Record Rise as Stocks Soar; Politics of the Economy
ANDERSON COOPER, CNN ANCHOR: We begin tonight with "Breaking News."New details on the economic crisis and how Britain, Europe and the U.S. plan to fix the mess; a new dollar figure; the announcement set for tomorrow, we've got early details tonight. New signs as well that investors like what they are seeing; Asian markets rallying as we speak. That's the "Breaking News" after a record day on Wall Street. The Dow industrials up 936 points, the sharpest point jump in market history. Investors are gaining $1.2 trillion on paper in a single trading day. Now, on the campaign trail, both candidates speaking out on the economy and how they'd fix it.</s>SEN. JOHN MCCAIN, (R) PRESIDENTIAL NOMINEE: The catalyst of this crisis was the collapse of the housing in America. And I want homeowners to be able to negotiate a new mortgage at the new value of their home so they can stay in their homes.</s>SEN. BARACK OBAMA, (D) PRESIDENTIAL NOMINEE: I've already proposed a middle class tax cut for 95 percent of workers and their families. But today, I'm calling on Congress to pass a plan so that the IRS will mail out the first round of those tax cuts as soon as possible.</s>COOPER: Senator Obama also proposing a new tax credit for small businesses that create jobs, a three month halt in home foreclosures and chance for people to take up to $10,000 from their 401(k) or IRA accounts without taxes or penalties. Today, there were no new specifics yet from the McCain camp. But they are expected to unveil a new economic plan tomorrow. We'll have more on the politics shortly. But first, the money and the "Breaking News" and Ali Velshi. Ali a lot of Americans no doubt, lawmakers must be relieved with this major come back on Wall Street.</s>ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Yes and look, it's a not a trend it's just a day. But let me tell you a little bit about how this day started out. On Friday night, we had a loss of 198 points but a lot of people thought that was really almost a game. Part of the loss there was because of price of oil have gone down and EXXON and Chevron brought the market down. So take a look at how today in went, it was up more than 500 points, for most of the day, then 600 points, and then in that last hour, something technical happened. It's called a short squeeze; it's people who are betting against the market realizing that those stocks weren't going to go down, you have to buy stocks to make up for it. So that's what that happened. We've never numbers like this, 936 points higher by the end of the day. Until today, the biggest number that we'd ever seen wasn't even a 500 point gain. Now there are a lot that happened. In Europe, the banks decided -- that the governments decided they were going to back up the banks. The U.S. has sort of gave out hints that it was going to start spending the $700 billion soon and maybe emulate the British model of guaranteeing bank loans. So that was another big deal. A lot of these things led to this kind of market charge that we had today. But we're not even half way made up for what we lost over the last couple of weeks -- Anderson.</s>COOPER: Ali, we're learning more details about what the government is going to announce tomorrow. What are you hearing?</s>VELSHI: There are four basic things that we're hearing about. Let me show you what they are. The first one is that the government seems to be targeting nine specific banks that they're going to make direct investments in. They're going to invest in those banks and they're going to get stocks back in return. The second thing is the Treasury has been authorized to spend the first $250 billion of the $700 billion bailout. Well, the President is going to give them authority to spend another $100 billion so that they can accelerate the pace at which they're buying up these troubled assets and investing in the banks. The third thing is we're going to get the rules on CEO compensation. As you know that bailout package had some provisions that if your company gets help from the government, from taxpayers, well, your CEOs aren't going to be able to walk away with golden parachutes or get too much money. We're going to get details on that tomorrow morning. And finally, the FDIC, the Federal Deposit Insurance Corporation which insures your bank accounts now up to $250,000 apiece is apparently going to start insuring non-interest bearing accounts, the kind out of which people's payrolls are paid. So that's a pretty important thing for all those people who are worried that this credit crisis could affect their payroll, Anderson, we're hearing news that could change too.</s>COOPER: All Ali Velshi thanks. Again, the Dow up a record 936 points, that's up 11 percent just today. The question is what comes next? What happens tomorrow? Some perspective now on where things may be headed and what it means to your bottom line; from "Fortune" magazine managing editor, Andy Serwer. Tomorrow, you said it's going to be an interesting day. What do you mean?</s>ANDY SERWER, MANAGING EDITOR, FORTUNE: When the flight attendants say, keep your seatbelts securely fastened, I mean there's no question Anderson that tomorrow is going to be another one of those days. There's a couple of things that happens. And first of all today was a bank holiday. So the credit markets were not open. So we'll get the full response of more developments from Washington. And we're also are going to be having the President and the Treasury Secretary as Ali suggests that they're going to be announcing more details about the plan, investing directly in banks also insuring more.</s>COOPER: You pointed out to me just before we went on the air, that the amount of money that the U.S. government is now going to be putting into banks which was basically what the Europeans have been doing or announced that they're going to be doing is minuscule compared to what the Europeans are putting into their own banks.</s>SERWER: Well, that's right.</s>COOPER: So in a way the plan is cheap?</s>SERWER: Right, well, the way the plan looks to me, is that's $250 billion, and perhaps plus an additional $100 billion. The details are still fuzzy. But remember, the Europeans are throwing the long ball here; they're throwing $2.3 trillion at their problem. The economy of Europe is say roughly the same size of the U.S. economy. And we're only going to be doing $250 billion. So they're spending ten times as much as we are. Some people are suggesting that our plan could be overwhelming in that sense. Underwhelming, I should say, excuse me.</s>COOPER: Well, isn't that something -- that this whole idea of injecting money directly into banks, isn't that something that Paulson wrote off a couple weeks ago?</s>SERWER: Yes in late September and I think it was September 23rd, in fact, there were suggestions that that was not necessary to do it all. And now, we've seen the Europeans do it and here we are doing the European model. For those who suggests that early in the year we should have headed this thing off the pass, that maybe a bit of a red herring because no one foresaw exactly how bad this is going to be. This is un-chartered territory right now. So maybe it is prudent to keep shifting in terms of what you see as the focus.</s>COOPER: There are those who have said, and I think its CNN's Fareed Zakaria was among them who said look, you know that as painful as this is, and gosh knows, it's going to be incredibly painful for some folks, more than others, but there are going to be a lot of people hurting, out of the work, seeing their savings disappear, but it's a dose of reality in an economy that very badly needed reality. Our economy has been bloated and drunk for a long time on greed and other things, and this is a wakeup call.</s>SERWER: Yes, I think we have too much debt as a nation. Individuals, our government, we're overleveraged. We borrowed too much and we're paying the piper right now. I mean, you don't want to say that we need pain, that people all around America need to be thrown out of work, I mean that's ridiculous that's crazy, that's horrible, particularly people who did nothing wrong. I mean you look at a guy who works in a factory, who never borrowed more than his mortgages and perfectly safe and perfectly on target and he loses a job because of this thing. It is true that we should not be borrowing as much as we have. People shouldn't be floating things in their cars. We're sending so much money overseas to pay for oil and our trade deficit. So it is a wakeup call. But the pain really hurts people. Job losses, that's the worst.</s>COOPER: Even people looking at the stock market now they're wondering should I get in on the stock market now it's gone up a thousand points.</s>SERWER: Well, the reasons for being on the stock market are the same today as they were on Friday is they were last year, which is when the market was 14,000 and now it's 9,000. You buy great companies with great profit prospects, hold them. Microsoft, Proctor and Gamble, Exxon and these companies are going to be around for a long time. It's true, they are cheaper now than they were a year ago and it's true, that they were cheaper on Friday and today. But this is a great lesson in market timing, right Anderson. I mean if you had sold on Friday, you would have looked like a sucker, right?</s>COOPER: And trying to time the market, as we got so many people Suze Orman and others telling us, is virtually impossible to do.</s>SERWER: A tough game.</s>COOPER: Andy Serwer we appreciate it. "On the Campaign Trail," it is a heated issue to drill or not to drill? Tonight, a look at the battle over Arctic oil, our "Planet in Peril" investigation when "360" continues.