The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight, Paul Gigot and David Broder examine the bowing out of Dan Quayle; Paul Solman looks at the risky business of day trading; Margaret Warner discusses the global economy with officials from Chile, Hong Kong, and the European Union; and Terence Smith and John Feinstein talk about the stunning Ryder Cup win by the U.S. golf team. It all follows our summary of the news this Monday.

NEWS SUMMARY

JIM LEHRER: President Clinton announced a record federal budget surplus today. He said in a Rose Garden ceremony it would be $115 billion in fiscal year '99, which ends on Thursday. He said it was evidence his administration's economic strategies were working. The deadline for a new budget is Friday, and Mr. Clinton spoke to congressional Republicans.

PRESIDENT CLINTON: The main thing that I would say is, I want them to work with me to meet our fundamental priorities. We can give the American people an honest, credible budget that extends the life of Social Security and Medicare, meets our responsibilities in education and other important areas, and leaves us free to pay down that debt, and to put America on a target to be debt-free in the next 15 years. I hope they will work with me in that spirit.

JIM LEHRER: The '98 fiscal year surplus was $69 billion. Republicans said today the back-to-back windfalls only proved a big tax cut was in order. Mr. Clinton vetoed a nearly $800 billion reduction last week, but he has said he'd sign a smaller cut. Former Vice President Quayle bowed out of the 2000 Presidential campaign today. He said at an Arizona news conference the odds he'd win the Republican nomination were too long, and he said he'd be facing an opponent, George W. Bush, who was on the way to raising $100 million. Quayle was the fourth GOP candidate to quit. We'll have more on this story right after the News Summary. As Quayle got out, Senator John McCain made it official he's in. The Republican Senator is a former Navy pilot and Vietnam prisoner of war. Speaking in New Hampshire, he promised to make national security and campaign reform top priorities.

SEN. JOHN McCAIN: I am the son and grandson of navy admirals, and I was born in America's service. It wasn't until I was deprived of her company that I fell in love with America, and it has been my honor to serve her and her great cause, freedom. I have never lived a day since that I wasn't more than thankful for the privilege. It is because I owe America more than she has ever owed me that I am a candidate for President of the United States.

JIM LEHRER: Overseas today, powerful aftershocks continued to rattle Central Taiwan. Rescue efforts for earthquake survivors were called off in some areas. Officials said the death toll from last week's quake and aftershocks stood at more than 2,100. 162 Remain trapped beneath the rubble, 18 are missing. Australian-led troops extended their control across East Timor today. Indonesian military officials announced they'd officially ceded authority to the United Nations force. We have a report from Philippa Meagher of Associated Press Television News.

PHILIPPA MEAGHER: Some of the last Indonesian troops pull out of East Timor, their place to be taken by the thousands of U.N. soldiers still pulling into the territory. By tomorrow, it's expected only 1,500 of what was an occupying force of 20,000 will remain. Jakarta will not formally recognize East Timor's independence until November, and two platoons of soldiers will remain until then. But confusion surrounded the formal hand-over of military control. The head of the U.N. forces said Indonesia still shared responsibility for security.

MAJ. GEN. PETER COSGROVE, U.N. Force Commander: This is still Indonesian sovereign territory, and under the U.N. resolution, Indonesia and the other partner nations-- indeed, the world community-- agree at Indonesia maintains security responsibility for the province until at some stage, I guess, the NPR will make a decision, and a new arrangement will be entered into.

PHILIPPA MEAGHER: Meanwhile, aid agencies have been distributing blankets and food to people in the capital, Dili, but their toughest challenge will be finding the thousands of refugees still hiding in the countryside.

AL DWYER, World Vision: Transportation is a problem. There's a lack of trucks in the city, there's a lack of warehousing space. Logistics certainly is a problem, and that's why we're distributing the commodity that we have when we get it.

PHILIPPA MEAGHER: And they'll have to rely on the U.N. peacekeepers for protection, but so far, only half of the expected force has arrived in East Timor.

JIM LEHRER: Russian jets hit targets in Chechnya for a fifth straight day. They bombed industrial sites and oil facilities near the capital, Grozny. The attacks were part of Russia's campaign against Islamic militants in the breakaway republic. Russian officials have blamed the Muslim guerrillas for invading the southern Russian province of Dagestan, and for recent bomb attacks at apartment buildings in Moscow. That's it for the News Summary tonight. Now it's on to the Quayle withdrawal, day trading, the world economy, and the big Ryder Cup victory.

FOCUS - BOWING OUT

JIM LEHRER: Dan Quayle says good-bye: We begin with excerpts from his announcement today in Phoenix, Arizona.

DAN QUAYLE: Today our campaign is really in a rather unique position, because the most recent national poll, the CNN/"Time" poll, shows us in second place, finally beginning to emerge as the clear alternative to the front-runner. Never before have we had a Republican primary like we are having today. The front-runner apparently will have up to $100 million to spend in the Republican primary. And after New Hampshire-- this is a very important point, and it was very critical in my decision-- there will be 18 primaries within 30 days of the New Hampshire primary. If I would win the New Hampshire primary, which I think I had a reasonable chance of doing, looking at the amount of money that I would have to raise and the calendar of these primaries, it became a very difficult proposition. There would be little time for reflection on what we had just achieved. There would not be sufficient time to raise the resources to be competitive in states like California, New York, Ohio, Michigan-- major expensive states. And so, reality set in. There's a time to stay and there's a time to fold. There is a time to know when to leave the stage. Thus today I am announcing that I will no longer be a candidate for President of the United States. I am going to work to unite this party. I will support the nominee of the Republican Party. I want to see the Republicans recapture the White House. It is time that we restore honor, dignity, and decency to the Oval Office. I am an optimist-- always have been, always will be. As Marilyn and I journey on to a different life, at a different pace, we do it with our heads held high. I am proud of what I have accomplished. I'm proud of my family. I'm thankful for the opportunities that I have had to get my ideas out there, and I want to continue to fight for those ideas.

JIM LEHRER: And to NewsHour regular Paul Gigot of the Wall Street Journal and David Broder of the Washington Post.

David, why didn't it work for Dan Quayle?

DAVID BRODER: I think two reasons, Jim. First of all, as soon as Governor Bush let it be known that he was going to run, Dan Quayle lost whatever chance he had to be the establishment candidate, be George Bush's senior - vice president - didn't stand up against being President Bush's son. And the second thing was that the battering that his reputation had taken from the moment that President Bush announced him as his surprise choice for Vice President right through -

JIM LEHRER: Back in 1988, you mean?

DAVID BRODER: That is right. Through those four years, he became the butt of late-night television jokes and cartoons, and the Republican conservatives, who shared many of his views, and admired Quayle's courage in fighting for those positions, nevertheless, felt that he couldn't be elected, and they're desperately eager to elect a President next year.

JIM LEHRER: Paul, what would you add to that?

PAUL GIGOT: I think to underscore David's second point - the Republican electorate is in a very pragmatic mood. It wants to win. And time and again I talked to voters who say, good man, Dan Quayle, good ideas, good experience, he'll never overcome that media stereotype. And, therefore he can't win and this year, I want to win. And what happens then is that he goes out to raise money, and the people who write $1,000 checks, or $500 checks, say, I like you, but I just can't do it. And so he found himself on the short end of fund-raising, and even if he won New Hampshire, as some of his advisers think, because of organization, they were looking at that stiff, shortened calendar, 18 contests in 30 days, and they said, we can't win.

JIM LEHRER: But, Paul, the world is -- history is full -- political history is full of people who were down and had worse things said about government than were ever said about Dan Quayle, and they recovered; they came back. Look at Richard Nixon. I mean, there's a whole list of them that you and David could add to. Why was Quayle unable to do that?

PAUL GIGOT: Partly I think it's this year. The Republican electorate is in a pragmatic mood. It does want to win this year more than some others. I think also the -- we have such a media-drenched political culture that I'm not so sure that if Richard Nixon had taken the beating that Dan Quayle has the Hotline, which is an insider publication, said that he purged his database and said that he found -- had been the butt of a thousand late-night jokes, and Dan Quayle had to take that consistently, time and again, in a way that I don't think a Richard Nixon, for example, had to 30 or 40 years ago. So I think it's very hard nowadays once a stereotype forms about you to change that stereotype unless some big event intervenes, and it's hard to do that when you're Vice President, which isn't exactly a job where you can take the initiative and change people's minds. And he was Vice President and was never able to overcome that initial problem he had, as David pointed out.

JIM LEHRER: David, there are stereotypes and there are stereotypes. Was there any validity to the stereotype that centered on Dan Quayle? You and Bob Woodward did a lot of work on him, did a long series of articles. I think that came out in book form, did it not?

DAVID BRODER: And Quayle is a more substantial person and a better campaigner than he was given credit for. During the four years that he was Vice President he did some serious work on deregulating business and on the space program. But it never caught up with the jokes about him. Jim, I think there's a difference between being widely despised or criticized, as Richard Nixon was, and in being ridiculed. You can overcome being disliked and despised, but it's very hard to overcome that steady barrage of ridicule.

JIM LEHRER: Did you believe, or did you perceive this time, David, that when Dan Quayle announced, when he decided to run for President this time, that he really believed he could get the nomination and be elected?

DAVID BRODER: Well, as he said himself, he is an optimist, and, you know, he'd won some big upset victories in Indiana. He took out an incumbent Democratic congressman in his home district around Fort Wayne. He took out Birch Bayh, who was one of the best campaigners the Democrats have ever seen in Indiana in a Senate race in 1980. He thought he could overcome odds. But there's one other factor I think that we ought to mention. Dan Quayle decided in 1996 not to run for governor of Indiana, as many of his friends there were urging him to do. He thought that it would be an advantage to be out of political office. He told me the last time we sat down and had a really frank conversation a few months ago that he now realizes that was a big mistake of judgment, that without a title in front of your name, it's very hard to stay in the news.

JIM LEHRER: He was, do you agree with that, Paul, he was off the stage too long?

PAUL GIGOT: Yes, I watched his speech in Ames, Iowa at the straw poll next to a Forbes advisor, and he listened to the speech, and he said, you know, that was really good. And if Dan Quayle had be delivering that speech for the last four years, every day and doing some of the legwork he needed to do, he might have been doing a little bit better now than he was but he did leave Indiana and go to Phoenix. He did leave the stage somewhat and opened the door for some other people.

JIM LEHRER: He also, as David said, did not hold office during, he not over left the state; he didn't hold office.

PAUL GIGOT: There were a lot of people urging him to run for governor of Indiana and I asked him in August whether he thought he should, might have in retrospect, in hindsight run and he said, maybe, which is interesting for a politician.

JIM LEHRER: From a practical point of view, David, what effect is this likely to have on the Republican race?

PAUL GIGOT: Well, he was competing with Steve Forbes and Gay Bauer for the religious conservatives, they will now take advantage of that. But I think the biggest effect is likely to be in New Hampshire, where he had the support of Former Governor John Sununu, the White House chief of staff in the early years of the Bush administration and he had a potential, a shot at least of being the endorsed candidate of the Manchester Union leader. That newspaper is probably looking for a new candidate and conservatives who were inclined to follow John Sununu are looking for a new candidate up there.

JIM LEHRER: Now, Paul, the other news of the day as everybody -- is no surprise here but that John McCain has said -- made it official he is definitely going to run for the nomination. Where does that fit into this now readjusted race?

PAUL GIGOT: Well, with Dan Quayle out, John McCain is now the only other candidate, other than George W. Bush, in this race who has held elected office. Believe that. Everybody else is either appointed office or never held office before. That makes him a substantial person and a man of experience. But he has got a very uphill climb like the rest of them do with Bush's big fund-raising advantage, big poll advantage. It's going to be very hard for anyone and I think he's compounding his problems with Sen. McCain, frankly, by staying out of Iowa. He has made a strategic decision that he can skip that caucus, go right to New Hampshire. That's never been done successfully in presidential politics, so he would be the first.

JIM LEHRER: Yeah, well, David, you are just office the McCain campaign bus, are you not?

DAVID BRODER: That's right.

JIM LEHRER: That is your campaign bus uniform you have on there, right?

DAVID BRODER: Jim, the announcement that the McCain people are hoping for someday is the announcement that Elizabeth Dole is giving up the race. Former Senator Warren Rudman of New Hampshire, his main backer up there told me on the plane going up to New Hampshire that if Elizabeth Doles gets out of this race, we have a real chance against Bush up here because she is competing with McCain for those mainstream Republican votes who are not already looked up by Governor Bush.

JIM LEHRER: And are not part of the conservative wing, the people you were just talking about.

DAVID BRODER: Exactly right.

JIM LEHRER: Do you read it is same way, Paul?

PAUL GIGOT: I do, I think he would love to have that happen because Steve Forbes is trying to coalesce the right particularly with Dan Quayle out and Pat Buchanan running off to reform. So, McCain would love to make it a two-man race among the party regulars, the establishment, with Governor Bush.

JIM LEHRER: Are there enough of them to defeat the right candidate?

PAUL GIGOT: I think so. I mean, I think as I said earlier, this is an unusual year with a lot of Republicans saying more than purity of on the issues, I want somebody who can win and who has the right biography and the right character to replace a fellow in the White House we don't particularly admire.

JIM LEHRER: Well, thank you both. David, you look terrific without a coat and tie. I have never seen you like this before. But you look pretty good, thank you both very much.

FOCUS - RISKY BUSINESS

JIM LEHRER: Now, winning and losing at day trading: Our business correspondent Paul Solman of WGBH, Boston, reports.

PAUL SOLMAN: In Carlos Rubino's New York cab, it's not just the meter that is raring to roll. There is the cell phone, the laptop computer, and of course the palm pilot, which is about to get a live feed from Reuters.

PAUL SOLMAN: Now is that wireless?

CARLOS RUBINO: It is a wireless modem.

PAUL SOLMAN: It is a wireless modem... so you're getting a signal...

CARLOS RUBINO: Satellite.

PAUL SOLMAN: A satellite signal all the time.

PAUL SOLMAN: Why is this 12-year veteran of the New York cab wars so wired? Because he is trading stocks.

CARLOS RUBINO: 24 hours a day.

PAUL SOLMAN: 24-hour-a-day Internet access, so you can make your trades here?

CARLOS RUBINO: Exactly.

PAUL SOLMAN: I see. So you stay on top of the market there, and then you make your trades here.

CARLOS RUBINO: Exactly.

PAUL SOLMAN: Rubino's last buy was Dell Computer, at $42. He sold at 42 and a half.

CARLOS RUBINO: I made, like, 50 cents. I sold.

PAUL SOLMAN: You made... you mean, it went up 50 cents per share?

CARLOS RUBINO: Yeah, I sold.

PAUL SOLMAN: Now, since Rubino pulls over to make transactions, there's only so much trading he can do in a day. So he's thinking of ditching the cab entirely to trade full-time, and to become that newest and most controversial species of investment creature, the full- fledged day trader. We wanted to know what makes day traders tick, and whether they really make money.

DAY TRADER: Come on, baby, go up.

PAUL SOLMAN: This is Tradescape, a firm of day traders. With reflexes honed on video games, they play the market like it's "Mortal Kombat," and don't let annoying details distract them. When we were allowed to watch, Kirk Kazazian was playing a brand-new stock called Agil. A-G-I-L. What is it?

KIRK KAZAZIAN: It's a new IPO.

PAUL SOLMAN: What does it make, what does it do?

KIRK KAZAZIAN: You know what, I don't know.

PAUL SOLMAN: But you don't know what it does, or what it makes, or who runs it, or anything?

KIRK KAZAZIAN: No. That's correct.

PAUL SOLMAN: But you've been buying and selling it?

KIRK KAZAZIAN: Today? Yes, at least sixty or seventy times.

PAUL SOLMAN: Sixty or seventy times?

KIRK KAZAZIAN: Yes.

PAUL SOLMAN: How have you done so far on it?

KIRK KAZAZIAN: I made money on it. I made some decent money on it.

PAUL SOLMAN: Now the computers at Tradescape keep score, and sure enough, Kazazian was up $29,000 for the day on a personal volume of 518,000 shares in Agil and a few other companies. A fluke? Hey, everybody we met was making money, from the high rollers to the low ones. So you're up $1,800 for the day?

DAY TRADER: Right.

PAUL SOLMAN: I take it. But yeah, you've done a tiny fraction of what he had done.

DAY TRADER: And that's about what I do every day.

PAUL SOLMAN: Many, if not most of these folks, are former stockbrokers. But Internet technology now lets them trade cheaply with their own money. And are you doing better here than you were doing as a stockbroker?

CRAIG THOMAS: I'm making two or three times as much. And with no stress.

PAUL SOLMAN: No stress? Well, there's plenty while the market's open, says Craig Thomas. But he goes home at 4:00. No more clients carping day and night.

CRAIG THOMAS: I don't have to handle client accounts anymore. Here's what I'm saying, this is what I'm looking for. You see how there's those guys on the bid?

PAUL SOLMAN: Like his brethren, Thomas rarely pries into a company's fundamentals, or even what it does. He simply tries to anticipate what other investors will do, and do it first.

CRAIG THOMAS: These stocks just came down about three points. I'm trying to find a bottom on it, so I can buy some.

PAUL SOLMAN: What is the company?

CRAIG THOMAS: N-T-R-O. I don't know. It's an IPO.

PAUL SOLMAN: All Thomas cares about at the moment is a spasm of selling that might be over. If he buys at the bottom before the crowd does, he explains, he'll turn a profit.

CRAIG THOMAS: I'm thinking if it came down this far, there will be some kind of opening where I can make some money.

PAUL SOLMAN: So the key in some sense is that you are trying to do what everyone else is going to do, except sooner.

CRAIG THOMAS: Right, pretty much.

PAUL SOLMAN: Now if day trading seems a bit short on, oh, substance, the folks at Tradescape insist it serves an important economic purpose: Making markets run more efficiently. More competition has meant lower commissions, they insist...

WOMAN: Buying that at 5 7/8.

PAUL SOLMAN: ...A lower spread between the price being bid for a company's stock, if you are selling, and the higher price being asked for that same stock, if you are buying. Steve Lipson does PR for Tradescape.

STEVE LIPSON: The difference that an individual pays when they buy a stock versus what they are going to be able to receive when they sell the stock, they used to lose maybe 50 cents a share just in the transaction cost to that spread. Now they maybe paying 25 cents, maybe even less. And that's their return, in their pocket, and it's due to the competition that the market makers face from the activities of day traders.

PAUL SOLMAN: So if you are wondering who's been losing while these guys are winning, well, the day trading line is, Wall Street, its market makers, and brokerage firms. But that can't be the whole story. Says MIT Finance Professor Andrew Lo, a lot of the losers are day traders themselves.

ANDREW LO, MIT Sloan School of Management: There are statistics that show that on average, if you take a look at the day traders, maybe something like 10 percent or 11 percent of the day traders are actually profitable, which means that the rest of the crowd, the 89 percent, are losing money, on average.

PAUL SOLMAN: Tradescape's response? That its traders-- the experienced ones, at least-- have a much higher success rate, according to an internal study.

OMAR AMANAT, CEO, Tradescape: Many of the traders who have made it through a learning curve past three months to six months are in fact... over 50 percent of them have been profitable. And... but again, that data has not been released, and we will...we are looking forward to releasing some of that into data.

PAUL SOLMAN: Now, even if these numbers are true, it still means that almost half of all day traders are losers. So who and where are they? Well, we figured maybe there would be amateur day traders who outnumber the pros by something like 50 to one. But Carlos Rubino was making money. And so was the one at-home day trader we profiled back in February, Lynn Harvey.

LYNN HARVEY: I made more in January than I made all year last year.

PAUL SOLMAN: Why do I keep meeting the winners?

ANDREW LO: Well, I suspect that the winners are the ones that are most vocal, the most visible, and are obviously the ones that have a great deal of enthusiasm for the activity. The ones that are losers are probably not likely to make a big deal of it.

PAUL SOLMAN: This is a recurring theme in finance, says Andrew Lo: Survivor bias.

ANDREW LO: This is much like the bias that we see when we ask people whether or not they voted for Richard Nixon in the second election, the landslide victory, where nobody seems to have voted for him after the fact.

PAUL SOLMAN: People don't want to admit voting for Nixon, says Lo, and...

ANDREW LO: They don't want to the admit that they've lost a great deal of money. It's a personal embarrassment. It's a sign of, I guess, weakness, or defeat.

PAUL SOLMAN: So the point is, no day trader who is losing money is about to let us in with a camera.

ANDREW LO: That's right.

PAUL SOLMAN: In fact, day trading losses can be devastating. When day trader Mark Barton lost half a million dollars in Atlanta earlier this year, he allegedly snapped and went on a killing spree. So there are losers, big ones. But Tradescape CEO points outs that unfortunately, tragedies can happen in any risky business.

OMAR AMANAT: This is also a career that by its very definition has its ups and downs. So certainly that is... that can be stressful for many individuals who are either too emotional or not as stressful for people who aren't as emotional.

PAUL SOLMAN: Our last stop was the apartment of Alexander Elder, a Russian migr psychiatrist-- he jumped ship in 1974-- who went on to become an investor, and has written the day trader's bible, "Trading for a Living." He too thinks camera crews like ours don't see the whole picture.

DR. ALEXANDER ELDER, Psychiatrist: This is... the question of profits of losses are tremendously sensitive, personal questions. I mean, till you see accounts, you cannot believe a word that you are saying-- that you are hearing.

PAUL SOLMAN: Dr. Elder's business these days is analyzing investors, and he says most of them are losers, and he knows why.

DR. ALEXANDER ELDER: What happens to most people is that when they start making money, they get so wonderfully happy about it, that they lose all sense of caution, and they start taking stupid trades. And then they lose money, and then they become scared. And then the guy who is scared is sitting in front of the screen with a trigger finger like this.

PAUL SOLMAN: Now Elder doesn't think losing is inevitable-- far from it. In fact, he says, if you understand how most investors can behave, you can win by betting against them. You study lots of charts that depict crowd behavior doing technical analysis, instead of focusing on a firm's fundamentals. Understanding the crowd's psychology leads to the hardest job of all, he thinks: Understanding your own.

DR. ALEXANDER ELDER: It's all about discipline. It's all about increasing your percentage of winners. It's all about keeping your losses small.

PAUL SOLMAN: Disciplined enough to take your winnings and get out, or cut your losses and get out.

DR. ALEXANDER ELDER: Right. Not get too greedy. You have to cut short your own good streaks, and you have to accept your own losses.

PAUL SOLMAN: MIT's Andrew Lo doesn't disagree. He has written a book that suggests the stock market isn't random, can be beaten, and that psychology plays a crucial role.

ANDREW LO: I think the comparison that I like to make is the difference between a professional gambler and a compulsive gambler. A professional gambler is somebody who understands all the odds, who knows how to make these calculations and tradeoffs between risk and reward, and is extremely disciplined in how they make their bets. A compulsive gambler has a need for the kind of stimulus that gambling provides. There is nothing refined about that need. It is an addiction, much like an addiction to a substance, and so the question of whether or not day traders are more like compulsive gamblers or professional gamblers can explain the difference between financial ruin and financial success.

PAUL SOLMAN: So only day trade if you can play poker really well?

ANDREW LO: Absolutely.

PAUL SOLMAN: In the end, then, it may be no wonder that the traders one sees on TV make it look easy. They're the ones who play the game best, the ones who, like Alexander Elder himself, do seem to be able to out-psyche the crowd. And when a New York taxi driver makes money at the game, you can bet he is not your usual cabbie.

PAUL SOLMAN: You seem to be about the happiest cab driver I've run into in some years.

CARLOS RUBINO: Yeah?

PAUL SOLMAN: Yeah.

CARLOS RUBINO: It's your lucky day.

PAUL SOLMAN: Yeah, well, maybe it's your lucky day. Let's see. Not surprisingly, Carlos Rubino was still way ahead of the market when we left him, another of day trading's oh-so-visible winners, which is probably why we wound up in his cab, recording, as usual, the exploits of another very unusual investor.

JIM LEHRER: Still to come on the NewsHour tonight, how's the world economy doing, and "Ryding" high.

FOCUS - GLOBAL VIEWS

JIM LEHRER: Margaret Warner has the world economy story.

MARGARET WARNER: For the past two years, the annual meetings of the International Monetary Fund and World Bank, the world's premier financial lending institutions have been gloomy affairs. In 1997, the Asian currency crisis hasjust broken out. In 1998, the Asian flu had spread to Russia and Latin America. The IMF has been criticized for mishandling those crises, and the fund predicted a worse year ahead. But this week as the world financial leaders meet again in Washington, the global economy has improved markedly, according to an IFM report. With us are three senior economic policy makers from three parts of the globe: Sir Donald Tsang, the financial secretary of Hong Kong; Eduardo Aninat, the minister of finance from Kiev; and Pedro Solbes, the European Union's commissioner for economic and financial affairs. He is a former finance minister of Spain. Welcome, gentlemen.

Secretary Tsang, the IMF's world economic outlook that's put out every year certainly is a lot more upbeat this year. Is the situation that much better?

SIR DONALD TSANG: Yes, quite clearly Asia has turned a corner; all the economies which have been effected by the Asian financial crisis have now posed positive figures of different extent. At the same time there have been some reforms in most the economies affected. The question is now is whether those reforms will continue and whether the recovery will be sustainable over the long term but then you can see Asia as a whole poised for greater competition in the new century.

MARGARET WARNER: Commissioner Solbes, how firm do you see this economic recovery? How firm do you think it is, how real?

PEDRO SOLBES: Well, I think it's also Europe is growing rather. We began the year with a forecast of growth of 2.1 for this year. We'll probably finish a little bit higher and for the next year it will be closer to 3 percent, and I think that the global conditions are very good because this rate of growth is counted out with a very good inflation rate and at the same sometime also with a rather sane -- public deficit situation. And I think even if we still have to carry out some structural reforms the situation is rather similar in some other countries. So I think the situation is difficult and it will be like that in the future.

MARGARET WARNER: Minister Aninat, as look at the world economic situation, why do you think it's so much better than a year ago you all thought it would be?

EDUARDO ANINAT: It is a very good question. First I think that the diagnosis of the first Asian flu and its aftermath in Russia and in Latin America and in the Caribbean shows the economics of society still are a very imperfect one and we should have to monitor our models in a better predicted way. But on the whole, I think that the economy worldwide is looking better for at least three reasons. Number one inflation is not to be seen in any continent not significantly. Latin America has achieved enormous progress in the areas of stabilization of prices. Number two we are not seeing more financial turmoil as in the banks, insurance houses and the like as the big ones we sue in '97 and '98. That is better news in terms of the typical financial volatility, and third I think that trade openness and much of the reforms being made is helping boost experts and imports in most continents throughout the world. This is very good news to keep it sustainable in time.

MARGARET WARNER: Secretary Tsang your view on why it's so much better than you all thought last year it would be -- do you degree with the minister?

SIR DONALD TSANG: Well, the forecast I have as far as Hong Kong is concerned, it is roughly the same as now as it was in March.

MARGARET WARNER: I'm talking really the whole world, the global economy.

SIR DONALD TSANG: I'm not surprised by the speed of recovery. If you look back to the recovery of Europe after the bout they had in 1991 and also in 1994 after the Mexican crisis, the recovery was in each and every occasion quite speedy and on this occasion too and I can see general recovery of about the same speed but I agree with Eduardo that those are the elements which have underpinned the recovery on this occasion.

MARGARET WARNER: And, so, Commissioner Solbes, what will it take to sustain this?

PEDRO SOLBES: Well, I think it will be sustainable because of the important effort that we have carried out in the last few years - mainly as concerned reforms in the different countries and also because of the exception of something which today is rather clear ... is that low inflation is very positive and then reduction of public difficult that is necessary to maintain private activity and additional growth. All this connected with the good evolution of the estate and the improving certain emerging market -- market emerging areas I think will guarantee this sustainability in the future.

MARGARET WARNER: Minister Aninat, when I looked at this global economic outlook and the communiqu yesterday both of them talked about the strong U.S. economy and how that was really a boost to the global economy. Yet, here in the states we have a lot of concern that the economy is a bubble. When you look at the U.S. economy what do you see? Do you see a strong economy or do you have concern that some of it might be an artificial bubble that could burst?

EDUARDO ANINAT: Well, I see two simultaneous things, number one as a professional economist I am puzzled about the long time span that this very good cycle is, this sort of very aggressive boom time cycle has taken along in the U.S. It is unprecedented, was not used to have such long periods of continuous economic growth. At the same time, number two, I see an enormous productivity change in the services sector, in the financial area, in agriculture, mining, manufactures in the U.S., in the transportation system. And I think it is the productivity change that has allowed this country to make an enormous revolution, perhaps a silent revolution; so being from a developing country myself, I only wish it continues to be so in the coming years.

MARGARET WARNER: Secretary Tsang, when you look at the U.S., do you see a country or an economy that has been transformed that really has made a fundamental revolution in productivity based I guess you are saying on the information economy?

SIR DONALD TSANG: Yes, indeed I do see a major significant advancement in the information technology and the investment it has made this country over the last two decades has begun to bear fruit and is manifested in export level and in terms of corporate structure, but of course there are worrying aspects of it all in that some of the stocks and shares have rather unhealthy, very large P. E. ratio which could be, could be risky.

MARGARET WARNER: So, Commissioner Solbes how much of the global economic recovery of past year does depends on the strong U.S. economy?

PEDRO SOLBES: Well, I think it's a substantial part, because even in Europe the situation was certain growth, it is like a hike in the states so the estate has acted as a real engine of the global recovery all over the world. And I could say that I agree with Secretary Tsang in the sense of saying that the real situation has been the changes, the part of the duty in the estates, the introduction of new technology because what is really impressive is this rate of growth maintaining at the same time a very low inflation situation, and this not implied that we have no problems in the future. I think that there are some risks of course but in any case I think this situation is rather good in general terms.

MARGARET WARNER: Mr. Minister, you were trying to get in.

EDUARDO ANINAT: Yes, I think it's a crucial point to see how the sequencing will come in in terms of this very fast U.S. growth but with some adjustment to the lower side starting next year, gradually hopefully, then the pick up of most of the European community countries, we need them to pick up in terms of the accelerating growth and Japan. For my own opinion I think the sustainability of the recent recovery at low-level still of Japan is crucial to make the rest of East Asia sustainable in its very positive growth. The sequencing is not a minor factor.

MARGARET WARNER: But, Secretary Tsang, is there any danger for the rest of the global economy in the strengths of the U.S. economy? That is, if there were a downturn here, would that be catastrophic, would it be just dangerous?

SIR DONALD TSANG: Catastrophic perhaps is too strong a word but as long as we realize there is risk involved and we believe in the cyclical nature of markets, then we have to accept at some point that there will be adjustment and the United States market is one of the largest markets. In the globalized nature we have seen today and quite clearly an adjustment in U.S. markets will impact on all other markets, whether they were in Asia, Scandinavia, Latin America, or South Africa. I think we have face that fact but as long as we individually continue the reform process which is equally important so that when an adjustment comes, we are better equipped to deal with the adjustment.

MARGARET WARNER: Mr. Secretary, staying with you, one final topic I want to ask you about, several weeks ago or a few weeks ago, we had an example of the World Bank and IMF threatening to withhold further financial assistance from Indonesia to get the Indonesian government to invite foreign troops into East Timor. Do you think that is a good idea to use the I M F or World Bank essentially for foreign policy or political ends? Secretary Tsang?

SIR DONALD TSANG: Well, for me East Timor is a very explosive issue. For one, I am the finance minister. I look at it most of it on the financial angles, and it is difficult for me to say whether it is the right decision or wrong decision but I would wish that the I MF continue to operate on a professional basis and not excessively influenced by politics.

MARGARET WARNER: It sounds as if you think perhaps it was.

SIR DONALD TSANG: Well, I think it's for, up to me, as I said I would wish IMF to continue to operate on a professional basis based entirely as far as allocation and funding assistance concern on their own judgment about the balance of payment situation of the individual economies.

MARGARET WARNER: Commission Solbes, your view on this, you don't even have to speak just about East Timor, but should the IMF and World Bank essentially use its policies not just for economics but also for certain humanitarian or political or foreign policy aims?

PEDRO SOLBES: Well, our experience in Europe is that it's really difficult to present a public opinion that we are criticizing some governments because they are not expecting human rights and at the same time we are cooperating with them. So in our politics, human rights and human protection is more and more important issue to be considered. It is true that sometimes in spite of the difficulties, we have to continue to cooperate not to createadditional problems to national populations but it is true that we cannot give exactly the same treatment governments who are not expect respecting human rights than to governments that are trying to do their best as concerns this specific point.

MARGARET WARNER: Do you see it that way, Mr. Minister?

EDUARDO ANINAT: The East Timor situation is really a sort of extreme case and consideration given the violence and the nonrespectfulness of defend will self-determination of what is going on there but more generally and seeing our conflict areas in the world, and the role of the World Bank and the IMF, I think one has to set a destination. On a technical basis the charter of both sister institutions coming from the Breton Woods Accord have to proceed according to their professional technical economic outlook, balance of payments, situations, development need sector of performance but we cannot forget that both are institutions belonging to the United Nations and as members of the United Nations, citizens' rights, human rights are a crucial thing. So in that sense, these institutions also to remain sensitive to the owners, the 182 countries belonging to the United Nations.

MARGARET WARNER: All right. Well thank you all three gentlemen very much. Thanks for joining us.

FINALLY - RYDER CUP

JIM LEHRER: Finally tonight, big drives, long putts, and a very sweet victory: Terence Smith explains.

TERENCE SMITH: Yesterday's dramatic capture of golf's premier team event, the Ryder Cup, came on the grounds of the country club in Brookline, Massachusetts. It was the 33rd biennial competition between the top American and European golfers. At the end of play Saturday, the United States team stood a full four points behind their European competitors. No underdog in the history of the cup had ever come back from so far behind. But in the end, the Americans put together a stunning string of improbable shots to capture the cup -- among the miracles, veteran Tom Lehman's birdie on the 13th hole, and his victory with this putt on 16. The world's top-ranked player, Tiger Woods, chipped in from the fringe on the eighth hole, and putted in on 16 to win his match -- and 27-year-old Justin Leonard sinking this impossible and crucial 45-foot putt on the 17th hole. But the competition wasn't without controversy, notably the wild celebration following Justin Leonard's epic putt, which spilled over onto the green...

SPORTSCASTER: The Americans really should compose themselves here.

TERENCE SMITH: ...And forced Jose Maria Olazabal to wait until calm was restored to take his own shot at a 25-foot putt. Had he made it, Olazabal would have stayed even with Leonard, and kept the Europeans in the match. But Leonard's putt clinched the win for the Americans.

JUSTIN LEONARD, U.S. Ryder Cup Team Member: Nothing like today. You know, from almost sheer despair there, being four down, to, you know, watching those guys go out early and play the way they did, just the way we had talked about doing it, and then to get their support as I'm out there, you know, it's just unbelievable.

TERENCE SMITH: The victory was America's first since 1993.

TERENCE SMITH: With us now is writer and commentator John Feinstein. His latest book is "The Majors," about the four major championships in professional golf. John, welcome. For the non-golfers among us, explain a little of the significance and importance of the Ryder Cup.

JOHN FEINSTEIN: Well, the Ryder Cup dates back to the 1920's, when a British businessman named Samuel Ryder witnessed an exhibition match between American golfers and British golfers, and thought it would be fun to have a formal competition between them, so he donated a cup in 1927. And they started playing every two years. But by 1977, the competition had become so one-sided in the Americans' favor that no one was paying attention to it. It was an afterthought both here and in the British Isles. So in 1979, all of Europe was added to the great... to the British and Irish side, and from that point on, the Ryder Cup has become more and more competitive. Europe won for the first time as a team in 1985, and since then, the momentum has swung back and forth. As you mentioned in the piece, the U.S. hadn't won before yesterday since 1993. So when they got behind on Saturday night, they were looking at a very embarrassing situation, because they were heavy favorites going into this match, with seven rookies playing for Europe, and so their comeback, as you could see, was extremely emotional, because they were facing humiliation if they lost.

TERENCE SMITH: Well, how did they manage to get in such a hole in the first place?

JOHN FEINSTEIN: Well, I think a lot of it has to do with the fact that it's always great to be an underdog in sports. There is nothing better than being a coach-- or a captain, in this case-- of a team, and being able to go in and say "no one thinks you can win," because that inspires athletes more than anything, and the Europeans had heard for months that they had no chance. Payne Stewart, one of the American players, was quoted before the matches as saying, "on paper, these guys shouldn't even be caddying for us." Well, clearly, Ryder Cups are not decided on paper. We saw that over the weekend. That's what makes them so much fun. And the Europeans played inspired golf; they played better in team situations than the Americans. They help each other; they support each other. It's not an accident that it was yesterday in singles play, where each player goes out by himself to play against each player, that the Americans were able to turn the thing around.

TERENCE SMITH: Well, what actually happened? By Saturday night, they are in a hole, a big hole. They are in a hole no previous team has climbed out of, and yet it was turned around. I read that among other things-- and tell me if this is really true-- that George W. Bush was there, and read a poem about the Alamo to the competitors?

JOHN FEINSTEIN: Yes, he did. Ben Crenshaw, the captain, who is also a Texan, brought Governor Bush into the team room on Saturday night and had him read a poem about the Alamo, and about having your back to the wall. You see, this was the great moment for the Americans, Terry, because now they were the underdogs. Ben Crenshaw was able to go in and say to his players, "no one thinks you can win. Everybody is against you." They even used Johnny Miller, the NBC TV announcer, as one of the bad guys, because they said he had been second-guessing them. Well, they were losing. He wasn't second guessing. He was pointing out their failures during the course of the matches on Friday and Saturday. But the Americans came out on Saturday with-- Sunday, excuse me-- with an us-against-the- world attitude, and it worked.

TERENCE SMITH: Tell me, tell us what it was like to be there.

JOHN FEINSTEIN: Well, it was extraordinary, because the Ryder Cup is like no other competition in golf, because it is a team match; because it is nation against nation; and because the fans get, really, I think almost too out of control at times. They...you never hear in golf people cheering poor shots except at the RyderCup, where fans on both sides of the ocean cheer for the opponents' poor shots, and as the Americans got closer and closer to winning the match, it got louder and louder around the country club, and by the time Justin Leonard made that putt at 17, you could see that everyone's emotions were out of control, including the players, because what the American players did when they stormed the green there, before Jose Maria Olazabal could putt, was wrong. It goes against everything in golf etiquette. They didn't do it with any malice at all. They did it because they were so overwhelmed by the comeback, but it was clearly wrong, and Ben Crenshaw and the players apologized to the Europeans afterwards for doing it.

TERENCE SMITH: Do you think it upset Olazabal? Could you tell?

JOHN FEINSTEIN: I don't think it was really that difficult for Olazabal, and I'll tell you why. He is one of the most deliberate players in golf. He probably would have taken almost as long to get up over the putt without the celebration as he did with the celebration. And, in a way, it may have given him a chance to compose himself under the circumstances, and he even said himself that it had no effect on whether he made or missed the putt. He just thought it was poor etiquette on the Americans' part to do it, and he was right about that.

TERENCE SMITH: Well, in the questionable manners department, I gather that David Duvall had been dismissing the Ryder Cup as a mere exhibition.

JOHN FEINSTEIN: Well, both David Duvall and Tiger Woods made that comment before the event. There was a whole controversy about whether the American players should be paid, because the PGA of America walked off with about $17 million from the players. The Americans players, who have never been paid in the past, although indirectly being a Ryder Cupper makes you a lot of money...some of them, including Duvall and Woods, were saying they should be paid, and they both said, Duvall and Woods, that it was an exhibition. Both of them come out of this weekend's... you know, "we changed our mind. This is the greatest event in golf," which is what happens to everyone once they play in the Ryder Cup.

TERENCE SMITH: Tell us a little about Justin Leonard, the man of the moment.

JOHN FEINSTEIN: Justin Leonard is an extraordinary young player in that he can't hit the ball that far. He's a little guy, but he is an amazing competitor. He won the British Open two years ago at the age of 25. He almost won it again this year. He was four down to Jose Maria Olazabal, with seven holes to play, and came back to be the hero, which is just an amazing performance.

TERENCE SMITH: How about that putt, that 45- footer?

JOHN FEINSTEIN: One of the most memorable putts you will ever see in golf. They will be replaying that on TV for years to come, not only because it won the Ryder Cup, but because of the reaction that everybody had to it.

TERENCE SMITH: It was extraordinary. John Feinstein, thank you very much.

JOHN FEINSTEIN: Thank you, Terry.

RECAP

JIM LEHRER: Again, the major stories of this Monday: President Clinton announced a record federal budget surplus: $115 billion in fiscal year '99. Republicans said the windfall only proved a big tax cut was in order. And Former Vice President Quayle dropped out of the 2000 Presidential campaign. A follow-up before we go tonight. We reported two weeks ago on a New York City's campaign against a deadly mosquito-borne encephalitis. It was originally thought to be St. Louis encephalitis, the most common variety. Now federal and state officials believe it is a milder strain similar to one known as West Nile encephalitis. It has been the first time it has been discovered in the Western Hemisphere. We'll see you online, and again here tomorrow evening. I'm Jim Lehrer. Thank you, and good night.