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Wall Street; Politics; Barack Obama; John McCain; Battle Ground States; Employment; Inflation; Housing Prices; Wasilla, Alaska

Aired September 17, 2008 - 23:00   ET


ANDERSON COOPER, CNN ANCHOR: Tonight, "Breaking News," Wall Street worsening, and the campaign tightening, new polling to tell you about. We'll 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's going to happen tomorrow?

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Well, we were talking about these 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 these massive company were to fail, it did not have that effect. It's got --

COOPER: It seems to worry the markets.

VELSHI: It seems to worry markets; we ended up loosing 449 points on the DOW, that's the second biggest loss of the year. That's more than four percent. These are big, big numbers. And now as you said, Asian markets all down more than three percent, some of them catching up to the losses that we 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.

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 very 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're seeing on the stock market.

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

VELSHI: Very scary.

COOPER: I'm wondering in -- everyone is wondering, what do you do with your stocks? What do you do with your 401(k)? What does all this mean to someone sitting in their 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: Do you think this maybe closer to the bottom from the top?

VELSHI: I think we are seeing a completely 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 were going to see now is everybody is saying this is what we need to get through the next year. If we don't have this kind of money we've got to raise it immediately. There is money in the world, Anderson, to bail these people out.

There's money in China, and Russia and the Middle East. And you might see those companies start to step in. The indications are, in fact, that the U.S. markets may open positively tomorrow morning. That is what the futures are saying. But we're still almost 12 hours away from that.

COOPER: All right, Ali Velshi, thanks, we'll be watching closely.

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

It's 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 how tight the race really is. And we'll have that in a moment.

But first a quick sampling of what each candidate had to say today.


SEN. BARACK OBAMA, (D) PRESIDENTIAL NOMINEE: The stakes in this election could not be higher. They could not be clearer. You know, we are in the midst of the most serious financial crisis in generations.

SEN. JOHN MCCAIN, (R) 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. 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 to 46.

He's also pulling ahead in our poll of polls which is a survey of a number of polls and 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 polls 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 the small Obama lead among white women. Now, that's significant. That's 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's Candy Crowley.


CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: 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's what this election is about.

CROWLEY: Obama 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, who put seven of the most powerful Washington lobbyists in charge of his campaign. And now he tell us that he is the one who is going to take on the old boys' network. The old boys network, in the McCain campaign that's called a staff meeting.

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

OBAMA: I'm Barack Obama. I hope you'll 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 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's certainly different than it was last week. But what are the Obama campaign people that 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 is chill. They may not put it quite that way but Obama has told people just to relax. That they always thought that 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've had several battleground state polls out today. And it is neck and neck. So but they contend that 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 he'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 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: 100 percent.

COOPER: No kidding? 100 percent?

CROWLEY: Yes, absolutely. I mean today he did top it off with the bombing in Yemen and did say it's proof that it is dangerous world and extended his condolences to the innocents that died in that bombing.

But he moved, he pivoted.

COOPER: Right.

CROWLEY: He said today I want to talk about the economy. Now, it also includes things like what he'd do for education and that sort of thing. But it all fits under the broad umbrella of the economy about 100 percent.

COOPER: OK, Candy I 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 time, she took questions at a campaign event in swing state Michigan.

CNN's Dana Bash is on the trail.


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

MCCAIN: 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. Thank you.

GOV. SARAH PALIN, (R) ALASKA VICE PRESIDENTIAL NOMINEE: I want to add something to that. 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.

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

PALIN: Now, we have hundreds of trillions of cubic feet of clean, green natural gas onshore and offshore. It's 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. Can you give us some details and some examples of your strategies and plans for economic empowerment for women?

PALIN: Well, first let me take a shot at that. And I'll tell you I'm a product of Title Nine 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 a 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 want to know if she can balance it all.

UNIDENTIFIED FEMALE: I'm 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. 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.

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

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: Give us specific skills that you think you have to bring to the White House to rebut that or mitigate that concerns.

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


BASH: Stump the candidate. Well, that didn't happen here at this Town Hall. We didn't hear any of the specifics 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 the natural gas pipeline and things that we've heard before like the fact that she commands the Alaskan National Guard and after that they moved on -- Anderson.

COOPER: Dana, a question about this audience and also Democratic audience as to these kinds of events. How controlled are they? I mean I think the people watching that who supports Sarah Palin and say look she did a fantastic job. Those who are 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 came here clearly wanted to come to hear Sarah Palin or wanted to hear John McCain. You had to sign up to get tickets because there was limited space. But in terms of the kinds of the questions that he got and she got, there is no indication 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 that I have seen John McCain get in the past. I've seen him get some pretty tough questions from people who want real answers on issue that they disagree with him on and not so much here.

COOPER: OK, Dana Bash I appreciate it.

There are lots to talk about; as always I'll be blogging throughout the hour, so will Erica. Join the conversation at Also you can link to the behind the scenes web cast. Erica is 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 tanking, some advice that you could take to the bank only on "360" ahead.


COOPER: Well, 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's 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 battleground and Jewish voters there one of the keys to winning.

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


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

HALIE SOIFER, DIR. OBAMA FLORIDA JEWISH OUTREACH: We are here today to talk about Senator Barack Obama and Joe Biden's records. And to ensure 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 voters 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 advantaged 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-school 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.

REP. ADAM HASNER: John McCain has a long proven track record. And this is a year more Jews are going to voting Republican than ever before.

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

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

UNIDENTIFIED MALE: We 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 turn out 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 isn't 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' wife usually votes Democratic. But says the Obama/Biden ticket is out of order.

JULES: But to me it's just ludicrous to have a neophyte for president and the experienced one as his assistant. That doesn't make sense.

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

RUTH GOLDBERG: I really don't want Obama but I think that's what we have to do if we don't want Bush again. That'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 toss ups. Are we learning anything or just kind of treading water here?

KING: Well, we're learning Anderson we're 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 this dead heat slight advantage Obama. Florida, Ohio, North Carolina, the 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 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 that 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: In terms of registration, that would seem to work in Obama's favor. In terms of getting out the vote there sort of now play as much enthusiasm on the Republican side as there has been on the Democratic side?

KING: You are dead right.

The Obama people so far, the deadlines are still out there and the Republicans are trying to play catch-up. 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've 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're going to spend a lot of time over the next seven weeks at 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.

John King thanks.

Just one battleground of course, Florida, the candidates barreling for several other swing states. John McCain, Sarah Palin teaming up in Michigan as we showed you and taking questions.

Coming up, we'll "Dig Deeper" with our panel.

Also ahead, the "Raw Facts," no spin, no slant about that multimillion 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 your self.

Plus, more on the DOW's big dive today, another bruising day on Wall Street's "Breaking News" on that tonight. What it means for your pocket book when "360" continues.


COOPER: We have been talking about the 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 and World Report" and also CNN contributor David Brody and CNN 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 AND FORMER PRESIDENTIAL ADVISER: Well, overall, Anderson, neither candidate has yet demonstrated a mastery of this economic situation in 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 can blame it on the Bush administration. But secondly, he is making a forceful argument against the folks in charge. And that helps him. And the critique I think is helping him.

And John McCain today coming out with Sarah Palin, well, that's interesting. It does seem -- doesn't it in the light of what just has happened the whole town hall the clips that we just say that doesn't that seem like yesterday?

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

COOPER: David -- Gloria, it's interesting this week Obama and Biden really targeted their criticisms almost exclusively at McCain. You don't really hear them talking about Palin now. Obviously, they're trying to link McCain's policies with President Bush. Do you agree that's working for them?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well I, you know, I think it is working for Obama and Biden this week 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's 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 it's tough because it goes against everything he's been telling us and 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 issue. Yet, in truth, how much can the president really do about the economy?

DAVID BRODY, CNN CONTRIBUTOR: Well, that's right. And I think that you might see the McCain camp start to go down that road a little bit. One of the things McCain may need to start doing is, you know, because they are pegging him as a Washington insider, the Obama campaign is, he may need to say, look, I'm a senator. One out of 100 votes and as president it is a different ball game in the sense that I've got veto power; I have a soap box.

It's a much different scenario. Because 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 could make the argument or at least try to make the argument that presidency is a different ball game. It'll be interesting, there are pitfalls there but at least he can try to go there.

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

GERGEN: It's also not true.

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

GERGEN: It's also not true, there are two things a president can and must do. And George Bush has been abnormally silent on this. First of all is to help the country understand what it is we're going through, to explain it to people.

One of the things Franklin Roosevelt did in his first fireside chat in the Great Depression was to come on the air and talk about what's going on in the banking industry. Because it was in crisis and he explained it in very, very simple terms.

COOPER: Do you think that fact that President Bush has not done that is a sign I mean he's got a very high negative ratings. Would he really instill confidence in people if he did that, David Gergen?

GERGEN: Well, and 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, has 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 this and those at that level. But the president, 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 is a question of the new stimulus package. Should there be something for infrastructure in the stimulus package? Those are -- we have a meltdown going on. The stock market today entered dangerous new territory. There is a real flight away from credit markets and flight for quality. It's dangerous.

BORGER: 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'd also have to tell you that a lot of the promises they're 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're not going to be able to afford it. So they are both in really 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 was on the campaign trail with him yesterday in Youngstown, Ohio, we kept saying fight, we're going to fight and we're going to win. We're going to fight, fight.

Because that's what his reputation is all about. And so that plays into something that is not going to change in two months. If the Obama campaign thinks they're going to change that image that's just not going to happen.

BORGER: But it's a question of fighting for what.

GERGEN: Exactly, exactly.

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

GERGEN: But Gloria, McCain has kept saying I'll fight for a bipartisan commission.

BORGER: Well, right. I've seen a few of those. Have you seen a few of those, David?

BRODY: I have.

COOPER: We're going to have to leave it there and no doubt every night we're 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. Well, it depends on who you ask we're asking Ali Velshi. He'll tell you what the government isn't doing and what they need to be doing and what all of this mean and what 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 bombings 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: It used to be 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 SENIOR BUSINESS 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 most 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: That's right. 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 CORRESPONDENT: 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 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; 1.7 million customers, however, 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 that you put the accent, Anderson.

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 love 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 playing around through the commercial breaks.

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), VICE-PRESIDENTIAL NOMINEE: 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 reformer, a 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: 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 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 finally sided with Lundgren, saying the city had never signed the proper papers.

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: After Palin left office, Wasilla sued once more, under Mayor Dianne Keller. But getting the land would prove expensive.

With construction underway, Wasilla really had no choice but to cut a deal, so it agreed to pay Lundgren 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.

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 dream. 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. Others 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: 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 that 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 in 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: Thank you.

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.

(COMMERCIAL BREAK) 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's "Shot" is from Houston, the Houston Zoo. That's Tucker the elephant, an Asian elephant to be precise, 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 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's not going 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."

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

That does it for this edition of "360." Thanks for watching.

Larry King starts now.

Have a great night and I'll see you tomorrow night.