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Is Mark-to Market the Root of All Out Problems?; Global Markets Struggling to Rally; Search Continues for 3 Missing Off Florida Coast; Steele's About-Face on Limbaugh; Madoff Tries to Keep Assets; Financial Crisis Deepens; Pink Slip Opportunities; White House Website Woes

Aired March 03, 2009 - 06:00   ET

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


KIRAN CHETRY, CNN ANCHOR: Welcome. It's Tuesday, March 3rd. Glad you're with us on this AMERICAN MORNING.

JOHN ROBERTS, CNN ANCHOR: Good morning. Good to have you with us. We got a lot to cover today and here's what's topping our agenda right now. Your money taking another big hit.

The Dow sinks to another new low, opening at a level that we have not seen since 1997. A number of overseas markets also tumbling right now. It's bad news all around.

We have a team of people here to break it all down. Our Christine Romans is with us in New York. Suzanne Malveaux is live at the White House looking at the president's plan to attack the economy. From an international angle this morning, Charles Hodson is in London with reaction to the ground in Europe. And our Carol Costello is in Washington looking at layoffs and how sometimes they can be, believe it or not, a gift in disguise.

Also this morning, he confronted Rush Limbaugh after the talk show host's latest verbal assault on the president. But now, Michael Steele, head of the Republican National Committee, is, well, shall we say, rethinking his position as it regards to Rush and apologizing to him. Jim Acosta is following the story live from Washington for us this morning.

A frantic search and a dramatic rescue off the coast of Florida. Three boaters are still lost at sea, two of them pro-football players. Coast Guard rescuers found one of the missing boaters clinging to the fishing boat that it capsized in rough seas. There's a picture there of Nick Schuyler as the Coast Guard is coming to the rescue. John Zarrella live in Miami with that developing story. We'll talk to him in just about eight minutes' time.

CHETRY: It is just amazing to think clinging to what's left of your boat upside down for 36 hours.

ROBERTS: You see the picture of Nick Schuyler there, and you got to think what is going through his mind.

CHETRY: I know. Unbelievable.

All right. Much more on that a little bit later, though. We are going with breaking news right now.

The markets overseas are reacting understandably to the brutal day on Wall Street. The red ink now stretching from Asia to Europe today after the Dow dropped 300 points Monday, in fact, finishing below 7,000 for the first time since 1997. It's been quite a slide from the Dow's peak of 14,000. This was just a year and a half ago.

The panic and the concern spilling over into prime time. In fact, last night on "LARRY KING LIVE," actor and economic commentator Ben Stein said he's alarmed but also offered his solution to this crisis.

(BEGIN VIDEO CLIP)

BEN STEIN, COLUMNIST, COMMENTATOR: It's a terrifying situation. The hopes and retirement dreams of an entire generation are being wiped out. I have never seen a more scary situation for savers and investors in this country. Drastic action is required. I don't see it coming.

I don't lay this crisis at the foot of the Obama administration. It started with Mr. Bush, but Mr. Obama is the president now. He's got to do something about this.

Mark-to-market has got to go. It's got to get the banks stabilized, stop this wild trading and credit default swaps. The speculators are killing the honest citizens.

(END VIDEO CLIP)

CHETRY: All right. There we hear from Ben Stein who oftentimes has some very, very smart things to say about the economy.

Christine Romans joins us now with more about this. These are words that our producers' eyes glaze over when we say but mark-to- market one thing. I mean, he's talking about the speculation and these credit default swaps which really a lot of people say is what led to the biggest problems in banking.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: And mark-to-market is a kind of accounting. It means that the banks have to be accountable every single day for what the value is of the things on their books. But we don't know what the value is of some of these toxic assets and so that's what's really dragging down a lot of these different companies.

And my phone lines are ringing off of the hook with people who want to talk about all the different things, including changing mark- to-market. So it's a little -- it's an accounting thing that's suddenly blown up into main street America. And I think that he is absolutely right, Ben Stein, when he says the savers and investors are being punished.

We are all being punished. We are watching our 401(k)s bleed dry. I mean, it is really amazing when you look at 10-year returns on the S&P 500 that are negative now for the first time ever. That means people who started investing in their 20s when they got their job and did what they were supposed -- now they're flat or negative if they're really heavily, heavily invested just in stocks.

Now some people will tell you that's why you have to have a balanced portfolio. You have to have some bonds. You have to have some cash. You have to have some alternative investments, a little bit of real estate. In that way you can weather it all. But everything is going down and that's what's really, really hurting the savers and investors. And especially people who didn't use credit to try to grow their wealth, they use the old-fashioned saving and investing, those people have been decimated and it is a sad, sad difficult situation.

ROBERTS: Yes. As we've seen the markets past though, things do turn around eventually. November of 1987, the market was back where it was a few years earlier.

ROMANS: That's right. And I keep looking at the charts and the GDP statistics. The last time it was this bad how long was it before there was a snapback, because that's what we really want to keep going back for, trying to figure out when things are going to turn around. We just don't know yet.

What the markets are telling us right now is that it's still a very difficult situation in the economy and will likely be that way for some time here. We're going to get a lot more economic data this weekend. Frankly, all of it expected to paint a pretty grim picture. So we're still in the jaws of it and that's the bottom line.

CHETRY: Well...

ROBERTS: Go ahead.

CHETRY: Yes. I was just going to say what we're going to try to do, though, is not be all gloom and doom and offer some practical advice...

ROMANS: Absolutely.

CHETRY: ... and a take on where you go from here if indeed you are in that situation where you watched your 401(k) dissolve.

ROMANS: Absolutely.

ROBERTS: Fortunately though for the moment, a little more doom and gloom. As we mention the economic pain is global this morning.

London's FTSE opened at its lowest level since April of 2003. The sell-off there also fueled by fears of painful bank losses. And this morning, we're tapping into the global resources of CNN.

Charles Hodson is the anchor of "World Business Today" on CNN International. He joins us live this morning from London.

Charles, what direction is euro headed in now? CHARLES HODSEN, CNN INTERNATIONAL ANCHOR: Well, Europe is really at the kind of tug of war between bulls and bears going on here. We're still seeing a little bit of strength in one or two of the markets in the Cochranton in Paris and in the SMI (ph) in Zurich. They're up just very slightly.

Whereas we saw some quite decent gains earlier on in the trading session with all of these markets up by one percent or more, now we're looking, for example, at the London FTSE, which is the largest of these indices, off by more than one percent.

We had a big kind of relief rally it seems. It was very interesting what happened with the Asian markets. They went way down after what had happened on Wall Street overnight in their terms. And then they actually clawed their way up and that momentum went upwards into Europe. But now I think, as soon as people see a little bit of strength, they're selling. I suspect that lot of people are taking chips off the table because they've been caught by surprise by just how far these markets have fallen, how fast in recent sessions, John.

ROBERTS: You know the fact that there's a bull to be found anywhere rather surprising.

Charles Hodson for us this morning. Charles, good to see you. Thanks so much.

And right now, British Prime Minister Gordon Brown is in Washington. In just a few hours, he's going to meet with President Obama to push a global new deal to tackle the credit crisis.

CNN's Suzanne Malveaux is the only reporter live at the White House this early in the morning, and she is loving it. What's the focus going to be at the meeting this morning, Suzanne?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Hey, John.

Just within hours or so, the two leaders are really going to try to change the game here, going from partners in war to partners in peace, essentially the focus not so much in the military alliance but really the economic alliance. So what we're going to see from Brown is that he is going to be introducing what he's calling the so-called global new deal, ways of reforming these crumbling financial institutions both in London and New York.

Obviously, President Obama is listening. You may recall that it was Britain that really took the lead in recapitalizing its own failing banks. It was the United States that followed suit. Also, both of these leaders trying to set the table, make sure that they have a common agenda for a global economic summit. That's going to happen in April. That's when President Obama will travel to London and they'll sit down with leaders of other industrialized nations and try to figure out ways to deal with this financial crisis, John.

ROBERTS: Prime Minister Brown did not have the warmest of relationships, shall we say, with President Bush. Symbolism always important in these types of meetings. Any insight on what we might see today?

MALVEAUX: The -- yes, as a matter of fact "The London Times" said they actually report that Brown, Gordon Brown, will come with the gift bearing gift for President Obama. It's actually a wooden ornament that's taken from a British ship of the 19th century that was used to suppress the slave trade and that was something that he believes will be a good sign and a good gift for President Obama.

Now, the last gift from Britain that was in the Oval Office, you may recall, that was the bronze bust of the world leader Winston Churchill. Obviously, President Bush adored Churchill so that was very significant. Since then, President Obama has removed it from the Oval Office, John.

ROBERTS: Yes. There was some controversy about that, too, in the old side. But now you spoiled the surprise, Suzanne.

MALVEAUX: I did?

ROBERTS: He knows what he's -- he knows what he's getting.

MALVEAUX: Oh, well, yes, that's true. Many are watching. We don't know if he's watching right now so we'll see.

ROBERTS: All right. Suzanne Malveaux at the White House this morning. Suzanne, thanks so much -- Kiran.

CHETRY: Other stories new this morning. President Obama reportedly offered to pull the plug on a planned missile defense system for Eastern Europe if Russia would help stop Iran from developing nuclear weapons. The "New York Times" quote sources saying that the president made this offer to Moscow three weeks ago in a secret letter that was hand delivered to Russian President Dmitry Medvedev. Russia has vehemently opposed the missile shield which would include sites in the Czech Republic and Poland.

Congress renewing efforts to pass legislation that would give the Food and Drug Administration the authority to regulate cigarettes and other tobacco products. House lawmakers pass the bill last summer. It faced a veto threat from then President Bush and never had a vote in the Senate. President Obama, who is trying to kick the cigarette habit, supports the bill.

And now to a desperate search in the Gulf of Mexico for three boaters, still lost at sea, two of them pro football players. One of the missing boaters was rescued Monday. The Coast Guard found them clinging to their capsized fishing vessel just off of Florida's Gulf Coast.

CNN's John Zarrella is following the developing story today in Miami. And when you saw the picture, John, it was just amazing to see him clinging to this capsized boat for 36 hours.

JOHN ZARRELLA, CNN CORRESPONDENT: Yes, right in the middle of the Gulf of Mexico, all that surrounded him is just water everywhere. Now, for these other three men still missing, they have now spent Saturday night, Sunday night, Monday night in the water, temperatures in the low to mid-60s in those waters. They are likely suffering some form of hypothermia beginning to set in, but for the one man yesterday a dramatic rescue.

(BEGIN VIDEOTAPE)

ZARRELLA (voice-over): The U.S. Coast Guard found Nick Schuyler cold, wet and alive.

CAPT. TIM CLOSE, U.S. COAST GUARD: The boat was overturned, and he was on top of the boat.

ZARRELLA: For the search teams, Schuyler's rescue is bittersweet. He was alone. This Coast Guard photograph showed him sitting on top of the 21-foot boat as it bobbed in the choppy waters of the Gulf of Mexico. Schuyler's friends, William Bleakley and NFL players, Corey Smith and Marquis Cooper, were not with him.

CLOSE: We now know we're looking for persons in the water, not the boat. So they're doing search and rescue planning and we started hitting that area very hard.

ZARRELLA: The boat was found 35 miles off Tampa Bay. The Coast Guard believes the current in the area would have carried the missing men southeast toward the coastline. Schuyler was hoisted in a basket from the Coast Guard cutter Tornado to a helicopter and airlifted to Tampa General Hospital. He was alert and sitting up as he was placed on the stretcher.

When she heard her son was alive, Schuyler's mother says she collapsed.

MARSHA SCHUYLER, NICK SCHUYLER'S MOTHER: I passed out. I went down. We're ecstatic. I mean, we couldn't have asked for a better ending for us.

ZARRELLA: Schuyler told the Coast Guard that a large wave capsized the boat on Saturday. All four men went into the water and all four were at least for awhile clinging to the boat.

SCHUYLER: I went and saw him first and he told me, "Mom, I kept saying, you're not going to go to my funeral." He says that's what kept him hanging on.

ZARRELLA: In the Coast Guard photographs, you can see Schuyler wearing a yellow raincoat and a red life vest. It's believed his friends were, too, but for them, time is not on their side.

(END VIDEOTAPE)

ZARRELLA: Because they are either present or past football players, the Coast Guard says their body physique, they're in better shape. So, Kiran, that gives them at least better odds of surviving -- Kiran.

CHETRY: It is heartbreaking when you think about it, he said that they originally were all four holding on to the boat, and so you just wonder where you go from there, and then when you take a look at those waters.

ZARRELLA: No question about it, and it's very chilly out there this time of year. Although the water has calmed down now, so if they're out there it will be easier for search teams to spot them.

CHETRY: All you can do is pray that somehow they made it through.

John Zarrella for us this morning, thanks.

ROBERTS: Here's our favorite story of the day. He tried to take on Rush Limbaugh, then the head of the Republican National Committee reversed course, did a 180, apologized. We'll take a look at Michael Steele's about-face. Jim Acosta is live with that coming up.

It's 12 minutes now after the hour.

(COMMERCIAL BREAK)

ROBERTS: Fourteen minutes after the hour now and time to fast forward to some of the stories that you'll be hearing about all day on CNN.

Senator John McCain looking to get to the bottom of the financial turmoil. At 3:00 Eastern, he and Senator Byron Dorgan will introduce legislation to create a select committee to investigate the causes of the crisis and make sure that it doesn't happen again.

While Gordon Brown meets with President Obama, former British Prime Minister Tony Blair will be on Capitol Hill talking climate change. He'll join key senators and company CEOs at a press conference focused on economic opportunities provided by U.S. climate policy.

And this afternoon, at 2:00 Eastern, First Lady Michelle Obama visits Arlington National Cemetery paying tribute to the service of American women in the military, The event is in honor of Women's History Month -- Kiran.

CHETRY: All right. John, thanks so much.

Well, you said this was the favorite story of the morning. A very public battle playing out at the highest levels of the Republican Party. After sounding off right here on our air at CNN about Rush Limbaugh, RNC Chairman Michael Steele doing a complete 180 and apologizing to the radio host.

Our Jim Acosta has been working the story. He is live in Washington. Boy, this sounds like a familiar storyline.

JIM ACOSTA, CNN CORRESPONDENT: Hmm, yes, who needs "Smackdown," Kiran, when you have Republican Party politics. That's right.

At issue are some highly explosive comments Limbaugh has been using to fire up the base. He repeated them this weekend at the annual conservative action conference bringing the crowd to its feet by saying he hopes President Obama fails. If you haven't heard it yet, take a listen.

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, CONSERVATIVE RADIO HOST: What is so strange about being honest and saying I want Barack Obama to fail, if his mission is to restructure and reform this country so that capitalism and individual liberty are not its foundation? Why would I want that to succeed?

(END VIDEO CLIP)

ACOSTA: Tough words in a time of economic crisis and a tough sell for this man, Michael Steele, the chairman of the Republican Party, the same man faced with finding a way to build the Republican base and get it back to power. So Steele took the unusual and risky step of calling out the man who rules talk radio. He did it right here on CNN talking to D.L. Hughley.

(BEGIN VIDEO CLIP)

D.L. HUGHLEY, CNN HOST: We don't need incendiary rhetoric.

MICHAEL STEELE, CHAIRMAN, RNC: Exactly.

HUGHLEY: Like Rush Limbaugh who is the de facto leader of the Republican Party.

STEELE: No, he's not.

HUGHLEY: Well, I tell you what? I've never heard anybody...

STEELE: I'm the leader of the Republican Party. Let's put into context here. Rush Limbaugh is an entertainer. Rush Limbaugh, this whole thing is entertaining. Yes, it's incendiary.

HUGHLEY: (INAUDIBLE) Republican Party. Right.

STEELE: Yes, it's ugly.

(END VIDEO CLIP)

ACOSTA: But it got uglier. If you take on a man with a microphone and a few hours of air time to kill, guess what happens? You got it, Limbaugh had Steele for lunch.

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, CONSERVATIVE RADIO HOST: It's time Mr. Steele for you to go behind the scenes and start doing the work that you were elected to do instead of trying to be some talking head media star.

(END VIDEO CLIP) ACOSTA: And that brings us to where we are now, the leader of the Republican Party stuck in the middle, backing off and issuing this public apology yesterday.

"I respect Rush Limbaugh. He is a national conservative leader and in no way do I want to diminish his voice. I'm sure that he and I will agree most of the time but will probably disagree some as well, which is fine."

The Democrats no doubt enjoying this fight from the sidelines. And, Kiran, I have a statement from Tim Kaine, the governor of Virginia and also the new head of the DNC, the Democratic National Committee. He says, "Chairman Steele's reversal and his apology to Limbaugh proves the unfortunate point that Limbaugh is the leader of the Republican Party, the leading force behind the Republican Party."

Almost word for word, Kiran, what Rahm Emanuel over at the White House, the White House chief of staff said on one of the Sunday talk shows, so the Democrats have their talking points now. They like where Rush Limbaugh is, and that it appears for the moment to be leading the Republican Party, if not running the RNC very much controlling what the RNC says and does at this point, Kiran.

CHETRY: Very interesting stuff. Jim Acosta for us this morning, thanks.

We also want to let people know that we're reaching out to both Michael Steele and Rush Limbaugh. So if we're able to talk to them, you can see it right here on AMERICAN MORNING.

It's interesting the reason we said the script sounds familiar is when a congressman by the name of Phil Gingrey also criticized Rush Limbaugh. He sort of called into his radio show, backtracked, called him a giant of conservatism. But not all Republicans --

ROBERTS: It was almost like one of those pilgrimages where you prostrate (INAUDIBLE) yourself and then you crawl along the pebbles to get to him. But yesterday, don't forget Ron Paul was on our air and Ron Paul said a couple of things about Rush Limbaugh. He said, He says the right things. I think a lot of people like to hear what he's saying but I also think he's a little bit polarizing and confrontational.

And otherwise what does it say when a talk show host is the leader of the Republican Party and not a political leader? He said, "I think it's kind of sad."

CHETRY: All right. Well...

ROBERTS: I think it's pretty sad. He said it's a good point to make. That means the Republicans are really starving for some type of leadership." We haven't heard Ron Paul apologize, though.

CHETRY: No. And Ron Paul doesn't really do that very much.

ROBERTS: Being Ron Paul means never having to say you're sorry. CHETRY: Exactly.

All right. Well, we'll continue to follow this, of course, get reaction on both sides this morning.

ROBERTS: We will.

This morning as the United States rushes thousands more troops to Afghanistan, new numbers reveal just how difficult and how bloody that war really is. CNN's international security correspondent Paula Newton is live on the ground with breaking developments. We'll go to her coming up next.

It's 20 minutes after the hour.

(COMMERCIAL BREAK)

ANDREW STEVENS, CNN CORRESPONDENT: Welcome back to the Most News in the Morning. I'm Andrew Stevens in Hong Kong following breaking news.

Another rocky day for the Asian stock markets but it could have been much worse. The Nikkei in Japan closed less than one percent down, but the banks are still in the front line of selling on worries about the U.S. financial system.

Hong Kong took a much bigger hit as the giant HSBC bank which has just announced that it's closing its U.S. consumer loans business and cutting 6,100 U.S. jobs plunged nearly 20 percent. That's after it unveiled a big (INAUDIBLE) job and a $17 billion capital raising plan. The Hang Seng closing down 2.3 percent -- John, Kiran.

ROBERTS: Tapping into the global resources of CNN there. Andrew Stevens giving us a glimpse of things in Asia. And in just a few minutes time, we'll continue to break the story down. We've got a couple of great economic minds here in our studio to look at how low the markets could go and what you can do to protect your investments. That's coming up in about eight minutes' time.

But right now, the United States rushing to send reinforcements to Afghanistan, where the Taliban is waging a bloody war to try to take back power. And this morning, CNN is dedicating more time and sources to a dangerous region where American troops are risking their lives.

CNN's international security correspondent Paula Newton is live for us this morning in Kabul, Afghanistan. And, Paula, we're already seeing a big spike this year in the number of U.S. deaths in Afghanistan.

PAULA NEWTON, CNN INTERNATIONAL SECURITY CORRESPONDENT: Already, John, you bet. There's been a tripling of U.S. troop deaths just in the first two months of 2009 compared to 2008. The greatest risk here, John, so far, are the IEDs, those roadside bombs and also huge threat of suicide attack. John, I want to point out we are just getting started here. It is beginning, the snow is beginning to thaw. Spring is coming. Those 17,000 troops are beginning to come into the country.

What the U.S. military is telling us is that they are ready to take on the Taliban yet again but unfortunately, John, that means more U.S. lives at stake, and also to point out not just the U.S. Army, it's also civilian deaths, also spiking in the first two months of 2009 -- John.

ROBERTS: You mentioned there, Paula, the 17,000 American forces that will soon be arriving in Afghanistan. President Obama's first moves in Afghanistan, he's still reviewing what to do there. Some of the commanders on the ground say they'd like to have at least another 10,000 troops. What are his options there?

NEWTON: You know, the key thing here, John, is they said it time again, just more troops isn't going to do it. What Obama is trying to do is select between do we do counterinsurgency, counterterrorism, or do we do that and nation build? Depending on what he chooses, that means more American lives at risk. It means he will need more troops but a lot more intelligent strategy about how to hit the Taliban, really clear those Taliban areas and then continue to have that strategy of holding communities so that they can really have a sense of peace and civilian life.

The problem here, John, and you know coming in here, you can see the troop movements inside, off the record, in confidence. U.S. troops telling me, look, with the drawdown in Iraq, we do not want exit door to Iraq leading straight into Afghanistan. We not knowing exactly what the end game will be.

But make no mistake, it's spring here, John. This will continue to get worse. It will be quite a bloody campaign before it's over -- John.

ROBERTS: Paula Newton reporting live for us this morning from Kabul in Afghanistan. Paula, thanks so much - Kiran.

CHETRY: Bernard Madoff the man who allegedly bilked investors out of billions wants to keep his penthouse apartment where he's under house arrest. That's not all he's demanding. We're going to bring you the new twist in the story.

Also ahead on Wall Street, it's 1997 all over again and that's not a good thing, the Dow's 300-point nosedive. So what does the market's breathtaking decline mean for your money? What does it mean for your 401(k)?

We have some of the best investment pros all around and they're going to join us with some good advice for you. It's not all doom and gloom at 27 minutes after the hour.

(COMMERCIAL BREAK)

CHETRY: Welcome back to the Most News in the Morning. The Justice Department releasing a string of once secret Bush administration memos that shed new light on its broad definition of presidential power in the wake of the 9/11 terrorist attack. One claims that the president had an unfettered right to transfer suspected terrorists to other countries without regard for possible torture.

CIA Director Leon Panetta has said that the U.S. will continue to engage in extraordinary rendition but will be more selective about where those prisoners are sent.

This morning, hope for families struggling to stay in their homes. Citigroup is announcing it will allow unemployed homeowners to pay as little as $500 a month on their mortgage. That reduced rate would last for three months and during that time, Citi will waive interest and penalties. Some homeowners may also be able to get an extension depending on their situation.

Also this morning, new outrage with the man charged with stealing as much as $50 billion from investors. In new court documents, Bernard Madoff is trying to keep the government from taking his $7 million New York penthouse by claiming that it actually belongs to his wife. He's using the same rationale to try to stop $62 million in other assets from being seized. Right now, Madoff remains under house arrest.

And also this morning, American taxpayers are steamed over the government pouring billions of taxpayer dollars into AIG, the insurance giant. The same company that burned through nearly $700 million every day for three straight months. Overnight, two iReporters sounded off at the latest bailout news.

(BEGIN VIDEO CLIP)

DAVID SEAMAN, IREPORTER: You know, if you were to give me $62 billion and ask me to lose it for you, I don't think I'd be able to lose that much money ever. That is the most money lost by a company in a single quarter ever in recorded human history. And here the government is bailing them out. You know, rewarding greedy company for bad decisions. And I would be surprised if this is the last time one of these companies down here is bailed out by the government in a big way.

MANNY DORADO, IREPORTER: Another bailout? This is ridiculous. This is to the point where you are giving money to a company that's not responsible or taking responsibility for their action. They're one of the reasons why we're in this deep hole. I wish people could give me money or the government could give me money for messing up or not being responsible.

(END VIDEO CLIP)

CHETRY: All right, so we want to hear your thoughts throughout the morning. Go to our Web site cnn.com/am. Send us an e-mail or an iReport.

Some interesting comments this morning, John.

ROBERTS: Absolutely.

Hey, AIG $60 billion fourth quarter loss bringing Wall Street to its knees yesterday. Stocks begin the day at a level not seen since 1997 after this latest blood bath. The Dow dipping below the 7000 mark. So the question this morning, just how low can it go? And what should you do with your money in this terrible bear market?

Joining us now to talk about it, financial adviser Jill Schlesinger and Jacki Zehner. She's the founding partner of the Circle Financial Group.

So we're back where we were 12 years ago. That would be OK if I could get back to 12 years of my life, but I can't. We're all 12 years older. So why is this market up to? Why does it continue to sag and how low could it go?

JACKI ZEHNER, FOUNDING PARTNER, CIRCLE FINANCIAL GROUP: Me, first?

JILL SCHLESINGER, FINANCIAL ADVISER: I'm going to put you first on that one.

ZEHNER: Well, you know, there's a lot of ways to look at this. How low can it go? It can go a lot lower from here. I mean, the reality is the news is horrible.

(CROSSTALK)

ROBERTS: What are we talking, 6,500?

ZEHNER: Well, technically speaking around 6000, maybe 6500. I mean, opinions are about this far apart. Goldman Sachs predicting we're going to see a nice, healthy rise by the end of the year, but the reality is the economic news is horrible. The economy is going downward. It's not bottoming out yet, and I think we have to, you know, hope for some good news before we really settle in.

ROBERTS: Jacki employing a little bit of black humor, a couple of minutes ago saying, well, if we have 13 more down days of 500 points a day, it will all be over with.

SCHLESINGER: You know -- and you know, it's interesting. There is -- when we talk about there is no good news, there is no good news even from the policy standpoint, because we're getting a different policy reaction. It feels like every single day. And I think that that's quite unnerving for investors.

Realistically, we came into the year thinking we're going to turn the page. We have a new administration. Perhaps there's going to be a greater systemic solution. We haven't seen that yet so you take bad economic news which we all know about. We then take this emotional hope that we really did have that something big was coming. And what we really got was nothing. We got a series of missteps, frankly. ROBERTS: OK. So let's get into a little bit of news that people can use. That's not a siren going off. It's just an air vent that's kind of noisy.

So we used to count the trillions of dollars in losses every day on the DOW would go down. We kind of stop doing that because it got really depressing. But people's 401(k)s in some cases have gone down 45 percent, 50 percent.

ZEHNER: If not more.

ROBERTS: So, I mean, people who are close to retirement or they're going to need that money eventually, what kind of shape are they in?

ZEHNER: Well, this is a tough one, again. I mean, it's hard to make the call. I was on an endowment call yesterday and we are making this exact decision. Do we pull the money out or do we stay in? The reality is longer term, of course. But honestly, I'm kind of sick of hearing that. Longer term, you can expect it to rise. A big issue around whether to take money out, when do you need it? Don't expect it to turn around tomorrow and bounce back. We're going to get bear market bounces, but we are in a bear market.

ROBERTS: And how long do you think we'll be in this bear market?

SCHLESINGER: I think that, frankly, you'd probably -- it's not worth putting a number on it. It's going to be here this year for sure. And when we talk about a bounce, I think the other thing that we have -- investors who are really used to the last 25 years, where a bad period was really followed by a stronger period. I don't think that that's coming. I think that's going to be the big surprise on this.

ROBERTS: So if you hang in now, don't expect it to go back to 12,000 a year.

(CROSSTALK)

SCHLESINGER: Absolutely not.

ROBERTS: I think five years from now.

SCHLESINGER: And I would even suggest that the timing is one issue and how much you can really spend.

ROBERTS: So our investment counselors tell us, you know, the famous phrase, dollar cost averaging, just keep putting in the money and over time, it will all work out just fine. But when you got the Dow down like this and you don't know if it could be down further, and your 401(k) is taking a hit, you're your investments are taking a hit, what should you do in terms of investing? Pull back on how much you contribute every month? Put it somewhere else? What would you do?

ZEHNER: Well, as my husband says -- and here's an emerging market trader, now a minister, 50 percent cash, 50 percent gold. Now, do I agree with it? No, I do not. But there is some reality that this is uncharted territory.

I think again you can invest for the long-term. I like that dollar cost averaging. A lot better entry point here than it certainly was at 14,000. So I think you can feel confident that longer term it's going to go up. But again, do you need that money now and be very, very aware of liquidity.

ROBERTS: This is a really symbiotic relationship. Had you invest and he prays.

SCHLESINGER: Exactly.

ZEHNER: Exactly.

(CROSSTALK)

SCHLESINGER: You know, there's something good.

ZEHNER: It works so far.

SCHLESINGER: And I just want to say something important. Because I think we are really inundated with bad news. No one has repealed capitalism. This country is going to be out of this mess and we will be better for it. The problem is we are paying for a 25-year keg party, and this is a nasty hangover. We will get through this, but the price that we are paying is the collective actions of a lot of different players.

ROBERTS: All right. Thanks for coming in this morning, folks.

ZEHNER: Thank you.

ROBERTS: Wish you had a little bit better news for us.

ZEHNER: Thank you.

ROBERTS: It's 36 minutes after the hour.

CHETRY: Life after a layoff. You could wind up richer than before.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: They're taking a hard look at their lives.

(END VIDEO CLIP)

CHETRY: How to capitalize on getting canned. They did it. You can, too.

You're watching the Most News in the Morning.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP) JAY LENO, HOST, "THE TONIGHT SHOW": Stock market went down 299 points today. Ooh, man. You know, I don't want to say things are bad. I don't want to be one of those negative people, you know. But you see who rang the closing bell today? Take a look. This is pretty bad.

(BELL TOLLING)

LENO: It doesn't look good. It doesn't look good.

(LAUGHTER AND APPLAUSE)

(END VIDEO CLIP)

CHETRY: Save that joke, Jay, because unfortunately, you may need to use it again. Well, in the midst of all of this doom and gloom, there may be a silver lining. It's because some people down on their luck are actually realizing there's a better life after being laid off.

CNN's Carol Costello is live in Washington to explain how some are turning a negative into a positive.

You know, some of my friends say the same thing. The best thing that ever happened to them is that they got let go from a job that ended up, you know, leading to something better.

CAROL COSTELLO, CNN CORRESPONDENT: That's right. You should keep saying that, Kiran. Everybody should keep saying that, because -- OK, here's your shot in the arm for the morning. You're laid off. You don't know what to do. The job you had when you were laid off, you didn't really like it anyway. So now you must look at it as an opportunity to do something that really makes you happy. Yes, it is possible.

(BEGIN VIDEOTAPE)

COSTELLO (voice over): Welcome to one of Chicago's hottest small businesses -- Asili Chi Salon and Spa.

JENNIFER JACKSON, ASILI CHI SALON & SPA: I'm on a playground all day, you know. It really is. It's really, really fun.

COSTELLO: That's co-owner Jennifer Jackson, who used to work in corporate America as an electrical engineer with all the perks. But she got laid off. She tried teaching. Got laid off from that, too. It's enough to send anyone into a depression deeper than the recession. But Jackson saw it as an opportunity.

JACKSON: I've always been a risk taker all my life and I've always felt like unless you step out there in faith and try something different, you'll never know your true potential.

COSTELLO: So, in her mid-30s with little savings, Jackson went to beauty school, found a partner, bought a salon. Her story is not unusual. Many laid-off Americans are looking for work, but are also discovering the answer in this recession might be to switch gears completely and do what you love.

HALLIE CRAWFORD, CAREER COACH: I'm actually finding that it's kind of a post-9/11 effect, similar to that, where people, when they're contacting me, they're taking a hard look at their lives, and you know, is their life going in the direction that they want it to?

COSTELLO: Walter Kerschbaum asked himself that question after finding himself without a job after 30 years on Wall Street. He found he didn't want to go back. He wanted to fix antique clocks. So, he used $25,000 in savings to open up his own shop and he's never looked back. The secret, he says, find something you love.

WALTER KERSCHBAUM, SCARSDALE CLOCKS: What would make you want to get up every day and get out of bed and do something? When you come up with that answer, second question is, is there a way I can make money out of that activity?

COSTELLO: Both Kerschbaum and Jackson aren't as rich in dollars as they once were, but both say they're rich in something more important -- happiness.

(END VIDEOTAPE)

COSTELLO: It's sort of controlling their own destiny, Kiran. Now, if you want to try this, you have to have a plan first and you really do have to have something you love, because it's most likely you're going to make a lot less money than you did in that job you were laid off from.

CHETRY: Yes. And she's very versatile to be able to, you know, be an engineer and then cut hair and wow.

COSTELLO: That was -- that was the most fascinating part. I asked Jennifer. I said, electrical engineer and a hair stylist? She said, actually being an electrical engineer helped me style hair, because of the angles that you use to cut hair, you know, the parts you put in hair to cut it properly and the styling that you have to do. So, in essence, you know, her background in electrical engineering and architecture actually helped her be a better hair stylist.

CHETRY: Who knew?

COSTELLO: It's true.

CHETRY: Well, good for her. All right. Carol Costello for us morning. Thanks.

ROBERTS: Not to mention how handy it is when your flat iron breaks down, right?

U2 releasing its new album today -- "No Line on the Horizon." And this morning, New York City Mayor Michael Bloomberg unveiling a special honor. We'll tell you what it is, coming up.

It's 43-1/2 minutes after the hour. (COMMERCIAL BREAK)

ROBERTS: The song is called "The Streets Have No Name," but there's a street getting a new name. Welcome back to the Most News in the Morning. A live look over New York City there.

Well, this morning, one of the streets in Times Square is being renamed U2 Way. The temporary renaming coincides with the release of U2's new album "No Line on the Horizon" and their unprecedented five- night gig on "The Late Show with David Letterman," and today's dedication takes place on West 53rd and Broadway, just outside David Letterman's Ed Sullivan Theater.

Forty-six and half minutes now after the hour. A check on the weather here. We had lots of snow yesterday. The streets of New York a little slushy and mushy, but the Central Park scene looking awfully beautiful today, Rob, and cold outside as well.

(WEATHER REPORT)

ROBERTS: Thanks so much. It's 48 minutes after the hour.

CHETRY: Think it's hard selling a house these days? Try selling your cave.

(BEGIN VIDEO CLIP)

UNIDENTIFIED CHILD: Look at it. It's amazing.

CHETRY (voice-over): The cave sellers are motivated. Jeanne Moos on Cave Drive.

JEANNE MOOS, CNN NATIONAL NEWS CORRESPONDENT: Now, who would be in the market for a nice cave?

(END VIDEO CLIP)

CHETRY: You're watching the Most News in the Morning.

(COMMERCIAL BREAK)

CHETRY: Fifty-one minutes past the hour. Welcome back to the Most News in the Morning.

So how much is the housing market slumping? Well, a Missouri man can no longer afford the cave he's living in and he put up his unusual home for sale on eBay. Here's Jeanne Moos.

(BEGIN VIDEOTAPE)

MOOS (voice-over): If the economic meltdown has you feeling like crawling into a cave, have we got a deal for you -- a unique cave home for sale on eBay. The latest bid?

CURT SLEEPER, CAVE HOUSE OWNER: I had an offer for $450,000 show up in an actual contract form. MOOS: Curt Sleeper needs to sell or refinance because he can't come up with the $83,000 balance he needs to pay off by May. In the words of his son...

PERRY SLEEPER, SON OF OWNER: eBay having to sell the cave, that would kind of suck because, look at it, it's amazing.

MOOS: Sure, naysayers laugh when Sleeper first said he would turn this cave in Festus, Missouri into a home five years ago.

C. SLEEPER: And all of the same people now look at the house with -- you know.

MOOS: Three bedrooms, gourmet kitchen, luxury bath.

C. SLEEPER: Ted Nugent, Bob Seger, MC5.

MOOS: There's even a stage used for concerts back in the '70s. Now, the 215 Cave Drive, yes, that's its actual address, is up for sale. Sleeper is being deluged with inquiries. People make cave puns without realizing it. "What is your rock bottom price?" Joked another, "This will go great with my Batmobile."

ACTOR PLAYING BATMAN: To the bat cave.

MOOS: Those two were always sliding down the bat poles and zooming out of the bat cave.

Actually, the bat cave entrance isn't nearly as impressive as this one. Sleeper is a website developer, irony alert, developing websites out of a cave.

(on camera): Now, who would be in the market for a nice cave? An experienced cave-dweller. I've got just the guy.

(voice over): We kid, but the most common kidding Curt Sleeper gets is about his kids.

UNIDENTIFIED MALE: Have you named your children Bam-Bam and what was the girl's name?

MOOS: Don't' throw pebbles to people who live in glass caves.

Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

CHETRY: Saved at sea, but his NFL star friends are still out there, somewhere.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We still have three men missing.

CHETRY (voice-over): Here live with the latest -- the Coast Guard captain in charge. Plus, big about-face for a military mom. She reported for duty with her kids. )

UNIDENTIFIED FEMALE: I can't find anybody else.

(END VIDEO CLIP)

CHETRY: You're watching the Most News in the Morning.

(COMMERCIAL BREAK)

CHETRY: Welcome back to the Most News in the Morning.

President Obama pledged to make the White House transparent and tech savvy under his administration. The people trying to sound off on the economic stimulus package, for example, via the White House website, were initially limited to only 500 characters. That sparked some outrage. They changed it to 5,000.

But it highlights one bump in the road as the Obama administration tries to harness the successful web model that they used during the campaign to raise hopes as well as cash. Nicholas Thompson is a senior editor at "Wired" magazine, and he joins us now.

It's interesting, because the biggest problem is sort of making that leap from campaign to the office of the presidency. Why is it such a hurdle via the web -- on the web?

NICHOLAS THOMPSON, SENIOR EDITOR, "WIRED MAGAZINE": Well, for a couple of reasons. The first is the actual technology. When they're on the campaign, they can use anything they want. When they get into the White House, they have slow computers, slow operating systems. The system with which they built their website is actually terrible. It's not built at all for web communications today. That's problem number one.

Problem number two is there are all sorts of regulations -- legal regulations, privacy restrictions that slow you down.

And problem number three -- the internet is really good. It keeps getting people passionate and riled up. And it's not quite as good at having sophisticated slower conversations. So it's great for a campaign. It's a little harder when you actually govern.

CHETRY: All right. So let's talk about a couple of things. One with the privacy thing. You can't really text message, which they did, right? And the president's not supposed, I mean, can't send out a text message.

THOMPSON: Right.

CHETRY: And also those like mass notifications that they were able to send out on the internet. They can't do, as you said, because of the technology. So privacy and technology sort of come together to make that tough. Can that change? THOMPSON: Well, some of it can change. So for example, the president's not allowed to track users. Most websites when you login, they give something call the cookie. It allows the website to let you stay logged in. Makes easier to use. Government can't do that, right?

So when the government actually started using YouTube on whitehouse.gov, YouTube sends out tracking cookies. Government had a real problem. But there's a way around it. You can use video. You can use other services.

So two things you can do. One, you can be creative about the technology you use and second, a bunch of executive orders changing the rules.

CHETRY: That's very interesting. So, you're saying he needs to sort of rewrite the way that the president is able or allowed to communicate.

THOMPSON: Right. Here's another example. Presidential Records Act mandates that every time you update a website, you take the old version and you archive it for historians, you know. That makes a lot of sense with documents, but the website where you want to sort of update 15 times an hour, a little hard. So, we kind of need to change that rule. So, Obama needs somebody smart who understands all these rules, working very hard to change them to make it optimally efficient.

CHETRY: OK. You also -- you talked about changing rules, easier said than done in Washington. And number two, they've got seven people right now working in that office of online technology. Doesn't seem that their online team has seven people. It doesn't seem that's enough to sort of handle the workload.

THOMPSON: Seven people and they haven't hired a CTO yet. CTO is one of the big promises the Obama administration...

CHETRY: Chief technology officer.

THOMPSON: Yes. Chief technology officer. He's not there yet. He or she is not there yet, and we'd like them to come in soon.

CHETRY: All right. So, all of these problems put together, what is the biggest -- the two things were transparency and also the interactive nature. They wanted a chance to hear the comments and be able to put bills online, for example, have people give real advice, real reaction and then maybe tailor, you know, some changes to the average person. You say right now that all of those comments basically go into a black hole. So, how does that change?

THOMPSON: Right. Well, that's actually very hard and extremely interesting. So, what you'd like is you'd like there from there to be a bill coming up and people to comment and people to read all the comments...

CHETRY: Right. THOMPSON: ...and to search in and to sort through, but there are a whole bunch of problems. The first is that people start commenting. They say crazy things. They'll say things about Homer Simpson, or they say things better destructive.

So, on "Wired", if somebody says something crazy, we just delete it. I mean, the federal government -- well, actually there's a First Amendment problem. So, they have to figure out how to deal with that. One way would be to allow people to login, set up citizen accounts, but they haven't figured out how to sort that out. So what they've done right now is they said OK, comment, people type things in and then we don't think anybody reads them.

So there's a big step in order to turn it from a one-way conversation into a two-way conversation, that needs to happen and I think they're going to figure it out but not today, not tomorrow, maybe in six months.

CHETRY: Maybe they should call you for some advice. Nicholas Thompson, senior editor at "Wired" magazine, thank you so much.

THOMPSON: Thank you.