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Bailout Bill Negotiators Look to Move the Plan Forward; Presidential Candidates Weigh in on Busted Economy

Aired September 30, 2008 - 10:00   ET

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

HEIDI COLLINS, CNN ANCHOR: Rising after the fall, one snapshot from Wall Street as we look at the big picture this hour. Your investments, your money and, most importantly, your credit. Few signals from Washington right now. The bailout bill negotiators expected to huddle behind closed doors. Can the financial rescue plan move forward?
It's Tuesday, September 30th, I'm Heidi Collins. You're in the CNN NEWSROOM.

White-knuckle, blank ink, buckle up for another wild ride on Wall Street today. I want to give you once again a look at the big board to the positive now, 183 points and we're about 30 minutes into the trading day. U.S. investors trying to rebound from yesterday's breathtaking plunge of more than 777 points. That is the blue chip's largest point drop in history. That loss of nearly 7 percent of the market's value adds up to about $1.2 trillion. The cause, of course, Congress's rejection of the financial rescue plan.

Let's get the very latest.CNN's Susan Lisovicz is joining me now from the New York Stock Exchange.

Good morning to you, Susan.

SUSAN LISOVICZ, CNN CORRESPONDENT: Good morning, Heidi.

And yes, we have a bounce-back rally. Some folks and veterans call it a dead cat bounce. When you drop a dead cat, there is a bounce. But it is a short-lived bounce. And so that's what some cynics say. But you know a lot of folks believe that the shock that reverberated from Wall Street is something that will continue to inform Washington that there are real consequences.

$1.2 trillion in market value was raised yesterday, the biggest one-day loss ever. And that is something that we can all relate to. We are all tied to this. Our futures, our retirement, our homes, our kid's educations, that kind of thing. So we are seeing a little bit of a rally in the hopes that when Washington gets back to work later this week, that something will get done.

What we're seeing in particular is that financial stocks are rallying. They have a lot of ground to make up. We do see more sign that the economy is in fragile - in a fragile state. The housing market, particularly we got a report in the last hour or so that showed housing prices, as the Case-Shiller reports housing prices declined for the tenth consecutive month. Housing prices down 16 percent, more than 16 percent from July a year ago. And that's one of the reasons why a lot of folks want something done out of Washington.

COLLINS: Yes, they sure do. All right. CNN's Susan Lisovicz, thank you, Susan.

President Bush issues an appeal to Congress. He says the cost of the $700 billion rescue plan will be quickly over shadowed by the cost of doing nothing.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The reality is we're in an urgent situation. And the consequences will grow worse each day if we do not act. A dramatic drop in the stock market that we saw yesterday will have a direct impact on the retirement accounts, pension funds and personal savings of millions of our citizens.

(END VIDEO CLIP)

COLLINS: President Bush says his administration will talk to congressional leaders today and discuss the challenges to the rescue plan. So new numbers out this morning and new measures of where the nation's economy stands. Here with the latest snapshot, CNN's Christine Romans coming to us from New York.

So what numbers are we looking at now, Christine?

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Well, there's a consumer confidence reading that showed some unexpected strength. So that is a little bit of good news. And you know, looking within those numbers, I really can't tell you why other than it's been a rough going for some time. So some unexpected strength there. And as Susan mentioned those housing numbers which are the crux of what we're talking about with this bailout, right?

COLLINS: Yes.

ROMANS: Those housing numbers showing some big, big losses, if you're in Miami, if you're in Phoenix, if you're in Las Vegas, if you're in some of those hot markets over the past few years, you are seeing huge price declines. You know, so this is the backdrop of the whole bailout. But you played that clip from the President, and I think that it's so perfect to point out that after yesterday's failure in the House and the President coming out and really talking strongly this morning, this is an administration that up until the very end of last year did not acknowledge that there were fundamental problems on Main Street.

The president didn't acknowledge that. He said there were storm clouds in the economy last December, and this was long after a lot of people had been saying so. And then even into March, April, May of this year, whenever he acknowledged something weak in the jobs market or something, he would say we're resilient, the economy is strong, that things will be great.

The Treasury secretary and the Fed chief doing much the same, pointing out the strengths, the fundamental strengths of the economy. So one of the things that's happening here is I think that for so long there was cheerleading. You almost have to have cheerleading from an administration because they can't go out to say things are headed to hell in a hand basket. You know what I mean, they have to come out and essentially positive.

But one of the reasons why my people aren't believing in our leaders now is because congressional approval ratings are so low and for so long we were hearing from the administration that things were fine, even when Americans said they feel like they were fine but now they're saying why should we believe you on this bailout. And I think that's the fundamental thing behind the failure yesterday.

COLLINS: Which is phenomenal to me, this confidence number that you were talking about. You know, that are directly affecting but that is a main word that we've been throughout all of this is confidence in the market, confidence in leadership. How does all of this play for businesses? Businesses that will obviously be affected by the bailout not being passed.

ROMANS: Well, here is the thing. We know this is a credit issue. You've got to get the borrowing going back and forth between these companies. That credit crunch continues right now. And one of the analysts who I followed today he said, listen, people don't believe what they're hearing from Washington. It will take until they lose their own jobs before they'll be willing to say I will support a bailout.

COLLINS: Yes and then it will be too late.

ROMANS: And then it will be too late.

COLLINS: All right. CNN's Christine Romans. We sure do appreciate that. Thank you.

Negotiations and arm-twisting. You can bet that's going on behind closed doors today. But you won't see any debate on the floor of the House for a couple of days now. That branch of Congress is in recess until Thursday.

More than half of all American households own stocks. So that means most of us took a big hit yesterday. So how are investors reacting now today? CNN's Richard Roth is in New York with more on that.

Good morning to you, Richard.

RICHARD ROTH, CNN CORRESPONDENT: Good morning.

Let's take a quick look at the scene recorded just a short time ago here on Wall street, the heart of American capitalism shaken by the biggest point drop ever on Wall Street. The Dow, yesterday investors somber, calm, outwardly. A lot of tension inside, coping with the big losses.

Some had forecast this could indeed happen if the congressional bailout package wasn't approved. Still it was rather shocking for many as they watch their television monitors as the vote occurred on Capitol Hill in Washington. I talked to one trader who had to explain to many of his investors that their accounts now stood at zero.

(BEGIN VIDEO CLIP)

EUGENE GLABIK, MERCER CAPITAL: The system I believe is a total mess. We've been nothing but lied to, OK? The government has been saying this bailout is coming and then what did they do? They go and they don't bail us out. Now we're down almost 700 points. My clients have zero in their accounts now thanks to Washington Mutual. Look at Wachovia. It's a global mess now, OK.. Now I have to go back in this morning again and deal with this all over again.

(END VIDEO CLIP)

ROTH: Now that broker was more angry with the banks that have either been bought out by someone else or traded down in a big tumble feeling they weren't honest about what was on their books. He believes there should be more regulation here. A lot of people do say that. They think that the Capitol Hill congressmen and women who oppose the bailout are short sighted, don't realize the liquidity crunch, the loan problem that could extend to everyone they say very quickly if there's no rescue package. Back to you, Heidi.

COLLINS: All right. CNN's Richard Roth from the streets of New York there in Wall Street. Thank you, Richard.

The nightmare on Wall Street leads to sleepless nights overseas. World markets toss and turn. Here is a quick look now at trading abroad. Japan's Nikkei lost more than four percent. Hong Kong's Hang Seng index rose 0.75 percent. London Stock Exchange has been pretty much flat. And at last check -- Germany's stock index was down slightly. For the very latest information on the market, both here in the United States and around the world, you can visit our financial Web site, CNNMoney.com.

The failure of the bailout bill is making waves on the presidential campaign trail. Both candidates are weighing in with their own ideas, and they're taking swipes at each other over the economy. Ed Henry is joining us now live from Washington yet again.

This is no surprise, Ed.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: That's right. Good morning, Heidi.

Obviously, it's been issue #1 on the campaign trail for a long time. But it's been elevated even more in recent days with this financial crisis really raising the stakes. Let's face it, John McCain himself put the financial crisis front and center last week when he declared he was going to suspend his campaign, come back here to Washington, get to work to try to broker a deal.

It was a tough defeat for him yesterday when this bill went down. He was on "AMERICAN MORNING" today. John McCain was talking about trying to get this bill revived, the bailout situation. And he's starting to turn this around on Barack Obama and say that he was excessively partisan, that that's what helped bring this bill down. Whereas Obama yesterday campaigning in the battle ground state of Colorado was making clear that he wants to try and put the blame on the crisis for the last eight years of the Bush administration's economic policies. He wants to tie McCain to those policies.

Take a listen to both sides.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: We haven't convinced people that this is a rescue effort, not just for Wall Street, but for Main Street America, for working families, for small businesses, for the heartland of America, all over America where people are going to lose credit. They're going to lose their ability to make purchases of automobiles, of other necessities of life. And we didn't do a good enough job.

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: I think he just doesn't get it. I think he doesn't get - I think he doesn't get that this crisis on Wall Street hit Main Street a long time ago. I think he's out of touch with what's going on in people's day-to-day lives.

(END VIDEO CLIP)

HENRY: This morning Barack Obama will be in Nevada talking about the economy at a rally. Also later today in Wisconsin, another key state that both sides want, obviously. John McCain meanwhile in Des Moines, Iowa, still. He was supposed to later this hour make a statement on the economy and then take some questions from reporters. We're told in the last few minutes that has actually been canceled. And instead Senator McCain will be making the statement about the economy, about the financial crisis a little later today in an economic roundtable in Iowa -- Heidi.

COLLINS: Oh, yes. Very good. It is pretty wild though. Isn't Ed? We got Republicans disagreeing with Republicans. Democrats disagreeing with Democrats. And then the age-old Republicans disagreeing with Democrats. It goes on and on.

HENRY: It kind of makes your head spin, doesn't it.

COLLINS: It does indeed. Ed Henry, thank you.

HENRY: Thank you.

COLLINS: Investors in shock now after yesterday's huge loss. So what should you do with your 401(k). CNN's Gerri Willis just minutes away with important advice.

Stampede at the temple. Rescuers rush to save victims trampled on a holy day in India.

(COMMERCIAL BREAK)

COLLINS: The bodies of three more hurricane victims have been found along the Texas Gulf Coast. That brings the human toll from Hurricane Ike to 32 people in Texas. There are still more than 350 people unaccounted for. Nationally 67 deaths are being blamed on the hurricane. About 150,000 residents in the Houston area are still without power this morning. It's been 18 days since Hurricane Ike tore through the area. Centerpoint Energy says it will be a few more days before they make all of the necessary repairs.

Also, heavy flooding has forced the evacuation of thousands of people in Mexico now. This is the scene in Vera Cruz along Mexico's southern gulf coast. Heavy rains sent rivers over the banks with flooding streets with as much as 10 feet of water. No deaths have been reported.

A deadly stampede has killed at least 147 in northwest India this morning. Thousands of people were climbing a narrow pathway to a hilltop temple to celebrate the start of a Hindu holiday. It's unknown what exactly triggered the stampede. Local authorities are discounting reports that rumors of a bomb started the rush.

Your retirement savings took a huge hit yesterday. So what do you do with your 401(k) now? Our Gerri Willis has some advice.

(COMMERCIAL BREAK)

COLLINS: Giving you a look of the big board now. Everybody really wondering what's going to happen today after yesterday's huge drop of 777 points. Right now we are still up triple digits, 264 points - 270 points to the positive for the Dow Jones industrial average. We'll keep an eye on those numbers for you all day here on CNN.

Congress rejects the bailout plan. Washington is stunned and world markets scramble. This morning European leaders are urging the U.S. to step up and reign in the crisis amid fears of a worldwide recession. CNN's Charles Hodson is in London for us this morning.

Good morning to you, Charles.

CHARLES HODSON, CNN CORRESPONDENT: Good morning.

Yes, what we're seeing on the European markets at the moment is essentially we're at three-year lows. We did see a lot of selling right out of the gate after that stunning slump on Wall Street that we saw yesterday evening our time.

Now though, the markets, some of them have recovered. But the last time I looked, in fact the FTSE was up by about 1 percent in Switzerland which has a lot of bank stocks in spite of the fact that bank stocks are under really heavy selling pressure at the moment. That is up by 1.5 percent. The Dax still down but the background here in Europe is there is a certain amount of restlessness among the political leadership and they're taking the gloves off and putting the United States in the frame saying really this is a U.S. problem.

Let me quote you, for example, from a statement that came from the European Commission, that's the European Union's own administrative body. And it's saying the turmoil that we are facing has originated in the United States, it has become a global problem. The United States have a special responsibility in this situation. They're talking about how the U.S. must show statesmanship for the sake of their own country and for the sake of the world.

And meanwhile the process of bailing out European banks continues, another one bank called Dexia was bailed out to the tune of $9 billion with the Belgian government there and the French government involved. So even some of the most solid banks we're seeing over here are starting to suffer as their capital decays and as the money markets again remain in a state of paralysis. Heidi.

COLLINS: All right. We sure do appreciate that, I think. Charles Hodson, thank you so much.

With all the uncertainty and the volatility in the market, you can't help but worry about your retirement savings. So what do you do about your 401(k)? CNN's personal financial editor Gerri Willis is here now with some pointers.

This is a question that I'm hearing all over the place. Gerri, how safe are our 401(k)s?

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, I think we're all worried, right?

COLLINS: Yes.

WILLIS: You look at the results and you think oh my goodness, I'm down so much. But look it's an investment. It's going to go up and it's going to go down because it's probably invested a lot in stocks. Let's look at the numbers. Let's look at 401(k) statement, demystify it a little bit. Remember information is power here. You're looking now at your account summary. This is just a summary of what's been going on in your 401(k). You probably have one of these in your mailbox or maybe your e-mail inbox. Look at the bottom here, this is what people focus on. How much your personal rate of return is down? This particular statement down six percent.

So I know this is worrying and concerning. But you really have to drill down into the account statement to get more details. Let's look at the asset allocation for just a second here because this is really the one factor that's going to tell you how risky your 401(k) is. Now, you see this particular 401(k), the mix of stocks and bonds, 48 percent to 52 percent. It's really conservative. Bonds a big part of this portfolio, in fact, probably too much, because this actually belongs to somebody in their 20s. So they need to be taking a little more risk.

But at the end of the day it's buying them a slightly better return. These are the things you want to focus on, Heidi. You want to be looking at the details, all the numbers. Let's talk just a little bit here about what we've learned from going through this 401(k) statement. First of all, you have to look at the whole thing, you have to look at your allocations, stocks, bonds, what are you invested in? Stocks are the riskiest, bonds are typically less risky. Who is making the picks for your portfolios? Who are the mutual fund managers? How do they perform vis-a-vis other mutual fund managers. You can find that at morningstar.com. How much company stock do you have?

You know, the surprising thing in the advent of Lehman going out of business, lots of those Lehman employees had company stock. You do not want to double down on that, a bad thing to do. In this environment you don't want to rush to buy and sell, unloading your stocks, now. Well, you're simply locking in that low price rather than doing something that's much more measured and planning ahead. That's what we want to see everybody do here. At the end of the day your 401(k) is going to be safe. You have to hold your stomach during nervous times like this. But it's not a time to be changing, switching in and out of stocks willy-nilly.

COLLINS: Yes. We should also probably talk about what happens if your employer goes bankrupt. We've heard an awful lot about -

WILLIS: Right.

COLLINS: People not being able to keep their doors open for their businesses.

WILLIS: You know, I get this question all the time. You know, if my company goes out of business, does my 401(k) disappear? No. Because by law and there are very strict laws about this. They have to keep the money separate, segregated so that your money is not locked in with your company's money. So it's not something to worry about. It's not an issue you have to be concerned about.

What you do want to do, check the asset allocation, see if it's what it should be for your age. You can find an asset allocation tool at CNNMoney.com. A great thing to do. Make sure your funds aren't charging you too high fees because fees rob from performance over the long term. Remember, this is your long-term money. You don't have to mess with it right now.

COLLINS: Yes. All right. Great advice, Gerri Willis, sure do appreciate that. You can follow all your fortunes at CNNMoney.com. We've got all of the day's market news and numbers, expert analysis and much more.

Rob Marciano standing by in the weather center now to talk a little more about the weather across the country.

Good day, bad day? Give us something good.

ROB MARCIANO, CNN, METEOROLOGIST: Not bad actually across much of the country. We'll get away with the nasty stuff first which is around the middle of the ocean. So that's good to go. This sub tropical storm Laura, sub, mean kind of between a tropical and an extra tropical storm. So it's a tweener. It's a hybrid so to speak. 60-mile-an-hour winds. It's certainly strong enough to have that but it has taken on some well northerly characteristics as it heads into the northern currents of the Atlantic. It will hit cooler waters. It will bother folks who are dealing with maybe the shipping traffic up there in the shipping lanes.

All right. This is what's going on across the rest of the country, pretty tranquil across about two-thirds of it. And then we've got some of the coolest air of the season that's breaking down across parts of the Great Lakes. The leading edge of that cold air is firing off some showers and thunderstorms, some of which will be kind of strong later on today. And really the big deal will be how much cooler it feels behind this cold front.

Here are some of the showers on the radar. Back side of the system to the lower hand of Michigan and then western PA upstate, western New York seeing some showers, not a whole lot of thunderstorms there. We had a pretty good bow run through Columbia, South Carolina and then Fayetteville, North Carolina. This is weakening as it heads towards the coastline.

And in Florida you're getting yourself a decent amount of showers and thunderstorms today, still in your rainy season. You've got a kind of a cool front, a stationary front that's draped right across you. What are temperatures like behind the front? Well about 60 in Chicago, 60 degrees in Minneapolis, 70, to 75 ahead of it. So you're talking about a difference from day today of about 10 to 15 degrees cooler once the front goes through. But it wasn't that warm beforehand. So this is likely the most cold air we've seen so far of this fall season.

Meanwhile it's 101 in Phoenix, 96 in L.A. and 86 degrees in Los Angeles. Today, Florida not too shabby there. She's out there not dealing with - not really causing any headaches. That's exactly what we like.

COLLINS: Yes. We sure do. All right.

MARCIANO: A couple more weeks of hurricane season. We'll try to you know get out unscathed.

COLLINS: OK. Great. Thanks. Appreciate it, Rob.

MARCIANO: All right.

COLLINS: President Bush says the fight for a financial rescue plan is not over. But what's the next round? Our panel of economic experts has some ideas.

(COMMERCIAL BREAK)

COLLINS: A new sense of urgency and determination, one day after the House turned thumbs down on a financial rescue bill. Stocks are attempting to make up some ground after yesterday's dramatic loss. Up 232 points on the Dow Jones industrial average. The President pledges to do all he can to get the relief package back on track. But he does warn unless Congress acts quickly, the economic damage could be painful and lasting. Everything is on hold until at least Thursday. The House is adjourned now for the Jewish holiday, Rosh Hashanah. Still a lot of question marks out there and jittery investors as well. Any reassurances to talk about? That's what we'd like to hear. Want to bring in our money team with CNN's Christine Romans now.

Hi there, Christine.

ROMANS: Hi there, Heidi.

You know, that painful long-lasting scenario that the president is talking about -- what does that mean? People can see the stock market but they can't see the credit market. And that's why I think you're getting so many people pushing back against the bailout and the bill.

Paul La Monica, editor-at-large for CNNMoney.com, Jeanne Sahadi, senior writer for CNNMoney.com, Poppy Harlow, anchor for CNNMoney.com -- the money team is all here.

What is this pushback that you're hearing from so many people who say, you know what? Let Main Street go down.

PAUL LA MONICA, EDITOR-AT-LARGE, CNNMONEY.COM: Yes, I think what you're having in terms of the taxpayer backlash is that people don't want to have money put at risk to -- quote, unquote -- "bailout Wall Street executives who --

ROMANS: But you point out, it's not Wall Street really.

LA MONICA: I think there's misconception that this bill is just about Wall Street. And clearly what we've seen in the past few days with a lot of banks either failing or being sold at fire sale prices -- Washington Mutual is based in Seattle. And it's a savings and loans.

ROMANS: That's not Wall Street. That's far from Wall Street.

LA MONICA: Right. And Wachovia is based in Charlotte. These are companies across the country that are facing financial hardship. I don't think the bailout bill would have saved them, because those two were among the more troubled in the banking industry, but still you're going to see possibly more banks go under because of the ties they have to Wall Street. So it's really just not about New York City.

POPPY HARLOW, CNNMONEY.COM: And it's interesting, this morning I spoke with the Democratic congresswoman, Sheila Jackson Lee. She voted against the bill. And I asked her why. And she said because it didn't help Mr. and Mrs. Main Street in terms of sort of staving off foreclosures, or helping them with foreclosures. But what Paul's point is, and what I think a lot of people now agree on, is the fact that helping bailout these banks, as people are calling it, does have an effect that is so far beyond Wall Street.

ROMANS: Let's talk about the -- you can't see a frozen credit market. You've been talking to your sources. It's still frozen.

JEANNE SAHADI, SR. WRITER, CNNMONEY.COM: Well you hear that a lot of small businesses are having trouble getting loans to meet their sort of everyday expenses, which is to say payroll, buying inventory, things like that. So in areas where the economy has slowed anyway, forget about he credit crunch, this just compounds the problem.

We were talking with an economist yesterday who you also interviewed. And she said we're sort of in a perfect storm. We've got recessionary conditions, we've got a credit crunch, and we've got presidential election politics. It's sort of an unprecedented combination of elements that are really hard to manage. So lawmakers are in a tough position. You understand that we want to help Main Street, piece (ph) of it. And that's why I won't vote for the bill. But the point of the bill isn't to directly help Main Street in the moment, it's to open up the lending markets so that Main Street can still continue to do business.

ROMANS: But here's the thing -- they have to sell, and Barney Frank has even said this, they have to sell to their constituents something that they're not going to be able to taste right away anyway. They're selling them something that is an insurance policy against something worse. And we're not quite sure how it's going to work out, how much money it's going to take in the end. There are a lot of unknowns on what is a huge, huge reworking of the capital markets.

COLLINS: Christine, quick question for you, because just a little bit earlier on this show, we were able to talk with a small business owner who I heard Jeanne talking about there, who hasn't had a paycheck of his own in three months. That's just one guy in one city of America.

What is it that needs to go in this bill, if there is any one thing, that would make the people who voted against it then suddenly feel safe or more confident or better about this bill in order to protect that man by the name of Erik that we just saw in Norfolk, Illinois?

ROMANS: How do we protect Erik?

SAHADI: Well, the Treasury and the White House yesterday, after the bill defeated in the House, came out and said we still think the plan we put forward is the most effective plan. Now it doesn't mean there's not a more perfect plan out there. But in terms of what would go into effect most quickly, I think that's why they're standing behind their plan.

What will help the guy get his paycheck? If you believe Paulson, is that kind of let's spur the markets.

ROMANS: Do we believe Paulson? That's the other thing. People have been talking about the fact that for much of the last year the administration was saying the fundamentals of the economy are strong and fine, that people who are complaining about what was happening on -- quote, unquote -- Main Street, the middle class squeeze, that that was overstated. And congressional approval ratings are very, very low. There could be a lot of people looking at Washington saying, why do I believe you now? LA MONICA: Yes, there is certainly a credibility problem. And that's one of the biggest issues, I think, facing this bill right now.

SAHADI: But even the people who say that they don't like Paulson's plan, still agree something has to get done. They don't not acknowledge the problem, they just don't like the solution he has proposed. But at some point, things happen so quickly, they unravel so quickly, that you really do have to come up with something sooner rather than later. It's not --

ROMANS: Let me ask you quickly about cycles, because there are those -- the free market types -- and that's what one of the arguments were among the Republicans -- the free market types who say you have to have cycles and there has to be pain before things can refresh and start all over again.

Are we artificially propping up the housing market and the banking industry by stepping in? Do two wrongs make a right? The government being involved in the housing market in the first place, and then the government going in and trying to rescue the credit market.

HARLOW: It depends how quickly you want to see changes. I think a lot of people agree something has to be done, a change isn't going to happen right away. But they think -- Paulson thinks the Bush administration, with this plan, we will see a change pretty quickly. And the question is the timing of this being -- going into the general election, a lot of people say Paulson might not even be the Treasury secretary in six weeks. And that's a question -- do we give him this sort of unreviewable, huge amount of power?

LA MONICA: I think we've already seen, obviously, a lot of economic pain since the credit crisis really started to go into full force last August. It's -- one of the funnier and more absurd things I've been hearing is that if we don't pass this, we may go into a recession. Even if we're technically not in a recession already, let's get real, we've had more than 600,000 job losses so far this year, housing prices have plummeted. The economy is not in good shape already.

ROMANS: Right. And housing prices -- today we heard the Case- Shiller Index down again. Double digit declines in Miami, in Phoenix, in Las Vegas, and all kinds of things going on. On Friday we're going to get another jobs report that is expected to show more jobs loss.

All right, Heidi, back to you.

COLLINS: All right. Yes, hey thank a lot. And also, to Jeanne, Paul and Poppy. Sure do appreciate that as well.

Thank you, Christine.

Want to look ahead a little bit now. One day after a record selloff, what can we expect from markets today? Well there is a little bit of a look for you. Up 274 points right now. And Susan Lisovicz is at the New York Stock Exchange with a closer look, plus mixed reaction from around the world. Pretty interesting, too.

Still feeling squeezed in some southern cities. Many people thought a post-hurricane gas shortage would last just a few days. Well now, AAA says the situation may not return to normal for two more weeks. The Atlanta area, one of the hardest hit. There have been long lines in stations running out of gas. Plus, panicking drivers topping off their tanks. Officials say that is a no-no.

(BEGIN VIDEO CLIP)

KEVIN KOLEVAR, ASSISTANT SECRETARY OF ENERGY: If people in the affected communities make sure that they act responsibly, conserve fuel where they can, whether it's carpooling or consolidating their errands or the like, and really only get gasoline if they need to get gasoline. Don't change your buying habits. Doing so is only going to ensure that you're going to pay top dollar for that gasoline. And to the extent that you hold off, you help make sure that fuel is available for somebody who might be in much dire need of that fuel than you are.

(END VIDEO CLIP)

COLLINS: Ha, good point.

Shorter lines being reported at stations this morning though. Deliveries are being used up by the higher demand.

The congressional ban of offshore oil drilling officially expires after today. That 26-year ban was abandoned in a new spending bill just passed. But don't expect immediate drilling to take place. It could take up to two years before leases are awarded for areas off the Atlantic and Pacific Coasts.

A Chinese milk scandal widens. And now, worries about tea. What's being pulled from store shelves?

(COMMERCIAL BREAK)

COLLINS: We've got a lot of ground to cover, but stocks are soaring after yesterday's massive plunge for the Dow Industrials. You see the numbers there for yourself. Susan Lisovicz is on the floor of the New York Stock Exchange now with how things are looking.

Just about an hour into the trading day now, Susan. Hi, there.

SUSAN LISOVICZ, CNN CORRESPONDENT: Hi, there.

One trader was just telling me moments ago that he really got a lot of confidence. He thought that the Dow would plunge another thousand points --

COLLINS: Wow.

LISOVICZ: -- at the open. And --

(CROSSTALK) COLLINS: Did you kick him?

(CROSSTALK)

LISOVICZ: I was sort of incredulous because I saw what was happening at the close. We closed at the lows yesterday. And one of the interesting things here is that a lot of people don't understand that there's always -- even when there's a massive selloff, there's always a buyer. It's just you're getting a buyer at such low prices. Well there was such a wave of selling at the end that what we were seeing -- it was like programmed selling that it was the specialist here, the people here, who were the buyers of last resort. You just really were having a hard time finding someone who could come in on the other side.

And if that hadn't happened, maybe we would have had something even worse. And that was, of course, the biggest point loss we saw for the Dow Jones Industrials, and $1.2 trillion erased on the day, which I might add is bigger than that massive bill being debated in Washington.

Today -- the worldwide markets -- we did see some selling, but we didn't seen anything drastic and that sort of gave some investors here confidence. And there's also some confidence that everybody gets that something has to be done, and that maybe something will be done later this week, Heidi.

COLLINS: Still a lot more to talk about though. Even though we see some of these numbers going back up a bit today, a lot of jitters, a lot of worries out there.

LISOVICZ: Well you know, another investment strategist I talked to -- he said, his big fear is that once something does get done -- he's just taking the approach that something will get done -- that there won't be anyone available to borrow money because everybody has just piled on so much debt.

We did get consumer confidence about an hour ago or so, showed an unexpected uptick. But it really came before a lot of this crisis really reared its head with Washington Mutual, Wachovia, obviously what happened, what didn't happen out of Washington yesterday. We do get the jobs report on Friday. We're expecting another loss as we have seen all year.

But right now, we do have a bounce-back. The Dow Industrials up 252 points, the Nasdaq is up 57 points. And oil is actually rebounding a little bit yesterday after one of the biggest drops we've seen there. A volatile day.

And you know what? You're going to expect this volatility. We also have a presidential election and --

COLLINS: We do?

LISOVICZ: Yes. And everybody is talking about that as well. So, yes, Heidi, to state the obvious -- there's just a lot of uncertainty.

COLLINS: Sure is.

LISOVICZ: And it plays out in dramatic ways here on Wall Street.

COLLINS: Yes, and not only here, but overseas as well.

Susan Lisovicz, sure do appreciate that.

In fact, oftentimes what happens on Wall Street does impact global markets the next day. No different today -- in countries like South Korea, Russia and Mexico. Let's go first to our correspondent in Seoul.

(BEGIN VIDEOTAPE)

(BEGIN VIDEO CLIP)

SOHN JIE-AE, CNN CORRESPONDENT: I'm Sohn Jie-Ae in Seoul.

In brokerage houses like this one, traders and investors have been keeping a close eye on the markets all day, fearful that the free fall of Wall Street will repeat itself in Seoul. But at the end of the day, there was a huge sigh of relief. After a dramatic 5 point plunge at market opening, the market closed only 0.5 percent lower than the day before. Traders say this is mostly due to heavy buying by institutional investors as well as investor sentiment that Wall Street and Washington will ultimately get their act together.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

MATTHEW CHANCE, CNN CORRESPONDENT: I'm Matthew Chance in Moscow.

And here at one of Russia's main stock exchanges, you may think the $700 billion rescue plan in the United States would stem dramatic falls over here. But in fact, what Russian investors are increasingly concerned about isn't the fate of the U.S. banks, but of the global economic growth.

Oil prices have fallen sharply on fears of a downturn. Metal prices, other commodities as well. All of the sectors that once made this one of the most booming markets in the world are now under intense pressure. Already since May, Russian stocks have seen nearly 50 percent of their value simply wiped out.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

HARRIS WHITBECK, CNN CORRESPONDENT: I'm Harris Whitbeck at the Mexico City Stock Exchange.

While Latin Americans have not been as exposed to the U.S. markets as Europe and Asia have, markets tumbled across the region here, too. Many are concerned about less U.S. investment in the region, less liquidity. And, in the case of Mexico, more unemployment because the Mexican economy is so closely tied to consumer spending across the border. But analysts say some Latin American investors are optimistic and are actually hunting for bargains on Wall Street.

(END VIDEO CLIP)

(END VIDEOTAPE)

COLLINS: The defeat of the $700 billion bailout plan is doing more than just hitting the stock market. It also prompted oil prices to tumble on Monday by the largest amount in 17 years. CNNMoney.com's Poppy Harlow has our "Energy Fix" from New York.

Hi there, Poppy.

HARLOW: Hi, Heidi.

It's interesting because you're hearing about the stock markets around the world, the story that didn't get as much play yesterday but is really key here is the decline we saw for crude oil, falling more than 10-and-a-half bucks, below $100 a barrel. That was the close yesterday. The second biggest drop ever.

Trading was so volatile -- get this -- some officials halted electronic trading for a few minutes in the oil market and we've seen some huge swings lately. A number of reasons for that -- hurricanes, supply concerns. But one thing that always weighs into the price of oil is the state of the global economy.

The oil market is generally seen as a really good indicator of which direction investors think the economy is headed. One trader explained it well, saying Monday's drop in price shows energy investors are not very optimistic, especially now that that bailout bill didn't pass.

(BEGIN VIDEO CLIP)

JEFF CARTER, INDEPENDENT ENERGY TRADER, CME. GROUP: Oil sold off because there's expectations that you're going to have a global slowdown. I think the mood on the floor, at least from what we could gather from everybody, was that the bill was going to pass, but it was going to be a narrow pass. And it was actually a narrow defeat. And so, when you have a little bit of a change in psychology, you have a big reaction to it.

(END VIDEO CLIP)

HARLOW: You bet. This market is ruled by emotion right now. This all comes down to demand, Heidi. When the economy falters, demand falls, Americans pulling back on driving and spending in every which way -- Heidi.

COLLINS: Yes, so a lot of people may be wondering, though, if a bailout does pass, does that then mean that demand is actually going to change and then the oil prices will go up? Not really, does it? HARLOW: No, it doesn't, and that's surprising.

I just spoke to another oil trader today, just before this, and he said we could even see oil go back down to around $50, $65 a barrel. Some say analysts even if a bailout plan is passed, we will not see an immediate comeback in terms of demand issues.

And Heidi, this is all because people are very, very nervous right now that demand for oil is falling dramatically. Oil is up a little bit today. But yesterday's story, I think, tells a lot -- Heidi.

COLLINS: Yes, all right, CNNMoney.com's Poppy Harlow.

Thank you, Poppy.

HARLOW: You're welcome.

COLLINS: Want to let you know you can follow your fortunes. Check out our special report, "America's Money Crisis" at CNNMoney.com. Get the day's market news and numbers, expert analysis and a whole lot more.

Knowing your meal's origin. New rules for food labeling. Where they may fall short, too.

(COMMERCIAL BREAK)

COLLINS: More fallout today from the tainted milk problem in China. Food giant Unilever is pulling some of its Lipton brand Milk Tea powder off store shelves in Hong Kong and Macau. The company said it found trace amounts of the chemical melamine in the products. Last week Unilever pulled Lipton Green Milk Tea off shelves in Taiwan.

So do you know what country your food comes from? Well a new federal law goes into effect today that could give you some answers. But as our chief medical correspondent, Dr. Sanjay Gupta reports, there are loopholes in the new law.

(BEGIN VIDEOTAPE)

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Well they're called the COL labels, Country of Origin Labels. Pretty good name for something that's been a long time coming. A lot of people would argue this idea of being able to know where your food comes from is something that's gained a lot of momentum especially with a lot of these recent food scares.

So I want to tell you specifically what foods we're talking about overall here. Meats, whole cuts and ground, as well as fish and shell fish -- some of those have been labeled for some time already -- fruits and vegetables, nuts and even some supplements, as you see there as well.

But if you take this a step further, and I think it's important to do this, you'll recognize that not all foods are labeled. And that leaves some pretty big loopholes in the entire system.

For example, we went to the grocery store here. Take a look at this chicken. A raw chicken like this -- this would require a label. But if it's cooked, or processed in any way, it no longer requires labels. So this chicken for example over here would not.

Even something like raw peanuts, peanuts over here -- you would have to have a label which country these peanuts came from. If they're roasted, though, they no longer require a label.

And the thing I think perhaps that is most concerning is when it comes to fruits and vegetables. For example, this cantaloupe has a product of the USA label on it already. But if it's cut up in any way and put into a fruit salad, it no longer requires a label. Now this is important because a lot of the food scares, for example, have come specifically from processed foods.

Now, if you want to get your lamb specifically from New Zealand or you want to get your grapes specifically -- Chilean grapes, you're going to be able to do that more likely than before. And these labels are going to come in all forms -- little stickers, little twist ties, little signs. But, keep in mind that some of the most recent food scares involving the United States have come from within the United States. For example, that e. Coli scare in spinach -- that came from California.

So this is a good move, but it doesn't quite go far enough yet. Stay tuned.

Back to you for now.

(END VIDEOTAPE)

COLLINS: To get your daily dose of health news online log on to our Web site. You'll find the latest medical news, a health library and information on diet and fitness. That address -- CNN.com/health.

Her team's fans say she doesn't have to hit a homerun, just not make an error. Coaching Sarah Palin before the big debate.

(COMMERCIAL BREAK)

COLLINS: Look at this. They've been camping out. But it's not for a concert, it's for the election. Absentee voting began this morning in Ohio, and these people wanted to be the first in line. The ballot casting comes after the courts upheld an early voting law. Until next Monday, new Ohio voters can register and cast an absentee ballot on the very same day.

Walking a fine line into Thursday's debate. Experts say Sarah Palin has to show she understands the issues without looking like she's been coached.

Here is CNN's Brian Todd.

(BEGIN VIDEOTAPE) BRIAN TODD, CNN CORRESPONDENT: At the very least, Sarah Palin is getting valuable training on where political curve balls might come from, like from a grad student in a South Philly cheesesteak joint.

QUESTION: So we do cross border, like from Afghanistan in Pakistan you think?

GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: If that's what we have to do to stop the terrorists from coming any further in, absolutely, we should.

TODD: On its surface, a position that seems more like Barack Obama's. It prompts her runningmate to say on ABC's "This Wee," we're on the same page.

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: She shares my idea that we will do whatever is necessary. The problem is, you don't announce it. You don't say to the Pakistanis, we're coming in unilaterally and carrying out operations.

TODD: But as she prepares for what is clearly her most important public appearance of this campaign, GOP strategists say the stakes for Sarah Palin and the McCain campaign have been hiked up considerably over the past week. McCain's gambit on the financial bailout raised them, as did Palin's own performance in a CBS News interview, parodied on "Saturday Night Live."

PALIN: Ultimately, what the bailout does is --

TINA FEY, ACTRESS, SATURDAY NIGHT LIVE: -- help those that are concerned about the health care --

PALIN: -- reform that is needed to help shore up our economy --

FEY: It's got to be all about job creation.

PALIN: It's got to be all about job creation.

TODD: McCain campaign officials tell us they're not worried about Palin's debate performance. They say some of her other answers in network interviews show she understood the issues. Campaign aides say Palin is going to Senator McCain's ranch in Arizona to prepare, and that some top staffers from the senator's campaign will help her.

Analysts say she has got a tall order to show command of the facts and not look rehearsed.

LISA BURNS, QUINNIPIAC UNIVERSITY: If she's not comfortable at this point, she needs to do whatever it is that takes for her to get more comfortable so she can say a few things that are possibly off script yet of course are still going to represent McCain's stance on these issues.

TODD (on camera): So Sarah Palin has clearly got to demonstrate command of the issues, but not look heavily coached. GOP strategists we spoke to say while Palin's own gaffes have contributed to the pressure on her, it's also true that expectations for her are so low that all she's got to do is avoid a major misstep and avoid losing this debate.

Brian Todd, CNN, Washington.

(END VIDEOTAPE)

COLLINS: I'm Heidi Collins. Join me again tomorrow morning starting at 9:00 a.m. Eastern.

For now, CNN NEWSROOM continues with Tony Harris.