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The Situation Room

The Dow Dives; Stocks Plunge Worldwide; Obama Urges Help for Middle Class

Aired October 06, 2008 - 16:00   ET

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

WOLF BLITZER, CNN ANCHOR: Happening now, the Dow dives. Jittery investors even more fearful that the $700 billion Wall Street bailout plan won't fix the credit crisis fast enough. And the fear is spreading around the world.
What's happening in U.S. markets is causing stock shock waves in Europe and Asia. Now some people fear a worldwide recession.

And John McCain and Barack Obama, they talk about the economy as their campaigns engage in a round of guilt by association. Both sides tying the other man with shady, in some cases criminal, backgrounds.

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

And President Bush is effectively warning, brace yourselves. For Americans holding on amid the economic roller-coaster, the president says it's going to take a while for it to stop. He warns there will be no quick fix to this credit freeze.

The markets themselves show how volatile the situation has become. Today the Dow Jones industrials plunged at one point by as much as 800 points. And that set a record for a one-day point drop.

The Dow also fell below 10,000. That the first time since 2004. The markets did rebound to close around some 300 points lower. What's happening here is rippling across oceans, with markets in Europe and Asia hit very, very hard.

CNN has reporters following every angle of this huge story.

But let's go to our senior business correspondent, Ali Velshi. He's in New York watching what's going on.

ALI VELSHI, CNN SR. BUSINESS CORRESPONDENT: Did you look at that number?

BLITZER: Ali, it is a roller-coaster. The Dow Jones we see now down about 325 points for the day. That number is going to change over the next few minutes as last-minute trading is being tabulated.

But go ahead and explain in relatively simple terms what has happened. We thought this was supposed to be over with, with the Congress and the president signing into law that $700 billion bailout. That was the beginning of the end. Things were going to get better. At least it hasn't so far.

VELSHI: No. And that's kind of what has people confused, including on Wall Street.

The bottom line here, you and I talked about this after the bailout on Friday, Wolf. Maybe the fact the markets ended up down on Friday was insulation against them ending further lower because we really do have problems in the economy.

Now, the Dow is not a gauge of the economy. It reacts to the economy as people feel the companies are going to make more money. And what happens is they wake up Monday morning after seeing Asia and Europe, and they say this bailout is going to take time to unstick our credit markets.

And in the meantime, how are American companies going to make money and why should I invest in them? Because they have such a struggle ahead of them.

We've lost 750,000 jobs. We're heading into the holiday shopping season, and Americans are not really in a shopping mood right now. This isn't good for companies across America, and that's what you saw. You saw a question mark about whether companies can actually fare well over the next few months.

Now, Susan will tell you more about this, but we have heard talk from people on Wall Street to say, enough already. This was what you call an orderly sell-off. We were down 800 points. We had more than half that lost.

But some people are saying, why don't we get it out of our system? Why don't all the stock traders get it out of their systems, sell off, and then we can understand that maybe we're close to a bottom and start again?

Very, very confusing for the average investor out there to know what to do. But Wolf, if you weren't paying attention to this market all day, it has been all over the map. And that's the danger of getting caught up in trading in and out of stocks if you don't do this for a living -- Wolf.

BLITZER: It's down 353 points, at least right now, and that number is going to continue to change, at least for a few more moments.

Is there anything else the federal government can or should be doing right now to try to ease concerns not only in the United States but around the world?

VELSHI: Well, there's talk about an interest rate cut, in fact one that would be coordinated with central banks around the world, which would be an unprecedented move. There is a move that can be an international meeting of central banks. But fundamentally, they've got to get on the case.

We've still got to solve this job problem that we've got. We've got to sort of have confidence.

But, you know, with four weeks left to go to an election, Wolf, it's hard for the sitting president to say anything that is going to be entirely meaningful. And we're waiting for the candidates, the presidential candidates, to do something that would announce what their plan would be to get us out of this. So I think we're in a holding pattern for a few weeks -- Wolf.

BLITZER: All right. Stand by, Ali. We're going to get back to you.

The Dow isn't suffering alone. Take a look at the stocks around the world and how they're doing on this day.

Hong Kong's Hang Seng Index down almost 5 percent. Japan's Nikkei losing 4.25 percent. Germany's DAX off more than 7 percent, and the British FTSE plunging almost 8 percent.

CNN's Susan Lisovicz is over at the New York Stock Exchange looking at this. It's not just an American -- they used to say in the old days, when America sneezed, the rest of the world had pneumonia. Is that still a true adage?

SUSAN LISOVICZ, CNN BUSINESS CORRESPONDENT: It's a true adage, and unfortunately the patient is on life support, one would think, after what we're seeing in the credit markets. And that's really what's playing out, Wolf, is that this financial crisis is not just restricted to U.S. shores.

The same things are happening overseas. And today we saw a number of governments in Europe, for instance, whether it's the German government doing a multibillion-dollar bailout of a German financial company, or the French company BNP Paribas pumping billions into a troubled Belgian company, or just simply governments in Europe guaranteeing banking deposits so there won't be a run on the bank.

There's the same problem. They had the exposure to the same risky, incredibly complex securities, as well as the fact that the economy, the global economy is slowing.

Yes, the U.S. leading the way. And there's a total aversion to risk. Nobody wants to lend.

So it's coming back to bite everybody. And you saw it in a global sell-off. In fact, in Russia, trading had to be halted a number of times, as well as in Brazil. This was tame, comparatively speaking -- Wolf.

BLITZER: And if there's a worldwide recession, that's going to decrease the opportunities for American exports around the world, which could merely reinforce this notion of a deep and long recession here. Is that right?

LISOVICZ: That's actually been one of the bright spots, Wolf. And that's why there is such an emphasis on trying to get the housing market in much better shape.

If nobody is lending, nobody is buying. It's as simple as that. So that is why I think you've been seeing this coordinated effort from central banks around the world to try to pump liquidity, to try prop up these financial firms, and try to restore some sort of -- or try to get some sort of calm in the marketplace.

You know, your deposits are safe. It's OK. But I'm not sure investors are listening, because you saw a big stampede into U.S. treasuries yet again, and you saw gold go up big time, up 4 percent on the day.

But one other thing that we saw as the result of a slowing economy is oil. Oil dropping about 6.5 percent today, below $90 a barrel. That is a benefit, but is a result of a slowing economy, or the expectation of a slowing economy -- Wolf.

BLITZER: A slowing economy in the United States, and not only in the United States, but around the world. The Dow Jones industrials now down 365, almost 366 points.

We'll continue to monitor it over these next several moments. Susan, thank you.

If you're one of the millions of American who's has a 401(k), you must be asking yourself, so what's next? Here with some professional advice for us is our personal finance editor, Gerri Willis.

So people who are watching, they've got to be nervous out there. Give us some perspective, Gerri, on how worried these folks should be.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, I have to tell you, Wolf, you know, we've been through bear markets before. And that's what we're in right now. It started July 2nd.

And I know the impulse is to sell everything right now, but you saw what happened in the markets today. At one point we were down 800 points. We ended up down about 300 and change.

If you had sold your stocks in the middle of that day, you would have had a very big loss. Locking in those losses, it's absolutely a mistake. I know the stock markets are nerve-racking for people with 401(k)s. I feel it myself. That's not the thing to be focused on right now.

BLITZER: If people are seeing that number, it keeps going down and down and down almost every single day. And the inclination is, you know what? If we haven't reached rock bottom yet, if it's going to go down another year or two, if this recession takes place, there's a temptation, you know what? It may -- or that mutual fund may be worth $30 a share right now, but that's a lot better than it would be if it was $20 or $10 a share.

WILLIS: I understand that, but if you're in the game for the long haul, if you have five, 10, 15 years to retirement, maybe even more, you want to ride that roller-coaster.

Look, that's what stocks are all about. They go up and they go down. But to feel the impact, the real impact that you want to feel in your retirement account, you've got to wait it out. Of course, I think people today should be focused on what caused this problem in the first place. That's too much debt. You've got to pay down your high interest rate debt.

The only place to go, Wolf, right now for a 13, 14, 15 percent return, it's paying down credit card debt. That's absolutely what you want to be thinking about next -- Wolf.

BLITZER: So to try to eliminate as much of your debt as possible. If you can pay off that credit card debt or pay off your mortgage, for that matter, is that a good idea?

WILLIS: There you go. Absolutely. You want to get rid of any debt that you can.

Remember, the big threat to you probably in this economy right now is that you might lose your job. And that's a very big thing. You want to pay off your debt, have some emergency funds available so that if you have to pay your rent, your mortgage out of pocket, you have the savings to do it.

BLITZER: Gerri, thanks very much. Right now, it's 369 points, almost 370 points down. Jack Cafferty is off today.

Up ahead, it caused the largest bankruptcy in U.S. history. Now the man who led Lehman Brothers takes a grilling from Congress.

(BEGIN VIDEO CLIP)

REP. HENRY WAXMAN (D-CA), CHAIRMAN, COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM: Your company is now bankrupt. Our economy is in a state of crisis. But you get to keep $480 million.

I have a very basic question for you. Is this fair?

(END VIDEO CLIP)

BLITZER: The financial crisis has Americans more worried than they were during Watergate. Even after 9/11. So which candidate do voters think will best ease their fears?

We have a brand-new CNN poll that's coming up. Stand by for that.

And Barack Obama and John McCain, they talk about the economy as well on this day. But their campaigns also trying to tie the other to men with rather shady backgrounds.

Stay with us. Lots of news happening right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: It was down as much as 800 points at one point earlier today, but right now the Dow Jones industrials down 369 points. There you see it right there. We're continuing to monitor this roller- coaster of a day on Wall Street.

With the Wall Street bailout plan now the law of the land, the presidential candidates are talking about what's next for failing businesses and for struggling families. Barack Obama is pushing for more urgent acts to help, but he's also having to fend off a new round of political attacks.

CNN's Suzanne Malveaux is here. She's working this story for us.

First of all, he outlined some new economic steps he's interested in seeing get off the ground right away.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: And you know, it's really important, Wolf, because a lot of people are asking and they don't even know whether or not to believe this bailout plan is going to work. Obviously, Barack Obama has something at stake with this. He pushed it through Congress. So voters want to know whether or not he really has faith in this plan or whether or not he has some better ideas.

(BEGIN VIDEOTAPE)

MALVEAUX (voice-over): As world markets plunged and hearings began surrounding the U.S. financial meltdown, Democratic candidate Barack Obama is hedging his bets, acknowledging the $700 billion bailout plan he pushed is far from a sure fix.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: It is a reminder that the rescue package that was passed last week is not the end of our efforts to deal with the economy. It's just the beginning.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: It's going to take awhile.

MALVEAUX: President Bush's call for patience was answered with a call for urgency.

OBAMA: It is very important for Secretary Paulson and Federal Reserve Bank Chairman Bernanke to move swiftly and try to restore confidence as quickly as possible.

MALVEAUX: If Obama becomes president, he will inherit the economic mess, so he is pushing for $50 billion in additional help.

OBAMA: ... on an economic stimulus package that can provide people some relief from high gas prices, food prices.

MALVEAUX: He is also calling to extend unemployment insurance and give tax breaks to 95 percent of working families.

But while Obama is chatting up his economic policy, his campaign and John McCain's are engaged in a character tit-for-tat. The McCain folks are blasting Obama for his association with '60s radical William Ayers, while the Obama folks are hitting McCain for his link to convicted financier Charles Keating.

Obama defended his campaign on "The Tom Joyner Morning Show" with CNN's Roland Martin.

OBAMA: We don't throw the first punch, but we'll throw the last.

(END VIDEOTAPE)

MALVEAUX: And despite the fact that Obama's campaign released a 13-minute video clip around the Keating controversy, Obama portrayed himself as above the fray today, saying that the American people aren't looking for what he calls the usual shenanigans or smear tactics that have come to characterize the campaigns. And the polls actually show that that is true.

They want to hear about the economy, who can best fix it, those other substantive issues. Obviously, Wolf, they're going to get their chance tomorrow when these two candidates face off in their second presidential debate.

BLITZER: It could be lively, that town hall format tomorrow night in Nashville. All right, Suzanne. Thanks very much.

One Democratic strategist says what McCain is doing is the political equivalent of the nuclear option, trying to cast Obama as a risky, even dangerous, politician. Just a short while ago, McCain accused Obama of trying to duck and dodge serious questions.

CNN's Dana Bash is working this part of the story. Dana, it was pretty harsh commentary from Senator McCain today.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: It sure was, Wolf. All you had to do to know what John McCain and his campaign want to cast the next month as, you had to just listen to the blistering speech he gave. And it was designed to sow doubts about Barack Obama, warn voters they don't really know Obama, and that they should worry because, as you said, that's the word that he is hearing, he is "risky."

Now, listen to the scathing rhetorical questions he posed to his New Mexico audience.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: What has this man ever actually accomplished in government? What does he plan for America? In short, who is -- who is the real Barack Obama?

But my friends, you ask such questions, and all you get in response is another angry barrage of insults.

(END VIDEO CLIP)

BASH: Now, McCain kicked off a series of issues from regulation of Fannie Mae and Freddie Mac, to health care, to earmarks, where he says Obama is misleading voters on McCain's record while refusing to talk much about his own position and his own record. Now, it's a tactic, McCain aides say, that we will see and hear a lot more from McCain. But I talked to several supporters, Wolf, of McCain today who actually say that they worry a little bit that McCain needs to try harder in this final month to craft a more clear economic message so voters know what he's going to do, because that obviously is the topic that everybody cares about, as you just illustrated at the top of the show.

BLITZER: That's what everybody is concerned about, the economy right now. The vice presidential nominee, Sarah Palin, she's weighing in though. Clearly, Saturday and yesterday and today.

In an interview with the conservative "New York Times" columnist Bill Kristol, Governor Palin said this -- and I'm going to put the quote up on the screen. She said this about the Reverend Jeremiah Wright, Obama's former pastor: "I don't know why that association isn't discussed more, because those were appalling things that the pastor had said about our great country."

And then she goes on to say, "To me, that does say something about character. But you know, I guess that would be a John McCain call on whether he wants to bring that up."

Earlier, Dana, as you know, Senator McCain, he criticized Republicans, other Republicans, for raising the whole Reverend Wright issue. Where does the campaign stand now? Because it was clearly a different tone coming from the vice presidential nominee.

BASH: Well, you're right. And just to, you know, sort of sum it all up, what we heard from McCain is he's going after Barack Obama on what you don't know with regard to some issues. What Palin is trying to do is another part of that same strategy, which is go after Barack Obama with some of his associations, with regard to a Jeremiah Wright.

What McCain and Palin aides say is what you just said, that, you know, she was asked a question about it, but it's really up to John McCain whether or not to inject Reverend Wright into this campaign. And you said it, you'll remember, it was back in April, McCain drew a line in the sand calling Wright out of bounds. And that was when he was promising to run an above-the-fray campaign against whatever Democratic opponent he has.

But, you know, several of McCain's top advisors, Wolf, have told us privately for some time, they do think that Jeremiah Wright should be fair game. Though aides say she was speaking for herself, the reality is, by Palin talking about Wright to a conservative columnist, by definition she was raising the issue, and perhaps even sending a signal to third parties McCain had once sworn against talking about, right? But maybe now it's OK.

BLITZER: All right. We'll watch this, see how far they go on this front as well. Dana, thanks very much.

Some dramatic new poll numbers we've just received here in THE SITUATION ROOM. We have brand-new poll numbers, information you probably want to know about, what they mean for John McCain and for Barack Obama. Pretty dramatic numbers, as I just suggested. Also, despite strong reviews for her debate performance last week, fewer people now think Sarah Palin is prepared to step into the presidency if need be. The qualification gap, that's coming up in our "Strategy Session."

And we're following the breaking news, a new week and a new stomach-churning day on Wall Street. The financial crisis deepens not only in the U.S., but around the world, as the chief of the failed investment house takes the congressional hot seat.

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

(NEWSBREAK)

(COMMERCIAL BREAK)

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

Happening now, another Monday, another gut-wrenching ride on Wall Street. And the U.S. markets are by no means alone. The economic meltdown going global.

Raised in prosperity and on the brink of entering the job market, worried young adults fear for their futures. How might that translate into this year's election?

And the first Monday in October in a political year. We're taking a closer look at what's in store this term for the U.S. Supreme Court.

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

But this just coming in to THE SITUATION ROOM right now, brand- new polls of the election and the economy. Our senior political analyst, Bill Schneider, is in Nashville, where the debate will take place tomorrow night. Now that the bailout has passed, are voters becoming more optimistic about the future?

Let's talk a little bit about these brand-new poll numbers, Bill. What are we learning?

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Well, they haven't become more optimistic. They have gone from bleak to bleaker.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): The bailout package didn't help. Public anxiety continues to mount. The D-word is back. Nearly six in 10 Americans believe the country is headed for another depression. And, for the first time, Barack Obama has a significant lead over John McCain in the presidential race, eight points.

The two sentiments are closely connected. The more likely you think a depression is, the more you vote for Obama. McCain is offering his prescription. MCCAIN: A vote for me will guarantee immediate pro-growth action, tax cuts for America's hardworking families, strong support for small businesses, which are the backbone of our economy.

(APPLAUSE)

SCHNEIDER: But more and more voters believe McCain's policies would be the same as President Bush's. And President Bush's job rating, 24 percent, is the same as Richard Nixon's was when he resigned after Watergate.

Only 26 percent of Americans have confidence in Bush's ability to handle the nation's financial crisis. Confidence in McCain, 50 percent. More than two-thirds have confidence in Obama's ability to handle the crisis.

OBAMA: The rescue package we just passed in Congress isn't the end of what we need to do to fix our economy. It's just the beginning of what we need to do to fix our economy.

(APPLAUSE)

SCHNEIDER: Why do voters have so much confidence in Obama's economic skills? Partly because he has a lot of Clinton people around him.

OBAMA: We need to do what a guy named Bill Clinton did in the 1990s, and put people first again.

(APPLAUSE)

(END VIDEOTAPE)

SCHNEIDER: The bad economy is driving a growing consensus that Obama is going to win. Right now, 61 percent of Americans believe Obama will be elected. Now, that is greater than the number of people who are planning to vote for him, because more than -- because 30 percent of Republicans believe their guy is going to lose -- Wolf.

BLITZER: Bill Schneider in Nashville getting ready for the debate, the second presidential debate tomorrow night.

Meanwhile, we have more new poll numbers on your reaction to that $700 billion bailout bill. According to our brand-new CNN/Opinion Research Corporation poll, 46 percent of you favor it, while 53 percent of you oppose it.

And those participating in the survey were also asked if they favored more assistance, beyond the $700 billion bill. Just 22 percent said yes, while a majority of Americans, big majority, 76 percent, said no.

In recent weeks, investment banks have tumbled like dominoes. Today, the chief of one of them took the hot seat.

Let's go to Brian Todd. He's working this story for us. Brian, I guess it was pretty rough going for that CEO when he went before this congressional committee today.

BRIAN TODD, CNN CORRESPONDENT: It got rough, Wolf. Some think it was not as rough as he could have gotten and maybe should have gotten. But get ready. We're now starting to see faces attached to the names of these fallen financial giants. Several will be dragged before Congress in the next few weeks, today, the man whose investment bank never got a lifeline. Its failure, in the minds of many, triggered this meltdown.

(BEGIN VIDEOTAPE)

TODD (voice-over): He's the first Wall Street titan to be publicly skewered in Congress over the financial crisis. Richard Fuld presided over the collapse of Lehman Brothers, the only major investment house not to have been bought out or bailed out. One of the first tense exchanges, over the claim that Fuld was paid nearly $500 during his 14 years as CEO, even while his bank dove into the shaky real estate market and started to lose everything.

WAXMAN: Is that fair, for the CEO of a company that's now bankrupt to have made that kind of money? It's just unimaginable to so many people.

RICHARD FULD, CEO, LEHMAN BROTHERS: I believe my cash compensation was close to $60 million, which you have indicated here. And I believe the amount that I took out of the company over and above that was, I believe, a little bit less than $250 million, still a large number, though.

TODD: Fuld defended the practice of giving huge bonuses and other payments to top executives, even as Lehman was hemorrhaging, saying at the of his company were employees doing business every day with clients. But he also had to defend a conference call in Lehman's final days before bankruptcy, where, according to the committee, investors were told the company didn't need new capital.

REP. DENNIS KUCINICH (D), OHIO: Did you mislead your investors? And I remind you, sir, you're under oath.

FULD: No, sir, we did not mislead our investors. And, to the best of my ability at the time, given the information that I had, we made disclosures that we fully believed were accurate.

TODD: Is Fuld being made a scapegoat for a market gone wild? One former Lehman exec who left 14 years ago, but who knows Fuld and the culture at Lehman, believes he is.

BRUCE FOERSTER, FORMER LEHMAN BROTHERS EXECUTIVE: I thought he was bringing Lehman Brothers back together to a customer-first culture, which was sadly missing at the firm when I was there.

(END VIDEOTAPE)

TODD: Still, Bruce Foerster believes decisions made at Lehman and several other firms over the past five to 10 years led to the financial industry's meltdown. He says the real estate market, with so many properties whose values had been wildly distorted, basically killed that firm. Richard Fuld said today he will be feeling the pain of Lehman's collapse for the rest of his life -- Wolf.

BLITZER: Did he say, Brian, what he would do differently?

TODD: He was asked that question very pointedly. He said, regarding the mortgage and commercial real estate markets, knowing what he knows now, he likely would have shut down his firm's involvement in those things. Imagine what the market would have been like if they had done that and maybe a few other firms had done that.

BLITZER: What a -- what a history. All right, thanks, Brian. Thanks very much.

President Bush sends out a two-part message to Americans worried about this financial crisis. It includes one part reality, another part reassurance. How might you feel after you hear what he's saying?

Barack Obama trying to tie John McCain to President Bush, but are Americans really buying that strategy?

And Sarah Palin is living up to what's considered to be a traditional running mate's role, prime political attacker.

We're dissecting all of that right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: As you know, we have been following the breaking news on Wall Street. The Dow Jones industrials at one point was down almost some 800 points earlier in the day, but it closes just under 370 points down. That's a significant drop, but clearly not as bad as it could have been.

President Bush is trying to strike a relatively optimistic note about the country's financial crisis. His message: Don't rush. Everything will be just fine in the long run.

Joining us now from the White House, our correspondent Elaine Quijano.

What are we hearing from the president and his top advisers about this crisis on this day, Elaine?

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Well, you know, it's interesting, Wolf.

After the rush last week to pass and sign financial rescue legislation into law, President Bush today was urging patience.

(BEGIN VIDEOTAPE)

QUIJANO (voice-over): On a day when world markets faltered, President Bush tried to balance reassurance and reality, choosing to focus on the massive government bailout bill he signed into law last week. BUSH: It's going to take awhile to restore confidence in the financial system. But one thing people can be certain of is that the bill I signed is a big step toward solving this problem.

QUIJANO: Making no mention of market turmoil, the president met with small-business owners in San Antonio, Texas.

BUSH: Had we not done anything, people like the folks behind me would be a lot worse off.

QUIJANO: He ignored a reporter's question about whether the U.S.' credit crisis has infected markets around the world.

QUESTION: Mr. President, how concerned are you about the global market?

QUIJANO: The financial crisis has dragged the president's approval rating to a record low, just 24 percent in the latest CNN/Opinion Research Corporation poll. Still, the president is trying to sound encouraging, but knows time is not on his side.

BUSH: And it looks like I'm going to have a lot of work to do between today and when -- when the new president takes office.

(END VIDEOTAPE)

QUIJANO: Now, later at a speech in Cincinnati, President Bush said he believes, in the long run, the economy will be, in his words, just fine.

As for the plummeting world markets, aides to the president say that U.S. officials from a number of U.S. agencies, including the Treasury Department, are working with their counterparts overseas in order to address the crisis -- Wolf.

BLITZER: And it is a crisis, indeed. Elaine's at the White House.

By the way, the Dow Jones industrials went down below 10000 today, the first time since 2004 the number has gone below 10000.

Let's go to Wall Street. Richard Roth is gauging the mood of what's going on over there.

Richard, I take it folks must be pretty depressed.

RICHARD ROTH, CNN SR. U.N. CORRESPONDENT: Tired and frustrated, traders left the exchange, Wolf, pouring out here into the streets on Wall Street.

But they have seen this before. And so have the media crews that descend on them for analysis, instant analysis. A week ago, remember, it was that 777 record point drop in the Dow. Today, it rallied towards the end. Traders were hoping that there was (AUDIO GAP) capitulation. But they don't what to do. They have seen bad numbers in Asia, in Europe. They knew it would be bad. And it was. As for people in the streets, a few people come up to me (AUDIO GAP)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: (AUDIO GAP) have to go home and make a call or check my 401(k) to make sure that I can really put my daughter through college in the coming months. She's getting ready to graduate from high school. I'm using that money to save for her to graduate, to go to college. And the way everything is dropping now, the economy, it looks like a second job is needed now.

(END VIDEO CLIP)

ROTH: (AUDIO GAP) pros would have liked to have seen a really big drop, because it would indicate maybe...

BLITZER: All right, unfortunately, we're losing his shot from Wall Street, Richard Roth. We will try to get back with him.

But it's been a roller coaster few days. Remember, last Monday, a week ago, 777-point drop, and then it went up a little bit. Then it went down. I think the market went down about 800 points last week, another 369 today, more than 1,000-point drop since that awful Monday of a week ago.

Coming up in our "Strategy Session": Sarah Palin's taking the gloves off.

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL CANDIDATE: I'm afraid this is someone who sees America as imperfect enough to work with a former domestic terrorist who had targeted his own country.

(BOOING)

(END VIDEO CLIP)

BLITZER: But with more Americans thinking Joe Biden's more qualified to be president, is she the right person to be delivering this message?

And Donald Trump, as Wall Street dips and dips, what's the world's most famous businessman have in store for his finances? He's going to be joining us live right here in THE SITUATION ROOM. My interview with Donald Trump, that's coming up.

(COMMERCIAL BREAK)

BLITZER: As the time is getting shorter and the stakes are getting higher in the race to the White House, there's a growing perception as just -- as perhaps another President Bush, that according to our latest poll numbers.

Joining us now in "Strategy Session," Democratic strategist and CNN contributor Donna Brazile. She's in Cleveland. And commentator Terry Jeffrey, editor in chief of the Cybercast News Service, he's here in Washington.

Terry, I will start with you.

We asked a question in our CNN/Opinion Research Corporation poll. Would McCain's policies be the same as Bush's? Back in early September, it was 50 percent said yes. Then, in mid-September, it went up to 53 percent. Now 56 percent of those who responded in this poll believe that McCain would just be more Bush. That's got to be really disturbing to the McCain camp.

TERRY JEFFREY, EDITOR IN CHIEF, CYBERCAST NEWS SERVICE: Well, it is.

I think it may have been a mistake for John McCain to come back and embrace the plan of George Bush and, by the way, the Democratic congressional leadership on that bailout, Wolf.

But I would step back from it a little further and I would say, if you want to see the switch in the trajectory of John McCain's campaign, you look from August, when he ran to the right, as a conservative, starting with the Saddleback Church forum, going through the pick of Palin, a very feisty convention, all through that period, he was going up.

When he started to go back towards the center and accommodate the liberal media, including with this bailout bill, he went down. So, if he wants to get his campaign on track, he has to start running from the right again, because that cultural right is going to appeal to both the Republican base and the swing vote in this election.

BLITZER: The argument though -- and Glenn Beck made it on this show the other day, Donna -- is that, if McCain had opposed the bailout and cited the extra stuff that was in there, the so-called earmarks, he might have had a better shot of being elected president, than by going along with Barack Obama and George Bush and everyone else, apparently, at least most of the leadership in Congress, in supporting it. Do you buy that?

DONNA BRAZILE, CNN POLITICAL ANALYST: No.

I think John McCain has had a hard time being consistent throughout this entire campaign. And, look, Wolf, the American people want change. They don't want four more years of the same. George Bush has been running this economy. John McCain has been right there, supporting George Bush every step along the way. He -- once upon a time, he said no to the Bush tax cuts. Now he's embraced had.

I think what's happened to John McCain is that his campaign has run out of -- run out of things to talk about. So, what they have preferred to do is just smear their opponent, Senator Obama, than come up with a plan to help the American people get back on their feet.

BLITZER: Terry, this other -- I will put a couple other numbers up there on the screen from this brand-new CNN poll. Is Joe Biden qualified to serve as president? Seventy-nine percent say yes. Nineteen percent say no. In early September, 70 percent said yes. Twenty-eight percent said no.

Is Sarah Palin qualified to serve as president? Forty-three percent say yes. Fifty-six percent said no. Fifty percent in early September thought she was qualified. So, that number has gone down over the past month. Why has it gone down?

JEFFREY: Well, I think, since Sarah Palin has been nominated, she's taken quite a beating from the liberal press.

But, look, I think this -- this polling number means very little for this reason. So, Joe Biden gets a great number here. He gets 79 percent. But he almost got no votes in the Democratic primary. And there's a lot fewer people that want Barack Obama to be president of the United States than 79 percent.

I think Sarah Palin truly has convinced people she's capable. I don't think that's the problem with the McCain campaign. I think if they Sarah Palin out there more, quite frankly, I think, if she was at the top of the ticket, they would be doing better.

(CROSSTALK)

BLITZER: Wait a minute. You think Sarah Palin would be doing better than John McCain?

JEFFREY: Yes, absolutely. I think John McCain's problem is philosophical, an inability to connect with the core Middle American voter that Sarah Palin, in fact, personifies.

BLITZER: All right, Donna, would she be a more formidable challenger to Barack Obama?

BRAZILE: Well, first of all, Terry, no one in the liberal media or no one out there in the liberal press has put words in Sarah Palin's mouth. And it's what -- what comes out of Sarah Palin's mouth that has caused her poll numbers to drop.

The American people have had an opportunity to vet Sarah Palin. They looked at her last week. They have heard her convention speech.

(CROSSTALK)

BRAZILE: And this is not a race to who can get the far right out. This is a race to who can get to center, who can undecided swing voters.

JEFFREY: Wolf...

BRAZILE: It's too late in the campaign, Terry, to start rallying your base. At this point, if you're not going after independents, you have lost it. And, clearly, the McCain campaign has lost it.

JEFFREY: Wolf, I believe the highest moment, actually, the apogee so far in the McCain campaign, was Sarah Palin's speech at the Republican Convention.

It was a great moment, not only because of the arguments she made against Barack Obama, but the arguments she made against the liberal press. I think there's a lot of people in this country who believe the media wants Obama to be elected president. And part of doing that is tearing down Sarah Palin. I think she ought to come right back at them, keep by her guns. I think she's the best asset the McCain campaign has.

BRAZILE: Well, Terry, let her have a press conference. Why doesn't she face the press? For conservative press, I'm sure the conservatives want to know her background. The conservatives are suffering like liberals today. When you see the economy tank, when you see the stock market plunge, that's not a conservative...

(CROSSTALK)

BRAZILE: That's a liberal one, too.

JEFFREY: I'll tell you what.

(CROSSTALK)

BLITZER: Hold on, guys. Hold on, guys.

JEFFREY: So, this is beyond the conservative and liberal argument.

BLITZER: I want you both of you to stand by. I want both of you to stand by, because Bruce Springsteen is singing right now at a Barack Obama rally in Michigan. And I can't help but want to listen a little bit.

Listen to The Boss.

(MUSIC)

BLITZER: There he is, Bruce Springsteen. He's at a rally out there in Michigan, a state that John McCain has now conceded, Terry.

I think a lot of Republicans are scratching their heads and wondering, why did he publicly say, you know what, I'm giving up on Michigan, which was supposed to be one of those blue-collar, middle- class battleground states where he thought he could make some inroads?

JEFFREY: Well, John McCain should not give up Michigan, and he shouldn't give up on any of those swing states in the Northern Midwest. But if he's going to have appeal there, Wolf, he's got to go out and he's got to fight as a conservative.

By the way, he's got to make an issue out of things like abortion and marriage. The other night in that debate, when Joe Biden said he -- he was against same-sex marriage, and Sarah Palin said she agreed with him, that was a horrible wasted opportunity.

The fact of the matter is that Barack Obama opposes Proposition 8, the California ballot amendment that would get rid of same-sex marriage in that state. He's for repeal of the Defense of Marriage Act.

BLITZER: All right.

JEFFREY: If you had same-sex marriage in California, and you repeal the Defense of Marriage Act, like Barack Obama does...

BLITZER: Donna...

(CROSSTALK)

JEFFREY: ... you have a national mandate for same-sex marriage. We ought to debate that in this campaign. Barack Obama ought to be asked questions like that. Joe Biden ought to be asked how he reconciles what he said the other night in the debate.

BLITZER: All right. Let me let Donna weigh in.

(CROSSTALK)

JEFFREY: ... where does the candidate actually stand?

BRAZILE: Terry -- Terry, the American people want to know about jobs, homes, foreclosures, health care, education, no offense to, you know, your views on same-sex marriage or abortions, but this is a really big economic crisis.

BLITZER: All right.

(CROSSTALK)

BLITZER: Hold on, Terry.

(CROSSTALK)

BRAZILE: John McCain left Michigan because he doesn't want to talk about the economy.

His campaign wants to change the subject. The American people will not change the subject, nor will they change their TV dial, because they're going to watch the CNN debate tomorrow night, Terry.

(CROSSTALK)

BLITZER: And -- and only -- and we make sure we get to hear Bruce Springsteen as well. That's a nice little added bonus.

(CROSSTALK)

BLITZER: All right, whatever your politics, he's still Bruce Springsteen.

All right, guys, thanks very much.

She -- she's been the butt of ongoing jokes, especially on late- night television. Today, Republican running mate Sarah Palin turned the table on "Saturday Night Live." We are going to show you what she did.

And the White House's new man to oversee the $700 billion bailout, where he comes from may surprise you.

And young, educated and worried -- we're looking at the financial meltdown, how it's playing out on college campuses right now.

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

(COMMERCIAL BREAK)

BLITZER: On our "Political Ticker": Vice presidential hopeful Sarah Palin is poking some fun at those -- at some of those who have been poking fun at her debate performance and recent interviews.

Listen to what she told a crowd at a campaign event in Florida today.

(BEGIN VIDEO CLIP)

PALIN: You know what? In response to critics, after that interview, what I should have told them was, I was just trying to keep Tina Fey in business, just giving her more information.

(APPLAUSE)

(END VIDEO CLIP)

BLITZER: And to our viewer, you're in THE SITUATION ROOM.