captioning sponsored by wpbt >> what this bill reflects is a sincere, honest effort to end this crisis. >> susie: on capitol hill, house lawmakers vote on a republican plan to raise the nation's borrowing limit and cut hundreds of billions of dollars from the deficit. can they end the stalemate and avoid a potential default? it's "nightly business report" for thursday, july 28. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:

this program is made possible by contributions to your pbs station from viewers like you. thank you. >> susie: good evening, everyone. my colleague, tom hudson, is off tonight. well, it's a nail biter on capitol hill tonight. just as lawmakers in the house were about to vote on house speaker john boehner's proposal to raise the u.s. borrowing limit and cut the deficit, the vote was postponed until later this evening. after that, the measure heads to the senate, where it's expected to fail. meanwhile, the chief executives of the nation's largest financial institutions are weighing in by urging lawmakers to reach a deal. the c.e.o.s of bank of america, citigroup, j.p. morgan chase and goldman sachs warned that the consequences of not acting would

be "grave for the economy, the job market and america's global economic leadership." so, are we really any closer to an agreement? darren gersh has the latest. >> the chair will protest pone proceedings to record a vote. >> reporter: and with that, the debt limit crisis entered limbo. the key issue now: will the debt limit increase last a few months or long enough to get past the election? >> listen, for the sake of jobs, for the sake of our country, i am asking the representatives in the house in a bipartisan way, i'm asking my colleagues in the senate, let's pass this bill and end this crisis. >> even if the speaker can round up the votes, it is unlikely to win support in the senate where 53 democrats vowed to oppose a short-term increase in the debt limit.

>> the economy needs more certainty than the speaker's proposal would provide. we must not be back here in six weeks doing the same thing i have been involved in for seven or eight months. >> reporter: senate minority leader mitch mcconnell dismissed democratic concerns as a political maneuvering. >> the president wants to avoid having another discussion about deficit and debt before his election. >> so, susie, we could be in for a very long night on capitol hill. >> susie: darren, what happened? why did he delay the vote? >> it looked like he was a couple of votes shoirt. we knew it would be a close vote. frankly, they're breaking arms. this is pure power politics. they're out there-- i've been told by a source close to the republican leadership that it's come down to, you know, threats against members, whether they're going to be supported for their reelection. it's really tough politicking to get those last votes to win this vote. >> susie: darren, whether inside

the beltway or outside washington, everybody is saying when the bill gets to the senate they're going to vote it down. what's the problem there? what's holding that one up? >> you know, the senate just doesn't want to have another stalemate like this. they want to get this through the election. also, you know, the senate wants to make changes. it's a democratic body, so they're going to want to make kmngz there are some tentative signs that the senate is coming around to an agreement that might be more in line with what the house republicans are propose if the house republicans can actually pass their bill. >> susie: and if they don't pass the bill, whether it's the house or the senate, what is plan b., going into the weekend, and they go back to the drawing board, what's plan b.? >> well, they're not going to go back to the drawing board. actually, if you look at it they're pretty close. the only really issue is how long will the debt extension last? somebody has to blink on that. somewhere maybe 2:00, 3:00 a.m. on sunday night somebody's got to blink because we're up against the deadline. >> susie: you know, there are all these headlines and concerns

about there might be a default. there could be a downgrade of the u.s. credit. the people at home watching, many of them who receive social security check,all they want to know, "am i going to get paid at the end of all of this? >> year, i'm going to have to tell my mom about that pretty soon. i think what's going to happen-- you know, it's possible those checks could be delayed a little bit, but the thinking in washington sas soon as it becomes real that a social security check isn't going to go out on time, believe me, members of congress are going to hear about it, and the thinking is that will be the time when everybody comes together and gets this done because nobody is going to want to explain why we're paying bond holders in china but we're not sending checks out to my mom, your mom, grandparents. that's not a political position anybody wants to be in. >> susie: they're going to have lots of persuading to do, right, darren? >> absolutely. >> susie: thank you so much for the update and we'll keep talking to you about this. that's our washington bureau chief, ger.

on wall street today, stocks moved mostly lower as the legislative logjam over the debt talks overshadowed positive job data. the dow lost 62 points, the nasdaq added a point, and the s&p 500 off four. as for volume, a little lighter- - about a billion shares moving on the big board and over two billion on the nasdaq. the number of americans filing for unemployment benefits dropped last week to the lowest level in three months. the labor department says claims fell by 24,000 to 398,000. that's a bigger drop than economists expected. and the number of contracts to purchase previously owned homes unexpectedly rose last month as buyers tried to take advantage of lower prices and borrowing costs. the 2.4% rise in pending home sales followed an 8% gain in may, according to the national association of realtors. meanwhile, foreclosure activity slowed down in the nation's largest metropolitan areas during the first half of the year. however, foreclosure listing firm realty-trac says that's because banks are taking longer to move against homeowners behind in their mortgages.

>> ways to turn child's playtime into a learning opportunity. >> susie: our guest tonight expects the u.s. will lose its triple-a credit rating even with a debt deal, but that event won't disrupt the markets. here to explain why: mike holland, chairman of his new york money management firm, holland and company. mike, nice to you have back. >> good evening, susie. >> susie: all right, so tell us why you think that a downgrade is inevitable, even if there is a deal in washington? >> well, let me start with a more positive note, susie, and i'll get to the answer. i think there's zero chance of the u.s. defaulting on its debt. i think there's zero chance of the u.s. not paying social security checks as darren gersh was just talking about. i think both of those will be honored.

social security checks will go out. the interest on the debt to everyone, not just the chinese holders of bonds, will get paid. so those two things. having aid that, the rating agencies aren't waiting for a debt limit deal-- which will come once this awful tough political mess gets cleared up a little bit. so we will get a deal on the debt limit at some point. when that occurs, it's just like for the viewers, a credit card kid who has a limit on his credit card, we're going to raise limit on the credit card. in the meantime, you always pay the minimum at the very least. in this case, the u.s. government borrows to pay more. that's why we need the debt limit increase. the credit card limit is going to go up. that will happen. in the meantime, we have much more credit card debt, if you will, to use that metaphor some more, than the rating agencies want to see. we have been spending-- promises to do things in the future are much more than our current tax ability to do it. so the two things just don't work. they actually have to do

something. they've already said they're going to. they've said there's a one in three chance. i think there's more than that now. >> susie: i will encouraged by your comments about no default but credit swiss came out with a report predicting if there is a default, stocks would drop by 30%. and that the economy would contract by 5%. what are your thoughts on that possible scenario? >> well, it couldn't have come bay at a better time. thank you credit sweep. the people in washington who didn't know that, they now have those numbers. they better be sure to remember those numbers because if they do the unthinkable and let something like that happen, it-- i think credit sweeps has probably underestimated the outcome. it would be-- it's not going to happen. it's a very catastrophic thick thing. i don't think it will happen. >> susie: so what should investors do? people are so confused about what's going to happen over the next couple of days and weeks. what's your advice on what they should do with their portfolios to protect their money? >> observations from my scarred

history-- i've been around for a long time-- and i've been through crises before. we will get three this one. if you've done anything extreme today the next week or two out of emotion or fear you probably will rue the day that you did it. i think if you have some cash, you should keep the cash. we could get some volatility in both directions, up and down. if it's down you can buy something. i think that owning u.s. companies who are exposed around the world in growth areas-- think of things liking? >>en or johnson & johnson, 3m-- these countries will continue to do well irrespective of what the crazy people in washington are doing. they're not expensive. and i think having some commodity exposure-- you and i in the past have talked about natural gas. some people like gold. i think owning things that are kind of impervious to political chicanery is a good thing to think about. >> susie: do you cell into the

rallies and buy on the dips, in a few words? >> if a few words. i'm not capable of doing that. if someone is successful at doing, that of course. you have the normal lack of liquidity, because it's summer, and then you have people absolutely fearful of craziness in washington, and also in europe, by the way. so there's no liquidity. so the moves up and down over the next few weeks, you can put your seat belts on for the next few weeks, i would think. >> susie: fasten those seat belts. all right, mike holland, thank you so much for coming on the program. >> thank you, susie. >> we have been speaking with mike holland of holland and company. well, the financial crisis in jefferson county alabama is increasing anxieties among muni- bond investors. that county, home to birmingham, cancelled today's vote on whether to file for bankruptcy. doing so is still an option. if it happens, it would be the largest bankruptcy by any municipality in u.s. history. erika miller looks at whether jefferson county represents a new wave of defaults. >> reporter: this picturesque

county has been teetering on the brink of bankruptcy for years, so what's a few more days? jefferson county plans to take up to a week to consider a counter-offer from creditors. commissioner jimmie stephens says the decision will rest on which option is better long- term. >> the jefferson county commission will... will pull the trigger and file for bankruptcy if that is indeed a more viable and a less harmful option for our citizens. >> reporter: the value of jefferson's bankruptcy could exceed $4 billion, double the previous record set by orange county, california, in 1994. muni-bond expert richard lehmann says jefferson's troubles started a decade ago when it was forced to build a sewer system it couldn't pay for. >> when they saw that they couldn't afford the level of expenditure involved, the financial advisors they had came in with some unique engineering to... to drive down the interest costs. and when the financial crisis

hit, that whole formulary evaporated. >> reporter: despite dire predictions of a wave of municipal defaults, there have been far fewer in the first half of this year, compared to last. bankruptcies grab headlines, but some experts see greater threats to muni-bond returns, like rising interest rates and inflation. erika miller, "nightly business report," new york. >> susie: meanwhile, the biggest u.s. city in bankruptcy won approval today for its chapter 9 bankruptcy plan. valejo, california, plans to cut interest payments to its bank and reduce benefits to retirees. the former u.s. navy town near san francisco had sought protection three years ago after the recession eroded tax revenue and unions rejected wage cuts.

>> susie: stocks slipped in and out of positive and negative territory all day as investors and traders waited for news on that debt deal. let's get right to the stock stories in tonight's "market focus." information technology was the street's leading sector-- cisco one of its best performers, up 2% to $16. goldman sachs said cisco's sales growth is set to rebound in 2012. wall street's worst performing

sector: sprint nextel taking the biggest hit. its second quarter loss widened as more than 100,000 subscribers dropped the carrier. sprint shares plunged almost 16%, their biggest one-day sell- off since 2008, down 82 cents to $4.34. the wireless giant lost 28 cents a share in the second quarter, more than double the loss analysts had expected. separately, sprint inked a 15- year deal with wireless startup lightspeed to build and operate a high speed network. the dow's worst performer: exxon-mobil on disappointing earnings. profits rose 41%, but not as much as analysts expected-- a rare earnings miss for the oil giant. exxon earned $2.18 per share, 15 cents below expectations. revenues rose an impressive 33% to $125 billion. still, exxon shares came under pressure, falling $1.85 or more than 2%.

several of exxon's smaller rivals in the oil patch also reporting mixed second quarter results. conoco phillips came out with better than expected earnings but its shares slipped. b.p. and royal dutch shell posted earnings that missed estimates, but their stocks rose slightly. all three said they're seeing evidence that higher crude prices are crimping global demand. coffee stocks caffeinating portfolios today, thanks to robust earnings. after the bell, starbucks reported better than expected numbers. the coffee chain earned 36 cents per share, two cents ahead of estimates. starbucks says the results would have been seven cents higher but were pulled down by higher coffee bean prices. shares rose over 2.5% in the regular trading session; they were trading as high as $41 after hours. shares of green mountain coffee roasters up 16% to $102.50. as you can see from this chart, the shares have tripled since the start of the year.

green mountain posted strong quarterly results: 49 cents a share, 13 cents ahead of estimates. with sales surging, its adding two new production facilities to keep up with demand for its single serve coffee refills. of course, coffee goes well with donuts. shares of dunkin' donuts' parent dunkin' brands adding almost 2% in their second day of trading. the stock closed at $28.39. it's up almost 50% from its i.p.o. price of $19 per share. and that's tonight's "market focus."

>> susie: japan's government wants to complete its earthquake reconstruction in the next ten years. the country's prime minister also wants to end japan's reliance on nuclear power. four months after that massive tsunami and earthquake, the world's third-largest economy is still struggling. and as lucy craft reports, the devastation and its aftermath have revealed a country desperately in search of a new leader. >> reporter: any illusions that the march 11th catastrophe would galvanize and unite japan's politicians, that the country's leaders would put aside their squabbling and rise to the occasion, have long since vanished. for this nation of 130 million, faith in government has sunk to an all-time low, and citizens are fed up. >> disgust. and its not just government. it's what's seen as the political establishment.

>> reporter: while japan's capitol hill, called nagatacho, is right in the heart of downtown tokyo, the gulf between rulers and ruled has never been more vast. >> it's a mess. it's a total mess. and behind it all, it's all about petty politics. it has nothing to do with policy. >> reporter: the political quagmire has prolonged the suffering of northeast japan, forced to bide its time waiting for funds and decisions from the all-powerful central government in tokyo. >> the repercussions are enormous. first of all, policymaking is frozen. the japanese government's

pronouncements on the nuclear situation are seen as unreliable. other countries don't trust our government. and because kan is a lame duck, other countries don't see any point in negotiating with him. >> reporter: presiding over the gridlock in nagatacho is prime minister naoto kan, reviled not only by political opponents but even members of his own party. >> he's lost touch with reality. and he thinks that by keeping on going and saying he can get beyond nuclear energy and other things with popular appeal, that opinion will turn around and people will support him. >> reporter: but voters haven't supported kan for a long time. disliked even before the march 11th disaster, yet with an uncanny ability to cling to power, kan grows ever more isolated. his refusal to step down has virtually halted the legislative process. >> the diet is totally dysfunctional. whether it's building temporary housing, clearing debris, progress is much slower than with the kobe earthquake of 15 years ago. >> reporter: kan has promised to resign soon, while remaining mum on the timing. but with no capable leader of any party around to replace him, analysts say things could get a

whole lot worse before they get better. >> that's the sad thing about the whole story, because kan's political opponents agree on one thing-- common hatred of kan-- but agree on little else. >> reporter: the real tragedy, critics say, is that the disaster could have served as a turning point, a chance to innovate on a range of fronts-- from energy, to tax policy, to free trade-- but japan's inept leaders almost guarantee that unusual opportunity will be lost. lucy craft, "nightly business report," tokyo. >> susie: here's what we're watching for tomorrow: our friday "market monitor" guest is mark lushini, chief investment strategist at janney montgomery scott. we'll also get an update on the economy from our first look at second quarter g.d.p. numbers. and the white house rolls out new fuel economy standards. we'll tell you what they could mean for auto makers and consumers.

the ford focus is hot! so hot, ford can't make the fuel efficient compacts fast enough to keep up with customer demand. and there may be another bottleneck impacting deliveries. the associated press is reporting that machinery for a key dashboard component doesn't always work and is slowing down production at the focus factory near detroit. reportedly, the auto maker is even flying in parts from europe. no comment from ford on the report. one of the largest settlements today in the bernie madoff fraud case: $1 billion. hedge fund tremont group holdings has agreed to pay that sum to the liquidator of madoff's firm. tremont was accused of missing warning signs of madoff's ponzi scheme. today's settlement raises the amount of money recovered for victims to more than $8.5 billion, or roughly half of the money lost by customers who filed claims.

>> susie: raising financially responsible children can be difficult, but we have some tips to help you do it. in tonight's "kids and cash," lessons your children can learn while they're having fun. here's alisa weinstein, author of "earn it, learn it." >> i love when my kids role- play. i'll be doing a bit of work and i'll hear them in the other room, pretending to be teachers,

or, if my son gets to choose, garbage collectors. and it's hysterical. they make costumes with whatever they can find around the house. and they-- meaning my daughter-- will decide who's the boss and what their tasks will be. but there's a huge piece in pretending to be an adult that many kids leave out of this kind of play: the payment part. you know, how adults earn money for doing these jobs in the real world. and i get why. kids see adults go to off to work, and kids may earn an allowance or be given money of their own. but its not often that parents cross the bridge between the two, that it's because we work that we then earn money. and no, paying them for making their bed or doing the dishes is not teaching them the same thing or will have nearly as much impact as paying them to have a real adult job, like marine biologist or costume designer or investigator. so try this: the next time your child is playing with his favorite toy and you realize a piece is missing, task him with creating a new one with whatever you've got in the house. then pay him $1 or $2 or whatever you want for being a toy designer.

you're connecting the dots. this is how the real world works. it's more than role-playing, and it's fun. and i love the idea that my kid could find a career that feels like play to her every day of her adult life. i'm alisa weinstein. >> susie: finally, speaking of kids and cash, even the tooth fairy is not immune to the weak economy. according to a visa survey, with less money to go around, she's only leaving about $2.60 per tooth this year. that's 40 cents less than the $3 she left last year. even with the diminished pay out, 90% of american children der age 12 still get a visit from the tooth fairy. and that's "nightly business report" for thursday, july 28. i'm susie gharib. good night, everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. thank you.

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