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NASA's Bed Rest Study; The Presidential Candidates on the Economy; Mexican Independence Day Celebrations Turned to Mourning; Stocks Take Historic Plunge; Recovering from Ike

Aired September 16, 2008 - 09:00   ET

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

HEIDI COLLINS, CNN ANCHOR: Slow recovery from two storms. No quick fix seen on Wall Street or the streets where Ike hit.
Today, the Fed could cut interest rates but will that calm investors after an historic plunge?

And being turned away in Texas. Residents told they cannot go home for some time.

I'm Heidi Collins. It's Tuesday, September 16th. You are in the CNN NEWSROOM.

The economy, it is "ISSUE #1" for you and it is our main focus this morning on CNN. Wall Street buckled up for a white-knuckled ride. The markets looking to rebound from yesterday's jaw-dropping loss of more than 500 points.

That is the largest point loss since the aftermath of the 9/11 attacks.

Overnight a brutal sell-off in Asia, too. Markets in Japan and Hong Kong lost about 5 percent of their value. South Korea, more than 6 percent.

So let's talk about what's happening right now. The fallout from the collapse of two Wall Street icons.

The Fed hoping to stop the bleeding from the biggest financial crisis this country has seen in decades.

Following all the angles, CNN's money team this morning on Wall Street. CNN's Susan Lisovicz. Our Kyung Lah is in Tokyo. Gerri Willis looks at how you can protect yourself as an investor, as CNN's Christine Romans looks at a possible dose of relief later on today.

Boy, we hope that is the case.

So let's begin with Christine and a move today that could ease the strain on your wallet.

Christine, we are hearing the Fed, of course, going to be meeting about 2:00 today.

CHRISTINE ROMANS, CNN CORRESPONDENT: That's right. And already this morning the Federal Reserve was doing what we call injecting liquidity into the marketplace, making billions and billions of dollars available to the banks to loan each other and that is expected or should -- give a little bit of relief this morning.

We still are seeing stock index futures, though, maybe indicating more of a decline. So we -- maybe not a real big impact overall in terms of the mood on that.

Still some anxiety on Wall Street this morning. We're waiting for a Fed meeting this afternoon. And, you know, even a few days ago no one expected that the Fed would cut interest rates from the 2 percent Fed funds target, but there are a few people who are saying that maybe the Fed, with a little bit of a cooler inflation number and lower oil prices, could have the wiggle room to do that.

But again, most people think the Fed won't do anything this afternoon. We'll be very closely watching this to see what the Fed has to say about just the conditions in the economy.

It's a really big day. I mean the Fed meeting could actually be overshadowed by all these other things that are happening. We are watching AIG.

COLLINS: Yes.

ROMANS: We are watching a lot of these other banks. We're trying to see what we're going to pick through from the wreckage of yesterday, and if yesterday was the big move or if there's more ahead -- Heidi.

COLLINS: Yes, and quite frankly, if this happens with AIG, possibly going bankrupt, that would just blow the whole Lehman Brothers thing...

ROMANS: Oh yes.

COLLINS: ... right out of the water. I mean it's an absolutely huge company that we are talking about. So we will talk more with you, Christine, about that very topic coming up shortly in the CNN NEWSROOM.

Meanwhile the opening bell on Wall Street, of course, less than a half-hour away. Want to check in with CNN's Susan Lisovicz on the floor.

Hi there, Susan.

SUSAN LISOVICZ CNN FINANCIAL NEWS CORRESPONDENT: Hi, Heidi. Well, we're coming off of a historic day on Wall Street. One trader described it yesterday as Darwinian in that only the strong survive.

COLLINS: Wow.

LISOVICZ: The problem here, Heidi, is that we're not through it yet, because AIG, this just massive insurance company, is teetering right now and we do not have a comprehensive plan on how it is going to make it on its own. So we are looking at a company that saw its shares drop a jaw- dropping 60 percent in one day, fall another 35 percent in the -- in pre-market trading. That's just one of our headlines.

We also have Goldman Sachs. Unfortunately now, 1 of only 2 stand-alone investment banks reporting its earnings. They actually came in better than expected. Big decline, not surprising, given the environment we're seeing.

Its earnings fell more than 70 percent. We're seeing that stock under pressure down 8 percent.

We did get some good news on inflation half an hour ago. But CPI, consumer price index, came in as expected, just a modest rise.

Oil prices -- if we're going to talk about inflation -- dropping another 4 bucks today. That's good.

We do have a Federal Reserve decision, as Christine mentioned, later on in the afternoon and the expectation is now that the Fed could intervene and the Fed -- actually the New York Fed already did injecting $50 billion in temporary reserves overnight.

That's the kind of situation we're in. It's -- there is a lot of uncertainty and what we've seen these kind of uncertainties is that the market sells off sharply. We're looking at a triple-digit open to the downside, Heidi.

COLLINS: All right, we'll be watching for that. We'll come back to you, Susan, when the bill rings in about 25 minutes or so.

Thank you, Susan.

LISOVICZ: You're welcome.

COLLINS: So you may be wondering how healthy is the U.S. economy?

Overseas, investors placed their bets and in Asia doom and gloom seems to be the mood of the day.

CNN's Kyung Lah looks at a brutal sell-off overnight.

Wow, Kyung, the latest now.

KYUNG LAH, CNN CORRESPONDENT: Brutal was certainly an understatement if you were in the middle of the markets here. It was a very rough ride in Asia. No matter where you look, South Korea, Hong Kong, and here in Japan, the -- world's second largest economy, all reported losses of anywhere from 5 to 6 percent.

One investor said that the best thing about today is that the day is over.

Now as far as what happens tomorrow and in the days after, the very big concern is in the export-driven economies of Japan and China is that the U.S. economy is fundamentally ill.

And here's how it impacts Japan and China and is connected to the U.S. These are export-driven economies. Think about the number of things you buy that have the words "Made in China" on them, or Japanese companies that you purchase from -- Toyota, Nissan, Nintendo, Sony, just to name a few.

They rely on the appetite of the U.S. consumer primarily. So if the U.S. consumer is not buying because of all these concerns that are happening on Wall Street, main street certainly being affected by Wall Street, then that impact, that appetite, goes away and then the economies in the companies in Japan and China are affected.

Asian markets certainly took a beating today, but they are bracing, Heidi, for more blows coming soon.

COLLINS: Ouch. All right. CNN's Kyung Lah, sure do appreciate that, Kyung.

And at the bottom of the hour we are going to be heading to London as well. CNN's Richard Quest will go beyond the numbers to look at the markets there.

No easy way after Ike. Look at that. Galveston, Texas officials urging residents who left not to come back and those who stayed to now leave.

The city described as unhealthy and unsafe and at last, a month away from having power restored -- at least a month away, I should say. Gas and electric lines to the island were severely damaged by Hurricane Ike.

And another thing people are worrying about today -- the possible spread of mosquito-born diseases. We talk about this all the time after storms like this.

In fact, President Bush leaving Washington this morning to survey the damage now in Galveston and Houston.

Houston residents also being told not to return yet. Some 150,000 Houston area evacuees are still out of their homes. Damage caused in the Houston area alone expected to run into the billions of dollars.

And with more than a dozen Texas refineries still at least days away from restarting, gas becoming a scarce commodity.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: It's going to be lack of gas in a day or two, and the debris in the streets is just unbelievable. It's just -- it's everywhere. Power lines are down. I don't see a lot of people doing that, but the FEMA people came in yesterday because they came right down that street.

(END VIDEO CLIP) COLLINS: A million and a half people in Texas still have no electricity. The death toll from Ike and from the bad weather spun off by the storm now stands at 27.

Well, it is a busy time of year for severe weather.

Rob, I know you've been down there and have a lot to report about what you saw when you were there. Wonder right now, though, if there are any other disturbances out there that we need to keep our eye on.

ROB MARCIANO, CNN METEOROLOGIST: You know what? As luck would have it, no.

COLLINS: No.

MARCIANO: Yes. This is probably the first time we've been able to say this in about six weeks.

COLLINS: I know.

MARCIANO: When you look at the tropical Atlantic basin, there are some clouds, there's a little disturbance down here, but that just not doing a whole lot. This is an upper-level trough. Not worried about that. The Caribbean -- pretty quiet. And the Gulf of Mexico pretty quiet as well.

So whew, looks like we've got some breathing room here but we're getting to the time of year where this area, you know, can flare up at any time. So at least for the next handful of days we're all right. Take a breather, enjoy, and the weather looks pretty nice across much of the country.

But I'll highlight this climate to watch tropical storm fact. That named storms we normally have about -- we have an average of 11 for the entire year. We've already seen 10. Hurricanes, we normally see six, for the entire year we've seen five.

Major hurricanes, we've already had three of those. And typically for the entire year we get two. So that gives you an idea of just how active this season is and how above-average it may very well become.

One other tidbit -- we have had six named storms in a row where we've seen landfall here in the U.S. That is a record. Here is Dolly, Edouard is here, Fay, tropical storm there, Hanna, also tropical storm. Gustav, you know about, and Ike the latest.

So six in a row making landfall in the U.S. That's never happened in a single season, Heidi. So, already we've broken a record here in the 2008 season.

COLLINS: Yes. Not a record we like very much either.

MARCIANO: No.

COLLINS: All right, CNN's Rob Marciano, our meteorologist. Appreciate that, Rob. We'll check back later on.

MARCIANO: Sounds good.

COLLINS: To politics now. Republican presidential nominee John McCain sounding off on the state of the economy. He talked with CNN's "AMERICAN MORNING" a little bit earlier today.

He pledged to reform financial regulations and clarified what he means when he says the fundamentals of the economy are strong.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: The American workers are the most productive, the most innovative, they're the fundamental of our economy, and the strength of it and the reason why we will rebound.

We will come back from this crisis, but right now we are the victim of greed, excess and corruption on Wall Street, which is hurting them very, very badly. And unfortunately, it will in the future.

But I believe in the American worker and I believe the American worker is the fundamental strength and future of America.

(END VIDEO CLIP)

COLLINS: McCain will attend a rally for his supporters in Tampa, Florida. That will come your way at noon today. We, of course, will bring you part of that event when it happens.

Meanwhile, Democratic presidential candidate Barack Obama in Golden, Colorado today. His event happening in the 11:00 hour. You can see part of that event right here on CNN as well, your number one place for politics.

Saved from flooding. Rescued in style. The Midwest hit hard by Hurricane Ike's rains. Check out this unusual life saving device. Yes, it's a tractor.

ANNOUNCER: CNN NEWSROOM brought to you by...

(COMMERCIAL BREAK)

COLLINS: Mutual attraction. Worried investors, listen up. Gerri Willis looks at some of the top mutual funds and how they are faring in these troubled times.

(COMMERCIAL BREAK)

COLLINS: Just the basic necessities. Texans without food, water and ice after Hurricane Ike are going to distribution centers now for help.

CNN's Sandra Endo is at one of them in Houston.

I wonder, Sandra, how do supplies look at this early hour?

SANDRA ENDO, CNN CORRESPONDENT: Well, it's been a very busy morning here, Heidi. Just take a look behind me. They are unloading the supplies as we speak, getting ready to dole them out.

And residents have been lined up down the block for hours just waiting for this center to open.

Now in about an hour or so, President Bush is expected to touch down here in Texas to tour the devastated areas for himself.

And the big challenge for residents here is how to cope in the aftermath.

(BEGIN VIDEOTAPE)

ENDO (voice over): Hauling ice, stocking up on food and water. Thousands of victims of Hurricane Ike are lining up waiting for hours to get basic necessities.

60 distribution centers are now open across Texas, and federal officials say supplies will be available for as long as they're needed.

DAVID PAULISON, FEMA ADMINISTRATOR: We have made sure that there's always two-day supply of food and water and ice on the ground so we're always two days ahead of what we need and we're shipping in stuff behind it continuously.

So we should not have an issue with supplies. They're out there in force now. And every pod that I've seen so far is working pretty well.

ENDO: FEMA officials say they will provide shelter for displaced residents for up to a month.

Nasir Mughal is one of them. He lived in Galveston for 20 years and is flooded out of his house. This is what's left of the convenience store he's owned for more than a decade.

NASIR MUGHAL, BUSINESS DESTROYED: If you want something in the den, you lost everything up. It's really hard to heal up.

ENDO: Fuel is a precious commodity. Only a few gas stations are open with motorists lined up around the block.

KENNETH POPE, NEEDS GAS: But I need it. I got to have it. That's the only way I can run my generator.

(END VIDEOTAPE)

ENDO: Now, Heidi, just take a look at the long line of residents waiting for these supplies. It just wraps around this church right here.

We talked to the first lady in line. She was here four hours before the center even opened and they are just opening it up for residents right now who are trying to get supplies and some good news, though, for Houston residents here.

The streets are reopening and the water's back on. But the long road to recovery continues.

Live in Houston, Sandra Endo. Heidi, back to you.

COLLINS: Boy, you said it. All right, Sandra, thanks for that.

So who's stepping in to help those people affected by Hurricane Ike and all of the other recent storms? You can find out at CNN.com's "Impact Your World" page. We got links to some organizations already offering assistance. Just head to CNN.com/impact.

Mutual funds, long considered among the safest investments especially in volatile times. So time for reality check now. How are some of those top mutual funds faring right now?

CNN's personal finance editor Gerri Willis is in New York with the very latest.

Good morning to you, Gerri.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Hey, good morning, Heidi. OK. Let's take a look first at some of the biggest mutual funds. We're measuring here by net assets.

You can see it here, you may have these in your 401(k), American Funds, Growth of America, PIMCO Total Return, Vanguard Total Return stock market index, that's a big one. A lot of people have that. And Vanguard 500 index. American Funds Euro Pacific.

Now those are the biggest funds. So what is the turmoil in the financial markets have to do with your 401(k)? Well, in terms of financials that's bank stocks. That's insurance stocks. 5 out of the 10 largest mutual funds owned, Bank of America and Citigroup, and 14 out of the 10 largest owned AIG.

Now these are all companies that are having trouble right now. If the top 10 largest mutual funds, if they were all mushed together, almost 14 percent of that portfolio would be in banking stocks, insurance stocks, some of these big investment banks.

COLLINS: Wow.

WILLIS: Yes.

COLLINS: I guess it would be interesting to know and probably a little bit scary how -- to get a sense of how big these losses really are.

WILLIS: Well, let's take a look at some of the losses. You know we pulled these from the top 10. American Funds Euro Pacific is down, 21.6 percent. Take a look at this. American Funds Capital World, again, we're looking at some of the biggest funds in the country. So many Americans invested in these funds, down 18.76 percent. Fidelity Contra down 16 percent.

As you can see, these are really big losses. As you know, the whole stock market has gone down this year but so many funds really concentrated in banks and financial stocks that when those stocks have a problem, boy, these funds really get hit.

Now here's my advice to you if you're wondering how exposed am I right now.

COLLINS: Yes.

WILLIS: Go to Morningstar.com. They have a tool there, you can actually look inside, look inside -- it 's called an X-ray tool -- your mutual fund and find out what your exposure is.

Of course, I just have to say, this is a great argument for even more diversification. Make sure you have some international exposure there, some bond exposure. It's easy, easy pissy, to double down on stock investments in this kind of market because so many people recommend them but you need to have your eggs in many, many baskets, not just U.S. stocks.

COLLINS: Yes, obviously. Diversification, if we can talk about that now is no different than what we usually talk about when we are talking about mutual funds.

Gerri, sure do appreciate that.

WILLIS: Thank you, Heidi.

COLLINS: To Iraq now. Assuming command in Iraq. A new military leader takes over. So will it change the way the war is run?

(COMMERCIAL BREAK)

COLLINS: In Los Angeles, federal investigators have issued a subpoena for the cell phone records of a train engineer involved in that fatal rail crash last week. They are looking to see if the engineer was texting moments before the accident as a couple of teens are claiming.

Right now train operators can really use their cell phone while riding the rails in California but that could soon change. The state's Public Utilities Commission is expected to vote on an emergency ban on Thursday.

Change of command in Iraq today. General David Petraeus, the top U.S. commander, hands over control to General Ray Odierno. So what does all of that that mean?

Want to go live now to Cal Perry who's standing by in Baghdad with the very latest. It's a good question. What exactly does it mean when we're talking about the way the war will be fought? CAL PERRY, CNN CORRESPONDENT: Well, Heidi, for General Petraeus, it means he'll be taking on a broader role. As the head of CENCOM he'll be responsible for all U.S. troops from the Horn of Africa to Central Asia. That includes Iraq an Afghanistan.

For General Ray Odierno it means he's going to have to hold the security gains that this country has benefited from in the past months.

To give you an idea of those security gains, when Petraeus took over in February of 2007, that -- in that month alone 500 bodies washed up on the Tigress River from sectarian violence.

Now the U.S. military says that attacks -- sectarian violence attacks 60 per week at that time, they now say those are down to negligible levels. That is going to be the task that Ray Odierno has. He's going to have to hold down the violence the way that it has been done in the past months.

COLLINS: So I know that you've had a chance, Cal, to meet several times with Odierno. Tell us a little bit about him.

PERRY: I sat with him early in 2007 in January and when we sat down he talked about actually his lead between his first and his second tour. He was at home with his wife sitting on his couch when he got a phone call from a friend of his, who's another commander.

That commander said your son has been gravely wounded. He has lost his left arm in a rocket propelled grenade attack. He tried to save other soldiers. He nearly bled out and died.

And when you hear him tell this story he gets emotional as he tells it. And you can see the NCOs that serve underneath General Odierno, the sergeants, they can relate to this, because when he talks about sacrifice they can tell that it's coming from his heart because his family has sacrificed.

Now we spent the morning tracking down his son. He was a captain in the army at the time when he lost his left arm in 2004. He now works for the New York Yankees, and, Heidi, this year on July 4th he threw out the first pitch against the game -- against the Boston Red Sox.

When asked afterwards about throwing out that first pitch he said I'm doing it for the men and women who are still serving bravely in Iraq.

COLLINS: Yes, it's a great shot there. We're looking at the still photo, Cal, on the air.

All right, Cal Perry, thanks so much. Live from Baghdad today.

Nerves rattled on Wall Street. Now the market gets ready for an opening in just a few minutes. We, of course, are watching closely here.

ANNOUNCER: Live in the CNN NEWSROOM, Heidi Collins.

COLLINS: Want to take you directly to the New York Stock Exchange where we are awaiting the opening bell on a Tuesday that follows a really rotten Monday, as I'm sure you well know.

Dow Jones Industrial Averages closed yesterday down 504 points to end the day at 10,917. Haven't seen a low number like that in a very, very long time. In fact, a lot of people reporting today it is the worst loss since September 11th.

Again getting ready for that opening bell any second now.

A lot to talk about today, once again, in the financial sector. We are hearing more about Lehman Brothers, a possible buy -- there you have it, the opening bell -- by Barclays, at least for a portion of Lehman Brothers. So that we're talking about.

Still, of course, talking about AIG, an insurance company, and what all of that means to you.

CNN's Susan Lisovicz standing by.

Want to talk about, Susan, what we are in for to if there's any way to know. And whether or not the market could rebound at least a little bit.

SUSAN LISOVICZ, CNN CORRESPONDENT: No to the rebound early on. We're looking at a big sell-off. And when you're coming off a historic plunge as we are, a lot of times you will see bottom fishing, but not today, not in the first few seconds of trading.

I mean, we're talking the first few seconds of trading, and we're down nearly 90 points. And we're expecting triple digits any moment now. Why is that? Because there is still so much uncertainty in the market place.

You know the markets, actually, stock market behave pretty darn well yesterday given the magnitude of information. Some of it just jaw-dropping information that was dropped on the street yesterday.

One trader told me he thought the market would drop a thousand points yesterday. The problem is that we're still waiting for information on one of the world's giant insurance companies, AIG. Really gasping for air at this point. It dropped 68 percent yesterday. It's dropping another 65 percent today. It was hit by credit downgrades overnight, Heidi. And when its credit further damage, it makes it more expensive to borrow money and that is exactly what AIG needs to do.

It needs to raise cash. It also, of course, hurts investor confidence. I don't have to tell you about confidence on Wall Street. What happens when you see this kind of debt spiral. It happened to Lehman Brothers over the weekend. And we are seeing that the Dow now down 131 points. Just a couple of quick headlines for you.

The Federal Reserve makes a decision on interest rates this afternoon, in 4-1/2 hours. A week ago, it was a given that the Fed would stay put. Right now, a quarter-point cut. It is fully priced in. Why is that? Because credit is tightening and we need credit in an economy like this. We need credit to be available and we need it to be cheap.

And the Federal Reserve is expected to cut. And oil is down more than $4 trading at $91 and change because of the continuing slowdown in this economy and the ripple effects around the world.

Heidi?

COLLINS: Yes. All right, Susan. We are watching all of it. Again, Dow Jones Industrial Averages now you see there down 164 points. We've got our eye closely trained on that. Susan, we'll talk with you again later.

Wall Street's woes as I'm sure you know rippling overseas. Far and wide. We want to check in now on the trading in London as well as some developing news about Lehman Brothers. CNN's Richard Quest is there.

Good morning, Richard.

RICHARD QUEST, CNN CORRESPONDENT: Heidi, very good morning to you from City Index (ph) here in the City of London. Wall Street is now under way. And of course the European markets are giving their initial reaction. London had been down around about 4.3 percent for most of the Tuesday morning session. Currently now London is actually roughly holding its own. And it's a similar sort of story that we're seeing across the other main markets in Europe, in Frankfurt and in Paris.

The news on Lehman Brothers, possibly Barclays once again coming in to pick up one or two of the distressed assets. You'll remember that over here on this side of the Atlantic, Lehman Brothers has now in the hands of the administrators, and Barclays is once again looking to pick up some of the profitable bits of Lehman Brothers.

The situation in the banking sector, Heidi, is what people are talking about in this room. Which bank is next to feel the wrath of the markets? Which bank is next that's in trouble? I won't mention any names because it becomes a self-fulfilling prophecy.

But, Heidi, I can tell you this afternoon in London, there are some talks that some very big banks could be in some deep trouble. I'm Richard Quest in London.

COLLINS: All right, Richard. Appreciate that. Again, live from London this morning.

In fact, I want to give you a measure of the misery on Wall Street. Now, this morning, investment banker Goldman Sachs is reporting a huge plunge in profits. The silver lining, though, the 70 percent decline was not as bad as analysts expected.

Investors are of course keeping a close eye on Goldman Sachs now in light of yesterday's news. Right now, Goldman Sachs is one of only 2 major independent investment banks that are still surviving. And you know Goldman Sachs and Morgan Stanley are what we are talking about here. The only ones left. Nonetheless, it is stocks that have been sinking most of this morning.

The remnants of Hurricane Ike being blamed for flooding in the Midwest. This video now showing people being brought to safety in Morris, Illinois, on a tractor.

Here, people are being evacuated in Chicago in another rescue. A dozen girl scouts and four adult leaders brought out by -- brought out of their camps by firefighters. A ladder was used to make a bridge to keep the campers above rapidly-rising creeks. Seven Illinois counties in fact have been declared disaster areas.

A one-two punch from an intense storm system and from Ike's remnants triggers flooding in southern Michigan.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: The water was actually really scary. We've never seen it this bad before. It was kind of deep. It was getting dangerously close to the houses.

(END VIDEO CLIP)

COLLINS: The rains in the region also caused an earthen dam to give way forcing a dozen families to leave their homes.

The U.S. military responding to Hurricane Ike now. We are there as a top U.S. commander in charge of recovery takes a look at the damage in Texas. Here's Barbara Starr now with an exclusive report.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): CNN is the only network traveling with the top U.S. military commander touring southern Texas to assess recovery efforts from Hurricane Ike.

GEN. VICTOR E. RENUART, CMDR. U.S. NORTHERN COMMAND: The numbers of rescues is beginning to draw down and the shift is beginning to occur to the recovery, reconstitution, the resiliency phase, if you will.

STARR: Troops are continuing days later to use helicopters and high-water vehicles to get to people stranded by the storm who now want to get out. But much of the effort is now focused on making sure food, water and supplies get to these stricken areas.

The military response to Ike is much different than the response to Katrina. This time, it's precision warfare against Mother Nature.

UNIDENTIFIED FEMALE: That's what we're trying to do here. Not bomb anybody, but certainly apply that kind of precision response so that the person who needs the ice gets the ice, the people who need shelter get shelter, the people that need to be moved get moved. STARR: The biggest difference, there are 6,000 active duty and National Guard troops here, compared to 75,000 in Katrina. Then, commanders say they relied on mass force and it wasn't effective. Now, they have more precision information on what is needed and where it needs to go.

(on camera): This military relief operation could now go on for weeks as southern Texas continues to try and rebuild. Barbara Starr, CNN, Arlington Field, Texas.

(END VIDEOTAPE)

COLLINS: Now we want to take you to Smith Point, Texas, and get a look at some of these iReports that are coming our way shot by Fred Anderson. Let's take a look now. He is actually president of the local fire department. He was able to go out on a search and rescue mission after the hurricane hit, Hurricane Ike, of course. And was also able to save a man who had been stranded by floodwaters for 2-1/2 days. Again that photo coming in from Fred Anderson. Thank you, Fred.

And this house wiped out. Actually, all you see is a slab that it once stood on. This house didn't do very well either. The bottom completely washed away. There was a mattress without a bedroom around it. And a trailer tossed and twisted by Ike. Again those photos taken, all of them, by Fred Anderson.

To these now from Kolby Flowers, Bridgetown, Texas. About half- hour east of Beaumont. Says his grandmother's house was completely damaged because of 5-1/2 feet of floodwater.

Bricks peel off just one by one as the water soaks through them when that happens for days and days. Obviously, you see the effects. Furniture just floating around the house because of all the water. A lot of things in fact his grandmother owned completely ruined.

Appreciate those iReports coming in. In fact, when the weather does become the news, please do remember to try and send us your iReports. Just go to ireport.com or type in ireport.com into your cell phone. And of course, stay safe if you do so.

What a difference a hurricane makes. Looking at how Ike changed landscapes all across the Texas Coast.

(COMMERCIAL BREAK)

COLLINS: People in Ohio still feeling the effects of Hurricane Ike's remnants. Winds hit the state hard, leaving damage like that. All but four of Ohio's counties in fact affected. Hundreds of thousands of power company customers are still in the dark. In fact they may not get electricity back until this weekend. Schools closed in hundreds of districts. At least six deaths in Ohio are being blamed on Ike and its aftermath.

Some new video now in from Houston and our affiliate there, KTRK, at a gas station. Gives you a good idea of the long lines people trying to -- first of all find gas, and then to actually make sure that their cars don't run out of it before they can fill up again. Obviously still a problem. Clean up, too, it's going to take a long time in Texas after Hurricane Ike.

Meteorologist Rob Marciano is here now.

Rob, I know that you were down in Texas. Some pretty dramatic pictures you were able to get, too.

ROB MARCIANO, CNN METEOROLOGIST: And then actually, when we finally left (INAUDIBLE), when they cleared enough of the road to where we could get out of Galveston, just seeing the road on the way to Houston was pretty dramatic as well. It's just a huge scope of damage from when it hit such a highly populated area.

A couple of things, though, that are really cool unfortunately for the folks who live in these places. We want to show you a couple of before and after pictures. First off, Gilchrest which is just east of Galveston. It's in Galveston County. It's across the entrance to the bay. And this is what likely got the worst -- some of the worst of the storm surge.

So, this is Google Earth of some of the structures before this storm. And then this is actual area of photography after the storm.

COLLINS: The land mass is completely change.

MARCIANO: I know what you think about. There's no seawall. There's barely any protection. Barely even a dune there. What's odd is that one house -- don't know what it's built out of. I don't know what kind of prayers they were saying before --

(CROSSTALK)

COLLINS: Limestone.

MARCIANO: But for some reason that one house remained standing. Obviously, the entire community completely gone. Now, just to the west of Gilchrest, is an area called Crystal Beach. And we also have some before and afters from this.

This is -- thanks to an iReport coupled with some USGS pictures. You see there similar picture from the before on the left to the after on the right. With just one or two homes standing. These areas likely saw anywhere from a 12 to 15-foot storm surge. Most of which we hope folks evacuated from that area. Obviously, it wouldn't be a good thing. But it also showed you just how well the Galveston seawall protects.

COLLINS: Well, yes. That's what we're going to talk to.

MARCIANO: Yes. This thing built in 1900, 17-feet high. And the way it has this concave shape so it kind of throws the waves back.

COLLINS: Yes, we saw that when they crashed, because obviously they were much taller than that. MARCIANO: Yes.

COLLINS: The waves ended up being -- was it close to 25 feet as projected?

MARCIANO: Yes. I mean, the waves were amazing. But it did a pretty good job of protecting downtown Galveston. So, either side of the island got the reverse storm surge, if you will, and that's where we saw quite a bit of damage. But it is amazing how -- I was amazed how well that seawall held up and this is likely the worst storm as far as water goes that they've seen since the 1900 storm which that seawall was built for.

COLLINS: Unbelievable. 8,000 people died. It's still, is it not regarded as the worst natural disaster?

MARCIANO: Yes. Yes. We really don't know exactly how many. At least 6,000 and possibly more than 8,000 people. There is an --

COLLINS: Back in 1900.

MARCIANO: Back in 1900. And the way we forecast back then, the National Weather Service back then, they would actually go out to the beach and watch the wave action the day before. And if there was any sort of change in the frequency or size of those waves, then they'd say, must be a storm out there.

And there is an interesting story about the gentleman that was part of the forecasting team down there. It wasn't the best forecast and there was not a whole lot of warning. And at the time, Galveston was "the" spot in Texas with -- it was booming. And nobody really evacuated. So, that's one of the reasons. So, thank goodness for the modern technology that we have --

(CROSSTALK)

COLLINS: Absolutely. I mean, there was an awful lot of warning. We've talked about this one for many, many days. I remember at least about a week or so.

MARCIANO: You can get people out but you can't push the water back. So now the rebuilding and the picking up of the pieces is going to take a long time.

COLLINS: Yes. We'll be seeing that for days. All right, Rob. Sure do appreciate that.

MARCIANO: You bet.

COLLINS: Thank you.

Making money without leaving bed. A NASA study paying you to rest.

(COMMERCIAL BREAK) COLLINS: Here's a live look now at the big board. We are about 20 minutes into the trading day on this Tuesday after as I said earlier really rotten Monday. Dow Jones finished yesterday at the close of business down 504 points. Right now, Dow Jones Industrial Average is down about 56 points. Kind of up and down all over the place. We've already seen this morning. So, we've got our eye on that for you.

To this now. NASA's bed rest study. Patients getting paid to stay in bed for three months straight. Sound like your dream job? Well, this next report could actually change your mind a little bit. Here's our chief medical correspondent Dr. Sanjay Gupta.

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Well, it's hard to believe, Heidi, but this is a pretty effective model of weightlessness. What you just described. Putting people at bed rest for three months. Now, as you might guess it is pretty expensive. It would cause about $250,000 for one subject to do the study. That's still far cheaper than trying to study these things in outer space. So meet Rod, the 12th patient of the study.

(BEGIN VIDEOTAPE)

RODERICK JONES, PATIENT OF THE STUDY: All I do is lay down in bed every day.

GUPTA (voice-over): This man is getting paid $12,000. Why? To stay in bed for 84 days.

(on camera): So, you've been in this bed...

JONES: Yes.

GUPTA: ...tilted like this...

JONES: Yes.

GUPTA: ...in this room...

JONES: Yes.

GUPTA: For 12 weeks?

JONES: For 12 weeks.

GUPTA: That sounds insane to me.

JONES: Somebody once told me that you have to be a little crazy to do something like this.

GUPTA (voice-over): 40-year-old Roderick Jones, a chemist by trade, was between jobs in trying to save money for a move with his family when he spotted an unusual ad on the Internet.

(on camera): So, they say, do you want to help space research, do you want a little vacation. And this is what they meant? JONES: At the time I didn't know that it was actually, you'll literally in bed for the entire study.

GUPTA (voice-over): Day in, day out. He lies at this six-degree angle with his head down. Surfs the Internet, watches all the cable TV he wants. He's fed three meals a day.

(on camera): How do you position your body to be able to eat?

JONES: Normally, I do one or two things. I can turn on my side and just move my tray. Or I can actually turn on my stomach as well.

GUPTA (voice-over): He talks on the phone and, yes, he even goes to the bathroom, laying in this position, head down, feet slightly up.

DR. PETER CAVANAGH, UNIVERSITY OF WASHINGTON, SEATTLE: It allows fluid to be redistributed in the same way that fluid is redistributed in space.

GUPTA (on camera): I mean, so you're saying you simply put someone in bed rest for 12 weeks, tilt their bed a little bit. Is that a good enough model of weightlessness?

UNIDENTIFIED DOCTOR: You can actually see chemical changes that occur within the bones.

GUPTA (voice-over): You see bone loss is a major problem for astronauts. In fact, they experience ten times greater bone loss than a post menopausal woman. Ten times. So half the study's participants are selected to exercise for two hours a day. The other half must stay in bed at all times. Rod is one of the exercisers. And it's that exercise that can be so effective in preventing bone loss.

After 84 days, the time has finally come to get back on his feet. Rod walks up and down the hallways without a hitch. The question is, has it all been worth it.

JONES: There was never a day that I doubted the worth of what I was doing.

(END VIDEOTAPE)

GUPTA: Another thing, Heidi, that I found so interesting was all the things that happen to the body with prolonged weightlessness. So, for example, to all these chemical changes. Your bones start to wither away. That calcium starts to get in the blood. People can get kidney stones. That can be a painful, even dangerous condition in outer space.

Also, blood clots. You got to get medications to try and prevent those from happening as well when someone is at bed rest for so long. How do you counteract so many of these things when they're happening in outer space? We'll have much more on this tomorrow. Heidi, back to you for now.

COLLINS: Thanks, Sanjay. One of the founding members of Pink Floyd is dead this morning. Richard Wright, the band member who wrote hits like "The Great Gig in the Sky" and "Us Among Them." You hear some of the music there. He died at his home in England yesterday. A spokesman says he had battled cancer. Wright was 65 years old.

(COMMERCIAL BREAK)

COLLINS: The presidential candidates on the economy. Where they stand and their plans to fix it?

(COMMERCIAL BREAK)

COLLINS: Mexican Independence Day celebrations turned to mourning. There are reports today that three people were killed, 50 others injured by two explosions in central Mexico. It happened on the nation's 158th anniversary of its independence from Spain. Mexico's president has condemned the attacks and is promising to help catch those responsible.

On the trail today, Senator John McCain will attend a rally for his supporters in Tampa, Florida. That will happen at noon. We, of course, will bring you part of that event when it happens. Meanwhile, Democratic presidential candidate Barack Obama is in Golden, Colorado today. His event happening in the 11:00 hour. You can see that as well right here on CNN, your number one place for politics.

So the economy, we know it's your issue number one. So where do the presidential candidates actually stand on it? CNN's Tom Foreman takes a look.

(BEGIN VIDEOTAPE)

TOM FOREMAN, CNN CORRESPONDENT (voice-over): As the latest financial earthquake rumbled through Wall Street, tremors were rattling the campaign trail. In Colorado, Barack Obama called it more bad fallout from years of Republican rule.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: For eight years, we have had policies that have shredded consumer protections, that have loosened oversight and regulation, and encouraged outsized bonuses to CEOs, while ignoring middle-class Americans. The result is the most serious financial crisis since the Great Depression.

FOREMAN: In Florida, John McCain blamed big business and bad government.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: People are frightened by these events. Our economy, I think, still, the fundamentals of our economy are strong, but these are very, very difficult times. And I promise you, we will never put America in this position again.

MCCAIN: We will clean up Wall Street. We will reform government.

(CHEERING AND APPLAUSE) FOREMAN: Amid recent problems in housing, banking and jobs, McCain's assertion that the economy is fundamentally sound was mocked by Obama.

OBAMA: Senator McCain, what economy are you talking about?

FOREMAN: McCain says he was talking about the fundamental American work ethic.

MCCAIN: Our workers have been the strength of our economy.

FOREMAN: For all that, with each new bit of bad news, both men are pushing their plans for economic reform. McCain is hitting hard on balancing the federal budget, cutting wasteful spending, and reducing food prices, among other things.

Obama wants to invest more in manufacturing, fund more research and education, and crack down on credit card companies, to list some of his goals.

(on camera): Both men want a simpler tax code and lower taxes for working Americans. Both want lower fuel costs, more foreign trade. And both insist, it all must start now.

MCCAIN: Our economy is at risk today. Have no doubt how serious this -- this problem is.

OBAMA: We are going to have a lot of rebuilding to do.

FOREMAN: The devil, of course, is in the unanswered questions about all these grand economic plans. Who will pay? Who will benefit? And will any of it really work?

Tom Foreman, CNN, Washington.

(END VIDEOTAPE)

COLLINS: Quickly want to take you to this live shot coming in. That's Air Force One. President Bush is on board. Will be deplaning in Texas today. Harris County, to be exact. And going to go and get a tour of all of the damage from Hurricane Ike and the aftermath, of course. We will be continuing to follow that story and if, he does in fact decide to speak or if we could see him getting off of the plane, we will certainly bring it to you. We're going to take some time in Texas today.