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YOUR MONEY

Bailout Debate from Wall Street to Capitol Hill to Main Street; How to Protect Your Money and Prepare for the Future; Politics and Your Money

Aired October 4, 2008 - 13:00   ET

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


CHRISTINE ROMANS, CNN HOST: Welcome to YOUR MONEY, I'm Christine Romans. Ali is on assignment.
What a week. The bailout debate reaching a fever pitch from Wall Street to Capital Hill to Main Street. But in the minds of any Americans this debate is far from over. Some say a government bailout is a good idea, others absolutely hate it, either way, it's a debate Americans have been and continue to be passionate about.

To articulate two very different views on the bailout story, we invited back Stephen Leeb, president of Leeb Capital Management and Peter Schiff president of Euro Pacific Capital and author of the new book "The Little Book of Bull Moves in Bear Markets."

Gentlemen, welcome to the program. The bailout, I've been told that we need it; we need it because if we don't have it we don't know what kind of horrific economy we face. You disagree.

PETER SCHIFF, PRESIDENT, EURO PACIFIC CAPITAL: I disagree. The people who are telling us that we need these bailouts are the same people who are telling us the economy is was in great shape just a few months ago or two years ago.

Unfortunately, when I watched that debate the other day, the vice presidential debate and both of these candidates are blaming these problems on Wall Street, greed, on predator lending, on lack of regulation, but the reality is all this happened, Wall Street, the mortgages and the community were just playing the hand that government dealt them. This was the government problem and the most irresponsible monetary policy in U.S. history under Greenspan. It was the moral hazards of Fannie and Freddie and it was the tax code that encouraged reckless gambling.

ROMANS: But the house is on fire now. We have to put the fire out.

STEPHEN LEEB, PRESIDENT, LEEB CAPITAL MANAGEMENT: That's another debate. There were a lot of people that caused it and I certainly don't disagree with Peter when he says the government was part of the cause. But right now the house is on fire and that has happened and just to give you one consequence of how serious this situation could be, take the fertilizer stocks. I mean, I'm talking, real micro stuff here. Yesterday or earlier this week, fertilizer companies fell 30 and 40 percent. You know why they fell that much? Not because demand for food is falling off a clip. There's 2 billion people in the world living on $2 a day and near starvation. The reason fertilizers fell that much people fear farmers can't get credit to grow their crops and that means if we don't do something quick you could have mass starvation not just in this country, all over the globe.

SCHIFF: Stephen, I agree with you the house is on fire, but the government will pour gasoline on it. If you want the fire to go out. You need to let the free market work.

LEEB: The free market right now and this is what the stock market is telling us which is as free as you possible can get in this world today is that if we don't do something, farmers won't be able to grow their crops and the world will starve!

SCHIFF: All they have is a printing press.

ROMANS: A lot don't believe -- they don't know what this doomsday scenario will be, the former vice chair of the Fed put it eloquently this week. She said, looks this, and is a lot like anticipating a nuclear war. You don't know what the chances are, but you do everything you can to avoid it. Shouldn't it be the responsibility of the federal government to make sure that even though it caused the problems we have to mitigate disaster?

SCHIFF: It's not their responsibility and not legally and they can't do anything about it. The government doesn't provide credit. They provide inflation.

LEEB: Peter, let me make one point. Peter talks again, two points. One, when we thought the bailout was in jeopardy, the market dropped $1 trillion. More than the value of the bailout. The one thing I'm very fearful of. And this I agree with Peter I don't like the government either, but I would rather give the government a little control now rather than complete -- rather than complete control later on.

Just a little history lesson. Let me just finish. Please let me just finish because I'm not disagreeing with you. What I don't want to see happen is unemployment fall to 25 percent and we pave the way for another FDR. This time we may not be so lucky. We may not get FDR we may get a guy like Lindberg who wants to be dictator. And that's the kind of thing that Alice Goodland (ph) talks about. That is the doomsday scenario, where the government totally seizes control, little control now in exchange --

ROMANS: This week there was this emergency conference call among corporate treasurers, who talked about how banks were holding on to the money. They weren't letting them borrow so they could do things like buy raw materials, so they could do things like pay their payroll. If we just let the market work it out what happens to companies in general?

SCHIFF: It's not that the banks are holding on to money. The money is not there anymore because they've blown their capital on bad loans. Remember we can only loan out money that somebody saves and if we blow our stock of savings, there's no more credit. That's the problem and the government can't replace the credit with the printing press. The problem is not going work. The situation will get worse and the stock market will keep falling and the government will take more power and they'll create more damage.

LEEB: However, much power the government needs to control and I don't disagree with Peter. This may not be enough and however much power the government takes right now, however much money they have to put in the system it's much more preferable than letting the government have complete control over the economy. Peter, I don't want to be saluting a dictator in this country, but that's what you're advocating.

ROMANS: Take a deep breath and stick around because you're coming back right after this break. Wait until you see what was said about the economy.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Our financial institutions are strong, our investment banks are strong. Our banks are strong.

(END VIDEO CLIP)

ROMANS: That was then. A surprising look back at what we were told about the economy before the Wall Street crisis.

(COMMERCIAL BREAK)

ROMANS: Populist uprising against the Washington bailout has its roots in a distressed Bush administration which for months said the economy was fine and a distress of Congress who after all, has oversight of the financial services industry. The language about what's happening in the capital markets and the economy has changed dramatically in the last two weeks. Listen.

(BEGIN VIDEOTAPE)

ROMANS (voice over): It's about as dire as a president can get on the economy.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We're facing a choice between action and the real prospect of economic hardship from millions of Americans.

ROMANS: This from an administration that for months said the economy was vibrant, the financial system strong. The president didn't acknowledge storm clouds until last September, by then it was raining.

BUSH: There are definite storm clouds and concern, but the underpinning is good. We'll work our way through this period.

ROMANS: Then with each disastrous job report and capital market crisis, an upbeat assessment. In January --

BUSH: Our economy is flexible and it is resilient.

ROMANS: In February the president was surprised by spiking gas prices.

BUSH: What did you say? You're predicting $4 a gallon. That's interesting. I hadn't heard that.

ROMANS: In March, Bear Stearns was in a death spiral and the Fed brokered its sale.

BUSH: We're in challenging times and another thing is for certain, that we take strong and decisive action.

HENRY PAULSON, SECRETARY OF THE TREASURY: Our financial institutions are strong. Our investment banks are strong. Our banks are strong. They're going to be strong for many, many years.

ROMANS: In July, Indy Mac Bank failed.

BUSH: I believe we will come through this challenge stronger than ever before.

ROMANS: The three trying to sell this $700 billion rescue didn't see it coming. The treasury secretary told MPR last year of the global economy.

PAULSON: That's as strong as I've seen it than at any time during my business career.

ROMANS: And again last October.

PAULSON: This is happening against a backdrop in an economy in which in other respects is very solid. So far, there's very little evidence it's bleeding over into other areas.

ROMANS: As the subprime crisis divulged early last year, the Fed chief --

BEN S. BERNANKE, FEDERAL RESERVE CHAIRMAN: We did not expect significant spillovers in the subprime market to the rest of the economy or to the financial system.

ROMANS: And now?

BERNANKE: This plan is an emergency plan to put out a fire, to resolve serious crises which have real Main Street implications.

(END VIDEOTAPE)

ROMANS: Back with us, Stephen Leeb of Leeb Capital Management. And Peter Schiff of Euro Pacific Capital. Gentlemen, you were watching the piece, what did you think?

SCHIFF: These are the guys we want to turn over. These guys were in denial the whole way. They don't understand the fundamentals of economics and they have no idea why we're in this mess in fact, they're the ones that lit the fire.

ROMANS: No one really got it.

LEEB: I think -- I mean, I have to say, Christine, after hearing that sequence of statements, Peter's argument appeals to me a little bit more, but not enough. I fervently disagree. I mean, yes, this was a terrible mess and what everybody missed had to do with the fact that we have 600 trillion -- yes. Half a quadrillion derivatives out there.

ROMANS: Right.

LEEB: And the complexity of this system is beyond the understanding of anybody and all we really know that the point in order to get ourselves out of it, we do need a lot of money. A lot of people missed it.

SCHIFF: How could you miss it? It was the elephant in the living room. It lays it out cold. How could you say -- either they were lying to us or they're incompetent, but either way we don't want it slowing our economy.

LEEB: Peter, whatever they were and there's blame to go around for a lot of people. I mean, you said before. One percent interest rates was a terrible mistake. I agree with you, but we're here today. The building has collapsed. Farmers will not get mortgages.

ROMANS: Paulson just a little over a year ago said it was the best global business environment of his business career and how quickly, how quickly we're trying to rebuild the entire financial system.

SCHIFF: It is a solution based on debt.

ROMANS: But doesn't that tell you that things -- as Bernanke wrote in his papers as an academic that the financial accelerator. Once the financial accelerator started --

LEEB: What you need to see is that the best decisions I've ever made in my career as a Wall Street investor and that's been pretty good, Christine is to admit that I'm wrong. Dead wrong, go out, get out, sell it and do something else and I think Bernanke has a brilliant record. He's studied the depression probably in greater detail than anyone else. Peter, that really is foolish.

SCHIFF: No, it is not foolish.

LEEB: No, it is. To call someone who has spent his entire his entire life clueless --

SCHIFF: He is clueless.

LEEB: You can't be the only guy right in the room.

SCHIFF: No, but I know that he is wrong.

LEEB: No, I don't think he is wrong. No, what he is saying --

ROMANS: Let's go forward. I think we both agree here that there has to be more, right? I'm hearing again and again this; bailout is not the end of it.

LEEB: Absolutely. There may have to be more, Christine, what we have to realize right now, we are not in a world with great alternatives. The '90s are dead and completely buried. We have to choose between whether or not we want to eat or whether or not we're willing to have inflation. I'd rather eat.

SCHIFF: Between freedom and socialism.

LEEB: No. I agree with you. I much rather have freedom. I think you make a good point, but what you're advocating will --

SCHIFF: No.

LEEB: Let me finish. What you're advocating the give the government a little control; complete control just likes the 1930's.

SCHIFF: You want them to have control.

LEEB: I'd rather give them a little control now and put a little money in the system so that if -- we don't get 25 or 30 percent unemployment. That was during the Depression.

ROMANS: Just quickly, very quickly, what does the world look like without a bailout? What does it look like with a bailout?

SCHIFF: Without a bailout, look, there's a price to pay for all of the extravagance. We've had a phony economy based on debt and consumption. We'll have a terrible recession, it will be bad, but this bailout will make it worse and it will turn it into a hyperinflationary depression and it will kill the value of our money and we'll have a real crisis on our hands and we'll have no way out.

LEEB: If we don't have a bailout the market went down eight percent or so on Monday. Those kinds of declines will continue. Credit will dry up for farmers. We'll have 30, 40 percent unemployment like that and then we'll have total government control of this economy. A dictatorship maybe.

ROMANS: Stephen Leeb and Peter Schiff, thank you so much. You can see the passion behind the debate and you can see the very important issues about what's happening in our economy right now.

When Wall Street panics, you have to be concerned about your money, but you can protect it. We'll show you how next.

(COMMERCIAL BREAK)

SUSAN LISOVICZ, CNN CORRESPONDENT: I'm Susan Lisovicz of the New York Stock Exchange. The trading week started with a sell off when the house rejected the financial rescue package. And the trading week ended with a sell off after the house approved the financial rescue package. Traders say the Friday vote was baked in the cake. Lawmakers more than one trillion dollars were erased in market value and the lousy jobs report Friday morning put a figurative gun to lawmakers' heads with another 159,000 jobs lost in the economy.

The market rallied ahead of the vote and then lost it all ending in triple-digit losses. Now instead of obsessing about Washington for two weeks, investors can again focus the so-called fundamentals. To one analyst, once you get over one hurdle, you start looking at the next and the next one is the weakness in the economy. There's growing doubt that a recession is avoidable even with the rescue package.

This past week alone we got crummy news on auto sales, mortgage applications and factory orders. And GE, considered a bellwether of the U.S. economy said it fell over $600 billion of its shares to Warren Buffett cheap.

Looking ahead, investors remain on edge. We'll start to get corporate earnings reports. The estimate ahead of that is companies in the S&P 500 will, on average, see profit declines of nearly five percent from a year earlier. The stock trader almanac says this past week was the Dow's worst since the September 11th terrorist attacks. The blue chips lost 800 points or seven percent. The Nasdaq and the broader S&P 500 did even worse.

Now, back to YOUR MONEY.

ROMANS: Is your money safe? What can you do to protect what you have and to grow it to prepare for the future? Walter Updegrave is senior editor for "Money" Magazine. He joins us now to break it down. It has been a tortured few weeks for people who are invested in the stock market and that is 50 percent of the country. We have 401(k) s. I'm not worried so much with people with taxable accounts -- the 401(k), the retirement account, should people be really concerned?

WALTER UPDEGRAVE, SENIOR EDITOR, "MONEY" MAGAZINE: Well this, is money that people are putting away for retirement. If you are many years away from retirement, this is money that you're not going to be touching maybe for 10, 20, 30 years. When it comes time for retirement and you'll look back at today and this will be kind of a blip.

When you're looking at that kind of a timeframe you don't want to be reacting to the pandemonium of the moment and so if you're 20, 30 years away from retirement and you're early in your career you want to have most of your money in stocks and some in bonds, but you don't want to change that. You don't want to go and shift your money around.

ROMANS: Let's look at where you should be. Because you talked a lot about asset allocation and people call in and ask if well it is OK for me to stay in the market? And the issue here is it's different for anybody and you need to be exposed properly for where you are in your life. Early career, stocks, you say 80 percent stocks and 90 percent stocks and the rest is bonds. Walk me through where you are and you've got the screen up so people can show where you for your trajectory before retirement show how you should be exposed.

UPDEGRAVE: Sure, so early career predominantly in stocks, you're not so much worried about short-term setbacks in the market. Mid- career you've accumulated some money and you want to be a little bit more careful, but you still need that long-term growth. Maybe you're 70, 75 percent in stocks and the rest in bonds or some other stable investment.

Later in your career when your getting into your 50s I would say there you're scaling back a little bit more, 60 to 65 percent in stocks. You want more cushion and you don't want to lose and take a big hit on the verge of retirement. By the time you're actually retired or you're 65, you probably want to be somewhere 40 to 55 percent in stocks. Some people say why do I need stocks at all I'm retired? Why do I want to be exposed to this at all?

ROMANS: Hopefully you'll be retired for 30 years.

UPDEGRAVE: Exactly, you're hoping that you're going to be around for another 30 years or longer and during that time you'll be pulling money out, but you still need your purchasing power to be growing and you don't want to wind up, say in your 80s facing some big medical expenses and having your money run out.

ROMANS: Walter, what if I just can't -- I call it the sominex test. What if I look at my retirement and I say you know what it doesn't matter how long it will be until I retire. I want to move more into safety. What should I do if I'm risk averse and I want to move my 401(k) into a safer place?

UPDEGRAVE: You have a couple of options and one is you can move into most 401(k)s and have a menu of options that include some kind of a stable value fund, a capital preservation fund and certainly a money market fund and you can move some more money into there. Again, I caution, the more that you do that, the less of a long-term return you are likely to earn unless you're very good at deciding when to get back which most people aren't, but if you're really, really concerned you could do that.

Another thing that somebody might want to do is a lot of 401(k) s these days offer target date retirement fund where it automatically divvies up your money among stocks, bonds and cash and you pick a date that corresponds to your retirement, which is 2030 or 2040, if you pick a date that's closer, maybe five years before your retirement that gives you a little bit more in bonds and a little bit more in cash.

ROMANS: Thank you so much Walter. Walter Updegrave, we always appreciate it.

What if airlines asked you to pay extra just for a right to buy a plane ticket or hotels charge you extra to allow you to book a room. In this economy it's pricing out some fans for giving up tickets that have been in their families for decades.

Ali Velshi takes look.

(BEGIN VIDEOTAPE) ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: It's Sunday before kickoff. Fans and families brag about their team and the playoff possibilities and a brand new stadium.

WOODY JOHNSON, OWNER, NY JETS: You saw all these stadiums in New York and around the country being rehabbed in a major way or actually replaced because they no longer are functional for what the fans want and from an income standpoint for the team.

VELSHI: But not everyone is excited. TSL or personal seat licenses are partially paying for the New York Jets and Giants $1.6 billion stadium and fans are footing the bill. Fans like Jay Malakoff.

JAY MALAKOFF, GIANTS SEASON TICKET HOLDER: $80,000 for the right to buy the tickets we've been buying for 61 years.

VELSHI: Here's how it works. Right now Jay has four Giants tickets each costing $85. To keep those seats he would have to pay a one-time, up front PSL fee of $80,000 or $20,000 per seat and still buy the ticket each year which in the new stadium are being raised from $85 to $160.

MALAKOFF: My seats are right here.

VELSHI: Same seats, same team, different stadium and a much bigger bill, one Jay and many other fans simply can't afford.

MALAKOFF: How do I tell the 11-year-old son that I can't pass the tickets now to a fourth generation because we can't afford to pay for them? Either that or I'll tell my daughter that I can't send her to school one year because I need to get my tickets for the Jets.

VELSHI: Jets owner Woody Johnson says it's a delicate balancing act.

WOODY JOHNSON, OWNER, NY JETS: We don't really want to price out any of our fans in this new stadium and hopefully we've come up with enough programs and enough ways that finance five-year financing. We have 27,000 seats in the stadium with no PSL as an accommodation to our fans.

VELSHI: The Jets and the Giants are not the first teams to use PSLs. Currently 16 of the 32 teams in the NFL have them.

UNIDENTIFIED MALE: From the teams I talk to and the executives I talk to, there's definitely a balance that they try to achieve in catering to their corporate fans and making sure families still come.

VELSHI: But some won't. Steve Kernin is turning his back on the Jets after 15 years and he's not going quietly.

UNIDENTIFIED MALE: No, PSL.

Unfortunately, I think this is the future. I'd like to turn back the clocks because the amount of money that the NFL is raising is beyond anyone's consciousness to even understand. VELSHI: According to "Forbes" Magazine, for the first time in any sort, team values in the NFL averaged $1 billion. Fans have always been emotionally invested in their team, but with PSLs becoming more common, they're being asked to become more financially invested as well.

Ali Velshi, CNN, New York.

(END VIDEOTAPE)

ROMANS: Politics and money. We'll take a look at the candidates and their plans for your money.

(COMMERCIAL BREAK)

FREDRICKA WHITFIELD, CNN ANCHOR: I'm Fredricka Whitfield in Atlanta.

December 5th is now sentencing day for O.J. Simpson. A Las Vegas jury convicted him of kidnapping and robbery. He could go to prison for the rest of his life. Prosecutors charged Simpson in a memorabilia hike. He claimed he was retrieving his own belongings.

President Bush cautioned today the new bailout law won't be a quick fix. He signed the $700 billion rescue soon after the house passed it. Now the Treasury Department must hire financial firms to buy and leverage bad mortgage assets.

And European leaders are holding an emergency Summit in Paris today to deal with the financial crises. Experts say a European-wide bailout program modeled on the U.S. rescue is not likely. Like the U.S., however, European governments have had to prop up banks exposed to subprime mortgagees there as well.

Barack Obama is on the campaign trail in Virginia today. He's attacking John McCain's health care proposals as quote, unquote radical. McCain is at home in Arizona today prepping for Tuesday's debate. McCain's advisers say he'll ramp up his attack on Obama in the coming days.

Up, up and away. Take a look at that. Hundreds of hot air balloons taking flight in Albuquerque's International Balloon Festival. The nine-day event usually draws nearly a million visitors from all over the world. You can see why. Despite the financial crisis, organizers don't expect much of a drop. Today's weather is very perfect for all of this.

Coming up at the top of the hour, "BALLOT BOWL," now time to go back to YOUR MONEY.

ROMANS: It was their one and only vice presidential debate. So how did Sarah Palin and Joe Biden do on issue number one, the economy? Here to grade both VP candidates is CNN political contributor Terry Wall and CNN political analyst and radio talk show host, Roland Martin.

Let's listen first to how gold tried to connect with middle class voters?

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: What a good barometer here as we try to figure out has this been a good time or a bad time in America's economy is go to a kid's soccer game on Saturday and turn to any parent there on the sideline and ask them how are you feeling about the economy and I'll betcha you're going hear some fear in that parent's voice. Fear regarding the few investments that some of us have in the stock market.

SEN. JOE BIDEN (D), VICE PRESIDENTIAL CANDIDATE: I understand what it's like to be a single parent. When my wife and daughter died and my two sons were gravely injured, I understand what it's like as a parent to wonder what it's like if your kid's going make it. I understand what it's like to sit around a kitchen table with a father that says I have to leave, champ, because there's no jobs here. I have to head down to Wilmington and when we get enough money, honey, we'll bring you down.

(END VIDEO CLIP)

ROMANS: So was it effective? Roland, did they connect with the middle class voter on the kitchen table issues?

ROLAND MARTIN, CNN POLITICAL ANALYST: I thought that Biden clearly offered more specifics when he began to talk about the economy, talk about jobs and talk about health care. Palin stuck to tax cuts. That was one of the fundamental problems and so I think she wasn't more specific.

And that is one of the problems, John McCain and Sarah Palin, that is their big Achilles heel. They're not offering a plan that people can understand other than saying tax cuts, tax cuts, and tax cuts. They have to go beyond that.

ROMANS: What do you think about what Roland says? She wasn't specific enough about those issues?

TARA WALL, DEP. EDITORIAL PAGE EDITOR, "THE WASHINGTON POST:" I have to respectfully disagree. I think that she certainly connected and if you looked at the barometer on the page on the stage or on the monitor it continued to go up. As she was talking about you're darn right the predatory lenders. I understand the health care issues because we looked at it ourselves. She made that connection as an every day American, being able to relate as every day Americans can to what's going on right now.

I think the distinctions are what -- both of them quite frankly talked about middle America and how they've been effective one way or another and it's how their plans address this issue specifically. Beyond the tax cuts, I think she also talked a lot about this toxic mess in Washington and on Wall Street and how we need to have a more, you know, transparent government. Those are the things that she talked about in regard to how to deal with it. Not just tax cuts. And how government needs to get out of the way. MARTIN: When the question came and when it came to the bailout, she absolutely avoided that question. When Joe Biden went after her on the healthcare proposal she couldn't even offer a response when it came to his health care plan.

So, look, it's nice to talk in generics and what it sounded like to me most of the time last night. Sort of like when you were in the sixth grade and you had a report to write, a five-page paper and you had enough info to one-page, but to stretch it to five pages. That's what she did. She was stretching it and to fill up five pages where as he was saying no. Here are specifics. That was a fail our her part and that's why when he was able to layout a proposal and he kept saying is where is your plan? She had none.

WALL: I think neither one of them really offered much of a plan.

MARTIN: He was clearer than her.

WALL: You know, being a Washington insider for so long it's easy for him to articulate much better, obviously. I think it is easier for him to have a smoother flow in how to talk to folks that are watching. I think that is one of his strengths, obviously.

But I think, again, when she started talking about what she does as governor of Alaska, having managed a budget and having managed employees and having made those real decisions about tax cuts and cutting people's pay, including her own and making reforms, that's where the rubber hits the flood what she's been able to deal with and how she's been able to deal with it and even the short time that she has been able to do it.

ROMANS: Let's be honest. Being in charge of a budget, knowing where the rubber meets the road. Let's be honest. Neither of these candidates and neither of these teams can go in with their economic platform and do the things they say they're going do. There is a huge hole in the budget that has just exploded that will only get bigger by everyone's estimation next year because we have a fire on Wall Street to put out.

WALL: This is not --

ROMANS: I know.

WALL: It's not even palatable. Quite frankly, she can't really -- McCain, Palin are really struggling to answer this issue to their own constituents as it relates to the $700 billion bailout. On one end it is not pliable to ask taxpayers to fork over more money to bail out Wall Street.

I think John McCain could have done the noble thing like some of his counterparts in the Senate and the House are doing by opposing this from the beginning and coming up with some real solutions that don't include not just $700 billion, but $100 billion with in that of pork and fat that he will have to account for.

MARTIN: All of that stuff isn't going to fly. If you want to appeal to your nice base that want you to vote against it. That's great, what John McCain said is, I recognized the problem and when you have small businesses right now, people who are unable to get the inventory because of loans. So if we can try to say all this nice stuff about Wall Street and here's the whole pork, but when you have the people who are employing people can't get inventory and they have to lay people off.

ROMANS: You can't buy raw materials --

MARTIN: And that's why he had to vote for it because he had no choice. The Republicans have to deal with it.

WALL: But Biden was for it before Obama was even against it.

MARTIN: But they voted for it.

WALL: They're not on the same page. It was within their own party as far as what to do economically.

MARTIN: They voted for it.

WALL: And quite frankly, bailing people out when you're talking about mortgages, remember, we had that in an economic stimulus package just a couple of months back which was something that Obama didn't vote for.

MARTIN: This is a whole different issue.

WALL: (INAUDIBLE)

MARTIN: This is much greater.

ROMANS: OK. Stick around because we're going to talk about this some more. We'll look at what the candidates must do now to win the White House.

(COMMERCIAL BREAK)

ROMANS: Two debates down, two to go, but bottom line, what will John McCain and Barack Obama have to do to close the deal and win this thing? Back now Roland Martin and Tara Wall. Let me ask you first, what do they have to do? What do they have to do on the economy in particular or does it not matter?

MARTIN: No, the economy matters.

ROMANS: Is it number one?

MARTIN: If you're John McCain, you don't want an economic debate. You want this to be a culture war because he knows he loses. If you're Obama, they say drill, baby, drill; I say economy, drill, and economy. You have to nail them on that. You don't get off focus. When Republicans start going to the attack and bringing up Reverend Wright, Tony Resko and culture wars. You simply ignore that stuff and you say pocketbook, pocketbook and the other guy doesn't have a clue. ROMANS: We know 159,000 people lost their jobs last month and we know that a quarter of a million people lost their jobs since the beginning of the year and we're going to lose more jobs. What can they do, each of them to tap in to that, to get people to vote for their jobs, for their pocketbook?

WALL: I think they need to continue to keep telling you stories and quite frankly, Sarah Palin tells a better story and it's more believable, anyway, when she tells these stories than John McCain. I think they'll continue to utilize her in a grand way as they are doing. She'll hit the ground running in some states, I believe by herself. She can also continue to talk about what John McCain did do early on in trying to raise the alarm when he talked about reforming Freddie and Mac years ago when his opponent opposed it.

I think things like that are what will probably work better for them. I think obviously he is going continue to struggle because we are in the middle of this economic situation that is being hung around the administration's neck for better or worse. Congress has culpability, but quite frankly, voters blame the administration and he's not going to -- he is going have a hard time, you know, having to distinguish himself between he and George Bush.

He's attempting to do that. Sarah Palin, I think is his best tool, if you will, when she starts talking about her real every day pocketbook issues that they --

MARTIN: She -- that's the point. The point is they're anything to vote on McCain and Obama. McCain, if he doesn't have a clue, he's going down. Not only that.

WALL: I disagree that he doesn't have a clue. I would disagree with the --

MARTIN: Here's the problem when you talk about the whole issue of Fannie Mae and Freddie Mac. He can raise the point but they have his own words of saying I didn't see this coming. This is John McCain. So the problem is you try to make America realize that here's the guy who saw it coming, but his own words say I didn't see it coming and so it doesn't jive.

Not only that he has to confront being Mr. Deregulator. He has to confront that. It's hard to all of a sudden talk about let's reign them in. This is where they're going to fail on that point and so if I'm John McCain, I'm being honest. You want to get away from the issue number one and go to issue number two or three.

WALL: Listen, he has to address the economy. He will address the economy again. There are clear distinctions between someone who sits on the sidelines and watches and tests the waters and sees what happened as Obama did --

MARTIN: But the guy who just --

WALL: Four days later came out and said oh, by the way, I agree with the Bush plan and I agree with Henry Paulson just said. Quite frankly, you know, look, John McCain and Sarah Palin will be fine. They will do fine if they continue to hit the message home about tax cuts, every day Americans and their plan for jobs --

ROMANS: Here's what I don't think a lot of people get --

WALL: All of these things relate to the economy and I think again, when you have someone who raise the alarms a couple of years ago about this. Whether you think --

MARTIN: That was 20 years ago, come on, Tara! You know at the RNC --

WALL: And understand -- actually I'm not -- I think that's what you're doing, Roland.

ROMANS: I think what most people don't get -- I'll wrap it up a little bit.

What most people don't get, I think is you have two different candidates with very different economic platforms and ideological positions and you know what? They've been thrown a grenade and that grenade has blown up and that's the first thing they have and we keep hearing over and over again about how Obama is going to be a new vote for change and the vote for McCain is a third term of the Bush presidency. But you what? Both of them have the same big problem. Absolutely.

MARTIN: When John McCain threw up that fake suspicion of his campaign and I'm going go to Washington and shake this thing up, he couldn't even get his own Republicans to vote for it. I think the reason people are going to Obama is because he's been cool, calm and collective versus you got the crazy guy that's popping off and he's done nothing.

WALL: We expected of liberals to pile on more big government.

MARTIN: Cool and calm always wins out.

ROMANS: We'll have to leave it here.

Which one of you is cool and which one can is calm? I'm collected.

MARTIN: Trust me; I'm a lot cooler than Tara.

ROMANS: Thank you so much. From buyouts to the big bailouts. How to protect your money from the turmoil on Wall Street and important information you can't afford to miss.

(COMMERCIAL BREAK)

ROMANS: Three quarters of a million jobs have been lost so far this year. It is survival of the fittest in the banking system and every single day there are a barrage of headlines that have all of us scratching our head. A CNN Headline News correspondent Jennifer Westhoven, and CNN's Susan Lisovicz and Paul La Monica editor at large for CNNMONEY.com are here to help us navigate through what has been a monumental last few weeks in the capital world.

We are talking about some really big stories here, Paul and among them, what's happening in the banking system. It is survival of the fittest, isn't it?

PAUL LA MONICA, EDITOR AT LARGE, CNNMONEY.COM: It does appear to be that way. It was very interesting earlier in the week. Wachovia agreed to sell its banking assets to the Citigroup in a deal that was brokered by the FDIC. It seemed like that was basically the last gasp before Wachovia might have failed the way Washington Mutual did and then on Friday Wells Fargo comes in and says well actually, we're going to buy all of Wachovia.

ROMANS: In the top of the press release to tell you what kind of a world we live in. The government didn't help us do this and it didn't have a role in it. That's what we're talking about in the banking sector.

JENNIFER WESTHOVEN, CNN CORRESPONDENT: I mean I almost wonder now if there will a potential bidding war between Citigroup and Wells Fargo for Wachovia. We could have one positive thing happening right now.

ROMANS: Does it seem on whole, as a good, when you have sort of a natural -- you don't have the government involved in two companies getting together?

LISOVICZ: Well, we actually have the private sector again and that in itself is a headline. Yes, I think that's why in spite of all the fear that's so pervasive in the financial markets that we saw a big rally at the open on Friday because in fact there was a company that was willing to pay something that wasn't a fire sale for a company that it saw value in. Bidding war may be in the offing. And not only just for those two companies, but it might inspire others as well. Remember Goldman Sachs for instance is now a bank holding company.

ROMANS: When I ask you moving on from the banks to sort of our jobs. Because when I ask people what the most important thing they can do, when I ask some experts, what is the most important thing that we all can do advice we could give, what I hear is keep your job. This is not the time to be taking risks with your job. Make sure the people above you and the people below you respect you and know you're doing a good job. This is very important; a lot of jobs have already been lost. It's bleeding into the services sector, too. How fragile is the job market?

LA MONICA: First of all, we are seeing accelerated job losses. The biggest monthly job loss in five years was reported for September. We've had, as you mentioned, over three quarters of a mall jobs already lost this year and it clearly could get worse from here because of how fragile the financial services system is right now.

WESTHOVEN: And I think here is the thing. No company wants to stand up and say, oh, we're going to be the first to lay off jobs right now. But some of them are. Marriott executives just said we're having so much trouble with the credit crunch; tens of thousands of jobs could be on the line. And then the Marriott's executives said, we're not the only company like this right now. We're typical. That goes to show you how many companies right now, private sector companies are in trouble, plus add on the California thing --

ROMANS: There was a report, there was an emergency call of 100 corporate treasurers this week who got together and said, we are not getting them the end of don't have the lending we need. We can't buy raw materials, pay our workers. We'll have to see how all this comes out. But I think we all agree we're in uncharted territory.

More with our money panel straight ahead. But, first here's this week's "Right on Your Money."

(BEGIN VIDEOTAPE)

ROMANS (voice over): The AARP says nearly 60 percent of its members are having a harder time paying for basics like groceries and medicines. Personal finance expert Eric Tyson says that's why reverse mortgages are so appealing.

ERIC TYSON: They are filling a need in the marketplace because there are seniors who get to retirement and they're house rich and they are house rich and cash poor.

ROMANS: Reversed mortgages let homeowners the loan does not have to be paid off until the home is sold.

TYSON: It can make the difference between being able to do repairs on the home or do some traveling or meet other out-of-pocket expenses that otherwise a senior might not be able to pay.

ROMANS: The government reports reverse mortgages more than doubled from 2001 to 2005 thanks to the housing relief bill they are expected to get even more popular. It increases the maximum eligible home value for FHA-insured reversed mortgages. But these loans should be considered a last resort.

TYSON: If you end up only using the reverse mortgage for a few years and sell the home fairly quickly, the interest rate you could pay could be a double-digit rate.

ROMANS: And that is this week's "Right on Your Money.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

ROMANS: Populous outrage against this bailout and a backlash that doesn't seem to go away. We're back with our senior money team to talk about it. CNN's Susan Lisovicz, Paul La Monica here and Jennifer Westhoven as well. People who hate this bailout, who hate it are undeterred in their hatred. Why?

LA MONICA: There's nothing that can convince the people that are against this, the individual taxpayers, to support it. I think the big problem is that there is just a lot of outrage about the fact that so many Wall Street firms and banks, big and small, got us into this mess by greed and corruption that still remains to be seen. No matter how much people stress the credit markets are freezing up, this will eventually affect you, some people say they don't mind suffering if it means Wall Street suffers, too.

ROMANS: The government got us into this; we cannot let the government get us out of it. We've got to let it fall.

WESTHOVEN: I really believe this. This is part of something that you talked about on the air which is the credibility gap, when you stand there and constantly say the economy is doing fine and people look around and say, it's not, when you constantly have officials saying things that turn out to be untrue or extremely questionable, even if they're true by the letter, people don't believe it right now.

And at this point, they don't believe it when you say, oh, my gosh, if we don't do something, this could turn into an economic nightmare, to them, they have absolutely no reason to believe that. That's why people think that Treasury Secretary Henry Paulson is just like any other people that they may blame in the government or fat cats on Wall Street.

LISOVICZ: I think that basically, I don't think this was ever sold to the public as clearly as it should. It is complex, no question about it. But the point is, you can't cut your nose to spite your face. Yes, there was a lot of excess, excess comes with the territory. And frankly, a lot of us benefit from the excess. Anybody who invests in the market, we enjoy it during the flush days. We also, of course, lose when we're going through a financial crisis like this.

But the point is, it's gone well beyond that. It's gone to Main Street and we're all going to pay the price in terms of access to credit. I put 20 percent down payment on my house. I worked hard, paid my way through school. I'm with everybody. The point is, there's a lot of blame to go around and some of it rests in Washington. There's no shortage of irony in that Washington has been saying that this is Wall Street greed. There was a lot of lax; a sleep at the wheel could be one expression, for some of the things that went on for quite a long time.

ROMANS: All right. Susan Lisovicz, thank you so much. Paul La Monica, Jennifer Westhoven, we can go on and on about that. Thanks, guys, we'll talk about it again next week.

Make sure you join us every week for YOUR MONEY, Saturday at 1:00 p.m. Eastern, Sundays at 3:00 right here on CNN. The economy is issue number one. We here at CNN are committed to covering it for you. Stay with the CNN Money team everyday for the latest news on your money. And log on to 24/7 to CNNMONEY.com. Have a great weekend.

(COMMERCIAL BREAK)

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