PBS NewsHour; August 16, 2011 3:00pm-4:00pm PDT

TOGETHER TO COMBAT THEIR FLAGGING ECONOMIES. WHILE HERE AT HOME, A KEY RATINGS AGENCY GAVE THE UNITED STATES ITS TOP GRADE. GOOD EVENING. I'M JEFFREY BROWN.

>> Woodruff: AND I'M JUDY WOODRUFF. ON THE NEWSHOUR TONIGHT, WE ASSESS EUROPE'S TROUBLES AND LOOK AT WHAT A SLOWDOWN THERE MEANS FOR THE U.S.

>> Brown: THEN, MARGARET WARNER GETS THE LATEST ON THE NEW WAVE OF DEADLY ATTACKS IN IRAQ FROM ANNIE GOWEN OF "THE WASHINGTON POST" IN BAGHDAD.

>> Woodruff: PAUL SOLMAN OFFERS A QUIZ WITH SOME SURPRISING ANSWERS ABOUT THE GROWING GAP BETWEEN RICH AND POOR.

>> PEOPLE DON'T UNDERSTAND HOW MUCH WEALTH THE TOP 20% HAVE. THEY ACTUALLY HAVE 84% OF THE WEALTH AND THEY THINK THEY HAVE MUCH LESS. THE BOTTOM 40% OF THE U.S. HAVE ABOUT .3% OF THE WEALTH.

>> Brown: FROM JAPAN, WE GET AN UPDATE ON THE RADIOACTIVE RISKS FACING THOSE WHO LIVE NEAR THE FUKUSHIMA NUCLEAR PLANT FIVE MONTHS AFTER THE TSUNAMI.

>> THE GOVERNMENT HAS OFFERED LITTLE ASSISTANCE AND NO GUIDANCE A HOW TO DEAL WITH RADIATION SO ORDINARY CITIZENS WITH LITTLE TRAINING ARMED WITH PERSONAL GEIGER COUNTERS HAVE STEPPED IN.

>> Woodruff: AND WE EXAMINE GOOGLE'S $12 BILLION DEAL TO BUY MOTOROLA'S MOBILE DIVISION AND ITS PATENTS.

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

>> OKAY, LISTEN. SOMEBODY HAS GOT TO GET SERIOUS.

>> I THINK...

>> WE NEED RENEWABLE ENERGY.

>> ...RENEWABLE ENERGY IS VITAL TO OUR PLANET.

>> YOU HEAR ABOUT ALTERNATIVES, RIGHT? WIND, SOLAR, ALGAE.

>> I THINK IT'S GOT TO WORK ON A BIG SCALE. AND I THINK IT'S GOT TO BE AFFORDABLE.

>> SO, WHERE ARE THEY?

>> IT HAS TO WORK IN THE REAL WORLD. AT CHEVRON, WE'RE INVESTING MILLIONS IN SOLAR AND BIOFUEL TECHNOLOGY TO MAKE IT WORK.

>> WE'VE GOT TO GET ON THIS NOW.

>> RIGHT NOW.

>> AND BY BNSF RAILWAY. THE WILLIAM AND FLORA HEWLETT FOUNDATION, WORKING TO SOLVE SOCIAL AND ENVIRONMENTAL PROBLEMS AT HOME AND AROUND THE WORLD. AND WITH THE ONGOING SUPPORT OF THESE INSTITUTIONS AND FOUNDATIONS. AND... THIS PROGRAM WAS MADE POSSIBLE BY THE CORPORATION FOR PUBLIC BROADCASTING. AND BY CONTRIBUTIONS TO YOUR PBS STATION FROM VIEWERS LIKE YOU. THANK YOU.

>> Woodruff: THE STRUGGLE FOR ECONOMIC RECOVERY DOMINATED POLITICAL DEVELOPMENTS ON BOTH SIDES OF THE ATLANTIC TODAY. THE LEADERS OF FRANCE AND GERMANY-- NICOLAS SARKOZY AND ANGELA MERKEL-- CALLED FOR NEW DISCIPLINE AND UNITY ON THE CONTINENT. AND HERE AT HOME, PRESIDENT OBAMA URGED AMERICANS NOT TO LOSE HOPE. THE FRENCH PRESIDENT GREETED THE GERMAN CHANCELLOR AT THE ELYSEE PALACE IN PARIS, AMID DEEPENING WORRIES ABOUT EUROPE'S ECONOMY. A NEW REPORT SHOWED OVERALL GROWTH IN 17 EUROZONE COUNTRIES INCREASED JUST TWO-TENTHS OF A PERCENT IN THE SECOND QUARTER. GROWTH IN GERMANY CAME TO A NEAR STANDSTILL. MERKEL AND SARKOZY RESPONDED WITH A CALL FOR A SINGLE COUNCIL TO GOVERN ECONOMIC POLICY FOR ALL.

>> ( translated ): THE FIRST PROPOSAL WE MADE IS TO CREATE, WITHIN THE EUROZONE, A TRUE EUROPEAN ECONOMIC GOVERNMENT. THIS ECONOMIC GOVERNMENT WILL BE MADE UP OF THE COUNCIL OF THE HEADS OF STATE AND GOVERNMENTS. IT WILL MEET TWICE A YEAR, AND MORE IF NECESSARY, AND IT WILL ELECT A STABLE PRESIDENT FOR TWO AND A HALF YEARS.

>> Woodruff: THE FRENCH AND GERMAN LEADERS ALSO PROPOSED THAT EURO NATIONS HAVE MANDATORY BALANCED BUDGETS, AND THEY PROMISED TO COORDINATE CORPORATE TAX POLICY.

>> ( translated ): OUR PROPOSALS ARE AIMED AT REGAINING THE CONFIDENCE OF THE MARKETS THROUGH OUR ACTIONS. THE DEBT CRISIS STARTED A FEW YEARS BACK FOR SOME COUNTRIES. IT WILL NOT BE OVERCOME WITHIN A DAY, BUT WE ARE CONVINCED THAT BY PERMANENT ACTION, AND THANKS TO IN-DEPTH WORK, WE WILL BE ABLE TO REGAIN THIS CONFIDENCE.

>> Woodruff: FOR THE MOMENT, MERKEL AND SARKOZY RULED OUT ISSUING GOVERNMENT BONDS GUARANTEED BY THE ENTIRE EUROZONE TO AID TROUBLED COUNTRIES. THAT'S BEEN A POPULAR OPTION WITH FINANCIAL EXPERTS, WHO ARGUE THAT SO-CALLED "EUROBONDS" WOULD DEAL WITH THE DEBT CRISIS AND RESTORE INVESTOR CONFIDENCE.

>> ( translated ): BY NOW, EUROBONDS SEEM TO BE THE ONLY WAY TO CALM THE EUROZONE, FOR THE MOMENT. NOW, THIS LAST ULTIMATE STEP IS TAKEN, THE TRANSFER AND LIABILITY UNION, SO THAT THE STRONG COUNTRIES LIKE GERMANY AND FRANCE CAN SHIELD THE WEAKER COUNTRIES, AND SO CALM DOWN THE MARKETS.

>> Woodruff: MEANWHILE, THERE WAS MIXED NEWS FOR THE U.S. ECONOMY. INDUSTRIAL PRODUCTION ROSE IN JULY AT THE BEST PACE IN SEVEN MONTHS, AS AUTO MAKERS REBOUNDED. BUT AT THE SAME TIME, RESIDENTIAL CONSTRUCTION WAS DOWN LAST MONTH. PRESIDENT OBAMA ACKNOWLEDGED THE COUNTRY'S ECONOMIC WORRIES ON HIS THREE-DAY BUS TOUR IN THE MIDWEST. BUT HE TOLD A CROWD IN PEOSTA, IOWA, "WE'LL GET THROUGH THIS MOMENT OF CHALLENGE."

>> THERE ARE TWO THINGS THAT I KNOW FOR SURE-- AMERICA IS GOING TO COME BACK FROM THIS RECESSION STRONGER THAN BEFORE. THAT I'M CONVINCED OF. ( CHEERS AND APPLAUSE ) I BELIEVE THAT. AND I'M ALSO CONVINCED THAT COMEBACK ISN'T GOING TO BE DRIVEN BY WASHINGTON.

>> Woodruff: THE PRESIDENT'S AIDES ALSO WELCOMED WORD FROM THE FITCH RATINGS AGENCY THAT IT WILL CONTINUE ITS TRIPLE-A CREDIT RATING FOR U.S. GOVERNMENT DEBT WITH A "STABLE" OUTLOOK. BY CONTRAST, STANDARD AND POOR'S HAD DOWNGRADED THE U.S. RATING. IN THE END, THOUGH, NONE OF THE DAY'S PRONOUNCEMENTS COULD KEEP THE STOCK MARKET RALLY GOING. THE DOW JONES INDUSTRIAL AVERAGE LOST NEARLY 77 POINTS TO CLOSE BELOW 11,406. THE NASDAQ FELL MORE THAN 31 POINTS TO CLOSE AT 2,523. AND IN EUROPE, SHARES MANAGED TO RECOVER FROM HEAVY LOSSES EARLIER IN THE DAY, BUT STILL FINISHED FLAT. FOR MORE ABOUT EUROPE'S INCREASING ECONOMIC WOES AND WHAT'S AT STAKE IN THE CURRENT BATTLE AMONG COUNTRIES, WE HEAR FROM TWO PEOPLE WHO CLOSELY FOLLOW EVENTS HERE AND ABROAD: SCHEHERAZADE REHMAN IS DIRECTOR OF THE EUROPEAN UNION RESEARCH CENTER AND PROFESSOR OF INTERNATIONAL FINANCE AT GEORGE WASHINGTON UNIVERSITY; AND HEATHER CONLEY, DIRECTOR AND SENIOR FELLOW OF THE EUROPE PROGRAM AT THE CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES. WE THANK YOU BOTH FOR BEING HERE. SCHEHERAZADE REHMAN, LET ME START WITH YOU. FRANCE AND GERMANY WERE THOUGHT TO BE THE STRONG COUNTRIES OF EUROPE. WHAT HAS SUDDENLY HAPPENED?

>> IT'S NOT REALLY SUDDEN. THEY ARE THE STRONG COUNTRIES OF EUROPE BUT INEVITABLY THEY WILL GET INSPECTED IN TERMS OF THEIR GROWTH. THEIR FUTURE IS CLOSELY TIED TO THE EURO ZONE AND TO THE EUROPEAN UNION. GERMANY'S TRADE, FOR EXAMPLE, THE EXPORTS TWO-THIRDS OF THE EXPORTS GOES TO THE EUROPEAN UNION. 40% OF THE EURO ZONE. IF THE REST OF THE ZONE IS STAGNATING IN TERMS OF GROWTH, GERMANY WILL STAGNATE. THAT'S EXACTLY WHAT WE SAW TODAY.

>> Woodruff: SO HOW MUCH OF THIS HAS TO DO WITH THE WEAKNESS WE'VE BEEN HEARING ABOUT FOR MONTHS? GREECE, IRELAND, PORTUGAL AND SO ON.

>> IT HAS A LOT TO DO WITH IT. UNDERSTAND THAT THAT SOVEREIGN DEBT CRISIS THAT IS GOING ON RIGHT NOW STARTED 22 MONTHS AGO. IT'S THE RESULT OF FEAR AND REAL DEBT ISSUES WITH THESE COUNTRIES AND IT'S SPREADING. BUT THAT'S THE SHORT-TERM CRITICAL OUTLOOK. THE REAL LONG-TERM ISSUE IS GROWTH. IF THERE'S NO GROWTH THERE IS NO WAY OUT OF THIS DEBT CRISIS FOR THESE COUNTRIES. THAT'S IS SAME FOR THE ENTIRE EURO ZONE. RIGHT NOW THE PROSPECTS DON'T LOOK VERY GOOD.

>> Woodruff: HEATHER CONNELLY THERE WAS A MEETING TODAY BETWEEN PRESIDENT SARKOZY AND GERMAN CHANCELLOR MERCKEL. WHAT ARE WE TO MAKE OF THIS? THEY SAID WE NEED A UNIFIED COUNCIL. WE NEED TO LOOK AT COORDINATING TAX POLICY FOR CORPORATIONS. HOW ARE WE TO SEE THAT?

>> TODAY'S MEETING WAS AN IMPORTANT STEP IN CREATING A EUROPEAN FISCAL UNION. THE MONETARY UNION WAS CREATED TEN YEARS AGO, BUT THE FISCAL POLICIES WERE NEVER COORDINATED. GERMANY AND FRANCE ARE LEADING BY EXAMPLE. THEY'RE TRYING TO CONSOLIDATE THEIR FISCAL POLICY, CORPORATE TAX BASE, CORPORATE AND TAX BASE POLICY. THAT'S GREAT FOR THE LONG TERM. THESE ARE IMPORTANT STEPS. TODAY'S MEETING DID NOTHING FOR THE SHORT TERM. AND THIS IS WHERE THE MARKET IS GROWING INCREASINGLY CONCERNED THAT THE TWO LEADERS OF EUROPE, THE PINNACLE LEADERS OF EUROPE ARE NOT DEVELOPING BOLD PLANS TO GET EUROPE OUT OF THIS CRISIS. WE SAW THE VOLATILITY LAST WEEK AND THE EUROPEAN STOCK MARKET. THE RUMORS AND THE UNCERTAINTY THAT ARE DRIVING THIS UNCERTAINTY IS NOW AS SCHEHERAZADE SAID SPREADING THE CONTAGION. IT'S GOING TO THE LARGEST EUROPEAN ECONOMIES. EVEN FRANCE IS NOW IN QUESTION. BUT WE DIDN'T SEE THAT BOLD POLITICAL SFAMENT ABOUT DEALING WITH THE IMMEDIATE CRISIS.

>> Woodruff: WHY NOT?

>> WELL, POLITICALLY THEY CAN'T GET FROM HERE TO FROM. ... FROM HERE TO THERE. THAT'S TRUE WITH CHANCELLOR MERCKEL. THE QUESTION OF EURO BONDS WHICH IS ULTIMATELY CREATING A TRANSFER UNION WHERE THE BORROWING COSTS THAT THE GERMANS CAN BORROW AT VERY LOW RATES WOULD BE IN ESSENCE USED TO BE USED BY THE PERIPHERY COUNTRIES IF THIS EURO BOND WAS CREATED. THAT IS A HUGE LEAP FORWARD. IT WOULD CREATE A UNION BUT ARE GERMAN TAX PAYORS WILLING TO SACRIFICE THEIR CREDIT RATING AND THEIR BORROWING COSTS FOR THE GOOD OF THE UNION. I THINK THAT'S WHERE CHANCELLOR MERCKEL KNOWS THERE'S A HUGE POLITICAL RED LINE IN GERMANY.

>> Woodruff: AND THE FRENCH PRESIDENT SARKOZY IS IN AGREEMENT WITH HER ON THIS?

>> HE IS. HE HAS TO BE BECAUSE WITHOUT THE GERMANS BEING INVOLVED NONE OF THIS WOULD HAPPEN. YOU HAVE TO UNDERSTAND THERE IS A POLITICAL CREDIBILITY DEFICIT IN EUROPE. THE SAME AS WE HAVE HERE. REALLY THIS BRINGS TO QUESTION THEIR ECONOMIC PLAN OF DEALING WITH THE FINANCIAL CRISIS. YOU KNOW, COME BACK TO A VERY OLD QUESTION TO BE RAISED ON THIS SHOW A LONG TIME AGO. SUCH SEVERE AUSTERITY MEASURES THE APPROPRIATE RESPONSE IN THE FINANCIAL CRISIS THE FEAR IS DRIVING SOME OF THIS.

>> Woodruff: HOW MUCH OF THAT AUSTERITY IS A FACTOR?

>> I THINK IT'S PLAYING RIGHT NOW. WE ARE SEEING FLAT GROWTH ACROSS THE BOARD IN THE EURO ZONE. AND FLAT FOR SOME TIME TO COME NOW.

>> Woodruff: AND WAS AN LOOK AT... AS WE LOOK AT GERMANY, HEATHER CONNELLY, GERMANY HAS BEEN SAYING WE DON'T WANT TO CONTINUE TO PROP UP OUR WEAK NEIGHBORS. BUT SO FAR THEY'VE BEEN WILLING TO DO THAT. HOW MUCH LONGER DOES THAT CONTINUE?

>> ABSOLUTELY. FOR THE LAST 18 MONTHS, GERMAN LEADERSHIP HAS PUT ONE LINE IN THE SAND. CROSSED IT. PUT ANOTHER LINE IN THE SAND AND HAS BEEN PUSHED TO DO THINGS THAT ARE QUITE EXTRAORDINARY. THE JULY 21 SUMMIT CREATING A NEW EUROPEAN STABILITY MECHANISM CREATING OR ADDING MORE FUNDING TO THIS STABILITY WERE REALLY IMPORTANT DECISIONS. AND THEY'VE GONE ALONG WITH IT. BUT I THINK NOW IS A CRITICAL MOMENT. THE CHANCELLOR'S COALITION HAS WEAKENED. HER COALITION PARTNER DOES NOT AGREE WITH FURTHER MEASURES PARTICULARLY DOES NOT AGREE WITH CREATING THE EURO BOND. SHE HAS STRUGGLED AT HOME, LOST VERY IMPORTANT REGIONAL ELECTIONS. I'M NOT SURE HOW MUCH FARTHER SHE CAN PUSH THE GERMAN PUBLIC AND THE GERMAN PARLIAMENT. SO THIS IS THE PROBLEM.

>> Woodruff: SCHEHERAZADE REHMAN, GIVEN THAT, WHAT HAPPENS? WHAT CAN HAPPEN? WHAT ARE THE OPTIONS NOW FOR EUROPE?

>> RIGHT NOW THE ONLY GAME IN TOWN IS THE EUROPEAN CENTRAL BANK. THIS IS THE EASIEST WAY OUT FOR EVERYONE INCLUDING MERCKEL. THE BANK KEEPS BUYING BONDS FOR ITALY, FOR SPAIN, FOR PORTUGAL FOR ISLAND ET CETERA AND KEEPS IT GOING INDEFINITELY. THE PROBLEM IS YOU CAN'T DO THIS INDEFINITELY. THESE COUNTRIES RUN INTO TROUBLE WITH THE SOVEREIGN DEBT. THEY PRINT BONDS TO GET OUT OF THAT PROBLEM. IN ORDER TO BE LIQUID THE EUROPEAN CENTRAL BANK HAS TO BUY THESE BONDS. IF THEY DON'T KEEP MAKING THESE LOANS, THE CENTRAL BANK WILL NEVER GET PAID BACK.

>> Woodruff: HERE IN THE UNITED STATES WE ARE LOOKING AT AS THE FEDERAL RESEARCH TOLD US LAST WEEK WEAKNESS FOR MONTHS, TWO YEARS AT LEAST TO COME. WHAT'S THE EFFECT OF ALL THIS ON THE UNITED STATES?

>> CLEARLY WE'VE SEEN THE EFFECTS OVER THE LAST COUPLE OF WEEKS IN THE STOCK MARKET. I THINK THE AVERAGE AMERICAN IS FEELING IT EVERY DAY. THESE POLITICAL INDECISIONS ON BOTH SIDES OF THE ATLANTIC ARE TAKING THE STOCK MARKET UP 600 POINTS DOWN 400 POINTS AND THEN DOWN 500 POINTS. I THINK THAT THE INDUSTRY... THE MAN ON THE STREET IS FEELING THIS.

>> Woodruff: THE MAN ON THE STREET IN EUROPE OR THE UNITED STATES?

>> BOTH BUT PROBABLY MORE HERE BECAUSE OUR INVESTMENT FUNDS TEND TO BE A LITTLE MORE RISKY ON THE STOCK SIDE THAN THE EUROPEANS' SO I THINK WE FEEL IT MORE. THEREFORE, THE AVERAGE PERSON MIGHT ASK, YOU KNOW, WHAT'S IT TO US IN TERMS OF HOW THEY'RE HANDLING THIS? EVERY TIME THEY HANDLE, THEY DANGLE. WE GET EVERY DAY ON OUR PENSION AND INVESTMENT FUNDS.

>> Woodruff: IS ONE SIDE OR THE OTHER, HEATHER CONNELLY, HAVING GREATER EFFECT OR ARE BOTH JUST FEEDING THE WEAKNESS OF THE OTHER?

>> THEY'RE BOTH INCREDIBLY INTERTWINED. LET'S REMEMBER EUROPE REPRESENTS 25% OF AMERICAN EXPORTS. THE PRODUCTION AND THE TIES OF OUR BANKING SYSTEM ARE SO TOGETHER THAT WHAT HAPPENS IN EUROPE DOES DRAMATICALLY AFFECT THE UNITED STATES. SO WE HAVE TO WORK TOGETHER. THERE HAS TO BE GREAT COORDINATION AND THERE HAS BEEN GREAT DISCUSSION BETWEEN THE TREASURY DEPARTMENT, THE FEDERAL RESERVE, THE EUROPEAN CENTRAL BANK AND THE EUROPEAN FINANCIAL AUTHORITIES. THERE HAS TO BE SOME COORDINATION HERE BECAUSE THE OTHER PROBLEM UNDERNEATH THE DEBT CRISIS IS THE EUROPEAN BANKING CRISIS AS WELL. WE HAVE VERY UNDERCAPITALIZED EUROPEAN BANKS THAT AFFECTS LIQUIDITY HERE.

>> Woodruff: THEY'RE TIED TOGETHER.

>> ABSOLUTELY.

>> Woodruff: AND AGAIN JUST TO STAY WITH THIS QUESTION, SCHEHERAZADE, ABOUT THE EFFECT ON THE UNITED STATES. FOR AMERICANS LOOKING AT THIS THE HOPE IS IS LET'S HOPE EUROPE GETS ITS ACT TOGETHER.

>> WE'VE BEEN TRYING TO TELL THEM TO DO THIS.

>> Woodruff: I'M ASKING. IS THAT THE QUESTION? IS THAT THE HOPE OF AMERICA?

>> ABSOLUTELY. PLEASE GET YOUR HOUSE IN ORDER BECAUSE IT'S NOT HELPING US. GORDON BROWN WHO WAS THE FORMER PRIME MINISTER OF THE U.K. HAD A WONDERFUL PIECE IN THE "WASHINGTON POST" LAST WEEK WHERE HE SAID A LOOSE STATEMENT ANYWHERE BY ANYONE WILL SINK MARKETS EVERYWHERE. HE'S RIGHT.

>> Woodruff: SO THE ONE THING AMERICANS CAN HOPE IS THAT EUROPE FINDS A WAY TO GET THROUGH THIS? MEANWHILE THE EUROPEANS ARE HOPING THAT THE PICTURE IN THE UNITED STATES IS NOT AS BAD WE'VE BEEN TOLD THAT IT IS.

>> WE ARE BOTH LOOKING AT EACH OTHER GOING "GET IT TOGETHER." WE ARE BOTH UNDER INCREASING PRESSURE FROM THE RATING AGENCIES. YOU HAVE THE EUROPEANS DAMNING THE CREDIT RATING AGENCIES THAT THEY'RE TO BLAME FOR THE CURRENT IMPASSE. WE ARE FEELING UNDER PRESSURE BY THE CREDIT RATING AGENCIES. WE'RE BOTH STRUGGLING. THE POLITICAL LEADERSHIP IS NOT THERE AND MEANWHILE THE MARKETS ARE TAKING MATTERS INTO THEIR OWN HANDS.

>> Woodruff: IN BRIEF, WHERE DOES ONE LOOK FOR RELIEF FOR IMPROVEMENT?

>> FOR THE U.S. OR....

>> Woodruff: FOR BOTH. SPECIFICALLY EUROPE.

>> I THINK BOTH SETS OF CONTINENTS HAVE SAME PROBLEMS. POLITICAL LACK OF CREDIBILITY WITH THE MARKETS. IF THEY CAN JUST DO THAT, WE'LL BE A HECK OF A LOT BETTER OFF IN TERMS OF VOLATILITY IN THE MARK. WE CAN REALLY GET DOWN TO THE NITTY-GRITTY OF REALLY DETERMINING WHAT IS GOING TO STIMULATE GROWTH.

>> WHAT WE DON'T KNOW IS HOW THIS EUROPEAN STORY ENDS AT THE MOMENT. THE DRAMA HAS CONTINUED FOR 18 MONTHS. DECISIONS THAT WERE MADE THAT WERE SUPPOSED TO STICK FOR SEVERAL MONTHS, THE LAST MAJOR SUMMIT ON JULY 21 LASTED FOR THREE WEEKS AND ITALY AND SPAIN SUCCUMBED TO CONTAGION. THIS CRISIS IS GETTING DEEPER.

>> Woodruff: NO CLEAR PATH FORWARD.

>> NO CLEAR PATH FORWARD.

>> Woodruff: ON THAT VERY DEPRESSING NOTE, WE THANK YOU BOTH. NEXT TIME IT WILL BE BETTER NEWS WE HOPE.

>> WE HOPE. THANK YOU.

>> Woodruff: THANK YOU.

>> Brown: STILL TO COME ON THE NEWSHOUR: DEADLY VIOLENCE IN IRAQ; THE WEALTH GAP IN AMERICA; RADIOACTIVE RISKS IN JAPAN; AND A BIG BET IN MOBILE TECHNOLOGY. BUT FIRST, THE OTHER NEWS OF THE DAY. HERE'S HARI SREENIVASAN.

>> Sreenivasan: REPUBLICAN PRESIDENTIAL CANDIDATE RICK PERRY TOOK SOME HEAT TODAY AFTER HE APPEARED TO THREATEN FEDERAL RESERVE CHAIRMAN BEN BERNANKE. IT HAPPENED MONDAY EVENING IN IOWA, AS PERRY CRITICIZED THE FED'S ECONOMIC STIMULUS EFFORTS. THE TEXAS GOVERNOR WARNED BERNANKE WOULD BE IN TROUBLE IF HE INJECTS MORE MONEY INTO THE SYSTEM BEFORE THE ELECTION.

>> WE WOULD TREAT 'EM PRETTY UGLY DOWN IN TEXAS. I MEAN PRINTING MORE MONEY TO PLAY POLITICS AT THIS PARTICULAR TIME IN AMERICAN HISTORY IS ALMOST TREASON IN MY OPINION.

>> Sreenivasan: PERRY'S REMARK DREW CRITICISM FROM WHITE HOUSE SPOKESMAN JAY CARNEY. HE WARNED AGAINST SAYING ANYTHING TO JEOPARDIZE THE FED'S INDEPENDENCE. CARNEY SAID: "WHEN YOU ARE PRESIDENT OR RUNNING FOR PRESIDENT, YOU HAVE TO THINK ABOUT YOUR WORDS." THE U.S. MILITARY NOW ESTIMATES THAT MILLIONS OF DOLLARS IN SECURITY AND REBUILDING FUNDS FOR AFGHANISTAN HAVE WOUND UP IN THE HANDS OF THE TALIBAN. CRIMINALS AND LOCAL POWER BROKERS SIPHONED OFF MILLIONS MORE. THE ASSOCIATED PRESS REPORTED TODAY THAT A U.S. TASK FORCE ESTIMATES, ALL TOLD, SOME $360 MILLION WENT ASTRAY. THE REPORT CITES PROFITEERING, BRIBERY AND EXTORTION. REBELS IN LIBYA WORKED TO SECURE GAINS TODAY IN KEY TOWNS NEAR TRIPOLI. THERE WAS MORE FIGHTING IN ZAWIYAH, WHERE FORCES LOYAL TO LIBYAN LEADER MOAMMAR QADDAFI WERE HOLDING OUT, USING SNIPERS AND ROCKET SALVOS. U.S. AND NATO OFFICIALS SAID QADDAFI'S MILITARY EVEN FIRED A SCUD MISSILE ON SUNDAY, BUT IT EXPLODED HARMLESSLY IN THE DESERT. WE HAVE A REPORT ON THE SITUATION NARRATED BY DAMON GREEN OF INDEPENDENT TELEVISION NEWS.

>> Reporter: THESE PICTURES TAKEN BY LIBYAN REBELS SUPPOSEDLY SHOW THEM INSIDE THE TOWN OF ZAWIYA TODAY, BRINGING TO HOSPITAL A FIGHTER INJURED IN THE STRUGGLE. THESE, THEY SAY, ARE SOLDIERS LOYAL TO COLONEL QADDAFI WHO HAVE BEEN CAPTURED. QADDAFI'S OPPONENTS SAY HIS DAYS ARE NUMBERED, THAT HIS FORCES ARE ALMOST EXHAUSTED. BUT MANY ARE WARY OF THE FACT THAT THIS HAS BEEN SAID BEFORE, AND THE CLOSER THE FIGHTING GETS TO TRIPOLI, THE MORE DESPERATE HIS LOYALISTS MIGHT BECOME. EVEN SO, NATO SPOKESMEN SAY THE USE OF UNGUIDED SCUD MISSILES BY THE REGIME IS NO MORE THAN A GESTURE OF DEFIANCE.

>> THE CURRENT REGIME DOES NOT HAVE ANY MORE EFFECTIVE OPERATIONAL CAPABILITY. IT COULD CERTAINLY, AS I MENTIONED, THROW THE DISHES AGAINST THE WALL TO MAKE A BIT OF NOISE BUT WE DO NOT BELIEVE THAT IT COULD GENERATE A SIGNIFICANT OPERATIONAL EFFECT.

>> Reporter: THE REBELS THEMSELVES SCENT VICTORY, CONTINUING TO TAKE SMALL TOWNS ALONG THE ROAD BETWEEN THEIR STRONGHOLD OF BENGHAZI AND THE CAPITAL. BUT IF THEY ARE FORCED TO FIGHT THEIR WAY INTO TRIPOLI, NO ONE KNOWS FOR SURE WHAT THE COST OF THAT BATTLE WILL BE.

>> Sreenivasan: IN WASHINGTON, DEFENSE SECRETARY LEON PANETTA SAID TODAY THAT QADDAFI'S DAYS ARE NUMBERED AND HIS FORCES ARE GROWING WEAK. IN SYRIA, THE DEATH TOLL ROSE TO 35 IN THE COASTAL CITY OF LATAKIA, UNDER ASSAULT BY THE MILITARY FOR FOUR DAYS NOW. TANKS AND GROUND TROOPS PUSHED DEEPER INTO THE BESIEGED CITY AS SHOOTING CONTINUED. MUCH OF THE DAY'S VIOLENCE WAS IN A NEIGHBORHOOD THAT IS HOME TO A PALESTINIAN REFUGEE CAMP. THOSE ARE SOME OF THE DAY'S MAJOR STORIES. NOW, BACK TO JEFF.

>> Brown: AND TO THE UPTICK IN VIOLENCE IN IRAQ. MARGARET WARNER HAS THE STORY OF MONDAY'S WIDESPREAD ATTACKS AND THE IMPLICATIONS.

>> Warner: IT WAS THE BLOODIEST DAY IRAQIS HAVE SUFFERED THIS YEAR-- 42 APPARENTLY COORDINATED ATTACKS ROCKED THE COUNTRY FROM NORTH TO SOUTH. AT LEAST 70 PEOPLE WERE KILLED AND MORE THAN 200 WOUNDED IN MORE THAN A DOZEN CITIES. BOMBINGS CLAIMED MOST OF THE LIVES, THOUGH THERE WERE SHOOTINGS, TOO. THE WORST HIT CAME IN KUT, WHERE MULTIPLE BOMBS DETONATED AT A MARKETPLACE, KILLING AT LEAST 35 IRAQIS.

>> ( translated ): A BOMB EXPLODED HERE, AND WHEN PEOPLE GATHERED, TEN MINUTES LATER, A CAR BOMB DETONATED, TOO.

>> Warner: CAR BOMBS STRUCK THE UPSCALE MANSOUR NEIGHBORHOOD OF THE CAPITAL, BAGHDAD, WOUNDING A NUMBER OF IRAQIS.

>> ( translated ): A BOMB FROM A PARKED CAR EXPLODED HERE AT 7:00 IN THE MORNING. I DON'T KNOW HOW THE CAR ENTERED THIS AREA BECAUSE THERE ARE SO MANY CHECKPOINTS IN MANSOUR."

>> Warner: EXPLOSIONS ALSO HIT A POLICE STATION IN THE SHIITE HOLY CITY OF NAJAF, KILLING SEVEN. AND LAST NIGHT IN YOUSSIFIYAH, GUNMEN IN MILITARY UNIFORMS INVADED A MOSQUE AND MURDERED SEVEN MEMBERS OF AN ANTI-AL QAEDA SUNNI MILITIA. THE GUNMEN SHOUTED THEY BELONGED TO AN AL QAEDA-LINKED GROUP, THE ISLAMIC STATE OF IRAQ. THE ATTACKS WERE THE LATEST IN A SURGE OF VIOLENCE SINCE THE BEGINNING OF THE YEAR. BUT IN WASHINGTON MONDAY, STATE DEPARTMENT SPOKESWOMAN VICTORIA NULAND NOTED THE VIOLENCE IS NOTHING LIKE IT WAS A FEW YEARS BACK WHEN IRAQ CAME CLOSE TO SECTARIAN CIVIL WAR.

>> WE REMAIN CONCERNED ABOUT THESE KINDS OF TERRORIST ACTS IN IRAQ, AND WE ARE WORKING CLOSELY WITH OUR IRAQI PARTNERS TO ADDRESS THEM. IN NET TERMS, THOUGH, OVERALL, THE VIOLENCE IN IRAQ IS SIGNIFICANTLY DOWN THIS YEAR OVER PREVIOUS YEARS.

>> Warner: STILL, MONDAY'S ATTACKS REVIVED QUESTIONS ABOUT THE ABILITIES OF IRAQ'S SECURITY FORCES. THE REMAINING 50,000 U.S. TROOPS ARE SCHEDULED TO WITHDRAW BY DECEMBER 31. BUT JUST TWO WEEKS AGO, THE IRAQIS OPENED TALKS WITH THE U.S. ABOUT HAVING SOME AMERICAN FORCES STAY LONGER. WE GO TO "WASHINGTON POST" REPORTER ANNIE GOWAN IN BAGHDAD. WELCOME. THANKS FOR JOINING US. IRAQI OFFICIALS ARE STAYING THAT THEY BELIEVE THESE 42 ATTACKS WERE COORDINATED. THE QUESTION IS BY WHOM? WHO DO THEY THINK HAS THE ABILITY TO PULL SOMETHING LIKE THIS OFF?

>> WELL, I SPOKE TO AN IRAQI ARMY COMMANDER YESTERDAY WHO BASICALLY ASSUMES THAT IT'S AL QAEDA AND IRAQ. THE U.S. MILITARY IS NOT SAYING YET THAT THEY THINK THAT AS WELL BUT THEY'RE SAYING THAT IT'S VERY SIMILAR TO A STRING OF ATTACKS THAT OCCURRED IN RAMADAN LAST YEAR WHICH WERE ALSO COORDINATED AND WENT, YOU KNOW, WHERE 53 PEOPLE DIED IN MULTIPLE CITIES IN IRAQ. THAT WAS PERPETRATED BY AL QAEDA IN ARAK. ALTHOUGH NO ONE HAS CLAIMED RESPONSIBILITY THEY BASICALLY THINK THAT IT'S LIKELY THE WORK OF AL QAEDA.

>> Warner: YOU'RE TALKING ABOUT THE SUNNI INSURGENCY, AL QAEDA LINKED. TO WHAT END? I MEAN, WHAT DO IRAQI AND AMERICAN OFFICIALS THINK IS THEIR POLITICAL OBJECTIVE WITH THIS?

>> SOME SAY THEY'RE TRYING TO DESTABILIZE THE COUNTRY SO THAT THE AMERICANS BELIEVE... WILL LEAVE AT THE DEADLINE THAT'S PRESCRIBED WHICH IS DECEMBER 31 OBVIOUSLY. BUT OTHERS FEEL LIKE THEY'RE JUST TRYING TO RATIONALIZE THEIR EXISTENCE AND THAT IF THEY WEREN'T PERPETRATING THESE ATTACKS THAT, YOU KNOW, THERE WOULD BE NO NEED FOR THE AMERICANS TO STAY SO THERE'S REALLY A LOT OF DEBATE ABOUT SORT OF WHAT, YOU KNOW, WHAT ARE THEIR OBJECTIVES? I DON'T THINK THERE'S ANY REAL CLEAR ANSWER RIGHT AT THIS POINT.

>> Warner: DO THEY THINK IT IS RELATED TO THE FACT THAT JUST TWO WEEKS AGO ON AUGUST 3 THE BAGHDAD GOVERNMENT, THE MALIKI GOVERNMENT, AND THE U.S. ANNOUNCED THAT THEY WERE GOING TO ENTER FORMAL TALKS ABOUT EXTENDING THE U.S. PRESENCE?

>> WELL I THINK THAT'S EVERYBODY HAS BEEN HOLDING THEIR BREATH, YOU KNOW, ALL THE IRAQI CITIZENS AND THE AMERICANS HERE AS WELL. I MEAN THAT'S LIKE THE 64 THOUSAND DOLLAR QUESTION HERE WHICH IS ARE THE AMERICAN TROOPS GOING TO GO IN TOTAL BY THE DEADLINE? THERE'S 46,000 HERE NOW. FAR FEWER THAN WERE HERE DURING THE SURGE IN '07. BUT, YOU KNOW, THEY'RE TALKING ABOUT MAYBE A FORCE OF 10,000 TRAINERS THAT COULD STAY BUT REALLY NOBODY KNOWS AND THE IRAQIS HAVEN'T MADE A DECISION. THE AMERICAN ARMY OFFICIALS ARE JUST WAITING FOR THEM TO SORT OF AGREE BEHIND THE SCENES AS TO WHAT THEY'RE GOING TO EVEN ASK FOR.

>> Warner: HOW DID ORDINARY IRAQIS THAT YOU TALKED TO IN THE STREETS REACT TO YESTERDAY'S ATTACKS? WERE THEY SURPRISED? ARE THEY UPSET? DO THEY SEEM RESIGNED?

>> I WOULD SAY, YOU KNOW, WHAT'S REALLY INTERESTING ABOUT BAGHDAD RIGHT NOW IS THAT IT'S SORT OF A CITY THAT'S COMING BACK INTO ITSELF. YOU GO OUT IN THE EVENING AND PEOPLE ARE IN THE RESTAURANTS AGAIN. THERE'S A LOT OF NEW HOTELS OPENING UP. THERE IS A NEW MALL OPENING UP. BUT, YOU KNOW, THE FOLKS SAY THAT THEY STILL DON'T FEEL SAFE. OBVIOUSLY THE VIOLENCE IS NOWHERE NEAR WHAT IT WAS IN '07. BUT THEY STILL DON'T FEEL SAFE. THAT'S, YOU KNOW, THAT'S A HUGE THING FOR THEM.

>> Warner: HAVE YOU HEARD ANYONE EXPRESS FEAR THAT IRAQ COULD SEE A RETURN TO THE SECTARIAN VIOLENCE THAT THEY HAD BACK IN '06 AND '07.

>> YES, I SPOKE TO AN IRAQI MAN TODAY WHO SAID WE WANT THE AMERICAN TROOPS TO STAY. WE ARE AFRAID THAT WHEN THEY LEAVE THE MINUTE THEY LEAVE CIVIL WAR WILL DESCEND ON THE COUNTRY AGAIN. NOBODY WANTS... NOBODY HERE WANTS TO GO BACK TO THE DAYS OF SECTARIAN VIOLENCE IN '07 WHEN THE IRAQIS COULDN'T WALK TO WORK WITHOUT SEEING CORPSES IN THE STREET. I DON'T KNOW THAT HIS IS IS THE MAJORITY POSITION. I THINK IF YOU TOOK A POLL, MOST IRAQIS WOULD SAY THEY WANT THE AMERICANS TO LEAVE.

>> Warner: I KNOW THAT THE IRAQI GOVERNMENT CAN BE KIND OF OPAQUE TO A REPORTER. IT'S VERY DIFFICULT TO KNOW WHAT'S GOING ON INSIDE. DO YOU HAVE ANY SENSE OF WHAT, AFTER SO MANY MONTHS OF DELAY, THE IRAQI GOVERNMENT FINALLY JUST TWO WEEKS AGO SAID, YOU KNOW WHAT? WE ARE READY TO TALK TO YOU ABOUT THE POSSIBILITY OF EXTENDING YOUR PRESENCE HERE?

>> I THINK IN IRAQ EVERYTHING TAKES LONGER. THERE'S A LOT OF DIFFERENT PARTIES THAT... TO THE DISCUSSION. I JUST THINK THAT-- AND I THINK IT'S FRUSTRATING TO THE AMERICANS THAT THEY HAVE DELAYED FOR SO LONG AS WELL. I MEAN, YOU KNOW, YOU HAVE ADMIRAL MULLEN ANDLY ONPANETTA BOTH SAYING PLEASE PLEASE MAKE A DECISION. WE CAN'T TURN BACK THE CLOCK OR STOP THE PROCESS OF LEAVING IF YOU DON'T MAKE A DECISION SOON. I THINK IT'S FRUSTRATING TO THE AMERICAN OFFICIALS AS WELL.

>> Warner: THANK YOU SO MUCH.

>> THANK YOU FOR HAVING ME.

>> Woodruff: NOW, THE OPENING CHAPTER OF AN OCCASIONAL SERIES ABOUT INEQUALITY IN AMERICA. IT'S A SUBJECT THAT'S GETTING MORE ATTENTION IN LIGHT OF THE WEAK ECONOMY AND THE ONGOING DEBATE SURROUNDING TAXES, REVENUE AND SPENDING. BILLIONAIRE BUSINESSMAN AND PHILANTHROPIST WARREN BUFFETT, WHO HAS ARGUED IN FAVOR OF HIGHER TAXES ON THE WEALTHIEST, CITED THE GROWING DISPARITY IN AN INTERVIEW ON PBS LAST NIGHT WITH CHARLIE ROSE.

>> IT SHOULD BE A LAND OF OPPORTUNITY. PEOPLE WOULD GET RICH, NOBODY IS GOING TO CONFISCATE EVERYTHING OR ANYTHING OF THE SORT. BUT THE DISTRIBUTION IN THIS COUNTRY OF MARKET... OUR MARKET SYSTEM HAS LED TO EXTREMES. I DON'T HAVE ANY SPECIAL STATUS IN THIS WORLD. I'M NOT A GREAT NURSE, A GREAT TEACHER. MAYBE MUCH MORE VALUABLE TO SOCIETY THAN I AM. I'M WIRED SO I CAN FIGURE OUT WHAT THINGS ARE WORTH. I GET SUPER RICH. AND SOMEBODY WHOSE ADENOIDS ARE IN A CERTAIN ARRANGEMENT GETS RICH BUT TELEVISION MAKES A LOT OF PEOPLE RICH. I MEAN LOU GEHRIG HELD OUT FOR $25,000 IN THE LATE '30s. THEY BENCHED HIM. HE HAD A LONG STRUGGLE. TELEVISION HAS MADE THE .230 HITTER OR THE .240 BETTER THAN TED WILLIAMS AT .406. THERE'S A LOT OF SERENDIPITY. EVERYBODY IN THIS COUNTRY OWES THEIR GOOD FORTUNE IN SOME WAY TO THE REST OF THE COUNTRY.

>> Brown: NEWSHOUR ECONOMICS CORRESPONDENT PAUL SOLMAN HAS BEEN LOOKING INTO THE REALITY AND IMPACT OF THE WEALTH GAP IN THE U.S. TODAY. HERE'S THE FIRST OF SEVERAL STORIES, PART OF HIS ONGOING REPORTING, "MAKING SENSE OF FINANCIAL NEWS."

>> Reporter: NEAR TIMES SQUARE, AT THE LINE FOR LATE SHOW TICKETS, WE BORROWED DAVID LETTERMAN'S AUDIENCE FOR A SHORT QUIZ ON ECONOMIC INEQUALITY. SO THIS IS THREE DIFFERENT SOCIETIES, IT'S THE DISTRIBUTION OF WEALTH IN THE DIFFERENT SOCIETIES... IN EACH CHART, WE EXPLAINED, YELLOW REPRESENTS THE RICHEST FIFTH OF THE POPULATION, BLUE THE SECOND RICHEST, AND SO ON DOWN TO ORANGE, THE POOREST FIFTH. WHICH CHART, WE ASKED, REPRESENTS THE DISTRIBUTION OF WEALTH IN THE U.S.? THIS ONE'S EXACTLY EQUALLY DISTRIBUTED... ...FROM THE TOP TO THE BOTTOM. IN THE FIRST CHART, EACH FIFTH OF THE POPULATION HAS 20% OF THE WEALTH. IN THE MIDDLE PIE CHART, A MIDDLING AMOUNT OF INEQUALITY-- THE RICHEST FIFTH OWNS 36%; THE POOREST FIFTH, ONLY 11%. AND IN THE THIRD CHART, EXTREME INEQUALITY, WHERE THE RICHEST FIFTH OWNS 84% OF THE NATIONS WEALTH, WHILE THE BOTTOM TWO FIFTHS-- 40% OF THE POPULATION-- OWNS AN ALMOST INVISIBLE 0.3% OF THE NATION'S PROPERTY. WHICH ONE DO YOU THINK THE UNITED STATES IS?

>> I'D SAY THIS ONE.

>> Reporter: YOU THINK THE U.S. IS COMPLETELY EQUAL? 20%, 20%?

>> IT'S NOT EXACTLY EQUAL, BUT THAT WOULD BE MY GUESS THAT IT'S THE CLOSEST. OR MAYBE THIS ONE. IT'S ONE OF THE TOP TWO.

>> Reporter: AND YOU?

>> MAYBE THE MIDDLE.

>> Reporter: THE UNITED STATES WOULD BE THE MIDDLE?

>> I THINK THE MIDDLE ONE'S THE US.

>> Reporter: MIDDLE ONE IS US, MIDDLE ONE IS U.S., MIDDLE ONE

>> Reporter: WHICH ONE WOULD YOU THINK THE U.S. WAS?

>> HOPEFULLY THAT.

>> THIS WOULD HAVE TO BE THIRD WORLD; THIS WOULD HAVE TO BE A PLACE LIKE INDIA.

>> Reporter: A PLACE THAT WOULD BE INCREDIBLY UNEQUAL, RIGHT?

>> YES.

>> I THINK THE U.S. WOULD BE HERE.

>> Reporter: AND THIS ONE?

>> I DON'T THINK THIS PLACE EXISTS.

>> Reporter: AT LEAST HE GOT THAT ONE RIGHT-- THE COMPLETELY EQUAL PIE ECONOMY IS COMPLETELY MADE UP. THE MIDDLE PIE REPRESENTS THE WEALTH DISTRIBUTION OF SWEDEN. THE BOTTOM PIE? WE ASKED TWO PRESUMABLY LOW- INCOME WORKERS NEAR THE TOURIST LINE FOR LETTERMAN. WHAT PLACE WOULD HAVE A DISTRIBUTION LIKE THIS?

>> UNITED STATES.

>> UNITED STATES.

>> Reporter: YES, THIS CHART REPRESENTS THE LAND OF OPPORTUNITY-- OURS.

>> Reporter: PSYCHOLOGIST DAN ARIELY DESIGNED THE QUIZ. HIS FIRST CONSISTENT FINDING-- MOST AMERICANS DON'T REALIZE HOW UNEQUAL OUR COUNTRY REALLY IS.

>> PEOPLE DON'T UNDERSTAND HOW MUCH WEALTH THE TOP 20% HAVE. THEY ACTUALLY HAVE 84% OF THE WEALTH, AND THEY THINK THEY HAVE MUCH LESS. AND MORE DISTURBINGLY, PEOPLE DON'T UNDERSTAND HOW LITTLE WEALTH THE BOTTOM OF THE DISTRIBUTION HAVE. THE BOTTOM 40% OF THE U.S. HAVE ABOUT 0.3% OF THE WEALTH-- BASICALLY, ZERO-- AND PEOPLE THINK THEY HAVE MUCH MORE THAN THAT.

>> Reporter: BUT HOW CAN THAT BE, GIVEN THE SPREAD OF MCMANSIONS AND LUXURY BRANDS IN AMERICA'S WEALTHY COMMUNITIES, SO EASY TO CONTRAST WITH ALMOST ANY POOR NEIGHBORHOOD IN THE COUNTRY? HARVARD BUSINESS SCHOOL PROFESSOR DAVID MOSS.

>> PEOPLE LOOK AROUND THEM AT THEIR LOCAL COMMUNITIES, AND LOCAL COMMUNITIES TEND TO BE MORE EQUAL THAN THE BROADER SOCIETY. SO AS THEY LOOK AROUND, THAT'S ESSENTIALLY THEIR JUDGMENT, OR OUR JUDGMENT-- I SHOULD INCLUDE MYSELF. I SEE THE SAME THING.

>> Reporter: SO THERE ISN'T THAT MUCH INEQUALITY IN NEWTON, MASSACHUSETTS, WHERE YOU LIVE, FOR EXAMPLE?

>> MUCH LESS, MUCH LESS THAN IN THE SOCIETY AS A WHOLE.

>> Reporter: MADDIE MCWILLIAMS, WHO ATTENDS HIGH SCHOOL IN UPSCALE NEWTON, AGREES.

>> IT'S GETTING EASIER FOR PEOPLE TO IGNORE THE INEQUALITY. THEY CAN STAY FAR AWAY FROM IT.

>> Reporter: INSULATE THEMSELVES?

>> YEAH. YEAH, I THINK SO.

>> Reporter: ANOTHER REASON PEOPLE DON'T REALIZE THE EXTENT OF INEQUALITY-- MOST OF IT IS EXPLAINED BY GAINS AT THE TIPPY- TOP. HARVARD ECONOMIST RICHARD FREEMAN.

>> IN THE LAST 30 YEARS OR SO, THE SHARE OF NATIONAL... OF INCOME THAT HAS GONE TO THE UPPER 0.1%-- NOT TO THE UPPER 1.0%; 0.1%-- ROSE BY 10 PERCENTAGE POINTS. THAT IS ONE OF THE MOST ASTOUNDING PATTERNS I'VE EVER SEEN IN DATA.

>> Reporter: 0.1%?

>> 0.1%, YES. PEOPLE SOMETIMES SAY-- "OH, THE RICH, IT'S THE UPPER 10%, IT'S THE UPPER 5%." NO, NO, THIS IS THE 0.1%. WARREN BUFFET HAS THIS WONDERFUL STATEMENT WHERE HE SAYS: "YES, THERE'S BEEN A CLASS WAR IN THE UNITED STATES, AND MY CLASS," NAMELY THE SUPER-RICH PEOPLE, "HAVE WON!"

>> Reporter: A GRAPHIC RECENT EXAMPLE-- THIS "NEW YORK TIMES" ONLINE SLIDE SHOW OF CHILDREN'S PLAYHOUSES, WHICH CAN COST UP TO A QUARTER OF A MILLION DOLLARS. MEANWHILE, MORE AND MORE AMERICANS-- MILLIONS OF THEM-- CAN'T AFFORD THEIR OWN HOMES.

>> MY HOUSE IS IN FORECLOSURE. I OWE THEM AT LEAST $100,000 MORE THAN MY HOUSE IS WORTH, PROBABLY CLOSER TO $150,000 MORE THAN MY HOUSE IS WORTH.

>> Reporter: ARE THEY COMING TO TAKE IT AWAY?

>> AT SOME POINT, THEY WILL. THEY HAVEN'T YET, BUT AT SOME POINT, THEY WILL.

>> Reporter: AND THEN WHERE WILL YOU GO?

>> I HAVE NO IDEA. I TRY NOT TO THINK ABOUT IT BECAUSE I REALLY HAVE NO IDEA.

>> Reporter: DENISE BARRANT HAS A COLLEGE DEGREE FROM LEHIGH UNIVERSITY, SOME MASTERS LEVEL COURSES, AND A PARALEGAL CERTIFICATE. SHE ONCE HAD A JOB AT A HEALTH INSURANCE COMPANY PAYING $80,000 A YEAR, PLUS A PART-TIME JOB-- JUST FOR FUN, SHE SAYS-- SELLING CLOTHES AT TALBOT'S. BUT FOR THREE YEARS, SHE'S BEEN UNEMPLOYED, FREE-FALLING OUT OF THE MIDDLE CLASS AND INTO POVERTY, LIVING IN A WELL-TO-DO BOSTON SUBURB SHE COULD ONCE AFFORD.

>> EVEN THE ORGANIZATIONS THAT WERE HELPING PEOPLE BEFORE HAVE BEEN STRETCHED SO MUCH THAT THEY'RE HAVING A HARD TIME HELPING PEOPLE.

>> Reporter: YOU MEAN IT'S HARD FOR YOU TO FIND A FOOD PANTRY?

>> THERE IS ONE IN THE NEXT TOWN OVER. AND IT WAS FUNNY-- I REMEMBER THE FIRST TIME I WENT, THE PEOPLE WERE LIKE, "WELL, YOU DON'T LOOK LIKE YOU SHOULD BE HERE."

>> Reporter: DON'T HAVE A LOT OF COLLEGE GRADS LIKE YOURSELF AT THE FOOD PANTRY.

>> I'M SURE THEY DIDN'T AT THE BEGINNING, BUT I'M SURE THEY DO NOW.

>> Reporter: BARRANT'S SITUATION HAS DETERIORATED SINCE WE FIRST INTERVIEWED HER EARLIER THIS YEAR, AND SHE SAID THIS:

>> THE TOP 1% IS LIVING WELL, AND THEY DON'T GET IT.

>> Reporter: ONE OF HER FELLOW INTERVIEWEES WAS SECURITY GUARD BOBBY HICKS.

>> 15 YEARS AGO, I WAS WORKING AS AN OFFICE PRODUCTS DELIVERY TRUCK DRIVER.

>> Reporter: AND YOU WERE DOING BETTER DOING THAT THAN YOU ARE NOW?

>> YES, ABSOLUTELY.

>> Reporter: THOUGH HICKS WAS BORN IN AMERICA; CHRISTI PIERRE- LOUIS, IN HAITI-- HER JOB FRUSTRATION ECHOES HIS.

>> IT MAKES ME FEEL LIKE THE AMERICAN DREAM IS NOT JUST... IT'S NOT FOR ME. IT'S JUST NOT FOR ME. MAYBE IT'S FOR THE WEALTHY, JUST NOT FOR ME, BECAUSE IT DOESN'T MATTER HOW HIGH I REACH, YOU KNOW, I'M REACHING UP MY HANDS, AND IT SEEMS LIKE I'M STILL VERY FAR AWAY FROM IT. IT'S LIKE SOMEONE LITERALLY PULLING IT. AS MUCH AS I'M RUNNING AFTER IT, THEY'RE RUNNING AWAY WITH IT, AND I DON'T GET MY PIECE OF THE AMERICAN DREAM. BECAUSE I WORK HARD IN THIS COUNTRY, TOO. I PAY MY TAXES JUST LIKE EVERYONE ELSE. I WORK HERE, I GO TO SCHOOL, AND I'M DOING MY BEST, BUT STILL MY BEST IS JUST NOT GOOD ENOUGH.

>> Reporter: SO THE U.S. LOOKS UNEQUAL TO A HAITIAN? ECONOMIST RICHARD FREEMAN IS NOT SURPRISED.

>> WE'RE HIGH FOR A POOR COUNTRY, IN TERMS OF INEQUALITY, AND WE'RE A RICH COUNTRY. WE'RE ABOUT THE SAME LEVEL OF INEQUALITY AS CHINA AND, OF COURSE, CHINA, HALF THE POPULATION ARE RURAL PEASANTS WHO ARE NOT PART OF THE MODERN WORLD. AND IF WE WERE TO COMPARE US WITH AFRICAN COUNTRIES, DICTATORS IN DIFFERENT PLACES, YOU KNOW, TAKING A LOT OF THE WEALTH FROM NORMAL PEOPLE, WE WOULD BE AMONG THE TOP HALF OF THE AFRICAN COUNTRIES OF INEQUALITY. SO THE U.S. REALLY HAS REACHED AN EXTRAORDINARY LEVEL OF INCOME INEQUALITY.

>> Reporter: THE LUXURY GOODS SPEAK FOR THEMSELVES. BUT WHO KNEW THAT THE KIDS OF THE WEALTHY WERE FLYING PRIVATE JETS TO CAMP THIS SUMMER? OKAY, TO SOME, THIS MIGHT BE CAUSE FOR INDIGNATION. BUT TO OTHERS, IT'S NOT THAT SIMPLE.

>> INEQUALITY IS THE FLIP SIDE OF PROVIDING POWERFUL INCENTIVES FOR PEOPLE WHO GENERATE A LOT OF INCOME.

>> Reporter: ECONOMIST STEVEN DAVIS.

>> PART OF THE SUCCESS OF THE UNITED STATES ECONOMY LIES IN THE FACT THAT, IF YOU SUCCEED IN A BIG WAY COMMERCIALLY, YOU'RE REWARDED FOR THAT. AND THE TAXES ON YOUR SUCCESS ARE MODEST, SAY, COMPARED TO WHAT THEY ARE IN A... IN A COUNTRY LIKE FRANCE OR IN THE SCANDINAVIAN COUNTRIES.

>> Reporter: BUT AS DAN ARIELY FOUND IN PART TWO OF HIS STUDY-- AND AS OUR OWN INFORMAL SURVEY CONFIRMED-- WHEN PEOPLE DIDN'T KNOW WHICH COUNTRIES THE PIE CHARTS REPRESENTED, THEY OVERWHELMINGLY CHOSE THE ONE REPRESENTING A MUCH MORE EQUAL AND YET STILL PROSPEROUS COUNTRY, SWEDEN, AS WHERE THEY'D LIKE TO LIVE. A FUNCTION OF THEIR POLITICS? WE WONDERED.

>> WE HAD 7,000 PEOPLE DISTRIBUTED AROUND THE U.S., DIFFERENT LEVELS OF INCOME, EDUCATION, WEALTH, POLITICAL OPINIONS. 92% OF THE AMERICANS PICKED SWEDEN OVER THE U.S. WHEN WE BROKE IT BY DEMOCRATS AND REPUBLICANS-- DEMOCRATS, IT WAS 93%; REPUBLICANS, IT WAS 90.5%. SO THERE'S A DIFFERENCE, BUT THE DIFFERENCE IS TINY, AND ONE OF THE POSSIBILITIES IS THAT WHEN WE DIG DEEP DOWN AND WE ASK PEOPLE TO EXAMINE THEIR CORE BELIEFS ABOUT A JUST SOCIETY, AMERICANS ARE REALLY QUITE CONSISTENT IN TERMS OF THINKING THIS IS WAY TOO MUCH INEQUALITY AND WE WANT SOMETHING WHICH IS MUCH MORE EQUAL TO SWEDEN.

>> Reporter: AND SO, LAST QUESTION: WHICH DISTRIBUTION DO YOU PREFER? YOU CAN LET US KNOW ONLINE.

>> Brown: PAUL'S NEXT REPORT EXAMINES THE CONNECTIONS BETWEEN THE FINANCIAL CRISIS AND THE GROWING WEALTH GAP.

>> Woodruff: NEXT, THE UNENDING AFTERMATH OF THE JAPANESE TSUNAMI AND THE MELTDOWN AT THE FUKUSHIMA NUCLEAR POWER PLANT. ONLY RECENTLY HAVE AUTHORITIES ACKNOWLEDGED THEY MISLED AREA RESIDENTS ABOUT THE DANGERS. JOHN SPARKS OF INDEPENDENT TELEVISION NEWS GOT AN INSIDE LOOK AT THE AREA AROUND THE NUCLEAR PLANT.

>> Reporter: THIS IS HE END OF THE ROAD. BEYOND A WELL-STAFFED CHECK- POINT LIES THE 20 KILOMETER EVACUATION AREA, A DEAD ZONE THAT SURROUNDS THE FUKUSHIMA NUCLEAR PLANT. WE WERE STOPPED, OUR PAPERS CHECKED, THEN THE POLICE WAVED US THROUGH. 80,000 PEOPLE EVACUATED THIS AREA WHEN EXPLOSIONS ROCKED THE NUCLEAR FACILITY IN MARCH. VEHICLES WERE ABANDONED ON THE HIGHWAY, SHOPS WERE SHUT, WITH THEIR SHELVES FULL OF STOCK, AND DAMAGE FROM THE TUSNAMI SIMPLY LEFT TO RUST. WE ARE NOW TEN KILOMETERS FROM THE FUKUSHIMA-DAIICHI NUCLEAR PLANT. OUR PERSONAL RADIATION MONITOR HAS BEGUN TO RISE, SO WE ARE GOING TO HEAD SEVERAL KILOMETERS BACK TO A SAFER AREA. THE THREAT POSED BY LONG-TERM EXPOSURE TO RADIATION MEANS FORMER RESIDENTS MAY NEVER RETURN HOME THIS, THE CAUSE OF MUCH PAIN . BUT THERE IS CLARITY AT LEAST-- THIS AREA HAS BEEN JUDGED UNSAFE. ON THE OTHER SIDE OF THE 20- KILOMETER BOUNDARY, THE SITUATION IS FAR MORE CONFUSED. THE TSUNAMI KNOCKED OUT FUKUSHIMA'S COOLING SYSTEM TRIGGERING EXPLOSIONS IN FOUR OF ITS SIX REACTORS. RADIOACTIVE MATERIAL SPEWED INTO THE AIR AND SEA. THE 20 KILOMETER EVACUATION ZONE WAS THROWN UP AROUND THE PLANT. LATER THE GOVERNMENT CREATED AN EVACUATION PREPARATION ZONE. RESIDENTS WERE LARGELY LEFT TO CHOOSE WHETHER TO STAY OR GO. HIGHER LEVELS OF RADIATION, HERE MARKED IN RED, HAVE SPREAD FAR BEYOND THESE EVACUATION AREAS, HOWEVER. COVERING DENSELY POPULATED AREAS LIKE FUKUSHIMA CITY. ALTHOUGH SOME OFFICIALS SAY THE WORST IS OVER.

>> NOT THAT MUCH TIME HAS PASSEDED SINCE THE ACCIDENT. IT IS ONLY FIVE MONTHS NOW. I DON'T THINK RADIOACTIVE MATERIAL PARTICLES ARE SPREADING ANYMORE.

>> Reporter: THAT VIEW SMACKS OF COMPLACENCY TO THIS MOTLEY GROUP OF VOLUNTEERS. THEY'LL SPEND THEIR SUNDAY CLEANING UP RADIOACTIVE CONTAMINANTS IN ONE PART OF THE CITY.

>> IT IS BRIGHT AND EARLY. IT IS BAKING HOT. BUT THERE IS A LARGE GROUP OF VOLUNTEERS ALL AROUND THIS HOUSE. IT'S THE HOME OF A WOMAN. SHE IS SEVEN MONTHS PREGNANT. SHE STILL LIVES HERE.

>> Reporter: THE GOVERNMENT HAS OFFERED LITTLE ASSISTANCE AND NO GUIDANCE A ON HOW TO DEAL WITH RADIATION SO ORDINARY CITIZENS WITH LITTLE TRAINING HAVE STEPPED IN. ARMED WITH PERSONAL GEIGER COUNTERS THEY FIND AND RECORD HIGH LEVELS OF RADIOACTIVITY IN THE GARDEN AND ON THE ROOF. THE OWNERS, SHE AND HER HUSBAND, FACE A TERRIBLE DILEMMA. SEEK SOMEWHERE SAFER OR STAY PUT.

>> WE STAYED HERE FOR THE DOG AND I HAVE A JOB TO GO TO. THERE ARE OTHER REASONS TOO INCLUDING THE MORTGAGE.

>> Reporter: THEY DID BRIEFLY RELOCATE. SHE SAID IT MADE HER UNWELL.

>> I GOT SICK FROM THE STRESS. I WAS REALLY WORRIED IT WOULD AFFECT THE BABY.

>> Reporter: THIS JUNIOR HIGH SCHOOL, HOME TO THE HIGHEST LEVEL OF RADIATION IN TOWN, WAS DISCOVERED BY ANOTHER VOLUNTEER GROUP IN THE SWIMMING POOL. THE READINGS HERE MORE THAN 2,000 TIMES STRONGER THAN NORMAL LEVELS. THE CLEAN-UP CREW HAVE GOT NO TIME TO LOSE. SCHOOL STARTS IN ONE WEEK. ALTHOUGH THE MAN IN CHARGE THINKS IT'S STILL TOO DANGEROUS.

>> EVEN IF WE CLEAN CLEAN UP ALL THE HOUSES AND FACILITIES IN TOWN WE JUST DON'T THINK PEOPLE SHOULD LIVE HERE.

>> Reporter: HE ACCUSES PUBLIC OFFICIALS OF HIDING HIGH RADIATION LEVELS IN THEIR DESIRE TO GET THINGS BACK TO NORMAL. THE MAYOR SAYS HIS BADLY DAMAGED CITY IS SAFE FROM RADIATION, AND WHERE HIGH LEVELS EXIST THE CONTAMINATION WILL BE CLEANED UP.

>> THE SCHOOLS ARE WORKING ON CLEAN-UPS. THAT WILL HELP REDUCE THE RADIATION LEVELS. WE'LL BE ABLE TO LET THE KIDS STUDY IN LOWER LEVELS OF RADIATION.

>> I JUST WONDER ABOUT ASKING PEOPLE TO COME BACK WHETHER YOU'RE TAKING A SIGNIFICANT RISK ABOUT WITH PEOPLE'S HEALTH.

>> I WANT PEOPLE TO COME BACK ESPECIALLY YOUNGER ONES. I'M NOT GOING TO FORCE THEM.

>> Reporter: JAPAN HAS SUFFERED GREATLY BUT THIS CRISIS IS FAR FROM OVER. RESIDENTS AND ACTIVISTS ARE WAITING... WAGING A NEW BATTLE AGAINST AN INVISIBLE ENEMY BUT THE THREAT POSED BY RADIATION TO HUMAN HEALTH MAY LAST FOR YEARS OR DECADES OR PERHAPS EVEN CENTURIES.

>> Brown: FINALLY TONIGHT, THE BUSINESS OF MOBILE TECHNOLOGY-- SMART PHONES AND MUCH MORE-- JUST GOT A BIG SHAKE-UP. INTERNET GIANT GOOGLE ANNOUNCED PLANS TO BUY MOTOROLA MOBILITY YESTERDAY. THE PRICE TAG-- $12.5 BILLION. IT'S THE LARGEST PURCHASE EVER FOR THE 13-YEAR-OLD TECH GIANT THAT'S BEST KNOWN STILL FOR ITS SEARCH ENGINE. BUT IN RECENT YEARS, GOOGLE HAS ALSO MADE A BIG PLAY FOR THE SMART PHONE MARKET, THROUGH ITS ANDROID OPERATING SOFTWARE SYSTEM. LAUNCHED IN 2007, ANDROID IS NOW USED IN MORE THAN 150 MILLION DEVICES WORLDWIDE, INCLUDING SOME 43% OF THE MARKET FOR SMART PHONES. BY COMPARISON, APPLE'S OPERATING SYSTEM, WHICH IS RUN ONLY ON APPLE PRODUCTS, SUCH AS THE iPHONE AND iPAD, MAKES UP 18% OF THE MARKET. NOW, GOOGLE HAS TAKEN ANOTHER BIG BET, DECIDING TO MAKE AND OWN THE HARDWARE, THE DEVICES, BY BUYING ITS OWN MANUFACTURER, MOTOROLA MOBILITY. MOTOROLA MOBILITY ITSELF SPLIT OFF FROM THE LARGER MOTOROLA COMPANY THIS PAST JANUARY. IT HAS 19,000 EMPLOYEES. THE DEAL POTENTIALLY PITS THE COMPANY AGAINST SOME OF ITS OWN BUSINESS PARTNERS-- OTHER DEVICE MAKERS THAT USE ANDROID SOFTWARE, SUCH AS SONY ERICSSON. BUT GOOGLE CAN GAIN ANOTHER IMPORTANT ASSET IN THE DEAL-- CONTROL OF MOTOROLA'S MORE THAN 17,000 PATENTS, PLUS ANOTHER 7,500 STILL AWAITING APPROVAL. WE LOOK AT THE DEAL AND THE MOBILE TECH BUSINESS NOW, WITH STACI KRAMER, EDITOR OF paidcontent.org, A WEB SITE THAT COVERS THE ECONOMICS OF MEDIA AND TECHNOLOGY; AND CHARLES GOLVIN, A PRINCIPAL ANALYST FOR FORRESTER RESEARCH. CHARLES GOLVIN, START WITH THE ISSUE OF MANUFACTURING PHONES AND OTHER DEVICES. HOW DOES OWNING A COMPANY DOES THAT FIT INTO GOOGLE'S LARGER STRATEGY?

>> WELL, IT'S MAINLY ABOUT COMPETING BETTER WITH APPLE WHO OWNS THE ENTIRE SOUP-TO-NUTS CONTROL OF THE SOFTWARE, THE HARD WEAR, THE CONTENT THAT THEY SELL AND THE CHANNELS THAT THEY DISTRIBUTE THE DEVICES THROUGH. GOOGLE, BECAUSE THEY LICENSE THEIR SOFTWARE TO MANUFACTURERS LIKE SAM SUNG AND LG, THEY DON'T CONTROL THOSE PIECES, THE HARDWARE PIECES. THEY JUST CONTROL THE SOFTWARE PIECES SO ACQUIRING MOTOROLA GIVES THEM MORE OF THAT TOP-TO- BOTTOM CONTROL OVER THE TOTAL PHONE OR TABLET EXPERIENCE.

>> Brown: STACI KRAMER, IF YOU PUT THIS IN THE LARGER CONTEXT THIS IS CLEARLY PART OF THE CONTINUING MOVE TOWARDS MOBILE COMPUTING GENERALLY, RIGHT?

>> WELL, IT IS. I MEAN THIS IS GOOGLE'S WAY OF LITERALLY BEING IN YOUR POCKET, BEING ON YOUR TABLET, BEING EVERYWHERE YOU ARE. ON THE LAST EARNINGS CALL, THE CEO OF GOOGLE SAID HE LIKES TO LOOK AT NEW PRODUCTS, NEW IDEAS THAT ARE... LIKE BRUSHING YOUR TEETH. IT'S SOMETHING YOU USE AND YOU DON'T HAVE TO THINK OF. THIS IS TO ME ANOTHER ONE OF THOSE KINDS OF THINGS.

>> Brown: CHARLES GOLVIN, MUCH HAS BEEN MADE OF THIS PATENT ISSUE. IN FACT, SOME PEOPLE SEEING IT AS EVEN THE MAJOR PART OF THE DEAL. NOW EXPLAIN THAT, WHY THESE GOOGLE GETTING CONTROL OF THESE THOUSANDS OF INTELLECTUAL PROPERTY PATENTS THAT THE MOBILITY COMPANY HAS, WHY IS THAT IMPORTANT?

>> WELL, IT'S IMPORTANT BECAUSE THE NEGOTIATIONS AMONG THE PHONE MANUFACTURERS, THE WIRELESS OPERATORS, THE SOFTWARE MAKERS, ARE REALLY A HORSE TRADING GAME OF "I HAVE THESE PATENTS THAT ARE REQUIRED FOR YOU TO MAKE YOUR PRODUCT; YOU HAVE SOME PATENTS THAT I NEED TO LICENSE IN ORDER TO MAKE MY PRODUCTS," AND THEY COME TO SOME KIND OF COMMON GROUND AND MAYBE IT RESULTS IN PAYMENTS IN ONE DIRECTION OR THE OTHER. BUT THOSE ASSETS THAT YOU BRING TO THE TABLE ARE CRITICAL IN NOT MAKING YOU A SELLER, IF YOU WILL, YOU KNOW, OF REVENUE. SO HAVING AN EQUAL STAKE OR A STRONG PORTFOLIO OF PATENTS ALLOWS GOOGLE TO BE AT THE TABLE AND HAVE SOMETHING TO OFFER IN TRADE AND NOT HAVE TO PAY OUT TOO MUCH REVENUE OR THEIR PARTNERS PAY OUT TOO MUCH REVENUE OR FACE LAWSUITS FOR, YOU KNOW, VIOLATING OTHERS' PATENTS.

>> Brown: CAN YOU GIVE ME AN EXAMPLE OF WHAT KIND OF PATENTS WE'RE TALKING ABOUT TO HELP PEOPLE UNDERSTAND THIS.

>> I'LL GIVE YOU AN EXAMPLE OF A VERY SIMPLE ONE THAT PEOPLE MIGHT NOT EVEN THINK ABOUT AS A PATENTABLE IDEA. FOR EXAMPLE, WHEN YOUR PHONE, WHEN YOU RECEIVE A CALL, THE NETWORK DELIVERS A PHONE NUMBER. THERE'S SOFTWARE INSIDE YOUR PHONE THAT LOOKS AT YOUR ADDRESS BOOK, LOOKS UP THAT NUMBER AND SAYS, OH, THAT'S SO-AND-SO AND THEN PRESENTS SO-AND-SO'S NAME TO YOU OR MAYBE EVEN A PICTURE OF YOU. NOK YO OWNS A PATENT ON THAT CONTENT SO ANY PHONE MANUFACTURER WHO WANTS TO DELIVER THAT SERVICE HAS TO LICENSE THAT PATENT FROM NOKIA IN ORDER TO BE ABLE TO DO THAT LEGALLY.

>> Brown: STACI KRAMER, WHAT ABOUT ANOTHER ASPECT THAT I MENTIONED IN THIS INTRODUCTION WHICH IS THE POTENTIAL PROBLEM THAT GOOGLE WOULD BE COMPETING WITH ITS CURRENT PARTNERS IN SOME SENSE.

>> WELL, IT WILL BE. AND, YOU KNOW, I THINK IT'S STILL NOT CLEAR TO ME HOW GOOGLE WILL RUN THIS AS A SEPARATE BUSINESS BY IT INTENDS TO DO WHICH HELPS PROTECT ITS PARTNERS, WHICH HELPS PROTECT ALL THESE OTHER IDEAS BUT AT THE SAME TIME ACHIEVE THAT KIND OF APPLE-LIKE INTEGRATION THAT EKE ECO SYSTEM THAT GIVES IT CONTROL OVER SO MANY THINGS. I DON'T SEE HOW EXACTLY THEY'RE GOING TO PULL THIS OFF YET. BUT IT DOES GIVE, YOU KNOW,... IT MAKES GOOGATE BOTH A COMPETITOR AND A PROTECTOR AT THE SAME TIME. IF THEY CAN MANAGE TO WALK THAT LINE AND DO IT, IT WILL BE QUITE A FEAT.

>> Brown: CHARLES GOLVIN, IT WAS INTERESTING TO BE READING THE TECH BLOGS AND INFORMATION TODAY. THERE WAS THIS SORT OF DEBATE ABOUT WHETHER THIS WAS A GOOD IDEA OR A COLOSSAL MISTAKE. IT'S THINGS LIKE THAT ABOUT WHETHER THEY'LL BE ABLE TO CARRY IT OFF. THAT'S WHAT'S DRIVING THIS DEBATE?

>> THAT'S PART OF THE DEBATE. CERTAINLY. I THINK MUCH OF THE SAME ANALYSIS PERTAINED TO MICROSOFT'S DEAL WITH NOKIA FORMING A STRATEGIC RELATIONSHIP AND QUESTIONING WHETHER OTHER LICENSEES OF MICROSOFT SOFTWARE, AGAIN, SAM SUNG OR L.G., MIGHT SEE THEMSELVES AT A DISADVANTAGE BECAUSE NOKIA MIGHT GET SPECIAL ACCESS TO THE SOFTWARE OR UNDULY INFLUENCE THE DESIGN OF MICROSOFT PRODUCTS. THE SAME QUESTIONS PERTAIN HERE WHEN IT COMES TO GOOGLE AND ITS ANDROID LICENSEES, WHETHER THEY WILL BE TREATED EQUALLY AND HAVE THE SAME ACCESS AS MOTOROLA WHO IS NOW PART OF GOOGLE.

>> Brown: STACEY, YOU STARTED TALKING ABOUT HOW THIS IS GOOGLE AND OTHERS TRYING TO REACH US IN A LOT OF NEW WAYS. THIS IS MORE THAN JUST... I MEAN, EVENTUALLY THIS IS MORE THAN JUST ABOUT SMART PHONES, RIGHT?

>> ABSOLUTELY. IT'S MORE ABOUT SMART PHONES. SOME PEOPLE HAVE SUGGESTED THAT REALLY THE CABLE BUSINESS IS AN AFTERTHOUGHT. IN A SENSE. IN THE BROADBAND BUSINESS TO WHAT GOOGLE IS ACQUIRING IN TERMS OF THE PATENTS AND THE ANDROID SIDE BUT IT IS A SIGNIFICANT MOMENT BECAUSE GOOGLE HAS NOT BEEN ABLE TO GET GOOGLE TV TO TAKE OFF ITS OWN REAL ENTRY INTO THE LIVING ROOM. BY ACQUIRING MOTOROLA MOBILITY IT HAS INSTANT ACCESS TO LIVING ROOMS ALL OVER THE U.S. WHETHER THEY'RE COME CAST, WHETHER IT'S CHARTER. ANY OF THE OTHER MAJOR CABLE OPERATORS. IT HAS SOME WAY IN. IN MY OWN HOUSE TODAY I JUST PICKED UP A CABLE MODEM WITH THE HIGHEST LEVEL OF POTENTIAL. MY FIRST... THE ONLY OPTION THAT I WAS ACTUALLY OFFERED WHEN I WENT TO AMAZON WAS A MOTOROLA BROADBAND MODEM. THEY ARE ALREADY THERE. WHAT THEY DO TO TAKE ADVANTAGE OF THAT IS THE NEXT QUESTION. CAN THEY PUT... CAN THEY MAKE THAT SET-TOP BOX AN ENTREE NOT ONLY INTO THE LIVING ROOM BUT ACTUALLY INTO PARTNERSHIP S WITH THE CABLE OPERATORS.

>> Brown: THAT MEANS THIS IS SORT OF PART OF A MUCH LARGER TECH WAR AMONG A NUMBER OF COMPANIES, RIGHT? GOOGLE, APPLE, MICROSOFT, OTHERS. WHERE ARE WE NOW IN THAT STRUGGLE?

>> WELL, IT ABSOLUTELY IS A STRUGGLE FOR PEOPLE'S DIGITAL LIVES. MORE AND MORE CONSUMERS TODAY OWN MULTIPLE KEKING DEVICES NOT JUST A SMART PHONE, NOT JUST A TABLET BUT P.C.s AND OTHER DEVICES THAT CONNECT TO THE INTERNET AND THE SERVICES THAT ARE CRITICAL TO THEIR DAILY LIVES. EVERY ONE OF THESE COMPANIES, WHETHER IT'S APPLE OR GOOGLE OR MICROSOFT, THEY WANT TO BE THE BRAND AND SERVICES BEHIND THAT EXPERIENCE. NO MATTER WHICH DEVICE YOU HAPPEN TO PICK UP. MOTOROLA DOES HAVE PRESENCE IN ALL OF THESE CATEGORIES. IN PHONES, IN TABLETS, IN TELEVISION SET-TOP BOXES. EVEN IN SOME HOME PRODUCTS LIKE SECURITY CAMERAS AND THE LIKE. SO THIS IS REALLY ABOUT BEING THE BRAND THAT YOU GO TO AND THE SERVICES THAT YOU NEED NO MATTER WHAT SCREEN YOU MIGHT BE LOOKING AT.

>> Brown: STACI KRAMER, JUST BRIEFLY, THIS DOES HAVE TO GO THROUGH SOME ANTITRUST, GETS A LOOK AT LEAST FROM THE JUSTICE DEPARTMENT, RIGHT?

>> I THINK IT WILL GET MORE THAN A LOOK ALTHOUGH I DON'T THINK WE'RE LOOKING AT ANYTHING QUITE AS INTENSE AS AT&T T-MOBILE, FOR INSTANCE. BUT IT DOES NEED A LOOK. IT DOES NOT APPROVAL. THAT IS ONE OF THE REASONS THAT YOU WILL HEAR THE CONSTANT STRESSING OF "THIS IS A SEPARATE OPERATION." THEY WANT NO MISTAKE. THEY WANT THIS SO BE SEEN AS SOMETHING THAT DOES NOT... THAT ENHANCES THEM BUT DOES NOT GIVEN THEM LIKE WORLD DOMINATION.

>> STACI KRAMER, CHARLES GOLVIN, THANK YOU BOTH VERY MUCH.

>> PLEASURE.

>> Woodruff: AGAIN, THE MAJOR DEVELOPMENTS OF THE DAY: THE LEADERS OF FRANCE AND GERMANY MET IN PARIS, AND CALLED FOR A NEW "ECONOMIC GOVERNMENT" TO STABILIZE THE EUROZONE. PRESIDENT OBAMA SOUGHT TO REASSURE CROWDS ON HIS MIDWEST BUS TOUR. IN IOWA, HE SAID AMERICA'S ECONOMY IS GOING TO COME BACK STRONGER THAN EVER. AND THE MARKETS STRUGGLED TO MAKE ANY HEADWAY, AS THE DAY'S PRONOUNCEMENTS DISAPPOINTED INVESTORS. STOCKS WERE FLAT IN EUROPE, AND WALL STREET'S THREE-DAY RALLY CAME TO AN END. THE DOW JONES INDUSTRIAL AVERAGE LOST 77 POINTS. ON OUR WEB SITE, THERE'S A STORY ABOUT A NEW CANCER STUDY, AND MUCH MORE. HARI SREENIVASAN EXPLAINS.

>> Sreenivasan: NEW RESEARCH SHOWS THE LINK BETWEEN SMOKING AND BLADDER CANCER IN WOMEN IS MUCH HIGHER THAN PREVIOUSLY BELIEVED. THAT'S ON OUR "HEALTH" PAGE. PAUL ASKS FORMER CHIEF I.M.F. ECONOMIST SIMON JOHNSON ABOUT HIS ECONOMIC OUTLOOK, EUROPEAN DEBT, AND THE WILD STOCK MARKET. THAT'S ON OUR "MAKING SENSE" PAGE. AND ON "ART BEAT," SPENCER MICHELS VISITS A REVIVAL OF GERTRUDE STEIN'S AVANT GARDE OPERA, "FOUR SAINTS IN THREE ACTS" IN SAN FRANCISCO. ALL THAT AND MORE IS ON OUR WEB SITE, newshour.pbs.org. JEFF.

>> Brown: AND THAT'S THE NEWSHOUR FOR TONIGHT. ON WEDNESDAY, WE LOOK AT EGYPT SIX MONTHS AFTER THE REVOLUTION IN TAHRIR SQUARE. I'M JEFFREY BROWN.

>> Woodruff: AND I'M JUDY WOODRUFF. WE'LL SEE YOU ONLINE, AND AGAIN HERE TOMORROW EVENING. THANK YOU AND GOOD NIGHT. MAJOR FUNDING FOR THE PBS NEWSHOUR HAS BEEN PROVIDED BY: CHEVRON. WE MAY HAVE MORE IN COMMON THAN YOU THINK.

>> AND BY BNSF RAILWAY.

>> AND BY THE BILL AND MELINDA GATES FOUNDATION. DEDICATED TO THE IDEA THAT ALL PEOPLE DESERVE THE CHANCE TO LIVE A HEALTHY PRODUCTIVE LIFE. AND WITH THE ONGOING SUPPORT OF THESE INSTITUTIONS AND FOUNDATIONS. AND... THIS PROGRAM WAS MADE POSSIBLE BY THE CORPORATION FOR PUBLIC BROADCASTING. AND BY CONTRIBUTIONS TO YOUR PBS STATION FROM VIEWERS LIKE YOU. THANK YOU. Captioning sponsored by MacNEIL/LEHRER PRODUCTIONS Captioned by Media Access Group at WGBH access.wgbh.org

>> THIS IS "BBC WORLD NEWS." FUNDING FOR THIS PRESENTATION IS MADE POSSIBLE BY THE FREEMAN FOUNDATION OF NEW YORK, STOWE, VERMONT, AND HONOLULU. NEWMAN'S OWN FOUNDATION. AND UNION BANK.

>> UNION BANK HAS PUT ITS GLOBAL FINANCIAL STRENGTH TO WORK FOR A WIDE RANGE OF COMPANIES. WHAT CAN WE DO FOR YOU?

>> AND NOW, "BBC WORLD NEWS."

>> THIS IS "BBC WORLD NEWS AMERICA." REPORTING FROM WASHINGTON. SIDE BY SIDE, THE LEADERS OF FRANCE AND GERMANY MEET FOR HIGH-PRESSURE TALKS, MORE THAN ENOUGH TO REASSURE THE MARKETS ABOUT THE HEALTH OF THE EUROZONE -- WHY IS IT ENOUGH TO REASSURE THE MARKETS ABOUT THE HEALTH OF THE EUROZONE? THE EUROZONE? AND A