tv PBS News Hour PBS October 19, 2011 6:00pm-7:00pm EDT
captioning sponsored by macneil/lehrer productions >> woodruff: riots erupted in greece today as thousands protested another round of tax hikes and spending cuts. good evening, i'm judy woodruff. >> ifill: and i'm gwen ifill. on the "newshour" tonight, we get two on-the-ground reports from athens on the clashes and the austerity measures aimed at easing the nation's debt crisis. >> woodruff: then, we recap the sparring at last night's republican presidential debate with political editor david chalian and "washington post" fact checker glenn kessler.
>> ifill: margaret warner examines the first cost of living increase for social security recipients in three years. >> woodruff: from rio de janeiro, fred de sam lazaro reports on one man's push to close the digital divide in brazil. >> the more brazil's poor gain access to technology and the know how to use it, the more they can participate in the country's booming economy which would get a $1 billion stimulus for the world cup and olympics. >> ifill: and jeffrey brown assesses the state of the banking industry, as some of the largest financial institutions report growing losses. >> woodruff: that's all ahead on tonight's "newshour." major funding for the pbs newshour has been provided by: >> computing surrounds us. sometimes it's obvious and sometimes it's very surprising where you find it. soon, computing intelligence in unexpected places will change our lives in truly profound ways. technology can provide
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foundations. and... this program was made possible by the corporation for public broadcasting. and by contributions to your pbs station from viewers like you. thank you. >> woodruff: a huge protest in athens, greece 100,000 strong erupted into rioting that lasted for hours today. the trouble broke out during a general strike aimed at new austerity measures. we have a report from martin geissler of "independent television news." >> reporter: with the greek government desperate to project an image of stability to the world this was athens today. running battles, rocks and teargas. hundreds perhaps thousands of rioters fighting with police. public anger clashing with europe's financial demands.
the bailout money greece needs to survive comes at a punishing cost-- tax hikes, wage cuts, tens of thousands of redundancies. the people have reached a breaking point. inside the greek parliament m.p.s were debating another package of cuts. outside in the choking teargas the message was clear-- the country as been squeezed to the point of suffocation. this began as a peaceful protest, tens of thousands converging on syntagma square to have their voices heard. they believe their government is the cause of this crisis not the solution. all classes, all ages represented. pensioner angelic barkitari came with three generations of her family. she has four children and husband all out of work. in all her years, she's never seen her country in this state. >> ( translated ): it's awful, these politicians have stripped the whole of greece and if we don't get rid of them, they'll keep doing it.
>> reporter: the greek government may dismiss today's violence as the actions of a minority but they can't ignore the broader message. the people here are seething. half the country was on strike today. for the youth, it's not just about jobs and money. they say they're being robbed of their ambitions and their dignity. >> we work like slaves, there's no future here. this is really bad, this it's really difficult for a young person to not have dreams. >> reporter: this evening the teargas and the crowds are dispersing but the anger isn't going away and tomorrow with the m.p.s expected to pass another package of cuts, another day of action is planned. this city is bracing itself once again. >> woodruff: for a closer look at the situation in greece, we check in again with john psarapolous, a freelance reporter based in athens. john, obviously there have been demonstrations before what was different about what happened
today? >> well, today you had a very, very large number of people, definitely the crowd was in the tens of thousands. you also had some very young people there-- people in the high school ages because schools are on strike. but you also had, of course marx which you are workers from people in their 20s all the way up to people close to retirement. it's very broad representative swath of society. what perhaps made it different is that now that the country is in such desperate shape for its sixth installment of this bailout plan people really feel it's a make or break moment for greece and these demonstrations timed to coincide with parliamentary debates have happened but now people feel that everything really is at stake and that's reflective in the debate inside parliament as well. >> and, john, what is it that the protestors say they want. are they in agreement on any set of demands? >> well, many people who work
for the public sector simply don't want this bill to go through because it carries into law promise it is the country's creditors. it will retire 30,000 people from the public sect orr. it will lower pay for the remaining 550,000 odd and it will also make it easier to fire people next year in a sector that has got used to tenured life long employment. if you ask people in the private sector they want the government to do more to develop the economy, to focus on boosting the economy which is now in its third year of recession. there are different reasons for opposing this bill. some people because their livelihoods are directly affected and others because they feel it's pushing us in the grand direction, deepening the resection and steepening up the rate at which greece seems to be falling apart economically.
rough rough john, you were telling me earlier the stresses of what's now taking place are reaching deep into society. you were telling me about people leaving the country. about how this is affecting people's health. >> there are enormous numbers of people leaving the country. highly educated highly skilled white-collar workers. you here conversations in the medical professions about hue howe highly specialized doctors no longer have a client base here and they have gone to the more lucrative markets of northern europe or the united states. you hear about people in the arts, even, graphic designers leaving, going to north america if they can. a lot of repatriated beaks who have dual citizenship are doing so and it's becoming more and more palpable to everyone that greece is going nowhere fast. this country is not going to be
a viable job market for young people entering the job market and graduating for the university maybe for the next decade in people's perception and therefore the future is elsewhere. rough rough you also were describing health strains, more people having heart attacks. >> there are enormous stresses in just about every profession you care to mention. from advertising to frans but also to blue-collar professions, plumbing, electrical work. everything has gone down. ask any sector of the economy. take something as simple as gasoline. gasoline consumption has gone down 35% in the last year and a half. 1,100 petrol stations have shut down. that's a very large number of small and medium-sized enterprises out of work. that's a family at least, maybe two or three families behind each business. we had a local jeweler suffer a
fatal heart attack over the summer because he was so stressed about the way his business was going leaving two small children behind and it's happening all over town. you hear an eck totally stories of people who are simply not able to cope with the stress of many remaining and the profession that they're in. people aren't even hoping for anything better, that i ear just trying to survive. rough rough john sar rap louse in athens giving us a human look on what's taking place on the ground. thank you. >> ifill: still to come on the "newshour": the attacks and counter attacks at last night's g.o.p. debate; the increase in social security payments; technology bringing change in brazil and the state of the troubled banking industry. but first, with the other news of the day. here's kwame holman. >> holman: the federal reserve reported today the u.s. economy improved slightly in most regions in september and early october. and home building increased in september, by the most in 17 months. but wall street had a down day.
the dow jones industrial average lost 72 points to close at 11,504. the nasdaq fell 53 points to close at 2,604. citigroup has agreed to $285 million in fines and repayments to investors to settle charges it committed civil fraud before the housing collapse. the securities and exchange commission said citigroup sold mortgage-backed investments of dubious quality then secretly bet on their failure. goldman sachs and j.p. morgan chase already resolved similar charges. goldman paid the largest settlement so far-- $550 million. it was a long night and day around zanesville, ohio, after dozens of lions, bears and tigers escaped. in all, 56 exotic animals were let loose tuesday by the owner of a wild-animal park. police said the man then committed suicide. authorities launched an all- night hunt for the animals. 48 were killed, and six were
captured. by this afternoon, only two were still on the loose-- a wolf and a monkey. sheriff matt lutz said deputies and veterinarians initially tried to capture the big predators. he described an encounter with a bengal tiger. >> this vet had more guts than i did by far. with a dart gun, he got very, very close, probably from one side of this tent to the other and tried to tranquilize this thing. i think we hit it, but as we did, got up showed very aggressive behavior and starting towards her and then turned and started running away from us. at that point, we didn't know if the tranq would work. we didn't know for sure how far the animal was going to go and we weren't going to take any chances of that tiger getting loose and we had to put it down. >> holman: schools in the area were closed for the day, and people were warned to stay inside their homes. and, the danger may not be over.
the monkey still on the loose likely is infected with herpes "b"-- a virus dangerous to humans. turkey launched an incursion into northern iraq today after kurdish guerrillas killed 24 turkish soldiers and wounded 18. the kurds attacked military outposts and police stations at two turkish border towns early this morning, then fled back into iraq. hours later, turkish helicopters and air force bombers crossed the border to attack kurdish fighters. armored vehicles also moved to join the hunt. in syria, activists reported security forces killed at least ten people today. at the same time, thousands of people filled the streets of aleppo, for a rally in support of president bashar al-assad's regime. the crowds waved flags and pictures of the syrian president as music and chanting rang out. anti-government protesters meanwhile held rallies elsewhere across the country. secretary of state hillary
clinton has arrived in kabul, afghanistan, on an unannounced visit. she flew in late this evening and was greeted by u.s. military and diplomatic officials. clinton plans to press afghan president karzai to continue reconciliation efforts with the taliban. in another development today, roadside bombs killed two nato troops in eastern afghanistan. floods threatening bangkok, thailand grew ever more critical today and the prime minister admitted her government is overwhelmed. she insisted officials are doing all they can, but she urged reporters to stop asking if the city will be inundated. we have a report from john sparks of "independent television news" on the situation just north of bangkok. >> reporter: some use shovels, others use their hands. students and teachers, secretaries and road sweepers, everyone digging furiously in the blistering heat. no time to lose on bangkok's northern boundary.
there was an emergency barrier to build along the hokwok canal by a volunteer army several thousand strong. >> ( translated ): everyone is worried sick, but you can't feel scared. you have to fight. >> reporter: last week the governor of bangkok told us ho could manage the flood risk to his city, but he's not saying that now. >> everyone is worried sick but flood waters from the north are approaching faster than anyone expected. >> you don't have to be a rocket scientist to say that there'll be an overflow somewhere. >> there will be floods in bangkok? >> we are trying our best to avoid it but the situation is drastically different from yesterday morning-- that's what i mean and i have given warnings to the people to make initial preparations. >> reporter: the governor-- now directing a fighting retreat a on the city's outskirts-- dykes, canals and sandbag walls have been overwhelmed. main highways have been cut and communities and industrial parks inundated.
a great deal of effort and a lot of faith is being put in this wall and it appears that it will soon be tested. we've been told that a large body of water lying 15 kilometers north of here is flowing in this direction and these people are running out of time. tens of thousands of people have already been evacuated and the authorities put the residents of seven city districts on notice today. and that large body of water? due in 24 hours, we're told. it's going to be an anxious wait. >> holman: those are some of the day's major stories. now, back to gwen. >> ifill: and to presidential politics and g.o.p. debate, round eight. it was the most pointed and personal exchange of the year. >> why don't you let me speak? ( crosstalk ) >> you're allowed... you're allowed to change... you're allowed to change. >> rick, you had your chance. let me speak. >> you can't change the facts. >> ifill: the clashes-- strident and severe-- came early and often last night, as seven republican contenders squared off in las vegas.
the feistiest exchange occurred between the two candidates with perhaps the most at stake-- former massachusetts governor mitt romney and texas governor rick perry. the hot button: illegal immigration. >> mitt, you lose all of your standing, from my perspective, because you hired illegals in your home and you knew about it for a year. and the idea that you stand here before us and talk about that you're strong on immigration is on its face the height of hypocrisy. ( laughter ) >> governor romney? >> rick, i don't think i've ever hired an illegal in my life. and so i'm afraid-- i'm looking forward to finding your facts on that, because that just doesn't... >> well, i'll tell you what the facts are. >> rick, again-- rick, i'm speaking. >> you had the-- your newspaper- - the newspaper... >> i'm speaking. i'm speaking. i'm speaking. >> ifill: when romney, in turn, criticized perry's record on the same topic, the fight broke out again. >> texas has had 60% increase in illegal immigrants in texas.
if there's someone who has a record as governor with regards to illegal immigration that doesn't stand up to muster, it's you, not me. ( applause ) >> governor perry, you have 30 seconds. >> you stood here in front of the american people and did not tell the truth that you had illegals working on your property. and the newspaper came to you and brought it to your attention, and you still, a year later, had those individuals working for you. >> we hired a lawn company to mow our lawn, and they had illegal immigrants that were working there. and when that was pointed out to us, we let them go. and we went to them and said... >> a year later? >> you have a problem with allowing someone to finish speaking. and i suggest that if you want to become president of the united states, you have got to let both people speak. so first, let me speak. ( applause ) so we went to the company and we said, look, you can't have any illegals working on our property. i'm running for office, for pete's sake, i can't have illegals. it turns out that once question,
they hired someone who had falsified their documents, had documents, and therefore we fired them. >> reporter: but romney was not the night's only target. now riding at the top of several polls, former godfather's pizza chief executive herman cain was greeted with new scrutiny of his 9-9-9 tax reform plan. >> we also have to be concerned about the hidden tax of the value-added tax, because at every step and stage of production, you'd be taxing that item 9% on the profit. that's the worry. >> herman's well-meaning, and i love his boldness, and it's great. but the fact of the matter is, i mean, reports are now out that 84% of americans would pay more taxes under his plan. that's the analysis. >> herman, i love you, brother, but let me tell you something, you don't need to have a big analysis to figure this thing out. go to new hampshire, where they don't have a sales tax, and you're fixing to give them one. they're not interested in 9-9-9. >> the worst part about it is, it's regressive. a lot of people aren't paying any taxes, and i like that. i don't think that we should
even things up by raising taxes. so it is a regressive tax. so it's very, very dangerous. and it will raise more revenues. >> ifill: cain called the critique misguided. >> and all of the claims that are made against it, it is a jobs plan, it is revenue- neutral, it does not raise taxes on those that are making the least. all of those are simply not true. the reason that my plan-- the reason that our plan is being attacked so much is because lobbyists, accountants, politicians, they don't want to throw out the current tax code and put in something that's simple and fair. they want to continue to be able to manipulate the american people with a ten-million-word mess. let's throw out the ten-million- word mess and put in our plan, which will liberate the american workers and liberate american businesses. >> ifill: but romney pressed cain for more. >> will the people in nevada not have to pay nevada sales tax and in addition pay the 9% tax?
>> governor romney, you're doing the same thing that they're doing. you're mixing apples and oranges. you're going to pay... >> i'm... >> no, no, no, no. you're going to pay the state sales tax, no matter what. >> right. >> whether you throw out the existing code and you put in our plan, you're still going to pay that. that's apples and oranges. >> fine. and i'm going to be getting a bushel basket that has apples and oranges in it because i've got to pay both taxes, and the people in nevada don't want to pay both taxes. >> ifill: candidates like former house speaker newt gingrich were left to force their way into the raucous debate. >> let me just point out for a second that maximizing bickering is probably not the road to the white house. ( applause ) and the... the technique you've used maximizes going back and forth over and over again. >> ifill: and minnesota congresswoman michele bachmann went out of her way to remind viewers she was the only woman on the stage. >> when you talk about housing, when you talk about foreclosures, you're talking about women who are at the end of their rope because they're
losing their nest for their children and for their family. i'm a mom. i talk to these moms. i just want to say one thing to moms all across america tonight. this is a real issue. it's got to be solved. >> ifill: after five debates in six weeks, the republican candidates get something of a break. they don't meet again until next month. for more we are joined by "newshour" political editor david chalian and glenn kessler, author of "the fact-checker" column for the "washington post." first, david, it seems that we have been through a lot of debates and there are at least a dozen more announced to go and that the stage for the primary campaign has shifted from plant gates and living rooms to these debate stages. >> i'll be shocked if we see a dozen more debates. (laughs) but it is true, gwen, that we have not seen the traditional
hallmarks of campaigning, or not nearly as much as we normally have in previous cycles by this point. i was just looking, for instance four years ago, mitt romney in the third quarter of the year before the election had spent $21 million already, he was up on the air with television ads, he had lots of staff organizing in the early states. this last quarter four years in he only spent $12 million. nearly half as much money. these guys are husbanding their resources right now. they are preparing for a potentially long nomination fight. a lesson they learned with barack obama and hillary clinton's fight in 2008 and so they're relying on these debates more and or in get their message out to get a lot of voters keyed into their message at one moment time and i think what you'll see now going forward sr. that a little bit more of that traditional campaign will start to take place because we're getting so close to the beginning of the voting. fill fill but it's cheaper to
debate than have ads. >> cheaper to debate. fill fill we saw them go after each other about specific issues the immigration issue was a by issue. obviously rick perry came prepared to raise the question about mitt romney's hiring of illegal immigrants on his property, at his home in massachusetts. what's true? >> well, this was an issue that was raised in the last presidential campaign. it is correct that mitt romney hired a lawn company that had illegal aliens working on it and the "boston globe" exposed it. whether romney knowingly hired illegal aliens, i don't think you can make that case. i mean, he found out about it, he complained to the company and as the story goes a year later the "boston globe" discovered yet again that they had illegal aliens and so then he fired the company. >> ifill: so technically a company he had hired did employ
illegal aliens but he personally did not know of it, that's his defense? >> right. that's as much as we know about the story. >> reporter: so the other attack which is romney pushing back at perry-- and i want to get this right-- he said that texas had a 60% increase in illegal immigrants while perry was governor, or at least in the last ten years, and that 40% of the new jobs that had been created in texas that perry likes to boast about were created for illegal immigrants. what's true about that? >> there are two statistics from two different sources. the first one comes from the department of homeland security and that does show that year 2000 to 2010 there was that increase in illegal aliens in texas and the comparison that romney was trying to make was that you didn't have the same increase in california and florida. that's official government data. it's true that... but can you blame romney for that? >> ifill: you mean perly. >> can you blame perry for that?
that's a stretch. the other statistic comes from a report by a pretty conservative interest group and there... you know, romney was cherry picking data from the report, there's a range there of 27% to 40% and then in the way they get that is they kind of pick the number out of a hat. so that you have to be a little more wary of. >> pelley: why is immigration such a big issue for them. why are they choosing this to stake their claims on? >> because it's such a big issue for the voters they're courting. it is one of those issues that is a hot-button issue inside that republican nominating electorate. it believes... lots of americans are concerned about illegal immigration but for this group of voters it lives inside their echo chamber conservative talk radio, it's a very hot topic there so as you're trying to woo the folks that do show up to iowa caucuses, to that do show
up to the south carolina primary this is an issue that they talk about and care about and the candidates can about it it at every single town halls so you're seeing two heavyweight contenders trying to box each other out because they have weaknesses on the issue so they're trying to look like they're the stronger one on it. >> ifill: 999, the herman cain tax reform plan which came under attack from almost everyone on the stage, who's going to pay more taxes, who's going to pay less? >> well, you saw in the clip you ran rick santorum threw out a statistic and give him credit for being up on the news because literally just two or three hours before the debate the very respected non-partisan tax policy center which is jointly run by the urban institute and brookings institution did the first comprehensive look at w wins and who loses. and what it showed that the bottom 84% of the taxpayers, individuals, would pay more in taxes under 999 and that upper
16%-- particularly the very wealthy-- would have a winfall, a huge winfall. >> ifill: and cain has been saying people would not pay more. >> he said particularly in the debate people who currently earn the least would not pay more. actually what the tax policy center showed was that it would... it would raise the same amount of revenue. that's correct. that's an assertion cain has made and that's what they found. it would raise the same amount of revenue but it would be skewed dramatically as a big winfall for the rich and for someone who currently pays little or no taxes you would be hit with a big tax increase. >> ifill: this is something which obviously you can say cain used this to catapult to the top of the race, the simplicity of it is very appealing to people. is it still building or losing them? >> well, we're going to wait to see how polls shake out now that analyses like this one are getting out there and being exposed. but, gwen, you hit on it right there in what you were saying is that the way he presented it helped him catapult to the front
of the polls. i don't know that the policy itself. people definitely are hungry for an overhaul of the tax code. that's a very popular position. the simple way he presented it with his manner very easy manner presenting it is no doubt what helped propel them to the front of the polls. now that he gets extra scrutiny as well as his foreign policy answers yesterday will get scrutiny i think you're going to start to see herman cain perhaps have to struggle to remain in that position unless he can get more many validators on board that these are actually policies worth consideration. >> ifill: there are so many things we could take apart from last night but we don't have a lot of time left. doing your job, glenn, fact checking what these candidates say, do these debates make it easier to hold them accountable for their climbs or this something we're going to see go back to television ads, whatever people see in living rooms? >> i'd like to think that the column i write and the other fact checking organizations do
make a difference and you do see if a candidate says something that is terribly false the worst award with give someone is four pinocchios. if they get four pinocchios they tend to change their language or might drop that line. so i feel like we're holding them to account. >> ifill: david, we have three weeks without a debate and then they start again. what happens? how does the campaign change? >> we'll see a lot more retail campaigning, candidates spend a lot more time in iowa and new hampshire specifically. >> ifill: like jon huntsman who wasn't there last night. >> exactly. jon huntsman's whole candidacy is based in winning new hampshire so he opted out of the debate. so as the calendar takes shape you'll start seeing real grass-roots on-the-ground organizing. who is my hard committed supporter who will turn out on election night? and we'll see television ads. it's going to be both positive for people not that well known, the candidates need to introduce themselves into these people's living rooms but trust me before
too long, gwen, probably before the next debate we'll see negative television ads. >> reporter: glenn kessler of the "washington post" will be there to tell us about it. thank you, too, david. >> woodruff: now, a long-delayed rise in social security benefits and its impact on seniors. margaret warner has the story. >> warner: seniors and the disabled haven't seen an increase in their social security checks for nearly three years. but today, the government said 55 million recipients will get a 3.6% bump in benefits, next january. the cost-of-living adjustment is tied to inflation. it means the average annual benefit of $14,200 will go up $43 a month or $516 a year. the changes affect one in five americans. for more, we turn to robert reischauer, president of the urban institute. he serves as one of the public trustees of the social security and medicare trust fund.
>> welcome back to the program. >> thank you. >> warner: first explain hot-button issue. why did seniors get no increase since january '09 when, in fact, we have seen inflation since then. >> well, what happened is they got a very large increase in january of' 909 because energy prices went up very rapidly in 2008 when we calculate this adjustment no sooner had they gone up than they fell and the overall price level then fell down below what it was in 2008 and until the price level gets back up above the point at which the previous adjustment was made there are no colas. so we went two years without colas, but in effect if we had been able to adjust our benefits monthly on exactly what inflation was doing, beneficiaries were a little better off than they would have been because of this big bumpup.
>> now, explain to us what percentage do seniors really depend on social security for the basics of life and for them how significant a boost is this? >> well about two-thirds of recipient units rely on social security for over half of their income and about 35% rely on it for 90% or more for their income so a very significant fraction of elderly in america are critically dependent on their social security checks and while this might not seem like a huge amount of money, $500 a year, it is very important to them especially when they're phasing rising costs from maybe medical expenditures and other things that they consume more of than the rest of us. >> now that raises a point. the advocacy groups for the elderly saying it's nice but 3.6% does not match the rate of inflation in health care costs to them which has been more than
double digited. >> that's probably true but they consume, obviously, a lot more than health care alone but there have been some experimental indexes trying to ferret out what are the price increases for products that the elderly face and by and large i think that evidence shows that they do face a slightly higher rate of inflation than an t average american worker. >> woodruff: so there's certain categories they may not see as much inflation, they don't use this much of. the >> they might not use as much gasoline, energy, for example. certainly we know that they spend a lot more of their income on health care. >> so in general the economic downturn we've seen the last couple of years, how has it affected older americans or retirees versus... or how differently than working americans? >> well, the interesting fact is that family income among
families with 65-year-old household heads has gone up a little under 4%, 3.9% since 2007 when we had the peak of economic activity. on the other hand the median income-- this is all injusted for inflation, the median income of under 65-year-old families has gone down by about 6. of course the answer to that is rather simple. it's that the elderly are less affected by job loss. >> warner: even though their requirement accounts or savings accounts aren't kicking up as much income. >> they aren't. but they don't receive a huge amount of their income from assets, only about 11% overoverall. many have pensions from government or private sector kicking in and those haven't
been reduced significantly. >> warner: looking even more broadly, if this is going to affect one in five americans-- because this increase affects disabled and other people getting payments-- will it have a wider effect on the economy in terms of consumer spending? >> certainly it will. it will help. we're going to beef up the checking accounts so to speak of a significant portion of the american population at a time when we have a need to stimulate demand. so in a macroeconomic sense this is good news. >> warner: and finally how sure a thing is this? i mean, is this for sure this will happen in january or could it come up on the chopping block in these deficit talks? >> there's no chance of that at all. this is baked in the cake at this point and one thing we should mention, though is that a certain fraction, about a third of it for many seniors will be absorbed by rises in their medicare part b premiums.
have also not risen for last two years because there has been no cola. so it's not all money in the bank. so to speak. >> warner: so they are expecting an increase in their medicare premium which has been deductd? >> yes, they will. it has been frozen to $96 a month it will go up to close $110. >> ifill: next, we take another look at economic inequality, this time in a developing nation. special correspondent fred de sam lazaro reports on how one man is using technology to transform lives in the slums of brazil. >> reporter: rio de janeiros gleaming skyline befits a world economic power. but there's another world not far from the skyscrapers and storied beaches of copacabana, starkly visible in the surrounding hillsides.
it is a violent world. even after police crackdowns and community policing initiatives in these slums or favelas, rio had 4,800 homicides in 2010, ten times the number in new york city which had the most murders among u.s. cities. social entrepreneur rodrigo baggio blames much of it on drug gangs and says it is rooted in poverty. >> ( translated ): brazil is the seventh largest economy in the world, but it is also has one of the world's highest levels of inequality-- a large portion of the population lives in economic and social exclusion. and people in these favelas they earn very low incomes. >> reporter: rodrigo baggio grew up in a privileged rio family, a self described computer nerd. but he's focused much of his work on using technology to tackle that inequality. his center for the democratization of information technology, or c.d.i. works with local community or
faith-based groups to bring technological literacy to people in the favelas. for years, c.d.i. has trained people from the community so they then can teach others the basics about software, how to do research on the internet, how to shoot and edit video, often with just cell phones. such equipment may be more accessible now, but baggio wants to transform how those tools are used. >> ( translated ): technology and technological inclusion allows for an impact that's greater than just learning how to use a computer and being able to have access to internet. the big impact is that it empowers low-income communities because it teaches them to utilize technology to um, understand their reality in a better way and identify the challenges that they face. >> reporter: baggio's favorite example is this video, posted on youtube by a group of young people.
>> ( translated ): these kids went out with cell phones and, and digital cameras and they were interviewing community members and taking pictures to, in order to better understand their reality, the challenges that they face in the community. and they chose an example of a photo of rats, some kids, one of the kids had taken a photo of rats. >> reporter: they traced the rat problem to garbage not properly disposed of or collected. then they spread the word through hand made and computer- generated fliers. they sent this video to the mayor, posted it on you tube and baggio says all the publicity got a response from city hall. it resulted in better trash services. >> ( translated ): i mean, this is a story, you know ten kids from a class that used technology, used the internet to, to discover a problem, and... and find a solution for it and change their reality as a result. and then the rats disappear. >> reporter: baggio left a prosperous career in business in 1995 to start c.d.i., looking to
combine volunteer work he'd done with street kids and his computer savvy. he relied mostly on corporate donations early on. today, there are 820 cdi- affiliated centers, which have served 1.3 million low income people across brazil and 13 other countries. c.d.i. still gets corporate donations but designs self- sustaining enterprises: once a computing school is set up, the community partners must maintain them, often through nominal fees for students who can afford it. at this community center, a hardware repair shop employs c.d.i. alums and generates income for the school. just up the hill, another alumnus alex jose do nascimento opened his own tiny cybercafe. >> ( translated ): because this is a very poor area of the slum
and they had never had access before really at all. i hope that for the next few years, 2014, and 2016, to really be able to grow this business. >> reporter: 2014 is when soccer's world cup comes to rio, followed by the 2016 olympics. nascimento hopes to benefit from the windfall in spending by the city and tourists. so are many people who work in poorly paid jobs-- hotel maids and restaurant help-- who are signing up with this c.d.i.-run training center to upgrade their career prospects. 23-year-old wanderson skrock is the center's manager. he's also getting his business degree in college. he's come a long way since running into a c.d.i. trainer while in a juvenile prison for drug dealing. >> ( translated ): the internet really opened my eyes. when i was a drug dealer, i had all the money, all the bling, all the women, all the material things that i wanted but i didn't have freedom. i was afraid to leave my
community, afraid to go to the beach, shopping; i didn't go to the malls; i lived in fear. i really fell in love with these guys, rodrigo's story and several of the other teachers, i started to learn about them and saw that it was kind of this happy family and i wanted to become part of this happy family. >> reporter: rodrigo baggio says technology is bringing sweeping change around the world, but it must be channeled properly. >> ( translated ): we're seeing these spontaneous revolutions happening in north africa and the middle east where people have been using technology to get access to information for mobilizing. this can happen in a chaotic way as in england recently, where kids outside the mainstream that don't have access to computers and clothes and stuff are now breaking into stores. but they can happen in a more organized way as well technology is a tool that allows people to mobilize in order to gain a better quality of life.
>> reporter: and the more brazil's poor gain access to technology and the know how to use it, the more baggio says they can participate in the country's booming economy, which will getting a $100 billion stimulus in new roads and other improvements for the world cup and olympics. >> ifill: fred's reporting is a partnership with the under-told stories project at saint mary's university in minnesota. >> woodruff: finally tonight, one more economic story. this tied to a subject of heated discussion and protests these days-- the health of big u.s. banks. jeffrey brown has the story. >> brown: even as the occupy wall street protests continue nearby, some of the nation's largest financial firms are reporting that they're feeling a very particular and different kind of pain just now to their bottom lines. goldman sachs announced a $428 million loss for the third quarter yesterday, just the
second loss since it went public in 1999. j.p. morgan chase, now the nation's biggest bank, posted a profit decline, its first in three years. and bank of america, which just fell from number one, did have a third quarter profit, but much of that was reportedly due to accounting procedures, instead of strong basic business. we assess the state and future of the banks now, with bert ely, a banking industry consultant who runs his own firm in washington, d.c. and simon johnson, m.i.t. professor former chief economist at the international monetary fund and co-author of the book "13 bankers." simon, i'll start with you. let's acknowledge that everyone bank has its own particular issues. as a general proposition, what's the state of the industry right now? >> i'll tell you that the state of the very largest banks, the bellwethers, if you like, is pretty bad. the biggest banks, i think, are proving themselves to be too big to manage. the management of bank of
america in particular is really struggling but even goldman sachs seems to be having great difficulties in today's market. >> brown: bert ely, general proposition? what do you see in >> well, i think simon makes a good point about the manageability problems in these large banks and that's why we see some downsizing taking place. but there are problems for the industry as a whole. these very low interest rates that we have today and will last for a couple of years are hurt the prooft the profitability of the banks. fee income of various types is down also and particularly for the smaller banks they're facing with rising costs of complying with banking regulations. so there are a variety of pressures on the banks and they're not going to ease up too soon. if there's any good news at all, it's that many of the banks are putting the worst of the loan loss problems behind them but on the other hand if things really get bad in europe, that will have spillover affects in the u.s. economy which would not be
good for the banks. >> john: so some of those things clearly go to the weak economy. others bert ely is puting on the table include regulatory factors. how important do you think regulation is at this point? >> i think a little bit less important. i would emphasize the interaction of the shocks coming from europe with the fact that we don't have a lot of capital. there isn't much equity financing in their banks and therefore they don't have strong buffers against losss so when they see the potential dangers coming from europe they hunker down, they cut back on loans, they get ready for the storm in that passion and that has a negative contracting effect on the rest of the economy. >> brown: simon, how much of the problems are self-inflicted problems that never got resolved? we talk misdemeanor times on this program several years ago in the midst of the financial crisis about all the bad assets out there. how much of that, simon, is still hanging out there and still with us? >> an enormous amount,
unfortunately and self-inflicted is exactly the right term. there is estimated to be about $700 billion in negative equity in residential mortgages. that's mortgages worth less than the house... the house is worth less than the mortgage and that, of course, is sitting on the bank's balance sheet. they don't want to deal with it, they don't want to do a write-down of it of any kind and that's paralyzing that the housing market and leading to blights in many communities where the banks don't want to take a loss and move on because they don't have enough capital. they never raise enough capital, they don't have enough equity to absorb the losses and they're fearful of what would happen and how the market would see their future if they were recognize those losses. >> brown: bert ely you listed some of the problems now but you didn't say self-inflicted wounds. what do you think about what simon johnson just said? >> i think there are certainly lot of self-inflicted wounds from several years ago being dealt with. i would differ with simon in terms of where those losses are.
there are a lot of losses that are going to be borne by investors outside the banks. the issue that the banks still had lope issues they have to deal with but a major problem they have today is their more credit worthy customers are reluctant to borrow because of their uncertainty about what's happening in economy and simon does make a very good point about the interaction between the u.s. economy and the european economy which, again, i think giving people... making a lot of people very cautious about such decisions as to invest and borrow. to build new buildings and factories. >> brown: bert ely, if some unwinding is necessary still, even if painful, that's such a bad thing. perhaps banks just lower their expectations the way so many other sectors have, including consumers. >> i would say certainly from an earn gs growth standpoint expectations are not very high
right now the banks are still working through problems but to come back to the banks not having enough capital, in order to attract that capital, banks have to have strong profitability and good growth prospects and many of them right now don't that. so you have a chicken and egg situation and unfortunately because of the weak economy we'll continue to stumbling along for a while as the banks slowly work through their problems of the past but are also dealing with the week economy in this current regulatory environment. >> brown: what do you think, simon johnson, about this notion of a new normal of lowered expectations that may not be such a bad thing given what we've saw through the last bunch of years. >> perhaps that's some extent that's true. i think the banks left to their own devices are adjusting slowly. bank of america for example is a $2.2 trillion bank. that's their total assets. their dramatic restructuring amounts to tens of billions of dollars of asset disposals.
it's too little too late. bank of america destroys enormous amount of value. it bought companies, paid $148 billion for companies in the past ten or so years. the market value of bank of america today is between $65 and $70 billion. they're too big to manage. they're destroying shareholder values. the shareholders should be demanding that bank of america is broken up. >> brown: continue on that, simon. you've argued that for a while. is that where we're heading given the lower profits that we see? the lower earnings. are we heading towards smaller banks or fewer and bigger banks? >> i think the political dynamic around this question, jeff, is beginning to change. governor jon huntsman, presidential candidate on the republican side had a piece in the "wall street journal" this morning saying simply too big to fail is too big. a very powerful strong message that resonates across the right and the left and huntsman said you can do this in various ways
and if you don't do it we'll end up like europe where in the best-case scenario the state is going to take over the banks and you'll have even more of a mess with the government trying to run credit. actually you don't want to go there but that's unfortunately where the obama administration policies are taking us and that's where the proposals that mitt romney puts forward is also taking us. so i think we could be on the verge of a very interesting new political discussion on these issues. >> brown: what do you think of that? >> i think first of all we are seeing and will continue to see the very largest banks do selective downsizing. for instance bank of america's said they were going to close 50 branches and reduce their employment by 30,000. we'll see... citigroup has been going through that. but at the same time we are also going continue to see consolidation within the banking industry, particularly among smaller banks because they're having a hard time making money and they are burdened with these regulatory costs. i don't think we're going to see the big banks broken up by the
government. i think what we will see instead is that they themselves under regulatory pressure and government pressure downsizing, selling things off, shutting things down but i don't think we're going to see a dramatic restructuring of the u.s. banking industry. >> all right. bert ely, simon johnson, thanks very much. >> thank you. >> ifill: again, the major developments of the day: riots erupted in greece as thousands protested another round of tax hikes and spending cuts. the social security administration announced millions of beneficiaries will get cost-of-living adjustments in january-- the first in three years and authorities near zanesville, ohio killed nearly all of the 56 lions, tigers and bears that escaped from a wild- animal park tuesday night. we add more content to many of our stories online. tonight, an offbeat take on a
country western song from an economist you'll recognize. kwame holman explains. kwame? >> holman: paul solman and simon johnson break down the lyrics to a ballad about modern-day finance from crooner merle hazard. that's on our making sense page. on brazil, find fred's post comparing population growth and prosperity there with another emerging power, india. that's on our global health page. plus, on our world page, see photos from sudan where fighting between the north and south has forced some people to escape and live in caves. all that and more is on our web site: newshour.pbs.org. judy? >> woodruff: and that's the "newshour" for tonight. on thursday, science correspondent miles o'brien looks at the elusive search for accurate predictions of earthquakes. i'm judy woodruff. >> ifill: and i'm gwen ifill. we'll see you online and again here tomorrow evening. thank you and good night. major funding for the pbs newshour has been provided by:
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