[Anderson Cooper, Cnn Anchor:] After a dismal day on Wall Street, Asian markets now reacting and reacting badly. Japan's Nikkei tumbling more than seven percent in early trading, the Dow plunged more than 400 points today, lost more than 900 points, nearly 10 percent since Election Day; a grim reminder of the challenges ahead for President-elect Barack Obama. We'll have all of the details coming up. The transition to power is picking up speed. Today Obama announced his first hire. Representative Rahm Emanuel, a top House Democrat has agreed to be his chief of staff. His reputation, a tough political infighter and already conservatives are howling about it. We'll also look at what other big names. John Kerry, Colin Powell may also get a new job. Also ahead in the hour, the Republican blame game gets nastier; new accusations about Governor Sarah Palin just as she returns home to Alaska. We'll have the latest And the nation's new First Daughters, Sasha and Malia, will be the youngest kids to live in the White House in decades. Life is about to change dramatically for them. A look at what may be ahead. We begin, though, in Chicago; base camp for Barack Obama's transition to power. President-elect Obama started day two post- election with his usual morning workout. And then stayed mostly out of sight; getting down to the business of choosing his White House staff and preparing to take the reigns of the presidency. Here's CNN's Candy Crowley.
[Candy Crowley, Cnn Senior Political Correspondent:] Old routines, the daily trip to the gym, now mixed with new ones. The first top level intelligence briefing, and phone calls with nine world leaders who offer congratulations and began the getting to know you phase. Behind closed doors, one of the hallmarks of democracy is underway; the peaceful transfer of power, the incoming First Couple will meet at the White House Monday with the outgoing First Couple.
[George W. Bush, President Of The United States:] We will ask administration officials to brief the Obama team on ongoing policy issues ranging from the financial markets to the war in Iraq. I look forward to discussing those issues with the president-elect early next week.
[Crowley:] In Chicago, the basics of a new team is coming together with old team faces. In what a source describes as done, Obama's senior White House adviser is likely to be David Axelrod, the main architect of the campaign, a long time Obama friend.
[David Axelrod, Obama's Top Adviser:] We've been fighting this fight for change for a long time.
[Crowley:] As low key as he is fiercely loyal, he is said to be the last person Obama calls at night. Already lined up as chief of staff, Illinois Congressman Rahm Emanuel, an alumnus of the Clinton White House. Temperamentally the polar opposite of the cool, deliberative president-elect, Emanuel is hard-charging, blunt, hyper- partisan, which is to say tough enough to keep everybody in their lanes at the White House, keep Hill Democrats in the corral, and protect the president and his agenda. In discussions for press secretary, the most visible White House job, Robert Gibbs, also a loyal, long time Obama adviser who helped shape the campaign. Limbo is a tricky place. As one Obama source put it, there's only one president at a time and we want to honor that. Still, there are deliberate signals after three days of flying below the radar, Obama will meet with his top economic advisers Friday and cameras are invited in for the picture; a clear message that the economy is the next president's top priority.
[Cooper:] All right, so Rahm Emanuel, David Axelrod, what about the cabinet, the kind of high-profile picks, how soon do we expect those?
[Crowley:] They want to move pretty quickly on this, particularly when it comes to those key positions, treasury secretary, again because they want to send out a strong signal that they're on top of this; that they are moving kind of to reassure people. You also might get state and defense. Fairly quickly, although fairly quickly is different in everybody's mind. Nonetheless, the president-elect is having a news conference tomorrow, the first since he won the presidency. So we may get some information there. I don't see any indication that we'll get, say a top-level cabinet position, but I think you will get the treasury secretary pretty soon. And in that meeting we talked about, that economic meeting, there are a bunch of potential treasury secretaries meeting with him. So, you know big news no matter what you do.
[Cooper:] Do they kind of clear this stuff with the White House? Saying we're going to have this meeting with our economic advisers? How do they coordinate this kind of stuff?
[Crowley:] No, they don't coordinate it with the White House at all those sorts of things. Obviously they're coordinating in every level and every department in terms of the transition. Obviously the president going to welcome them to the White House, Obama and his wife to the White House on Monday. So there's that kind of what looks like very good cooperation, both sides say it has been so far. But in terms of Obama out here meeting with his economic advisers, that's just planning for next year and that's got nothing to do with George Bush.
[Cooper:] Candy, thanks. Transition to power, under way tonight, it's the first in eight years for Democrats. That long, dry spell is going to create a bit of a feeding frenzy. Democrats jockeying for key jobs in Obama's administration; a lot of names being floated and more decisions could come as early as tomorrow. With a look at that here's CNN's Ed Henry.
[Ed Henry, Cnn White House Correspondent:] To the victor belong the spoils and after eight years out of the White House, Democrats want to be spoiled with high profile jobs.
[Joe Lockhart, Former Clinton White House Press Secretary:] For every senior job, there's probably ten qualified people. And it's hard to be the person who has to tell the nine that they're not the number one pick.
[Henry:] Senior Democrats say John Kerry is jockeying to be Secretary of State and has a good case after endorsing Barack Obama over Hillary Clinton.
[John Kerry, Former Presidential Candidate:] The next president of the United States.
[Henry:] But some Democrats worry he can veer off message just like Vice President-elect Joe Biden, which keeps New Mexico Governor Bill Richardson and Republican Chuck Hagel in the hunt.
[Sen. Barack Obama, President-elect:] We're going to have to cut programs some programs that don't work in order to provide health care.
[Henry:] Health care is another top priority and a natural fit in the cabinet would be well-respected former Senate Majority leader, Tom Daschle. But Democratic sources say Howard Dean, a medical doctor who had a strong run as Democratic Party chair is hungry for the job. Speculation about treasury secretary has centered on Lawrence Summers, though he's faced controversy for sexist comments he made while serving as president of Harvard University. A dark horse to help stabilize the markets is former Fed chairman Paul Volcker.
[Alan S. Blinder, Former Vice Chairman, Federal Reserve:] He's not a person that would stay four or eight years given his age, but to get things started would be a fabulous choice.
[Henry:] Plugged in Democrats say there's also serious talk of Obama briefly keeping President Bush's Defense Secretary Robert Gates on board to show the new president is not just looking for yes men.
[Lockhart:] I think you need a mixture of loyalists, people that President Obama trusts and works with, and people from the outside who bring a different perspective who can question his decision, question his judgment.
[Cooper:] Ed Henry is with us now. A lot of people expect change, expect something different and new. A lot of the names we're hearing are not necessarily different or new, is this just about rewarding people who, you know, gave you an endorsement during the campaign?
[Henry:] Partially it is. But Barack Obama obviously has to be careful to not just make it that because if you just have essentially patronage, you're not going to have a new direction as you say. And also, you've got to get down to brass tax on some of these policies that Candy was talking about. The financial crisis, you have to get on that right away. You just can't just find old faces, you have to mix it in with some new faces.
[Cooper:] So is he going to bring in Republicans?
[Henry:] There's a good chance of that. And one reason why Barack Obama has given us a clue repeatedly by saying he really enjoyed that book "Team of Rivals" about Abe Lincoln by Doris Kearns Goodwin. And basically that Lincoln brought all of these people around the table and they weren't all in agreement; different parties, et cetera. And that's why someone like Colin Powell could be at the table. That's why Chuck Hagel and even Robert Gates in the Bush administration. Obviously Barack Obama has disagreed sharply with President Bush on Iraq, for example, but Robert Gates has been pretty much a realist and has been not on the same page completely with the Bush administration. He's been pushing them to make changes; that could be a smart move.
[Cooper:] Gates obviously brought in to replace Rumsfeld.
[Henry:] That's right.
[Cooper:] Ed Henry, we'll be watching, thanks. Let us know what you think of Obama's choices so far. Join the live chat, ac360.com. I'm about to log on. Check out Erica Hill's live Web cast during the break, as well. Just ahead, President-elect Obama, he's called for Americans to pull together, but some ruby-red conservatives are already on the attack, pulling no punches. We'll tell you what they are saying already. And Governor Sarah Palin returning to Alaska, new details about bitter infighting in the McCain campaign are leaking out. Coming up, the explosive new charges and Palin's response. Plus this
[Sasha Obama, Barack Obama's Daughter:] Love you, daddy. Bye.
[Cooper:] That was Sasha Obama during the campaign before her dad was elected president; now she and her sister Malia heading to the White House. The promise of a new puppy, what's life going to be like for them at 1600 Pennsylvania Avenue? We'll look to the past for some answers.