New York Stock Exchange with what might be on the horizon along with how stocks are looking today.

Hey, Carrie.


Well, investors certainly digesting all of those headlines you just mentioned, comments from Alan Greenspan, and they're basically adding to Wall Street's growing lists of worries. You know, fears have really intensified in recent days about a possible global recession, a lot of people thinking we are currently in a recession. And a lot of investors becoming increasingly nervous about the money they have invested, if they haven't put it all in cash already, and what could happen to that money.

Now, this week we're in the thick of third-quarter profit reporting season, and the reports have generally been pretty weak. And of even greater concern, the forecasts, looking ahead for the rest of the year, are even worse. You know, some companies not even giving solid forecasts. And that's really unnerving investors. Wall Street never likes uncertainty.

Now, along with a lot of the corporate results, we're getting more job cuts every day. You know, today we're learning Goldman Sachs plans to lay off 10 percent of its work force. Yesterday it was Merck, Yahoo! Earlier Merrill Lynch. A lot of others have announced their intentions to lay off workers, as well, Kyra. And some experts say that we haven't seen the end of the job cuts, certainly.

PHILLIPS: Well, so is it safe to say that we have not hit bottom yet? LEE: You know, it's impossible to say, really. Probably too soon to say. I mean, look, the market's definitely searching for it, right? But things have been so volatile lately. I mean, the Dow lost nearly 700 points -- 750 points over the last two days. Today we're seeing more volatility. Already we've seen point swings down more than 100, up above 200. Right now the industrials down 100 again. And you know a lot of the action happens in the last day, last hour, rather, of trading.

I will leave you with this, though. We have not seen two back- to-back gains on the Dow, two days back-to-back with gains on the Dow since September 25th and 26th. So that's showing that we're looking for direction, let alone a bottom at this point.

PHILLIPS: All right. Carrie, thanks.

Well, you've seen the stock numbers and you've seen the poll numbers. Is there a connection? And how would a President Obama policy or a President McCain policy affect the markets?'s Paul La Monica joins us at the bottom of the hour to actually give you specific stock he thinks will go up and down under each president, whoever it is, whichever one gets the presidency.

Well, with 12 days to go, the race for president is all about the flip-flops. And I don't mean candidates changing their positions on the issues but changing their positions in the polls. Now, look at these numbers.

A month and a half ago a CNN/Opinion Research poll found that independent voters preferring -- or preferring, rather, John McCain by an eight-point margin. Well, now they favor Barack Obama by six points.

Voters over 50 went for McCain by 16 points in early September. Now they favor Obama by ten points.

And here's the lay of the land. Keep your eyes on Ohio, Nevada, North Carolina and Virginia. Those states went for George W. Bush four years ago, and the latest CNN polling shows that Obama is ahead in all four today. His margin ranges from four points in North Carolina and Ohio to ten in Virginia. And North Carolina, Nevada and Ohio, along with Florida, Missouri and Colorado, are seen as toss-ups.

Now, speaking of Ohio, any minute now GOP running mate Sarah Palin will take to the stage. Actually, she just did in Troy. That's just north of Dayton, by the way. We're going to listen into her rally in just a few minutes, when she's finished with all her thank yous.

Meanwhile, her Democratic opponent is in North Carolina. See any patterns here?

Well, Joe Biden is on a college tour. UNC Charlotte this morning. We're going to go to Wake Forest -- he went to Wake Forest this afternoon. We're going to stop by that event, actually, next hour.

All right. Back to Nevada. The latest CNN/"TIME"/Opinion Research poll shows Obama with a five-point edge among likely voters. But numbers only tell us so much.

CNN's Dan Simon traveled to the little town of Genoa, tucked between Lake Tahoe and Carson City. It's a Republican bastion and a changing political landscape. That's for sure.

Hey, Dan.


I have to correct you on your pronunciation, because they get really edgy here.

PHILLIPS: Uh-oh. What did I say?

SIMON: I said Genoa. It's actually Genoa. You think it's Gen- oo-wah, but it's Genoa.


SIMON: And you know what?


SIMON: Exactly.

PHILLIPS: Thank you. I stand corrected.

SIMON: OK. You know -- I'm telling you, they get angry. This isn't how you really picture Nevada. There's not a slot machine here for miles. Genoa's claim to fame is that it was Nevada's first settlement back in 1850.


SIMON: I just want to give you a little bit of a scene setter here, as the guy honks his horn. This looks to be one of the original wagons. And you can see that the town has really maintained its historic feel.

And when you come to small towns like this, rural areas, you quickly realize when you talk to folks that it is dominated by Republicans. In 2004, about 70 percent of the town's 600 voters went for George W. Bush. And I have to tell you, they are dismayed, very dismayed by the growing possibility that this town and that this state could go for Obama. Take a look.


SIMON: How disappointed would you be that, after all these years, if Nevada turns blue?

UNIDENTIFIED FEMALE: I'd be devastated. I don't think that's going to happen. I think the farmers and the hard-working people that have been here their whole lives are going to get out there and vote.

CHRISTINE ADAMSON, REPUBLICAN VOTER: I think everybody's looking for a change. I just wish that it wasn't such a dramatic change. You know? I think we need to take baby steps.


SIMON: So the latest CNN poll of polls shows Obama leading McCain by four points in the state of Nevada. For McCain to actually pull this out and keep the state red, he's going to have to do very well in towns like this in the rural areas and get his broad base of support to come to the polls. He also has to do well in the Reno area.

And the, when you look at Las Vegas, which is dominated by Democrats, he has to hope that a lot of those folks really don't come to the polls. But already a little bit of a grim statistic. When you look at the early voting numbers that have come in, and are coming in, in large numbers, in Las Vegas and overwhelmingly, most of those early voters are Democrats, Kyra.

PHILLIPS: All right, Dan Simon. Now Genoa. Saying it right. What is this I'm seeing from your producer?

SIMON: You got it.

PHILLIPS: You met some -- some hip woman on a Harley-Davidson? Or you got me a Harley-Davidson sweatshirt there in Genoa? Is that right?

SIMON: That's right. You know, she -- that was Tina Delong.


SIMON: And she's got a Harley-Davidson sweatshirt, and she has two pit bulls. And she likes to joke. She likes to joke that that those two pit bulls are also Republican.


SIMON: So you do not want to mess with -- you do now want to mess with Tina.

PHILLIPS: Do they wear lipsticks? Do the pit bulls wear lipstick? I just want to know.

SIMON: No. Didn't see any -- didn't see any lipstick. But most of day they go with her and they're chained to her -- to her jeep. She goes with them everywhere.

PHILLIPS: All right. Tell her I want that sweatshirt.

Thanks, Dan.

And we're going to get straight to Sarah Palin. She's holding a rally in Troy, Ohio. Let's go ahead and listen in. GOV. SARAH PALIN (R-AK), VICE-PRESIDENTIAL NOMINEE: I, too, want a president who's been tested. What I want is a president who spent 22 years in uniform defending our country. I want a president who isn't afraid to use the word "victory" when he talks about the wars that America is fighting.

I want a president who is ready on day one. I want a president with the experience and the judgment and the wisdom and the truthfulness to meet the next international crisis, or better yet, to avoid it.

I want a president who knows how to win the war and wants to win the war, and as the mother of one of the troops in Iraq today, he's exactly the kind of man, John McCain is, that I want as commander in chief.

Ohio, I know that each one of you, you are here today because you know the stakes in this election. It is so high, these stakes are. This is about the future of our country. And I think of these kids in that (UNINTELLIGIBLE) -- this is about their future, the future of America. Our country is facing tough economic times right now, and now more than ever we need someone tough as president.

We need a leader with experience and courage and good judgment and truthfulness. We need someone with a bold and free and fair plan of action to take this country in a new direction. We need John McCain.

John and I, with our economic plan, we will help our families keep their homes and help our retirees keep their savings and those investments that they have worked so hard for, and then they trusted other people to manage those dollars, but then with corruption in Washington and corruption on Wall Street, they're forced to worry today. No. We will help them keep their savings.

We will help all of us to afford health care. And we're going to help our students pay for college. Yes.

We will get this economy put back on the right track, and one of the first things we do to get us there, we bring tax relief to every American, and to every business.

And speaking of businesses -- speaking of businesses, I know that here in Ohio, the backbone of your economy are small businesses. If you own a business, if you work for a small business, let us see that representation. If you raise your hand -- you are all over. Truly, you are the backbone of this economy and America's economy, and we're going to let you keep more of what you earn and produce so that you can hire more people. That's how you create jobs.

PHILLIPS: Sarah Palin speaking live in Troy, Ohio, holding a rally there. If you want to see it in its entirety, you can go

Meanwhile, what's happening with the candidates at the top of the ticket? John McCain is brainstorming -- or barnstorming, rather, through Florida -- probably brainstorming, too -- trying to shore up support in a state Republicans had hoped that they wouldn't have to worry about.

He's aiming today's stops at blue-collar voters and accusing Barack Obama of changes his views just days before the election.


SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: You know, this week -- this week we learned that Senator Obama is concerned that his plan for wealth redistribution is seen as welfare. So he just added a work requirement. Twelve days to go, 13 days to go in this election, he changes his tax plan, because the American people have learned the truth about it, and they didn't like it. It's another example that he'll say anything to get elected.


PHILLIPS: Now, Florida has 27 electoral votes, the fourth highest total in the country. CNN's latest Florida poll of polls shows Obama leading McCain by three points.

Barack Obama has one event scheduled today. He just wrapped up a rally in Indiana, another reliable red state where he's making a strong showing in the polls there. And then he's heading to Hawaii to visit his 85-year-old grandmother, who's said to be seriously ill.

Now, in an interview with CBS, he talked about his decision to leave the campaign trail and his failure to get to his mother's bedside before her death in 1995.


SEN. BARACK OBAMA (D-IL), PRESIDENTIAL NOMINEE: It was sort of like this in the sense that she had a terminal illness. We knew she wasn't doing well. But, you know, the diagnosis was such where we thought we had a little more time, and we didn't. And so I wanted to make sure that I don't -- I don't make the same mistake twice.


PHILLIPS: Well, Senator Obama is expected to return to the campaign trail Saturday in Nevada.

Have you heard about Proposition K in San Francisco? Proposition is the operative word. Legalized sex sales in the city could happen if voters are OK with it.

And body massages by the blind. That's the only way it's done right now in South Korea. Change is in the air, and folks are not happy about it. We're going to find out why they're so mad.


PHILLIPS: Coming out of nowhere and doing something really, really cool. Some Texas students who clearly learned a lot in high school.


PHILLIPS: You can see the San Francisco travel brochure right now: "Come for the landmarks. Stay for the hookers." The city is flirting with legal prostitution. Voters will decide November 4 if the world's oldest profession is OK in the city by the bay.

Carolyn Tyler from our affiliate KGO reports.


CAROLYN TYLER, KGO REPORTER (voice-over): This woman we'll call T. is uniquely qualified to talk about Prop K. The measure on the November ballot would decriminalize prostitution in San Francisco, by preventing police from investigating, arresting and prosecuting those who sell sex.

T. was a prostitute in the Mission neighborhood for years. In fact, she just got off the street a few months ago. She now lives at Safe House, a residence for women with the resources that help them turn their lives around.

T. is adamantly opposed to Prop K.

T., FORMER PROSTITUTE: My biggest concern is that it's going to create more violence on prostitutes more than anything else. Other Johns come into the city they know that they won't be prosecuted, could be more violent toward the girls out there.

TYLER: Prop K supporters believe prostitutes will feel more protected by police.

UNIDENTIFIED FEMALE: Prop K calls on the police to enforce the laws against violence, coercion, rape and other areas against sex workers, so it will mean that sex workers will be safer.

TYLER: She and other supporters helped collect the more than 7,000 signatures necessary to put the measure on the ballot. It's supported by the local Democratic Party and the National Lawyers Guild of San Francisco among others.

(on camera) San Francisco's district attorney is opposed to Prop K. She says prostitution is not a victimless crime.

(voice-over) And she and other critics believe it will make San Francisco a magnet.

UNIDENTIFIED FEMALE: It will put out welcome mat for people around the Bay Area, in particular pimps and prostitutes, that you know, this is open market. Come to San Francisco.

TYLER: Proposition K supporters say it's a matter of basic human rights. Patricia West is a call girl who also sees a public health component. PATRICIA WEST, SEX WORKER: I find that a lot of times workers will not accept condoms and other things like that, because they can be used as evidence and probable cause for arrest. It's a real public health issue.

TYLER: She won't convince T., who is grateful to be out of the life.

The rest of San Francisco weighs in November 4.


PHILLIPS: Prostitution is already legal in parts of Nevada and to a degree in parts of Rhode Island.

We want to show you some pictures now we're just getting in to CNN from our affiliate WPXI. Now, we're getting word out of Mount Pleasant Township, Pennsylvania, at least one has been killed in this crash that involved a school bus and a truck. If you know the area, it was along 18 in Mount Pleasant Township.

The bus was apparently carrying students at the time of the crash. However, there's no word on whether any of them were injured.

Obviously, we're seeing some people taken from the scene there. We'll try to get more information. We'll bring it to you as we get it.

The White House hopefuls agree on at least one thing: the next president will face a dangerous world. Our Zain Verjee will look at some of the global threats.

And an inferno near Beverly Hills. We'll have the latest on the battle against a wildfire that shut down sections of interstate 405.


PHILLIPS: An update on a story that was breaking yesterday. Turns out reports of gunfire on the campus of Western Kentucky University were just that, reports.

After the school went on lockdown, police flooded in, but they found no signs that shots had been fired and no gunman. The confusion seems to have started with a brawl that broke out in a school building and moved to a dorm. Five students were taken in for questioning. Last we heard, no arrests have been made.

Some incredible scenes in Los Angeles just a few hours ago as a wildfire that burned in a neighborhood near Beverly Hills. Now firefighters have gotten control of that blaze and all visible flames have been extinguished.

The fire was in L.A.'s Brentwood section about two miles from the Getty Center. Sections of Interstate 405 had to be shut down as the flame spread. That major freeway is now open again. And is there any relief in sight from the wildfire threat on the West Coast? Meteorologist Chad Myers joining us now to give us a little more info.

Hey, Chad.

CHAD MYERS, CNN METEOROLOGIST: A little relief today, because the Santa Ana winds always slow down during the afternoon, but then they pick up in the evening hours when the air actually begins to settle over the mountains and then blow offshore. And that's what it will do today, blow offshore from the Nevada dry desert area and then across this area. And as it stops, eventually all of this will blow right offshore and so will the winds span again.

Look at this. Could you imagine? Let me shrink this back down, because I really want to be able to show you some of these fire pictures. Here's something right there. There's is the freeway still open. Could you imagine somebody driving down the freeway and there's all the fire just kind of going on up in the mountains here?

And then this. This is an amazing picture. Both of these are from the A.P. Here are the firefighters kind of on the off road here. And there's the entire -- the entire bank, the entire hill completely on fire. The underbrush and also the overgrowth brush. You can see some of the treetop fires.

Two different fires here. It's hard to control. Sometimes just the bottom will burn, which is all the stuff that falls off the trees. That's a ground fire. But then when you get a treetop fire things could get completely out of control and start jumping quite quickly.

Let me show you where this was. We'll go over to the Google site here. Here is the 405 freeway kind of looking up to the north here. Here's the Getty Center right there. This has nothing to did do with Rush. This is not Getty in Rush. It's the Getty Center here, as you come down the 405. This is entirely -- all of this, all of this is on fire this morning. A hundred acres.

And then you come on down through here and see how really topographical it is. Just kind of spin it for you. You can really see where the mountains are, and these mountains are where all the fires are. Those mountains also are where the canyons come in and the winds come in, and these canyon fires can really get going. We'll expect, probably, some more to fire up tonight. Right now, though, that's 100 percent contained.

PHILLIPS: Hey, Chad, you mentioned the Getty. I mean, that's an unbelievable museum.


PHILLIPS: Beautiful artwork, sculptures, outdoor garden. Is that under any type of threat?

MYERS: It was right up to it, basically.


MYERS: I mean, just within a few miles. Less than a few miles. But now everything is being contained and we think that so far there's been no damage whatsoever. Obviously, maybe some smoke smell around there.


MYERS: But nothing, actually. No permanent damage to the Getty Center at all.

PHILLIPS: OK. That's good news.


PHILLIPS: Thanks, Chad.

MYERS: You're welcome.

PHILLIPS: Off the coast of Alaska, the search is resuming for two fishermen missing after their ship went down in frigid, stormy seas. Five men killed; four others survived.

The fishing vessel sent out a distress -- distress call yesterday morning after it started taking on water. Now, at the time, it was headed to Dutch Harbor, about 800 miles southwest of Anchorage.

Well, your vote could affect your money. Barack Obama and John McCain have very different ideas for reviving the economy. But how will the election results affect the stock market?


PHILLIPS: Hi, everyone. I'm Kyra Phillips, live at the CNN headquarters in Atlanta. And you're live in the CNN NEWSROOM.

1:32 Eastern time right now. Here are some of the stories we're working on in the CNN NEWSROOM. The Dow's been in and out of negative territory today. It's been reacting to a bevy of bad news, including jumps in foreclosure filings and jobless claims, week corporate earnings and word that a global recession could be coming. Dow Industrial's down 94 points right now.

And the former Fed chairman went before congressional committee today to give his views about the financial crisis. Alan Greenspan said that he thinks more layoffs and unemployment are coming. He also said that he made mistakes and is shocked by what's happening.

And the city council in New York votes this afternoon whether Mayor Michael Bloomberg should be able to seek a third time. Right now, Big Apple mayors are limited to a pair of four-year terms.

So as we see every day, predicting the stock market is a tricky business. Kind of like predicting elections. But what about the impact of the upcoming election might have on stocks? Would a president McCain be good or bad for certain parts of the stock market? And what about a President Obama.

Let's bring in Paul La Monica, editor at large for All right, Paul, we're talking -- well, you're talking with a lot of people about looking at how specific types of stocks will fare depending who is elected.

So, let's go ahead and start with energy stocks.

PAUL LA MONICA, CNNMONEY.COM: Yes. Energy's clearly one of the most important issues that both McCain and Obama have been talking about. They differ a lot there. So, I think what people are expecting if Obama wins is that some alternative energy companies, companies that specialize in solar and wind, those are companies that could probably do a little better under an Obama presidency.

With McCain, you're probably looking more at nuclear energy companies as one since that's an area that he's stressing. Also back to Obama, the traditional oil companies could be in trouble. Companies like Exxon/Mobil because Obama has been pretty vocal about windfall profit taxes. Even though, I don't know if there's going to be many more windfall profits with oil prices falling the way have lately.

PHILLIPS: So, specifically, you're even going out and saying that even a company like Exxon. Are there any other specific companies that you have seen, or have studies that might fall into those areas?

LA MONICA: Yes. In terms of specific companies for Obama, some of the alternative energy companies that mentioned to me for solar is a Solar energy company, who's actually a Danish maker of wind turbines called Vestas Wind System, that was mentioned. And regarding McCain, Ex-Salon, is a big utility that has about 10 nuclear power plants in the U.S. They're the most in the country, mostly in Pennsylvania, New Jersey and Illinois. So, that could be a beneficiary if McCain is elected and pushes more nuclear power initiatives.

PHILLIPS: All right. I'm taking note, here. Because of course, everyone is going to want to buy stock, depending who wins the presidency. OK. Go ahead and go into -- now's the right time to buy. Right, Paul?

LA MONICA: You would hope, yes.

PHILLIPS: OK. let's talk about health care.

LA MONICA: Like Mr. Toad's wild ride.

PHILLIPS: I know. Everything's a risk nowadays, right? Health care policies. Let's talk about how that might affect specific types of stocks. And let's name some companies if we can. Let's go ahead and look at -- you want to start with industrial stocks? No, no. We're going to move into that in a second.

Let's start with health care stocks. LA MONICA: Yes. In terms of health care, I think the fear with Obama usually is the case with Democrats, is that there will be more reform in terms of Medicare reform and other reform. Kind of maybe put curbs on prices for drugs, which is obviously good for consumers, but may be bad for the investors in those specific companies.

So, it looks like a company like Humana or Health Spring, two companies that are managed care firms that rely on Medicare a lot, they could be possibly in trouble if Obama were to win. On the flip side, for McCain, companies like Pfizer, Novartis, big drug giants, they could probably do a little better, because he'd be less likely, at least that's the theory, he'd be less likely to push major health care reform and curbs on drug prices.

PHILLIPS: OK. Now talk about industrial stocks. Taking a look at Obama and McCain, what could go up. It looks like you're saying there's a number of stock options that would go up underneath industrial stocks?

LA MONICA: Yes. With Obama, especially since this economy is, to put it mildly, struggling, there's a thought that Obama could possibly push for new deal esque-type initiatives to rebuild highways, mass transit systems, other transportation infrastructure. And that, you know, would be possibly something that could spur some more job creation and be good for companies like Vulcan Materials, Granite Construction, other big construction firms.

With McCain, it wouldn't be necessarily construction firms or industrials like that. The obvious beneficiary for McCain could possibly be some defense contractors, especially if McCain wins and we wind up staying in Iraq longer than we might otherwise stay under an Obama presidency. And Verizon, the big telecom giants and other industrial-type firm that McCain might possibly have -- you know, we might do better under McCain. Because he'd be less likely to push for a type of legislation that would allow allow Verizon, or would prevent Verizon from raising prices of having these tiered pricing for internet access.

PHILLIPS: Got it. Stock broker standing by, Paul La Monica. Interesting stuff. Great column today. Thanks a lot.

LA MONICA: Thank you.

PHILLIPS: And to read Paul's column and find other great articles about your finances, just go to our web site, CNN

Joe Biden says if Barack Obama becomes president, he can expect to be tested by a global crisis soon after taking office. Senator Obama says that every president gets tested while John McCain says, he's been tested already. What kind of tests are they talking about? Our State Department correspondent Zain Verjee take as look.


ZAIN VERJEE, STATE DEPARTMENT CORRESPONDENT: Whoever wins the White House must face a dangerous world. OBAMA: The president's going to be tested.

MCCAIN: I've already been tested.

VERJEE: The new commander in chief will inherit the suspects. Iran maybe on a unstoppable for a quest for a nuclear bomb. North Korea already has a bomb. And with an ailing Kim Jong-Il, could be on the brink of chaos.

Afghanistan, the Taliban gaining strength. Next door in Pakistan, terrorists plot to kill Americans. But the financial crisis has changed the playing field.

DAVID ROTHKOPF, CARNEGIE ENDOWMENT FOR INTL. PEACE: Not only are we constrained by financial weakness, but other countries have grown stronger. And so, as you look out at the landscape, it's as though some mountains were rising, others were falling. The landscape is changing around you and you're being asked to navigate across that.

VERJEE: The candidates want to steer different courses.

OBAMA: The question is, will the next president meet that test by moving America in a new direction, by sending a clear signal to the rest of the world that we are no longer about bluster and unilateralism and ideology, but we're about creating partnerships around the world to solve practical problems.

MCCAIN: Just this weekend, Senator Biden guaranteed that if Senator Obama is elected, we will have an international crisis to test America's new president. My friends, we don't want a president who invites testing from the world at a time when our economy is in crisis. And Americans are already fighting in two wars.


VERJEE: The next president is going in with less money and less power.

ROTHKOPF: For one party or another to say, you know, I can handle it, I know what the solution is, or I've been tested, is somewhere between, you know, exaggerated and irresponsible.


PHILLIPS: Zain Verjee joining us now.

Zain, what about Iraq? That's going to be a major challenge for the next president?

VERJEE: Right. Really key for the next commander in chief, who's going to have to navigate the withdrawal of U.S. troops in Iraq, Kyra. The clock is really ticking there because there's no agreement on the future of 150,000 U.S. troops there. And that crisis could fall into the post-election transition period, or straight into the lap of the next president -- Kyra. PHILLIPS: Well, what about countries that are going to emerge as greater powers possibly? You know, the next president's going have to deal probably specifically, I'm assuming you're going to say Iran.

VERJEE: Well, yes. I mean, the challenges with Iran is definitely on the table. A lot of analysts are saying, too, is that you're going to be looking at a total change in the whole structure of the world, because of the financial crisis A change in the U.N. Changes in the group of seven industrialized countries. That may span to include countries like India, China, Brazil, because they have the money. You know, the U.S. has been a big check writer, now it borrows from China. All of this stuff will be a big challenge for the next president because the landscape is changing and the U.S. doesn't have the kind of money it used to.

PHILLIPS: Well, now I'm understanding more and more why "Dancing with the Stars" is becoming so popular. And why Sarah Palin and Barack Obama are going to be starring in the next episode. I think this is all to help develop world peace (INAUDIBLE) this show, bring so many people together.

VERJEE: It definitely may signal an improvement in international relations and a shift in the perception of the U.S. around the world to showing some different moves and some different steps there.

But I tell you, Kyra, that dress doesn't look at expensive as some of those clothes that we've been reading about. But they look like they'd make good dance partners. Don't you think?

PHILLIPS: Yes. Not so bad. I don't think either one shopped at Saks when they got those outfits.

VERJEE: You would be great at "Dancing With the Stars," Kyra. You're a good dancer.

PHILLIPS: I'll pass. Maybe a little salsa now and then. A little two-step. I can be cross cultural. I can hang with you over there at the State Department.

Thanks, Zain.

VERJEE: Thanks.

PHILLIPS: All right. Well, you answer the phone then there's a pause and then the tape rolls and then well, there's another political robocall that's coming through. Next hour here in the NEWSROOM, our Carol Costello reports -- well she actually reports on those annoying but supposedly effective political weapon.

And you're on time but your doctor isn't. And your wait may drag on for hours. We're going to find out what you're can do about that.


PHILLIPS: Well, you show up at your doctor's office on time. Then you wait and you wait and you wait, sometimes for hours. It certainly is frustrating. But, in today's Empowered Patient, CNN medical correspondent Elizabeth Cohen is here to tell us what to do when that happens, besides scream. Besides yell at everybody.

ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: Well, I'm going to show you one thing that some people do. Some people have become so frustrated and so bored in the doctor's office, they actually videotape themselves.

Yes, that's right. This woman here says she waited three hours in the examining room. So, she did leg lifts, she did some finger exercises. Why she didn't pop her head out and say, hey, come on. Have you forgotten about me, I don't know. But, she says three hours in the doctor's office. That's how bored and frustrated people have become. It's amazing. You got on YouTube, there's tons of people who've done video tapes of themselves waiting in the doctor's office.

PHILLIPS: Classic. I know, I start going through the drawers, I start looking at --

COHEN: You hope they don't come in while you're in there.

PHILLIPS: Exactly. Especially when you have that gown on, when it's all open in the back.

So, what's going on here? I mean, why does it seem like the wait is longer than it used to be?

COHEN: One of the reasons is that doctors are having a harder time making money. Especially internists and family doctors. So, what they're doing sometimes is just packing more patients into the day, hoping that if someone doesn't show up, well, there's someone right behind them. Some doctors are even double booking. 1:00, two patients.

PHILLIPS: It's so frustrating. So, what do you do about it?

COHEN: Couple of solutions. Besides videotaping yourself and putting it on YouTube.

PHILLIPS: I say, it's pretty funny, though.

COHEN: It is pretty funny. It is pretty funny. Here's an idea. Stage a revolt. I talked to one woman in California who got everyone together in the waiting room and said, let's write letters to this doctor. They did and she said the doctor changed, the waits got a lot better.

You can also choose to just shut up and wait. Just bring a book, bring your laptop. Figure you're going to be stuck for a couple hours. Get stuff done, relax a little bit. And the third thing you can do is you can go online and find a wait-free doctor. Yes, it is true. Some doctors have pledged to try to get their wait times down. And in my column this week on, I'll give you the link. You can see --

(CROSSTALK) PHILLIPS: Fabulous. Elizabeth, thanks.

Well, they can't see, but they've got the magic touch when it comes to a massage. What new rules on the table have rubbed many masseurs in South Korea the wrong way.


PHILLIPS: A suicide bomber striking early and brutally in Baghdad. He rammed his car into an Iraqi government convoy this morning, but ended up killing mostly civilians, at least 11 people dead in all. There are conflicting reports on whether the Iraqi labor minister was riding in the convoy. We have confirmed, though, that he is fine.

And coalition forces handed over security responsibilities in Babil Province today. Twelve of Iraq's 18 provinces are now back under local control we are told. But (AUDIO GAP) troops will stay close to assist if needed.

Meantime, the big picture is still up in the air as Washington and Baghdad butt heads over the status of forces deal. It is meant to kick in when the U.N.'s troop mandate expires at the end of the year.

So how do you make masseurs in South Korea tense? Take away their lock (ph) on the relaxation business. Sohn Jie-Ae reports from Seoul.


SOHN JIE-AE, CNN CORRESPONDENT: Kim Kyae-An Gian has been pummeling and squeezing flesh for 40 years, but in order to be a certified masseur in South Korea, Kim needs more than nimble fingers. He needs to be legally blind, which he is. In a country with a weak social safety net, the government has for decades given the practice exclusively to the visually impaired as a means to earn a living.

"People who can see can do other things," he says, "but no one wants to hire a blind person. So unless we beg on the streets, there is no other way to work, to raise our children."

And when that is threatened, the blind masseurs protest. Last month blind protesters jumped off of a bridge in a violent rally against a government proposal to license estheticians to give massages. While no one was seriously hurt, the blind masseurs are demanding sight and skin specialists (ph) stay away from the body and focus mostly on the face and hands.

The estheticians are holding their own one-man protest in front of the Welfare Ministry. But not against the blind, against doctors who they claim are eroding their businesses. They say they have no fight with the blind masseurs.

KIM HYE-SOOK, ESTHETICIAN (through translator): We have a different person. They massage to treat people, we massage to improve their skin.

JIE-AE: But that doesn't keep Kim from worrying about the future.

(on camera): After starting out massaging clients at a public bath nearly 40 years ago, Kim just last year opened this brand new massage clinic, the first certified by the government.

(voice-over): He has three other blind masseurs on his payroll who have no other skills than massaging.

"If anyone could get the license," he says "then sighted people who have better funding can builder nicer facilities, and then they can take our clients."

But Kim is sure no sighted person can ever give a massage that is comparable to the one that people like Kim can give.

Sohn Jie-Ae, CNN, Seoul.


PHILLIPS: Well, they've got spirit, yes, they do. They've also got a lot of class. Some Texas students bestow a big honor on one of their own.


PHILLIPS: Well, maybe we don't always give teenagers enough credit for the things that they have learned. In fact, students a at Texas high school could probably teach all of us a thing or two about friendship, acceptance and pride.

This story now from Shana Franklin of our Dallas affiliate, KDAF.


SHANA FRANKLIN, KDAF REPORTER: High school senior, Erik Cobb (ph), will never read, write or drive. But, fellow students chant his name and the crowd parts as he walks his school's halls. He owns them.


FRANKLIN: The 17-year-old who got cerebral palsy, mental retardation and an eye impairment from a SIDS episode when he was just 3-months-old was just named homecoming king of Colleyville Heritage High School. It is an award his best friend says is well deserved.

GRAHAM MCMILLAN, ERIK'S BEST FRIEND: No matter if you are someone who sits by himself at lunch, someone who is really smart, someone who is really athletic, he loves everybody at an equal level. He sees everybody the way they are.

FRANKLIN: Fame has not spoiled Erik. When I asked him how it feels to be king, he did not gloat.

COBB: Me? I am fine. FRANKLIN: He even recreated some of the announcement night magic for us, showing us how he locked arms with his mom walking on the football field. Then he improved my vocabulary, introducing me to the name of the wand in this picture, an emblem of power you know.

COBB: Septor.

MCMILLAN: Yes, septor.

FRANKLIN: Accolades are not new for the 17-year-old. Here are just the highlights. Last spring, Erik was named one of America's five most influential people. He has won many medals in many sports over many years at state special Olympics. And Erik was his high school varsity football team's manager freshman through junior year.

CATHY STEINER, ERIK'S TEACHER: This is a kid who had these big football players singing SpongeBob SquarePants on the bus coming home from games.

MCMILLAN: Letter --

COBB: Letter --


STEINER: I think sometimes we tend to limit people as to what they can do, and I think Erik has kind of shown that he can do anything. He is -- he can be like everybody else.

FRANKLIN: In Colleyville, Shana Franklin for CNN.


PHILLIPS: And we are happy to report that there are lots of other class acts out there. Quick search turns up at least five other high schools around the country where students honored maybe the unexpected choice this year. We hear Alito High School in Texas should have handed out tissues for Kristen Pass's (ph) coronation. The new homecoming queen has Down's syndrome, and one of her friends paid her the best compliment saying -- quote -- "she is the person we all want to be."

Victoria Alba (ph) was crowned homecoming queen of Abraham Lincoln High in Council Bluffs, Iowa. 17-year-old Victoria also has Down's syndrome. She said she was excited to win and the best part was dancing with the cute and hot homecoming king.

The next hour of CNN NEWSROOM starts right now.