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Solving the Economic Riddle; Do Debates Make a Difference?
Aired October 08, 2008 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
HEIDI COLLINS, CNN ANCHOR: Global interventionstriggers turnaround. The Fed and other federal banks drop interest rates. Markets go up. Our money team makes sense of it all.
And did the debate make a difference? The candidates had their say last night. This morning, how did it play across America? How will it play on November 4th?
It's Wednesday, October 8th. I'm Heidi Collins. You are in the CNN NEWSROOM.
While you were sleeping, fears of a global recession sweep around the world, and the U.S. and other countries take dramatic action. Just about two hours ago now the Federal Reserve announced a cut in a key interest rate. Other countries are doing the same thing.
It's an urgent move underlining just how frightening the international crisis has really become. Here's an example. Hours before the announcement, Japan's Nikkei average closed down nearly 9.5 percent. That is the biggest one-day drop in 21 years.
Russia's major market lost more than 10 percent. Trading was actually suspended there until at least Friday. Markets in England, France and Germany had also been deep in the red, but news of the cuts sent them soaring back towards positive territory.
And now a dramatic turnaround is expected on Wall Street. Yesterday the Dow Jones Industrial Average, as I'm sure you well know, closed down more than 5 percent.
CNN's money team is, of course, in place, ready to go around the world to break it all down for you. Let's see where Wall Street is headed if we can do that off the top here as it faces its lowest open in years.
Senior business correspondent, Ali Velshi, is in New York along with our Christine Romans, and Andrew Finighan is in London.
We want to go ahead and start with you, Ali and Christine. Tell us what's going to happen when that bell rings?
CHRISTINE ROMANS, CNN CORRESPONDENT: Well, wouldn't we like to know what's going to happen, right?
COLLINS: Yes.
ROMANS: I mean the Dow Jones Industrial Average, the futures had popped after the Fed had that global coordinated emergency rate cut but now they are lower again. Now remember, the Fed and global central banks are trying to restore confidence in the system where confidence has been in short supply.
The Fed cut rates by half a percentage point to 1.5 percent. Lowering that rate supposed to pump money into the economy by reducing borrowing costs on a broad range of loans. But here's something that the Fed said in its statement on this joint coordinated effort.
It said, the recent intensification of the financial markets has -- financial crisis has augmented the downside risk to growth. The intensification of the financial crisis. We've been asking for weeks, are we on the brink of some kind of crisis?
COLLINS: Right.
ROMANS: And this is confirmation from global central banks that we are in a crisis, Heidi.
ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Now, Heidi, you know, what -- yesterday, Federal Reserve Chairman Ben Bernanke hinted that there would be some sort of rate cut. And we've been hearing about...
COLLINS: Yes.
VELSHI: ... this global coordinated effort even after his hint. As you know markets went down further than they had. And then as all this development in Asia and Europe overnight came through, Christine was watching these markets early this morning. Dow futures, which are the bets on how the Dow is going to open, were down more than 300 at one point and, boy, they shot way up after this rate cut.
Guess what? They're down again close to 200 points because there's some feeling that what is normally supposed to happen in a rate cut is it makes that money cheaper and it immediately brings your prime rate down so if you have a loan tied to prime it makes it cheaper.
But there are a lot of people who thought low rates weren't the problem. A five-year -- a 30-year fixed mortgage is still 5.99 percent on average this week if you have good credit. So low rates didn't seem to be the problem, it's that nobody trusts anybody else...
COLLINS: Yes.
VELSHI: ... and nobody wants to lend anybody any money.
So will this help, in addition to the Fed deciding that it's lending companies money directly which they announced yesterday, in addition to this $700 billion bailout plan? The bottom line is, the markets seemed very, very determined to sell off and to go down right now, and that's what we're still feeling that pressure of, Heidi.
COLLINS: Yes, when will we know whether or not it was enough or it's going to be enough?
ROMANS: That's a really good question. I talked to Mark Zandy of Moody's Economy.com and he said look, the cumulative effect of what everything the Fed has done is going to be to restore liquidity to the credit markets and that's what we're really worried about here.
COLLINS: Yes.
ROMANS: The stock market is kind of a sideshow. It's a way that we can measure what's happening but the credit markets have been frozen. And Mark Zandy says that all of these things when TARPed -- that's when they take those toxic assets -- terrible acronym for when they take the toxic assets off of the bank books.
And this commercial paper facility we told you about yesterday where they can -- the Fed can actually loan money, short term to some of these companies...
COLLINS: Right.
ROMANS: ... when those things are actually up and running, he said liquidity will return and then he hopes confidence will return after that. It just hasn't happened yet and that's why you have fear hop- scotching around the globe.
And in that -- I mean I'm sure Ali agrees with me on this, fear is the enemy here and what they're trying to do...
VELSHI: Sure.
ROMANS: ... is they're trying to buy confidence again and we just haven't been able to restore the confident in the system.
VELSHI: At the same time, Christine, I know you're sort of struggling through a bit of a cold, and one economist this morning, (INAUDIBLE), tell me, you know, it's kind of like a cold. You kind of have to go through it. You can't take new medicine every day necessarily.
It might help, it might not. But the bottom line is that cold will be done when that cold is done.
COLLINS: Yes, well, unfortunately, sometimes we just have no control over that.
VELSHI: Yes.
COLLINS: So, all right, Ali Velshi, Christine Romans, thanks, guys.
ROMANS: You're welcome.
COLLINS: We'll talk with you a little bit later on.
Meanwhile, we go live to Wall Street for the start of a new day. Of course, can that Dow rebound from its 500-point loss yesterday? That is the question, the opening bell, of course, coming up at the top of the hour.
And we want to know how are you handling this financial crisis? Are you doing anything different or are you just watching with both eyes open or maybe one closed? Send us your iReports. We're very interested to know what's happening to you. That address, ireport@CNN.com.
Now let's go to London where the British government has launched its own massive bailout plan. Our Adrian Finighan is standing by live this morning.
Adrian, good morning to you.
ADRIAN FINIGHAN, CNN CORRESPONDENT: Good morning, Heidi. European markets, London markets tanked early on. We've got about 2 1/2 hours left in the session.
Earlier in the day, though, the FTSE was down by somewhere about 6 percent despite Britain's government throwing a lifeline to the country's troubled banks. UK Finance minister, Alistair Darling, announced an $87 billion rescue plan shortly before the European markets opened today.
The government is offering nearly $44 billion in the form of new capital to Britain's major banks, an extra $44 billion will be made available if it's needed, and there's more money available in the form of new loans.
That wasn't enough to put confidence back into the markets. However, the coordinated rate cuts that Ali and Christine were talking about, that was enough to send them off the -- to bring them back off their lows.
Russia today, though, they're also feeling the economic chill. The Kremlin forced to shut down one of its main exchanges after some staggering losses in early trading there today. The MICEX in Moscow, it's closed, would you believe, until Friday now after plummeting more than 14 percent in the first half hour of trade.
COLLINS: Adrian, I wonder if you've had a chance to talk with people there, just regular people who are dealing with this. What's the reaction to it all, then, on the streets, if you will?
FINIGHAN: Well, it's funny, Heidi, until, you know, yesterday, the day before, you tell people that you were a financial journalist and their eyes would glaze over.
COLLINS: Yes.
FINIGHAN: They had no understanding, they didn't want to know. Suddenly everybody wants to know about finance and what's happening in the world of money, because it impacts them directly.
We've had a bank here in -- in Britain go under. It's actually I say it's here in Britain. It's affecting a lot of British and Dutch savers. The bank is based in Iceland. The country's second largest bank there was put into receivership.
A lot of people have got pension funds, deposits, house deposits put away, life savings put away in attractive interest rates, savings plans in Iceland through the Icesave Bank. It went under. People just don't know how or when they're going to get their money.
Luckily, we're told today the British government is guaranteeing all the deposits held in Icesave accounts. But you know, it's that kind of thing that really is frightening people nowadays. They want to know what's going to happen next.
COLLINS: Exactly. That was a crazy story out of Iceland.
All right, Adrian Finighan, we sure do appreciate that, live from London this morning.
High noon in the battle for the troubled Wachovia Bank now. Less than three hours from now a legal cease-fire ends for rival bidders Citigroup and Wells Fargo. The companies had promised the Federal Reserve they would withhold any more loses until today noon hour Eastern Time.
Citigroup and Wells Fargo have been locked in this bitter battle to control of the ailing bank.
Well, not surprisingly, the financial crisis in this country dominated round two of the presidential debates. Both John McCain and Barack Obama scored points, but really no knockouts.
At least that's what debate watchers told CNN right after last night's match-up. A CNN/Opinion Research Corporation poll found 54 percent think Obama did a better job. 30 percent say McCain did.
But did the debate really change any minds? Our Jessica Yellin was front and center in Nashville and joins us now.
Good morning to you, Jessica. What really stood out to you? What are people going to remember? Any famous lines? Any anything from last night?
JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Well, there were a couple of sharp elbows thrown last night. John McCain, at one point, referred to Barack Obama as "that man," sort of dismissively.
Barack Obama, a number of times, shouted down Tom Brokaw. I wouldn't say -- I shouldn't say "shout," but insisted that he follow-up and break with debate format because he wanted to go back at John McCain.
So there were some moments of tension in the debate. But what really struck me, Heidi, is, despite all the talk on the campaign trail by John McCain that he was going to take the gloves off, and despite the Obama's campaign's insistence that they'd punch back if punched, it really was a debate that focused a lot on the issues.
We really did hear about their tax policies, entitlement reform, how they plan to try to tackle this financial crisis. And, again, the economy front and center, as you said. Both men addressed what they would like to do as president to steer America back on to the right path.
Let's listen. (BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Until we stabilize home values in America, we're never going to start turning around and creating jobs and fixing our economy.
We've got to give some trust and confidence back to America. I know how to do that, my friends. And it's my proposal. It's not Senator Obama's proposal. It's not President Bush's proposal. But I know how to get America working again, restore our economy and take care of working Americans.
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: The middle class need a rescue package and that means tax cuts for the middle class. It means help for homeowners so that they can stay in their homes. It means that we are helping state and local governments set up road projects and bridge projects that keep people in their jobs.
And then long term, we've got to fix our health care system. We've got to fix our energy system that is putting such an enormous burden on families. You need somebody working for you, and you've got to have somebody in Washington who's thinking about the middle class and not just those who can afford to hire lobbyists.
(END VIDEO CLIP)
YELLIN: Now, Heidi, the CNN poll you referenced showed that most debate watchers found that not only did Barack Obama win the debate, they also found him more -- better able to handle Iraq, the economy, the financial crisis. They even said they found him more intelligent in the debate.
The one category McCain won, better able to handle terrorism.
Now what does this all mean? It means that right now people thought Barack Obama did well in the debate. It does not mean that this thing is by any means done. Many more days to go. Many more. This has been a roller coaster of an election and who knows what could happen between now and Election Day -- Heidi?
COLLINS: Yes, very good point. 27 days to go, to be exact. All right, Jessica Yellin, we sure do appreciate that. Thanks.
In just a few minutes, as a matter of fact, Democrat and Republican strategists are going to weigh in on the debate, the policies, and the final weeks of campaigning. Then in the next half hour, how voters see the candidates after the debates.
(COMMERCIAL BREAK)
COLLINS: Quickly, just a reminder, everybody. We're 15 minutes away now from that opening bell on Wall Street. Everybody, very anxious and interested in how things are going to look right out of the open.
Futures have been up and down and all around, if you will. So we are watching that very closely. Keep it here, everybody. (BEGIN VIDEO CLIP)
MCCAIN: I would order the secretary of the treasury to immediately buy up the bad home loan mortgages in America and renegotiate at the new value of those homes, at the diminished value of those homes, and let people make those -- be able to make those payments and stay in their homes.
Is it expensive? Yes. But we all know, my friends, until we stabilize home values in America, we're never going to start turning around and creating jobs and fixing our economy. And we've got to give some trust and confidence back to America.
OBAMA: The middle class need a rescue package. And that means tax cuts for the middle class. It means help for homeowners so that they can stay in their homes. It means that we are helping state and local governments set up road projects and bridge projects that keep people in their jobs, and then long term we've got to fix our health care system.
We've got to fix our energy system that is putting such an enormous burden on families. You need somebody working for you, and you've got to have somebody in Washington who's thinking about the middle class and not just those who can afford to hire lobbyists.
(END VIDEO CLIP)
COLLINS: Two presidential debates down, one to go. How did Barack Obama and John McCain do in their second face-off?
Well, joining us to talk about reaction from both sides this morning, Republican strategist Ed Rollins is in New York.
Good morning to you, Ed.
ED ROLLINS, REPUBLICAN STRATEGIST: Good morning.
COLLINS: And Democratic strategist Jennifer Palmieri is in Washington.
Good morning to you as well, Jennifer.
JENNIFER PALMIERI, CENTER FOR AMERICAN PROGRESS: Good morning.
COLLINS: All right. So we just heard some sound there from the debate last night about the economy and the words that sort of echoed out for me were trust and confidence.
Jennifer, I'll start with you. Does America trust Washington as a whole?
PALMIERI: I don't think that they trust Washington as a whole, particularly after the last couple of weeks in Congress.
COLLINS: The bailout plan. PALMIERI: The bailout plan, and because I think after the failures of it to pass -- and the House last week, I think, really crippled people's confidence in Washington. But I do think that they have shown that they have confidence in Barack Obama to lead as commander in chief and to lead in the financial crisis.
And this is something that's a relatively new development. I think that they -- as they saw how he handled the crisis, that it sort of hit high pitch in the last three weeks, I think they saw a president in him. And I think that when they saw his debate performance on September 25th, the first one, I think they decided then he's ready to be commander in chief.
And those were kind of the outstanding question -- can they see him as commander in chief? Can they see him as president? And he -- met those tests and I just think that that's why you've seen McCain, in the past couple of weeks, have such a hard time.
COLLINS: And, Ed, I would ask you the same question of you. You look at some of the poll numbers, particularly on the issue of the economy. Not looking as strong for John McCain as for Barack Obama, according to our poll numbers here.
What does he need to do now? I mean, how does he turn that tide, if you will, regarding the economy?
ROLLINS: Obviously, last night was not a game changer. McCain needed to have a better debate. He needed to basically make people take a second look at him and a second look at Barack Obama.
I don't think Barack Obama has -- has quite inspired the public that he can either be the commander in chief to lead, but I think at this point in time he does have the momentum.
The key thing here, I think, is that -- you know what happens three weeks, three and a half weeks is a long -- lifetime in politics and it will go back and forth here a little bit, but I think the bottom line is the country is scared and frightened and, obviously, looking for a new leader.
McCain suffers from, obviously, his Republican credentials, and even though he's been a maverick and fought George Bush on many issues, the Bush brand, the Republican brand is pretty diminished right now.
COLLINS: In fact, just one thing I want to share with the two of you from the "Politico." It says this, "Watching John McCain and Barack Obama at their second presidential debate was like watching two fighters circling each other, throwing a jab here, landing a blow there, but neither one ever really delivered a knockout punch.
The troubles for John McCain, however, is that he needed one."
Jennifer, what -- on the heels of last night, what does the Obama campaign do now? Just ride the wave or what do they do?
PALMIERI: I mean they aren't (INAUDIBLE) necessarily going to ride a wave or take anything for granted. And I think that you'll see -- I think you'll see Obama continue to do what -- as I think he's done well for the past two weeks which is, you know, which is to try and rise above the fray, but he always hits back when he's hit.
And I thought that last night, it seems to me, that one of the things he was trying to do was sort of put to rest kind of the nagging attacks that are still out there from McCain. Questions about, you know, that, you know, of McCain's false claim that he would raise taxes. I think that McCain's claim...
COLLINS: He's not going to raise taxes.
PALMIERI: That...
COLLINS: Obama's not going to raise taxes.
PALMIERI: Right. But -- and then -- and also on health care. You know there is a -- there's the sense, the false sense, that McCain tries to create that somehow Obama's camp's plan is government-run health care which is not.
And I thought that McCain -- excuse me, Obama was particularly cogent on health care, on making clear that his taxes would not raise -- his tax package would not raise taxes over anyone making more than $250,000 a year and I think that they -- they are very careful that they want to make sure because they're doing well, but they got to clear the decks of any sort of attacks that are out there and make sure that they respond to them.
COLLINS: Ed, it's got to be the same thing from the McCain camp. Obviously, everyone is trying to make their points about the different plans that they have for the economy. We know that. We've heard that before in many of the campaign speeches.
But, you know, he's been called the comeback kid before. There are 27 days left until this election and I heard you earlier making some comparisons to the 2000 election.
ROLLINS: Well, you know, and -- no offense to Jennifer, who is one of the best on the other side, he has not made the final sale yet. I mean people don't look at him and see the next president. They may give him points on a debate or what have you, but at the end of the day there are still serious doubts.
And a man who was very inspirational earlier in the campaign is not very inspirational today when the country desperately needs it.
Equally as important, though, I think all the game plans that they've laid out there, all explanations of what they are going to do, these all have to be cast aside. And what nobody has answered is how are they going to pay for these things when we've just added another trillion dollars to the deficit.
COLLINS: We never hear that. How do they pay? We never hear that.
ROLLINS: And you don't hear that. And the reality is that some of the formulas that they have may make the economy worse. And I think in the next three weeks that you've got to basically convince voters, and whoever can do this, I'm telling you the truth, here's what I'm going to do, it's can't traditional.
COLLINS: Yes.
ROLLINS: It's not Republican or Democrat. We're in a crisis, I can handle the crisis.
COLLINS: Yes. Clearly there's some going to be some tough choices.
To the both of you, we sure do appreciate it.
ROLLINS: Thank you.
COLLINS: I got to say my favorite part of the whole thing was when they stood in the way of Brokaw's prompter.
PALMIERI: Yes, that was the highlight.
COLLINS: Yes, I like that a lot.
Republican strategist, Ed Rollins, thank you, and Jennifer Palmieri, our Democratic strategist, thank you very much.
ROLLINS: Thank you.
PALMIERI: Thanks, Heidi.
COLLINS: Environmentalists and the Navy, in a noisy dispute now. Underwater case surfaces in the Supreme Court.
(COMMERCIAL BREAK)
COLLINS: Just a few minutes away now. I want to keep your eyes trained on this, because soon there's going to be a lot more numbers up there. We don't know which direction they are going to go, of course, referring to this interest rate cut that has just happened this morning by a half a point.
So, we're going to talk about that and see what happens to the New York Stock Exchange. Five minutes away.
Meanwhile at the Supreme Court today, is the Navy doing enough to protect whales from its underwater sonar testing? Want to go live now to our senior Pentagon correspondent, Jamie McIntyre.
And Jamie, I have to say, I've never talked with you about whales before.
JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Well, Heidi, the issue before the high court is when can the president waive environmental laws in the interest of national security? And the case, as you said, involves Navy sonar exercises and the extent they may pose hazards to whales, as we saw when we got a firsthand look earlier this year off the coast of California. (BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: Ten minute bridge, whales 500 meters out.
MCINTYRE (voice over): The Navy is demonstrating for CNN's cameras how it turns down its sonar as soon as whales come within 1,000 meters.
LT. CMDR. MARC DELTETE, USS MOMSEN: Six decibels, which is essentially -- it's like 75 percent like taking a flashlight and taking 75 percent of your flashlight out.
MCINTYRE: But whale advocates argue it's not enough.
JOEL REYNOLDS, NATURAL RESOURCES DEFENSE COUNCIL: It's dangerous. Scientists agree about that. The only question is, what is the Navy willing to do to prevent the harm associated with that sonar?
MCINTYRE: A lower court ruled the national security exemption granted by President Bush was constitutionally suspect. That sent the case to the Supreme Court.
(On camera): So what's happening to the whales? Despite millions of dollars of research, scientists aren't really sure. One theory is that these deep whales, the deepest diving sea creatures, are surfacing too fast after they are frightened or disoriented by the sonar, creating a version of what divers know as the bends.
(Voice over): The Navy says it learned a lot from an experience back in 2000 when too many sonar ships combined with a narrow underwater channel drove 16 whales to beach themselves in the Bahamas. Seven of them died.
DONALD WINTER, NAVY SECRETARY: We recognize the importance that protecting marine mammals and several of the endangered species.
MCINTYRE: Still, the sailors insist they want to be good stewards of the sea.
DELTETE: I just had a son about three months ago, I want to make sure that -- you know, when he's older I want to make sure there's whales out here that he can see.
(END VIDEOTAPE)
MCINTYRE: The science is inconclusive about the hazard that sonar poses to whales. But, Heidi, the high court doesn't need to decide that, it just needs to decide when the president can put warfare ahead of the welfare of marine mammals -- Heidi?
COLLINS: All right, very interesting debate. Jamie, I know you have to get inside so we appreciate that.
Our senior Pentagon correspondent, Jamie McIntyre this morning.
The Fed and the central banks giving global investors a boost with rate cuts. Wall Street responds. The bell sounds in just a moment.
(COMMERCIAL BREAK)
HEIDI COLLINS, CNN ANCHOR: Well, this is what we've been waiting for, the opening bell on Wall Street just a couple of seconds ago -- NHL, there. A couple different teams getting ready for some serious game action. And speaking of game action, look at this now. Here it is. Down right out of the gate. It's 204, the Dow Jones Industrial Averages. We had known the futures were going to be down. At least we expected that. And then word of the fed rate cut and the futures kind of went up a bit and then back down. So, here we are, now down 214. I'm looking at the big board there.
Obviously, big financial news this morning. Fears of a worldwide recession are deepening. And the U.S. and other countries taking dramatic action. One of those stunning moves this morning, central banks from Washington to Beijing have slashed those interest rates that we're talking about.
Want to bring in CNN's money team in New York. Senior business correspondent, Ali Velshi, along with our Christine Romans.
So, what do you guys make of it? Ali, down 218 now.
ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Yes, and Christine was in here this morning while I was trying to get some sleep, and all of a sudden markets around the world were tanking and we had heard rumor of this. Christine, take it away. Tell us what you saw when this started happening.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: OK, this is what we saw. We saw it exactly at 7:00. A global coordinated rate cut, and this was after huge, huge losses overnight in Asia. I mean, incredible losses in Asia overnight. The Dow after being down 508 points yesterday, some 13 percent over the past five days, and then suddenly the Central Banks come in and they cut interest rates. The Fed funds target by half a percentage point, and you saw Dow futures spike.
The hope was the Fed is doing everything it can with coordinated effort -- matter of this means that that we know that central bankers know that there's a problem. They said they decided an intensification of the fiscal of the financial crisis and that they were working on it. But now, you are seeing some concerns again. Just when are we going to see a thaw in the credit markets. Just when are we going to see confidence resume? And we have not seen confidence return just yet. And that's what this is all about. It's about fear and confidence, right, Ali?
VELSHI: Yes. And Heidi, as you can see, after all that effort, this is supposed to make money cheaper to borrow for companies and for individuals. The prime rate dropped along with this rate cut so you're paying 4.5 percent for prime rate. If you have an adjustable rate mortgage or an adjustable rate credit card, you see that drop immediately. And yet, look what's happening. We're still seeing a market that is down. But the good news that it's down less than it was right at the beginning.
But this is the effect of a rate cut. It's supposed to make money cheaper. It's supposed to encourage businesses to expand and hire more, and supposed to make consumers spend more. But that wasn't the problem. Rates weren't the problem. The problem is nobody was lending anybody any money because they didn't trust they'd get paid back. So here's the good news here. We were thinking that this was going to be a lot worse at the beginning, and the market is coming back a little bit from that more than 200 points that it was down right at the beginning, Heidi.
COLLINS: Yes, but it's such a good point to say and remind everybody once again. Obviously, this is sort of all we have to look at.
VELSHI: Right.
COLLINS: And Christine, you were talking about this before, and now we're down to double digits. Boy, you could really be transfixed on that all day long, couldn't you?
ROMANS: The credit market, does this, then, make people suddenly go out and start buying houses or start buying cars or changing over hands with their money? Oh no, not right now.
(CROSSTALK)
VELSHI: Yes, and I mean, without really good credit. People are still having trouble getting those loans. We know companies are having trouble getting their short-term loans that move by the Fed yesterday combined with the effects of the bailout plan in a few weeks might help people do that. But you're right. And we can't point this out enough, Heidi, that -- because that's the thing. That's the scoreboard we get to look at.
It might lead some people to think that that is the scoreboard for the economy. It is not. We have the bigger scoreboard for the economy is our economic growth, our jobs which we are losing right now, and our home prices which continue to go down. We're also getting reports this morning out from America's Retailers about the kind of month they had. We're compiling those numbers, and we'll -- we'll bring them to you to get a sense of what Americans are doing with their money right now and whether you are like them in holding back a little bit or you're spending more. We'll bring you that through the course of the morning.
COLLINS: Yes. Very, very tentative, obviously. Ali Velshi, Christine Romans, thanks so much, guys. Again, we'll check in later on. It's going to be going on all day that's for sure. People looking at the numbers and wondering what to do with their own money.
Meantime, CNN's Susan Lisovicz is at the New York Stock Exchange this morning where the bell rang just a few minutes ago.
And, Susan, we're kind of seeing this thing go all over the place right now.
SUSAN LISOVICZ, CNN CORRESPONDENT: It's gyrating wildly because...
COLLINS: Yes.
LISOVICZ: ...I think we're living in unprecedented times when you think about it. Friday we had this landmark legislation. On Monday, the Federal Reserve was opening up its coffers even wider up to $900 billion, lending, not only, of course, to commercial banks, but to investment banks as well. Yesterday, buying commercial paper. Today, unprecedented in that. It's a coordinated action by Central Banks around the world.
But, you know, one trader told me this morning when futures reversed again, they rallied, and then they went down. He said, you know, money may be cheap, but it doesn't mean that it's available. Just yesterday, Heidi, we got a report from the Federal Reserve itself showing that borrowing by consumers fell in August for the first time in more than ten years. Not only because consumers are pulling back, but because they are having problems getting access to loans.
And analysts, another analyst said what we are battling here is trust, confidence and perception. Those are hard things to shake overnight. Another thing that we're getting this morning is retail sales for the month of September. Wal-mart, where a lot of people go when times are tough, came in at the low end of its own forecast. JCPenney which is the mistier retailer, its sales plunged 12.5 percent. So, you know, you're seeing a lot of signs that point to one thing. And that the economy is slowing down, and the markets reacting to it despite these unprecedented moves by the Federal Reserve. Right now, triple digits on top of a terrible couple of days here.
Heidi?
COLLINS: All right. We'll see you again shortly. Susan Lisovicz, thank you.
Short selling on Wall Street. Some consider the practice as sort of prophet of doom. That's because the short seller essentially bets against a company with its own stock. A few weeks ago the government ordered a ban on the short selling of more than 900 financial stocks for fears that it would drive down values and then threaten the companies. Some experts say the move destroyed investor confidence. Tonight, just before midnight, Eastern Time, the government ban is lifted and short selling can resume on those stocks. It will be interesting to see what effect that will have.
Meanwhile, the international move to slash interest rates sent many world markets bouncing back from breathtaking losses, but for financial hubs in Russia and Asia, the action came after their closing bell. Our correspondents are all tracking it. Let's begin with Emily Chang in Beijing.
(BEGIN VIDEOTAPE)
EMILY CHANG, CNN INTERNATIONAL CORRESPONDENT (on camera): We're at a brokerage in Beijing where Chinese markets have closed. The Shanghai Index closing down 3.04 percent. Certainly not as bad as what's happened in the other Asian markets, but the third day in a row, Chinese markets have tumbled. When we walked in here, you could just feel the exasperation and see the suspense among investors as they watched the screen. One man approached us immediately blaming the United States saying U.S. markets are taking markets around the rest of the world down with them.
Another man didn't want to place blame, but said that China's government should step in to help. Many people here are very concerned that China's economy is going to take a major hit in this financial crisis. Demand overseas is already slumping and China's economy is export driven and demand domestically is lagging as well. So, fear, a lack of confidence and uncertainty very much on the minds of Chinese investors right now.
SOHN JIE-AE, CNN INTERNATIONAL CORRESPONDENT (on camera): I'm Sohn Jie-Ae in Seoul. People here understand that the panic and the uncertainty that is gripping this market is mostly not about Korea but what is happening outside of Korea, especially the United States. Korean government officials are rushing to assure people that the economic fundamentals here are strong, but that doesn't stopped the stock market from tumbling nearly six percent or the Korean Won falling to its lowest point against the U.S. dollar in over ten years.
So, you would think that under these circumstances, they will be more concern about what the U.S. presidential hopefuls would have to say. But we had a very difficult time getting anyone to comment or to talk about the U.S. presidential debate. Except for one office worker who said that he was spending all his energy in just trying to survive this economic slowdown and he had time for nothing else.
(END VIDEOTAPE)
COLLINS: Another dramatic move that unfolded overnight. Great Britain's government launched its own rescue plan to bail out the nation's largest banks there.
A town hall-style debate, John McCain's favorite format. Did the Republican rise to the occasion, or did Barack Obama take center stage? CNN's Ed Henry with some defining debate moments.
(BEGIN VIDEOTAPE)
ED HENRY, CNN WHITE HOUSE CORRESPONDENT (voice-over): On a day that Dow dropped 508 points, the financial crisis dominated round two. And the front-runner, Barack Obama, spent most of the night in control after immediately tying John McCain to the status quo.
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: I believe this is a final verdict on the failed economic policies of the last eight years. Strongly promoted by President Bush, and supported by Senator McCain, that essentially said that we should strip away regulations, consumer protections, let the market run wild.
HENRY: McCain moved just as quickly to break from the White House. Touting a plan for the government to buy mortgages homeowners can no longer afford. SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: And it's my proposal, it's not Senator Obama's proposal, it's not President Bush's proposal. And I know how to get America working again, restore our economy and take care of working Americans.
OBAMA: We --
HENRY: After barely looking at Obama in the first debate, McCain again could not hide his disdain, especially over a 2005 energy bill.
MCCAIN: Loaded down with goodies, billions for the oil companies. And it was sponsored by Bush and Cheney. You know who voted for it? Might never know. That one.
HENRY: They also offered deep differences on foreign policy.
MCCAIN: And in his short career, he does not understand our national security challenges. We don't have time for on-the-job training, my friend.
OBAMA: It's true. There are some things I don't understand. I don't understand how we ended up invading a country that had nothing to do with 9/11.
HENRY: And a sharp contrast in the closing statements. Dramatic change versus steady leadership.
OBAMA: But we're going to have to have the courage and the sacrifice, the nerve to move in a new direction.
MCCAIN: And I'll rest on my record but I'll also tell you, times are tough. We need steady hand at the tiller.
HENRY (on camera): Bottom line, John McCain is falling behind in key battleground states needed a game changer and didn't get it. That means he needs to come up even bigger in next week's third and final debate. Time is running out, fast. Ed Henry, CNN, Nashville.
(END VIDEOTAPE)
COLLINS: Time is running out, all right. Only 27 days to go. Until Election Day. So, did anything the candidates said last night sway any voters? Wrapping things up in Nashville, our deputy political director Paul Steinhauser for us this morning.
So, what are you hearing out there, Paul?
PAUL STEINHAUSER, CNN DEPUTY POLITICAL DIRECTOR: Well, Heidi, we did a poll -- CNN and the Opinion Research Corporation. We questioned debate watchers. And I think the question everybody has is who do you think did a better job? So, take a look at these numbers. Among debate watchers we polled by a wide margin, 24 points, 54 percent of those said Barack Obama did a better job in the debate. 30 percent said John McCain. So, how did Barack Obama arrive with that number?
Take a look at this, the party breakdown among Democrats. A vast majority of the Democrats we polled as the debate watchers. They said Obama won. Not as many as -- a majority, but not as many Republicans, 64 percent said McCain won. Here's the key, though, independent voters. And they are so crucial right now in this election. And by a 2-1 margin 54 percent to 28 percent, independent voters who were debate watchers in our poll say that Barack Obama did better in the debate.
One other interesting point, take a look at this, the favorability numbers of the candidates. Barack Obama went up, 60 percent before the debate started among those we questioned. 64 percent after the debate. John McCain, kind of flat lined right there, 51 percent before, 51 percent after. We also asked some other questions -- who do you think was clearer and more of a commander-in-chief type? Barack Obama, who is more in touch with the voters' concerns, Barack Obama. And we also asked (INAUDIBLE) categories you don't want to win. Who was more of a politician, and who went more on the attack? John McCain.
Remember, though, Heidi, as you just said, 27 days left until Election Day. So, while these numbers aren't so optimistic for John McCain, a long time to go. Anything can happen.
Heidi?
COLLINS: All right. Well, we are certainly watching very closely, because a lot of things could happen in that time. You never know. And I don't want to make you stand out in the rain too much longer. Our deputy political director Paul Steinhauser. Paul, thank you.
Quickly, let's get a look at the big board because we said we were going to keep our eye on this for you, and look now. Is that a plus sign? I think I see a plus sign. Weird. Because right off the top we were down about I believe it was more than 200 points as the futures had been pointing to, and that changed. And then when it opened it was down and up. I'm going to quit trying to keep track because you just never know what's going to be happening right now. Again, all of this very interesting on the heels of the fed rate cut that happened this morning of a half a point. So, we're watching closely.
Meanwhile, hole in the house. Homeowners didn't see what was happening, but certainly heard it. And it's happened before.
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COLLINS: All right. 9:46 Eastern Time now, and we are looking at the big board all morning long here. To the positive now, just by double digits, just by a little bit, but very interesting, certainly upon the news of the emergency rate cut. That action taken by the Federal Reserve, and it also in conjunction with several other central banks across the world. So, what impact will it have? Certainly not only on the Dow Jones Industrial Averages, but also on the credit freeze. That is the thing to keep in mind. We are watching very closely right here.
To this story now, Iraq. A female suicide bomber kills nine people outside a courthouse in Iraq. The blast happened near a security checkpoint in Central Baquba in the Diyala Province. Five Iraqi soldiers and a police officer are among the dead. 17 other people were wounded. Iraqi officials say the woman bomber was wearing a traditional black over garment known as an Abiya. More than 30 female suicide bombers have set off explosions this half, half of them in Diyala Province.
Malaysia's prime minister calls it quits. Abdullah Ahmad Badawi says he'll step down in March and hand control to his deputy. At that point, he had served just about a year of his five-year term. Badawi has been hammered with calls from his own party to step down since the party's poor performance in March of the general election.
Let's take a moment to get on over to Rob Marciano standing by in the severe weather center talking about what's happening not only on the big board, which is right below you, you know. We're watching that really closely.
ROB MARCIANO, AMS METEOROLOGIST: OK.
COLLINS: But we, of course, want to know if it's going to rain across the country, too.
(WEATHER REPORT)
COLLINS: They've dreamed of careers on Wall Street, but the financial nightmare is scaring MBAs.
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COLLINS: One more check. All right, up to about 60 points to the positive now, Dow Jones Industrial Averages. We are watching these very closely, obviously, because of the fed rate cut that was announced earlier this morning. Just trying to get a clear picture of what's happening and how you will be affected by all this. In fact, the market meltdown may be a great learning tool for some MBA students. But outside the classroom it's causing a great deal of concern. Here now is CNN's Dan Lothian.
(BEGIN VIDEOTAPE)
DAN LOTHIAN, CNN BOSTON BUREAU CHIEF: (voice-over): Plan "A" for Akbar Thobhani was to turn last summer's internship on Wall Street into a full-time job earning six figures. But the second-year MBA student at MIT's Sloan School of Management ran into reality.
AKBAR THOBHANI, MBA STUDENT: At the end of the day, very few offers were given.
LOTHIAN: The hurricane that slammed Wall Street sucked the air out of big dreams.
ANDRE LO, PROFESSOR, MIT SLOAN SCHOOL OF MANAGEMENT: It's certainly a challenging time, and I think our students are concerned about what the future might be for their career opportunities. LOTHIAN: Inside the grad school's simulated trading room, we met with second-year student Benjamin Frenkel. His high tech start-up went belly up during the last bubble, and the finance field he's headed into has imploded.
BENJAMIN FRENKEL, MBA STUDENT: I still really think finance is a great place to be, but I personally am sort of broadening my horizons as well as looking at jobs in management consulting.
LOTHIAN: At Harvard Business School, where 44 percent of the last graduating class went into financial services, career coaches are helping current and former students navigate through this violent and seemingly endless storm.
JANA KERSTEAD, HARVARD BUSINESS SCHOOL: I think many of them are saying, "What's my risk tolerance? Am I comfortable with this or am I not?"
LOTHIAN: A team from here recently flew to New York City to meet with members of last year's graduating class who got great jobs on Wall Street, but wonder for how long.
UNIDENTIFIED MALE: It works for people, too.
LOTHIAN: Some still in grad school are also worried that consulting or high tech jobs might be harder to get, because now they're competing for those jobs with more MBA students and more experienced workers.
FRENKEL: I think it's a little bit scarier than you'd like it to be.
LOTHIAN: But Frenkel's passion to eventually do something in finance hasn't diminished; neither has Thobhani's.
THOBHANI: It's really hard to tell which direction I'm going to head in. I mean, the goal is still there, but I just don't know how I'm going get there.
LOTHIAN (on camera): There is something a little bit more positive that's come out of all this. Professors say they have a real-time disaster to dissect in the classroom. And one MBA student told me there are so many lessons that can be learned that can help them avoid some of the traps that landed Wall Street in this mess in the first place. Dan Lothian, CNN, Boston.
(END VIDEOTAPE)
COLLINS: A pumpkin not carved for a jack lantern, but a boat. No trick. This guy is paddling to give special needs kids some real treats.
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COLLINS: All right, let's take another peak. Dow Jones Industrial Averages up about 116 points right -- 118. We'll keep our eyes on it. It will -- who knows what it will do, but it is certainly been in a lot of different places this morning that's for sure. So, we're watching that very closely. And we are also staying on top of things here to make it all make sense for you.
Meanwhile, look at this, a parked 18-wheeler rolls down a hill and right into a house. It happened in Alabama. A mother and her son were home at the time, but they were not hurt.
(BEGIN VIDEO CLIP)
INEZ HILL, HOMEOWNER: I'm just shaking all over. I couldn't believe it.
