PBS NewsHour; August 17, 2011 6:00pm-7:00pm PDT

GOOD EVENING, I'M JUDY WOODRUFF.

>> Brown: AND I'M JEFFREY BROWN. ON THE "NEWSHOUR" TONIGHT, WE ASSESS THE ECONOMIC SLOWDOWN AND CHALLENGES AHEAD IN AMERICA'S HEARTLAND.

>> Woodruff: THEN, WE LOOK AT REPUBLICAN PRESIDENTIAL HOPEFUL AND TEXAS GOVERNOR RICK PERRY WHO TOUTS HIS STATE'S JOB GROWTH AND LOW TAXES AS A MODEL FOR THE REST OF THE COUNTRY.

>> Brown: PAUL SOLMAN EXPLORES WHETHER THE GROWING GAP BETWEEN RICH AND POOR CONTRIBUTED TO THE 2008 FINANCIAL COLLAPSE.

>> THOSE AT THE HIGH END ARE PUTTING SOME OF THEIR MONEY INTO LENDING TO EVERYONE ELSE. AND THOSE DOWN BELOW, THEY'RE DOING THE BORROWING. THAT'S CREATING A SOURCE OF ENORMOUS INSTABILITY. IF THERS A CONNECTION BETWEEN INEQUALITY AND FINANCIAL CRISES, THAT IS A CAUSE FOR CONCERN.

>> Woodruff: MARGARET WARNER UPDATES THE REVOLUTION IN EGYPT WITH GLOBAL POST'S CHARLES SENNOTT, WHO RETURNED TO TAHRIR SQUARE LAST MONTH.

>> Brown: AND RAY SUAREZ GETS AN INSIDE LOOK AT THE WORLD OF MODERN DAY PIRATES OFF THE COAST OF SOMALIA FROM AUTHOR AND JOURNALIST JAY BAHADUR.

>> Woodruff: THAT'S ALL AHEAD ON TONIGHT'S "NEWSHOUR." MAJOR FUNDING FOR THE PBS NEWSHOUR HAS BEEN PROVIDED BY:

>> I MEAN, WHERE WOULD WE BE WITHOUT SMALL BUSINESSES?

>> WE NEED SMALL BUSINESSES.

>> THEY'RE THE ONES THAT HELP DRIVE GROWTH.

>> LIKE ELECTRICIANS, MECHANICS, CARPENTERS.

>> THEY STRENGTHEN OUR COMMUNITIES.

>> EVERY YEAR, CHEVRON SPENDS BILLIONS WITH SMALL BUSINESSES. THAT GOES RIGHT TO THE HEART OF LOCAL COMMUNITIES, PROVIDING JOBS, KEEPING PEOPLE AT WORK. THEY DEPEND ON US.

>> THE ECONOMY DEPENDS ON THEM.

>> AND WE DEPEND ON THEM. ♪ ♪ MOVING OUR ECONOMY FOR 160 YEARS. BNSF, THE ENGINE THAT CONNECTS US. AND BY THE ALFRED P. SLOAN FOUNDATION. SUPPORTING SCIENCE, TECHNOLOGY, AND IMPROVED ECONOMIC PERFORMANCE AND FINANCIAL LITERACY IN THE 21ST CENTURY. THESE INSTITUTIONS AND AND WITH THE ONGOING SUPPORT OF THESE INSTITUTIONS AND 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.

>> Brown: PRESIDENT OBAMA WAS ON THE ROAD AGAIN TODAY OFFERING IDEAS FOR HELP IN THE RURAL ECONOMY, WHILE CONTINUING TO COUNSEL PATIENCE. HE SENT THAT MESSAGE AMID REPORTS OF A MAJOR SPEECH ON JOBS AND THE NATIONAL ECONOMY, IN SEPTEMBER. DAY THREE OF THE PRESIDENT'S ECONOMIC BUS TOUR FOUND HIM IN HIS HOME STATE OF ILLINOIS, INSISTING AGAIN THAT THINGS WILL GET BETTER.

>> I THINK A LOT OF TIMES THERE HAVE BEEN FOLKS WHO SAID, WHO WONDER, WHETHER OUR BEST DAYS ARE STILL AHEAD OF US OR ARE THEY BEHIND US. BUT I WILL TELL YOU WHEN I TRAVEL THROUGH DOWNSTATE ILLINOIS, WHEN I TRAVEL THROUGH IOWA, WHEN I TRAVEL THROUGH THE MIDWEST, I AM ABSOLUTELY CONFIDENT ABOUT THIS COUNTRY.

>> Brown: PRESIDENT OBAMA BEGAN THE WEEK IN MINNESOTA, WHERE UNEMPLOYMENT WAS AT 6.7% AS OF JUNE. THE STATE ALSO ENDURED A THREE- WEEK LONG STATE GOVERNMENT SHUTDOWN THIS SUMMER. FROM THERE, THE PRESIDENTIAL BUS ROLLED ON TO IOWA, WITH 6% UNEMPLOYMENT-- LOW BY NATIONAL STANDARDS, BUT WELL ABOVE WHERE IT WAS IN RECENT YEARS. ILLINOIS' JOBLESS RATE STANDS ABOVE 9%. IT'S ALSO FACING SEVERE BUDGET WOES AND SIGNIFICANT CUTS. SPEAKING AT A TOWN HALL IN ATKINSON THIS AFTERNOON, THE PRESIDENT ACKNOWLEDGED THAT A VITAL COMPONENT OF ANY TURNAROUND-- THE HOUSING MARKET -- IS AT LEAST A YEAR AWAY FROM COMING BACK.

>> THE FEDERAL GOVERNMENT IS NOT GOING TO BE ABLE TO DO THIS ALL BY ITSELF. AND IT WILL PROBABLY TAKE THIS YEAR AND NEXT YEAR FOR US TO SEE A SLOW APPRECIATION AGAIN IN THE HOUSING MARKET.

>> Brown: IN HIS BUS TRIP THIS WEEK, THE PRESIDENT OUTLINED SEVERAL RELATIVELY SMALL INITIATIVES TO SPUR JOB GROWTH IN RURAL AREAS. BUT TODAY, HIS AIDES SAID HE'LL LAY OUT A MAJOR NEW NATIONAL JOBS PLAN IN A SPEECH AFTER LABOR DAY. ONE THAT WILL INCLUDE TAX BREAKS, HELP FOR THE LONG-TERM UNEMPLOYED, AND SPENDING ON CONSTRUCTION PROJECTS. AND THE PRESIDENT WILL CALL FOR MORE THAN $1.5 TRILLION IN DEFICIT REDUCTION.

>> I DON'T THINK IT'S GOOD ENOUGH FOR US TO JUST DO IT PART WAY. IF WE'RE GOING TO DO IT, LET'S GO AHEAD AND FIX IT.

>> Brown: IN THEIR OWN CAMPAIGN TRAVELS IN IOWA, REPUBLICAN PRESIDENTIAL HOPEFULS HAVE BEEN HAMMERING AWAY AT THE JOBS ISSUE.

>> HOW MANY JOBS ARE YOU GOING TO CREATE?

>> AS MANY AS I CAN. OKAY?

>> WE'RE GOING TO MAKE SURE THAT GROW THE ECONOMY, GROW JOBS AND WE WILL RESTORE THE PROMISE OF THE FUTURE TO THE NEXT GENERATION. IT WILL HAPPEN.

>> Brown: THE JOBS THEME SEEMS CERTAIN TO ECHO WITH INCREASING URGENCY IN THE MONTHS TO COME. AND WE TAKE A CLOSER LOOK AT THE ECONOMIES IN THE REGION THE PRESIDENT VISITED, WITH DEE DEPASS, A BUSINESS AND ECONOMICS WRITER FOR THE "MINNEAPOLIS STAR TRIBUNE." DAVID SWENSON TEACHES IN THE ECONOMICS DEPARTMENT AT IOWA STATE UNIVERSITY. AND MICHELINE MAYNARD IS SENIOR EDITOR OF "CHANGING GEARS"-- A PUBLIC RADIO PROJECT ON THE FUTURE OF THE INDUSTRIAL MIDWEST. WELL, THIS BUS TRIP WAS MOSTLY AIMED AT RURAL AREAS. GIVE US A SNAPSHOT OF ILLINOIS WHERE THE PRESIDENT WAS TODAY.

>> WELL, THE ECONOMIC SITUATION ISN'T THE WORST IN THE GREAT LAKES BUT IT'S CLOSE TO THE WORST IN THE GREAT LAKES. UNEMPLOYMENT IS OVER 9%. WHEN THE YEAR STARTED, THE STATE HAD A $13 BILLION BUDGET DEFICIT. ITS PENSIONS WERE UNDER THREAT AND THE FIRST THING THAT HAPPENED HERE WAS THAT INCOME TAXES WERE RAISED. I THINK WHAT YOU SEE IS ISSUES IN CHICAGO OF UNEMPLOYMENT IN PARTICULAR. SOME CRIME THIS SUMMER. WE HAVE A NEW MAYOR, RAHM EMANUEL, WHO HAS BASICALLY SAID, LOOK, I'M GOING TO HAVE TO CUT THINGS AND HE ACTUALLY GOT THE UNIONS TO COME TO THE ABLE AND PRESENT THEIR OWN SUGGESTIONS. AND THE REST OF THE STATE IT'S A LITTLE BETTER. PLACES LIKE DECATUR, ILLINOIS, WHICH WE FEATURED IN A REPORT, HAVE SEEN SOME HIRING GOING ON. IT'S NOT AS BAD IN THE RURAL AREAS OF ILLINOIS BUT THE BIG CITIES ARE SUFFERING.

>> Brown: DAVID SWENSON, YOU CERTAINLY HAD POLITICIANS IN GALORE IN THE STATE OF IOWA RECENTLY. I MENTIONED THAT THE UNEMPLOYMENT IS 6%, WHICH FEELS A LITTLE LOW TO MANY, BUT HOW DOES IT FEEL THERE?

>> WELL, 6% UNEMPLOYMENT RATE IS MUCH HIGHER THAN IOWANS ARE COMFORTABLE WITH. WE WENT INTO THE RECESSION A LITTLE LATER THAN THE NATION, BUT WE ROSE AT ABOUT THE SAME PACE OR AT THE SAME SLOPE THEREAFTER AND WE'VE MAINTAINED A HIGH... RELATIVELY HIGH UNEMPLOYMENT RATE SINCE THAT TIME. THE HIGHER-THAN-AVERAGE UNEMPLOYMENT RATE IS WORSE, THOUGH, OUT IN SOME OF OUR MEDIUM-SIZED CITIES. THOSE CITIES DEPEND ON MANUFACTURING JOBS, WE KNOW THAT MANUFACTURING HAS TAKEN AN EXTRA SPECIAL HIT. MANUFACTURING IS A BIG COMPONENT OF THE IOWA ECONOMY. THOSE ECONOMIES ARE THE ECONOMIES THAT ARE HURTING A LITTLE BIT WORSE THAN THE STATE AVERAGE. THEY WERE IN THE RECESSION SOONER, THEY'RE PROBABLY GOING TO COME OUT OF THE RECESSION LATER AND THEY'RE THE TYPES OF ECONOMIES AND THE TYPES OF COMMUNITIES THAT ARE GOING TO BE VERY ATTENTIVE TO ANY TYPE OF NEW JOB INITIATIVE.

>> Brown: AND DEDEPASS, NATIONALLY, OF COURSE, THERE WAS A SENSE THAT THINGS WERE GETTING BETTER AND THEN UNEMPLOYMENT STARTED CREEPING UP AGAIN AND GROWTH SLOWING. IS THAT WHAT'S HAPPENING IN MINNESOTA?

>> THAT'S THE SAME EXACT PICTURE THAT YOU'RE SEEING IN MINNESOTA. WE HAD COME BACK FROM AN 8.5% UNEMPLOYMENT RATE IN APRIL OF 2009 AND HAD GOTTEN ALL THE WAY DOWN A 6.5% UNEMPLOYMENT RATE IN APRIL AND FROM THERE IT STARTED TICKING UP AGAIN. IT CERTAINLY DIDN'T HELP THAT WE ENDED UP HAVING A THREE-WEEK STATE SHUTDOWN, STATE GOVERNMENT SHUTDOWN THAT DISPLACED 22,000 STATE WORKERS, PLUS ANOTHER 3,000 STATE CHIROPRACTOR EMPLOYEES. AND SO YOU HAVE A BIG HIT THAT'S ABOUT TO COME OUT TOMORROW. WE'RE EXPECTED TO GET THE UNEMPLOYMENT RATE FOR JULY FOR THE STATE AND IT'S EXPECTED TO GO UP AS FAR AS... POSSIBLY AS MUCH AS A PERCENTAGE POINT. SO WE'RE HURTING QUITE A BIT.

>> Brown: AND DEE DEPASS, WHAT KIND OF INDUSTRIES ARE MOST AFFECTED HERE?

>> WELL, OUR HOUSING INDUSTRY WAS DRAMATICALLY IMPACTED. IT SORT OF STARTED, OBVIOUSLY, THE RECESSION IN THIS STATE. WE'VE GOT LARGE WINDOW MANUFACTURING HERE IN MINNESOTA. ANDERSON WINDOWS IS BASED HERE, MARVIN WINDOWS IS BASED HERE. WE HAVE SOMETHING CALLED O.S.B. STRAND BOARD MANUFACTURERS HERE. THEY'RE THE ONES THAT DO THE... IT'S LIKE A... CREATED PLYWOOD AND THERE ARE A NUMBER OF FACTORIES HERE. SO WE HAD LAYOFFS BASICALLY IN A LOT OF MANUFACTURING COMPANIES THAT CATER TO THE HOUSING SECTOR AND THAT REALLY HURT MINNESOTA, I'D SAY, QUITE A BIT. WE'RE STARTING TO SEE SOME STABILIZATION IN THAT, BUT IT CERTAINLY DID SOME DAMAGE EARLY ON.

>> Brown: NOW MICKEY MAYNARD, YOU LOOK THROUGHOUT THE REGION. BROADEN IT OUT A BIT AT OTHER STATE BUS TALK ABOUT SOME OF THE INDUSTRIES YOU'RE WATCHING MOST CAREFULLY AND MOST CONCERNED ABOUT.

>> RIGHT, WELL, MICHIGAN IS FLIPPING AGAIN. I HEARD DEE SAY MINNESOTA'S NUMBERS ARE COMING TOMORROW. MICHIGAN'S NUMBERS CAME OUT TODAY AND THEY HAVE RISEN BACK TO 10.9%. SO THEY'RE HEADED TO 11% AGAIN. THEY WERE UP OVER 12% AT THE DEPTH OF THE RECESSION. AND, YOU KNOW, PEOPLE SAY THAT MANUFACTURING IS COMING BACK, AND IT IS COMING BACK TO A CERTAIN EXTENT. BUT THERE ARE STILL JOBS BEING LOST. ANN ARBOR, MICHIGAN, IS THE HOME OF BORDERS BOOKS. AND BORDERS BOOKS IS NOW GOING TO LIQUIDATE AND THAT WILL BE SEVERAL HUNDRED HEADQUARTERS JOBS IN ANN ARBOR AND THOSE ARE THE KINDS OF JOBS NOBODY REALLY WORRIED ABOUT. OHIO IS A LITTLE BIT BETTER OFF. THEIR UNEMPLOYMENT RATE IS ABOUT 8.8% AND THERE, TOO, THEY HAVE BEEN RELIANT ON MANUFACTURING AND YOU'RE SEEING THEM SHIFT OVER TO MORE SERVICES LIKE HEALTH CARE. YOU'RE SEEING THESE STATES LOOK AT ENERGY AS FAR AS GREEN ENERGY JOBS GO. BUT, YOU KNOW, YOU NEED A BULK OF JOBS TO COME BACK TO REPLACE THE JOBS THAT WERE LAST. THERE WAS SOMETHING LIKE 500,000 JOBS LOST IN MICHIGAN ALONE DURING THIS RECESSION AND THERE REALLY AREN'T THE MAGIC BULLETS THAT ARE GOING TO CREATE THESE THOUSANDS OF JOBS THAT CAN COME SO THOSE PEOPLE CAN GO BACK TO WORK.

>> Brown: DAVID SWENSON, GIVEN THAT, HOW MUCH CAN YOU TELL ABOUT PUBLIC ATTITUDES, ABOUT CONSUMER CONFIDENCE, ABOUT WILLINGNESS TO BUY THINGS, WILLINGNESS TO BUY HOMES, ET CETERA.

>> WELL, STATEWIDE AND NATIONWIDE WE ALREADY KNOW THE CONSUMER CONFIDENCE IS DOWN. THE WILLINGNESS OF HOUSEHOLDS TO OPEN UP THEIR POCKETBOOKS AND TO TAKE RISKS IS LOWER. PEOPLE ARE SAVING MORE AND ALL OF THOSE ARE WORKING AGAINST A RECOVERY. A STATE LIKE IOWA DEPENDS HEAVILY ON THE REST OF THE COUNTRY BUYING IOWA-BASED GOODS AND SERVICES WHERE A MAJOR FINANCIAL CENTER IS AS WELL. AND IF THE REST OF THE COUNTRY ISN'T RECOVERING, WE'RE NOT GOING TO RECOVER. WE HAVE SOME STRENGTH IN OUR ECONOMY BECAUSE THE AGRICULTURE ECONOMY IS RELATIVELY STRONG. WE HAVE HIGH PRICES FOR GRAIN RIGHT NOW. THOSE TYPES OF THINGS ARE HELPFUL, BUT THAT'S NOT ENOUGH TO CARRY THE REST OF THE ECONOMY. WE NEED THE REST OF THE NATION TO BEGIN RECOVERING SO THAT WE CAN CATCH ON TO THAT RECOVERY AND BEGIN RECOVERING MORE OURSELVES.

>> Brown: AND ARE THERE... DEE DEPASS, WE TALKED ABOUT THE PRESIDENT COMING THROUGH WITH SOME RELATIVELY SMALLER INITIATIVES IN THE LAST FEW DAYS AIMED AT RURAL ECONOMIES. BUT I WONDER, DO THOSE JIBE WITH THE KINDS OF IDEAS THAT YOU'RE HEARING IN YOUR STATE IN TERMS OF WHAT GOVERNMENT CAN DO EITHER AT THE FEDERAL OR STATE LEVEL?

>> I THINK WHAT YOU'RE SEEING HERE IS SOMETHING SIMILAR TO WHAT DAVID TALKED ABOUT IN IOWA. YOU ARE SEEING RURAL AREAS DO BETTER THAN OUR URBAN AREAS. CAN YOU TALK A LITTLE BIT MORE ABOUT... JUST ASK YOUR QUESTION IN A LITTLE BIT OF A DIFFERENT WAY, JEFF, IF THAT'S OKAY AND I WANT TO BE ABLE TO ANSWER YOU.

>> Brown: I WAS JUST WONDERING IS THERE MUCH DISCUSSION ABOUT WHAT GOVERNMENT CAN DO THERE TO HELP THE ECONOMY?

>> RIGHT NOW THE GOVERNMENT INPUT IS A LITTLE BIT DIFFICULT. WE'VE JUST COME OFF OF THE STATE SHUTDOWN AND A LARGE... WE HAVE A $5 BILLION BUDGET DEFICIT. AND SO THE DEBATE HAS BEEN HOW CAN WE BALANCE THE BUDGET NOT SO MUCH HOW CAN OUR STATE GOVERNMENT HELP YOU. ONE OF THE SETBACKS HAS BEEN THAT THERE ARE GOING TO BE LAYOFFS OF LOCAL AND STATE GOVERNMENT WORKERS SIMPLY BECAUSE OF THIS BUDGET CRISIS. SO AS FAR AS THE STATE GOVERNMENT PUTTING FORTH A MESSAGE AS TO HOW IT CAN HELP CONSUMERS FEEL MORE CONFIDENT ABOUT WHAT'S GOING ON IN THE ECONOMY, THOSE DISCUSSIONS RIGHT NOW ARE NOT REALLY TAKING PLACE. IT'S JUST TOO FRESH RIGHT OFF OF THE CRISIS THAT WE JUST CAME OFF OF WITH THE BUDGET CRISIS.

>> Brown: AND MICKY MAYNARD, BRIEFLY, THAT KIND OF STATE GOVERNMENT CRUNCH IS FELT IN A NUMBER OF STATES THAT YOU KEEP AN EYE ON, RIGHT?

>> IT IS. AND WE KNOW ABOUT ALL THE TURMOIL POLITICALLY IN WISCONSIN. AND THEIR UNEMPLOYMENT RATE IS ACTUALLY PRETTY GOOD. I MEAN, NONE OF IT'S GOOD, BUT THEY'RE 7.5% IN WISCONSIN. BUT, YOU KNOW, TO YOUR POINT ABOUT WHAT PEOPLE ARE ASKING TO BE DONE, ONE OF THE BIG THINGS THAT HAPPENED IN MICHIGAN BACK DURING THE DEPRESSION WAS THE C.C.C., THE CIVILIAN CONSERVATION CORPS. AND IF YOU LOOK AT NORTHERN MICHIGAN, A LOT OF WHAT'S UP THERE WAS BUILT BY THE C.C.C. AND YOU'RE STARTING TO HEAR PEOPLE SAY "WELL, LET'S GET A GOVERNMENT PROGRAM, EVEN IF IT PAYS PEOPLE LESS THAN THE PREVAILING WAGE. BUT LET'S GET SOME JOBS CREATED AND PUT PEOPLE BACK TO WORK."

>> Brown: MICHELINE MAYNARD, DAVID SWENSON, DEE DEPASS, THANK YOU ALL VERY MUCH.

>> THANK YOU.

>> Woodruff: STILL TO COME ON THE "NEWSHOUR": REPUBLICAN GOVERNOR RICK PERRY'S PRESIDENTIAL BID; THE WEALTH GAP AND THE FINANCIAL CRISIS; EGYPT'S UPRISING SIX MONTHS LATER AND A PIRATE STORY. BUT FIRST, THE OTHER NEWS OF THE DAY. HERE'S HARI SREENIVASAN.

>> Sreenivasan: WALL STREET STARTED THE DAY WITH STRONG GAINS, BUT CONFLICTING SIGNALS ON CORPORATE EARNINGS UNDERCUT THE MARKET'S MOMENTUM. IN THE END, THE DOW JONES INDUSTRIAL AVERAGE GAINED JUST FOUR POINTS TO CLOSE AT 11,410. THE NASDAQ FELL NEARLY 12 POINTS TO CLOSE AT 2,511. VICE PRESIDENT BIDEN HAS KICKED OFF A FOUR-DAY VISIT TO CHINA. HE ARRIVED IN BEIJING TODAY WITH HIS GRANDDAUGHTER BY HIS SIDE. LATER, HE TOOK IN A BASKETBALL GAME BETWEEN THE GEORGETOWN UNIVERSITY HOYAS FROM WASHINGTON D.C. AND A CHINESE TEAM. MR. BIDEN IS EXPECTED TO TRY REASSURE CHINESE LEADERS ABOUT THE U.S. ECONOMY. CHINA HOLDS MORE THAN $1 TRILLION IN U.S. GOVERNMENT DEBT -- THE MOST OF ANY NATION. MASS PROTESTS BUILT ACROSS INDIA TODAY AS A LEADING ANTI- CORRUPTION CAMPAIGNER FASTED IN JAIL. 74-YEAR OLD ANNA HAZARE WAS ARRESTED ON TUESDAY, THEN ORDERED RELEASED. HE REFUSED TO LEAVE JAIL UNLESS HE'S ALLOWED TO FAST IN A CITY PARK. AT LEAST 15,000 PEOPLE TURNED OUT TODAY IN NEW DELHI, SUPPORTING HAZARE. SIMILAR PROTESTS ERUPTED IN MUMBAI, BANGALORE AND ELSEWHERE, WITH FARMERS, STUDENTS, LAWYERS AND OTHERS JOINING IN. A DEBATE IS NOW BREWING IN BRITAIN OVER THE JAIL TERMS HANDED OUT IN THE WAKE OF LAST WEEK'S RIOTS. HUMAN RIGHTS GROUPS RAISED NEW CONCERNS TODAY THAT SOME OF THE SENTENCES ARE TOO TOUGH-- CITING THE CASES OF TWO MEN IN NORTHWESTERN ENGLAND. WE HAVE A REPORT FROM STEPHEN DOUGLAS OF "INDEPENDENT TELEVISION NEWS."

>> Reporter: IT'S WHAT DIDN'T HAPPEN ON THESE STREETS THAT'S BROUGHT BOTH PRAISE AND CRITICISM. JORDAN BLACKSHAW AND PERRY SUTCLIFFE-KEENAN USED FACEBOOK TO TRY TO START A RIOT, BUT NO ONE TURNED UP EXCEPT THE POLICE. THEY WERE SENTENCED TO FOUR YEARS IN PRISON. FAMILY FRIEND ELIZABETH MARSH BUT ON CONTRAST JOSHUA MOULIN WAS RELEASED WITHOUT CHARGE. HE URGED PEOPLE TO VANDALIZE A LOCAL SHOP. SO ARE SOME JUDGES BEING TOO TOUGH?

>> I THINK IT'S RIGHT WE SHOULD ALLOW THE COURTS TO MAKE DECISIONS ABOUT SENTENCING. YOU WEREN'T SITTING IN THE COURT, I WASN'T SITTING IN THE COURT. WE DIDN'T HEAR THE EVIDENCE. THEY DECIDED IN THAT COURT TO SEND A TOUGH SENTENCE, A TOUGH MESSAGE AND I THINK IT'S VERY GOOD THE COURTS FEEL ABLE TO DO THAT.

>> Reporter: BUT WHETHER PUNISHMENTS HAVE BEEN CONSISTENT AND PROPORTIONATE IS IN QUESTION. NICHOLAS ROBINSON WAS GIVEN SIX MONTHS FOR STEALING A CASE OF WATER. BUT DAVID ATTOH WAS FINED 150 POUNDS FOR TAKING TWO T-SHIRTS. URLSAA NEVIN WAS SENT TO PRISON FOR FIVE MONTHS AFTER BEING GIVEN A PAIR OF SHORTS THAT HAVE BEEN LOOTED. LINDA BOYD WAS GIVEN A SUSPENDED SENTENCE FOR STEALING ALCOHOL AND CIGARETTES.

>> I'M CONCERNED THERE MAY BE A FEELING THAT ONE COULD SIMPLY THROW THE GUIDELINES OUT THE WINDOW.

>> Reporter: TONIGHT JORDAN BLACKSHAW'S LAWYER SAYS HE PLANS TO APPEAL. OTHERS MAY FOLLOW. HE SAYS HIS SENTENCE HAS LEFT HIM SHOCKED AND UPSET.

>> Sreenivasan: THE LONDON POLICE CHIEF URGED THE PUBLIC AGAIN TODAY TO TURN IN ANYONE INVOLVED IN THE RIOTS. HE SAID, "DON'T LET THEM GET AWAY WITH IT." NEW BODY ARMOR FOR U.S. TROOPS MAY NOT PROVIDE ADEQUATE PROTECTION IN THE BATTLEFIELD. THE DEFENSE DEPARTMENT'S INSPECTOR GENERAL IS WARNING THAT THE ARMY IMPROPERLY TESTED MORE THAN FIVE MILLION BULLET- BLOCKING PLATES-- WORTH $2.5 BILLION. THE I.G.'S REPORT WAS ISSUED TUESDAY. THE ARMY SAID IT HAS ALREADY IMPLEMENTED THE REPORT'S RECOMMENDATIONS TO IMPROVE THE TESTING. MAJOR TOBACCO COMPANIES HAVE LAUNCHED A LEGAL BID TO BLOCK GRAPHIC NEW WARNINGS ON CIGARETTES. R.J. REYNOLDS, LORILLARD AND THREE OTHER FIRMS ARE SUING IN FEDERAL COURT. THE NEWLY MANDATED LABELS SHOW DISEASED LUNGS, A SMOKER'S CORPSE AND A MAN'S CHEST WITH SMOKE RISING FROM A TRACHEOTOMY HOLE. THE COMPANIES ARGUE THE LABELS APPEAL UNFAIRLY TO PUBLIC EMOTIONS AND WILL COST MILLIONS OF DOLLARS TO PRODUCE. THOSE ARE SOME OF THE DAY'S MAJOR STORIES. NOW, BACK TO JUDY.

>> Woodruff: AND TO THE CAMPAIGN TRAIL, WHERE RICK PERRY HAS BURST ON TO THE SCENE AND HAS BEEN CAUSING QUITE A STIR. HE ENTERED THE RACE FOR THE REPUBLICAN PRESIDENTIAL NOMINATION JUST FIVE DAYS AGO, BUT ALREADY TEXAS GOVERNOR RICK PERRY IS MAKING WAVES. ON MONDAY, IN IOWA, HE WENT AFTER BEN BERNANKE-- CHAIRMAN OF THE FEDERAL RESERVE-- WITH AN OMINOUS WARNING AGAINST ANY EXPANSION OF THE MONEY SUPPLY.

>> WE WOULD TREAT HIM PRETTY UGLY DOWN IN TEXAS. PRINTING MORE MONEY TO PLAY POLITICS AT THIS PARTICULAR TIME IN AMERICAN HISTORY IS ALMOST TREACHEROUS OR TREASONOUS, IN MY OPINION.

>> Woodruff: WHILE CAMPAIGNING IN IOWA, PERRY POUNDED THE PRESIDENT ON HIS JOBS RECORD IN TOWN AFTER TOWN.

>> WE ARE IN ECONOMIC TURMOIL. AND IF WE DON'T HAVE A PRESIDENT OF THE UNITED STATES THAT GETS AMERICA WORKING, WE ARE IN TROUBLE.

>> Woodruff: AND HE HAS REPEATEDLY CITED HIS OWN JOBS RECORD AS GOVERNOR OF TEXAS.

>> SINCE JUNE OF 2009, TEXAS IS ABOUT 8% OF THE POPULATION OF AMERICA, BUT 40% OF ALL THE NEW JOBS CREATED IN THE UNITED STATES WERE IN THE STATE OF TEXAS.

>> Woodruff: PERRY HAS BEEN GOVERNOR FOR ALMOST 11 YEARS AND HAS NEVER LOST AN ELECTION IN HIS 27 YEARS IN PUBLIC OFFICE. A FIFTH-GENERATION TEXAN, HE WAS RAISED ON HIS FAMILY'S FARM, NEAR THE SMALL TOWN OF PAINT CREEK. HE SERVED IN THE AIR FORCE, AND THIS WEEK, HE SAID THE TROOPS WANT A COMMANDER-IN-CHIEF WHO UNLIKE PRESIDENT OBAMA HAS WORN THE UNIFORM. THE PRESIDENT ANSWERED IT ALL IN A C.N.N. INTERVIEW LAST NIGHT.

>> YOU'VE GOT TO BE A LITTLE MORE CAREFUL ABOUT WHAT YOU SAY. BUT I'LL CUT HIM SOME SLACK. HE'S ONLY BEEN AT IT FOR A FEW DAYS NOW.

>> Woodruff: THIS MORNING, IN NEW HAMPSHIRE, PERRY MOVED TO A NEW SUBJECT-- CLIMATE CHANGE.

>> I THINK WE'RE SEEING IT ALMOST WEEKLY, OR EVEN DAILY SCIENTISTS WHO ARE COMING FORWARD AND QUESTIONING THE ORIGINAL IDEA THAT MANMADE GLOBAL WARMING IS WHAT IS CAUSING THE CLIMATE TO CHANGE.

>> Woodruff: PERRY CONTINUES HIS CAMPAIGN IN NEW HAMPSHIRE TOMORROW-- THE FIRST IN THE NATION PRIMARY STATE. FOR MORE, WE ARE JOINED BY PAUL BURKA, SENIOR EXECUTIVE EDITOR OF THE MAGAZINE, "TEXAS MONTHLY." HE'S BEEN COVERING TEXAS POLITICS FOR MORE THAN 35 YEARS. PAUL BURKA, THANK YOU VERY MUCH FOR BEING WITH US.

>> THANK YOU. >>.

>> Woodruff: LET'S TALK ABOUT GOVERNOR PERRY'S JOB CLAIMS THAT HE IN TEXAS HAS BEEN CREATING 40% OF THE NEW JOBS IN THIS COUNTRY OVER THE LAST TWO YEARS. FIRST OF ALL, IS THAT BORNE OUT BY THE FACTS AND SECOND OF ALL, WHAT SORT OF JOBS?

>> WELL, THE ANSWER TO THE FIRST QUESTION IS YES IT APPEARS TO BE BORNE OUT BY THE FACTS. THE SECOND QUESTION IS REALLY MORE INTERESTING, WHAT KIND OF JOBS. AND THAT IS SOMETHING THAT THERE'S GOING TO BE QUITE A LOT OF DEBATE ABOUT. FOR EXAMPLE ONE OF THE IMPORTANT COMPANIES THAT GOVERNOR PERRY BROUGHT IN WAS COUNTRYWIDE AND THAT WAS RIGHT AT THE BEGINNING OF THE MORTGAGE CRISIS THAT COUNTRYWIDE WAS INVOLVED IN. AND THEY SET UP A CALL CENTER IN THE MIDLAND/ODESSA AREA, AS YOU RECALL IT WAS AROUND 500 JOBS. WELL, THE CALL CENTER COLLAPSED BECAUSE THE MORTGAGE INDUSTRY COLLAPSED SO THAT DIDN'T HOLD. THAT WASN'T GOVERNOR PERRY'S FAULT, BUT NEVERTHELESS THE CALL CENTERS ARE NOT THE TYPE "A" JOB THAT YOU WOULD LIKE TO SEE COME TO YOUR COMMUNITY. NOW, I DON'T WANT TO SOUND ELITIST ABOUT THAT BECAUSE IF YOU'RE DEALING WITH PEOPLE LIKE WE HAVE IN TEXAS WHERE WE HAVE THE LARGEST NUMBER OF PEOPLE WITHOUT A HIGH SCHOOL DIPLOMA, WE WANT THOSE PEOPLE EMPLOYED. SO CALL CENTERS DO SOME GOOD. BUT NEVERTHELESS, THERE IS A QUESTION ABOUT HOW GOOD THESE JOBS ARE.

>> Woodruff: I WAS JUST GOING SAY, PICKING UP ON WHAT YOU JUST SAID. SO HIS POLICIES AS GOVERNOR WERE THE RESPONSIBLE FOR THE CREATION OF ALL SHOWS JOBS?

>> YES. HE HAS A FUND THAT THE LEGISLATURE PROVIDES HIM OF SEVERAL HUNDRED MILLION DOLLAR WHICH IS HE USES TO RECRUIT COMPANIES. HE MAKES TRIPS TO STATES LIKE CALIFORNIA AND SAYS "COME TO TEXAS BECAUSE WE DON'T HAVE A STATE INCOME TAX." HE IS VERY AGGRESSIVE ABOUT PURSUING JOBS. I MEAN, I THINK IT HAS CLEARLY BEEN HIS NUMBER-ONE PRIORITY FROM THE FIRST DAY HE BECAME GOVERNOR.

>> Woodruff: PAUL BURKA, HIS COMMENTS ABOUT THE FEDERAL RESERVE BOARD CHAIRMAN BEN BERNANKE AND HE SAID IN ESSENCE IF THEY EXPAND THE MONEY SUPPLY THEN WE IN TEXAS WOULD TREAT HIM UGLY. HAS HE THAELD VIEW? HAS HE TALKED A LOT BEFORE NOW WITH MR. BERNANKE AND THE FED IS?

>> I NEVER HEARD HIM MENTION THE FED. IT HAS NOT PLAYED ANY ROLE IN ANY OF HIS SPEECHES THAT I'VE HEARD. CERTAINLY NOT IN ANY OF HIS PROPOSALS BEFORE THE LECTURE. BUT IT IS CLASSIC RICK PERRY BUT PERRY IS AN EXTREMELY AGGRESSIVE POLITICIAN AND HE WILL PUSH THESE THINGS TO THE LIMIT. AND I THINK WHAT HE SEES IS... AND WE LEARNED IT WHEN GOVERNOR PERRY MADE SOME REMARKS ABOUT TEXAS POSSIBLY LOOKING AT SECESSION IN 2010 THAT HE KNOWS THAT WHEN HE MAKES THESE STATEMENTS THAT THE MEDIA'S GOING TO HATE IT, THE PEOPLE ON THE LEFT ARE GOING TO HATE IT, BUT THE PEOPLE THAT LIKE HIM AND HAVE THIS STREAK OF TEXAS EXCEPTIONALISM ARE GOING TO LOVE IT. SO IT'S BREAK EVEN AT WORST FOR HIM.

>> Woodruff: I ASKED ABOUT THE FED BECAUSE HE SAID TODAY THIS IS SOMETHING HE FEELS PASSIONATELY ABOUT I ALSO WANT TO ASK YOU ABOUT THIS OTHER COMMENT HE MADE TODAY WHERE HE SAID THE EVIDENCE IS JUST NOT THERE THAT HUMANS ARE MAKING GLOBAL WARMING WORSE. IS THIS SOMETHING THAT HE'S TALKED A LOT ABOUT AS GOVERNOR?

>> HE HASN'T TALKED A LOT ABOUT IT, BUT THAT IS WHAT HE BELIEVES AND HE HAS SAID THAT. IT'S NOT SOMETHING THAT COMES UP ALL THE TIME AND WE DON'T... IT HAS BEEN AN ISSUE IN TEXAS A LITTLE BIT BECAUSE CARBON CAPTURE IS VERY IMPORTANT. WE HAVE VERY DIRTY AIR IN OUR BIG CITIES. WE HAVE A LOT OF COAL PLANTS THAT THE GOVERNOR HAS SUPPORTED AND SO THERE'S CERTAINLY A CONCERN IN TEXAS ABOUT GLOBAL WARMING. I'M FROM GALVESTON. THE HOME I GREW UP IN WAS ABOUT SIX FEET ABOVE SEA LEVEL AND WE DO GET HURRICANES SO TEXAS IS CONCERNED ABOUT THE FUTURE. I THINK GOVERNOR PERRY IS, TOO, BUT IT'S NOT BEEN A SUBJECT OF DEBATE IN THE LEGISLATURE AND IT'S NOT A BIG ISSUE IN TEXAS AND POLITICAL CIRCLES.

>> Woodruff: WHAT ELSE WOULD YOU SAY ABOUT GOVERNOR PERRY. YOU SAID HE'S AWARE OF THE REACTION WHEN HE MAKES THESE STATEMENTS. HIS ABILITY TO WITHSTAND THE GLARE THAT COMES FROM RUNNING FOR PRESIDENT, THAT IT'S THE THIS RELENTLESS COVERAGE OF EVERY WORD SPOKEN. TO WHAT EXTENT IS HE PREPARED FOR THAT.

>> I THINK HE'S VERY PREPARED. HE WAS AN AIR FORCE PIE LOT. HE WENT TO TEXAS A&M AND WAS FAMOUSLY A YELL LEADER THERE AND CAN STIR UP A CROWD. AND I THINK PERRY IS USED TO THE CRITICISM. HE'S BEEN IN TEXAS POLITICS FOR TEN YEARS. HE REALLY DOESN'T CARE WHAT OTHER PEOPLE THINK ABOUT HIM. HE ONLY CARES ABOUT WHAT HIS PLAN IS. HE'S ALWAYS GOT A PLAN THAT'S WHAT MAKES HIM FORMID-ABLE IN POLITICS. HE'S A TOUGH GUY. THAT'S SERVED HIM WELL BECAUSE HE'S HAD VERY TOUGH RACES AND VERY TOUGH CRITICISM OVER THE YEARS.

>> Woodruff: WELL, PAUL BURR CAR, I'M SURE WE'RE GOING TO COME BACK TO THE QUESTION OF RICK PERRY IN THE FUTURE BUT THANK YOU VERY MUCH FOR GIVING US YOUR PERSPECTIVE HAVING COVERED HIM. THANK YOU SO MUCH.

>> THANK YOU.

>> Brown: NOW, WE CONTINUE OUR SERIES ON "INEQUALITY IN THE UNITED STATES." A NEW REPORT FROM THE ANNIE E. CASEY FOUNDATION FINDS THAT THE POVERTY RATE AMONG CHILDREN HAS RISEN BY 18% OVER THE LAST DECADE. THAT MEANS TWO MILLION MORE CHILDREN DROPPED BELOW THE POVERTY LINE BETWEEN 2000 AND 2009 BACK TO LEVELS OF THE EARLY '90s. "NEWSHOUR" ECONOMICS CORRESPONDENT PAUL SOLMAN IS LOOKING AT THE WIDENING WEALTH GAP. TONIGHT, HE EXPLORES POSSIBLE CONNECTIONS BETWEEN INEQUALITY AND THE FINANCIAL CRISIS. IT'S PART OF HIS REPORTING ON "MAKING SENSE OF FINANCIAL NEWS."

>> Reporter: AT BOSTON MISSIONARY BAPTIST, A CONVOCATION OF CHURCHES FROM ACROSS THE CITY, WITH CONGREGATES WHO'D FINISHED THE DEBTS TO ASSETS PROGRAM.

>> ROXBURY PRESBYTERIAN CHURCH, 38 GRADUATES!

>> Reporter: A SIX-WEEK FINANCIAL LITERACY COURSE RUN BY THE GREATER BOSTON INTERFAITH ORGANIZATION.

>> BOSTON MISSIONARY BAPTIST CHURCH, 116 GRADUATES! ( APPLAUSE )

>> Reporter: THE NEW ALUMS WERE GRADUATING FROM DEBT IN AMOUNTS THAT BEGGAR THE BORROWER, AND THE IMAGINATION.

>> AFTER FOUR YEARS OF WORKING HARD AT THIS, I'VE BEEN ABLE TO PAY OFF A GRAND TOTAL OF $73,500. ( APPLAUSE )

>> Reporter: SOME 700 PEOPLE WERE CELEBRATING, BUT IF RECENT TRENDS HOLD, DEMAND FOR THE PROGRAM MAY SWELL. FROM THE CRASH OF '08 TO THIS SPRING, AMERICANS HAD- UNCHARACTERISTICALLY BEEN PAYING DOWN THEIR DEBTS. BUT BORROWING IS AGAIN ON THE RISE, ACCORDING TO THE FEDERAL RESERVE. HISTORICALLY, THOUGH, HIGH DEBT RELATIVE TO INCOME, IS A FAIRLY RECENT DEVELOPMENT FOR AMERICANS, WHICH ECONOMIST FRANK LEVY BLAMES ON THE GROWING PRESSURES OF ECONOMIC INEQUALITY.

>> THE PART THAT'S REALLY CHANGED IN THE LAST 20 YEARS IS DEBT, THAT PEOPLE TOOK OUT MORE DEBT TO SUSTAIN CONSUMPTION.

>> Reporter: TOOK OUR MORE DEBT BECAUSE, HE SAYS, AMERICA IS GROWING MORE UNEQUAL. SINCE THE TOP 1% NOW COMMANDS MORE THAN A THIRD OF ALL WEALTH, HOW'S THE BOTTOM 99% SUPPOSED TO KEEP UP WITH THE JONESES, IF NOT THE KARDASHIANS BY BORROWING.

>> IN THE 1950s AND 1960s, EVERYBODY'S INCOME WAS RISING, EVERYBODY HAD SOME CLAIM ON ECONOMIC GROWTH SO THAT PEOPLE COULD BUY A MIDDLE CLASS STANDARD OF LIVING. IF YOU GO BACK TO THE '70s INTO THE '80s WHEN THINGS BEGAN TO FLATTEN OUT, PEOPLE STARTED DEALING WITH THAT BY PUTTING A SECOND-EARNER INTO THE LABOR FORCE. BUT THAT OBVIOUSLY HAS LIMITS AND SO ONCE THAT WAS PRETTY WELL EXHAUSTED, ONCE YOU START GETTING INTO THE '90s, THEN WE'RE INTO THE HOME EQUITY LOANS AND THE CREDIT CARD STUFF AND ALL THE REST OF THAT TRYING TO KEEP CONSUMPTION GROWING LIKE IT HAD BEEN BEFORE.

>> Reporter: WE'RE NOT TALKING POOR PEOPLE. MARISOL TROTMAN EARNS HER SALARY AT DANA FARBER CANCER INSTITUTE, AND EVEN GOT A RAISE THIS YEAR.

>> BUT IT WAS SO MINIMAL, IT TURNED OUT TO BE LIKE A $3 INCREASE WHICH REALLY DIDN'T MAKE A DIFFERENCE.

>> Reporter: THE ADMINISTRATIVE ASSISTANT REGRETS GOING $10,000 INTO DEBT, EVEN IF IT WAS MAINLY FOR ROOF REPAIRS.

>> YOU'RE JUST DIGGING A BIGGER HOLE AND WHEN THE INCOME ISN'T INCREASING AND THE, YOU KNOW, THE I.O.U.s GO UP, IT'S NEVER EASY.

>> Reporter: NERLINE GRAND- PIERRE IS A LAB SUPERVISOR AT BOSTON UNIVERSITY. SHE'D RUN UP $29,000 IN DEBT.

>> WE JUST KEPT GETTING MORE AND MORE INTO DEBT. WE WERE USING OUR CARDS JUST BASICALLY TO SURVIVE. SO THE RAISE THAT I GET BASICALLY IS NOT ENOUGH TO COVER MY BILLS.

>> Reporter: BAD FOR GRAND- PIERRE. AND, ARGUABLY, BAD FOR THE REST OF US. BECAUSE HOWEVER NECESSARY THE BORROWING OF RECENT YEARS MIGHT HAVE SEEMED, IT WAS BOUND TO END BADLY FOR JUST ABOUT EVERYONE.

>> THE HUGE GAP BETWEEN THE RICH AND EVERYONE ELSE IS NOT JUST A MORAL OR ETHICAL PROBLEM. IT IS A MAJOR FACTOR EXPLAINING THE SEVERE FINANCIAL AND ECONOMIC CRISIS THAT BROKE OUT IN 2008.

>> Reporter: ECONOMIST DAVID KOTZ:

>> IF THE ECONOMY'S GOING TO EXPAND, WHILE PROFITS ARE GOING UP VERY RAPIDLY AND WAGES ARE STAGNATING OR FALLING WHICH HAS BEEN THE RULE SINCE 1980, THEN WHO'S GOING TO BUY INCREASED OUTPUT OF THE ECONOMY? IT'S POSSIBLE ONLY IF HOUSEHOLDS BORROW TO MAINTAIN THEIR LIVING STANDARD. AND THAT'S WHY WE'VE SEEN THE HUGE GROWTH IN HOUSEHOLD DEBT IN THE ECONOMY. MILLIONS OF FAMILIES UNABLE TO PAY THEIR BILLS FROM THEIR DECLINING INCOME WERE FORCED TO BORROW AGAINST THEIR HOME TO, TO KEEP THE ELECTRIC POWER ON.

>> Reporter: PROFESSOR DAVID MOSS OF THE HARVARD BUSINESS SCHOOL AGREES.

>> AS THE CRISIS WAS IN FULL SWING IN LATE 2008, NOVEMBER- DECEMBER 2008, I STARTED TO PUT TOGETHER A GRAPH, A SIMPLE CHART ON BANK FAILURES IN THE 19th AND 20th CENTURY UP TO THE PRESENT. AND A REALLY VERY STRIKING PATTERN EMERGED.

>> Reporter: STRIKING, SAYS MOSS, WAS THE RESEMBLANCE BETWEEN HIS BANK FAILURE CHART AND A GRAPH OF U.S. INCOME INEQUALITY OVER THE LAST CENTURY.

>> SURE ENOUGH, THE MATCH WITH BANK FAILURES WAS REMARKABLY STRONG. INEQUALITY PEAKED JUST BEFORE THE FINANCIAL CRISIS IN 1929- 1933, AND THEN IT PEAKS AGAIN IN 2007 JUST BEFORE THIS RECENT FINANCIAL CRISIS AT ALMOST EXACTLY THE SAME LEVEL. AND THAT GOT ME THINKING MORE AND MORE MAYBE. THOSE AT THE HIGH END ARE PUTTING SOME OF THEIR MONEY INTO LENDING TO EVERYONE ELSE. AND THOSE DOWN BELOW WHO ARE NOT SEEING THE KIND OF INCOMES GROWTH THEY HAD GOTTEN BEFORE AND DON'T HAVE THE KIND OF BARGAINING POWER TO RAISE THEIR INCOMES THAT THEY HAD BEFORE, THEY'RE DOING THE BORROWING. THAT'S CREATING A SOURCE OF ENORMOUS INSTABILITY. ADDING IF THAT MODEL IS RIGHT THEN THERE REALLY COULD BE A CONNECTION BETWEEN INEQUALITY AND FINANCIAL CRISES.

>> Reporter: NOW, NOT EVERYONE BUYS THE STORY THAT INEQUALITY LED TO THE CRISIS.

>> I DOUBT THAT THIS WAS A MAJOR FACTOR IN THIS.

>> Reporter: ECONOMIST RICHARD FREEMAN:

>> CERTAINLY WE KNOW THE DEBT LEVEL WENT UP IN THIS PERIOD OF TIME AND WE KNOW THAT PEOPLE'S TAKING ON HOUSING AND DEBT, CONSUMER DEBT THAT THEY ULTIMATELY COULDN'T AFFORD UNLESS HOUSE PRICES KEPT GOING UP, CONTRIBUTED TO THIS. BUT THE PART THAT IS HARD IS THAT, SAY THEIR INCOMES HAD RISEN BY 10%, MAYBE THEN THEY WOULD HAVE TAKEN ON EVEN MORE DEBT.

>> Reporter: RAGHURAM RAJAN'S BOOK ON THE FRAGILITY OF THE GLOBAL ECONOMY, "FAULT LINES," MAKES MUCH OF INEQUALITY, BUT BLAMES THE GOVERNMENT RESPONSE TO IT FOR THE CRASH.

>> STARTING IN THE 1980s, THE LARGE SEGMENT OF THE AMERICAN POPULATION IS FALLING BEHIND IN INCOMES. WHEN PEOPLE FALL BEHIND THEY GET ANXIOUS, THEY WANT SOMETHING TO BE DONE. PART OF THE BIG REASON THE INCOMES ARE FALLING BEHIND IS PEOPLE DON'T HAVE THE EDUCATION FOR THE JOBS THAT ARE BEING CREATED. IT'S HARD TO FIX EDUCATION, WHAT DO POLITICIANS DO INSTEAD? THEY SAY, WELL LET'S EXPAND CREDIT. EVEN IF HE CAN'T ACTUALLY GET A GREATER INCOME, IF HE CONSUMES MORE, HE HAS A BIGGER HOUSE, THEN HE STOPS WORRYING SO MUCH ABOUT HIS INCOME.

>> Reporter: WE MET UP WITH RAJAN AND CECILIA CONRAD EARLIER THIS YEAR, AT THE ANNUAL ECONOMISTS' CONVENTION IN DENVER. PROF. CONRAD BLAMES THE CRASH ON THE RICH EXPLOITING INEQUALITY, BY RENTING THEIR MONEY AT FAT INTEREST RATES TO THOSE TRYING TO STAY IN THE MIDDLE CLASS. AND NOT ONLY BY TAKING OUT A MORTGAGE OR HOME EQUITY LOAN.

>> I WOULD EXPAND IT TO INCLUDE NOT ONLY HOME OWNERSHIP, BUT CREDIT CARD DEBT. IF YOU LOOK AT THE GROWTH OF THE FRINGE BANKING SECTOR, THE SORT OF PAYDAY LENDER, THE GROWTH IN THOSE, ALL OF THOSE WERE HELPING TO FUEL CONSUMPTION. IT'S THE MODERN VERSION, INSTEAD OF LET THEM EAT CAKE, IT'S LET THEM HAVE FLAT SCREEN T.V.s.

>> Reporter: DENISE BARRANT, OUT OF WORK FOR THREE YEARS AND FACING FORECLOSURE, IS A CASE IN POINT.

>> I THINK PEOPLE BECAUSE THEY WERE FEELING THE PINCH TOOK EQUITY OUT OF THEIR HOUSES, WHETHER THEY SHOULD OR THEY SHOULDN'T THEY WERE CERTAINLY ENCOURAGED. AND I THINK THAT PEOPLE FELT A LOT OF PRESSURE TOO BECAUSE AS YOUR STANDARD OF LIVING WAS DECLINING, YOU GET INTO A SITUATION WHERE THERE'S JUST NO TURNING BACK. AND THEN ONCE THE VALUE OF YOUR HOUSE WENT DOWN IT'S JUST A NO- WIN SITUATION.

>> Reporter: DO YOU EXPECT THAT AT SOME POINT YOU MAY HAVE TO DECLARE BANKRUPTCY?

>> I MIGHT. I MEAN UNLESS THERE'S A MIRACLE AND MANNA FALLS FROM HEAVEN OR SOMETHING I JUST DON'T SEE HOW I WILL EVER BE ABLE TO DIG MYSELF OUT OF THIS HOLE, WHICH IS A VERY YOU KNOW DISCOURAGING FEELING.

>> Reporter: MEANWHILE, BACK AT MISSIONARY BAPTIST.

>> ♪ THERE CAN BE MIRACLES WHEN YOU BELIEVE... ♪

>> Reporter: REMEMBER BRIDGET MASON, SO PROUD OF DIGGING HERSELF OUT OF A $73,500 HOLE? SHE'S GOING TO HAVE A HARD TIME STAYING OUT.

>> TWO DAYS AGO, I FOUND OUT THAT AFTER FIVE YEARS OF EMPLOYMENT I'VE BEEN LAID OFF. I'M DEVASTATED, I AM DISCOURAGED, BUT I AM SO GRATEFUL THAT I HAVE COME THIS FAR.

>> Reporter: TO BUSINESS SCHOOL PROFESSOR DAVID MOSS, THE SIGNS OF A STAGNANT JOB MARKET, SHAKIER GLOBAL BANKS AND AGAIN- RISING INEQUALITY ARE OMINOUS.

>> IF THERE'S A CONNECTION BETWEEN INEQUALITY AND FINANCIAL CRISES, THAT IS A CAUSE FOR CONCERN.

>> Reporter: THAT WOULDN'T JUST BE CAUSE FOR CONCERN I WOULDN'T THINK, BUT FOR SERIOUS ANXIETY.

>> ABSOLUTELY. AFTER 1933, IT DIDN'T GROW OF COURSE, IT LEVELED OFF AND THEN WITH WORLD WAR II IT CAME DOWN DRAMATICALLY AND STAYED DOWN FOR QUITE A LONG TIME. WHAT WE'VE SEEN IN THIS CRISIS IS THAT IT DIPPED DOWN JUST A LITTLE BIT, NOW IT LOOKS LIKE IT'S HEADED BACK UP, PROBABLY WILL EXCEED WHERE IT GOT.

>> Reporter: MORE INEQUALITY; MORE DEBT; MORE TROUBLE. THANK GOODNESS PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. BUT RECENT HISTORY PROVIDES LITTLE COMFORT FOR WHAT MAY BE TO COME.

>> Brown: NEXT IN OUR SERIES ON INEQUALITY: WE'LL LOOK IN DETAIL AT THE NEW STUDY ABOUT POVERTY RATES AMONG CHILDREN.

>> Woodruff: NEXT, A REPORTER'S RETURN TO CAIRO AFTER THE EGYPTIAN REVOLUTION. MARGARET WARNER HAS THE STORY.

>> Warner: CHARLES SENNOTT, EDITOR OF the ONLINE NEWS SITE "GLOBAL POST," WAS AMONG DOZENS OF WESTERN JOURNALISTS IN EGYPT DURING THE FEBRUARY UPRISING THAT TOPPLED PRESIDENT HOSNI MUBARAK. REPORTING FOR A "FRONTLINE" DOCUMENTARY, SENNOTT SPENT DAYS IN TAHRIR SQUARE TALKING WITH THE PROTESTORS, FROM THE YOUNG FACEBOOK CROWD TO MEMBERS OF THE MUSLIM BROTHERHOOD. IN JULY, SENNOTT RETURNED TO CAIRO AS A SECOND WAVE OF TAHRIR SQUARE PROTESTS WAS UNDERWAY, MOSTLY DIRECTED AT THE MILITARY COUNCIL THAT'S NOW RUNNING THE COUNTRY. HE HAS WRITTEN A PIECE, WITH ACCOMPANYING VIDEO FOR "GLOBAL POST" AND THE "FRONTLINE" WEBSITE. HE JOINS US NOW. CHARLIE, WELCOME BACK.

>> THANKS.

>> Warner: SO YOU WENT BACK FIVE MONTHS AFTER MUBARAK WAS OUSTED. YOU WENT BACK TO THE SQUARE. WHAT DID YOU GO LOOKING FOR? WHAT DID YOU FIND?

>> WE WENT LOOKING FOR THE PEOPLE WE KNEW FROM THE REVOLUTION. YOU HAD MUSLIM BROTHERHOOD, COPTIC CHRISTIANS, SECULAR ACTIVISTS FROM THE APRIL SIX MOVEMENT. WE WANTED TO CHECK IN WITH THEM AND SEE WHY THIS REVOLUTION HAD COME AFTER SIX MONTHS AND WHAT WE FOUND WAS A LOT OF UNCERTAINTY AND FRACTURED MUTUALS. A LOT OF SPLINTERED PARTIES AND A SENSE THAT THE UNITY OF TAHRIR SQUARE HAD DISAPPEARED.

>> Warner: NOW, IN FACT, WE HEAR THAT SENTIMENT EXPRESSED BY A YOUNG MAN, ONE OF YOUR YOUNG ACTIVISTS CONNECTIONS, MOHAMMED ABBAS WHO IS FROM A WORKING CLASS MUSLIM BROTHERHOOD CONNECTED FAMILY AND LET'S LISTEN.

>> WE HAVE PROBLEMS. A LOT OF PROBLEMS.

>> WHAT DO YOU GAIN BY TAKING TAHRIR BACK, HOW DOES THAT PUSH THE REVOLUTION FORWARD?

>> Warner: WHY IS HE SO DISILLUSIONED?

>> WELL, WHAT YOU'RE SEEING THERE IS MOHAMMED ABBAS, WHO WAS REALLY ONE OF THE INSPIRATIONAL MEMBERS OF THE YOUTH MOVEMENT, OF THE PLUZ LIMB BROTHERHOOD. HE'S NOW BEEN REMOVED FROM THE MUSLIM BROTHERHOOD BECAUSE HE JOINED A PARTY THAT DIDN'T MEET THE APPROVAL OF THE MUSLIM BROTHERHOOD. MANY OF HIS FRIENDS WHO HE GOT TO KNOW WHO COME FROM THESE DIFFERENT PLACES IN EGYPTIAN SOCIETY HAVE SORT OF SPLINTERED OFF AND GONE IN DIFFERENT DIRECTIONS. THE UNITY OF THE REVOLUTION HAS NOW LEFT THEM ALL HEADED IN VERY DIFFERENT DIRECTIONS AND YOU'RE RIGHT, YOU COULD REALLY FEEL THAT DECEMBER ON THE DENSE. IT'S ALSO COMING RIGHT OFF OF RENEWED PROTESTS. SUDDENLY IN EARLY JULY THE PROTESTS ERUPTED ANEW. IT'S BEEN CALLED THE SECOND WAVE OF THE REVOLUTION WHERE THE DEMANDS WERE BASICALLY PUT FORWARD ONCE AGAIN TO GO BACK TO THE BEGINNING. THEY SAY THIS IS REALLY ABOUT POLICE BRUTALITY AND THIS REGIME.

>> Warner: AND WE HAVE A CLIP THAT SHOWS THIS. THIS IS GIGI IBRAHIM, AN EGYPTIAN AMERICAN MADE FAMOUS IN THE FRONT LINE DOCUMENTARY. SHE ENDED UP ON THE COVER OF "TIME" MAGAZINE AND SHE SOUNDS REALLY ANGRY. WE'VE GOT A CLIP OF THAT.

>> LAST NIGHT WAS REALLY ABOUT MISTREATMENT OF POLICE. THAT HASN'T CHANGED SINCE THE REVOLUTION AND THIS WAS ONE OF THE MEAN, MEAN THINGS THAT MADE THE REVOLUTION HAPPEN TO BEGIN WITH. THE TORTURES IN PRISON. NOBODY IS... HAS BEEN REALLY SENTENCED IN ACCOUNTABILITY OF ANY TORTURE CASE OR ANY KIND OF KILLINGS OF THE MARTYRS SINCE THE REVOLUTION. THIS IS EXACTLY THE SAME REASON THAT WE STARTED THIS REVOLUTION CALLING FOR ACCOUNTABILITY AND TO STOP POLICE BRUTALITY AND TO STOP TORTURE AND TO STOP THE BRUTAL TREATMENT AND MISTREATMENT OF THE POLICE.

>> Warner: NOW, THEY ARE FURIOUS BECAUSE THEY DON'T FEEL, WHAT? THE PEOPLE... POLICE AND SECURITY PEOPLE WHO WERE RESPONSIBLE FOR THE KILLING OF PROTESTORS HAVE BEEN PUNISHED.

>> THAT'S CORRECT. THEY'RE REALLY SAYING LET'S GO BACK TO THE BEGINNING WHERE THIS REVOLUTION BEGAN ON JANUARY 25, KNOWN AS POLICE DAY, A DAY WHEN YOU'RE SUPPOSED TO HONOR THE POLICE IN EGYPT BUT IT WAS A JOKE TO THE EGYPTIAN PEOPLE THAT REALLY THIS POLICE FORCE WAS SEEN AS VERY BRUTAL AND CORRUPT. SO THEY WERE SAYING LOOK, WE'VE HAD 840 UNARMED PROTESTORS KILLED DURING THESE PROTESTS AND NONE OF THE POLICE HAVE BEEN BROUGHT TO JUSTICE.

>> Warner: SO DO YOU HEAR THE ARMY WAS HEARING THE GIGI IBRAHIMS AND ALL THOSE PEOPLE WHEN THEY DID ACTUALLY PUT... STARTED HOSNI MUBARAK BEING TRIED AND HIS CHIEF OF THE INTERIOR.

>> I THINK IT'S A GREAT QUESTION AND I THINK YES. I THINK THEY DID HEAR THE DEMONSTRATIONS RISING UNAGAIN AND I THINK THAT'S WHY IT'S CALLED THE SECOND WAVE OF THE REVOLUTION. YOU HAD A REVOLUTION GOING ADRIFT, THE MILITARY WAS QUITE PLEASED WITH THAT, DELAYED THE ELECTIONS, LET'S JUST GAK TO LIFE. AND I THINK MOST OF THE EGYPTIAN PEOPLE DESIRE THAT. THEY WANT A RETURN TO NORMALCY. THEY WANT TO GET BACK TO BUSINESS. TOURISM IS A $12 BILLION INDUSTRY IN EGYPT. THEY WANT A BACK. BUT THE PROTESTORS WERE SAYING WE CAN'T GO BACK TO STATUS QUO AND THAT SMALL REMINDER OF PUTTING PEOPLE BACK IN THE STREET, I THINK THE MILITARY HEARD THAT AND HAS NOW MADE SOME MOVEMENTS. IS IT YOU HAVE? WILL IT LAST? WHAT WILL HAPPEN WITH THE ELECTIONS? ALL OF THESE QUESTIONS ARE VERY MUCH IN THE AIR RIGHT NOW IN EGYPT.

>> Woodruff: NOW, AFTER HEARING THESE ANGRY OR DISILLUSIONED YOUNG PEOPLE, THERE'S ALSO ANOTHER CLIP I THOUGHT WE COULD PLAY FROM ANOTHER MAJOR FIGURE, A FOUNDER OF THE APRIL 6 MOVEMENT.

>> HE WAS.

>> Warner: AND HE SEEMS TO HAVE A SENSE OF PERSPECTIVE. MAYBE BECAUSE HE'S OLDER. LET'S LISTEN.

>> ( translated ): IT'S NATURAL THAT AFTER ANY REVOLUTION THERE BE A TRANSITIONAL PHASE. I THINK THAT IN EGYPT SPECIFICALLY THERE HAS BEEN A PERIOD OF IMBALANCE. THIS IS PERFECTLY NORMAL, BUT WITH THE PRESENCE OF A YOUTH FORCE MONITORING AND PUSHING FOR DEMOCRATIZATION, IT WILL SURELY SUCCEED, NO MATTER HOW LONG.

>> Warner: WHAT DOES HE MEAN THERE WILL BE BALANCE. WHAT DOES HE TALKING ABOUT?

>> HE'S AN ENGINEER BY TRADE, A CIVIL ENGINEER. YOU'RE RIGHT, HE'S VERY CALM. HE'S WISE. HE'S VERY STEPPED BACK UNLIKE MUCH OF THE TWITTERATTI.

>> Warner: THE GIGI IBRAHIMS.

>> THE GIGI IBRAHIMS. HE SEE THIS IS AS A STRUCTURAL MOVEMENT. ALMOST LIKE ENGINEERING H. HE SAYS YOU HAVE TO BE PATIENT WITH THIS. CAN HE CONVINCE THEM OF THAT? I DON'T KNOW. BUT I THINK WHAT HE MEANS BY IT'S NATURAL IS THAT REVOLUTION PROSE DEUCE CHAOS. OUT OF THAT CHAOS HOW HAS TO EMERGE A NEW DEMOCRACY. HOW THAT'S GOING TO HAPPEN VERY MUCH AN OPEN QUESTION. HE'S ALSO REFLECTIVE BECAUSE THE APRIL 6 MOVEMENT IS NOT A POLITICAL PARTY. THEY'VE FRACTUREED INTO POLITICAL ELEMENTS BUT THEY'RE ACTUALLY A SOCIAL MOVEMENT AND MUCH MORE ABOUT SOCIAL ENGINEERING THAN THEY ARE ABOUT REVOLUTION.

>> Woodruff: SO AS YOU LEFT, CHARLIE, WHAT WAS YOUR CONCLUSION ABOUT THE PROTEST MOVEMENT ITSELF? YOU SAID IT'S FRACTURED. HAS IT LOST ITS SENSE OF PURPOSE? HAS IT LOST ITSS PRI? I MEAN, YOU HAVE ONE-- ESPRIT. YOU HAVE ONE SCENE IN YOUR PIECE IN WHICH YOU TALK ABOUT ONE OF THESE PROTESTS YOU WENT TO THAT DIDN'T... DEFINITELY DIDN'T HAVE THE ENERGY OF FEBRUARY... JANUARY AND FEBRUARY.

>> I THINK EGYPTIANS ARE TIRED. I THINK THEY'VE BEEN THROUGH A LOT. THIS REVOLUTION WAS AN EXTRAORDINARY EVENT, AS YOU KNOW. WE BOTH COVERED IT TOGETHER. I THINK WHAT YOU SEE IN EGYPT NOW IS FATIGUE BUT NOT A LOSS OF HOPE. A SENSE OF DETERMINATION THAT THERE'S A LOT OF WORK TO DO. AND A FEELING THAT THERE'S NOT ABA LOT OF ORGANIZATION OR COORDINATION TO GET THAT DONE. THE POLITICAL PARTIES HAVEN'T FORMED. THE ELECTIONS ARE LOOMING.

>> Warner: IN NOVEMBER?

>> IN NOVEMBER. AND IT LOOKS LIKE THE MUSLIM BROTHERHOOD, ITS NEW POLITICAL PARTY, STANDS TO TAKE ABOUT 30% OF THE VOTE BY... THAT'S A MODEST ESTIMATE. THE SAW FISTS COULD TAKE 10%. THEY'RE THE RIGID PURITANICAL HIS LAST I CANS. THEN YOU HAVE TO NATIONAL DEMOCRATIC PARTY WHICH WAS MUBARAK'S PARTY WHICH WAS FRACTURED BUT STILL REPRESENTS BUSINESS INTERESTS AND NEW FORMULAS. IT'S A PUZZLE THAT HASN'T COME TOGETHER BUT I WOULD NOT SAY THAT THE LEADERS HAVE LOST HOPE. I THINK WHAT THEY'RE LOOKING FOR NOW IS COORDINATION AND THEY'RE GOING TO HAVE TO PULL BACK TO THEIR CORNERS AND ORGANIZE AND AFFECT CHANGE.

>> Warner: NO ONE WILL GIVE THEM TO THEM, THEY HAVE TO GIVE IT TO THEMSELVES. CHARLIE SENNOTT, THANK YOU VERY MUCH.

>> THANKS, MARGARET.

>> Brown: FINALLY TONIGHT: A REAL-LIFE TALE OF CRIME ON THE HIGH SEAS, OFF THE HORN OF AFRICA. RAY SUAREZ HAS OUR BOOK CONVERSATION.

>> Suarez: THREE YEARS AGO, SOMALI PIRATES CAUGHT THE WORLD'S ATTENTION, CAPTURING LARGE OIL TANKERS AND CARGO SHIPS AS WELL AS PRIVATE YACHTS FOR HEFTY RANSOMS. A CENTURIES OLD BUT FORGOTTEN PRACTICE OF PIRACY WAS BACK IN THE NEWS. IN RESPONSE, A GROUP OF MARITIME NATIONS COMMITTED TO FIGHT PIRACY DEPLOYED THEIR NAVYS, OVER SEVERAL THOUSAND SQUARE MILES OF OCEAN. JOURNALIST JAY BAHADUR SPENT THREE MONTHS IN NORTHEAST SOMOLIA GETTING TO KNOW MODERN-DAY PIRATES AND TALKING TO GOVERNMENT OFFICIALS ABOUT THEIR EXPLOITS. IN "THE PIRATES OF SOMALIA.

>> INSIDE THEIR HIDDEN WORLD" HE EXPLORES THEIR TACTICS AND WHY THEY'VE BEEN ABLE TO FLOURISH AND JAY BAHADUR, A YOUNG, RELATIVELY INEXPERIENCED REPORTER GOES TO ONE OF THE MOST DANGEROUS PLACES ON THE PLANET, SELF-ASSIGNED AND WAS THERE A POINT AT WHICH YOU THOUGHT "THIS WAS A BAD IDEA"?

>> IT WAS MOSTLY ON THE PLANE OVER THERE THAT I HAD THE MOST TREPIDATION ABOUT IT BECAUSE I KNEW THAT IF THE PEOPLE ON THE OTHER END DIDN'T PICK ME UP I WOULD HAVE ABOUT A HALF AN HOUR BEFORE I WOULD MAYBE NOT BE KIDNAPPED BY PIRATES BUT BY SOMEBODY AND A LOT OF JOURNALISTS ACTUALLY RELATIVELY RECENTLY, BRITISH JOURNALISTS HAD BEEN CAPTURED BY THEIR OWN BODYGUARDS. SO I HAD A PARTNER BUT I HAD NEVER MET HIM. I DIDN'T KNOW ANYTHING ABOUT HIM DEEP DOWN. I HAD SPOKEN TO HIM ON THE PHONE SO I WAS ON THE PLANE OVER THERE DEBT PRILY TRYING TO MAKE FRIENDS WITH ANYONE WHO WOULD SPEAK TO ME SO I COULD HAVE SOMEONE TO TAKE ME HOME INCASE MY RIDE DIDN'T SHOW. SO THAT WAS REALLY THE WORST OF IT. (LAUGHS)

>> Suarez: PIRACY ON THE HIGH SEA EVOKES EXOTIC EXCITING DARING VIOLENT IMAGES BUT THE DAY-TO-DAY REALITY OF THESE MEN'S LIVES AS YOU PORTRAY IN YOUR BOOK SEEMS VERY DIFFERENT.

>> THEY'RE NOT... YEAH, THEY'RE NOT THE BLOOD THIRSTY PIRATES YOU THINK OF WHEN YOU THINK OF 17th CENTURY BUCCANEERING. AND THE MAIN CHARACTER I EMBEDDED WITH FOR ABOUT THREE MONTHS AS YOU MENTIONED WAS A FORMER FISHERMAN NAMED BOYA, THAT WAS HIS NICKNAME, ANYWAY. AND HE AND HIS MEN WERE ALL FORMER FISHERMEN. THEY WERE THE ORIGINAL WAVE OF FISHERMEN PIRATES WHO HAD BEGUN FIGHTING AGAINST FOREIGN FISHING IN THE 1990s. THEY WEREN'T MURDER RURS. THEY WERE SCARY GUYS BUT THEY WEREN'T MURDERERS. THE PIRATES YOU SEE OUT THERE NOW ARE BECOMING INCREASINGLY BLOODY AND VIOLENT AND DON'T HESITATE TO USE TORTURE.

>> Suarez: YOU TALK ABOUT MILLIONS OF DOLLARS BEING REALIZED AS RANSOM FOR SOME OF THESE CAPTURED SHIPS. SEIZED ON THE HIGH SEAS, BROUGHT INTO A SOMALIAN PORT. WHEN THAT COUPLE OF MILLION BUCKS COMES ASHORE IN THIS PUNTLAND PLACE, HOW DOES IT GET DIVVIED UP? WHO'S IN FOR A SHARE AND HOW MUCH MONEY ARE WE TALKING ABOUT?

>> WELL, THE RANSOMS THEMSELVES ARE OFTEN ACTUALLY NOT DELIVERED BY HAND BUT ACTUALLY PARACHUTED DOWN FROM SMALL AIRCRAFT THAT JUST DUMP IT ON THE SHIP OR NEARBY THE SHIP AND LEAVE AND PIRATES IMMEDIATELY RUSH AND GO PICK UP THE PACKAGE AND THERE'S AN ACCOUNTANT ON BOARD WHO HAS AN EXCEL SHEET WITH EVERYONE'S NAME ON IT AND HOW MUCH THEY'RE OWED BUT ROUGHLY SPEAKING-- AND I HESITATE TO GIVE CONCRETE NUMBERS BECAUSE THIS TRADE IS VERY OPAQUE, IT'S HARD TO KNOW EXACTLY WHAT'S GOING ON-- THE FINANCIERS ROUGHLY TAKE 50% OF IT. SO IF YOU FRONTED THE MONEY YOU'LL GET 50% BACK AND IT WILL BE SPLIT UP PROPORTIONATELY TO WHAT YOU PUT IN.

>> Suarez: SO THE PEOPLE WHO TAKE THE RISK AREN'T GETTING MUCH MONEY AT ALL.

>> NO. IN FACT, IN THE BOOK I LOOK IN-DEPTH AT A GANG THAT CAPTURED A GERMAN CONTAINER SHIP WHEN I WAS IN SOMALIA. THE GUARDS, THEY'RE CALLED HOLDERS, THE ONE BROUGHT ON TO GUARD THE HOSTAGES ONCE THE SHIP HAVE BEEN CAPTURED SPENT A LARGE PART OF THEIR LIVES FOR TWO MONTHS ON THE SHIP, OVER TWO MONTHS, AND MADE ABOUT $10 AN HOUR. THE COOK ON THE SHIP MADE SOMETHING JUST OVER $5. AND EVEN IN SOMALIA THAT MONEY DOESN'T GO VERY FAR IF YOU HAVE FRIENDS AND RELATIVES READY TO SAP YOU AND DRAIN YOU DRY FOR WHAT YOU'VE JUST MADE.

>> Suarez: IS THIS DANGEROUS WORK? IS THIS RISKY WORK? DO THESE GUYS JUMP INTO THESE HIGH SPEEDBOATS WITH SOME CONFIDENCE THAT NOBODY UP THERE ON THAT CARGO SHIP IS GOING TO START SHOOTING BACK?

>> WELL, THE RISKS AREN'T FROM THE CREW SHOOTING BACK BECAUSE LARGELY THE INTERNATIONAL MARITIME COMMUNITY HAS DECIDED AGAINST COLLECTIVELY AGAINST THE ARMING OF THE MERCHANT MARINE WHICH CARRIES MANY OTHER PROBLEMS WITH IT. BUT REALLY WHAT THEY HAVE TO WORRY ABOUT IS INTERNATIONAL LABOR FORCES, OBVIOUSLY, BUT THAT'S NOT EVEN THE WORST. THE WORST IS JUST SIMPLY RUNNING OUT OF FUEL AND STARVING. I MENTIONED THIS GANG THAT I WAS FOLLOWING CLOSELY. FROM FIRSTHAND ACCOUNTS THAT THEY HAD ON BOARD, I CALCULATED THEY DIDN'T HAVE ENOUGH TO GET BACK WHICH MEANS YOU'RE GOING OUT THERE AND JUST HOPING AND IF YOU DON'T FIND A SHIP YOU'RE HOPING YOU GET PICKED UP BY A NAVAL SHIP OR SOMETHING BECAUSE YOU'RE RUNNING OUT OF WATER AND FOOD. SO THEY MIGHT HAVE A FEW WEEKS OF FOOD AND WATER AND NOT VERY MUCH FUEL AT ALL.

>> Suarez: THE WORLD RECOILS FROM THIS KIND OF THING IN PART BECAUSE IF YOU MESS UP THE SHIPPING OF THE WORLD, EVERYBODY LOSES. IT'S A LOT OF GOODS OUT ON THE OCEAN AT ANY ONE TIME BUT YOU ALSO MENTION IN YOUR BOOK THAT THE WORLD IS SPENDING LIKE A BILLION AND A HALF DOLLARS TO SOLVE A $75 MILLION PROBLEM.

>> I WOULD CALL IT THE MOST COORDINATED INTERNATIONAL NAVAL EFFORT IN HUMAN HISTORY. YOU HAVE SHIPS FROM DIVERSE COUNTRIES OF CHINA, MALAYSIA, RUSSIA, UNITED STATES, OBVIOUSLY, BRITAIN, IRAN, ALL CONVERGING ON THE INDIAN OCEAN IN THE GULF OF ADEN FOR ESSENTIALLY THE SAME PURPOSE. SO YOU HAVE EVERY COUNTRY THINKING THE SAME WAY. YOU HAVE A VERY, VERY HIGH LEVEL OF CORPORATION AMONGST THE DIFFERENT COUNTRIES AND THE DIFFERENT FLEETS BUT ULTIMATELY IT'S JUST NOT ECONOMICALLY... ECONOMICALLY IT DOESN'T MAKE SENSE WHAT THEY'RE DOING.

>> Suarez: "THE PIRATES OF SOMALIA: INSIDE THEIR HIDDEN WORLD." JAY BAHADUR, THANKS A LOT.

>> IT'S MY PLEASURE.

>> Woodruff: AGAIN, THE MAJOR DEVELOPMENTS OF THE DAY: PRESIDENT OBAMA WOUND UP HIS MIDWESTERN BUS TRIP, TRYING TO REASSURE AMERICANS THAT RECOVERY IS COMING. AND MASS PROTESTS BUILT ACROSS INDIA AS A LEADING ANTI- HE SAYS HE DOES NOT EXPECT A NEW RECESSION. AND MASS PROTESTS BUILT ACROSS INDIA AS A LEADING ANTI- CORRUPTION CAMPAIGNER FASTED IN JAIL. YOU CAN FIND MORE ONLINE ABOUT EGYPT'S UPRISING AND THE WEALTH GAP IN THE U.S. HARI SREENIVASAN HAS THE DETAILS.

>> Sreenivasan: THERE'S A LINK TO CHARLES SENNOTT'S REPORTING FOR "FRONTLINE" AND "GLOBALPOST" ON OUR WORLD PAGE. JUDY HAS A BLOG POST ABOUT THE INCOME GAP IN WASHINGTON, D.C. NEIGHBORHOODS AND PAUL WILL POSE QUESTIONS ABOUT INEQUALITY TO EXPERTS. SUBMIT YOURS ON HIS MAKING SENSE PAGE. PLUS ON ART BEAT, FOLK MUSICIANS GILLIAN WELCH AND DAVE RAWLINGS DISCUSS THEIR LATEST ALBUM "THE HARROW AND THE HARVEST." ALL THAT AND MORE IS ON OUR WEB SITE: newshour.pbs.org. JUDY?

>> Woodruff: AND THAT'S THE "NEWSHOUR" FOR TONIGHT. I'M JUDY WOODRUFF.

>> Brown: AND I'M JEFFREY BROWN. 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: AND THE WILLIAM AND FLORA HEWLETT FOUNDATION, WORKING TO SOLVE SOCIAL AND ENVIRONMENTAL PROBLEMS AT HOME AND AROUND THE WORLD. AND WITH THE ONGOING SUPPORT OF THESE INSTITUTIONS AND 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. Captioning sponsored by MacNEIL/LEHRER PRODUCTIONS Captioned by Media Access Group at WGBH access.wgbh.org Captioning sponsored by WPBT

>> Susie: GOLD-- IT'S THE SHINING STAR OF A TARNISHED ECONOMY, BUT SHOULD IT BE IN YOUR PORTFOLIO?

>> TODAY, INVESTORS ACTUALLY ARE VIEWING IT AS A COMPLETELY SAFE, STEADY, STABLE INVESTMENT THAT