captioning sponsored by newshour productions, llc >> ifill: grounded flights, a stock market halted. it was a bad day for computer glitches, travelers and investors across the country. good evening. i'm gwen ifill. >> woodruff: and i'm judy woodruff. also ahead this wednesday: debating the limits of privacy-- disputes over government power to access encrypted data. >> ifill: plus, protecting pristine waters of the great lakes. growing safety concerns over aging pipelines at risk of rupture. >> oil is very hard to clean up so i guess i'm worried that a leak would be close to an impossible thing to solve.

>> woodruff: those are some of the stories we're covering on tonight's pbs newshour. >> major funding for the pbs newshour has been provided by: ♪ ♪ ♪ moving our economy for 160 years. bnsf, the engine that connects us. >> supported by the john d. and catherine t. macarthur foundation. committed to building a more just, verdant and peaceful world. more information at macfound.org >> and with the ongoing support of these institutions

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: wall street battled bad news all day and ended with sizeable losses. a computer glitch that stopped trading for hours. the dow jones industrial average lost more than 260 points to close back near 17,500. the nasdaq fell nearly 90 points and the s&p 500 fell 35. >> ifill: microsoft announced today it's cutting another 7,800 jobs, or about 6% of its global work force. the cuts affect the company's struggling phone business. microsoft already cut 18,000 jobs in that sector as part of a major restructuring. >> woodruff: greece made a new financial bailout proposal today, in the face of a new

deadline and a possible "grexit" -- a greek exit from the euro zone, the european monetary union. it came as greece's prime minister addressed the european parliament in strasbourg, france. jonathan rugman of independent television news, reports. >> reporter: he arrived to mix of cheers and scattered boos. his country in crisis, but alexis tsipras seemingly not so. greece, he said, had been turned into an austerity lab, but the experiment had failed, though he promised to provide detailed reform proposals in next few days. >> ( translated ): we are asking for productive and fair compromise. i believe together we can rise to this historical challenge. >> reporter: his fellow greeks with their 'no' signs loved it. but their leader's defiance was a little muted because today

greece formally requested another three year aid package in exchange for promises, which europe's stony-faced leaders are no longer inclined to believe. >> you are talking about reforms but we never see concrete proposals of reforms. i'm angry because we are in fact sleep walking towards a grexit. >> reporter: alexis tsipras still believes that he can strike a deal to keep greece inside the eurozone. but his european partners are far from sure. and this remains a battle of wills and a war of nerves, in brussels last night greece was given what sounded like an ultimatum. europe will keep greek banks afloat till sunday, but only beyond that if serious talks have begun. at a midnight press conference a weary german chancellor appeared to rule out any more debt cancellation. extending debt repayments perhaps germany's only acceptable definition of compromise.

>> woodruff: greek business leaders warn that if there's no deal, the country will see an "explosion of unemployment" and virtual economic collapse. >> ifill: the exiled government of yemen announced today it will accept a truce with shi-ite houthi rebels, who control much of the country. as part of the deal, president abd-rabbu mansour hadi called for a rebel pullout from southern and eastern provinces. the houthis had no immediate response. >> woodruff: and in iraq, a baghdad court sentenced 24 islamic state militants to death for the massacre of 1,700 iraqi soldiers. the troops were killed last year near tikrit when isis overran the city. government troops have since retaken tikrit. another 600 militants accused in the massacre are still at large. >> ifill: back in this country, the mayor of baltimore fired the police commissioner today after a recent spike in homicides.

arrests have plunged and killings surged since april. >> we cannot continue to have the level of violence that we've seen particularly over the last few weeks in our city. and i remain committed to work every single day to make baltimore a safer city. we have made progress and i don't want to lose any of that progress. >> ifill: just yesterday, the police department announced an outside review of its response to april's unrest. >> woodruff: new york city will stop demanding cash bail for suspects in low-level or non- violent crimes. today's reform addresses complaints that too many poor people wind up in the troubled rikers island complex because they can't afford bail. under the new policy, judges have the authority to order supervision options including daily check-ins. >> ifill: and, a federal judge today ordered that the washington redskins' trademark registration be canceled.

he upheld an appeal board's finding that the team's name is offensive to native americans. the ruling allows the team to keep its name, but makes it harder to sue for trademark infringement. team officials said they'll appeal. >> woodruff: still to come on the newshour: disruptions in the air and on wall street roil passengers and investors debating privacy rights, terror threats and government access to encrypted communications, aging pipelines in the straits of mackinac prompt safety concerns, in china, investor panic creates a crisis of confidence in the chinese economy, how the shutdown of export-import bank may affect american business and why television remains the dominant medium in the digital age. >> ifill: worries over the vulnerability of our technology and computer networks landed front and center.

hacking, intelligence and national security were already the focus of a capitol hearing as the day started. then a series of computer system failures quickly cascaded. >> woodruff: the nation's biggest airline, biggest stock exchange, and most prominent business newspaper suffered long service interruptions. first, an internet router issue at united airlines suspended all its flights for nearly two hours. the problem lead to 800 flight delays and 60 cancellations. then, shortly before noon, a "technical problem" halted trading at the new york stock exchange. it lasted four hours-- the longest suspension of trading on that exchange in several years. finally, the website of the "wall street journal" suffered "technical difficulties" that sent readers to a temporary site. we explore disruptions and vulnerabilities with michael regan of "bloomberg news" and kevin mandia is the president of fireeye, a company that specializes in dealing with cybersecurity and network protection.

and we welcome you both to the program. michael regan, to you first, let's start with the new york stock exchange closed down for over three hours. how big a disruption was this and what's known about what caused it? >> well, the problems at the new york stock exchange actually started even before the market opened, when traders send pre-market orders to the exchange, and it was clear that the communication between brokerages and the exchange was not working properly, a lot of customers were not getting the confirmations that their orders had been received. that could cause problems -- trairsd to have to resend orders and have duplicate orders in the system. at first it looked like a routine glitch. by 11:30, the exchange made the decision to shut down trading on that exchange.

there are eleven official stock exchanges in the u.s. right now and in the neighborhood of 50 alternative venues where trades can be matched, so the market was able to function pretty much as norm. they routed orders away from the new york stock exchange to the other exchanges out there. that said it certainly is the type of thing that can affect investor confidence, especially after a long series of glitches on electronic exchanges we've seen in the last few years. >> woodruff: what about the other two institutions? united airlines where delights were delayed or canceled and the "wall street journal." >> united had an issue with the computer router that connects various networks and caused them not to be able to issue tickets to passengers and not be able to dispatch staff properly so it shut down flights for about two hours. at the same time about 20 minutes or so after the new york stock exchange went down the "wall street journal" home page a as you said started having issues and was unavailable.

so there was a lot of sort of speculation flowing through the markets that all three instances were related and that there was some sort of targeted attack on the u.s. those concerns were dismissed pretty quickly. you know the officials from the companies said that they were not related. homeland security said it did not appear cyberattacks were the issue. so at the moment, looks like it was just three separate computer issues at three separate companies. it is possible the "wall street journal" got a lot of heavy traffic after the new york stock exchange shut down when people went to look up news about what was going on. although they haven't said it, it sounds like a plausible explanation. >> woodruff: kevin mandia, what would you add to that in terms of what was the cause and whether there was a possibility of some cyberattack? >> well, anytime your network goes dark, you have a software problem or a security problem, it's one of the three or a

combination but right now i'm hearing it's a software glitch or hardware problem and no one's talking about a security issue here. what we can take from this though, is when there are attacks or security issues it's good to have a second way of doing business the old fashioned way to of doing things, whether hardware, software or security issue. >> woodruff: kevin mandia what does this tell us if anything, about the vulnerability of these big systems -- and i realize they're all very different operations -- because we know the technology is getting bigger and more complex, what does it say about their ability to handle that? >> well, we rely on these things, but i think we're doing pretty good. it's hard to be in the airlines and go dark or a news company like the "wall street journal" or the stock exchange and go

dark and have nobody to notice. there's nowhere to hide when you have an issue like this but they don't come up rev day and i suspect we'll go multiple years before something like this happens again. >> woodruff: michael regan, as somebody who covers the exchanges and wall street, how vulnerable do these institutions think they are for this sort of thing? do they feel they are prepared for what may? >> the u.s. stock market has become a massive computer system spread out over so many different exchanges. these glitches happen from time to time, but this one made headlines because it's the new york stock exchange,ist,ist an icon. it shows it's good the system is spread out over these many exchanges. when one goes down, the others take up the slack and take over the business for them temporarily, and, you know, in that respect, it was a success today that the system operated that way.

that said, dollar lot of people -- there are a lot of people, a lot of critics of the industry that believe it has gotten way too complex, that we don't need 11 stock exchanges and the other venues, that maybe four or five would be enough, and this is certainly going to reignite the debate about whether the market has become too complex. >> woodruff: well pick that up, kevin mandia whether it's the stock exchange or the airlines or another big institution, how prepared are they for the kind of incredibly more complicated technological world we know we're heading into? >> well, everybody is trying to get more prepared. that's what we're all doing. if you look over the last 15 years in cybersecurity, there have been more and more attacks, the watermark of security is going up in our nation because everybody is more aware with all the headlines on almost a daily basis of another attack and another threat. we don't have good rules in cyberspace now. we have countries hacking other countries, we have criminals

trying to hack on a daily basis so everyone is getting more prepared for that. when you're hacked either by a 15-year-old kid or military garnering intelligence from your organization, the liabilities are the same to everybody is raising awareness. >> woodruff: kevin mandia, michael regan, thank you both. >> thank you. >> ifill: earlier in the day, the obama administration went to capitol hill to make its case over accessing encrypted information. essentially the government wants to be able to read certain data that intelligence agencies cannot do now because it's been protected with special codes. that's at the heart of an ongoing battle with tech companies. >> encryption is a great thing. it keeps us all safe. it protects innovation. >> ifill: but f.b.i. director james comey warned at senate hearings today it's also a double-edged sword. that's because the technologies that seal off smartphones from surveillance, also impede efforts to track criminals and terrorists.

>> we are moving inexorably to a place where all of our lives all of our papers and effects, all of our communications will be covered by universal strong encryption. and that is a world that in some ways is wonderful, and in some ways has serious public safety ramifications. >> ifill: google, apple and other tech firms have ramped up data encryption, in the wake of edward snowden's revelations of sweeping government surveillance. they're also responding to stepped-up hacking coming from russia and china. but at the same time, islamic state followers and other militants are now using encrypted communications to recruit, at a rapid pace. deputy attorney general sally yates underscored that point today. >> isil currently communicates on twitter, sending communications to thousands of would-be followers right here in our country. when someone responds and the conversations begin, they are then directed to encrypted platforms for further communication.

and even with a court order, we can't see those communications. this is a serious threat. and our inability to access these communications with valid court orders is a real national security problem. >> ifill: and, the f.b.i.'s comey suggested it's just a matter of time before that leads to a terror attack. >> we are stopping these things so far through tremendous hard work, the use of sources, the use of online undercovers, but it is incredibly difficult. i cannot see me stopping these indefinitely. >> ifill: in a new report, 14 of the world's top cryptographers and computer scientists argue that giving the government access, will compromise commercial and consumer secrets. others focused today on privacy concerns. peter swire, with the georgia institute of technology, said the government already has plenty of ways to track people. >> for the first time in human history, most of us carry

tracking devices called cell phones. and when you add in video surveillance and the upcoming internet of things, evidence about a suspect's whereabouts at a time and date is far, far more often available then ever before. >> ifill: ultimately, federal officials said, they hope to work with tech firms to strike a balance between privacy interests and public safety. but where is that proper balance? for that we get two views. stewart baker was assistant secretary of homeland security during the george w. bush administration and general council at the national security agency during 1990s and susan landau is one of the authors of the paper objecting to more government access. she's a professor of cybersecurity policy at the worcester polytechnic institute. stewart baker, we've heard james say many things, among them he wrote there's no doubt bad people can communicate and that he essentially can't stop them with impunity.

tell me how that works. >> so it is possible now to write codes that no one can break and to use those codes to communicate -- to store everything on your phone in an encrypted fashion or to communicate with co-conspirators in a fashion, really for the first time since we've had modern communications that no government can get into. so government intel loses, slowly, the ability to understand what people are saying to each other on modern communications. hasn't happened yet, but it clearly is getting ready to happen as encryption becomes ubiquitous. >> ifill: susan landau, what's the danger in the government having another tool in which they can use to protect us? >> so it's not a question of having another tool. the real issue is whether or not we should have what they call exceptional access access to encrypted communications and exceptional access described in the abstract sounds good, but

you have to actually think about it in particulars. for, example one technology that's within introduced is called forward secrecy. forward secrecy is the idea that you have a key that you use an ephemeral key to enscript your communications so, if at any point your key is stolen, all past communications are secure. so sony had become aware, for example, when its data was stolen. it could have changed keys and no communications could have been intercepted, but even more importantly all the old communications would have been safe against the people who hacked sony. that's the issue. the issue is that the government is saying exceptional access without explaining how they want this done and all security matters in the details. >> let's talk about that. the government is asking basically for companies to share keys, to allow backdoor access

to information for national security purposes. what are the limits of that? >> i think what's clear is what the government isn't trying to say, this is exactly how we want you to do it, because i'm sure that susan landau would be saying, well, that won't work and we've got these objections to being told how to do it. the government is saying, here's a problem we think it needs to be solved, there may be multiple ways to solve it and, indeed there are. it is possible, for example for the companies that make this encryption possible to keep keys or to store the data encrypted with their own keys as well as with the users' keys. this is really what the companies were doing until recently. >> ifill: susan landau, you wrote somewhere you considered this magical thinking. explain why. >> right. so when stu mentions the idea of keeping the data secure at the companies, we have numerous examples. for examples the google database of surveillance targets was

hacked presumably by chinese pack hackers, and what it did was a great counterintelligence operation that exposed which agents were under u.s. government surveillance. what we've seen over and over again is that, with a determined opponent, the data is not secure. the only way it's secure is if there's end-to-end encryption. i completely agree with the director that it makes the f.b.i. and law enforcement's job more difficult, but the question is balancing different types of security against each other. and stu is correct that i want specific suggestions because the idea that we could come up with some magic solution that solves the problem isn't correct. you need specific solutions you need to analyze them carefully to see where security vol necials are so you don't introduce more problems. >> ifill: what is the government asking for that's different than what they already have?

>> they want to make sure as the encryption becomes ubiquitous that it doesn't leave them helpless even when they have a court order. they're asking companies to take that concern seriously and not simply say, that's not our problem, we're putting end-to-end strong encryption out there and if terrorists or pedophiles use it, that's your problem, too, not ours. and what the director is saying is, no, that's a social problem and there are security risks built in for the government to get access to that but there are security risks of a very different sort if we don't have access to those communications. >> ifill: susan landau, is there middle ground, something you can imagine the tech companies could concede to allow the government get a greater access but maybe not the blanket access they may desire? >> there is no easy way to enable easy access to everybody's communications and data at risk unless you have the

keys stored in an insecure way. that's why our tech report was very clear -- tell us the proposal, don't say you can do it but tell us the proposal and we can look at it and analyze it. there is also an issue that hasn't been brought up which is what happens when you have a multi-national firm and communications between the u.s. and the u.k. or the u.s. and france or the u.s. and china? do both countries have access? how do you manage that? what happens when a u.s. person travels overseas? if we're going to demand this sort of thing, then, of course other nations will and then u.s. communications will be quite insecure. >> ifill: sounds like you're right. there is no easy one. susan landau, stewart baker. thank you very much. >> a pleasure. >> woodruff: concern continues to rise across the country about the nation's aging

infrastructure. that concern is particularly apparent when looking at older pipelines that carry crude oil and natural gas. one of those pipelines carries oil under some of the most pristine water in the country: the great lakes straits of mackinac in michigan. scientists say a spill in the straits would be an environmental and economic disaster. elizabeth brackett from public televison station wttw in chicago reports. >> reporter: the air is crisp and the water is cool in the northern great lakes, a body of water that contains 90% of the fresh water in the united states. and it's the reason nearly a million tourists visit mackinac island every year. >> back for another season? all right. >> reporter: but this year, islanders have more on their minds than tourists. just north of the famed mackinac bridge two aging pipelines carry

20 million gallons of crude oil and natural gas a day under the straits of mackinac. long time island resident and former biological sciences professor lorna straus worries about a possible pipeline break. >> it would be a devastating thing, oil is very hard to clean up. so i guess i'm worried that a leak would be a close to impossible thing to solve. >> reporter: pipeline number 5 is owned by enbridge energy. the canadian company operates the largest crude oil and liquids pipeline system in the world. line 5 is 645 miles long. it stretches from wisconsin across michigan's upper and lower peninsulas and terminates in ontario, canada. the 30 inch pipeline splits into two 20 inch lines when it crosses 41/2 mile under the lake. lake michigan and lake huron join here at the straits of mackinac. because this area is far from

any major urban center and because the shoreline is lined with forest and not agriculture, very little pollution gets into this water. that means these waters are some of the most pristine in all of the great lakes. 30 million people depend on the great lakes for their drinking water. and company spokesman jason manshum says that's one of the reasons why enbridge works so hard to keep line 5 safe. >> line 5 has been in operation in michigan for more than 60 years and it's been operating safely and reliably at the straits, we've not had any incidents over that 4 1/2 mile stretch. >> reporter: it's those 62 years under water for pipeline 5 that trouble retired dow chemical engineer gary street. >> my biggest concern is that the line is very, very old, it's probably suffered the usual wear and tear that any older facility can suffer. i think there's a real reason to be concerned that the line could

fail at almost any time. >> in the last decade enbridge has safely transported more than 13 billion gallons of crude oil throughout the us and canada. that's a success rate of 99.9993%. >> reporter: but a national wildlife federation report found that enbridge was responsible for more than 800 oil spills between 1999 and 2010. aging pipelines are a national concern. over 5,000 spills in the 124,000 miles of pipeline were reported to the federal government over the last 15 years, including this major spill in michigan. in july of 2010 an enbridge pipeline ruptured in the kalamazoo river dumping 1 million gallons of oil near enbridge spent $1 billion and three years on clean up and the epa says oil still remains in the kalamazoo. environmental activist jim

lively says it was that spill that prompted concern about the safety of the enbridge pipeline in the straits of mackinac. >> just weeks before that spill they said very much the same thing, no concerns this pipeline is very safe and then it leaked for 17 hours over a million gallons into the kalamazoo river, the largest inland oil spill in america happened right here in michigan. >> the incident in the kalamazoo river ultimately made us a far safer company. we have gone through pretty radical wholesale changes across the board in things like advanced leak detection, pipeline integrity, training of personnel, training of first responders so they know how to detect a leak and how to respond with boots on the ground. >> reporter: the pipeline in the straits is now monitored with computerized systems that operate both inside and outside the pipeline. the findings are analyzed in enbridge's state of the art control room that operates 24/7 in edmonton, canada. in addition, manshum says dive teams physically inspect the pipeline every other year. >> it hasn't aged in the bottom of the water. the coating is in fantastic

shape and the steel has not deteriorated, it looks just like it did in 1953. >> reporter: there is one difference, the pipeline is now covered with invasive mussels which didn't enter the great lakes until the 1980's. >> zebra mussels create three problems. they create extra weight on the pipeline, weight that was never allowed for in the design of the pipeline. they mask any problems from the outside that could be observed by a diver or by a remote camera and the third thing is the zebra mussels excrete a very acid material. if that acid material were to get behind the protective coating, it will cause corrosion and the line would fail prematurely. >> reporter: what nearly everyone up here agrees on, even enbridge, is that an oil spill in these pristine waters would have a major impact. ecologist knute nadelhoffer of the university of michigan's biological field station says

the environmental impact of a spill could take years to overcome. >> this is a fairly simple food chain. we have a limited number of algae in the water, limited number of species, aquatic plants on the shorelines compared to more diverse ocean systems, chemicals will propagate through this system faster. they are likely to change this system for decades or centuries. >> reporter: as the mayor of inac island gets ready to open her hotel for the season it's not the next decade or century she's thinking about. it's the impact of an oil spill right now. >> mackinac is the gem of michigan as far as the tourism industry goes. so if anything should ever happen it would be catastrophic. >> reporter: enbridge insists a pipeline failure in the straits would be detected almost immediately.

>> we have isolation valves on either side of the straits and those valves would be completely closed within three minutes. >> you shut the line at mackinac city you shut it off at st. ignace, you still have 325,000 gallons in each of those lines that could spill, that can and will spill, will spill into the straits. >> reporter: that's why activists say the only sure way to avoid a possible environmental and economic disaster is to shut the pipeline down. >> i believe that enbridge is trying hard to make sure they could minimize a spill, of course they're trying hard to do that. but do i trust them, no. should we trust them, of course not, not with this, not with the great lakes. >> reporter: shutting down the pipeline is one of the options being considered by a pipeline task force chaired by michigan's attorney general. the commission will also look at the economic impact of shutting down the 4 1/2 mile stretch under the straits of mackinac. i'm elizabeth brackett for the pbs newshour from chicago.

>> ifill: the chinese stock market has been in free fall over the past month, spurring worries that the contagion could spread beyond the massive nation's economic and political borders. margaret warner has the story. >> warner: another brutal day ravaged china's two main stock markets-- in shanghai and shenzhen-- as a three-week plunge accelerated. small investors-- who make up 85% of china's traders-- have been hit hard: people like 67- year-old he meizhen. >> ( translated ): when i look at the index, i feel nervous all over my body. i'm worried so much. the market opens with plunge to its daily limit. how can we stand it? >> warner: the benchmark "shanghai composite" index lost another 6% of its value. it's down more than 30 percent

since mid-june, and by day's end, nearly half of all stocks on the two exchanges had stopped trading. all of this, despite a series of drastic moves by beijing to rein in the selling. financial analyst michael every- - in hong kong-- says so far, nothing's worked. >> will they suspend the entire market? possibly. i don't think anything can be ruled out if we keep seeing 8% falls day after day after day. one would hope not, because china was supposed to be moving towards greater reforms in the financial market area. and everything they are doing at the moment is backsliding from that. >> warner: those reforms toward greater liberalization have been pushed by president xi xinping. and for a time, the markets skyrocketed. from mid-june 2014 to mid-june 2015, the chinese markets gained 150%. even after recent losses, their value is still up 70% from a year ago. chinese regulatory officials now complain of "irrational selling" driven by a "panic sentiment". others worry about what desperate investors might do. >> ( translated ): the people work hard to make money, they are not bosses, they work hard,

older people use their retirement payment, like us, selling things on the street, to make some money. people might kill people, or set fire to things, people might die. >> warner: u.s. officials are also watching closely. treasury secretary jack lew counseled calm today. >> i will say that china's markets are still pretty much separated from world markets. they're obviously moving towards being more integrated, but right now they're not, so you're not going to-- i don't think-- see the direct linkage there concern. i think the concern, it is a real one, is what does it mean about long-term growth in china? >> warner: still, there is some spillover: hong kong's main index dropped sharply today, as did japan's, south korea's and australia's. >> ifill: and margaret joins me now. margaret joins me now. margaret, what is at the root of the sudden slide in the chinese market? >> it was really classic bubblele. the chinese economic growth has been slowing and the government started encouraging individual

investors to get into this market and help capitalize these small entrepreneurial companies. not the state-owned enterprises but the ones who have trouble getting money from banks sometimes for good reason. so they relaxed restrictions that used to not allow you to barrow money to finance stock purchases. so that's the first thing. you had all this margin lending. if the market goes down, the investors have to pay back with real money what they've got in the stock market or other assets. secondly, as that all developed, the most -- the ones that were caught are these smaller investors which are as we said, are 85% of the market. these are uneducated people. you can see it in the quotes that we had from people. they are known as momentum investors. they jumped in in april, may when stocks were selling at 150% price to earnings ratio, even worse than the nasdaq bubble

here in 2000 in the u.s. so they are getting tremendously hit because they with respect in for the run up. >> ifill: does that mean the government has had to step in to arrest this? not so different from what we had to do in 2008. >> true but here's the difference. here's steps they took -- they're making brokerage firms buy stocks and are putting more money into it. the u.s. bailed out big financial institutions they thought posed a systemic risk to the system, too big to fail, classic. but they said our test is restoring gdp growth and employment. they didn't make the market the test. so people didn't sit and watch television and go oh my god, we're failing. so what they did in china is set up the markets as a test of their own economic management and the whole theory of economic liberalization and the danger is of course, that more they do and it doesn't workover night,

then it encourages more panic selling and it is, in fact, going to make people lose confidence in government's economic management. >> ifill: does this have political ramifications for president xi? >> for sure and that's what the chinese government is worried about. the president presented himself as an all-powerful leader, and getting into economic globalization was considered a vote of confidence in his system. so you get more people.s somebody said to me last night, he owned the runup, he owns the slide. clearly secondly, they're worried about economic popular discontent. you can hear that from one of the people in our piece that now that more chinese-owned -- and it's small compared to the u.s. in the u.s. 50% of the americans are in the market some way. in china it's only been 10%. but this past year, by estimates, it's gone up to 17%

and these are poor people. so that is the threat. and third, of course, is that if people don't feel confident, they're not going to buy things. well, this is a government that said, we're going to change our economy from exports driven to consumer driven. >> ifill: that's what's happening inside china. is there a potential for this to spread? >> as the secretary of treasure said today not in terms of investment exposure. because the chinese have country the market so insular, only 5% of the investors are even foreign. but the danger is with slow economic growth, because it's the world's second largest economy, will effect other export-driven economies and could have a knock-on effect on the commitment of president xi to continue with economic reforms. >> ifill: thanks for keeping us up to date. >> my pleasure. >> woodruff: from financial problems abroad to a big money

debate in this country. last week, the united states' export-import bank hit a political wall. its authority to conduct new business expired as congress hotly debates whether it should exist. the bank is a multibillion- dollar government agency that helps foreign companies buy american goods. here's how that works. an american company wants to sell goods to a foreign corporation. the export-import bank then gives the foreign company a loan or loan guarantee and the company buys the goods from the american business. ideally, the loan gets repaid but there is a risk to taxpayers that the foreign company could default. who exactly benefits? last year the bank financed nearly $30 billion worth of u.s. exports. the single largest winner: boeing and the aircraft industry. thousands of small businesses also gained with more than ten billion in financing. but the 81-year-old bank faces an uncertain future-- some conservatives argue it is a bloated government give-away--

while others insist it is a critical competitive tool for american business. joining me now to discuss from capitol hill are two members of congress: democrat brad sherman of california and republican jim jordan of ohio. congressman sherman, thank you very much for joining us. let me just begin with one of the main criticisms one hears from republicans and that is that the bank bank is the export import bank is all about corporate welfare, that something like $8 billion went, as we said last year, to boeing and other big companies that really don't need this kind of government help? >> the money goes to those who are buying our products. by making these loans, we support tens of billions of dollars of exports and 164,000 jobs. many of those jobs are with big employers, others with small employers, including boeing

suppliers, but roughly 90% of the bank's total transactions are with small businesses that are exporting. we need to support 164,000 jobs and we can't sacrifice them in the worship of ann rand the deity of libertarianism. >> woodruff: but the argument is if the big companies like boeing get the lion's chair of the money. >> boeing doesn't get the money. the money goes to the customers, and you're trying to out-compete airbus, for example, you're trying to out-compete some of the best competition in the world, world-class competition they have their finance authorities, germany has tripled the size that we do. france japan, china are all using the system to get their exporters the contract. if we don't get the contract, we lose the 164,000 jobs. >> woodruff: let me make another point that one hears from the critics and that is

that this export-import bank is really helping just a tiny percentage of the total exports the united states engages in, that it's a drop in the bucket and that if the bank goes away, it's not going to make much difference. >> 164,000 jobs is just a drop in the bucket to the united states economy but we can't afford to give up one job. we certainly can't afford to give up 164,000 jobs. and if we abolished everything we did in washington that created fewer than 164,000 jobs then we would lose 1% of our economy here 1% of our economy there, and just 1 or 2% unemployment rate was the difference between a healthy and unhealthy economy. >> woodruff: the other criticism we hear and it's related what you just said, is these jobs numbers are truly inflated that they have been calculated, cooked up to make it look like the bank is making a big difference when in reality,

it's not the case. how can you -- what do you say to the opponents, to the critics who say these are not real numbers? >> it's clear that the exports being financed support 164000 jobs. now, you can guess how many of those contracts we would have gottengotten otherwise, but that's like telling ford to abandon its finance promotion and people will still buy the cars. the fact is chevy and toyota are offering pretty good cars as well. that's why ford has, from time to time, finance promotion, that's why the other auto companies do as well. and if you tell our companies we cannot have finance promotion but the german companies l the french, chinese companies will, we're going to lose jobs, and that's why it's important to these 164,000 jobs that we are reauthorize an agency that makes

money for the federal government. almost million last year and over $7 billion in the last couple of decades. >> woodruff: that's the point one reads the critics are making and that is they're saying in all that the government doesn't gain from this, it ends up paying because of the money that ends up going to the companies that make the money otherwise and the taxpayers end up the ones who are held liable and the american taxpayers lose out. >> we have instant replay. we can look back over the last 20 years and see this bank has transferred almost $7 billion to the treasure. c.v.o. says they made $700 million last year, and this is after taking into account their costs of operation and an allowance for bad debts. so this is -- c.v.o. tell us if

we abolish this agency the debt has gone up by almost $1 billion. it's making money. >> woodruff: finally what's your forecast? do you think so this bank is going to survive or not? >> it needs to be resurrected at this point and resurrections are difficult and rare, but i think we will be successful if the house and the senate realize this entity creates jobs and the opponents are clinging to this ideological, theological belief that these agencies shouldn't exist. they might be right in a world in which germany, japan and china did not have similar agencies. we have to compete, and that's why we need this agency to help our exporters compete with those other exporters. >> woodruff: representative brad sherman we thank you. we hoped to have representative jim jordan join us. we hope to talk to him in the future. we thank you again.

>> thank you. >> ifill: finally tonight, the latest edition to the newshour bookshelf. here's william brangham with a look at one author's defense of the power of televsion. e way we get our various media, news books tv has undergone changes. facebook to twitter, netflix, to name a few these entities will only speed the client of our only dusty media. not so fast for columnist and critic michael regan. mile michael wolff, he has written "television is the new television: the unexpected triumph of old media in the digital age." michael wolff, thanks for being here. >> thank you for having me. television is the new

television. explain. how is that true? >> what do you do all day? what are we doing now? what does everybody -- i think i can fairly say everybody watching now how do they spend most of their -- a good part of their day? certainly more time than they do on the internet. they watch television. i think you can go further. what are the most cultural moments in this day and age? it's watching television whether mad men game of thrones, or whatever. television is this centerpiece of our lives. now, the interesting thing is that we have been told for rather a long time now that that isn't true that it isn't true and that it would be ever less true that the internet social media mobile applications, this was the future, this was media, this was transforming how we

thought about media and how we thought about ourselves. i thought to myself, well think a minute, is this really true? i think it turns out not to be true on an actual, practical basis. we watch television. but on the other side it turns -- it's not true on a business basis either. so we've grown all these digital media companies and the dirty little secret is that they don't work, they don't make money, that they are -- that they actually created businesses that are bad businesses. >> you write in your book "not only has the web not destroyed tv but the media sources creating phenomenal traffic may become its createst weakness. how is building a bigger

audience a weakness? >> first thing you have to look at the quality of the audience. so buzz feed brags of an audience of 150 million people a month, millions bigger than the super bowl, but is that really true, since it doesn't come remotely, not 1% remotely close to having the earning power and the revenues of the super bowl audience? you used to say, what's wrong with this picture? and really, where you come out on this is, i think saying no, it's not an audience, and i don't think they even call it an audience. they call it traffic. it is literally like traffic speeding by and what buzzfeed does is put you will billboards which you glimpse for a second and then you're past and that's basically what advertising is in digital media.

>> brangham: so in your mind is tv a better business model or are they delivering something more valuable to us as consumers? >> well, i think television has actually -- it hasn't as if television stood still. quite the opposite. it responded to the opposition and made a better product. remember when television was the wasteland? i think you can now argue that digital and social media that's the wasteland. also television converted its business model. it used to be 100% advertising supported, except for pbs. and now it is actually only 50% advertising supported. the rest comes from fees -- well, we all pay an enormous amount every month for television. digital, on the other hand because really, its stated purpose was to eat television's lunch, and it said let's make everything for free, and we'll be fully advertising supported,

a decision that basically means that digital media will always be a marginal business. >> brangham: is there something in the digital media world that you look at and think, this is actually a hopeful model for how the business could go? >> well curiously, netflix. but what that means, and i think almost everybody in the digital world is now coming around to this thinking is let's go into the television business because netflix, while it says it's the disrupter of television is television. that's what we watch on netflix and, in fact netflix pays almost $2 billion a year to hollywood and the television industry in licensing fees. but i think almost everybody -- google, facebook buzzfeed recently made the announcement huffington post recently made thethe announcement, that they want

to find a way into the television business. >> brangham: what does that tell you if television created a model that all these digital disrupters are now emulating, what does that say about what the audience, what we want? >> i think it says very clearly what we want is old-fashioned story. we want well-written, intelligent, structured well-performed, well-produced content, and i think we want to sit there and i think we want to enjoy it. >> brangham: the book is "television is the new television: the unexpected triumph of old media in the digital age." michael wolff, thank you very much for being here. >> thank you. >> woodruff: on the newshour online: while the group known as the islamic state only became known to americans in the past year or so, its roots are deeper than you may think. in this week's installment of the newshour podcast "shortwave"

-- we take a look at where this terrorist organization came from, and where it may be headed. find a link to listen, on our home page. that's at pbs.org/newshour. >> ifill: and that's the newshour for tonight. on thursday. former president jimmy carter talks to judy about his latest book: "a full life: reflections at ninety." i'm gwen ifill. >> woodruff: and i'm judy woodruff. join us online and again here tomorrow evening. for all of us at the pbs newshour, thank you and good night. >> major funding for the pbs newshour has been provided by: ♪ ♪ ♪ moving our economy for 160 years.

bnsf, the engine that connects us. >> carnegie corporation of new york. supporting innovations in education, democratic engagement, and the advancement of international peace and security. at carnegie.org. >> and with the ongoing support of these institutions 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 newshour productions, llc

captioned by media access group at wgbh access.wgbh.org

. this is . this is "nightly business report." nyse interrupted for an unprecedented 3 1/2 hours today. no stocks traded on the big board because of a software malfunction. what happened? why and how vulnerable are investors like you in the age of electronic trading? not even a long trading haul could give stocks any relief today. the dow, nasdaq and s&p 500 all suffered stiff losses as china's shares plunge again and greece's debt debacle rolls on. >> a growing number of american workers are quietly kidnapped oversea every year. the business of ransom we show what it is like to be taken hostage. all that and mo