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American Morning
North Korea Ready to Launch Satellite; World Market Tumble; Cockpit Laser Attacks; Amex Paying You Not to Spend
Aired February 24, 2009 - 08:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(COMMERCIAL BREAK)
JOHN ROBERTS, CNN ANCHOR: It is coming up on 2 minutes after the hour now. And new details this morning about a White House visit that fuels speculation that the government may seek to nationalize one of the nation's biggest banks. Last night, Richard Parsons, the head of Citigroup showed up at the White House. But senior administration officials tell CNN that he was there to meet with Valerie Jarrett, one of President Obama's closest advisers.
It appears that President Obama has settled on a nominee for commerce secretary. It's his third pick for that job. Administration officials say that the president is close to naming former Washington Governor Gary Locke to the position. Locke is a prominent Asian- American politician in this country. The president's last choice, Republican Judd Gregg, stepped aside, citing irreconcilable conflict with the administration.
And this morning, the price for a gallon of gasoline down now the tenth straight day. According to AAA, the national average is $1.90. Right now, just nine states and Washington, D.C. report regular gas prices of $2 a gallon or more.
UNIDENTIFIED ANNOUNCER: This is "CNN Breaking News."
ROBERTS: And we're following breaking news this morning. Disturbing word from North Korea that it is getting ready to launch what it calls a satellite. The U.S. and South Korean officials are skeptical. In 2006, North Korea fired a long-range missile from the same site. CNN's Pentagon correspondent Barbara Starr is monitoring the latest developments from the Pentagon.
Why is it that the United States and South Korea not taking the North at their word here, Barbara?
BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, John, they have been watching with U.S. satellites this missile launch facility for about two weeks now. They have seen a good deal of activity there -- some fueling equipment, some missile monitoring equipment.
The key question for U.S. intelligence right now is what is North Korea getting prepared to do? Are they going to launch a satellite? Or are they going to launch a long-range missile as they did in 2006? There's no good answer to that question just yet, officials say, because they aren't seeing the missile components on the actual launch pad yet. But the bottom line is the U.S. does believe that North Korea is getting ready to launch either the missile or the satellite. It is a matter of a good deal of concern, of course.
The question is what are North Korea's motivations? A lot of people think they're basically trying to rattle President Barack Obama's cage, if you will, say, pay some attention to us over here, get some concessions in those six-party talks. Whichever way it goes, it's going to be a matter of intense concern -- John.
ROBERTS: But just for clarity's sake here, Barbara, the Taepodong-2, which we saw some pictures of, was the one that they launched in a failed attempt at a missile test, got about 40 miles before it self-destructed. Would it be a different missile on the launch pad if they were to launch a satellite or could they use that to put a satellite into orbit?
STARR: You know, that's really an interesting question. They could potentially use the Taepodong-2 technology, put a satellite on the front end and try and boost it into a satellite orbit. Right now, North Korea is using a different name for the missile they say they will use to launch a satellite. So, there's a lot of different names floating around out there about what they say they're doing, but the U.S. -- the bottom line is U.S. intelligence watching this, as you say, around the clock.
John?
ROBERTS: Barbara Starr for us at the Pentagon this morning. Barbara, thanks so much for that.
KIRAN CHETRY, CNN ANCHOR: And we're following breaking news this morning as markets all over the globe are reacting to this slumping U.S. and world economy. Fears that the global economy will continue to diminish and the U.S. government will not be able to stop the bleeding, causing a worldwide market retreat. Japan's Nikkei down, China's Hang Seng also down, and London's FTSE down this morning as well. All of these comes on the heels of the Dow's 250-point drop yesterday, bringing the markets to the lowest point since 1997.
And in a little more than 12 hours, President Obama is scheduled to give Congress as well as the nation an address, possibly a sober assessment of the tasks and challenges that lie ahead, in a prime time address. It's going to be at 9:00 Eastern tonight. And of course, CNN will be carrying that live.
To help us put things into perspective today, we have Christine Romans with us, as well as Suzanne Malveaux here this morning.
Thanks to both of you. Good to have you here on the set with us. And we'll start with you, Christine. So, we saw the dramatic drop in the Dow and using the headline this morning, so low, we haven't seen it this low since 1997. And then on top of that, other bad news this morning like the recipient of the biggest chunk of bailout money, AIG, saying we may need to go back to the drawing board as well. So all of this contributing to this overall feeling that we still haven't figured out exactly why we're in this.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: We haven't figured out what to do to get us out of it either. I mean, when you look at the Dow and the S&P and the major markets, a dramatic move yesterday. Of course, the worse since the spring of 1997.
But also, I mean, since that first stimulus passed and was put into effect, that first -- sorry, not stimulus, $700 billion bailout, the very beginning of this whole process, the Dow down 34 percent. It lost a third of its value. Since this president took office, actually took office, it's down 11 percent. I mean, what the market is telling us is that it wants to see a plan. It wants to see what's going to happen here, and that we're in the guts of a painful global dislocation that is undoing itself, and that's just the way it is.
I think it's human nature, especially as Americans, to want to say we have bought this, invested in this and now we've fixed it, but that's not the crisis we have here right now. We've a crisis that's changing. A lot of my sources are saying literally day-by-day, the pieces on the chess board are moving around and this administration has to figure out how to win the game.
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: It's one of the things that the president has to do tonight and they realize this is they have to instill a sense of confidence here because they realize they haven't done that so far. And what you're going to hear he's going to talk about what he's talked about before.
It might be a little repetitive for those of us who've heard this before, but not for the general public because he's going to try to cut in half that federal deficit by the time he finishes his first administration. He's going to talk about renewable energy, health care and still try to reform some of those entitlement programs, those huge programs like social security, Medicare, things like that that they believe they can do that.
But he's also going to have a sobering assessment that this is going to require a lot of sacrifice, a lot of pain and there's a little bit of political cover that he's giving himself when he says you need to be patient here, because they don't really know whether or not all of this is really going to work. I mean, as you mentioned, this is uncharted territory.
ROBERTS: It's really stunning. You'll understand, this is a White House correspondent, you're talking about cutting the deficit in half by the end of his first term to $530 billion.
MALVEAUX: The numbers are staggering.
ROMANS: It could have been a record and unheard of even a couple of years ago.
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ROMANS: Cutting it in half could have been a record even a couple -- I know. It really is. These numbers are staggering and I think the American people keep looking and saying, wait a second here. You know, just a year ago, we were talking about $168 billion stimulus that was going to help blunt the recession. Oops. You know, back I think in 1993 -- I'm not sure -- beginning in early '90s, Bill Clinton tried to get a $30 billion. In his State of the Union, he asked for $30 billion stimulus. He didn't get it. You know, $30 billion, are you kidding me? Just over the course of a couple of administrations, we've just reset the table.
CHETRY: Right. And, Suzanne, this is interesting. I heard the language when you talked to Louisiana Governor Bobby Jindal. And he said, we believe that there could have been a better stimulus out there. He used the word temporary. And then you hear other economists like Jeffrey Sachs saying, you know, this stimulus seems to be the tip of the iceberg, it needs to continue, it needs to be long term. So, there seems to be divergence of opinion as to whether or not this is supposed to be a temporary injection or this is something over the long haul that we're going to keep having to throw money into.
MALVEAUX: Right. And there's a lot of speculation that this is just the beginning, that there going to have more and more stimulus packages that we're going to see. And one of the reasons why the White House is actually emphasizing fiscal responsibility. It was just yesterday, they had this conference -- fiscal responsibility. They had the governors and they had lawmakers.
And John, as you know, perhaps Robert Gibbs made a little bit of news this morning because we saw Obama's rival yesterday, John McCain, challenging him on this whole idea whether or not he should get a new Marine One helicopter when it cost just as much as Air Force One. Let's take a listen.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R), ARIZONA: I don't think that there's any more graphic demonstration of how good ideas have cost taxpayers enormous amount of money.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I've already talked to Gates about a thorough review of the helicopter situation. The helicopter I have now seems perfectly adequate.
(END VIDEO CLIP)
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ROBERTS: One quick question before we go.
ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: Yes, sir.
ROBERTS: Are you going to put this helicopter contract on hold?
GIBBS: The president, when he read the story in the paper about ten days ago, we were on the airplane, we talked about this. We were both surprised that the airplane that we were on, which is huge, cost as much as the helicopter we were on. The president talked to the secretary of defense, and I think as he said yesterday, to Senator McCain, we don't need any new helicopters at the White House.
ROBERTS: So does that mean you're going to put that contract on hold?
GIBBS: That's exactly what he talked to the secretary about.
(END VIDEO CLIP)
MALVEAUX: So maybe he was hedge in just a little bit, but he did sounded like he was making that commitment. They're going to put that on hold. It's $11.2 billion, but it's a drop in the bucket, though, when you think about it.
CHETRY: But the other question, though, is it would have gone into the economy, right? I mean, people would be building these. Lockheed Martin or other contractors would have gotten money for that. So, I mean --
MALVEAUX: So what do you do? So the administration --
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CHETRY: Exactly.
(CROSSTALK)
MALVEAUX: Because it looks like they are being, you know, greedy or something, or there is something that he doesn't necessarily need and he is spending too much.
ROBERTS: But the argument is you can get a lot more bang for your buck by taking that $11 billion than putting it to something else other than defense contracts.
MALVEAUX: I think you're exactly right, though, that this is the beginning. I mean, this -- we're talking about $11 billion dollar helicopter, but this is -- this is the very beginning. And for months, people have been saying, you know, gosh, I know the price tag on that first bailout is hard to swallow, but there is going to be more.
OK, we know the stimulus is hard to swallow, but there probably will have to be more. I mean, there probably will have to be more. I think you're absolutely right.
(CROSSTALK)
MALVEAUX: You're going to hear about the sacrifices, too. He is going to talk about that tonight.
ROBERTS: We're covering issue number one all day long, and also today, cnn.com rolling out extensive and exclusive coverage about your money beginning at 11:00 Eastern. A special online edition of "STATE OF THE UNION" with John King with real time reaction from you.
At noon, Christiane Amanpour previews President Obama's prime time speech to Congress at 1:00 Eastern. Ali Velshi and the CNN Money Team host a two-hour special on the state of the economy. And at 3:00 Eastern, Suze Orman answers your questions. It's all day, all online at cnn.com/live.
CHETRY: And speaking of questions. If you have them, we have answers for you. Some of the sharpest economic minds live on our set all morning talking about what's at stake for the president and tonight's speech, and what it means for your money and your future.
Also when you threat for airplanes, pointing lasers at cockpits, blinding pilots and putting flights at risk, who is doing it and why? We're going to have more on what investigators are finding out this morning. It's 12-1/2 minutes after the hour.
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UNIDENTIFIED MALE: I'm driving a pickup truck that's 12 years old. My wife is driving a car. We just paid it off. It's five years old, but then I see a lot of these people with foreclosure signs driving new vehicles and living above their means. So it's a little frustrating when you hear that. And those kind of people are going to get bailed out when you work hard.
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CHETRY: It's a frustration sentiment that's being echoed by many. A lot of people feeling tight times during the recession and wondering where is my bailout? And in a speech tonight, President Obama is going to be outlining a path to better economic times hoping to restore confidence as we face difficult, difficult times for sure. Wall Street, in fact, big down day yesterday, tumbling to lows we haven't seen since 1997.
So we're going to bring in our panel of experts right now. We have two leading economists with us -- Diane Swonk and Lakshman Achuthan. Also, real estate analyst Danielle Babb, also a dean at Andre Jackson University School of Business.
Thanks to all of you for being with us.
Diane, let me start with you. We heard the gentleman there talking about his frustration with some of the aspects, I guess you could say, of the economic recovery plan. But he says, you know, some of this is going to people that behaved irresponsibly. What about, you know, people that didn't over leverage, people that live within their means and now are suffering because of the tough economic times either through layoffs or other problems?
DIANE SWONK, ECONOMIST: Well, it certainly is an understandable feeling and I can certainly relate to it since I wasn't one of those people that went into debt. That said, I understand, full aware of the fact that what happens to my neighborhood when several house has gone to foreclosure. The crime rate goes up. My house loses value and I pay the price as well. Also, many of those people who say they had nothing to do with it did buy cars when they cashed out on over inflated values on their homes. It's been in the headlines since 2004 that the housing market boom could not be sustained.
So as much as many of us would like to walk away and say we have clean hands on this, I think everybody has a little bit of blood on their hands. And at the end of the day, we're all in the same boat. And if we're not all rowing our oars to the same end and trying to get to land at the same time, we're going to sink the boat with our own infighting.
CHETRY: Interesting. And Lakshman, let me ask you about this. The stock market again as we said tumbled yesterday to the lowest we've seen in 12 years. It's the same day that the president held an economic responsibility summit. And some analysts were saying, you know, he's in a no-win situation. Every time the president talks about the economy, we seem to take a further dive.
LAKSHMAN ACHUTHAN, ECONOMIST: Right. Right. It's like a flash pole and immediately is described to him because you have to say somebody is responsible, right?
And we like to think that the president has full control over this. The hard truth is he does not. He can do some things that will mitigate the pace of the downturn. You cannot change the fact that we are in a recession.
And the stock market, mind you, is a very imperfect leading indicator of where things are headed. I think, right now, the fact that it's going down is consistent with longer leading indicators, which are also going down. However, the stock market just a month ago was rallying, you know. And people were saying, oh, there's a recovery around the corner. In the spring of '08, the market was rallying, so much so, that the collective wisdom on Wall Street was that the Federal Reserve was going to raise interest rates three or four times in 2008. That seems patently silly. However, a lot of money was bet that way by some of the smartest people around.
CHETRY: And Danny, I want to get your take on that as well. I mean, you know, we are not blaming the president and saying that every time he speaks the Dow drops. It's just that people are perhaps looking for answers that none of us are going to get any time soon. So how do you reassure? And what do you say to the average investor, to the average person who was hoping to keep their home and maybe still be able to put a little bit away?
DANIELLE BABB, AUTHOR, "THE ACCIDENTAL LANDLORD": Well, first, I think it's an indicator of confidence. I think we have to get away from all of these vague language, where every time we see Geithner speak, we see the market tumble as well.
People are looking to, you know, invest in homes or actually maintain their positions in the market. This is a perfect time to position yourself for the next couple of years, but a lot of people are very afraid to put their money in any investment vehicle whether it's stocks, bonds or whatever. We're starting to treat credit like a public utility, and the more we do that, I think the more we're going to see a response for the market. It's going to continue a downward slide.
CHETRY: It's just ironic, isn't it, Diane? We were reporting today as well that American Express is actually paying, in some cases, people to close their accounts, where, before, you just got flooded with mail and take out a home equity loan, take out a zero interest only loan.
I mean, you know, are we talking about a total change in the way that we approach day-to-day life in the way that we want our standard of living to be in order to turn this around?
SWONK: Well, you know, absolutely. I mean, the bottom line was we just killed Santa Claus. I mean, we believed in Santa Claus for a long time, and I think we just killed him. The way that the American consumer thought and I was in banking for 20 years and thankfully not now.
But, you know, one of the issues was credit cards. And I would always warn our credit people that the best way to die is in debt because it means you've lived beyond your means your entire life. And you need to guard against that incentive.
The problem is we all live too long. I mean, in general we went in to a lot of debt we couldn't afford. We went way beyond what our means were. And now the pendulum has swung way too far in the other direction. Somewhere in the middle is where we need to be, but we're way now in the other side of that equation.
CHETRY: And let me get you, too.
(CROSSTALK)
ACHUTHAN: Well, you know, on the credit situation, it's very difficult to tell which part is cyclical and which part is a long-term lifestyle change that we're going to have going forward. So we know during recession critical falls, and it actually falls even after the recovery has begun until we start feeling confident so much so that we are willing to loan each other tons of money.
Is it a structural lifestyle change? We don't really know yet. That's the kind of thing that happens --
CHETRY: And that's how we avoid what happened in Japan.
(CROSSTALK)
UNIDENTIFIED FEMALE: Exactly. And you know --
(CROSSTALK)
SWONK: We don't really have --
(CROSSTALK) CHETRY: Well, Diane, let me get you in real quick.
DEBB: We don't really have a banking system to support it. We went from spending about 6 percent more than we make to actually saving 2 percent of our income every year so that's a positive change. Something that -- it's actually good for the future. You know we have several things going on here at one time. I think too much government interference in the private sector. It has people worried. Investors worried, which is going to keep the market a little bit lower.
And we've got now, you know, government talked about buying mandatory convertible preferred shares of stock in banks that we know are not doing well. That is another potential concern.
CHETRY: Well, we're going to have to leave it there. Danny Babb, as well as Lakshman Achuthan, and Diane Swonk, thanks to all of you for being with us. We're going to hear more from you later in the hour.
John?
ROBERTS: Pilots blinded by lasers. The dangerous practice of shooting lasers into cockpits. A rash of new attacks as investigators concern. We'll show you where.
And trouble during a space launch this morning. Why a NASA mission is now in jeopardy. It's 21 minutes after the hour.
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UNIDENTIFIED ANNOUNCER: This is CNN breaking news.
ROBERTS: We're following breaking news this morning. Fire officials say at least one person is dead and another 20 injured after a four-alarm fire in New York City's Chinatown. The six-story apartment building went up in flames around 4:00 a.m. Local Time. It took about 168 firefighters to get the blaze under control. One fireman sustained minor injuries. The cause of the fire at this point still unknown.
At Camp Verde, Arizona it appears an ATV ride went horribly wrong. Two people got too close to the river and were swept away. They were spotted clinging to a tree. Rescue teams lowered a boat into the rapids and pulled the victims to safety. Both of them were treated in an area hospital.
And check this out. NASA launching a satellite from California this morning to monitor greenhouse gases. That satellite, however, failed to reach space because of a, quote, "serious malfunction." If that satellite had been a success, it would have allowed scientists to check co2 levels and study the impact on the earth's climate.
Now a developing story about a dangerous threat to airplanes. Pilots temporarily blinded by lasers pointed at the cockpit. It's not the first time that it's happened, but there has never been a report of so many flights attacked in such a short period of time. Our Jeanne Meserve has the story for us this morning.
JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: John, Kiran, laser incidents are frighteningly common, but it is unusual to see a cluster like this.
(BEGIN VIDEOTAPE)
MESERVE (voice-over): At the Seattle-Tacoma Airport Sunday night, in a 20 minute period, a dozen planes reported having their cockpits illuminated by a laser beam.
UNIDENTIFIED MALE: Jazz 99, I just got hit by that laser.
UNIDENTIFIED FEMALE: Alaska 207. On Seattle tower, on Runway 1-6 right. Cleared to land. And several aircraft have reported a laser on about a two-mile final just east of the final. It was a green laser.
UNIDENTIFIED MALE: Yes, we saw it, as well.
UNIDENTIFIED FEMALE: Horizon 1, thank you.
MESERVE: The Federal Aviation Administration has received 148 reports of lasers hitting cockpits just since the first of the year. In one typical day earlier this month, there were incidents in Salt Lake City and Ogden, Utah; Lake Charles, Louisiana; Orlando, Florida; Burbank and San Jose, California.
No accidents have been blamed on lasers. But an FAA report concluded the potential definitely exists, because the high intensity beams can impair vision and distract a pilot.
CAPT. ROBERT HESSELBEIN, AIR LINE ASSOCIATION: Whether intentional or unintentional, it's -- it's a sort of a terrorist moment for the crew members, who are trying to safely land an airplane. And suddenly they're dealing with blindness -- or temporary blindness, or an incredible distraction at an inappropriate time of flight.
MESERVE: Because of the potential danger, all around the nation, the FBI has made it a priority to investigate laser incidents.
SCOTT ROBINSON, FBI: Who would have the radar recordings?
Would it be you or would it be the FAA TRACON?
MESERVE: Sunday night at Sea-Tac, pilots were able to identify the neighborhood where the lasers originated.
UNIDENTIFIED MALE: Mark that position, 649. He's about a block- and- a-half to the west of the main north-south arterial.
UNIDENTIFIED FEMALE: Thank you.
UNIDENTIFIED MALE: You bet.
(END VIDEOTAPE) MESERVE: Seattle Port police searched the area twice, but didn't make any arrests. They are continuing to investigate with the assistance of the FBI.
John, Kiran, back to you.
CHETRY: All right. Thanks so much, Jeanne Meserve. An uneasy nation waiting for answers as President Obama puts the finishing touches on tonight's critical speech, but there are some questions that can't wait. Our financial experts are here to help make sense of the meltdown for you.
Also, she was a polarizing figure during the presidential campaign so what does the future hold for Governor Sarah Palin? The filmmaker behind a new documentary about the governor is here to talk about it. It's 27 minutes after the hour.
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CHETRY: We're coming up on 30 minutes past the hour. Following breaking news overseas this morning. Right now, growing concerns over a long-range North Korean missile site. Pyongyang insists that full- scale preparations are under way to launch what it calls a satellite. But U.S. officials are concerned because back in 2006 North Korea fired a long-range missile from that same site.
Secretary of State Hillary Clinton is about to embark on her first official trip to the Middle East. Secretary Clinton will meet with Israeli leaders in Tel Aviv and on the Palestinian side, she's only going to be meeting with Palestinian authority leader Mahmoud Abbas. Not Hamas leaders. Hamas is designated as a terror group by the U.S. Secretary Clinton also comes with a $900 million dollar pledge from the U.S. for Gaza reconstruction.
Well, the economy getting so bad that American Express will pay you to close your account. They're sending letters to select customers offering them $300 if they close their account and pay off the balance and they are suffering because debt-ridden consumers are slashing spending and also falling behind on payments. John.
JOHN ROBERTS, CNN ANCHOR: Thanks, Kiran.
A story developing right now. In uncertain times and with stocks collapsing to a 12-year low. President Obama is putting the finishing touches on a critical speech that he'll deliver tonight. People across the country are getting impatient and uneasy as the bills pile up and they want answers. We went out to hear what is on your mind right now.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: When I go to work, you know, because I work as a waitress and every day I go, it's less and less people and which means less and less money for me.
(END VIDEO CLIP) ROBERTS: The best money minds in the nation are here all morning long trying to make sense of the meltdown for you. Joining us from Chicago is the chief economist and senior managing director of Mesirow Financial Diane Swonk is here. Here in New York, real estate analyst and founder of the Babb group, Danni Babb and also managing director of the Economic Cycle Research Institute Lakshman Achuthan who remains with us this morning.
Diane, let me start with you. People are wondering if the worse is yet to come. Your thoughts on that?
DIANE SWONK, CHIEF ECONOMIST, MESIROW FINANCIAL: Unfortunately, the worse is yet ahead of us just because we are basically still falling in the economy or losing 20,000 to 30,000 jobs in the month of February alone that we can't escape that. That said, because we can't see the bottom doesn't mean a bottom isn't out there. And unfortunately, most people focus on looking down rather than up until we hit that bottom.
I don't think we're going to see a bottom for some time and it won't file like feel like a good economy until well into 2010 because we're going to see a high unemployment rate persists even as the economy rebounds back into growth.
ROBERTS: So Danni, what do you think is going to happen in the real estate market in the next six to 12 months?
DANNI BABB, FOUNDER BABB GROUP: We're going to continue to see a decline in most areas, particularly those that were heavily investor driven like Nevada, Florida, California. But I think more importantly that we can start, to begin to see the trouble in the jumbo market, jumbo prime as people with good credit, expensive homes, home prices have tumbled. They are in negative amortization mortgages that are about to reset in 2009, and 2010 and that's what's going to happen.
ROBERTS: Right. When people look to these big announcements by the president, please, we need some confidence here, turn things around. But we have Geithner talking about the bank bailout. Nothing happened. We had the president talking about the real estate bailout. Nothing happened. We had him talking, promoting this economic stimulus package. Nothing happened. Things are just getting worse. I mean, what can the president say to put a floor under things and get people, lift people back up again?
LAKSHMAN ACHUTHAN: Right. He is attempting to say I recognize how bad it is. And I'm putting together a coordinated plan to minimize the pain on the downside and, you know, he's not forecasting a recovery just yet. When you look at things like the stock market or the job market, these are slightly different.
The job market is coincident. It tells you where you are right now in this cycle. The stock market is trying to look forward a little bit but we've all been saying there is so much uncertainty out there. And the problem, the biggest problem actually that the president faces right here is all that uncertainty brings with it a huge attraction of ideological solutions from the right and the left. They'll have extreme solutions. I have the answer but honestly that's not true. When we're looking at - you can alternatively look objectively at leading indicators of the economy, they are continuing to go down. So based on that fact, you must try to minimize the downturn as best as you can.
ROBERTS: Diane, if you were running the president's address tonight, what would you have him say?
SWONK: Well you know I keep quoting Ben Bernanke these days. And that is one of his most famous quote of the last year is there is no room for atheists in fox holes where ideologues in financial crisis sees. I think that really hits the nail in the head as this idea that we can, you know, someone sitting in an ivory tower telling them from their, you know, pedestals of what to do the right thing. You really do have to try everything. He is doing exactly what he needs to do in terms of mitigating the pain but there are no silver bullets and that's why much of the stimulus actually doesn't hit until 2010 and 2011 in terms of jobs and we will need it.
ROBERTS: And Danny, we talk about partial nationalization of banks, spending trillions of dollars to bail out the industry again and again and raising taxes to cut the deficit. What direction is this administration headed in a year from now? Are we going to see a lot more government involvement in our lives?
BABB: I do think we will see a much more government involvement. When you look at you know the banking situation, for example, in some cases, the government, the taxpayers may own 40 percent or more of very strong position in banks. The French, there was a great interview yesterday with the French finance minister that said that worked for us but the United States, your banks do more than just checking and savings like we do. You actually invest. And that's not going to work as a government solution.
ACHUTHAN: Right. One last point, the slightly hopeful point.
ROBERTS: OK.
ACHUTHAN: The business cycle always turns. If we did nothing, it would turn, it would be a sharp downturn. If we do something, it will still turn. And the forward looking indicators after falling off a cliff have landed on a ledge. They stopped dropping aggressively for the moment. So we get a little bit of a reprieve here.
ROBERTS: We will watch him very closely tonight and tomorrow for reaction for all of this. Good to talk to you, folks. Thanks for coming in this morning. Appreciate it. A reminder to tune in to CNN tonight at 9:00 Eastern. President Obama will make his first address to the nation on the state of the economy. See it live right here or with your friends on Facebook at cnn.com.
In a brand new documentary just out. Alaska Governor Sarah Palin says the media headed out for her and helped make Barack Obama president. Her words and her future. We're talking to the filmmaker just ahead. It's 36 minutes now after the hour. (COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
GOV. SARAH PALIN (R), ALASKA: Something big took place in the media and in many - in mainstream media deciding we're going to seek and we're going to destroy this candidacy of Sarah Palin.
(END VIDEO CLIP)
CHETRY: That was the governor of Alaska, Sarah Palin sounding off in a new documentary about the '08 presidential race. And the film is called "Media Malpractice: How Obama got Elected" and Palin was targeted. But did the media really derail Governor Palin's campaign and going forward, what is her role inside the GOP?
Well joining me now is the man behind the film, conservative filmmaker John Ziegler. Thanks so much for being with us this morning.
JOHN ZIEGLER, CONSERVATIVE FILMMAKER: Thanks for having me. I didn't realize I was a conservative filmmaker but I appreciate it nonetheless.
CHETRY: Well, go ahead, how would you describe yourself?
ZIEGLER: I'm a filmmaker that likes to tell the truth. How is that?
CHETRY: And what was your experience? You had two hours with Sarah Palin. You had a chance to talk to her and you feel though that she did not get a fair shake in the interviews and in the press coverage of the collection.
ZIEGLER: There's absolutely no question that if you compare the treatment of her with the treatment of Barack Obama, that Sarah Palin got the short end of the stick. It's not even close. We've proven it in this documentary. You can find out all about it at howObamagotelected.com. The evidence is overwhelming and we've proven the case.
CHETRY: Why do you think that Sarah Palin was targeted the way she was?
ZIEGLER: It was a perfect storm situation. First of all, she was a threat to the media's favorite candidate Barack Obama. Also, she was very good for ratings. Every single story about Sarah Palin, whether it was the clothes which was completely bogus and ridiculous or many other stories that were not true sold newspapers and sold magazines and increased television ratings, increased internet circulation. So that was another element to this.
Plus I think a lot of the people in the media have an inherent distrust and are threatened by a woman who is very good looking, five kids, and has it all, happily married, very attractive. She was threatening to a lot of people especially in the news media. CHETRY: So you don't think it had to do with - you believe that Sarah Palin as a person as opposed to Sarah Palin and her views were conservative views about abortion, about guns -
ZIEGLER: There is no question the fact that she is pro-life offended a lot of people in the news media especially a lot of women in the news media. There's no doubt about that.
CHETRY: There are other people that came that were just as conservative like Mike Huckabee who many people said were media darlings. What was the difference?
ZIEGLER: Well, Mike Huckabee was not frightening. Mike Huckabee was never going to be president of the United States. Mike Huckabee was never going to be Barack Obama. When Sarah Palin came on the ticket, all of a sudden McCain-Palin rocketed to the lead. The news media panicked because their first attempt to destroy her back fired and so you guys called in the cavalry and you try to destroy here. I mean you were successful in a lot of ways.
CHETRY: I want to ask you about this because we're being honest there were a lot of conservatives, a lot of independents who were thrilled when Sarah Palin first came on the national stage.
ZIEGLER: Right.
CHETRY: I mean there are people who were really, really overjoyed to see a candidate like Sarah Palin for many reasons and of course, liberals do not agree with here on the opinions and liberals are not going to like Sarah Palin regardless of whether or not she's attractive or has five kids. But a lot of people felt that she was very refreshing. And then I want to read to you what conservative columnist Kathleen Parker said and I want to get your thoughts on this.
ZIERGLER: Sure.
CHETRY: She wrote, "like so many women, I've been pulling for Palin, wishing her the best, hoping she will perform brilliantly. I've also noticed that I watched her interviews with the held breath of an anxious parent, my finger poised over the mute button in case it gets too painful. Unfortunately, it often does. My cringe reflex is exhausted."
You believed that it wasn't necessarily how Palin answered, but the format of these interviews and the fact that the interviewers were out to get her?
ZIEGLER: Well, first of all, it's a great career move for people like Kathleen Parker to bash Sarah Palin. You would never quote Kathleen Parker in a million years if she said nice things about Sarah Palin. And that's a phenomenon that goes on in the news media.
If you're a republican or conservative bash Republicans, all of a sudden CNN wants to quote you and thinks that you're noteworthy and credible. But we proved in this documentary which you can find at howobamagotelected.com that everything you think you know about the media-created perception of Sarah Palin is almost totally based in falsehoods and we provide context to the news media did not especially when it comes to the Katie Couric interview which has been misunderstood in many ways and I hope the historical record will be corrected by this documentary.
CHETRY: Let me ask you one other question before we go. Because there are people that I know that I'm friends with who are conservatives who were very happy to see her as well who said that regardless of how she was treated that the interviews that she's done after the fact paint herself as a victim when we're in the middle of a huge crisis, make her look small. Why didn't she just say you know what that was then and here is my plan if I'm going to run in 2012 here is my plan to make the country better.
ZIEGLER: It's a great question and it has been very frustrating to me that this interview that I have done with Sarah Palin, all of which is now available on the DVD. I urge people to watch the whole thing because it tells a totally different story of this election that somehow she comes across in the news media.
The very same news media that destroyed her credibility and now she is a whiner because she wants to set the historical record straight? What is she supposed to do? Sit back in the fetal position like George Bush did and have her approval ratings go to 28 percent. She is fighting back. She's telling the truth and in this documentary you get the real truth about what happened to Sarah Palin in this election and Barack Obama, by the way.
CHETRY: And in a nutshell tell me why you feel so passionately, why you believe this was wrong?
ZIEGLER: This is incredible injustice! What happened here.
CHETRY: What is it about Sarah Palin that makes you feel strongly about here.
ZIEGLER: I think she is someone who is a good person, who tells the truth and who has an incredible future and I believe what happened with the media targeting of her was a great injustice. It was an injustice regardless of your political persuasion. It was dangerous for democracy. Anyone that cares about fairness in our media ought to care about this issue.
If you're a Hillary Clinton supporter or Barack Obama supporter or Sarah Palin, this is an incredibly important issue and I've devoted my life to it and that's why we put it all together in howobamagotelected.com.
CHETRY: All right. Well, it was great to talk to you today. You certainly showed your passion as well. Thanks so much, John.
ZIERGLER: Thank you for your time.
CHETRY: It's 44 minutes after the hour.
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ROBERTS (voice-over): Is Mexico's drug war headed here? New fears. New turf. America.
UNIDENTIFIED MALE: It's spilling over to the borders. It's very much a consequence of our failed prohibition of policies.
ROBERTS: The dangerous drug war, too close to home. You're watching the most news in the morning.
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ROBERTS: We're back with the most news in the morning. Mexican drug lords aren't just bringing narcotics into the United States, some violent cartel clashes are breaking out north of the border and now police say the problem will only get worse. That is heating up debate over the so-called war on drugs inside the beltway.
Our Jim Acosta is tracking the developing story from Washington this morning. Jim, down there along the border between Mexico and the United States, things really getting heated and we are seeing a lot of this spreading very far north from time to time.
JIM ACOSTA, CNN CORRESPONDENT: It is heating up, John. And with so much attention focused on the economy these days, the war on drugs was barely mentioned during the campaign and now President Obama has some difficult decisions to make. Just as a dramatic surge of violence is flaring up south of the border.
(BEGIN VIDEOTAPE)
ACOSTA (voice-over): After more than 6,000 people died in drug- related violence south of the border last year, there are fears that Mexico's narco war is headed north.
VINCE VASQUEZ, BORDER SEUCRITY ANALYST: We already begun to see drug related violence and cartel violence in Phoenix. So this is something that I think you'll begin to see more and more reaching the interior of the United States.
ACOSTA: Just before he took office, President Obama pledged to support Mexico's crackdown but critics of the U.S. war on drugs argue it's time for a change in policy. Aimed at reducing demand.
ETHAN NADELMANN, DRUG POLICY ADVOCATE: The border violence in Mexico has not been this bad since the Mexican revolutions of a hundred years ago. It's spilling over to the borders. It's very much a consequence of our failed prohibition policies.
ACOSTA: Three former Latin American presidents recently wrote in "The Wall Street Journal," "the war on drugs has failed and it's high time to replace an ineffective strategy with more humane and efficient drug policies."
OBAMA: Let's do what's smart.
ACOSTA: During the campaign, Mr. Obama promised a new approach.
OBAMA: I think it's time we took a hard look at the wisdom of locking up some first-time nonviolent drug users for decades.
ACOSTA: The White House says it wants to focus more on prevention and treatment and less on prison time. The administration is considering Seattle police chief Gil Kerlikowske, prevention advocate for the nation's next drug czar.
The question is whether that means change for federal drug enforcement agents battling traffickers. The clash captured in the DEA's own reality TV show. And there are foreign policy implications. The Bush administration had promised a billion dollars in aid to Mexico's army, an echo of U.S. support for Colombia's drug war. Opponents of the drug war ask who is winning?
REP. RON PAUL, (R), TEXAS: I don't think like pot but I hate the drug war so I would repeal all of the prohibition but I wouldn't even bother taxing it!
(END VIDEOTAPE)
ACOSTA: Now changing drug policies says one expert is sort of like changing directions in an aircraft carrier. Slow is the key. For now, the administration is not talking about legalizing or decriminalizing drugs, something that would require the consent of Congress, John.
ROBERTS: You know, so we talked about everything that's going on inside of Washington and the debate there, at the same time, some schools in the southwestern districts are telling their students do not - the violence.
ACOSTA: That's right. A couple of universities in Arizona have issued warnings to their students saying don't go to Mexico. And just last Friday, the state department issued an updated travel warning for Mexico, warning Americans that if you cross over into these border towns, expect that you might run into some of the violence that has flared up down there.
There are clashes going on not between the police and these cartels but the military. And in some of these cases, the State Department is saying Americans can't leave even leave these areas while these clashes are going on. The warning that's going out to University students as we get very close to spring break, it is a right of passage is that you go to these areas at your own risk. John.
ROBERTS: Let's talk about a lot of people go to the Yucatan Peninsula, a lot of people go down to the west cocabo, San Lucas, are they still OK, do we know?
ACOSTA: Right. As far as we can tell, you know that kind of violence is not happening at the big resort towns. So if you can fly there, you're probably going to be OK. But, you know, a lot of college students from Texas, Arizona and New Mexico, they drive, you know, as we were saying last hour, 20 hours or so through the interior of Mexico and there are kidnappings going on. Mexican police stations are shot up like, you know, out of the old wild west, John. So it is a concern for students.
ROBERTS: Terrible problem there. Jim Acosta, bringing it to us this morning. Jim, thanks so much. Kiran.
CHETRY: We'll take a quick break and when we come back we're learning new details from our White House correspondents about what may be in Barack Obama's speech tonight. The president is going to be addressing Congress, as well as the nation, about our economic crisis. So how is President Obama going to strike the right balance between being realistic and also being optimistic about the future? We're going to talk more about it coming up.
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CHETRY: welcome back to AMERICAN MORNING. It's 55 minutes after the hour right now. We're going to check in with Rob Marciano for a look at weather across the country. This morning, it's still pretty cold out there in a lot of places.
ROB MARCIANO, CNN, METEOROLOGIST: It is cold and it's still winter so another month or two before we see things to warm up. I want to show you some pictures here. You guys reported on this just a little while ago. There was an orbit satellite that was supposed to launch or did launch early this morning out of Vanderberg Air Force base.
It launched successfully and it was carrying an orbiting carbon observatory which was going to measure basically carbon at very exact levels so we could get a better grip on climate change. Well apparently the payload failed to separate from the launcher. So that is not a good thing. And from what we understand, the rocket itself splashed down into the ocean and the payload did not separate. Any more details than that will be forthcoming today but that does not sound like a successful mission at this point.
All right. Today, we're looking at cold air across much of the country with the exception, Kiran, of warming air across Texas. 10 to 20 degrees average and that's nice to hear. And I know you guys are shivering up there so spring is just around the corner.
CHETRY: That's right. It depends on who you listen to. Staten Island chuck said no, not until six more weeks of winter but Punxsutawney Phil said yes. But Punxsutawney did not bite the mayor of the city either.
MARCIANO: Well, they're a little bit feisty in New York. That's for sure.
CHETRY: Thanks, Rob.
ROBERTS: Looking at the temperature outside, I think Punxsutawney Phil was correct, six more weeks of winter. Hey, today's CNN.com is rolling out its extensive and exclusive coverage about your money beginning at 11:00 Eastern. A special online edition with "State of the Union" with John King today with real-time reaction from you. At noon, Christiane Amanpour previews President Obama's primetime speech to Congress. At 1:00 Eastern, Ali Velshi and the CNN money team host a two-hour special on the state of the economy and at 3:00 Eastern, Suze Orman answers your questions. It's all day, all on-line at CNN.com/live. And of course, tonight, full coverage of the president's address to a joint session to Congress.
CHETRY: That's right. And our White House correspondent is getting a little bit of new information about exactly what he is going to talk about in his speech saying that it's probably going to run about 50 to 60 minutes. He's going to address a lot of the concerns but also strike an optimistic tone and maybe a sign that he listened to some of that advice from former president Clinton that you have to say, you know, our best days are still ahead of us.
ROBERTS: Yes. There's always this belief that if you talk down the economy, you'll actually start to bring it down and there's enough things bringing down the economy without the president talking down as well. He'll also be talking to some degree, we understand, about health care as well. Because if you're talking about cutting the deficit, you got to do something about Medicare, Medicaid and social security.
CHETRY: That's right and he is launching a big push next week as well to talk about tackling wasteful spending in health care. A lot of big challenges ahead that's for sure.
ROBERTS: That's going to do it for us on this AMERICAN MORNING. We'll see you back here again tomorrow with full post-game analysis of the president's address.
CHETRY: In the meantime, CNN NEWSROOM with Heidi Collins starts now.
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