Program Note: Be sure to tune in to watch Ali’s full report on breaking news on the government’s economic rescue effort tonight on AC360 at 10pm.

Ali Velshi | Bio
CNN Senior Business Correspondent

Back after Hurricane Katrina - after covering so many stories about how the insurance companies seemed to be deliberately trying to find ways to not pay the legitimate claims of insured hurricane victims, I embarked on a mission to find someone who had a good plan to work around the insurance companies. A way to insure your home against risk without going through one of the big, heartless companies. Know what I found?

Nothing.

In fact, there’s no way to spread risk without pooling it. And insurance companies are the very pooling of that risk. As unsavory as it is, they do it, and the only reason they engage in the risky business, is because there’s a promise of a good reward.

Its the same thing with banking. There are few ways to make money more easily than paying someone a little bit to hold their money, and then lending that same money to someone else for more money. The risk is that the person you loaned it to doesn’t pay you back, and the person who loaned YOU the money wants it back. Someone’s legs are going to get broken in the process. It’s a risky business, but if someone doesn’t do it, people won’t be able to borrow money to take their own risks - risks that could make them rich, and employ other people.

Because of these risks, companies who engage in them, at the highest and most important levels, are called Keep reading

Chrysler CEO Robert Nardelli, left, and Ford CEO Alan Mulally testify on Capitol Hill on Wednesday.

Ali Velshi | Bio
CNN Senior Business Correspondent

- Reid cancels the auto bailout vote because he doesn’t have the 60 votes to pass it; Congress (Pelosi, Reid, Frank) says we want to help but you need to show us a viable plan for what you’ll do with the money, we gave money out before and got burned when companies didn’t use it in the way they were supposed to; show us a plan for how you plan to use the money by Dec. 2nd and if its good we’ll reconvene Dec. 8th to vote on it.

- Will these companies be able to come up with a plan before Dec. 2nd. They didn’t present a plan this week to congress, Ford seems to have the best chance and is least in trouble, GM is in major trouble and could blow throw the entire $25 billion itself in 5 months will want all/most of the money, and Chrysler is a private company so its completely unclear on what they’re finances are like or what kind of plan they’ll come up with but it will mean opening up their books and private dealings to scrutiny, unheard of for a private company but necessary if they want public funds

- The auto industry had this week’s hearings to paint the worst case scenario and hope Keep reading

Ali Velshi and Erica Fink
CNN

Measuring the economy might be a science, but what makes the economy tick isn’t.

The U.S. economy, more so than other worldwide economies, is largely based on how investors and, ultimately, consumers, feel. Typically, we measure economic strength or weakness using the GDP, or Gross Domestic Product, which is historically thought of as the broadest measure of economic activity.

But, while GDP may be a good measure of the whole economy (and it may not be, but that’s another story), we wanted to take the temperature of the things that matter to you, and how you feel. How you feel affects how you spend, and that’s what really matters in this economy.

Read more…

A board on the floor of the New York Stock Exchange floor shows the Dow Jones Industrial Average down 800 points, during the trading day Monday.

Ali Velshi | Bio
CNN Senior Business Correspondent

Editor’s Note: Today, CNN Anchor Rick Sanchez asked CNN Senior Business Correspondent Ali Velshi, “Why did we pass this bailout and the market doesn’t show any signs of life?” His answer is below:

I want to remind people, the bailout - I said we needed a bailout because the credit markets are frozen. The credit markets affect you by getting loans to people who need to buy your house and loans to your company to make operating expenses like payroll… Now, you would expect after the bailout bill was passed, we’d see a more positive reaction. Buried in all of that stuff on Friday was a report that we’d lost 159,000 jobs bringing this year’s total to 3/4 of a million. That’s the single most important thing…

(But) scared to death doesn’t help. The panic doesn’t help. Don’t bother being about that. Markets are tripping over themselves to get in and they always get in too late. Don’t panic about this… We watched the market very closely in the last hour, particularly the last 15 minutes to see how things are going. The fact that the market is going up and down, on the down side, but it’s moving, it’s not consistent, tells me this isn’t people bailing out of the market. There is a buyer for everybody trying to sell a stock today. A very serious market is when you’re trying to sell stocks and there are no buyers at any point. At this point, the market would have to be down 2,200 points to stop trading for the rest of the day. This is not as disorderly as it looks.

For those of you with 401(k)s, your loss will be very reflective of the loss on the S&P 500 and the Dow, 25 to 30%. You didn’t make any bad decisions. Hold on and don’t panic.

Ali Velshi | Bio
CNN Senior Business Correspondent

How does this credit freeze affect you?

If you are invested right now, understand that the market can make up 777 points in a matter of days.

That’s not your concern, don’t overreact to this.

But let me explain to you the credit markets - because that is where the problem is.

You have major investors, and I mean major: countries, sovereign wealth funds, pension funds, hedge funds and then you have banks. They send money between each other.

The most direct relationship between you, this bailout and the credit markets is that banks loan you money: auto loans, student loans, home loans, and that’s already a problem, that’s frozen.

Now - you’re trying to sell your house because maybe you’re being foreclosed on? Well, those same banks loan other people money, including someone who might have bid on your house. You want to go to contract, but they can’t get that loan, and that’s the 2nd way this affects you.

The third way - these banks and these major investors loan money to corporations. It is very standard for corporations to borrow money on a short term basis to meet their operating expenses - including salary. Well that affects you right now: if a company can’t meet those payments that means that you may not get your salary, or you may get laid off.

These are just three simple ways in which this credit freeze, this credit crisis affects you.

Fear swept across the financial markets Monday after the government's financial bailout package failed the House.

Ali Velshi | BIO
CNN Senior Business Correspondent

Despite what will likely be the biggest point loss this year, and the biggest point drop in history, markets are not the big deal here. This is about the credit markets, which are seriously frozen, imperiling the ability of companies to raise short-term cash to pay their bills.

You can’t see this happening in real time in a box on the corner of your screen. We have very clear indications of it, both anecdotally, and through the measure of dreary markets and LIBOR. But we’ll really only know about it when it’s too late – when companies cant make payroll or close down shifts at plants.

This underscores a fundamental lack of understanding of financial markets in Congress.

This is not Armageddon, and this, too, shall pass. But because of the failure in Washington today, more people will lose their homes, more businesses will fail, and more people will lose their jobs.