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Easing Fear on Wall Street After a 500 Point Climb; Financial Problems Plaguing Insurance Giant AIG; Another Jump in the Death Toll from Hurricane Ike; Plastic Dangers

Aired September 16, 2008 - 11:00   ET

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

HEIDI COLLINS, CNN ANCHOR: It is Tuesday, September 16th, in the CNN NEWSROOM. Good morning. I'm Heidi Collins.
Easing fear on Wall Street after a 500 point climb. Look at that. Live shot for you. Dow Jones showing positive numbers. Would an interest cut, though, be a sweetener for sour investors? We'll talk about that.

And the longest serving prisoner on Georgia's death row may face execution tonight. Plus, supporters say Jack Alderman is innocent.

From baby bottles to water bottles. A new study finds a hidden danger in everyday plastic.

More financial fallouts. Several developments unfolding today affecting issue number one, the economy. We are watching Wall Street and your wallet. We are waiting to see what the Federal Reserve will do about interest rates. Some anxious investors keeping an especially close eye on today's Fed meeting.

Before yesterday's stock market meltdown, the Central Bank was expected to leave interest rates unchanged. Well, now, some analysts say a rate cut is actually possible.

Also on the radar today, the financial problems plaguing insurance giant AIG. Several credit rating agencies have downgraded the company as it struggles to raise cash. On the positive side, though, new numbers out just a short time ago show a drop in consumer prices. They fell one tenth of one percent last month mostly because of lower energy prices. Very interesting. So let's go ahead and put it all in perspective now, and talk about what it means for your personal finances.

Christine Romans and other members of our CNN Money Team are joining us now from New York with some insight on all this.

Hey, Christine, I can't keep my mouth shut about those positive numbers we're looking at right now on the big board.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: I know. I know, it's a remarkable time on Wall Street. People are very nervous. There's a lot of anxiety, but there's also clearly some bargain hunting because stocks are up right now. I'm with Allan Chernoff, Jeanne Sahadi and Paul La Monica.

Paul, I want to ask you a turn around for stock, not really that surprising considering how much they fell yesterday.

PAUL LA MONICA, EDITOR-AT-LARGE, CNNMONEY.COM: That is true. I think, though, that it's a long day and it's hard to really get too excited yet. I mean, around mid afternoon yesterday, when the Dow was only down about 200 points, I thought to myself, you know what --

ROMANS: Not so bad.

LA MONICA: This isn't that bad. We're now holding up. And then, obviously 500 by the end of the day. So, a lot can happen between now and 4:00.

ROMANS: And it's erratic. Stocks have been very, very erratic. And there are a lot of people who are clearly nervous. I want to really boil it down here. When people are hearing about Lehman Brothers and concerns about AIG, and reaching back to Bear Stearns and Fannie Mae.

Why does what's happening in the financial sector matter, Jeanne, to Americans?

JEANNE SAHADI, SENIOR WRITER, CNNMONEY.COM: One of the reasons is mortgage loans. It's going to be harder for most people to get mortgage loans if bankers and others who are nervous about what's going on in the market are nervous about their liquidity. They're not going to be making loans as much.

I mean, when the government took over Fannie and Freddie last week, the thinking was this is going to instill confidence. Because people know Fannie and Freddie had backing. And they are the ones who buy the mortgages so lenders will be freer to give them out. And it's still true that if you've got great credit you can get one. But this is not tremendously good news I don't think for consumers in the loan market.

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Right. If you don't have good credit, very, very bad news. If you have very good credit, it actually could be good news. Why? Because investors have been running into treasury, very safe treasury securities. That means the interest rates on them have been going down and the mortgage rates are tied to those interest rates. So that means some long-term interest rates actually going to go down. And so if you have great credit, you could get a better rate.

ROMANS: Heidi posed a great question. She said would a rate cut be a sweetener for sour markets? If the Fed cuts that key short-term interest rate, what does that mean and how does it help?

LA MONICA: What it would mean is we would be at -- we're already at about 2 percent on that rate right now. That's historically low. So there's concern that the fed may be not able to cut drastically because you can't go any lower than zero.

So, what would be good about a rate cut is that would probably lead to lower rates on certain types of consumer loans like credit cards and home equity lines of credit. The flip side is that if you're trying to save money, if you're in a high yield or supposedly safe CD or money market account, that rate is going to go down, too. So rates to borrow will go down. But rates that you're hopefully earning will go down, too.

ROMANS: And this is tough for older Americans. It's tough for charities. It's tough for people like churches and synagogues who have their endowment money that is sitting and by definition has to be in very short term or very solid securities like that so they can lose their interest rates. There is a downside to that. You're right.

CHERNOFF: Although, you think about it now. And you know, sometimes cash is king. And right now it is compared to what the stock market has been doing.

ROMANS: Well, then, the question is, what do people do right now if they are fully invested and maybe they do have their eggs in a lot of different baskets and they are diversified? Is there something to do right now for individual investors or is it too late?

(CROSSTALK)

LA MONICA: You probably just sit tight. And that's the key. Be diversified. That's the lesson for all markets during that.

ROMANS: All right. And we say it every time. And every time people get nervous, but we'll say it again. Be diversified. Don't put it all in one basket. You just have to ride it out.

All right. Hi, Heidi.

COLLINS: We continue to follow this story obviously here in the CNN NEWSROOM. Christine and the panel, we sure do appreciate that. As you know, the financial markets boiling with change. You can keep up with what's happening with the markets as well as insurance giant AIG on the best Web source for business news. You're looking at it there, CNNMoney.com. The top destination for issue number one, the economy.

Another jump in the death toll from Hurricane Ike. Here is what we know at this point. Officials are now reporting 40 people dead across ten states from the Gulf Coast to the Great Lakes. More than 30,000 evacuees are still in shelters and more than two million people in Texas alone remain without power. It could be weeks, in fact, before electricity is back on in many of those areas.

Well, as you saw earlier here, President Bush is in the hurricane zone. Right now he's aboard Marine One, getting a look from above at the destruction caused by Ike. The president will later talk with victims in his home state who face weeks, as we said, without power or adequate supplies. He is promising they'll work hard and fast to help get their lives back to normal.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I have come home to the great state under very difficult circumstances for the people who live down here. My first observation is that the state government and local folks are working very closely and working hard and have put a good response together.

(END VIDEO CLIP)

COLLINS: No telling how long it will take for many people to piece their lives back together, of course. But take a look at what's left here. This is Crystal Beach that you're looking at. Texas town hit perhaps the hardest by Ike. It's still completely cut off. The only way in right now, by boat.

Every building in the town either damaged or destroyed. People living there say they watched homes floating down the street as Ike swept through. And take a look at this bird's eye view now of Crystal Lake Beach front right before Ike hit. And here is that same area after the storm. It looks entirely different, doesn't it? Neighborhoods wiped out. Rescuers are searching the debris now for possible victims.

Well, the U.S. military is responding to Hurricane Ike. Our Barbara Starr is the only reporter to get a look at the devastation now with a top commander in charge of the recovery effort. It's a CNN exclusive.

(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.

RENUART: 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: Some of the immediate needs in the aftermath of Hurricane Ike, food, water and ice, just basic essentials. Officials have set up distribution centers. Let's check one of them out. We want to go live now to CNN's Sandra Endo at a Houston relief area.

We checked in a little bit earlier with you, Sandra. And there were people that had already been in line this morning four hours prior to when this relief site, even opened the actual operation center.

SANDRA ENDO, CNN NATIONAL CORRESPONDENT: That's right, Heidi.

And you can see there's just a massive amount of people here just waiting in line still. It has opened, in fact. And people are slowly moving through the line, getting their supplies. But the big concern for a lot of people here is not knowing when their conditions at home are going to improve.

(BEGIN VIDEOTAPE)

ENDO (voice-over): President Bush is taking a first-hand look at the devastation left by Hurricane Ike.

BUSH: I know with proper help from the federal government and state government, there will be a better tomorrow.

ENDO: Thousands of victims of the storms are lining up for basic necessities like food, water and ice.

UNIDENTIFIED MALE: I've been through Katrina on a bridge from Monday through Friday with no food and water. So, to come out here to see volunteers of food and water is a blessing because we didn't have anything in New Orleans at all.

ENDO: 60 distribution centers are now open across Texas. And federal officials say supplies will be available for as long as they're need.

DAVID PAULISON, FEMA ADMINISTRATOR: We have made sure that there's always two days' 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 Magal (ph) 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 MAGAL, HURRICANE VICTIM: If you own something and then 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.

UNIDENTIFIED MALE: But I need it. I got to have it. That's the only way I can run my generator.

(END VIDEOTAPE)

ENDO: Now, FEMA officials just came by this line giving people water as they wait. And you can see a lot of people brought their coolers and carts to cart away some of their supplies. Other people are in line via cars to get those supplies in their trunks. And some good news for Houston residents today. They are reopening some streets. Water and power is being restored. But it's going to be a long road to recovery. Live in Houston, I'm Sandra Endo, Heidi, back to you.

COLLINS: Long road with long lines. Boy, that's for sure. All right. Sandra Endo, sure do appreciate that.

You may be wondering who is stepping in to help those people affected by Hurricane Ike and all of the other recent storms. Well, you can find out at CNN.com's "Impact Your World" page. We've got some links to organizations that are offering assistance. Just head to CNN.com/impact and you can get involved if you so choose as well.

The market on a roller coaster ride. And some of the world's best known companies scrambling now for their very existence. What are John McCain and Barack Obama saying about avoiding this kind of crisis in the future?

(COMMERCIAL BREAK)

COLLINS: Senators John McCain and Barack Obama have campaign events over the next couple of hours. Live coverage right here on CNN, your home for politics.

Obama wrapping up a two-day swing through Colorado. He's in Golden today. Same town that hosted Republican vice presidential nominee Sarah Palin just yesterday. Look for Obama to hammer his opponent on the economy once again today.

John McCain holding a rally at the Tampa Convention Center next hour. You will see that live as well. Several polls show McCain pulling ahead in Florida now since the GOP convention. After Tampa, McCain heads to Ohio to meet up with his running mate, trying to capitalize on the zip she's put in the ticket.

The economy, issue number one. And for voters the top of the worry list as we count down to November 4th. Here now, CNN's Tom Foreman.

(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: She's changed her mind and won't cooperate. Governor Sarah Palin fired Alaska's public safety commissioner in July. He claims it happened after he refused to fire the governor's ex-brother- in-law, a state trooper.

Palin initially promised to help with the probe into the firing. But the McCain campaign now calls the investigation tainted, one hijacked by Obama operatives. The Alaska State senator in charge of that investigation is a Democrat and Obama supporter.

All the latest campaign news is at your fingertips. Just go to CNNPolitics.com. We also have analysis from the Best Political Team on Television. It's all right there, CNNPolitics.com.

Are the plastic bottles we drink from putting our health at risk?

(COMMERCIAL BREAK)

COLLINS: A preliminary report sheds new light on last month's deadly plane crash in Madrid. According to the report that has been distributed to the Spanish government, the plane's wing flaps did not deploy during take off and the pilots were unaware of it because a cockpit alarm on the instrumentation did not go off.

The investigators did not say the problems with the wing flap caused the crash. Some more investigation obviously continuing. As you know, 154 people died in that accident.

More fallout now from the California train collision that killed 25 people. The state's Top Rail Safety Regulator wants an emergency order banning cell phone use by train operators. The Public Utilities Commission votes on that ban Thursday. The NTSB is investigating whether the engineer on the commuter train was texting just before the collision with a freight train. The agency has subpoenaed his cell phone records.

Plastic dangers. A study out just last hour says many plastics we use every day contain a chemical that may make you sick. Our medical correspondent Elizabeth Cohen is here now with more on this.

So, this chemical that we need to talk about, BPA stands for.

ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: Bisphenol A.

COLLINS: Bisphenol A. OK.

COHEN: That's right.

COLLINS: What kind of things is it found in?

COHEN: It is found in tons of things. No doubt that sometime today you have used a product that contains Bisphenol A.

COLLINS: Already have. Yes.

COHEN: I'm sure you already have. Let's take a look at what BPA is in. Water bottles that so many of us drink out of. Baby bottles, pacifiers, these kinds of cups. Things that you store food in it. Even -- this one sort of surprised me, Heidi, the lining of tin cans, of aluminum cans. They're actually lined with plastic that contains BPA.

And this is what this new study says. It's from the Journal of the American Medical Association. It's a landmark study because it's actually in people, not in animals which is unusual in this area. What they found is that folks who actually had high levels of BPA in their body, they were three times more likely to get heart disease, also more likely to get diabetes.

COLLINS: All right. So, why do you have to use BPA? If you're a manufacturer, can you just not use it?

COHEN: It would be really tough to convert every product that has BPA in this country to a product without it. But as we speak, Heidi, there is a hearing going on Congress -- on Capitol Hill. And there are loads of experts urging Congress to ban PBA in products.

However, the American Chemistry Council, they disagree with this. And they say the weight of scientific evidence continues to support the conclusion of governments worldwide that Bisphenol A is not a significant health concern at the trace levels present in some consumer products. So as you can see some controversy here.

COLLINS: Yes. So, in light of that, it's kind of, you know, we're aware of it but we don't really know how significant it is. What do you do?

COHEN: Right. While experts debate what do you do, here's what you can do. If you're worried, you can simply try to by products that don't have BPA. There's more and more of them out there. For example, when I went to look to see what was out there, there are baby bottles, water bottles, pacifiers, sippy cups that don't have BPA.

All you need to do is look on the label. For example, this baby bottle that I'm holding right now, it says right here BPA-free. So you could look for those products if you're concerned.

COLLINS: Yes. OK. And that has to be up to you. How worried should we be overall?

COHEN: This is something people need to remember. You're not going to drop dead because you drank some water out of a water bottle with BPA.

COLLINS: Good to know.

COHEN: This chemical -- if it is a problem, it's a problem long term. It's a problem from all the water bottles you ever drunk out of it, you know, since you were born. So, it's not something that's going to kill you overnight because your baby sucks on a pacifier with BPA. That's important to remember.

COLLINS: Yes. Very important. All right. Our medical correspondent Elizabeth Cohen.

Elizabeth, thanks for that.

COHEN: Thanks.

COLLINS: And just a quick reminder, health news online. You can log on to our Web site where you will find the latest medical news, health library and information on diet and fitness. Once again, that address CNN.com/health.

One of the world's largest insurance companies teetering on the edge of collapse. What could that mean for your financial future?

(COMMERCIAL BREAK)

COLLINS: The Federal Reserve set to make a decision on interest rates today. But just a few weeks ago, Wall Street was expecting rates to hold steady. But now a major shift in thinking.

Susan Lisovicz is at the New York Stock Exchange with more details on this and a check of the market, as well, which have been all over the place, Susan. But let's get back to the Fed. This is certainly a change in thinking.

SUSAN LISOVICZ, CNN CORRESPONDENT: It is, but then again, we have had extraordinary events over the last few days. If you had asked last week about the Federal Reserve and its decision on the interest rates, we would have said, nonevent. But now, an interest rate cut is a possibility as opposed to the Fed just standing put. Why is that?

Well, we had some stunning developments over the weekend that included Lehman Brothers going bankrupt, a firm that predates the Civil War, Merrill Lynch, another giant on Wall Street, concluding it couldn't survival alone and agreeing to a sale, and now AIG getting hit by several downgrades and in jeopardy of falling as well.

Rate cuts, not a certainty. But, you know, one way we measure on Wall Street is something called the Fed Funds Futures. And they indicate in near certainty that the Fed will cut by a quarter of a point. Bloomberg reports about a week ago the odds of that happening -- 2 percent. That's how extraordinary the events are that occurred in the last few days, Heidi.

COLLINS: Yes, that's for sure. When we talk about Fed cuts, or interest rate cuts I should say, then we have to talk about inflation. So you have to wonder if that's still an issue. I imagine it is.

LISOVICZ: It's an excellent point and it's why the Fed was in such a dilemma because we had sky-high oil prices and an economy that was slowing, job losses mounting, foreclosures, home prices, all of that, and the Fed was really caught. But guess what? Energy prices have come tumbling down. That's pushing prices at the consumer level down, too. As a matter of fact, this morning we didn't have time to talk about the latest CPI read, Consumer Price Index. Shows prices actually dipped a bit last month marking the first monthly decline in nearly two years.

And another way we can measure inflation is oil prices. Oil prices down $3.50 adding to yesterday's $5.00 drop. That, and unconfirmed reports that the government may bail out AIG, and I stress these are unconfirmed reports, helped the market stem much bigger losses earlier in the session. The Dow Industrials right now down 36 points. The Nasdaq is down nine points.

So we're talking about not even half a percent -- about half a percent, maybe, on the three major averages. Kind of modest, but we have more news coming out. We're still waiting to hear something on AIG and, of course, we have the Fed decision later today -- Heidi.

COLLINS: Yes. A whole lot of news going on obviously.

Susan, we'll wait to hear more about that possibility there for the government stepping in with AIG. Very, very interesting.

Susan Lisovicz on the floor of the New York Stock Exchange. Thanks, Susan.

LISOVICZ: Thanks, Heidi.

COLLINS: Titans in the financial industry brought down by bad real estate investments. Wall Street's risky business blamed for the current financial crisis. Critics say warning signs were ignored.

The story now from CNN's Brian Todd.

(BEGIN VIDEOTAPE)

BRIAN TODD, CNN CORRESPONDENT: The scope of this fall, breathtaking. First, Bear Stearns, now Lehman Brothers and Merrill Lynch. Colossals of the American banking industry that survived the Great Depression have all collapsed within the last five months. Analysts say the warning signs were there for years and they primarily blame the CEOs of these companies for being blinded by profits, loading up on risky subprime mortgages and real estate investments that weren't worth what the banks paid for them.

But some say federal regulators were also asleep at the switch. The Federal Reserve Bank, though more responsible for commercial banks than investment banks, had the bully pulpit and could have waived a warning flag years ago that these firms were engaging in risky behavior.

Some observers lay much of that responsibility on the leadership of Alan Greenspan, who left the Fed in 2006. After the dotcom bubble burst early this decade, they say the Fed under Greenspan should have warned that the housing market was on a similar track.

BILL FLECKENSTEIN, AUTHOR, "GREENSPAN'S BUBBLES": The Fed encouraged deregulation and securitization which made banks and lending institutions think they wouldn't be responsible for the individual mortgage which helped cause -- which allowed any consumer to get almost an unlimited amount of money.

TODD: Contacted by CNN, a representative for Greenspan said he wasn't available for comment. But in a network interview on Sunday, Greenspan did say the government should not try to protect every single institution.

But congressional overseers, analysts say, could also have pressured the Fed more, could have asked tougher questions of banking industry leaders, but were too heavily influenced by them and by quasi-government banks, Fannie Mae and Freddie Mac.

PROF. JEREMY SIEGEL, WHARTON SCHOOL OF BUSINESS: We know with Fannie and Freddie, tens, if not hundreds, of millions of dollars that were spent lobbying Congress to -- to curry favor, and as a result ignore many of the risks that these institutions, as well as Freddie and Fannie, were taking.

TODD: Contacted by CNN, a spokeswoman for the Senate Banking Committee says its chairman, Democrat Chris Dodd, has been front and center in trying to stop this crisis from happening. She says Dodd was ringing alarm bells early, holding the first hearings on predatory lending hearing early last year.

(on camera): A spokesman for the House Financial Services Committee says that panel did try to reform Fannie Mae and Freddie Mac, but was often thwart thwarted by the Bush administration. A White House spokesman says that's a joke, that it was the administration that tried to reform Fannie and Freddie, but Democratic committee leaders often got in the way.

Brian Todd, CNN, Washington.

(END VIDEOTAPE)

COLLINS: Insurance giant, AIG, teetering on the brink of disaster. The company struggling to raise cash to keep itself afloat. Lakshman Acuthan is managing director of the Economic Cycle Research Institute.

He is joining us from New York this morning to talk about AIG's problems, and most importantly, Lakshman, how it affects people at home that are watching right now.

LAKSHMAN ACHUTHAN, ECONOMIC CYCLE RESEARCH INST.: Well, AIG is caught up in the so-called credit crunch. You were just talking about the housing downturn, which began in 2006; a credit crunch related to the falling home prices began very much on Wall Street in 2007. And in 2008 we had a recession begin. And that is exacerbating those earlier problems. It's really making it very difficult to deal with any policy initiatives to counter the weakness in the credit crunch. And you're seeing all of the carnage happen this year. We have Bear Stearns, we have Fannie and Freddie, we have Lehman and Merrill and now AIG, being tipped over because the recession is intensifying all those earlier problems.

So there's plenty of blame to go around. I think the regulators and the Fed, but also allowing this recession to take hold was a very, very dangerous and costly policy mistake. For the consumer at home, what it boils down to, in English, is that credit is going to be tougher. No matter what anyone tells you about interest rates, it's tougher to get loans at the moment on the consumer level.

COLLINS: Yes, and the biggest question, as I'm sure there are still people out there who would argue with you about whether or not there's a recession --

ACUTHAN: Sure.

COLLINS: -- it's not a given for a lot of people.

But let me just ask you this, because we are hearing preliminary, definitely unconfirmed reports that the government is now talking with AIG about a possible -- another bailout. People at home need to know that because why?

ACHUTHAN: Well, because it's -- again, the reason the government has to get involved in these situations is to keep the system working so that essentially credit keeps moving. And when so much of our economy is based -- and all of the consumers out there, it's very difficult to be an American consumer today without accessing credit on some level. Not a lot of people go around paying cash for everything.

COLLINS: Yes, but where does this money comes from, if there is a federal bailout -- is who?

ACHUTHAN: The taxpayer. Make no mistake about it.

This is why this debate over recession, for example, is such a big deal. Because if the policymakers, who are supposed to be kind of managing the situation, and there's a good debate about the mistakes that were made in the years past, are not even recognizing what's going on at the moment, how are you going to get good solutions? And so we have, instead, these late night, weekend deals which are quite expensive, as we're pointing out here, that are trying to combat the problem. It's really going to be very expensive for the American taxpayer, both in terms of the rates you're paying for credit or access to credit today and in your tax bill going forward.

COLLINS: All right. We sure do appreciate your insights on all of this.

Managing director of the Economic Cycle Research Institute, Lakshman Acuthan -- thank you.

ACUTHAN: Thank you.

COLLINS: The terrible toll now from Hurricane Ike. Here is what we know at this very moment. Officials are reporting 40 people dead across 10 states from the Gulf Coast to the Great Lakes. More than 30,000 evacuees are still in shelters. President Bush is in the storm-damaged area right now. He's actually aboard Marine One taking an aerial tour from Houston and Galveston. The president's message, we hear you and we'll work hard and fast to help you. You saw him speak just a few moments ago here on CNN.

Want to get over to Rob Marciano now who is watching everything happening, certainly in the aftermath of Ike.

Rob, and obviously you were down there right in the middle of all of it.

Give us some of your impressions as we look at the maps behind you now.

ROB MARCIANO, AMS METEOROLOGIST: Well, I think that you're going to see more and more pictures come out. Because it's been so difficult for the media to fan out and get access to the spots that were cut off and most heavily damaged. And now finally we're getting aerials. And actually finally guys were able to get on the ground via boat, to some of the most devastated areas.

So, this story is of larger scope I think, than what was originally first reported. But we said the whole time what a huge storm it was. Can we load up the before and after pictures because these are definitely dramatic. Zooming into Gilchrist, which is just to east of Galveston City. It's in Galveston County. It's on the right side of the bay, or just to the inlets of the bay.

This is a before picture of Google Earth. And this is an after aerial shot thanks to AP. And you can see everything has just been wiped out there. Probably a 12 to 15 foot surge at this spot, at least. But there's no seawall to protect it. Look, there's one house there that was actually standing still. So, amazing pictures there. And again, the video of the damage and the numbers as far as survivals and potential fatalities will probably change.

All right. Let's talk good news. Atlantic basin looking real quiet my friends. And I think it will be quiet for several days to come, for the first time in several weeks. The National Hurricane Center has put one line that we like on the bottom of their discussion which says no tropical storm formation expected in the next 48 hours. So, that felt good.

COLLINS: We'll take each and every one of those hours.

MARCIANO: Yes. And look at this. Even the map across the lower 48 looks to be pretty quiet.

COLLINS: Boring, love it.

MARCIANO: A lot of (INAUDIBLE), a lot of suns. Just a little bit of showers across Carolinas. But other than that, most people will be enjoying what mother nature has to offer for a change of pace.

COLLINS: OK. Very good. Thanks so much. Rob Marciano over at the weather center. Sarah Palin promises she and join promises she will cut your taxes. We'll take a look at her record on taxes as governor of Alaska.

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COLLINS: It's Tuesday, and they're on the trail. John McCain talking to CNN this morning from Florida. He holds a rally in Tampa, at the top of the hour, live coverage right here on CNN. McCain then flies to Ohio, where he will join up with his running mate Sarah Palin.

Barack Obama's address in Colorado, set to get started any minute now. Golden, Colorado, there for you, empty podium. We of course, will bring you live coverage when it happens. Obama capping a two day swing across the battleground state.

Governor Palin and taxes. What's her record in Alaska?

CNN's Jessica Yellin in Anchorage, now. Part of the best political team on television.

(BEGIN VIDEOTAPE)

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Governor Sarah Palin vows if she and John McCain are elected, they'll slash taxes.

GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: We're going to bring tax relief to all Americans.

YELLIN: And she says her record in Alaska, proves it.

PALIN: I'm returning a chunk of that surplus straight back to the people because they can spend it better than government can spend it for them.

YELLIN: Alaska has no state sales tax, no state income tax and no state-wide property tax. So what taxes did Palin cut as governor?

LT. GOV SEAN PARNELL (R), ALASKA: It started her first year when she introduced a studded tire tax repeal, business license fee reductions. It's culminated this year in a gasoline tax suspension.

YELLIN: That's true. Eliminating that tire tax saves drivers $5.00 on each winter tire. The gas tax saves them 8 cents a gallon for a year. On the stump, John McCain says Obama wants to raise taxes and he singled out Obama's proposal to place a windfall profits tax on oil companies.

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: And he's convinced that the 1970s style windfall profits tax is just what America needs.

YELLIN: Palin instituted exactly that kind of tax here, giving some of the money back to Alaskans. Checks arrived last week and it's made her popular. And what about this claim? PALIN: Property taxes were way too high. So, every year in office I cut rates for six years in a row.

YELLIN: As mayor of the town of Wasilla, Palin did cut property taxes repeatedly. But she raised sales taxes to finance an ice skating and sports arena which is still in the red. She improved city infrastructure, but left the city in debt.

Partisans are divided on the question, is Palin a fiscal conservative.

BILL WIELECHOWSKI (D), ALASKA STATE SENATE: I'd Say Governor Palin is a fiscal conservative in the same vein as George Bush.

PARNELL: Well actually, she's the fiscal hawk in the house.

YELLIN (on camera): And Governor Palin is the only one of the four candidates who has not released her personal tax returns. The campaign says they will release them on their own time frame.

Jessica Yellin, CNN, Anchorage, Alaska.

(END VIDEOTAPE)

COLLINS: The longest serving prisoner on Georgia's death row could face execution tonight. Efforts underway right now to keep the sentence from being carried out.

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COLLINS: The longest serving inmate on Georgia's death row could be executed tonight. Jack Alderman has been on death row since 1970s. Right now his attorneys are fighting to get him clemency. CNN's Brooke Baldwin is joining me now with the latest on this developing story.

So, curious Brooke. What are his attorneys arguing exactly? I mean, they must be saying he's clearly saying he's not guilty.

BROOKE BALDWIN, CNN CORRESPONDENT: Obviously they say he's not guilty. He has always maintained his innocence during this whole 34- year term on death row.

Basically the answer is quite simple, Heidi. They say he didn't do that. Why do we know that? We know that because an accomplice in the crime actually confessed to it. And talk about an 1th-hour attempt to save this man's life. One group even took out this full- page ad fighting for Jack Alderman here. This is from the "Atlanta Journal Constitution," just from last week.

So, the 57-year-old is scheduled to be executed tonight by lethal injection for that killing -- 1974 killing of his wife Barbara. But as of yesterday, the execution was stayed. Now, Alderman, as I said, he's been serving on death row here in Georgia, for 34 years. That is the longest in the state's history. Even the Pope has sent a letter asking for clemency. Alderman's attorneys argue, as I mention, it isn't fair that he is put to death that a crime that someone else later confessed to.

(BEGIN VIDEO CLIP)

MIKE SCHIAVONE, REPRESENTED ALDERMAN: There's no question that John Brown killed Jack's wife. And it was all based on John Brown claiming that somehow Jack had hired him to do it.

(END VIDEO CLIP)

BALDWIN: John Brown, of course, the accomplice. Now Monday, just yesterday morning, a Fulton County superior judge ordered the stay if Alderman's execution, allowing for this meaningful clemency hearing which just wrapped up about an hour ago. In fact, I just got off the phone with Jack's attorney, and he told me Alderman's 86-year- old father came to town to Atlanta, to testify, saying Jack has actually become a better person, Heidi, a better son since being in prison. And he says it's now up to the state board of pardons and paroles to decide today whether to carry out this execution in Georgia, tonight. Still hopeful, they are.

COLLINS: Yes. And just to let everybody know. If, in fact, it does happen, it's about seven hours away, 7:00 p.m. tonight is when that -- whole event could take place.

Brooke, we know you're watching it closely. Let us know if anything changes.

BALDWIN: Sure.

COLLINS: A witness in the O.J. Simpson robbery trial who became light head and dizzy on the stand yesterday, may be questioned again today. Bruce Fromong fell ill while Simpson's lawyers were cross- examining him and the trial was suspended for the day.

Simpson is accused of armed robbery, kidnapping and assault with a deadly weapon. Prosecutors say he broke into a Las Vegas hotel room to steal memorabilia he says belonged to him. Fromong told the jury, he heard somebody in the room saying, put the gun down. One of the key questions is whether Simpson knew weapons were in the room.

The storm has passed, but victims of Ike are still being rescued. Search and rescue crews are pulling people --

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COLLINS: Search and rescue crew, still pulling people to safety in Texas, days after Ike blew through.

CNN's Ed Lavandera has the story.

(BEGIN VIDEOTAPE)

ED LAVANDERA, CNN CORRESPONDENT (voice-over): Flying over the destruction and looking for survivors isn't easy. Especially when one of them like this man, is floating on mangled debris only wearing a life vest. An Air Force rescue team pulled him to safety from Crystal Beach, Texas, a small coastal town decimated by hurricane Ike.

STEVE MCGRAW, TEXAS HOMELAND SECURITY: This is the largest search and rescue effort that Texas has ever taken. Started in the east, going all the way West. And house by house, block by block, search and rescue.

LAVANDERA: Carrying and moving the elderly is proving to be a challenge once again. An elderly man had to be rescued from his car after driving into high water along Interstate 10. And state officials say they're looking into how and why nearly 300 people were abandoned at a nursing home. And at another nursing home in Houston, the elderly had to be moved out because of damage to the building.

UNIDENTIFIED MALE: Well, we had part of the roof tear off and water coming in the roof. But the parking lot, we were waist deep, chest high in water and the winds were howling.

LAVANDERA: But, across the region, there are miles and miles of damaged homes that need to be inspected. An exhaustive search to make sure there aren't more victims trapped in the rubble.

(on camera): On Sunday, several thousand people had to be evacuated and moved to shelters in San Antonio and Austin. A sign that life here will take weeks, if not months, to return to normal.

Ed Lavandera, CNN, Houston.

(END VIDEOTAPE)

COLLINS: Really amazing some of the pictures that we have seen coming in. As we know, the president is there right now getting a tour from up above in Marine One of both Galveston and Houston. I know you'll be following throughout the rest of the day, T.J. Holmes.

T.J. HOLMES, CNN ANCHOR: We expect -- yes. Possibly hear some more from the president, hear a whole lot more about Ike and, of course, Wall Street, unfortunately. Which has everybody a little bit, understandably freaked out.

COLLINS: Yes.

HOLMES: So, yes, we will continue on in the NEWSROOM. Thank you, Heidi, on this Tuesday, the 16th day of September. Hello to you all. I'm T.J. Holmes, sitting in for my good friend Tony Harris, today.