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Central Banks Band Together to Slow Economic Collapse; Senator Obama Gains Lead in Poll of Polls

Aired September 18, 2008 - 14:00   ET

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

FREDRICKA WHITFIELD, CNN ANCHOR: Workers this week are conducting annual preservation work on the national monument. They're sealing cracks to keep water out. I bet you are wondering, how do they do that? Well, the carving on this memorial began in 1927. And every now and then, even that needs a little face lift.
Well, he has lived long. He has prospered. And he still looks pretty good as well. Timoji Tinabi (ph), well, he turned 113 today. The native of southern Japan is listed as the world's oldest man by the Guinness people. Tinabi he says he is an early riser, and he drinks milk every afternoon and avoids alcohol and no to smoking. Japan has one of the longest life expectancies anyway. More than 36,000 people there are over the age of 100.

However, the world's oldest person is an American, by the way, a 115-year-old Indiana woman. The next hour of CNN NEWSROOM starts right now.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The American people can be sure we will continue to act to strengthen and stabilize our financial markets and improve investor confidence.

(END VIDEO CLIP)

WHITFIELD: Soothing words from the president, plus tens of billions of dollars from the Treasury, the Fed and other central banks. A formula for economic recovery, or are they all just buying time?

Scared of stocks? Bailing on banks? Skittish investors are once again banking on gold. We show you how to turn your greenbacks into bullion.

And the storms have moved on, but the suffering remains in Haiti on a monumental scale. Now two big names try to capture the world's attention.

Hello, again. I'm Fredricka Whitfield in for Kyra Phillips at the CNN world news headquarters in Atlanta. And you are in the CNN NEWSROOM.

Gestures, statements and vast amounts of money; all part of a global campaign to shore up struggling banks, to calm investors, to keep the American meltdown from spreading. President Bush called off a political fund raising trip today to meet with his economic advisers. And in a statement, you may have seen live here on CNN, Mr. Bush promised extraordinary measures to meet the numerous challenges.

Overseas, the central banks of Europe, Britain, Switzerland, Japan and Canada, all teamed up with the US Federal Reserve to pump an additional 180 billion dollars into the credit system. The aim is to motivate banks to keep lending. Stock markets opened the day with a rally, though not on the scale of the sell offs yesterday and Monday. It fizzled late in the morning, but found new life just the last hour. Stayed tuned for that.

John McCain blames a former Republican Congressman for the economic mess. At a rally a short time ago in Cedar Rapids, Iowa, the Republican presidential candidate singled out Christopher Cox, now chairman of the Securities and Exchange Commission, the SEC, and a former law maker from California.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: There was no transparency in the books of the Wall Street banks. Banks and brokers took on huge amounts of debt, and they hid the riskiest of all investments. Mismanagement and greed became the operating standard while regulators were asleep at the switch.

The regulators were asleep, my friends. They were not working for you. The primary regulator of Wall Street is the Securities and Exchange Commission. Recall the SEC kept in place trading rules that let speculators and hedge funds turn our markets into a casino. They allowed naked short selling, which simply means that you can sell stock without ever owning it. They eliminated last year an important rule called the uptick rule that has protected investors for several years.

Speculators pounded the shares of even good companies into the ground. The chairman of the SEC serves at the appointment of the president, and in my view, has betrayed the public trust. If I were president today, I would fire him.

(END VIDEO CLIP)

WHITFIELD: All right. We are talking about the SEC Chairman Christopher Cox. We have reached out to Chairman Cox's office, but no one there is commenting as yet. See what the White House has to say as a result of what McCain just said. Brianna Keilar is at the White House and, very quickly, the president came out or at least the White House came out reacting.

BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: Oh, yes, we heard from White House Press Secretary Dana Perino. She said that the chairman has the president's support. SEC Chief Christopher Cox is of course in charge of over-seeing the agency that regulates the securities industry. He was appointed by President Bush a little over three years ago, got unanimous consent from the Senate. But again, White House Press Secretary Dana Perino is saying that the chairman has the president's support. We did hear President Bush this morning come out and give an address. He actually canceled a trip that he scheduled to Florida and Alabama so that he could be here at the White House concentrating on the economic issues. This was his first on-camera address about the economy since the AIG bailout on Tuesday night. This was not though, by any means, an announcement by the president about the White House's plan to deal with this financial crisis.

He did not get into any specifics about options that he is considering in the White House, holding those details very close to the vest. But what he did do instead was tout what the government has done already. That includes the taking over of Fannie Mae and Freddie Mac, the bailing out of AIG, and also a move by the SEC, the tightening of a trading rule.

(BEGIN VIDEO CLIP)

BUSH: Actions demonstrate my administration is focused on meeting these challenges. The American people can be sure we will continue to act to strengthen and stabilize our financial markets, and improve investor confidence.

(END VIDEO CLIP)

KEILAR: Now, we have heard President Bush repeatedly saying that these are adjustments. That is a word we have heard a lot, adjustments that the markets -- that is taking place in the financial markets. We also heard White House Press Secretary Dana Perino saying that these are market corrections. Yes, this is pretty muted language when you consider that there are a number of analysts saying that this week is a horrible week for the US economy, the worst week since the Great Depression.

The White House trying to be a calming influence here for Americans and for the markets. From the White House perspective to go out and say that the sky is falling, even if the sky is falling, would be very dangerous and just add to the turmoil that we are seeing in the financial sector. Fredricka?

WHITFIELD: Yes, but I though glaringly absent was we didn't hear from the president use words like optimistic or the slowing economy, like we have in the past, recent past, whenever he talks about this economy. Instead, he was being very careful about his word choice this go round.

KEILAR: Yes, and that is something heard from the White House. You remember before President Bush saying that the fundamentals of the economy were strong or the core of the economy was strong. What we heard from Dana Perino, I believe it was yesterday, saying that the economy has the strength to deal with the problems, but saying the economy is strong -- she didn't want to wade into that, for whatever reason, whether it was because it has become a campaign issue or because the president doesn't feel that way. Very possibly because of the campaign issue, though, Fredricka.

WHITFIELD: Brianna Keilar, thanks so much, from the White House this hour.

Well, in the midst of such worldwide turmoil, Congress agrees to one point on this: it is somebody's fall. Democrats point to what they consider eight years of lax financial regulations. Some Republicans take issues with sudden government intervention.

(BEGIN VIDEO CLIP)

REP. TOM FEENEY (R), FLORIDA: The question remains if there is no private sector left to bail out the tax payer. And the taxpayers are the lenders of last resort. Who bails out the tax payer? There is simply nobody left on the hook when, as was said earlier, you have privatized all of the risk taking, and encouraged people to take risks in search of higher returns or rewards for Wall Street executives. And you have socialized on the back of hard working, prudent and responsible tax payers all of the risk.

REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: We don't need to take regulation and supervision off the field, because when we do, we end up where we are now. And that is how we are going to go forward with it, in a very serious way, because this is deadly serious to middle- class families, who are concerned about their jobs, their homes, the education of their children, and how they pay for college.

(END VIDEO CLIP)

WHITFIELD: Lawmakers in both parties say they should have been consulted about more of the administration's emergency measures.

So how is this for an emergency measure? The world's most powerful central banks are banding together to try and salvage the global credit system. CNN's Allan Chernoff joins us with more on that, and on a separate move by the Federal Reserve bank of New York as well.

ALLAN CHERNOFF, CNN BUSINESS CORRESPONDENT: That is right, Fredricka. In order to work out of this mess, the economy has to function. And our Federal Reserve, the central bank is trying to make sure that the economy, indeed, and the financial world continues to operate. That is how serious this all is.

So the Fed today took the extraordinary step, historic, of injecting 105 billion dollars into our banking system. It did this through its primary dealers. Those are big institutions on Wall Street that deal with the Fed everyday. It lends them -- the Fed does -- lends to these primary dealers 105 billion dollars. They in turn hand over a bunch of treasury securities and debt of Fannie Mae and Freddie Mac.

That is how the Fed injects money into the system. The idea is to get the banks lending to each other and, ultimately, to get the banks lending to companies and to us.

WHITFIELD: All right, Allan Chernoff in New York, thanks so much. Trying to put a hopeful spin on that. We appreciate it.

Stocks losing value. So where should you put your money? Gold perhaps? We'll talk about striking gold.

(COMMERCIAL BREAK)

WHITFIELD: All right. In our latest national poll of polls, some slight movement in Barack Obama's direction; 47 percent of voters say that they will cast their ballots for him; 44 percent say they will vote for John McCain; nine percent say they still have not made up their minds.

Well, yesterday, Obama had a one-point lead, his first lead over McCain in ten days, since the convention. The poll of polls is an average of four different surveys. Our senior political analyst Bill Schneider joins us now from Washington.

So Bill, let's take a look at some of the new state polls out today, because these battleground states really can determine a lot coming up. Florida, for instance. It is a tie. You see right there. Ohio, Obama is up by two points over McCain. And in Indiana, McCain is taking the lead over Obama. So, give me an idea how this race is shaping up when you take a look at these state by state polls.

BILL SCHNEIDER, CNN POLITICAL ANALYST: Well, we have looked at about 12 state polls that have come out this week. And there is something interesting happening in the states. In ten of those 12 state polls, the Democratic ticket is doing better than John Kerry did in 2004. Those states include California, Colorado, Florida, Indiana, Missouri, Montana, New Mexico, North Carolina, Ohio and Wisconsin. In every one of those ten states, Barack Obama is improving on the performance of John Kerry in 2004.

I am not say he is winning of those states. Most of them are actually too close to call, within the margin of error. But the Democrats are doing better than four years ago. In one state, Nevada, the Republican was ahead three points, George Bush in 2004, and McCain is still leading by three points. And in only one state, and that is the state of New Hampshire, the Republican ticket is actually doing slightly better. McCain is doing better than Bush did in 2004. New Hampshire, you may remember was the state that John Kerry carried by just one point. Now McCain is two points ahead in New Hampshire.

But that is the only state where we can find McCain actually doing better.

WHITFIELD: Interesting. Any reason why McCain would be doing better than Bush in New Hampshire?

SCHNEIDER: Well, because McCain has a powerful base in New Hampshire. McCain carried the New Hampshire primary. He won it in 2000. He won it again in 2004 -- in 2008 rather. That was the state that really gave McCain a big push at the beginning of the primary season. He has worked that state very hard. And McCain is a very strong candidate in New Hampshire.

So he is hoping that that will be one state, at least one state, that McCain can take away from the Democrats. WHITFIELD: Ah, interesting. Bill Schneider, thanks so much. We will -- let's talk about another push that McCain is getting now. Donald Trump is now choosing sides in the race for the White House. Did I spoil the surprise for you? The billionaire businessman is backing Republican John McCain. Trump talked about the race with CNN's Larry King.

(BEGIN VIDEO CLIP)

LARRY KING, CNN ANCHOR: Have you formally endorsed a ticket?

DONALD TRUMP, "THE APPRENTICE": No, but I am endorsing McCain. I am basically very strongly -- You have to understand, I have known him. I like him. I respect him.

KING: So you are endorsing him?

TRUMP: He is a smart guy and I think he is going to be a great president.

KING: So you are endorsing him?

TRUMP: Sure. I will endorse him on your show. Why not?

KING: You just endorsed him.

TRUMP: I endorse him.

(END VIDEO CLIP)

WHITFIELD: Why was he so hesitant on that word endorsement. Trump also told CNN that McCain's choice of Sarah Palin as his running mate has rejuvenated the Republican party. All the latest campaign news right at your fingertips. Just go to CNNpolitics.com. We will have analysis from the best political team on television. That you know. It is all there at CNNpolitics.com.

(COMMERCIAL BREAK)

WHITFIELD: The scars of Hurricane Ike are not going heal any time soon. In Galveston, officials say they need another week, at least, to make repairs. They are asking people to stay out so they won't put anymore stress on the city's infrastructure. Power, water, sewers services, all of that coming along very slowly in Galveston.

Houston still has about one million customers without electricity. And even in Ohio, about 900,000 customers are still in the dark thanks to wind from Ike's remnants. Some people might be off of the grid until next weekend.

As for the rest of the country, fall is jumping the gun in some places. Let's check in with Chad Myers, but it feels so good, doesn't it?

(WEATHER BREAK) WHITFIELD: All right. Oil prices have been swinging nearly as wildly as the stock prices these days. CNNmoney.com's Poppy Harlow has our energy fix from New York. Hi Poppy, good to see you.

POPPY HARLOW, CNNMONEY.COM: Good to see you, Fredricka. Oil prices have really been pushed out of the headlines this week. We've heard so much about the volatility on Wall Street. But oil has been on a wild ride too. Oil prices fell sharply earlier because of the weak economy, all that turmoil. But then they rose again, more than six dollars a barrel yesterday, crossed 100 dollars a barrel today.

Right now, oil is down right around 97 dollars. Because of the volatility a lot of people are still working to make the world more green. One example of that right in Minneapolis, Minnesota. I visited the I-35 bridge that reopened this morning. Take a look at it there. Of course, it collapsed last year, killing 13 people.

Now, just a year ago today, they began to work on constructing the new bridge. It is now carrying traffic. I got a tour of the bridge yesterday before it opened. It has several green features, including what you see there, LED lighting. It is the first bridge in the country to have that technology. Those lights will last longer and use a lot less energy.

Now, the Minnesota Department of Transportation says they used less energy building the entire bridge, because they did a lot of the construction right there on location, rather than shipping in pieces from around the country. Now, they also decided to recycle. Take a listen.

(BEGIN VIDEO CLIP)

KEVIN GUTNECHT, MINNESOTA DEPT. OF TRANSPORTATION: There was a fair amount of concrete from the old bridge, and we ground all of that up, and some of that got incorporated back into the road beds.

(END VIDEO CLIP)

HARLOW: Unlike the old bridge, this new one has its own storm water system, meaning that when it rains all of the water collects in the bridge. It doesn't fall with all the debris into the bridge. That is not an energy fix like the LED. Fredricka, it's still a green feature certainly.

WHITFIELD: Wow. Well, lots of mixed feelings, I'm sure, going on as a result of this. Happy to see the positive spin. But clearly folks are still mourning what was a horrible tragedy.

HARLOW: They still are. Certainly, it's bittersweet for all of the people that worked on the project, all the people that live in the region as well.

WHITFIELD: Poppy Harlow, thanks so much. We appreciate it.

Billions of dollars to bail out American businesses in a big way. How can you bail out your own personal finances or at least try to preserve it? Is gold the answer? Before you go on a gold rush, we have what you need to know.

(COMMERCIAL BREAK)

WHITFIELD: All right, 29 minutes after the hour. Here are some of the stories we are working on in the CNN NEWSROOM. The world's most powerful central banks are banding together to try to solve the global credit system. The big five, along with the Federal Reserve, are trying to give the system a 180 billion dollar shot in the arm.

John McCain says if he were president right now, he would fire the head of the Securities and Exchange Commission, Christopher Cox. No comment yet from Cox.

And CNN's latest nationwide poll of polls suggests that Barack Obama is ahead of John McCain, 47 percent to 44 percent.

Back to money news. The Dow industrial tumbled 800 points in the first three days of trading this week. The market opened higher this morning, but it has been swinging wildly ever since. Susan Lisovicz is at the New York stock exchange with a look at what is going on. Hi, Susan.

SUSAN LISOVICZ, CNN CORRESPONDENT: Hi, Fred. Well, you know, you would think that after the two worst sell-offs of the year this week, you might get a rally with traction, that has not happened. Things have unfolded in such rapid fashion in the last 11 days or so that there is a real expectation that another shoe could drop, and what has happened today as a result is that things have been swinging wildly all over the place. The Dow was up 200 points at its high, it was down more than 100 points at its low.

Right now we have just got modest gains, the Dow Industrials are up 40 points or a third of a percent. The Nasdaq is up 6 points or about a quarter of a percent. U.S. stocks, just to put it in perspective, have lost $1 trillion in value this week because of all of this turmoil. The focus remains in the financial sector.

Washington Mutual, according to reports, has put itself up for sale, its credit rating was downgraded to junk earlier this week. Its stock is soaring today, but it has lost 94 percent of its value over the past year. There are also reports that Morgan Stanley and Wachovia are considering a merger. However, shares of Morgan and Goldman Sachs, the only two standalone investment banks left on Wall Street, are sliding.

There are some financial giants that are rallying. American Express, which is a Dow component, is up 13 percent, Fred. It is just volatile.

WHITFIELD: Wow. So everyone wants to be extremely hopeful, but even with this kind of injection into financial system, it is still very unpredictable.

LISOVICZ: That is right. And you know, it is a complex situation, but you know, The Wall Street Journal had a very good metaphor, I thought, this morning, that it said the U.S. financial system resembled a patient in intensive care.

The body is trying to fight off the disease that is spreading and the team of doctors is using experimental medicine in some cases to cure the patient, and that speaks to what you're talking about, these efforts overnight, among other things, to inject some liquidity, to try to get financial institutions to lend, to stop hording cash and to loan money.

And to that point, you know, we have been seeing all of this fear in the marketplace, we have been seeing this real pile-on with the financial stocks. And so sometimes the fears become a self-fulfilling prophecy.

And so The Wall Street Journal is reporting this afternoon that CalPERS, which is the largest pension fund in the U.S., is no longer lending out shares is of Goldman Sachs and Morgan Stanley. This is an effort to try to prevent this short selling, this real pile-on.

The Securities and Exchange Commission also restricted short selling, a type of short selling today, because sometimes you see these strong institutions, Goldman and Morgan, both reported earnings, they both reported real profits this week, and still there is this pile-on. And so CalPERS, taking steps to try to prevent this kind of short selling that has really in some cases amounted to a death spiral for some stocks.

WHITFIELD: Wow. Very unsettling I think for everybody across the board. All right. Susan Lisovicz, thanks so much.

LISOVICZ: You're welcome.

WHITFIELD: If you have some money or some liquid assets, you are probably wondering right now, what do I do with it? What is the best way to invest it? Well, apparently that diving Dow and the housing crunch are feeding a growing gold rush these days. An ounce of gold is selling for around $880, and while that is high, it was over $1,000 an ounce earlier in the year.

We found another indicator of the high demand gold on one of the larger gold dealer Web sites, take a look, it had this message for buyers. "We are working diligently to fulfill all existing client orders, we apologize for any delays in order fulfillment."

Well, some of the more popular one ounce gold coins are not being minted fast enough apparently to keep up with this new demand. So, should you jump on the gold band wagon? Joining me now to talk about it is Paul La Monica, editor-at-large with cnnmoney.com.

Good to see you.

PAUL LA MONICA, EDITOR-AT-LARGE, CNNMONEY.COM: Thanks a lot.

WHITFIELD: All right. So how do you get this gold even if it sounds something that is rather appetizing about now?

LA MONICA: Yes. I think really the key for anyone out there that is thinking of investing in gold because of how tumultuous the markets have been, you only want to have a small percentage of any of your assets...

WHITFIELD: How small?

LA MONICA: ... in gold. Most financial planners suggest as small as maybe 5 percent, maybe 10 percent of your total portfolio. It really should not be a big percentage, because it is very volatile. It does well in times like this when everyone fears that the world is coming to an end, but we obviously always aren't always in that scenario.

WHITFIELD: Oh, OK. Interesting. Well, there are so many different forms in which to get gold. I mentioned the gold coins, sometimes you can get the little bullions or maybe some nice bars just like that. How do you make that determination -- you know, and here is a nice little picture showing the variety of things. How do you decide exactly in what form I want to buy gold?

LA MONICA: Yes, to be honest, the easiest way to invest in gold is not really by probably buying the metals, itself. That tends to be something that's just practical for a lot of people buying huge bullions of gold and then taking it to a bank.

You know, really, what you can do is, if you have an investment account with a brokerage firm that you're comfortable with and you want to talk to them about gold stocks, there are plenty of gold mining companies, they are mutual funds that invest in gold stocks and actually the metals, themselves.

And those can be a little bit safer, because it is spread out over a group of companies that are in the mining industry as opposed to just buying the metal, itself.

WHITFIELD: So you won't have that tangible product of gold, instead a certificate or something on paper that says, you know, I have invested XYZ amount of money into gold.

LA MONICA: Right.

WHITFIELD: Now does it matter whether it is American gold or whether it's African gold or from somewhere else?

LA MONICA: Not really. I mean, obviously, gold prices have just been skyrocketing in the past few days simply because people are worried about what is going on in the financial markets.

WHITFIELD: So 5 percent, you know, of your portfolio to go toward gold, what kind of profit are you seeing for a lot of folks who have made this decision, say, within the past couple of months and it has been so volatile, the entire market as a whole, the people are getting a little nervous and have been for a few months now?

LA MONICA: Right. If you have made an investment in gold some time in the past few months or even weeks, you might have been able to make a quick profit. Gold got down to about $750 an ounce or so, and now it is around $900 an ounce, but to put it in that perspective, gold was at $1,000 an ounce in March when Bear Stearns was melting down, and everyone thought that the financial system would implode.

Then dropped down to about $750. It's back up to $900. Since it has really risen so rapidly in such a short period of time, you'd have to think that a lot of people are professional investors making bets on this.

And they are going to find some place else to go soon, so they might sell off their gold, and if you are buying now, you might be left with an asset that is going down.

WHITFIELD: All right. Interesting stuff. Paula La Monica, cnnmoney.com, appreciate it.

LA MONICA: No problem. Thank you.

WHITFIELD: On the gold rush there.

All right. If Wall Street is too rough and tumble perhaps for your taste, don't bother looking overseas. The Hong Kong market dropped a staggering 7 percent today. Then made it all back, more or less, to close almost flat. In Tokyo, the Nikkei plunged as well, and stayed down more than 2 percent to a three-year low. The CAC-40 Index in Paris rose more than 1 percent, only to fall back just as much.

Well, it doesn't take long for a crisis to pass from Wall Street to Main Street. And it can pass around the world in between. CNN's Richard Quest connects the dots in London.

(BEGIN VIDEOTAPE)

RICHARD QUEST, CNN CORRESPONDENT: The starting point has to be Lehman Brothers going into bankruptcy protection earlier this week. Lehman Brothers, many of their assets were insured by AIG. Of course, American International now found itself in trouble and had to borrow money from the U.S. Fed.

Professor, so far so good?

PROF. WILLEM BUITER, LONDON SCHOOL OF ECONOMICS: AIG had to get an $85 billion loan from the Fed secured against all its prime assets in order to tide it over, a massive liquidity squeeze.

QUEST: So, so far so good. But AIG owns ILFC, International Lease Finance Corporation, the largest purchaser of aircraft in the world.

(voice-over): It has got more than 100 planes on order from Boeing and Airbus. Both companies currently have problems of their own, so if ILFC cuts back on its order, things get worse for everyone.

BUITER: You are now getting to the point that a financial crunch affecting an investment bank is reaching the manufacturing assembly line in Seattle or in Toulouse. Financing of aircraft through these leasing arrangements is likely to become more expensive, the way all financing is becoming more expensive.

QUEST (on camera): But now we really start to see how this feeds into the wider economy and affects you and me, because the airlines will start to pay more for their aircraft, from ILFC and Boeing and Airbus. They will pass on those costs to passengers.

On this side of the equation, Boeing and Airbus, fearing a reduction in orders will cut back to their suppliers. Jobs get cut or jobs get lost. And ultimately, we all pay the price.

Professor, have I gone too far from Lehman Brothers going under to us all feeling the effect?

BUITER: Well, this is how a crisis of the financial sector becomes a financial crisis impacting on the non-financial corporates and households, and through that an economic slowdown, and if you are not careful and don't take the right measures, possibly an economic crisis. That is how it happens.

QUEST (voice-over): Once the fire is put out, the real burning question becomes, what lessons have been learned?

(on camera): Professor, where in all of this could the rot have been stopped?

BUITER: Well, at many points. Clearly, this here would be one point where AIG, if it had stuck to what it knows how to do, insuring regular economic activity as opposed to acting like an investment bank without the investment bank expertise and knowledge.

QUEST: But once that had happened, this becomes inevitable.

BUITER: Unless the right measures are taken, widespread increase in unemployment and stagnating growth.

QUEST (voice-over): It all may seem so basic in hindsight, credit crunch 101.

(END VIDEOTAPE)

WHITFIELD: Oh, man. And Richard Quest is joining us live now.

And gosh, is hope fading, kind of like your marker was there?

QUEST: The problem -- this whole issue is, Fredricka, that once this thing happens, it somersaults, it water cascades, whatever metaphor you want, we have seen it classically today. Lehman Brothers to AIG. AIG to International Lease. International Lease to Boeing and Airbus. Boeing and Airbus to airlines around the world. And ultimately, to you, me, to workers, to passengers, to our pocketbooks.

WHITFIELD: Wow. So it is everybody's problem, not just ours. It is all connected.

QUEST: No question about it. It just takes time, and that is my urging to anybody who really is having difficulty understanding or thinks this is a problem of those highly paid greedy bankers on Wall Street or in the city of...

(CROSSTALK)

WHITFIELD: Let's not get you started.

QUEST: Eventually we will all feel the effects. And we have really seen that linkage this week.

WHITFIELD: Yes. We are feeling it. All right. Richard Quest, thanks so much, good to see you.

All right. And of course, you can follow your fortunes, hopefully they're all fortunes or lack thereof, sorry, cnnmoney.com. We have got all of the day's market news and numbers, expert analysis and much, much more.

(COMMERCIAL BREAK)

WHITFIELD: U.S. Secretary of State Condoleezza Rice says Russia's recent behavior threatens to isolate the country and make it irrelevant on the international scene. Our State Department correspondent Zain Verjee joins us now with more on that -- Zain.

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Hi, Fredricka. Secretary Rice really hit at Russia with some stinging criticism. She accused Russia of being authoritarian at home and aggressive abroad. She also warned Russia that it is taking actions that puts it on a path to isolation and irrelevance.

Now Russia's invasion of Georgia, which is a U.S. ally, Rice said, really achieved nothing at all. She also, in her speech, expressed real frustration and disappointment with Russia.

(BEGIN VIDEO CLIP)

CONDOLEEZZA RICE, U.S. SECRETARY OF STATE: I have traveled repeatedly to Russia. The last time -- two times with the Defense Secretary Robert Gates to try to foster cooperation. Increasingly, Russia's leaders have simply not reciprocated. And their recent actions are leading some to ask whether we are now engaged in a new Cold War.

No. We are not. But it does beg the question, where did this Russia come from? How did the Russia of the 1990s become the Russia of today?

(END VIDEO CLIP)

VERJEE: Key in Secretary Rice's message was the U.S. and European unity. She is telling Russia essentially that the alliance is strong and the Russians don't have any opportunities to exploit cracks there, because it is solid. She also said that the West is going to stand up to Russian bullying and its threats.

At the end of the speech, too, Fredricka, Secretary Rice also said that she hopes that the new president and the new secretary of the state will go to Russia as a reminder to all of us really that tensions with Russia really are going to spill over to the next administration, and whoever wins the White House is going to have to wrestle with the Russian bear -- Fredricka.

WHITFIELD: Well, it is going to be interesting to see if this speech has any impact on Russia and Russia's point of view now of the U.S.

VERJEE: Right. Well, the speech itself is unlikely to, although the Russians will be watching it carefully, as will the Europeans, and then Russian people, too. The Russians, though, many analysts have said, just looked like they are in a defiant mood. They seem to want to test the U.S. and they feel pretty strong, Fredricka, because they have got the money and power from their oil and gas, and that is what Europeans really rely heavily on.

But in the end, Rice's speech may just fall flat, because all of the criticism in the world may not be enough, because it is not backed up with tough consequences. And the U.S. can't do it, because it has little leverage, little worldwide credibility, and the administration is at the end of the term.

The other thing too, Fredricka, is that the U.S. also needs Russia on international issues like negotiations with Iran and North Korea and counterterrorism, so that the only time that the Russians really may change their behavior is if they feel a severe economic impact from the situation -- Fredricka.

WHITFIELD: All right. Zain Verjee in Washington. Thanks so much.

Perhaps this might help you to lose your appetite. Some people call it "Frankenfood," will you call it dinner anytime soon? The FDA issues new some guidance on genetically-engineered meat.

(COMMERCIAL BREAK)

WHITFIELD: All right. For better or worse, it is probably coming to your dinner table. The FDA has set up guidelines to regulate meat, milk, and eggs from genetically-engineered animals. Medical correspondent Elizabeth Cohen is here.

Huh, all right. So a lot of folks are saying, I'm losing my appetite on this one, but do you really have a choice?

ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: You might not have a choice because it might not be labeled "genetically engineered." It might just look like plain old meat. So let's talk about what genetically engineered meat is and how they do it. We have a lovely example for you. What scientists have done...

(COW MOOING)

COHEN: There he is. There is the cow. You take DNA out of that cow, take a little DNA out of him. Take the -- there it is. There is the DNA. You take that DNA out of the cow and you put it into a pig, and you know what happens?

(PIG GRUNTING)

COHEN: Whoops, there he is. You know what happens? Is you get fat pigs. You get pigs that mature really, really quickly to even get them to market quickly and save money. And so scientists are trying all sorts of variations on this theme to get meat and other foods that will be faster to sell, and also that could be healthier.

You could genetically engineer meat so that it has got have more omega 3 fatty acids in it. That is a good thing.

WHITFIELD: How will we know when we go to the supermarket?

COHEN: You won't necessarily know, it might not be labeled. You wouldn't necessarily know.

WHITFIELD: Now is it safe?

COHEN: OK. There are people who are saying, you know what, we are not sure if it is safe, and the problem is, is that they say that the government is not doing enough to make sure that it is safe. They say the government is just kind of letting this happen without putting in proper precautions.

WHITFIELD: When might this show up on the shelves? Since we won't be able to read the labels, I wouldn't know, but just give us a ballpark here.

(CROSSTALK)

COHEN: It could be in just a few months that the FDA will totally pave the way for this to be sold, and then that will allow these manufacturers to start marketing it.

WHITFIELD: Oh, that is fascinating stuff. Could be quick.

(PIG GRUNTING)

WHITFIELD: Oh, I like that. Thank you.

(LAUGHTER)

COHEN: I'm not referring to us of course, yes.

(LAUGHTER)

WHITFIELD: All right. Let's hope not. All right. Thanks a lot, Elizabeth, appreciate it.

All right. Well, Hollywood answers the call for help. Actor Matt Damon and hip hop artist and activist Wyclef Jean get together to help those devastated by hurricanes in Haiti.

(COMMERCIAL BREAK) WHITFIELD: All right. Cleanup at the Houston Zoo with a little help from this big guy. That is Tucker, a 3-year-old elephant lending a hand -- or trunk I should say. The zoo is open, but with a limited number of concession stands, of course, but the zoo's education programs have been canceled until the next week, best part is getting help from that guy.

All right. To Haiti, hundreds of thousands are still desperate for help in the aftermath of Ike and previous storms. Often when aid does arrive, it sets off a frantic struggle among hungry storm survivors. One woman ended up being caught up in razor wire, tangled and she was actually bleeding. As many as 100,000 Haitians are in need.

Actor Matt Damon and Haitian-born singer Wyclef Jean toured the flood-ravaged country to bring attention to the suffering there. Our own Don Lemon had a chance to talk with them.

(BEGIN VIDEOTAPE)

WYCLEF JEAN, MUSICIAN: When we landed in Gonaives, you could actually smell the dead bodies as you are going through the town. This is what we experienced.

DON LEMON, CNN ANCHOR: Matt, I understand that at one point Wyclef turned to you and said, people should not live like this, and that struck you as the sentence that summed up the whole trip.

MATT DAMON, ACTOR: Yes. It was perfectly said. I mean, it was true. I mean, you know, the smell was incredible, it was like walking into a wall, and you know, to see people walking through this water that was just -- you know, it is sewage and it is just incredibly unsanitary and these little children with no shoes walking -- you know, it is just -- it was -- we -- our animals don't live like this, you know?

And these are people. And the whole time we were there we had, you know, the U.N., the blue helmets were with us, and some cops that -- some, you know, were with us. But we didn't see any other police or, you know, we didn't see anybody. I mean, there was nobody there.

(END VIDEOTAPE)

WHITFIELD: So what are the two stars doing next for Haiti? You can see the full interview with Don Lemon, Saturday, 10:00 p.m. Eastern only on CNN.

And of course, if you would like to get involved in relief efforts for those already affected by Hurricane Ike in Haiti and elsewhere, of course, in this country, go to cnn.com's "Impact Your World" page, you will find links to groups providing food and shelter to people in need. That is cnn.com/impact.

(COMMERCIAL BREAK)

WHITFIELD: A thunderstorm at Kennedy Space Center keeps the shuttle Endeavour under cover. Endeavour was supposed to join Atlantis on the launch pad this morning, NASA will try again tomorrow. Atlantis is scheduled for liftoff next month on a final and risky mission to service the Hubble telescope. Endeavour is being prepped for a rescue mission if needed.

And this is a very unusual face-to-face meeting in London, kind of. OK. The woman with the world's longest legs meeting the smallest man. He is just under two-and-a-half feet tall or two-and-a-half feet short. Her legs, more than four feet long, and by the way, she is a little over six feet-four inches tall in all. The pair met in London's Trafalgar Square Tuesday.

They posed for the cameras, as you can see, to publicize the release of the newest version of the Guinness Book of World Records, that certainly will get your attention. This year's edition of the popular book hit stores yesterday. And all turned out to take a gander at that -- or them.

All right. Rick Sanchez is coming up next.