The NewsHour with Jim Lehrer

MARGARET WARNER: Good evening. I'm Marg aret Warner. Jim Lehrer is off this week. On the NewsHour tonight, the fire that's raging through Los Alamos, New Mexico; the risks of buying stocks with borrowed funds; today's court hearing on the fate of Elian Gonzalez; and essayist Clarence page on the confederate flag. It all follows our summary of the news this Thursday.

NEWS SUMMARY

MARGARET WARNER: A wind-driven firestorm swept through Los Alamos, New Mexico today. It has damaged or destroyed 300 to 400 homes so far, and forced some 18,000 people to evacuate the area. The Los Alamos national laboratory was shut down, but authorities said all radioactive materials and explosives were stored safely in fireproof facilities. The National Park Service started the blaze a week ago to clear brush, but it soon flared out of control. We'll have more on this story right after the News Summary. The issue of political asylum for Elian Gonzalez went before a federal appeals court in Atlanta today. The boy signed an application for asylum while he was living with his Miami relatives, but the INS rejected it on the grounds that his father was opposed. A Justice Department lawyer commented after the hearing.

JAMES CASTELLO, Assistant Deputy Attorney General: Juan Miguel Gonzalez, the father of Elian who has legal authority over him and who has a close and loving relationship with him, has made it very clear that he does not want to apply for asylum on behalf of his son. Second, a six-year-old child is too young to make these kinds of legal decisions on his own. An adult has to make them on his behalf, and under the immigration law, that adult is Elian's father.

MARGARET WARNER: The relatives' lawyers didn't speak after the hearing. It could be weeks before the appeals court issues its ruling. We'll have more on this story later in the program tonight. Army investigators have substantiated a sexual harassment complaint lodged by the service's highest-ranking female general against another army general. Several major newspapers and wire services reported that today. They said the army's inspector general has concluded that Lieutenant General Claudia Kennedy was in fact the victim of an unwanted advance from Major General Larry Smith. That conclusion will be reviewed for possible disciplinary action by the army's vice chief of staff, General John Keane. A Pentagon spokesman would not comment on the case. In the Philippines today, a computer student said he may have accidentally released the "love bug" computer virus. We have this report from Philippa Meagher of Associated Press Television News.

PHILIPPA MEAGHER: Accompanied by his sister, Onel de Guzman hung his head before the press as he answered questions through hislawyer. It's now thought his college thesis project, designed to steal passwords from other computer users, was the start of what became the "I Love You" virus. The 23-year-old admitted he may have hit a wrong key by mistake, sending the program on a worldwide rampage, causing billions of dollars worth of damage. His lawyer says his client may have failed to understand the consequences of his actions. De Guzman says he can't remember where he was last Thursday, the day the virus erupted. Asked how he felt about the damage it caused, he simply replied, "nothing." De Guzman is one of two students from this computer college in Manila who are now under investigation. Another dozen computer hackers are also wanted for questioning, members of an underground group, which wrote and sold thesis projects to other students. Some Filipino politicians are putting a positive spin on the incident, saying it shows that the Philippines can produce world-class computer programmers.

MARGARET WARNER: Philippine investigators and the FBI are still examining computer diskettes seized from de Guzman's apartment. Leaders of the United Methodist Church handed a double defeat to gay rights activists today. Meeting in Cleveland, the church's general conference voted by nearly two-to-one to maintain a policy that homosexuality is, "incompatible with Christian teaching." A second, equally lopsided vote reaffirmed a requirement that any Methodist clergy who are gay or lesbian must remain celibate. Bishop Edward Egan was named by the Pope today to succeed Cardinal John O'Connor as the Archbishop of New York. O'Connor died last week of brain cancer. The 68-year-old Egan has been bishop of the Bridgeport, Connecticut, Diocese since 1988. He said he was humbled to be chosen.

REV. EDWARD EGAN, Archbishop Designate: My first reaction was, "Edward, get down on your knees and beg the lord to give you a hand and don't get up too quickly." But I want to be a New Yorker, and I guess I am officially one, so my second reaction was, "Edward, get up off your knees when the Lord lets you and feel welcome."

MARGARET WARNER: The new archbishop is considered a conservative who backs the Pope's opposition to abortion and homosexuality. Five major pharmaceutical companies agreed today to slash the price of HIV and AIDS drugs for developing nations. The UN announced the agreement in Geneva. Health workers have complained that the high cost of such drugs virtually blocks their use in sub-saharan Africa. That region has 80% of the world's HIV-positive population. South Carolina's legislature voted today to remove the confederate flag from the State House dome. The House gave final approval to moving the flag to a confederate memorial on the capitol grounds. Legislators now must reconcile the House bill with a Senate version. But the NAACP rejects both bills, and says its tourism boycott of South Carolina will continue. We'll have a Clarence page essay on the confederate flag at the end of the program tonight. Between now and then, the fire ravaging Los Alamos, buying stocks with borrowed money, and today's Elian Gonzalez court battle.

FOCUS - FIRESTORM

MARGARET WARNER: Kwame Holman begins our coverage of the Los Alamos fire.

KWAME HOLMAN: Firefighters say they were making progress toward containing the fires in and around Los Alamos, New Mexico, until hot, dry winds of up to 60 miles-per-hour aided the flames today. So far, some 400 homes have been destroyed. Thousands have been evacuated from the North Central area of New Mexico that includes Los Alamos and White Rock. Today, some 10,000 more residents were urged to leave Espanola to the North.

MAN: It's pretty scary -- probably the biggest thing to happen in this town.

KWAME HOLMAN: The National Park Service deliberately set the fire a week ago as a so-called prescribed burn designed to clear brush and prevent catastrophic wildfires. But stoked by wind and low humidity, the flames quickly flared out of control, spreading over 18,000 acres. The blaze passed through part of the Energy Department's Los Alamos national laboratory yesterday, but this afternoon, officials said it posed no threat to nuclear and other weapons stored in underground bunkers and fortified buildings.

BILL RICHARDSON, Secretary of Energy: We believe that our extensive nuclear materials throughout the complex are safe. They are located in many fire resistant buildings, and we believe that the public should not be concerned about that. We have an excellent security force. We also at this time are conducting some radiological tests. We do not believe at this time there has been any radiological releases, but at this moment we are conducting tests to see if there is plutonium or beryllium. We believe again that there have been no radiological leakages.

JOHN BROWN, Los Alamos Laboratory Director: What might be referred to is that we do store high explosives in concrete bunkers, the fire did burn through that area, and we did just what we wanted to do. We left those high explosives in those bunkers, the fire blew straight through; it charred the area, but did not harm those bunkers. So everything is safe with respect to the high explosives.

KWAME HOLMAN: As today's high winds came in, firefighters were prevented from challenging the blaze directly. Water-bombing helicopters and airplanes saw only limited duty.

FIREFIGHTER: Engine one is on their way.

KWAME HOLMAN: Some fire crews did manage to protect homes along the edges of the fire's path. Today, New Mexico's senior Senator, Republican Pete Domenici, vowed to find out why Park Service officials set the fire last week in spite of an unfavorable weather forecast.

SEN. PETE DOMENICI, (R) New Mexico: Somebody made a mistake and obviously we have to begin an investigation as to how it started and did somebody do something that should not have been considering the dry condition, the drought, and the winds, et cetera.

KWAME HOLMAN: In addition to this blaze, New Mexico officials are contending with at least two other wild fires elsewhere in the state.

MARGARET WARNER: Elizabeth Farnsworth takes it from there.

ELIZABETH FARNSWORTH: And for more on the fire, we're joined now from Los Alamos by New Mexico Governor Gary Johnson; and Buddy Young, the regional director of FEMA, the Federal Emergency Management Agency. Interior Secretary Bruce Babbitt is in Washington. He oversees the national park service, among other things. Governor Johnson, please bring us up to date. What's the status of the fire now?

GOV. GARY JOHNSON, (R) New Mexico: Really quickly I want to correct one thing. We're talking about 100 homes that have been destroyed, but it is a bad situation. You can see how hard it's blowing out here, probably in excess of 30 miles an hour. There is fire to the South of Los Alamos coming through the labs. And, again, we believe the labs are completely safe. There's no danger to the public. But we're still concerned about property in Los Alamos. Nobody has been hurt throughout all of this. There was an evacuation yesterday of all of Los Alamos. Of course White Rock has now been evacuated. That's also another concern isthat the fire to the East has gotten to White Rock, another community of about 7,000-8,000. We also have problems to the North in Espanola. It has gone that far. It has gone ten miles approximately to the North. So, this is a bad situation. There are a lot of people here on the ground, probably a thousand, 600, 700, directly involved in firefighting. So a lot of people putting in a lot of really good effort to make, you know, better a bad situation.

ELIZABETH FARNSWORTH: Governor, what's happening at the lab? Are there fires burning at the various sites and buildings of the labs now?

GOV. GARY JOHNSON: I have to apologize. Because of the wind it's a little bit difficult to hear you, but although fire is coming through the lab, again there is no safety danger to the public. When you're talking about these materials that are being stored on the lab, in the lab, we're talking about concrete structures, double-walled steel doors, the safest place for this material during a fire is just where these materials are.

ELIZABETH FARNSWORTH: And Governor, for the record, what are the materials? What nuclear materials are there?

GOV. GARY JOHNSON: Technically speaking maybe Buddy could address that. Again, I know that plutonium is dealt with certainly. Los Alamos does process nuclear material, plutonium. There is explosives, there are chemicals at the lab. Again, all these materials are safe.

ELIZABETH FARNSWORTH: And Governor, we heard Energy Secretary Richardson say that radiological tests were being conducted. Do you have the results of any of those tests?

GOV. GARY JOHNSON: Yes, we do. There is just again no... nothing is being released here at Los Alamos, and these monitoring devices are within the lab and they're also on the perimeter of the lab. So, the monitoring shows nothing is being released.

ELIZABETH FARNSWORTH: Okay. Governor Johnson, don't go away. Buddy Young, what do you see? You've been on a tour of the area. What do you see?

BUDDY YOUNG, Regional Director, FEMA: Well, there's a tremendous amount of damage here in the city of Los Alamos. As the governor said, there's somewhere around 100 houses, maybe 150, we don't know exactly how many houses have been totally destroyed. Of course there's a lot of land, a lot of forest, a lot of country around here that's been burned. I heard something like 18,000 acres. The fire is still spread over a very large area.

ELIZABETH FARNSWORTH: Mr. Young, how evacuees do you have right now?

BUDDY YOUNG: We believe there's around 18,000.

ELIZABETH FARNSWORTH: You've evacuated all of Espanola and what about Pueblo, is that being evacuated?

BUDDY YOUNG: I'm sorry.

GOV. GARY JOHNSON: No, those areas haven't been evacuated. Espanola has not been evacuated. White Rock has and so has Los Alamos.

ELIZABETH FARNSWORTH: Where is everybody going, Buddy Young? Where are they all being taken care of?

BUDDY YOUNG: Well, they have several shelters set up. There's quite a few people in the shelters. Most of the people are finding a place to stay with friends and relatives.

ELIZABETH FARNSWORTH: Do you expect more to be evacuated? Can you tell from the way the fire is moving now whether you'll have a lot more evacuees?

BUDDY YOUNG: I don't know that I'm in a position to answer that question. The governor may know more about that than I do. I'm not real familiar with the country here. I'm from over in Texas, and I don't know the area as well as the governor does. There's a lot of small communities around Los Alamos and the Santa Fe area, but I don't know where they're all located so the governor may have to address that.

ELIZABETH FARNSWORTH: Governor?

GOV. GARY JOHNSON: Well, you pointed those out. We're talking about potentially Espanola, San Ildefonso and Santa Clara.

ELIZABETH FARNSWORTH: Okay. Secretary Babbitt, do you want to add anything here? I know you're a licensed firefighter. How is a fire like this fought?

BRUCE BABBITT, Secretary of the Interior: It is particularly tough today because we've been pulling in a lot of people from the inner-agency fire center. When these things get that hot and the wind is blowing that much, we simply can't put firefighters in front of a fire like that. The good news is we've had no casualties either among residents, civilians, or firefighters.

ELIZABETH FARNSWORTH: So it's burning so hot right now that they're still not engaging directly with it?

BRUCE BABBITT: When the wind is up above 30 miles an hour, you cannot put firefighters in the path of that fire. You can do some flanking work, we can some aerial work, a few bucket drops, some slurry-bombers from the higher altitudes is possible. What we have to do is hope for a break in the weather. There's some indication that we may get a little window of better weather tomorrow.

ELIZABETH FARNSWORTH: Secretary Babbitt, before I get into what started this fire, park officials at Bandolier National monument have been quite open about how they did a prescribed burn. Do you have anything to add to everything else that's been said so far?

BRUCE BABBITT: Well, I think it's important that we get the facts and get them out publicly and correctly. Now, I talked and authorized an investigative team this morning to come from the inner agency fire center up in Boise. They're on the ground now and they're busy gathering the facts to make certain that we know exactly what happened. That won't take too long, maybe a week or two. Then I will appoint an independent investigative board to review the findings and as a result of that I think the public is entitled to an explanation. I think there are three possibilities here. One is somebody made a mistake by not following the guidelines. The second possibility is....

ELIZABETH FARNSWORTH: Just give us briefly those guidelines and describe what a prescribed burn and what happened at Bandolier, just briefly what's known.

BRUCE BABBITT: Okay. A prescribed burn consists of going out when the weather conditions are right and putting the fire on the land to burn off the excess fuel and the brush and the undergrowth so that there won't be an even worse fire sometime down the road when conditions are even worse. We burn two to three million acres of land every year in the West. That's an area about the size of Rhode Island. It lessens the fire danger. We've been doing it for years and it's an important thing because it's the only way you can keep the forest healthy and keep the fire danger now. Now, these problems do arise not frequently but this is one and it's a bad one. Now, the question is ascertaining whether somebody made a mistake, whether we need to revise the guidelines and prescriptions. They're tremendously detailed. There's a very scientific matrix that you have to go through in terms of the amount of moisture out there in the forest, the fire indices, how many tons of fuel per acre, what the weather forecasts are like, how much precipitation there's been during the preceding winter - it's a very scientific process. But it's either human error guidelines-- or it's possible that it's an act of God, -- not have been anticipated. I think it's very important to get all the facts out and withhold judgment until we've got those facts out and lay them out to the public and say what it is we're going to do about it.

ELIZABETH FARNSWORTH: Governor Johnson, do you have anything to add about this prescribed fire that was a burn in Bandolier National Monument a week ago, which got out of control?

GOV. GARY JOHNSON: I share in everybody's concern about this. That is that of course this was a controlled burn that has gone awry. Obviously something went wrong. Maybe a lot of things went wrong. And I'll just echo everybody's concern here. What went wrong, I know there will be an investigation, yes. Let's reserve judgment. But let's find out exactly what happened. Certainly we don't want this to ever happen again. Let's find out what happened.

BRUCE BABBITT: Elizabeth, I would add only one thing to that.

ELIZABETH FARNSWORTH: Yes.

BRUCE BABBITT: We are making plans to suspend prescribed fire, particularly in the Southwest. I want the governor to hear that. I'll be in New Mexico tomorrow. I'll be meeting with a Dan Glickman, the Secretary of the Agriculture, and we will prepare an announcement defining the terms and conditions of a... of implementing a suspension of any further prescribed fire activity. I say that in response to the governor's concerns. I think it's a fair concern, and I think we need to do that until we have got the facts out and understood and acted upon in this particular case.

ELIZABETH FARNSWORTH: Governor, were you able to hear Secretary Babbitt?

GOV. GARY JOHNSON: You know, you completely cut out. I'm going to agree with you....

BRUCE BABBITT: George, you can't.

GOV. GARY JOHNSON: Again, you're in and out.

ELIZABETH FARNSWORTH: All right. Can you hear me now? He said he's going to announce a cessation of prescribed burns in the southwest when he arrives in New Mexico tomorrow. Okay. (Wind blowing) Governor, can you hear me now and Buddy Young, can you hear me?

BUDDY YOUNG: Occasionally.

ELIZABETH FARNSWORTH: All right. I want to ask either one of you-- I'm speaking loudly. I hope you can hear me-- back to some questions about the lab. There are places like Bayou Canyon where there were tests recently and mild strontium showed up that was not a worry but if it burns it could be a worry. And I have been talking to people in Santa Fe about smoke reaching them eventually. Can you tell us what happens if some of those areas where there are remnants of radioactive material, if they burn?

GOV. GARY JOHNSON: I think that clearly it's been established that there isn't that danger that's present. And, again, I've heard a number of specific concerns, specific areas. I have asked the lab, the lab has addressed those concerns (wind blowing) I'm pretty confident that again, that is not going to be the case. Now again, there are all sorts of allegations as to what's been stored where, what's been buried where. Without specifics, you know, we really can't address that on the scene.

ELIZABETH FARNSWORTH: Buddy Young, are you concerned about that? Do you have plans? For example, there's toxic waste too being cleaned up at the lab. Are you concerned about that?

BUDDY YOUNG: Well, I'm sorry, go ahead, governor.

GOV. GARY JOHNSON: Again, as governor, I am confident that there is no safety danger here to the public. Again, these materials are stored properly. There is again a lot of conjecture over what has happened in the past. Those specific areas that I've had question over I've addressed to the lab. They've adequately answered my concerns.

ELIZABETH FARNSWORTH: All right. Buddy young, anything to add?

BUDDY YOUNG: Well, I might add that the EPA is bringing in some additional testing equipment to set around in other areas to make sure that if anything is detected we'll be aware of it and can deal with it at that time.

GOV. GARY JOHNSON: And I think that's a great idea. I mean, again just assure the public of what is, in fact, happening. That's great. Buddy, we appreciate you doing that.

ELIZABETH FARNSWORTH: And, Secretary Babbitt, any final word here?

BRUCE BABBITT: This really is a tragedy for the people involved. We're going to do everything we can to make certain that we have provided for these folks, that we make certain we can get a level of restitution, get them back into a reasonable residential situation. What we've got to do now is get this fire out, get the resources in, make certain that there are no casualties and then get back, figure out what went wrong, correct it and in the meantime lay out some regulations to suspension-- to suspend prescribed burn inning the Southwest at least until we can make some preliminary determinations of what went wrong.

ELIZABETH FARNSWORTH: All right. Thank you three very much.

MARGARET WARNER: Still to come on the NewsHour tonight: Risky investing, Elian Gonzalez, and a Clarence Page essay.

FOCUS - MARGIN TRADING

MARGARET WARNER: The risks of playing on the margin in today's investment world. Spencer Michels explains.

ANNOUNCER: In today's midday column, Morgan Stanley is talking negatively about Cox Communications --

SPENCER MICHELS: 49-year-old investment advisor Bill Higgins spends most of his time watching and playing the stock market from his two- room apartment near San Francisco's Civic Center. The financial cable station CNBC plays continuously in his bedroom. He reads "The Wall Street Journal." He goes on-line and on the phone to follow his stocks. Higgins, like an increasing number of Americans, buys some of his stocks on margin. That is, he borrows money from his broker, paying interest to pay for up to half the price of the stocks.

BILL HIGGINS, Investor: You're expecting... You're anticipating the stock to make a substantial move, if that's correct. It takes guts, but it takes knowledge. I mean, you have to understand that when you're using margin, it's credit, and credit's not capital.

SPENCER MICHELS: With technology stocks pushing the market up the last few years, many investors were tempted to borrow to buy into new companies. But Higgins says he knew buying on margin was risky, so he laid off the volatile tech stocks.

BILL HIGGINS: It's easy to start a dot-com company, so why should it be worth billions of dollars? So if you're crazy enough to buy that on margin, maybe you should get a warning. But you'll definitely get a margin call if you're wrong.

SPENCER MICHELS: A margin call is when the broker-- like Morgan Stanley or Charles Schwab-- fearing it could lose its loan, demands quick payment, forcing the borrower to come up with cash, or to sell stocks. When the market dropped precipitously in April, there were a lot of margin calls.

BILL HIGGINS: I started trading at $38 on the Internet.

SPENCER MICHELS: Higgins didn't get one, but he is disturbed by companies that give loans too easily, and traders who take them.

BILL HIGGINS: A lot of these firms are just encouraging trading left and right, and i don't think it's very healthy. I think it's just a formula for disaster, especially if there's going to be margin trading, because margin gives them the sense that they have more capital than they do have.

SPENCER MICHELS: From 2% to 3% of money invested in the stock market is money borrowed on margin. And although the percentage of stocks bought on margin has remained steady as total investment in the market has soared, the amount of money loaned for stock-buying has increased. It's gone up 58% from last August to a total of $278 billion.

ANNOUNCER: When Barry Hertz created My Track...

SPENCER MICHELS: Sometimes on-line trading companies like My Track that advertise heavily also invest on their own on margin. Baruch Israel Hertz, who appears in the ads, owns the firm, and he did just that. When the market dropped, he reportedly ended up owing $45 million to four brokerage houses.

BARUCH ISRAEL HERTZ: What can I say? I'm fast.

SPENCER MICHELS: Hertz has declined interviews. Much advertised on-line trading, together with low trading fees, have made stock trading easier and cheaper today than ever before, luring more people into the market. And brokerage houses like Fidelity Investments now offer margin trading, which can be achieved with a click of the mouse on its web site. Most reputable firms like Fidelity will loan a customer less money to buy stocks they consider risky than they do for blue chips. Tracey Curvey, who is in charge of online trading at Fidelity, says the requirements that margin buyers can only borrow up to 50% of a stock's value protect customers and the brokerage.

TRACEY CURVEY, Fidelity On-Line Investments: I think all of the industry is looking closely at their margin balances and portfolios because of the market volatility. But I do think the industry has been very responsible in looking at the margin requirements and in trying to educate their customers about how it works, and how it can be a positive and not a negative.

SPENCER MICHELS: In good times, buying on margin can be a positive-- people make money. But in the late 1920s, buying on margin became a grave danger, inflating the values of stocks. A speculator could put up just 10% of a stock's value, and borrow the rest. Margin debt was ten times greater than now, relative to the total amount of money invested. The stock market crashed, and that was followed by the Great Depression. Most historians put part of the blame for the crash on margin buying. In those days, the lenders of money kept on lending at a furious pace, despite admonitions from the Federal Reserve Bank, according to economist Bradford Delong.

BRADFORD DELONG, University of California: The Federal Reserve up to a year before the crash began telling banks that it did not want them making any more loans on stocks, that it did not want them taking stock for collateral for any loans at all. But of course back in 1929, the banks thought about this and told the Fed, "go away."

SPENCER MICHELS: Delong teaches economic history at the University of California at Berkeley. He says at first no one, including President Herbert Hoover, knew what to do.

BRADFORD DELONG: Throughout the 1929-1932 presidential term, throughout the Hoover term, very little happened in Washington. They just kind of stand like stunned deer and watch the Depression unfold. But starting in March of 1933, with his inauguration, Roosevelt kind of tried everything, and one thing was the Securities and Exchange Commission and expansion of the powers of the Federal Reserve as well. So that today no bank dares do what the National City Bank and the others did in 1928 and 1929, which is to ignore the Federal Reserve.

SPENCER MICHELS: Today, 71 years after the crash, the controls enacted during Franklin Roosevelt's administration, including the limits on the amount a stock investor can borrow, are supposed to protect the economy. Still, individuals can lose money. Alan Kelly works as a water in several restaurants, and buys stocks on margin.

ALAN KELLY, Waiter/Investor: There's a lot of people playing the market out there. Absolutely.

SPENCER MICHELS: On margin?

ALAN KELLY: Probably a lot of them are probably playing margin, sure. With the bull market of the last few years, everybody seems to think, you know, people are taking a chance.

SPENCER MICHELS: When the market plummeted, Kelly got hurt.

ALAN KELLY: Oh, that was pretty bad.

SPENCER MICHELS: Was it?

ALAN KELLY: Yeah.

SPENCER MICHELS: Did you get any margin calls?

ALAN KELLY: Ah, i got a couple.

SPENCER MICHELS: What happens when you get a margin call?

ALAN KELLY: Well, you pay up the money, or you sell out.

SPENCER MICHELS: So what happened with you?

ALAN KELLY: I paid up.

SPENCER MICHELS: There were winners as well. Larry Bill, a day trader who buys and sells stocks for a living, didn't happen to have any outstanding margin loans.

LARRY BILL, Day Trader: It was great, because i was in cash. I was buying, then i was selling two hours later, and it was wonderfully profitable for me.

SPENCER MICHELS: So in other words, you didn't have any money on margin at that point, you're saying?

LARRY BILL: Not when it was going down. But once it had reached the bottom, yes, i did buy on margin to pick up the bargains. Most were not that lucky. Most are in a lot of pain.

SPENCER MICHELS: When millions of investors are forced by margin calls to sell off the stocks they bought high-- even the solid ones-- prices drop, and the whole market can go into a tail spin.

BRADFORD DELONG: And that's the stuff of which great crashes are made.

SPENCER MICHELS: But Delong says today's stricter rules mean less risk. What makes the risk uncertain is that some money is borrowed not on margin, but elsewhere, and is used to buy stocks.

BRADFORD DELONG: People will find a way to speculate with borrowed money. And when you close down one possible channel, people are inventive enough to think up others.

SPENCER MICHELS: The Securities and Exchange Commission doesn't know how much stock is bought on borrowed money outside of margin, and can't do much about it. But for securities bought on margin, the SEC has asked the stock exchanges to examine their practices. And several states have issued warnings that some traders, like Mike Pavlik, endorse.

MIKE PAVLIK, Stock Trader: I think the problem with margin and the normal trading public is that they're undisciplined. They don't cut their losses.

SPOKESMAN: Hey, there's news on Vertel. Oh, that's a good increase!

SPENCER MICHELS: Discipline is what this company-- Electronic Trading Group-- is all about. These young traders buy and sell stocks all day long, using the company's money. They take home 50% to 70% of their profits. The company gets the rest. They are watched carefully by manager Clem Wohlreich, who has taught them rules and practices.

CLEM WOHLREICH, Electronic Trading Group: I think you may be over- trading a little bit. Make sure you don't go down for the day, because you've got a good day going on. It's a trader's crime to lose money after they've been up on the day, okay?

SPENCER MICHELS: While these company traders don't buy, as customers do, on margin, and are subject to a different body of federal rules, Wohlreich says the discipline they live by could be a model for margin buyers.

CLEM WOHLREICH: They're kids mostly. They're in their early 20's, and they think, "well, just let me do it one more time, and i get all the money back." That's not the way we trade. We trade with discipline. If... If you can show me that you can apply the disciplines that we suggest, i suggest i can probably make you a successful trader.

SPENCER MICHELS: Each trader has a dollar limit that he can lose. If he loses that, he stops trading for the day.

CLEM WOHLREICH: 80% to 85% of our traders are successful this month, and over 85% are successful for the year. Probably 70% to 80% of the people who walk in off the street are unsuccessful, and they, in fact, lose all their money.

SPENCER MICHELS: So, for somebody to trade on margin, borrowing money to trade, without the training you have?

CLEM WOHLREICH: Or without the discipline, you might as well take a loaded .38.

SPENCER MICHELS: Several brokerages report that in the past few weeks the amount of margin debt has declined somewhat, possibly because the April market drop forced some margin players out of action.

UPDATE - TUG OF WAR

MARGARET WARNER: Now, the latest in the legal battle over the fate of Elian Gonzalez. In January, the Immigration and Naturalization Service, backed by Attorney General Janet Reno, refused to consider an asylum application from the six-year- old boy and his Miami relatives. The government said only the boy's father-- then still in Cuba-- could speak for him. In March, ruling on a lawsuit brought by Elian's relatives, a federal judge in Miami upheld the INS decision. But in April, the 11th Circuit Court of Appeals in Atlanta granted the Miami family's request for a temporary order barring Elian from leaving the United States. The court also said the Miami relatives had, "presented a substantial case on the merits of their asylum claim on Elian's behalf." Today, the Appeals Court held its long-awaited hearing on the merits of this case. The question: Did the INS act correctly in dismissing the boy's asylum application? Jay Weaver, a reporter for the "Miami Herald," was in the Atlanta courtroom today, and joins us now.

Welcome, Mr. Weaver. This is the day the Miami relatives have been waiting for. How did the hearing unfold?

JAY WEAVER, Miami Herald: Well, it was an interesting beginning because the presiding judge, James Edmonson, actually came out before the hearing began at 9:00 and politely asked all of us in the courtroom-- there were about 150 people: Lawyers, journalists, a few family members, and the Department of Justice lawyers in the spectator area -- and they said, you know, these are oral arguments. This is part of a body of evidence that will help us decide whether or not Elian Gonzalez is entitled to a political asylum hearing. And he urged all of us not to draw conclusions from the types of questions asked or the nature of the questions. And it was an interesting beginning to what was supposed to be a 40- minute hearing, and it turned out to be an 80-minute hearing. So it went twice as long as it normally does.

MARGARET WARNER: All right. Well, we'll try to adhere to the judge's admonition. Let's start with the lawyer for the Miami relatives, Kendall Coffey. What did he argue and how did the judges respond?

JAY WEAVER: Well, Kendall Coffey, who was a former U.S. Attorney in Miami, is among a dozen attorneys representing the Miami relatives who want to force the government to give the boy an asylum hearing. Basically he said that the Immigration and Naturalization Service made a big mistake when it did not interview the boy for an asylum request, and that he was entitled to one, that the law passed by Congress says any alien may apply for asylum. That means any alien of any age. And immediately one of the judges, a circuit judge named Charles Wilson from Florida, asked Kendall Coffey, you know, does the INS have the discretion to do this, you know, to deny the boy an asylum hearing? And he said absolutely not. That it is required by law for the INS to give the boy an asylum hearing. But it went a step further. Charles Wilson also raised the point, "but he's only six years old. How can he possibly make an informed claim for asylum?" And on top of that, the judge noted he has only, you know, a scrawled signature on one of his three applications submitted by his Miami relatives, and it didn't even have his last name on it. So this judge seemed to be probably the one that was tipping his hand the most about the problem that the Miami relatives have with their request for a political asylum hearing for the boy.

MARGARET WARNER: Then next the Deputy Solicitor General, Mr. Kneedler, went. Again, tell us about the exchange there.

JAY WEAVER: Well, he was probably peppered with the most questions. Judge Edmonson, who is the presiding judge again, came out with a lot of questions about, you know, the...what he saw as kind of an inherent conflict between the fact that the father is from Cuba, a Communist country, and the boy is in the United States seeking asylum in a free democracy. And he seemed to think that that was an inherent conflict and seemed to differ a lot with the INS on that point. The INS..

MARGARET WARNER: Meaning what exactly?

JAY WEAVER: Well, meaning that the INS In its original ruling said that there was no conflict, that the father spoke for the boy...

MARGARET WARNER: And they had gone to Cuba and spoken to the father.

JAY WEAVER: And the INS had interviewed him twice, and found him to have a loving, caring relationship with the boy, and there was no reason to think that this boy would be persecuted if he went back to Cuba, either subjectively or objectively. There was nothing about the boy's relationship with his father or relationship with the Cuban government that was going to lead to some sort of persecution. And so the government determined it was in the boy's best interest to be reunited with his father. But the judge seemed to question whether there was just an axiomatic, inherent conflict between what the father wants and what the boy may want in the asylum application, simply because we have a Communist country on the one hand and a free democracy on the other.

MARGARET WARNER: And then finally, Greg Craig, the lawyer for Juan Manuel Gonzalez, the father, who is now achieved standing in this, also I gather, had a few moments.

JAY WEAVER: Yes, he did. In fact, his comments were more heartfelt, more emotional, because he does not necessarily have to reiterate the government's arguments on immigration law. He merely needs to make the more compelling argument about, we have a boy and a father now reunited after the federal government seized the boy from the Miami relatives' home on April 22. He was imploring the judges to not let this dispute drag on forever. It would damage Juan Miguel, it would damage the boy, it would damage the family. But what was interesting about Greg Craig's statement were questions about why it took Juan Miguel Gonzalez almost five months to come to the United States to claim his son, and Craig answered the question very efficiently. He said that within two days of the boy's arrival, after he was rescued off the Florida coast, that the Miami exile community and the Miami relatives-- when I say the exile community, I'm referring to the Cuban exile community-- and the Miami relatives made it crystal clear they were never going to turn over this boy. Moreover, it became clear to Craig, as he pointed out, that it was going to be difficult for the father to be able to get his boy back immediately, which was one of the terms that he was demanding in order to come to the United States. And lastly, he was saying that you had two governments that are normally strange bedfellows, and divergent interests, you know, as far as U.S.-Cuba policy goes. But they couldn't come to terms on a visa, and whether the father should come. So he answered the question in that manner and the judge seemed-- Joel Dubina was the judge-- seemed to be satisfied with that response.

MARGARET WARNER: So, briefly, I gather one of the judges indicated that they may rule in a few weeks, but that could still then be appealed.

JAY WEAVER: Yes it could. Judge Edmonson early on, before the hearing began at 9:00, said that normally this would take a few months for us to respond to, but because of the importance of the case, they would give it expedited treatment. That means that they would make a decision within a few weeks.

MARGARET WARNER: All right.

JAY WEAVER: And the decision could come down this way. The appellate court could say that the lower court was right in siding with the government in saying that the INS acted within its authority to reject or shelf the boy's asylum claim. Or it could say the INS or the Immigration Service should give the boy an asylum hearing. There could be appeals after that as well, but if...

MARGARET WARNER: Mr. Weaver, I'm sorry. We're going to have to leave it there because I have to go on to another panel, but thank you very much.

JAY WEAVER: You're welcome.

MARGARET WARNER: For more, we turn to two experts on asylum law and policy. Wend Young is Washington liaison and staff attorney for the Women's Commission for Refugee Women and Children, a nonprofit education and advocacy group. The commission filed an amicus brief with the court, arguing that the INS should grant the boy an asylum hearing. And Philip Schrag is a law professor at Georgetown University and director of the school's asylum law clinic. He is also the author of "A Well-Founded Fear: The Congressional Battle to Save Political Asylum in America." Welcome to the two of you.

Professor, in a nutshell, what's the nub of this case?

PHILIP SCRAG, Georgetown University: Well, the important threshold question to understand is that to win asylum, a person who arrives in the United States must show a well-founded fear if that individual would be persecuted if returned to the country from which they came. It's not enough to show that there are many human rights violations in the country. It's not enough to show that the country treats its own citizens shabbily. The person who gets asylum must show that there are good reasons to believe that that person individually-- in this case, Elian individually-- would be persecuted. The question in this case then is, to what extent must the government evaluate Elian's claim that he would be so persecuted if he were to make such a claim? The boy is only six years old. He can't make the claim by himself. He can't understand at that age what persecution, human rights violations, and immigration law are all about, so he must speak through somebody. Normally in the United States, we allow a father or mother, the surviving parent, if there is only one, to speak for a child. And so normally we have a very strong presumption that the parent here would ask the government to give the boy an asylum hearing, which means a thorough evaluation of his asylum claim. Because the parent here, Juan Miguel, said he didn't want an asylum hearing for the boy, but the boy's Uncle Lazaro said he did, the government looked at Lazaro's papers, his application and gave the boy some... gave the claim some consideration, but not a full asylum hearing, and determined that there wasn't enough there to make a judgment that there should be a full asylum hearing, which is a very long, drawn-out proceeding, and rightfully so.

MARGARET WARNER: So would you agree, that's the nub of it: Whether the INS Had to consider Elian Gonzalez's claim despite the father's wishes?

WENDY YOUNG, Women's Commission for Refugee Women and Children: Yeah, I believe also, though, that an issue that is very fundamental and very critical is before the court as well, which is, does a child have the right to seek asylum? The statute is very plain in its language: Any alien may apply for asylum. If you look at international law and if you look at the INS's own internal guidelines, they acknowledge that that includes children, that regardless of age, an individual does have the right to seek asylum. This is an issue that I hope the 11th Circuit will state very clearly, and affirm that the child does have the right to do so.

MARGARET WARNER: And have there been cases when a child has been granted asylum over the wishes of the parent?

WENDY YOUNG: This is a highly unusual case. I think it's important to state that right up front. In the several years I've been doing this work, I've never seen a case quite like it. What is much more typical is you'll see that the parent is actually sending the child out of the country to protect that child from the abuses or conflict going on in that country, or the parent is missing in action, perhaps dead because of whatever problems are going on, or sadly in today's world, you also see cases where the child's been forced to flee the country to escape abuse from the parent him- or herself.

MARGARET WARNER: Well, now the law does say that any alien may apply for asylum. Why not give any child in this situation access to the full process?

PHILIP SCHRAG: Well, we have a very unusual case here where the child is neither alone-- what we call an unaccompanied minor-- nor do we have the parent saying that he wants the child to be considered for asylum. We have a case where the parent says that the child should not be considered for asylum. And it could be quite disruptive of parental-child relationships, and of a parent's right to make decisions for a very small child, if a distant relative could come in and subject the family to a very long hearing. What I mean by a very long hearing is that if you say, well, why shouldn't the government give this boy a hearing -- it sounds like an afternoon's work. But it isn't that. If the government were to say, "yes, Elian gets a hearing," then because Juan Miguel is not going to speak for Elian, the first step will be to appoint a guardian for Elian. That will take some time. The guardian will have to research human rights conditions in Cuba, and Elian's risk of persecution. That will take some time. Finally there be an interview by a trained asylum officer of the government. That will take some time because Elian can't speak for himself. There will be witnesses and experts at that interview. If the government at that point decides that Elian is not qualified for asylum, the case doesn't end. The case, then, under the government's own regulation, goes on to a full-fledged trial before a neutral judge, which is a good thing in most cases, but that takes time, too. That can take up to a year. Then there are three appeals, which could add years to the time that this family's life is disrupted and Juan Miguel and Elian are forced to remain in the United States away from their own country. That's worth doing in a case where there's real reason to believe that the child would be injured and the parent agrees with that. For example, in a case where a woman brought her daughter here, and then wanted to return to her country where the daughter would be subjected to genital mutilation, it shouldn't be simply the case that the mother's wishes should control what happens to the daughter and whether she gets a hearing or not. But that's a clearer case than this one.

MARGARET WARNER: How do you feel about that? Under what circumstances would it be appropriate to... essentially for the INS to intervene between parent and child?

WENDY YOUNG: Well, certainly in a normal situation, a child belongs with their parents. But there are unfortunately cases where the parents' interests are in conflict with the child. I think what this case has done has actually to identify a procedural gap in our current system. We have no means in place currently to assess that parent- child relationship and to judge whether the parent is truly in a position where they are reflecting the best interest of the child. Our concern is also that the Immigration and Naturalization Service is not a child welfare agency, and for the courts to be saying that the INS has this discretion right up front to be screening out children's cases on these bases without any oversight, is troubling because they don't have that expertise to evaluate those kinds of relationships.

MARGARET WARNER: So do you think this could be... You said it's an unusual case. Could it be a precedent-setting case, and what kind of ruling would you like to see?

WENDY YOUNG: I hope that it doesn't set a precedent that is going to impact negatively on the thousands of other unaccompanied children who arrive in the United States each year. Last year the INS had 4,600 children in its custody, so it's important that they not set a precedent that hurts those other children. To do that, I think that they do need to state very clearly that a child does have the right to seek asylum. There is a capacity issue here that this case raises, that we also need to deal with, which is when you're dealing with very young children in particular, how do you get to the merits of their claim? How do you take testimony from a very young child? How do you evaluate that testimony? Interestingly, the INS issued guidelines to address many of those issues in 1998.

MARGARET WARNER: And how do you think this might or might not establish a precedent?

WENDY YOUNG: I think the case has already established a precedent of sorts. In the district court, the lower court, where Lazaro sued the government, the issue was simply whether a minor child could apply for asylum, or a child had a right to apply for asylum. And the district court said that the father simply spoke for the child. That's no longer the issue. The government has now conceded in its briefs that there are some conditions under which even over a parent's objection, the objective indications are such that the asylum should evaluated for the child.

MARGARET WARNER: Professor, thank you both very much. We'll have to leave it there. Thanks.

ESSAY - CAPTURE THE FLAG

MARGARET WARNER: Finally tonight, essayist Clarence page of the "Chicago Tribune" considers the Confederate flag.

CLARENCE PAGE: History lives in my neighborhood. We live near old Fort Stevens, a civil war battle site, partly reconstructed by a federal jobs program during the Depression. Now the majestic ramparts, parapets, and cast-iron cannon bear silent witness to a stormy past that lives on, with bracing resilience in our national memory. I bring my son here. We talk about how President Lincoln stood here, tall and proud and was fired upon. We talk about how the Union turned back the forces of Confederate General Jubal Early, here at the edge of the nation's capitol. My son tries to simplify the story. He wants to know, "who are the good guys? Who are the bad guys?" Like so many children's questions, it is simply stated, yet infinitely profound. I make it personal. I remind him that the American experience is our family's experience. Our ancestors were slaves in Alabama during the war between the states. "Which side," I ask, "do you think they were rooting for?" William Faulkner once wrote that "the past is not dead. It's not even past." With that, Faulkner captured the tragic spirit of the South, and not only the South. The past haunts America's present, its powerful symbols have become a Rorschach Test, in which one sees the history one wants to see. Is the Confederate battle flag, for example, a symbol of racism, a benign tribute to honor the past, or a visible wish to turn back the clock?

GEORGE WALLACE: And I say segregation now, segregation tomorrow, and segregation forever.

(Cheers)

CLARENCE PAGE: Most Southern states didn't start flying it over public buildings until the 1950's and 60's, when the modern civil rights era began. Southern defiance against Washington became, by connection, a defense of racial segregation. That too, must be remembered. A century and a half after the Civil War, Americans still play capture the flag, as we try to capture history. On one side, there is the cult of the lost cause, or what's left of it. It's an ancient movement to portray the southern cause as a noble crusade to preserve state sovereignty against betrayal by Lincoln. Lincoln too, has become a symbol as powerful and controversial as the flag, even among historians. Was he the great emancipator or was he as racist as the conventional wisdom of those times? Or was he both? Even "Ebony" Magazine's historian, Lerone Bennett, argues in his latest book, "Forced into Glory," that Lincoln really had no intention to free the slaves. In this effort to claim another piece of history for ourselves, the descendants of slavery share an irony with the descendants of the confederacy. If we can reduce Lincoln's role, we can claim a greater role in our own liberation. The conflict over the southern flag is a struggle between two of history's losing sides, two sides ironically chained together by our shared history. Each of us shares an ironic resentment toward the other, and anyone else who refuses to see our side of history. History, it has been said, is written by the winners. That's a cynical way to say that one's own version of history has been somehow lost, stolen, or strayed. Battles about history are not really about the past. They are about the future, and whose story is to be told by our children to their children. Over time, the battle flag's attraction appears to be fading. More Confederate descendants are standing up, like Senator John McCain did, to say that their ancestors fought nobly, but on the wrong side of history. A new South is emerging, slowly displacing the old, and taking its place in a rapidly changing world. Even the land of sweet sorghum and magnolias, where the past is not even past, the future is beginning to happen. As the new South emerges from its bitter past, so does America. I'm Clarence Page.

RECAP

MARGARET WARNER: Again, the major stories of this Thursday. A wild fire that started as a controlled burn destroyed at least 100 homes in Los Alamos, New Mexico. On the NewsHour tonight Interior Secretary Bruce Babbitt said he would announce a temporary halt to control burns in the Southwest. And a federal appeals court heard arguments on whether Elian Gonzalez should be granted a political asylum hearing. We'll see you on-line and again here tomorrow evening with Shields and Gigot, among others. I'm Margaret Warner. Thanks for being with us. Good night.