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Stocks Soar; Bill Clinton Weighs in on America's Financial Crisis

Aired September 18, 2008 - 18:00   ET

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

WOLF BLITZER, CNN ANCHOR: And happening now: rumors flying, hope rising for a new solution to the crisis in America's big investment banks.
The treasurer secretary and the Fed chairman, they are heading to Capitol Hill right now, after another wild day on Wall Street.

Barack Obama and John McCain, they're going tooth and nail over the economy. They're mocking the other guy's proposals. This hour, the tough talk and who is gaining advantage.

And sharp new questions about Sarah Palin's credentials coming from within the Republican Party.

And Bill Clinton, the former president, is now weighing in as well. Stand by for that. The best political team in television is also standing by.

We want to welcome our viewers in the United States and around the world.

I am Wolf Blitzer. You are in the THE SITUATION ROOM.

A bit of relief ringing through the tense and troubled financial markets today, stock prices surging in a late and stunning turnaround on Wall Street. The Dow Jones industrials closed up more than 400 points, recovering a lot of the ground lost yesterday.

Investors found new optimism in a report -- it is only a report so far -- that the federal government might create a new vehicle to try to absorb banks' bad debt, much as it did after the savings and loan crisis two decades ago. And we are getting late word from sources on Capitol Hill that the treasury secretary, Henry Paulson, has asked for a meeting with top congressional leaders about an hour or so from now.

We are told the Federal Reserve, chairman Ben Bernanke, and the Securities and Exchange commissioner, Chris Cox, will also be there. We are keeping close watch on this story, and we will bring you any new developments. Stand by. Your money is at stake right now.

And like the rest of us, Barack Obama and John McCain are riding this economic roller-coaster. And with every twist and turn, they are finding new ways to lash out at one another.

CNN's Ed Henry is standing by with the McCain/Palin camp, but, first, our senior political correspondent Candy Crowley, she is watching all of this unfold.

And, Candy, there were strong words exchanged today. What is going on? I was struck by the toughness in Barack Obama's comments today, but go ahead and give us an update on what we learned.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, what we learned today, first of all, as we see these polls kind of creeping up and going back to their pre-convention levels, that certainly some traction seems to have been made by Barack Obama in pounding home this economic issue.

He has been throughout the interior West in these first four days of the week talking the economy and he ended it up on the same note.

(BEGIN VIDEOTAPE)

CROWLEY (voice-over): Amidst growing anxiety among voters and pundit calls for both sides to be more specific, Barack Obama turned to the immediate need to stabilize the country's economic underpinnings.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: I was ahead of the curve in calling for regulation. And that is why I am calling on the Treasury and the Federal Reserve to use their emergency authorities to maintain the flow of credit, to support the availability of mortgages and to ensure that our financial system is well capitalized.

CROWLEY: Promising new plans to deal with the country's financial meltdown, Obama says he will meet with his economic advisers tomorrow.

As the crisis takes up the fourth day of headlines, new indicates Barack Obama has halted what seem to be John McCain's momentum. In the CNN poll of polls, Obama is now back up top, up two points. The numbers come in the wake of tougher and sound-bite-ready criticism of McCain. It is a daily pounding, scoffing at McCain's statements, linking him to the problem.

In response to McCain's call today to fire the Securities and Exchange Commission chairman, Obama heaped scorn.

OBAMA: Here is what I say. In the next 147 days, you can fire the whole trickle-down, on-your-own, look-the-other-way-crowd in Washington who has led us down this disastrous path. Don't just get rid of one guy. Get rid of this administration. Get rid of this philosophy. Get rid of the do-nothing approach to our economic problems, and put somebody in there who is going to fight for you.

(CHEERING AND APPLAUSE)

(END VIDEOTAPE)

CROWLEY: Tough words, Wolf, with a definite populist theme to it. This entire week, Obama has number trying to frame McCain not as the reformer or the maverick that McCain says he is, but as a part of the problem. This is a dual message that the Obama people think has been working very well. I asked one of them today whether they thought Obama would be talking about anything but the economy, and the reply was, not any time soon -- Wolf.

BLITZER: All right, thanks, Candy. Stand by. Candy is going to be joining us later.

John McCain is trying to discourage voters from taking their economy pain out on him and the Republicans, so he and his running mate, Sarah Palin, are sharpening their criticism of both Barack Obama and Joe Biden.

CNN's Ed Henry traveled with McCain and Palin out to Iowa today. And they are looking for some soft spots to lash out against the Democrats. So, what happened today, Ed?

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Well, Wolf, you are absolutely right. In fact, Senator McCain knows That he could pay a political price for this economic crisis with the Republicans in power. So today, he came out. He was more focused and a bit more tougher in pushing back against Senator Obama.

(BEGIN VIDEOTAPE)

HENRY (voice-over): A song from the movie "Top Gun" to claim that John McCain is a maverick, but danger zone also describes the threat the sinking economy poses to McCain's campaign, so he is lashing out at Barack Obama's indecision over the bailout of AIG.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Senator Obama didn't take a position. On the biggest issue of the day, he didn't know what to think. He may not realize it, but you don't get to vote present as president of the United States.

(CHEERING AND APPLAUSE)

HENRY: What McCain left out is, he initially opposed the bailout before appearing to offer reluctant support for it. That seems to be a sign of McCain's concern the public may punish Republicans for the crisis, which is why McCain also declared he would sack President Bush's head of the Securities and Exchange Commission.

MCCAIN: The chairman of the SEC serves at the appointment of the president, and, in my view, has betrayed the public trust. If I were president today, I would fire him.

HENRY: McCain's running mate, Sarah Palin, who helped draw a large crowd in the swing state of Iowa, lashed out at Democrat Joe Biden's claim that it would be patriotic for wealthy Americans to pay more taxes during tough times.

GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL CANDIDATE: To the rest of America, that is not patriotism. Raising taxes is about killing jobs and hurting small businesses and making things worse.

(CHEERING AND APPLAUSE) HENRY: The rally was twice interrupted by anti-war protesters, sparking McCain to again talk tough about how Obama should debate him at town hall meetings.

MCCAIN: And the next time one of those people start yelling, tell them to yell at him to come and stand together.

(CHEERING AND APPLAUSE)

(END VIDEOTAPE)

HENRY: Now, Democrats quickly pointed out that because of a Supreme Court decision, it appears that the president does not have the actual power technically to fire the SEC chairman.

Experts say, actually, you could fire the person as chairman, but not remove them from the actual commission, sort of an arcane legal debate. The point, though, is that Senator McCain was saying this because it shows how much he wants to distance himself from the president on this economy, Wolf.

BLITZER: Ed Henry, stand by. Thanks very much.

We just mentioned that the treasury secretary, Henry Paulson, the Federal Reserve chairman, Ben Bernanke, and the SEC chairman, Chris Cox -- he's a former Republican congressman from California -- they are all set to meet very soon with top congressional leaders here in Washington.

We are also learning that just a short time ago President Bush finished a meeting with all of them. The White House is not providing additional details of that meeting, but earlier today the president did come out and make a brief statement about this economic crisis. He defended government actions, saying they are necessary to avoid what he called a severe disruption to the financial markets.

And the White House issued a statement also supporting Chris Cox, reiterating their confidence in him as the chairman of the SEC.

Let's go to Jack Cafferty. He has got "The Cafferty File." My head is beginning to spin, all this stuff going on, Jack.

JACK CAFFERTY, CNN ANCHOR: Well, apparently, that is happening in Congress, too, because, what will you bet they all take their recess right on schedule on the 29th of this month and go home?

BLITZER: Yes, they have got to be ready for the election.

(CROSSTALK)

CAFFERTY: Oh, yes. Yes. And they all deserve to be reelected. So, I can't even start.

If you think the fallout from this crisis in the financial system is barely touching your life, well, let me point out a couple of things. The Dow, Nasdaq, S&P all down about 17 percent so far this year, which means, whether you have had the stomach to look at your statement or not, your 401(k) is getting slapped around like a red- headed stepchild.

Thinking of taking out money from the stock market, using it to buy a house? Well, besides the risk of selling those stocks at a loss, banks are tightening lending standards, making it tougher to get mortgages. And that is not just for people who have bad credit either. Tougher for everybody.

Using your credit cards to get by until things start to ease off a little bit? That is not a great option either. Miss a payment, you will be whacked by the credit card company. "USA Today" reported today that there are penalty rates as high as 32 percent.

And, finally, all those hundreds of billions of dollars in government loans and bailouts for AIG, Fannie Mae, Freddie Mac, Bear Stearns and the like, well, that is money that you and I, the taxpayers, are all on the hook for as well.

So, the question is this: How is this deepening financial crisis affecting you? Let us know. Go to CNN.com/caffertyfile. You can post a comment on my blog -- Wolf.

BLITZER: Thanks, Jack. Speak to you in a few moments as well.

So what is the way out of this financial crisis? We just told you about a report that the federal government might create a new vehicle to absorb banks' huge debts. Our Ali Velshi is standing by to explain what this would mean for all of us, the taxpayers.

And Bill Clinton, the former president, is now weighing in on this financial crisis. You are about to hear what he is saying and what he says about John McCain's running mate.

And McCain says something that is raising eyebrows in Spain. Is he really giving that country the cold shoulder, as some believe? What is going on between McCain and a top NATO ally?

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: All right. CNN has just learned that the House speaker, Nancy Pelosi, is sending a letter to President Bush asking him -- and I am quoting now -- for a comprehensive and effective systematic" -- "systemic," that is, "response to the crisis on Wall Street."

In the letter, Pelosi tells the president of the United States, the response must be one that would restore stability, grow the economy, create jobs, and help hardworking Americans. Pelosi also says Congress is willing to stay beyond its September 26 adjournment date to consider proposals. She is hosting a meeting with the treasury secretary, the Federal Reserve chairman, and other leaders in Congress in her office. That is coming up shortly. Stand by. We are watching this dramatic developments unfolding.

And, as we reported, stocks soared today on the news of a possible drastic government action to confront the country's worsening financial crisis.

Let's go to our senior business correspondent, Ali Velshi. He is following all of these developments.

Ali, explain to the viewers about what some would consider to be the mother of all government bailouts.

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Absolutely.

And this is -- there are various reports of this meeting going on and the high-level people who will be attending it. CNBC in particular has been reporting that there is a plan under way put forward by Henry Paulson to come up with a trust, something like the trust that emerged after the savings and loan crisis.

Now, the best way to describe this, Wolf, is that the government would in some fashion take up all the bad debt, all the stuff that we can't get rid of that is holding us back, and somehow hold on to it for some time, clear the books, let people sort of proceed, let businesses sort of proceed free of this bad debt that keeps hampering us, and at some point the government would unload that over the course of the next few years.

After the savings and loan crisis, it took six years to actually completely unload that debt. Now, it is unclear as to what the government would actually be buying. After the savings and loan crisis, it was actual property. In this case, as you know, these mortgage-backed securities are in many cases paper that were attached to an income stream that stopped being paid.

So, we don't know what it is, but it would be a very, very big -- financially big project, whatever it is, and that is obviously something that will come up against some opposition from those who think there shouldn't be any bailout at all. But we are talking about many, many hundreds of billions of dollars if this comes to pass.

We are going to be on this story until we find out exactly what is going on Capitol Hill, Wolf.

BLITZER: All right, it's certainly something that traders on Wall Street liked to hear about today. But we will continue to monitor it with you, Ali. Thank you.

So what does the last president of the United States think about what is going on in this crisis?

Let's go Mary Snow. She is in New York. We have now heard Bill Clinton weigh in, Mary. What is he saying? MARY SNOW, CNN CORRESPONDENT: Yes, Wolf, he was asked about the bailouts, and says, in this case, the government had no choice, but he also said there was too little attention for too long to the real estate problems. The former president made the comments during an interview on CNBC.

He does, however, differ with the government's decision not to help investment bank Lehman Brothers, which filed for bankruptcy earlier this week. Former President Clinton says his instinct would have been to offer Lehman Brothers a line of credit, at least -- Wolf.

BLITZER: He also weighed in on the Republican ticket, specifically the Republican vice presidential nominee, Sarah Palin. What did he say?

SNOW: He had some words of praise for her. He was asked in this interview if he was surprised by the Palin bounce for the McCain campaign. He said he wasn't. Here is a little bit of what he had to say.

(BEGIN VIDEO CLIP)

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: She is an instinctively effective candidate, and with a compelling story.

And I think it was exciting to some that she was a woman. It was exciting that she was from Alaska. It was exciting that she is sort of like the person she is. And she grew up in a -- and came up in a political culture and a religious culture that is probably well to the right of the American center, but she didn't basically define herself in those terms.

She basically said, look, this is where I am from. I'm not going to impose this on you. This is what I want to do that I think we can all be a part of. So, she handled herself very well.

So, no, I wasn't surprised. I think that, you know, I disagree with them on a lot of these issues, and that is why I -- aside from my party affiliation, that is why I would be for Senator Obama and Senator Biden anyway.

(END VIDEO CLIP)

SNOW: The former president also said that it would be a mistake to underestimate Sarah Palin.

He was also asked, if McCain wins, would Senator Hillary Clinton run in 2012? He said he doesn't know, but that she's working hard for Senator Obama. And he also said he believes Obama will win, but expects a competitive race until the very end -- Wolf.

BLITZER: All right, thanks very much.

Mary Snow is in New York watching all of this for us.

There's a new it group of voters out there, and we are calling them Wal-Mart women. We are taking a closer look at what they want and whether they are buying Sarah Palin's regular-folks appeal.

And a leading Republican senator is questioning Sarah Palin's experience. Would it be sour grapes or is there real concern? The best political team on television is standing by.

And amid the devastation of Hurricane Ike, some homes are still standing. We have some really remarkable I-Reports to share with you. They are coming in from the battered parts of Texas.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

(NEWS BREAK)

BLITZER: Hurricane Ike wiped out entire neighborhoods in Texas, but a few houses survived Ike's wrath and are still standing strong amid all the rubble.

Our Internet reporter, Abbi Tatton, is here. She is looking at some incredible I-Reports, especially of one of these houses. Tell us what we are seeing.

ABBI TATTON, CNN INTERNET REPORTER: Wolf, we got this I-Report and we did a double-take. Take a look at this scene here, the Texas coastline completely destroyed, save for one building, one house still intact.

Incredible as that seems, that is the scene in Gilchrist, Texas. We are going to Google Earth in to this area to show you exactly where we're talking about. This is the area along the Bolivar Peninsula, low-lying area that was devastated by the storm surge. But this is the house of Pam (ph) and Warren Adams (ph). Their sister, Judy Hugsbeth (ph), explains to us that this is a house that was entirely rebuilt after Hurricane Rita, to withstand a Category 5 storm. And that explains it.

She said that the couple had evacuated safely. But, as you can see from all these pictures, Wolf, the whole rest of the area is just devastated. Texas officials telling me that in this area of Gilchrist, 200 houses before the storm. Fewer than a dozen remain.

BLITZER: That is truly amazing and that it could withstand all of that.

TATTON: Absolutely.

BLITZER: It really is incredible.

All right, Abbi, thanks very much for that.

A politically-charged question: Is it patriotic for the richest Americans to want to have their taxes increased? It is a new point of contention between the McCain/Palin and Obama/Biden camps. Stand by. The words were very sharp. You will hear them. That's coming up. And some uncertainty today about McCain's potential dealings with an important NATO ally. We are going to tell you what McCain said and why it is raising concerns overseas.

And Barack Obama on the ballot in Brazil?

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now: John McCain and Joe Biden are slamming each other over what should be done to rescue the U.S. economy, and the war of words is getting nasty and nastier every two hours.

Sarah Palin may call herself a hockey mom, but will the so-called Wal-Mart moms usher her and McCain to a November victory?

And McCain raising eyebrows in Spain. Did he snub the country's prime minister, a NATO ally? All of this, plus the best political team on television.

I'm Wolf Blitzer. You are in THE SITUATION ROOM.

John McCain is making headlines right now in Spain over what he said and what he didn't say in an interview about meeting with the country's prime minister, a key NATO ally with troops serving in Afghanistan right now.

Brian Todd has been working this story for us. Brian, tell our viewers what this one is all about.

BRIAN TODD, CNN CORRESPONDENT: Wolf, it is pretty striking on balance here, Wolf.

Spain is an important U.S. ally with more than 800 soldiers in Afghanistan. About two dozen of them have been killed there. But the country's leader can't get a meeting with President Bush. And he may not get one with John McCain if he is elected.

(BEGIN VIDEOTAPE)

TODD (voice-over): In an interview with a Spanish-language radio network, John McCain is asked four times if he would meet at the White House with Spain's prime minister, Jose Luis Rodriguez Zapatero. Four times, McCain avoids a direct answer.

(BEGIN AUDIO CLIP)

MCCAIN: I would be willing to meet with those leaders who are our friends and want to work with us in a cooperative fashion.

TODD: McCain's foreign policy adviser shoots down speculation that McCain might not have known who he was talking about, says the nominee knew exactly what he was saying and simply did not rule in or out a White House meeting with President Zapatero. For his part Zapatero says he understands all this. Says it's logical for McCain to show what he called prudence in the election cycle.

JOSE LUIS RODRIGUEZ ZAPATERO, SPANISH PRIME MINISTER: The government I lead will work with the next U.S. administration whatever the outcome of the elections.

TODD: The Spanish leader has been shunned by the Bush White House because he pulled Spanish troops out of Iraq in 2004. But Spain is a partner in Afghanistan, and the two NATO allies have inched closer since then. Earlier this year, McCain was quoted in a Spanish newspaper saying he's interested in normalizing relations with Spain, and quote, "I would like for President Zapatero to visit the United States." The McCain campaign now says his refusal to commit to a White House meeting is not a flip-flop toward Spain, but is McCain leaning toward the old Bush mantra if you're not with us, you're against us?

REGGIE DALE, CENTER FOR STRATEGIC & INTL STUDIES: Regardless of how they feeling about having the prime minister of Spain at the White House, they will meet at NATO meetings and other meetings with international leaders. So I think it would be to read too much into this to say that it is a big shift towards a neoconservative attitude.

(END VIDEOTAPE)

TODD: Now, if McCain is elected a meeting could take place within his first 18 months in office. Spain assumes the rotating presidency of the European Union early in 2010. The holder of that position often hosts a summit of EU and American leaders. So John McCain could find himself at the Spanish prime minister's doorstep right about that time -- Wolf?

BLITZER: How does Barack Obama, Brian, feel about meeting with the prime minister of Spain?

TODD: Obama's people say he is willing to meet with Zapatero at the White House. Of course, this is a candidate who has said he will meet with Mahmoud Ahmadinejad, Hugo Chavez, no strings attached, not much of a stretch there to meet the Spanish prime minister.

BLITZER: He says no strings attached but he also says there would have to be preparation for that in advance. All right. Thanks very much, Brian. Brian Todd reporting. Senator McCain is also taking a much tougher stance today on the economy, and he is going all out against Obama and Joe Biden.

Let's talk about this and more with our CNN senior political analyst Gloria Borger, our CNN senior political correspondent Candy Crowley, and David Brody, the senior national correspondent for the Christian Broadcasting Network, they're all part of the best political team on television.

Guys I'm going to play what Joe Biden said in his exchange on ABC's "Good Morning America" this morning and then right after that, you will hear how John McCain responded. Listen to this. (BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Anybody making over $250,000 is going to pay more.

SEN. JOE BIDEN, (D-DE) VICE PRESIDENTIAL CANDIDATE: You got it. It is time to be patriotic, Kate. Time to jump in and time to be part of the deal, and time to help get America out of the rut.

MCCAIN: Raising taxes in a tough economy isn't patriotic, it's not a badge of honor, it's just plain dumb.

(END VIDEO CLIP)

BLITZER: It's not everyday that you hear Senator McCain use the word "dumb" in referring to Joe Biden, Gloria. What's going on?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, look, I think Joe Biden gave him an opening on the one economic issue in which McCain has really made a lot of progress. If you look at recent polls, over half of Americans believe that Barack Obama is going to raise their taxes. And any time John McCain can take on Joe Biden or Barack Obama on the issue of taxes and whether it's prudent to raise them or not, he's going to do it. So, he handed him an opening.

BLITZER: But the point is, Candy, Obama and Biden say it all of the time, 95 percent of the Americans out there are going to get a tax cut. It's only those making more than $250,000 a year that are going to get a tax increase, and Biden says, you know what, these rich folks they should be patriotic about that fact of life and just accept it. But go ahead, talk about the politics.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, I mean, the politics of it are that just as Gloria said, the Obama campaign has had a rough time by trying to combat this notion that he is going to raise taxes on everyone. When the McCain camp talks about it, they're talking about capital gains and they are talking about taxes for people $250,000 or more salary makers.

I think the problem with what Biden said was linking it to patriotism, and we have seen Sarah Palin go off on that. Talking about, oh, so if you pay taxes, more taxes we don't think that makes you more of a patriot. So I think it was the way it was framed rather than, you know, Joe Biden could have said, yes, we are going to raise taxes for people who make over $250,000. We think the system needs to be fairer, it's the middle class that needs the help. Instead he linked it to patriotism.

BLITZER: David, you're itching to get into this conversation, go ahead?

DAVID BRODY, CHRISTIAN BROADCASTING NETWORK: Well Wolf, I mean I think Candy makes a really good point I mean any time patriotism is brought up. I don't think that's a discussion the Obama campaign wants to bring up, because they've had some patriotism problems of their own. So I think that's kind of a toxic word out there for the Obama campaign. But, look, Gloria is on to something pretty big here which is that it's all about lower taxes for the McCain campaign, that's what they want to do.

And you know, in addition, what I have been hearing from the McCain camp today is what they're telling me is that they want to advance this down the field a little bit. What they're saying now is that they're going to go after Obama and the Obama campaign on this idea that, who is Obama getting advice from? Just recently within the last hour or so we saw a national television commercial come out about exactly who Obama is getting advice from when it comes to Fannie Mae and other economic situations out there. That's the road they're going down. Expect to see a couple of different ads come out in the near future.

BLITZER: All right. Standby guys, because we're only just getting started. Also new questions today about Sarah Palin's foreign policy credentials, and this time, they're coming from a top Republican senator, that would be Chuck Hagel, said it just left him speechless. We have seen soccer moms and security moms, but this year, maybe a different group of moms that could sway the election. Stay with us, you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: There is new questioning now of the vice presidential nominee Sarah Palin's experience and this time it comes from a top Republican senator. We are back with the best political team on television. Gloria, we're talking about Chuck Hagel, he's retiring from the senate this year. He's a Republican from Nebraska. He told the Omaha "World Herald" and I'm quoting now, "She, referring to Sarah Palin, doesn't have any foreign policy credentials... You get a passport for the first time in your life last year. I mean, I don't know what you can say. You can't say anything." Those are pretty tough words. What do you make of this?

BORGER: Well, correct me if I'm wrong, Wolf, but I think he is the first Republican we've really heard from on the record questioning her foreign policy credential. Look, he is off message, he used to be a very close friend of John McCain's.

He considered running against him for the presidency and he went with Barack Obama on his European and Mideast tour. Having said that, I think that he's saying publicly what some Republicans are saying privately, but she was not chosen for her foreign policy credentials. She was chosen because they thought she could bring that Republican base home, and she has helped do that.

BLITZER: He hasn't endorsed anyone right now, Chuck Hagel, he says he's not going to endorse anyone at least for the time being. David Brody, I assume you know Chuck Hagel and he is the Republican a lot of Democrats really admire.

BRODY: Well that's right. And that's why the Republicans will blow this off and say he's a Republican that many Democrats admire. Exactly what you're saying. There are two worlds out there, Wolf. People in Boise don't wake up and check their blackberries to find out what Chuck Hagel was thinking. And my point simply to say that is that you have U.S. senators albeit a Republican one, but you also have some other conservative intellectuals like the David Brooks and others who are really concerned about Sarah Palin.

That's the one world out there, but then you have the other world and that is those -- call them Wal-Mart moms, call them whatever you want, hockey moms. They're out there on the campaign trail, they're energized, they are juiced. Palin may have what we're calling a Teflon quality to her, because look, I mean she seems to do no wrong in their eyes on the campaign trail, and that's the key, because really at the end of the day, they need to be energized and mobilized to get out there and vote, and that's what's happening.

BLITZER: But you saw some of the polls that are now coming out on this specific question whether she has enough foreign policy experience to be president, Candy, and more than half of the Americans who responded in that one poll, Bill Schneider reported earlier said they believe she doesn't have that kind of experience.

CROWLEY: Yes, there has been some damage along the way, but I don't think there is any damage where Sarah Palin has done John McCain the most good. And that is in the conservative part of the party, which the McCain people were worried was not going to come out for him. Certainly was not going to work for him, and might just sit at home.

That's where she has done the most good. It's not in those aggregate numbers, it is in what she has done to consolidate the conservatives which is why John McCain is now free to reach out and say I'm a maverick, independents can trust me, because Sarah Palin has taken care of what was really his primary problem before he picked her.

BLITZER: But is it fair to say, Gloria, that as long as the subject on the agenda is the economy, a bad economy as we all know exists right now, that may be bad news for everyone out there, but for the Democrats, its good political news.

BORGER: Yes, I guess its good political news, because what it does is it brings George W. Bush front and center again and his stewardship of the economy front and center. And every time George W. Bush is center stage, that's not good news for John McCain, because it allows Barack Obama to yoke him together with President Bush. So it is not good for Republican, but I also believe that the voters are looking now for leadership from both of these candidates, and I am not so sure they have seen everything they think they need to see yet.

BLITZER: Candy, you're covering Obama right now and I assume he's going to stay on message for the time being and keep it economy number one?

CROWLEY: Sure, absolutely. But I think Gloria hits on a really good point and that is both of these candidates have been taken to task, ok, so what's your plan right now? Stop blaming each other and tell us what you would do and neither one of them really have done that, I mean today Obama said I call on the fed and the treasury department to use their emergency powers. Well they are doing that.

And the truth is neither one of these men are in a position right this second to do a thing about this. So even as they're being called to do specific, there is danger in putting specifics out there because you can attack them. So they're both kind of out there with that greater regulation thing.

BLITZER: All right guys, unfortunately we have to leave that there, but we'll continue tomorrow. Maybe it won't happen, but might you soon meet Barack Obama or John McCain while you're shopping for food, laundry supplies, other everyday items? You could be part of a key group that both men are courting right now. CNN's Dana Bash is in Grand Rapids, Michigan. Dana?

DANA BASH, CNN CORRESPONDENT: Wolf in the 2000 election, there were soccer moms. 2004 security moms. This year there is a different kind of female voter both parties agree could determine who wins the White House. And here in Michigan and in another battleground state of Colorado, we went to Wal-Mart to talk to them.

(BEGIN VIDEOTAPE)

BASH (voice-over): As Cindy Otterbein loads her bags in the minivan, she's reminded of the one thing that's most driving her vote.

CINDY OTTERBEIN, UNDECIDED VOTER: The economy right now. My husband has a job and we are lucky that he has that, but things are changing and he is making less this year than he has in the past.

BASH: Otterbein is one of the most sought-after voters this election year. Wal-Mart women. White, lower educated, middle-aged women more likely to vote their pocketbook than their party.

NEIL NEWHOUSE, GOP POLLSTER: I think they could swing the election either toward McCain or toward Obama.

BASH: Republican pollster Neil Newhouse said Wal-Mart women make up about 16 percent of the electorate.

NEWHOUSE: The reason why they're key in this election is simply because they have concerns about both of these candidates. They have concerns about John McCain's commitment to the economy and they have concerns about Barack Obama's inexperience and his leadership.

BASH: That's exactly what Mary Vanderplueg told us about Obama.

MARY VANDERPLUEG, UNDECIDED VOTER: I don't think he has the experience.

BASH: But she said that John McCain turned her off this week by saying --

VANDERPLUEG: The thing about the economy being in good shape.

MCCAIN: The fundamentals of our economy are strong.

VANDERPLUEG: That's crazy. I mean, no. Just when I think I might vote for him, he opens his mouth again.

BASH: McCain aides are hoping to lure Wal-Mart women with Sarah Palin, someone like them.

MINDY LILLY, UNDECIDED VOTER: I think she is kind of the good old American mom, and she sounds like she'll stand up for what she believes in.

BASH: But not everyone is sold.

DEE MCKINNERNY, UNDECIDED VOTER: The government has been the same too long. And I don't see that McCain and Palin will change that.

BASH: And economically stretched single mother a Wal-Mart woman whose vote could decide this election.

(END VIDEOTAPE)

BASH: These voters are especially critical to John McCain. That Republican pollster we spoke to actually came up with the concept of Wal-Mart women said they are mostly Democrats by party affiliation, but voted for President Bush in 2004. Precisely the kind of swing voters McCain must win over in key battlegrounds like here in Michigan -- Wolf?

BLITZER: Dana Bash is in Grand Rapids, Michigan reporting for us.

The secretary of state Condoleezza Rice, she's really lashing out at Moscow. She has some unusually harsh words of Russia's standing in the world. You'll probably going to be surprised at how strong her language is. Standby.

Also, it's not just traders and financiers getting hit by the turmoil on Wall Street. Jack Cafferty has your e-mail on how this financial crisis is affecting you.

And the picture that sums up the stock market madness. Jeanne Moos takes a most unusual look. Lots more news happening right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's check back with Carol she's monitoring some other important stories incoming into THE SITUATION ROOM right now. Carol, what's going on?

CAROL COSTELLO, CNN CORRESPONDENT: Wolf, secretary of state Condoleezza Rice has a warning for Russia. She says Moscow is headed on a path to isolation and irrelevance because of its authoritarian policies. Rice slammed what she said was the Russian government's use of oil and gas as a weapon and she called on western powers to stand up to Russia following Moscow's invasion of Georgia last month.

One of the busiest arteries in the twin cities is opened again. Police cars, fire trucks and ambulances led hundreds of vehicles across Minneapolis' new interstate 35W bridge this morning. Thirteen people died when the old bridge plunged into the Mississippi River on August 1, 2007. The new $234 million smart bridge has hundreds of sensors to collect data to warn of any possible problems.

And guess what? Barack Obama is on the ballot in Brazil. At least his name is. It turns out election law in that country allows candidates to put any name they want to on the ballot as long as it isn't offensive. A handful of contenders in local elections have been chosen to be known as Barack Obama, apparently hoping to ride his distant coat tails to office. A look at the headlines right now -- Wolf?

BLITZER: He's very popular in Brazil I guess.

COSTELLO: I guess so.

BLITZER: Carol, thanks very much.

Jack Cafferty also being seen in Brazil right now. He's very popular there as well -- Jack?

CAFFERTY: But my name's not on the ballot down there. How is the deepening financial crisis affecting you is the question.

Mark writes, "Our credit cards went over the limit last month. The credit card company raised our interest rates very high. We're trying to get a second card to close out that credit card but it's proving very difficult even though our credit is very good. This is terrible for us."

Samuel in Florida writes: "It's affecting me through my small business. Even with a good business idea and good personal credit, it's hard to get a bank to take a chance on a start-up. Something has got to change."

Martin in Georgia writes: "I'm very worried because I think the worst may still be ahead."

Audrey in Garland, Texas: "When George Bush took office, a certain stock I owned was selling $42 a share. Today that same stock, which I still own, closed at 33 cents a share. Need I say more."

Rob in Virginia: "It's not affecting me. I don't live beyond my means and I have a cash stash."

Charlie writes, "How has the financial crisis affected me? This old conservative Republican is going to vote for Barack Obama. That's how much it's affected me."

Stuart writes: "I'm cutting back on everything I don't absolutely have to have, like cable. So you tell me." Stuart, that sounds a little extreme to me. You should give up food. Keep your cable.

If you didn't see your e-mail here you can go to my blog, cnn.com/caffertyfile. Look for yours there among hundreds of others -- Wolf?

BLITZER: At least basic cable I would keep, definitely. That's what we are. We're basic.

CAFFERTY: Can't get any more basic than this.

BLITZER: Thank you. He's the Wall Street trader whose face is on the front page of newspapers across the country. Indeed, around the world. Now CNN's Jeanne Moos is on a most unusual quest to find the man in that photo. And graduation day in Iraq. That and a lot more of todays hot shots. Stay with us, you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Here's a look at some of the shots coming in from our friends over at the associated press. Pictures likely to be in your newspapers tomorrow. In Israel, a man reads the news of foreign minister Livni's victory for her party's leadership position. She's on track to become that country's second female prime minister.

In Yemen, soldiers on high alert in front of the U.S. embassy a day after an attack killed 17 people, including the attackers.

In Iraq, newly designated police celebrate their graduation from the police academy. In Spain, the director, Woody Allen, adjusts his headphones at a film festival while promoting his new film. Some of this hour's hot shots, pictures worth a thousand words.

And here's a picture that speaks a thousand words about Wall Street's woes. Jeanne Moos wants to speak to the man in the photo and here's her most unusual report.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Up 410 one day. Down 449 the day before. The open. The close. And in between, the headache. The headache felt round the world. We're calling it the uh-oh photo. If the market is all Greek to you, read his face. Imagine finding yours next to nightmare on Wall Street. Or how about street of screams with a plunging graph superimposed on your mug. It's enough to make you reach for --

Head on, applied directly to the forehead.

MOOS: We headed directly to Wall Street looking for the face in the uh-oh photo.

Do you know him?

Nope.

MOOS: Do you know who this guy is? I'm looking for this guy. Do you know this guy? Do you know this guy?

UNIDENTIFIED MALE: Yes, that looks like Roger Clemens.

MOOS: No, we're talking the Dow Jones average. Not a pitcher's earned run average. Though the resemblance is striking.

Stock exchange expert CNN's Susan Lisovicz asked around.

SUSAN LISOVICZ, CNN BUSINESS CORRESPONDENT So I said, who is this guy? Do I know him? And they said, Chris Crotty, they said, Yes, he's in the garage.

MOOS: Not that garage.

Chris Crotty calling Chris Crotty.

The garage is a trading floor off the main trading floor at the stock exchange. We finally located floor broker Chris Crotty, but he didn't feel like talking. Apparently he had enough ribbing from all his friends.

I was thinking he might just have an itch or something.

LISOVICZ: It could be an allergy.

MOOS: Reminding us of the time secretary of state Condoleezza Rice was under pressure at a Mideast summit. Several times she touched her face apparently to move her hair and, voila, still photos made it look like she was sweating bullets.

UNIDENTIFIED MALE: Let's see how it went.

MOOS: So beware, floor traders, no wiping, no touching your face or running your hands through your hair. If you blow out air, you could become the uh-oh photo. As for the uh-oh comedy sketch, the award goes to "Saturday Night Live" back when the tech bubble burst.

UNIDENTIFIED FEMALE: Does reliable have a mid cap fund?

UNIDENTIFIED MALE: It would offset the risk in your stocks, in your portfolio.

UNIDENTIFIED FEMALE: So I could buy the --

UNIDENTIFIED MALE: Reliable is one of the largest online brokerages.

UNIDENTIFIED FEMALE: I think I've learned something.

UNIDENTIFIED MALE: It's a great time to invest.

MOOS: Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

BLITZER: I remember that episode. That was funny. We want you to check out our CNN political podcast to get the best political team to go. You can subscribe at cnnpolitics.com or go to iTunes if you want to do that. That's a good idea.

I'm Wolf Blitzer in THE SITUATION ROOM. We'll see you back here tomorrow. Up next, "Lou Dobbs Tonight." Kitty Pilgrim sitting in for Lou. Kitty?