Return to Transcripts main page


Wall Street Meltdown Continues; Dead Heat in Battlegrounds

Aired September 17, 2008 - 22:00   ET


ANDERSON COOPER, CNN ANCHOR: Tonight, breaking news: Wall Street worsening the campaign tightening, new polling to tell you about. We will have more on that shortly.
First, though, the breaking news: Wall Street, the economy, your money, hang on. It is going to be a bumpy night. Stocks again taking a beating. The Dow plunging another 450 points, on top of 500 on Monday. Investors losing an estimated $700 billion today -- $700 billion today. Asian markets open now also getting hit. The massive federal bailout of AIG not stemming the worry. And new developments tonight could trigger another tidal wave tomorrow.

Ali Velshi, working the story, joins us now with the latest.

Ali, bottom line, what happened today? What is going to happen tomorrow?

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Well, we were talking about this 24 hours ago, Anderson. We thought that this government bailout, this loan of $85 billion to AIG, was meant to calm markets, to say, the U.S. government stepped in before this massive company were to fail. It did not have that effect.


COOPER: It seemed to worry the markets.

VELSHI: It seems to worry markets.

We ended up losing 449 points on the Dow. That's the second biggest loss of the year. That's more than 4 percent, these are big, big numbers. And now, as you said, Asian markets all down more than 3 percent, some of them catching up to the losses that we have had today.

The bottom line is, investors are concerned that this isn't over. We understand that Morgan Stanley is in talks with Wachovia, possibly to ready themselves for a buyout, where Wachovia might take over Morgan Stanley.


VELSHI: We also know that Washington Mutual, one of the biggest banks in the country, may be preparing itself to be taken over, if that had to come to pass. Now, what they're learning is, that deal last night was expensive for AIG. If you have to go to the government for a bailout, it is going to be very costly for your company. So, people are trying to figure out how they manage through this -- how they muddle through the next several months as a financial institution, where you don't have money. And that's what we are seeing on the stock market.

COOPER: So, for people who don't follow this as closely as you do, I mean, this is incredibly scary.

VELSHI: It's very scary.

COOPER: I'm wondering it.


COOPER: Everyone is wondering it. What do you do with your stocks? What do you do with your 401(k)? What does all this mean to someone sitting at home?

VELSHI: We are hoping we are in the final innings of this, that we are closer to the bottom than the top in the financial sector.

COOPER: You think this may be closer to the bottom than to the top?

VELSHI: I think we are seeing a complete washout. There is no benefit now for any financial company in the world not to come clean and say, this is how bad things are, because, if you don't come clean, the market will find it for you.

I think what we're going to see now is, everybody saying, this is what we need to get through the next year. If we don't have this kind of money, we have got to raise it immediately. There is money in the world, Anderson, to bail these people out. The money is in China, and Russia and the Middle East. And you might see those companies start to step in.

The indications are, in fact, that U.S. markets may open positively tomorrow morning. That's what the futures are saying. But we are still almost 12 hours away from that.

COOPER: All right, Ali Velshi, thanks. We will be watching closely.

We're going to talk a lot later in the show about the economy. Ali will be back.

It is pretty much all the candidates are talking about today on the campaign trail, each candidate running new ads, McCain promising reform, Obama directing viewers to his Web site, where he offers specifics.

The battle in swing states is as close as we have seen. New polling just out late today shows just how tight the race really is. And we will have that in a moment, but, first, a quick sampling of what each candidate had to say today.


SEN. BARACK OBAMA (D-IL), PRESIDENTIAL NOMINEE: Stakes in this election could not be higher. They could not be clearer.


OBAMA: You know, we are in the midst of the most serious financial crisis in generations.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: I'm here in Grand Rapids to send a message to Washington and Wall Street. We're not going to leave the workers of Michigan hung out to dry, while the government gives billions in taxpayers' dollars to Wall Street.


MCCAIN: We're not going to stand for that. We're not going to stand for it any longer.



COOPER: Let's get to the numbers that matter. They appear to be shifting yet again, poll numbers, John McCain's convention bump receding, just as Obama's did.

A new CBS/"New York Times" poll just out tonight now gives Obama nationwide a five-point lead, 48 to 43. That's a seven-point gain from just last week, when he was down 44-46. He's also pulling ahead in our poll of polls, which is a survey of a number of polls, leading by a razor-thin one-point margin, also a gain in the last several days.

Now, Sarah Palin seems to be losing some of her initial appeal. CBS poll showing her favorable numbers eroding. It's now 40 percent favorable, 30 percent unfavorable. Compare that to 44/22 when she was offered the job. In both cases, though, about one in three surveyed simply are not sure what to think of her.

The polling also shows a small Obama lead among white women. Now, that is significant. That is up from a 19-point deficit in the last poll.

We have reports tonight on both candidates, first, Senator Obama, a feistier Senator Obama on the trail.

Here is Candy Crowley.


CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT (voice-over): Colorado to Nevada and next New Mexico, Barack Obama is shuttling through his wish-list states, riding a wave of bad economic news to define the November stakes.

OBAMA: We can't steer ourselves out of this crisis by taking the same disastrous road. And that is what this election is about.

CROWLEY: Obama's strategists are going at this with precision. He uses the teleprompter now, offering a more focused view of his economic agenda, with little chance for error. And he delivers sound- bite-friendly body slams to bruise McCain's maverick image.

OBAMA: This is somebody who has been in Congress for 26 years...


OBAMA: ... who put seven of the most powerful Washington lobbyists in charge of his campaign. And now he tells us that he is the one who is going to take on the old boys' network...


OBAMA: The old boys' network, in the McCain campaign, that's called a staff meeting.



CROWLEY: There was no mention of McCain in a new two-minute ad, just Obama in a living room setting talking mainstream problems and solutions, calling for an end to petty attacks.


OBAMA: I'm Barack Obama. I hope you will read my economic plan. I approve this message, because bitter partisan fights and outworn ideas of the left and the right won't solve the problems we face today.


CROWLEY: Still hearing concern from high-level Democrats and donors that he's only running even in a political environment toxic to Republicans, Obama is calling in reinforcements. With poll numbers showing a small post-Palin increase in white women voters for McCain, Hillary Clinton and Joe Biden posted a video conversation, highlighting what they say Obama will do for women.

SEN. HILLARY RODHAM CLINTON (D), NEW YORK: Women are often bearing the brunt of the economic changes.

CROWLEY: This is Obama's shot at controlling the campaign conversation. And strategists say, he will not let up. It may be several days before there is any tangible proof he has found his footing, but, inside the campaign, they say he has. "It's been a great political week for us," an Obama strategist insisted. "We won every day, no question."


COOPER: It is certainly different than it was last week. But what do the Obama campaign people you talk to say to those Democrats who are worried that he is not further ahead at this point?

CROWLEY: You know, the one word, chill. They may not put it quite that way, but Obama has told people, just relax, that they always thought this was going to be a close race, that they are not looking at those national polls, because they don't believe they are reflective of where the electoral vote is going to count, those battleground states.

Now, as you know, we have had several -- we have several battleground state polls out today. And it is neck-and-neck. So -- but -- but they contend they feel very good, that they see a path toward 270 electoral votes, and they think their path is a lot easier, particularly if they can pick up Western states, like this one, in Nevada, or where he's been earlier, in Colorado, or where's going now, to New Mexico, tomorrow.

So, the fact is that they truly believe that this is about those battleground states, and not about those overall state polls. They want people to kind of relax. And now that they have the economy out there and in the headlines, they are feeling pretty good.

COOPER: You say they are talking about the economy now, more than ever. How much in a given Obama speech now is focused on the economy?

CROWLEY: A hundred percent. A hundred percent.

COOPER: No kidding, 100 percent?

CROWLEY: But it's -- you know, yes, absolutely. I mean, today, he did top it off with the -- the bombing in Yemen, and did say it is proof that it is a dangerous world, and extend his condolences to the innocents that died in that bombing.

But, boy, he moved, he pivoted right...

COOPER: Right.

CROWLEY: He said, today, I want to talk about the economy.

Now, it also includes things like what he would do for education, that sort of thing. But it all fits under the broad umbrella of the economy about 100 percent.

COOPER: OK. Candy, appreciate that. Thanks very much.

We are also going to talk about that bombing in Yemen on the program. We're going to have Peter Bergen discussing that.

And we're going to show you those battleground state polls. As Candy said, they are mighty tight.

Now the McCain ticket, he and Sarah Palin back on the road together. For the first, she took questions at a campaign event in swing state Michigan.

CNN's Dana Bash is on the trail.


DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): He was wrapping up his answer to the first voter question about confronting radical Islamic terrorism, and she jumped in.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: But I know a great deal about it. I know how to handle it, and I know how to defeat it, but it's not going to be a short struggle.


MCCAIN: Thank you.

PALIN: I want to add something to that.

MCCAIN: Always.


PALIN: Sometimes, my running mate is a bit too humble. We need to remember who it was who pushed for and supported and risked much for the strategy that is working in Iraq. And that is...

BASH: Sarah Palin playing character witness for John McCain. But her first town hall meeting was as much about beefing up her chops as his. And McCain carefully deferred to Palin on issues he wants her to take on, like energy.

PALIN: We have hundreds of trillions of cubic feet of clean, green natural gas onshore and offshore. It is a matter of Congress allowing these lands to be tapped.

BASH: And this from a former Hillary Clinton supporter.

UNIDENTIFIED FEMALE: Anyway, my question is, equality for women begins with economic empowerment.


UNIDENTIFIED FEMALE: Can you give us some details and some examples of your strategies and plan for economic power -- empowerment for women?

PALIN: Well, first, let me take a shot at that. And I will tell you, I'm a product of Title IX in our schools, where equal education and equal opportunities in sports really helped propel me into -- I guess into the position that I'm in today, where...

MCCAIN: Could I mention she was the point guard on a state championship basketball team?


BASH: The first question specifically directed at Palin was the seventh one asked, what she says to those who know if she can balance it all.

UNIDENTIFIED FEMALE: As a mother, I just wanted to hear your response to the people out there that have said that you can't be a mother and the vice president, which, of course, you can.

PALIN: Well, let's prove them wrong.


PALIN: And just I'm very, very blessed to have this opportunity to show that -- you know, people had asked the question. I was pregnant when I was the governor, and they asked, how are you going to be the governor and have a baby in office? And I said, the same way that every other governor has brought up a family, had a baby in office. Granted, they were men. Maybe...

BASH: Palin was asked about one issue where the running mates disagree.

UNIDENTIFIED MALE: Have you been able to convince the senator on drilling in ANWR?

PALIN: I'm still working on it.



UNIDENTIFIED MALE: And the next question is...

MCCAIN: This town hall meeting is adjourned.


BASH: The audience was nothing if not friendly. A question about Palin's foreign policy experience was asked to make a point.

UNIDENTIFIED FEMALE: If you could please respond to that criticism and give us specific skills that you think you have to bring to the White House to rebut that or mitigate that concern.

PALIN: If we are so blessed as to be sworn into office as your president and vice president, certainly, we will be ready. If you want specifics with specific policy or countries, go ahead and you can ask me. You can even play stump the candidate, if you want to.


BASH: Stump the candidate, well, that didn't happen at this town hall. We didn't hear any of the specifics that -- that the voter asked for.

Instead, what happened, Anderson, is that McCain stepped in and he gave some bits of Palin's resume, like the fact that she negotiated with oil companies for a natural gas pipeline and things that we have heard before, like the fact that she commands the Alaska National Guard. And, after that, they moved on -- Anderson.

COOPER: Dana, a question about this audience and also Democratic audience at these kind of events. How controlled are they? And I think people watching that who support Sarah Palin say, look, she did a fantastic job. Those who -- her detractors will say, well, look, she got softballs from the audience. At these events and at Democratic events, how controlled is the crowd?

BASH: Well, the answer to that is, the people who -- who came here clearly wanted to hear Sarah Palin and wanted to hear John McCain. You had to sign up to get tickets, because there was limited space here.

But, in terms of the kinds of the questions that he got and she got, there is no indication that -- you know, that they knew anything that they were going be asked. But I will tell you -- you sort of hit it dead on -- the questions that both of them got here were much more friendly than I have seen John McCain get in the past.

I have seen him get some pretty tough questions from people who want real answers on an issue that they disagree agree with him on -- not so much here.

COOPER: OK. Dana Bash, appreciate it.

A lot to talk about. As always, I will be blogging throughout the hour. So will Erica. Join the conversation at

Also, you can link to the behind-the-scenes Webcast. Erica has already started it. She's just getting started now. Log to for that.

Up next, new polling in the battleground states that matter, and some big surprises when it comes to how close the numbers are.

And, later, your bottom line -- with Wall Street sinking, the economy taking, some advice that you can take to the bank -- only on 360 ahead.


COOPER: With the four new polls factored in, the latest CNN electoral map suggests that, if the presidential election were hold today, Obama would win 243 electoral votes, McCain 189, with 116 electoral votes still up for grabs. And, of course, 270 electoral votes are needed to win the White House.

Now, Electoral College estimate is based on a couple of factors, including the most recent state polls, voting trends, as well as campaign advertising spending.

So, that's the electoral map. Yellow means the states in play, a battleground for John McCain, and, Barack Obama, yellow signals full speed ahead. The opposite, of course, of a traffic signal. Yellow is where both candidates are spending the most time and a lot of money. Among those yellow states, Florida, with its 27 electoral votes, one of the biggest battlegrounds, and Jewish voters there one of the keys to winning.

CNN's John King has the "Raw Politics."


JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT (voice-over): Early morning at a retirement community synagogue, coffee, bagels and outreach critical to Democratic chances in battleground Florida.

HALIE SOIFER, OBAMA FLORIDA JEWISH OUTREACH: We are here today to talk about Senator Barack Obama and Joe Biden's record and to insure that Barack Obama is elected the next president of the United States.


KING: In a close fight for Florida, the Democrats need big margins among Jewish Democrats. And, seven weeks to Election Day, new CNN polling shows it is remarkably close, a statistical dead heat here and in three other key battleground states, in Florida, 48 percent to 48 percent. In Ohio, it is Obama 49 percent to McCain's 47 percent, North Carolina, McCain 48 percent, Obama 47 percent, and Wisconsin, Obama 50 percent, McCain 47 percent.

In Indiana, our fifth battleground poll this week, it is advantage McCain, 51 percent to 45 percent. With so many states so close, the urgency is obvious.

UNIDENTIFIED FEMALE: Would you like us to send you something in the mail?

KING: These home-schooled children are pitching in at a Republican phone bank in Delray Beach. State Representative Adam Hasner is a key McCain surrogate leading a Jewish outreach program he believes is making significant dents in Obama's base here.

ADAM HASNER (R), FLORIDA STATE REPRESENTATIVE: John McCain has a long proven track record. And this is a year when more Jews are -- are going to be voting Republican than ever before.

KING: The GOP effort includes ads reminding pro-Israel voters that Obama,in a primary debate last July, said he would be willing to sit down with Iran's president without preconditions his first year in office.

In its Jewish outreach, the Obama campaign now says he does want aggressive diplomacy with Iran, but would not rush into top-level meetings.

DAN SHAPIRO, SENIOR OBAMA MIDDLE EAST POLICY ADVISER: You may hear and you may see ads or see rumors that, well, Barack Obama wants to go and have coffee with Ahmadinejad, the president of Iran. Not true. Not true. Not true. KING: The big turnout is proof of Democratic enthusiasm. But some former Hillary Clinton supporters here say some friends are slow to warm to Obama. Others here worry he is not tough enough.

UNIDENTIFIED MALE: He has to get specific and tell the American people, let's wake up; this is what's happening.


KING: At the Boca Diner, there is ample evidence of a feisty campaign and of McCain inroads among Jews.

Jules Weiss usually votes Democratic, but says the Obama/Biden ticket is out of order.

JULES WEISS, RESIDENT OF FLORIDA: To me, it's just ludicrous to have neophyte for president and the experienced one as his assistant. That just doesn't make sense.

KING: Ruth Goldberg is no Obama fan either, but likes McCain less.

RUTH GOLDBERG, RESIDENT OF FLORIDA: I really don't want Obama, but I think that's what we have to do if we don't want Bush again. It's as simple as that.

KING: Seven weeks out, and Florida is once again in the thick of it, and it is anything but simple.


COOPER: John, just like last week, most of these new battlegrounds are tossups. Are we learning anything or just kind of treading water here?

KING: We are learning, Anderson, we are going to have a fascinating seven weeks, for starters.

But we are learning some other things. If you look at the national polls -- and Candy alluded a bit to this earlier -- the McCain/Palin honeymoon post-Republican Convention does appear to be over, and Obama does appear to have a small bit of steam in the national polls, as the debate turns back to the economy.

We will watch over the next several days if that translates at the state level. Now, at the state level, you would still have to say, despite all these dead heats, slight advantage Obama.

Florida, Ohio, North Carolina, three states we just mentioned there, all very close, all states the Republicans won last time and the time before. So, it is the Republicans playing defense in more red states than the Democrats are playing defense in blue states, fascinating to watch as we go forward.

Anderson, this all puts a premium on registering voters. Those deadlines are approaching. And the turnout organizations -- and we saw here in Florida, Indiana, earlier in the week, both campaigns now pouring more and more money into that, because they know how close everything is.

COOPER: And the registration -- in terms of registration, that would seem to work in Obama's favor. In terms of getting out the vote, there is certainly now as much enthusiasm on the Republican side as there has been on the Democratic side?

KING: You're -- you are dead right. The Obama people so far -- the deadlines are still out there, and the Republicans are trying to play catchup, but so far advantage Obama when it comes to registering people. The big question there, will all those young people actually turn out on Election Day? In the past, they have been unreliable.

And, in terms of turnout, that has been a game, in both Bush elections, the Republicans dominated. The Democrats say, this time, they will be at least as good -- they believe better. We are going to spend a lot of time over the next seven weeks looking into those turnout organizations that could decide just how close it is.


KING: And some even worry here in Florida, Anderson -- they're already worried about the possibility of a race so close, we have that dirty word: recount.

COOPER: I have never heard of such a thing in Florida. That would be stunning.


COOPER: John King, thanks.

Just one battleground, of course, Florida -- the candidates barreling through several other swing states today -- John McCain, Sarah Palin teaming up in Michigan, as we showed you, taking questions. Coming up, we will dig deeper with our panel.

Also ahead, the raw facts, no spin, no slant about that multimillion-dollar sports complex in Sarah Palin's hometown. Her supporters call it a crowning achievement as mayor. Others say Palin's passion for the project clouded her vision. You can decide for yourself.

Plus, more on the Dow's big dive today, another bruising day on Wall Street, breaking news on that tonight, what it means for your pocketbook -- when 360 continues.


COOPER: As we have been talking about, economy front and center on the campaign trail.

Let's dig deeper with CNN senior political analysts David Gergen and Gloria Borger. David is also a former presidential adviser, and Gloria is a columnist at "U.S. News & World Report." And also CNN contributor David Brody, a senior national correspondent for the Christian Broadcasting Network.

David Gergen, the campaign has entered a new phase. How do you see this now playing out, the last couple of days? Where do you see it going?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Well, overall, Anderson, neither candidate has yet demonstrated a mastery of this economic situation and the financial markets. Neither has offered a clear plan for going forward. Neither has really shown an urgency about it.

But, overall, I think you have to say that Barack Obama has gained from this more than John McCain has. First of all, he's -- he can blame it on the Bush administration. But, secondly, he is taking -- he is making a forceful argument against the folks in charge. And that helps him. He's -- and the critique, I think, is helping him.

And John McCain today coming out with Sarah Palin, while that is interesting, it does seem, doesn't it, in the light of what has just happened, the whole town hall clips that we have just seen, doesn't that seem like yesterday?



GERGEN: And, so, from my point of view, I think the -- to go to John King's point, the momentum for John McCain and Sarah Palin does -- has stalled out. There is a little momentum on Barack Obama's part. But he hasn't yet fully seized it. And he -- and it is still very close.

And John McCain could still take it away from him.

COOPER: David -- Gloria, it's interesting. This week, Obama and Biden really have targeted their criticisms almost exclusively at McCain. You don't even hear them talking about Palin now, obviously trying to link McCain's policies with President Bush.

Do you agree that is working for them?

BORGER: Well I -- you know, I think it is working for Obama and Biden this week because -- because of the news.

And, look, McCain is in a really difficult situation right now, Anderson. He's got, first of all, to rail against the incompetence of his own party. And he's also got to take a turn, fundamentally, away from deregulation, which is something he has been talking about for the last two decades, into being a regulator.

So, the pivot he makes is to essentially saying, this is because of those corrupt CEOs on Wall Street. I'm a populist. I'm on your side.

It's kind of a difficult argument for everyone to understand and to believe. He's working at it, but -- but it's tough, because it goes against everything he has been telling us in the press for the last two decades.

COOPER: But, David Brody, you know, in fairness, David Gergen made the point that neither candidate has really been able to kind of own this -- this issue. Yet, in truth, how much can the president really do about the economy?


And I think that you might see the McCain camp start to go down that road a little bit. You know, one of the things McCain may need to start doing is -- you know, because they are -- they are pegging him as a Washington insider, the Obama campaign is -- he may need to say, look, I'm a senator, you know, one out of 100 votes. And, as president, it is a different ball game, in the sense that, you know, I have got veto power, I have a soapbox. It is a much different scenario, because they're -- you know, the Obama campaign is trying to say that, you know, he was in Washington for 26 years. What did he really do on this?

And McCain can make the argument -- or at least try to make the argument -- that, you know, presidency is a different ball game.

It would be interesting. There are pitfalls there, but at least he can try to go there...


COOPER: David Gergen, it is a hard argument for any presidential candidate to make, though, saying, well, look, the president really can't do much about the economy. I mean, no one wants to hear that. That's not going to be something...


GERGEN: And it's also not true.

COOPER: It's also not true, you're saying?

GERGEN: It's also not true.

BORGER: Right.

GERGEN: There are two things a president can and must do -- and George Bush has been abnormally silent on this -- first of all, is help the country understand what it is we are going through, to explain it to people.

So, one of the things Franklin Roosevelt did, his first fireside chat in the Great Depression, was to come on the air and talk about what is going on in the banking industry, because it was in crisis. And he explained it in very, very simple terms, so everybody understood.

COOPER: Do you think the fact that President Bush has not done that is a sign -- I mean, he's got very high negative ratings. Would he really instill confidence in people if he did that, David Gergen? GERGEN: Well, it's still more confidence than we have now.

I think, fortunately, we have, in his treasury secretary, someone who is getting high marks for the way he is handling this. Hank Paulson has done -- in my judgment, done a very good job. And I think others feel that way.

And, also, the Federal Reserve is getting high marks. So, there is a sense that at least the people in those -- at that level. But the president is -- I mean, the White House is like -- it is not at home on this.

And, secondly, the thing, Anderson, there are some steps that need to be considered, whether it is a new resolution trust, you know, of the kind we had in the -- during the S&L crisis that needs to be set up. Or are we just simply going to wait until January, February, March to think about that? There's a question of a new stimulus package. Should there be something for infrastructure in a stimulus package?

Those are -- you know, we have some -- we have a meltdown going on.


GERGEN: This -- the stock market today entered dangerous new territory. There is a real flight away from credit markets into flight for quality. It's dangerous.

BORGER: You know, and the -- and the problem is, Anderson, that neither of these candidates are known for their economic expertise.

And if they were to tell you the truth about what's going on, they would also have to tell you that a lot of the promises they are making in this campaign, of all of those tax cuts, and universal health care, and everything else may right now be going down the drain, because we are not going to be able to afford it.

BRODY: And -- and...

BORGER: So, they are in a -- you know, they're both in really an uncertain situation right now.

BRODY: Anderson, what McCain is known for is being a fighter, so to speak, this maverick image that he has.

And, so, that's why you hear him -- I mean, I was on the campaign trail with him yesterday in Youngstown, Ohio. And he kept saying fight. We are going to fight and we're going to win. We are going to fight, fight, because that is what his reputation is all about.

And, so, that plays into something that has -- is not going to change in two months. If the Obama campaign thinks they are going to change that image, you know, that is just not going to happen.

BORGER: Yes, but it is a question of fighting for what. GERGEN: Exactly. Exactly.

BORGER: And that is -- and that is where Barack Obama has a little bit of trouble.

BRODY: Right.

BORGER: Because what the American public doesn't understand yet -- and I think Obama has started to talk about that more this week -- he has started to put some meat on the bones -- is fight for what. What am I going to do for you?


GERGEN: But, Gloria, McCain is saying, I will fight for a bipartisan commission.

BORGER: Well, right.

GERGEN: You know, that's what I'm going to fight for.

What kind of fight is that?

BORGER: I have seen a few of those. Have you seen a few of those, David?


COOPER: We're going to have to leave it there. No doubt, every night, we are going to be talking about this for a long time to come.

Gloria Borger, David Brody, David Gergen, thanks.

So how healthy is the economy? One of the things I knew you'd ask. We're asking Ali Velshi. He'll tell you what the government isn't doing, what they need to be doing, what all of this means, the bottom line is for you right now.

Plus, what did FEMA learn from Hurricane Katrina. The people of Texas are cleaning up from Hurricane Ike, trying to piece their lives back together. There's a lot of angry folks in Texas tonight. It is not going well for many of them. We'll tell you why.

And a brazen attack on a U.S. embassy in Yemen. The State Department says a suicide car bombing, to have all the hallmarks of al Qaeda. We'll talk to CNN's terrorism expert, Peter Bergen. Nobody knows it better. When 360 continues.


COOPER: Music to your ears, now it's the soundtrack to a horror movie, seems like. Another 450 points gone from the Dow today. New word of possible buyouts and mergers with tens of billions of dollars in the balance, hundreds of thousands of jobs on the line and tens of millions of retirement plans in the quick sand. So how bad is it?

Ali Velshi is here, CNN's senior business correspondent.

Let's talk unemployment. What do the numbers show? What do they don't show?

ALI VELSHI, CNN CORRESPONDENT: Let's broaden this out beyond the stock market, because that's not all we do. Most of us work. And the numbers, the unemployment number for the country is 6.1 percent.

You'll hear people telling you that's not so bad historically. But look at where it's gone. This is just this year. It's gone up to 6.1 percent.

And that's not really even the big story. The big story is that, in this kind of economy, just to keep up with the increase in the number of people who join the work force every month, economists say that we have got to increase our work force by about 100,000 jobs a month. We've not done that. We've lost an average of 76,000 jobs a month since January of this year.

COOPER: Seventy-six thousand? Wow.

VELSHI: Per month. So we're negative 176 from where we should be. We are down 605,000 jobs so far this year. People without jobs don't have mortgage payments to worry about and don't have energy crisis to worry about. They don't have an income.

COOPER: What about inflation?

VELSHI: Inflation is the other thing. We just had new numbers on inflation. So as of August over the course of one year, your inflation is running at 5.4 percent. Doesn't sound like that much. But did you get a 5.4 percent raise? Probably not. Did you get 5.4 percent in your -- in your investment portfolio? Probably not, given the investments that we've seen lately. In fact, you're not getting 5.4 percent, generally speaking, anywhere.

That's not just the problem. Five point four percent is what the government calculates as a basket. But look at gasoline, up 35 percent in a year. Energy for your home up 17 percent in a year. So a lot of people -- a lot of people say that 5.4 percent is not even a real reflection of what the average American is seeing.

COOPER: What about home prices. They dropped an average 20 percent from their high.

VELSHI: Which means that one place -- if you weren't making it at your job and you weren't making it in the stock market maybe you could at least see the price of your home go up. There was value in that. That isn't there either, which means you have no source of spending more money.

And this economy is entirely dependent on people having money to spend. If we don't have money to spend, two thirds of this economy starts to drive to a halt. And that's why we are where we are.

COOPER: Scary stuff. Ali Velshi, appreciate it. Thanks, Ali. Still ahead on 360, FEMA under fire once again, this time for its response to Hurricane Ike. The storm leaving parts of Texas in ruins, thousands homeless. Everyone knew it would be bad. So why is it taking so long to get basic supplies like food and water to survivors?

Plus, we'll take you behind the scenes at 360, show you what Erica Hill's Web cast during commercial breaks is all about. If you haven't watched it, we'll give you a little quick preview here.


COOPER: Coming up, Sarah Palin as mayor. We'll show you what some Wasilla residents call her crowning achievement. Her detractors say it's nothing to brag about. We'll give you the facts, let you decide.

First, Erica Hill joins us with a "360 News and Business Bulletin" -- Erica.

ERICA HILL, CNN ANCHOR: And Anderson, we begin with an update we got just moments ago, this coming from federal investigators who now say the engineer driving that commuter train that slammed into a freight train last Friday in Los Angeles did, in fact, send text messages from his cell phone while on the job.

But very important to point out here, it is unclear whether he was texting at the time of the crash. That crash, of course, killed 25 people, including the engineer.

In Houston the lines still long. Supplies, though, are finally reaching those in need. The city's mayor expressed frustration with FEMA yesterday over the delays in aid delivery. Well, today, Homeland Security Secretary Michael Chertoff was in Houston and Galveston to meet with local officials.

Also, power, we can tell you, is slowly being restored across the state of Texas. One point seven million customers are still without it.

We are hearing some more details about a major drug bust over the weekend off Costa Rica. A team of U.S. Coast Guard special agents captured a submarine-like vessel, stuffed with nearly seven tons of cocaine. Street value here: $187 million.


And on Wall Street gold prices surging 9 percent. That is a record one-day gain, while the Dow plunged almost 450 points. Gold, though, was not all that glittered. Turns out oil prices were up six bucks a barrel. Skittish investors are abandoning their stocks for more hard assets -- Anderson.

COOPER: Wow. All right. Here's tonight's "Beat 360" photo. Governor Arnold Schwarzenegger at a news conference yesterday, talking about his decision to veto a state budget.

Here is the caption from Chuck on our staff: "One more 'Kindergarten Cop' joke, Blitzer, and I'll crush you."


HILL: I like it with the accent.


COOPER: Think you can do better, go to I'm sure you can do better with the accent. Click on the "Beat 360" link, send us your entry. We'll announce the winner, and the winner, of course, gets a brand-new T-shirt.

Erica, we've talking about your Web casts, which is on during commercial breaks. We have yet to actually come up with a fancy name for it. But especially -- if anyone comes up with a name for it let us know.

HILL: Let us know if you have any ideas.

COOPER: It's actually a lot of fun to watch. It's only during the commercial breaks, and you have to log on to That's what the site looks like. You go to the right-hand side below the link to the live blog and the Web cam. What you get to see is Erica unfiltered, with me and guests like Suze Orman, who of course stopped by last night. Take a look.


HILL: I'll tell you, last night I got home and my husband said, "Did you look at the 401(k)?"

I said, "Ooh, I was afraid to." But today I looked. And it wasn't as bad as I thought. And part of me thought about what you say all the time, and that is, if you invest for the long term, it's OK. So we just need to sit back and wait?

SUZE ORMAN, PERSONAL FINANCE EXPERT: Are you kidding? Fortunes are made during times like this. All of a sudden, you can pick up a stock that was at $80 a share. Now that stock is $10 a share, and you know that shock is going to come back again later on. Are you kidding? You can make a fortune.

HILL: All right. Good. Well, I hope so. Great to have you here. Thank you. Come back soon.

ORMAN: Cheesy music. Da, da, da.

HILL: She likes "Beat 360."


HILL: What's not to like about the "Beat 360"?

COOPER: She likes the cheesy music we play.

Coming up, Sarah Palin -- again, Log on to see Erica and folks and me. Sarah Palin as mayor, coming up. The biggest project she undertook as mayor has some questioning her leadership style, has others saying she gave the town something they'll enjoy for years. You can decide if it was a good idea.

With election day just weeks away was al Qaeda sending a message today with a deadly attack on an embassy in the Middle East? We'll talk to national security analyst Peter Bergen.



GOV. SARAH PALIN (R-AK), VICE-PRESIDENTIAL CANDIDATE: So this election you're going to have a couple of choices, obviously, and it's going to come down to who you can trust. And it's going to come down to who has set an example for you. What you can look back on in terms of track record and precedents set by a candidate.


COOPER: That is Governor Palin, of course, tonight, laying out the experience argument at a town-hall meeting in Grand Rapids, Michigan. It was a town-hall meeting with Senator McCain fielding questions from the audience, as is common at town-hall meetings with both McCain and Obama. Most of the questions are what you might call softballs. That happens at both candidates' events.

The McCain campaign calls Governor Palin a former maverick and highlights her experience as a mayor and governor to drive that message home. So we've been taking over the last couple of weeks a look, a close look at Palin's experiences in Alaska, what her supporters say and what her detractors say.

Tonight, a project that some call her legacy as mayor of Wasilla, Alaska. As you'll see, why it was built and how it was paid for continue to stir up debate.

Up close, 360's Randi Kaye.


RANDI KAYE, CNN CORRESPONDENT (voice-over): The big attraction in the small town of Wasilla, Alaska, is this sports complex. It has a soccer field, a running track and indoor hockey rink with heated seats.

It was Sarah Palin who pushed to build it when she was mayor here from 1996 to 2002. Supporters call it her lasting legacy, her crowning achievement.

BRUCE URBAN, WASILLA'S RECREATION MANAGER: She really was very, very passionate about this right from the start.

KAYE: But Palin's passion, some residents say, clouded her vision. Missteps left the town paying a much higher price for the land and huge legal bills. PATRICIA FAYE-BRAZEL, WASILLA RESIDENT: She did leave it with debt. It wasn't done correctly. And now we have more debt and more legal fees, more problems.

KAYE: In 2002 Palin urged residents to approve a 25 percent sales tax increase to cover the $14.7 million bond to build this place. They did, by fewer than 20 votes. The problem? Not all the land belonged to Wasilla, and it would cost a bundle to get it.

DIANE WOODRUFF, WASILLA CITY COUNCIL MEMBER: I really think that there was probably quite a bit of money wasted there.

KAYE: Diane Woodruff (ph) has been a longtime critic of Sarah Palin.

WOODRUFF: I'm curious as to why somebody in the previous administration didn't make sure that we had clear title before they started building, because certainly, once we started building, we were over a barrel.

KAYE: Over a barrel because someone else said the land was his. This man, Gary Lundgren.

We tracked him down in Central America. Turns out, in 1999 the Nature Conservancy was negotiating to sell the land to both Wasilla and to Gary Lundgren. The difference was, the town hadn't signed a purchase agreement for all the land it needed. Lundgren had.

GARY LUNDGREN, FIGHTING WASILLA FOR LAND: We were the successful bidder.

KAYE: The town immediately sued. A federal court sided with Lundgren, saying the city had never signed the proper papers.

(on camera) By then construction was underway. That's right. Even though the title to the land was being challenged in court, Mayor Palin gave the go-ahead to break ground.

LUNDGREN: When they started building, the title to the land was in my name. Really, the city never had clear title to the property underneath the sports complex until this year, 2008.

KAYE (voice-over): After Palin left office, Wasilla sued once more, under Mayor Dianne Keller. But getting the land would prove expensive.

(on camera) With construction underway, Wasilla really had no choice but to cut a deal, so it agreed to pay over $800,000, and that's just for the land. The town also had to pay Lundgren's attorney's fees and interest on the land, another $700,000.

(voice-over) Lundgren also says at least twice he offered to give the city some of the disputed land free if they'd just stop suing.

LUNDGREN: They turned the offer down. They said they needed more than 20 acres. KAYE: Wasilla's former lawyer tells CNN he has no recollection of an acceptable offer from Lundgren.

The rub for residents? Records show the city originally paid $145,000 for part of the land. With the settlement and all those fees, Wasilla's bill so far is more than $1.5 million.

WOODRUFF: She inherited a city with pretty much no debt and, all of a sudden, we have a lot of debt. I don't think that that labels her as a true fiscal conservative.

MAYOR DIANNE KELLER, WASILLA, ALASKA: I think that this is a community drain. It may have been a part of Sarah Palin's dream. But it was not her -- only her dream.

KAYE: Mayor Dianne Keller sees Palin's signature project as a boon, because it's brought in more than $3 million for local businesses. Other agree.

LANEYA WILKES, WASILLA RESIDENT: Yes. It's worth it. It's going to make it back. I mean, it's a place for us to come and use and enjoy for many more years.

KAYE (on camera): While the complex is getting plenty of use, Wasilla may have to open up its checkbook again. Gary Lundgren has appealed to the Alaska Supreme Court, challenging the value of the land.

Randi Kaye, CNN, Anchorage, Alaska.


COOPER: Well, coming up tonight, an act of terrorism aimed at America. An American embassy under fire. Was al Qaeda behind it? New details and fears, next.

At the top of the hour, another bad week. The breaking news on Wall Street. The Dow sinking 450 points, 450. John McCain and Barack Obama weighing in on the crisis. New developments on the markets in Asia when 360 continues.


COOPER: The aftermath of today's deadly terror attack on the embassy in Sana'a, Yemen. Wearing military uniforms, suspected Islamic insurgents used car bombs and snipers in the assault. Ten Yemenis and six terrorists were killed. No Americans were injured.

The State Department says it bears all the hallmarks of al Qaeda. Of course, it was back in Yemen in 2000 when al Qaeda fighters bombed the USS Cole. 360 -- with a 360 dispatch is now -- joining us is CNN national security analyst, Peter Bergen.

Peter, so the State Department said it bears the hallmarks of al Qaeda, I guess, coordinated attacks. Do you agree? PETER BERGEN, CNN NATIONAL SECURITY ANALYST: Yes. Suicide bombing, shooting, six people who ended up being dead. Al Qaeda has had a presence in Yemen since the early '90s: the USS Cole attack in 2000, kidnapping tourists, killing tourists. Because Yemen is a very poor country with a very weak central government, it's a place that al Qaeda has continued to have a presence.

COOPER: As I recall, there was a jailbreak, I think, of some of the guys a while ago. How -- how strong is al Qaeda in Yemen and how connected is it to al Qaeda in Pakistan?

BERGEN: I'm not sure how connected it is to al Qaeda in Pakistan, except for the sense that, you know, Osama bin Laden himself is -- comes from a family that originated in Yemen. There are a lot of Yemenis in the group, and people who've emigrated, the Saudis, whose families are originally Yemeni, like Osama bin Laden.

But you know, I think it's fairly vibrant in Yemen. It, of course, is near Saudi Arabia, where al Qaeda also has a presence. This is a group that has continued to thrive.

You pointed out about the prison break. A number of the militants involved in the Cole attack escaped from prison in Yemen after 9/11. Escaped two times, in fact.

So this really goes to the question of the Yemeni government not really controlling things very well. There's quite a lot of American dissatisfaction with the Yemeni government on this score. And of course, there will be more dissatisfaction with this attack on the embassy itself, Anderson.

COOPER: It's remarkable, these prison breaks. There was a prison break in Yemen. There was a prison break from Bagram Air Base of militants. There was a prison break in Kandahar, I think if memory serves me correctly, of like, 300 Taliban militants just a short time ago.

How, big picture, al Qaeda from Pakistan, how resurgent are they? How strong are they, once again?

BERGEN: Well, certainly, on the Afghan/Pakistan border they're resurgent. And you mentioned the prison break in Kandahar in southern Afghanistan. Literally hundreds of Taliban, fairly hardened Taliban members escaped. And of course, that helps the insurgency on the Afghan/Pakistan border, just as the prison breaks in Yemen help al Qaeda when these guys get out of prison there.

COOPER: It's -- it is a scary world out there. Peter Bergen, appreciate your expertise. Thanks very much, Peter.

BERGEN: yes.

COOPER: A quick reminder: Peter is blogging tonight. You can see his latest post at

"The Shot" is next. A little -- want to end on a little lighter note. Got some elephants. Got some baby squirrels. I'm not sure, really, what all the fuss is about. But we'll take a look.

And top of the hour, McCain, Obama, new polling and your money. That and more when 360 continues.


COOPER: Time for "The Shot." And it's animal related, so cue the wild-eyed cat and the music. Do we have the wild-eyed cat? We don't have the wild-eyed cat.

HILL: Sad. Maybe she's coming up later.

COOPER: Tonight, our "Shot" is from Houston, the Houston Zoo. That's Tucker the elephant, an Asian elephant, doing his part to get the zoo in shape after Hurricane Ike: moving branches, brushing debris off the grounds.

I actually don't think he's actually helping. I think this is, like, a publicity thing.

HILL: He may not be, but in the end, without knowing it...

COOPER: There it is.

HILL: ... it's going to help.

COOPER: That's the "Dramatic Animal Video."

HILL: I think the cat was impressed.

And from that I see your elephant and raise you a wee little squirrel. Look at that squirrel, all so cozy. Izzy the squirrel was rescued by a Houston family.


HILL: They actually stayed during the storm, but they evacuated afterwards. And the squirrel was apparently in their driveway. With a fair amount of coaxing from the kids, the family decided to take the squirrel with them.


HILL: We're told Izzy is about three weeks old and she will apparently be just fine. But she will not be their pet, Anderson, because according to the squirrel lady who has helped them out with the squirrel in Tulsa, they don't make good pets.

COOPER: I've never seen a baby squirrel, just like I've never seen a baby pigeon.

Now our "Beat 360" winners -- I don't know what that means. Our daily chance to viewers to show up our staffers. Let's show the picture.

Arnold Schwarzenegger there at a news conference yesterday, talking about his decision to veto the state budget. Our staff winner, Chuck, his caption: "One more 'Kindergarten Cop' joke, Blitzer, and I'll crush you."


COOPER: Our viewer winner, Nathan from Calgary. His caption: "The only difference between a soccer mom and a Terminator, lipstick."


COOPER: Ba-dum-bah. Do I get in trouble for that? I hope not.

Nathan, your "Beat 360" T-shirt is on the way.

You can also check out all the other entries and everything show related at

Coming up at the top of the hour, where is the market going tomorrow? That's the question. We've got more on the breaking news. It could send another shockwave through Wall Street.

Also, your money, your vote. How the candidates handled the economy today and how the McCain-Palin combo answered questions tonight. That and more when 360 continues.


COOPER: Tonight breaking news: Wall Street worsening and the campaign tightening. New polling to tell you about. We'll have more on that shortly.