tonight onworldfocus" -- israeli prime minist benjamin netanyahu and u.s. special envoy orge mitchel meet to try to solve thehorny ise of jewish settlements in the west bank. can they find commonround? om those trying to broker a peace to stockbrokerhoping to cash on it. tonight, we ta you to the paleinian stock exchange. it may be onof the world's smlest but the dreams are big. the wake of the world's economic mtdown, we have a special "howhey see it" report from britain's itn wch estions one of the basic principa of american economics. and the wod pays tribute tohe passing of senator edward kennedy. >>rom the world's leading porters and analysts, here's

what's hpening from around the world. thiss "worldfocus." made possible in part byhe following fuers -- majosupport has also been provided by the peter g. peterson foundatn dedicated to promoting fiscal respoibility and addressing key econoc challenges facing america's ture. goodvening. i'm martin savid. >>the quest for peace in the middle east has been gng on for gerations now, and it never seems to get much sier. we got that pression again today after anotr apparently inconclusive meeting in loon between israeli pre minister benjin netanyahu and u.s. middle east envoy george mitchell. the two men and the two naons they rresent have been searching for monthsow for a way to resve their differences over israeli settlents in the west bank. the u.s. has been puing hard

for an israeli settlement freeze, d the palestians are refusing to reart peace talks untiisrael halts all constructi there. despite their failure to rea agreement again day, the two sides wi resume talks in washington nt week. both men tried to put e best ce on today's talks. >> we've made so headway in the past five months. my government hataken several sts both of word and deed towards peac and i ho that today and in the coming weeks, we can movthe process forward. >> the american comtment to american securitis firm and unsheable. and we apeciate the opportunity to discuss with you, ways by which we can move toward our common objective which is a comprehensive peed in the middleast. >> we are goi to try to make sense of ts important story tonight by turning to one our regulars. we're joined by dani levy, a senioresearch fellow for the new america foundation mr. levy was alsa former advisoto the israeli vernment representing the

labor pay. welcome back. u. >> think an agreeptfgreemt that the has to be an agreement on this middlies peace process to move this forwar ere do we stan >> there is a narrowingf gaps. the israeli's sides still nt exemptio. ea construction, ea jerusalem, that's problematic. anything over the green line contributes over intertional law but you consider had in is perhaps the mst right wing government ihistory i think there habeen progres i thk the obama administration now wants to move on bond the settlement issue so i think moving to an end ge on that. >> you didn't see as today being as some sort ofsetback? high don't think so. i think we'll cntinue next week. within four to six weeks i thk we'll haveoved o >> the opinion plls coming out of israel shows a great deal of opposition fr an idea of a settlement freeze. and distss at the obama administration so what leverageoes the united states have then. >> first of all, some context. as a standalone freeze not

popular. put it in the broader outlinef an angreement, withdrawal, two states, arab recnition. israelis can get hindthat. another ran they thk that w wi move onto those broad issues. are there pollshat shows that obama's desperately popular. only 40% of israelus thin that 's more pro-paltinian and now it's true. israelis usually preferred presiden bush. preferred over obam some israeli ministers ar sang to get americans let's have sanctions. ttom line israelis understd how portant the relationship is, they appciate the relationship and israeli'so dependent on the.s. but without it getng ugly, president oba has tremendous influence at his disposal shold he choose to useit. >> there seemed to be progrs of reachg this orall, broar outline of a peace proposal. you stl feel that way? >>hat i think we have is th if ere's going to be a two-statsolution, we sti -- we know what it looks like.

but we ow, palestini state, 67 lines some minor landslides. refugees acknoedged what happed to em, they can't return on mass to israel. security without emptying the palestinian state its meaning. we know the outlines. the question is ca you bri e parties, the israi governnt, hamas,or instance, to agree to thes that requires.s. lifting because it's an american internatnal interest i think that you might get it. >> palestinian lear mahmoud abbas whene comes to w york he might meet with netanyahu. what do you think about that. >> the palestinians e saying without a fll freeze no negotiations. think america will be able to brinthe palestinians past tha position. what they're saying now is we can meet in the new york, that's not same as negotiations s it gis them some wiggle om. i think you' likely, perhap here in new york if not soon thereafter tsee isrlisnd lestinians rsuming

negotiations. threal issue is how closely will the u.s. shepard whether the u.s. at sam stage bring its own pan forward. >> and for that, we' bring you back daniel levy, tha you very much aslways. >> one person notablabsent from tod's talks in london was the israeli foreign minier, avigdor liebman. you may rell, he's the haline israeli politician known for his often u. diplomatic lanage. there's nospeculation that lieberman's influence may be fading within thisrai government, a develoent that some s as increasing the likelihood of a mideast pee deal. channel 10 news of israel s this report, transted from hebrew and narrated by orldfocus" producer yuval lion. >> reporter: the wonders o iseli politics. only six monthago the combination of words, igdor lieberman d foreign minister, was unthinkable. but thman who told the president of ept where to go -- >> tnslator: he doesn't wt to come here. he can get lost. >> became rael's most senior diplomat. afr that, it was clear to

everyone tt lieberman would boss around netanyahu. he defeated him in t coalition negotiatio and he entered theoreign ministryith a storm. >> there is one document to which we areccountable and 's not the anapolis agreent. it is no lonr in effect. >> reporter: six mths later, and eberman is a foreign minister alst in na only, left to deal with relatively minor ministeri issues. on the imptant issuesm he' not involved. while the defense nister is conducting negiations with the ericans on stoppg settlement consuction the foreign minister is outside. when the prime ministeand defee minister hold talks with senior american offials on iranhe foreign minister is outside. lieberman is weaked because of thallegations of fraud hanging over s head. >> if the attoey general indis me, there's no doubt that at that moment i will resign. >> reporter: there are tho who didn't understand this lieberman statement. it was his callated way of bung time. previoly, seniorfficials der investigation have resigned beforbeing indicted.

what the difference? at lea half a year, maybe more. lieberman, who resned from olmert's government because negotiationsith the pastinians, has already declared tt he won'treate obstacles r netanyahu. in otherords, he gave the prime minier a green light to freeze setement construction and toesume negotiations with the palestinians t by chance, this lieberman statement was not given in fnt of the cameras. whknows better than he, that zigzging it's best do so quietly. >> that was isra's channel 10 ne. wh thinking about the middle eas it's the peace gotiations that often come t mind. but what you m not know is that palestinians on t west nk are already busy planning for the ture. just yesterday, e palestinian authority said it plans toave all the instutions necessary for statehood in place withi two ars. oupartner deutsche welle recently paid a vit to the palestiniastock market, a ace that's small in size but big in dreams.

>> repter: for almost a month getting to wk has been a lot easier for ahmad. one of the most stringent israeli checkpoin is locate the outside nablus but checks are only sporadic nowadays. >> it'll take some time to reverse ni years of siegeut i'm very happy aboutwhat's going on itas made my employee life easier so far. unfortunately it doesn'tffect so much the change becausenow th stock exchange is fully electron. >> reporter: istorically, nablus has been t economic nter of the west nk despite the region's political onflict. the paleinians securit exchange wa established here 14 yearago. and since then the cued's index has en a baroter of the palestinianeconomy. ahmad is the chief ecutive of e of the wod's sller stock market a he's optimist ningt 200 the -- perform well. despite e global financial crisis. many companies listed on the

stock exchge are good, soli profitable companies. we have en in busess for a ry long time. and basically they'rused to woing in situations of unstable polical in economic vironments. and ey have internalized that into their operation >> repter: on a glob sca, daily ade volume here is minut. averaging 3.5 million euros. 39 companies are lisd on the exchge. one company,elecommunications firm pattel, accounts for almst half the index' value. an ivestor wants touy to the company. brokers ar followi the deal. >>ranslator: the palestinian market is reallydown at moment and we're down with it. >> translator: i think it's still going to tak a long ti. we'ra long way fm being able to compete wi the other stock markets.

>> reporter: the nablus exchange is now working to attract mo instors from theiddle east d palestiniansiving abrd especially in south america. >> t minute ere's a slight improventin the political and diplomatic front, particularly the prospectsf the peace agreement with israel, growth is going to come to the paleinian's stock exchange and when it comes it' not going to be 20% a 30%. butmuch, muchore. reporter: plans to take the exchangeitself public b 2010 butest way to attract instors and bring sustainable growth to the wst bank economy will be long-term peace reement. >> that was deutsche welle >> and that brings us to our segment,how you see it." we'd like to know from y, what do you tnk it will take to reach a mideast peace agreent? you can tells what you think by going to the "how you seet" section of ourebsite at worldfocus.org and we'll rort on what you id tomorrow. st night, we asked you about the detention of terror

suspect o was thought to be only 12 years old en he was sent tguantanamo. hoshould the u.s. deal with terror suspects whenhey are still chdren? e viewer told us, "of course the arrest was pper and the detention atuantanamo was prer. hehould still be detained. as far as his age, h he actually suceded. americans uld be just as dead as if he were 25." but other viewer saw it differtly, saying, "it truly frightens me that we tat ildren like adults. en i think of how unsure i w of myself atge 14 and how easily i might have en inuenced i thank my lucky stars that i survived. rning to afghanistan, officials there releasedore paial results today from last week's presintial election. those resultshow president hamid karzai wideng his lead over his nearest ral, the former feign minister abdullah abdullah. withess than a fifth of the vote counted, kaai now leads abdullah 45% to 35%. if karzai winsore than 50% of the vote, he wouldvoid a two-man ruff. abdullah has aused karzai and his pporters of widespread vote rigging.

in other news on afghanista richard holbrook, the erican special envoy for the regionhas accused citizens from many of t oil-rich persian gulf countes of aiding the taliba in an interviewith cnn, holbrook claimed that su money is gater than the taliban's profits from opium. "it seems to be more from indivials carrying money in their suitcases,holbrook said. "sometim they are taking advantage of the pilgrime," to holyities in saudi arabia. "setimes from charities," he said.ñyc&zqi > as americans mourn the los of senator edward kennedtoday, remembrances and condolees are also pouring in om around the world. in ireland, the land of kennedy's cestry, prime minister brian cow said, "in good days and bad, tedennedy worked valiant for the cause of pce on this island." israeli prime minister benmin nenyahu praised kennedy as, "a

eat american patriot, a grea chamon of a better world, a great friend of israel." nelson mandela also mourd kennedy's deat saying, "he made hisoice heard in the struggle against aparthe at a time when the frdom struggle was not dely supported in the west. we mournith his family and the united states of americathe loss of a champi of democry and civil righ." > one issue of deep concern senator kenned as it is to many, was e global econoc crisis. tryi to figure out who's to blame for the crisis has bece a popur pastime. fingers ha been pointed at bankers, government regutors, and even consumers. buas itn's faisal lam reports tonight's "how they see itsegment, there's another oup that's now come under th mioscope -- economists. >>eporter: the credit cruh has failed banks, cos millions of jobs and wrecked the finance of many vernments,but has it also claimed another vtim? the way we thi about how our economies work, does the cris

also mea the death of economi as wknow it? >>opefully after this isis, the eonomy establishmentill be discredid enough. to think oit, w many economists saw the risks we were taking? how many? a few. >> they thought themselvess askin to a natural sns with the ability to me the same óq maps, because money enled them do that. and, too, to have stronpredictions. and i think that's rbish. >> reporr: all the -- economics is all based oa set assumptionof how people, shoppers companies are motivated to pure their self-intests. from tat can be derived molds of how our entire econies beha. a rulenature but the free market will automatically bng out the best result for ll. it was the chica school of thought, the valet the by iedman and his colleagu were the driving force. they won nine nobel prizes.

t post financialcrisis, t chicagschool appears toe in retrt. robert luksas one the remaining high priests o the chicag school. he won th nobel prize for economics in 1995 >> we tught we knew lot. it turned out we didn'know a damn thingbo the stability the banking system so you know it's bck to the dwing board. we'll e what comes out it. somebody is ing to have to figure this stuff out. >> you don't mind melton freedman right. >> yeah. mean if he w right something,e was wrong about others but mbe we should all apologe for not grasng the fragileature of the finanal system but i don't see why chicago in particular. >> reporter: these days, economics muscles its way io etty much every subject matt -- istory, the environment, en a bit of self-help. t it's a cani of orthodox economs represented b these

textoks that have been conveying the samehing that the world can be moded by a seriesf formula, by mathematics and thatan be used topredict the future. ile they've got thr formula wrong, and that asking real questions about the foundations over social sciencwith huge fluence. the failure of mathematical economics, pticularly the failure of tho associated with the nobel prize winners is is that one lading thinker to the scrappg of the prize to sa roit incomtent ecomists. >> it's joke. i mean would ty give that nobel prize to a physicist bed on the same criteria? i doubt it. give it to medicine, if i wro a papersaying, i we led on mars and did not have ngs and th -- andthen this would flow and boom you would g a noble? come on it makes no sense. >> rorter: so you're aually actively lobbying? >> well isaw the swedish king and i'm goingto go back there and make case why they should remove it. >> rorter: the complex financial products that

ulmately prove disastrousn is credit crisis have their roots its theories a equations. it's so wideread,ntensive use ofmathematics and economics. led tcertain failure. it wasn't that. >> no, no, no. a lot of people hate me. they're missing the boat. they've been misng the boat for centry, you know? someeople got mad at newton because he spent too much time with equations. come on. you don't need modern math i order to have financial crisis reporter:o the chicago school on ecomics in general isnder attack as neverbefore. t there is some he head scratching from the thinkers who ruled the wor. little say sor. >> faisal islam, fortn. regardless of the causof thglobal economic crisis, one thing is clear -- amica's budget deficit is increasing just yterday, the obama administration aounced it could reach $9 trillion overhe

next ten years. that's $2 trillion more than previously estimat. joining us forore is c. fred rgsten, the director of the peterson instituteor internationaeconomics. the chairman othe peterson institute. ter peterson, has a separate foundation whichs among those priding funding for "worldfocus." welcome to the program. >>ood to be here. >> some are predicting the n defit numbers will lead to a the value the dollar. do you buy that? and so, why should w be concerned? >> bigger budget deficits mean bier trade deficits. that means the us. has to borrow more from theest ofhe world. and ov time, that clearly does put down morpressure on the doll. in the shortrun, bigger budget deficits might mean higher interest rates and that might shorup the dollar for a wle. but overtime, it's bad for the dollar, it's bad for t countr we go into more foreign debtticious undmines our position in the rld p it's a thoroughly bad >> i think seeet's look at cha as i specific. how might a decline in the vue of the dollar fect the

willingness of the chinese governme to invest in america. >> chinaolds something ke $1.5 trilln ints foreign cuent reserves. it's the bgest in the world. it sees even a10% decle coming ithe dollar that takes sothing like $150 blion off of the val of its hdings. so it's obviously gng to be anxiouandworried. the chese have been expressin those worries for th better part of a year. they've probably been moving gradually out of doars into euros and maybe ye andther kurnies. the key issues is whether they continue toinance our deficit in the future. an ifhey're afraidhe llar's going to fl, hey won'do nearly to the sme extent. that means we'll have to pay higher interest rates to get the financing. and that to put it mildly would complicate o recovery from the current crisis. >> on the flip side,ouldn't a fallindollar help boost american exports to foreign countries? >>a lower dollar improves the pric competitivenesof our exports and the competitiveness of our domestic

producs against imports. it does help us bring dwn our trade deficit whi has been ch too large the past and it has been one of our big economic problems. you wantto getan exchange ra for the dollar that'sjust right, le goldilocks. it shouldn'be too hig because that does hrt our tra but if it gets too low and particularly if it fal too fast, then it will pushp inflation. particarly push up intert rates. and be a thoroughly bad thing for ou economic rcovery efforts. >> we've got aout 40 seconds left. onnother subject, we heard a rert earlier about what some see as a mindset in the nancial community prone to taking t much risk. do you agree? >> the fact that the fincial community took too mucrisk and underpriced its rk was domint cause of e current cris. one would ho they would not get back in that mindset too soon, t if economic policy does not provide the right frework, partilarly in our financial regulations a not reformed to had off an

underpricingf ris then we uld be back in the so all over again. it's a disturbing report. major policy efforts have tobe undertaken thead it off. >> fred bergston, thank you very much for joining us night. >> good be here. there's word of labounrest in south africa. miners at onof the world's largest platinum companies he gone on strike. south afca produces 80% of the world's platinum the strike is expected tpush uphe price of the precious metal which issed in everything from jewelry to catalytic convertersn cars. africa's mineral wealth halong been both a essing and a curse for that continent. there, it's been a causef warscoups, and revolutions. that's the sject of this excerpt from the latt edition of "wide angle," called "oe upon aoup." it's the storyf how the

discery of a vast oil reserve in the tiny west african natn of equatorial inea caught not justhe attention of american oil companiebut that of an international gang of mercenaries. >> psi obian leads e of the world's least understood oil stas. >> he's very intligent. he is ve intelligent. not thevil man, the media has always made him t to be. >> obig has his defenders. s country though, its capita anding on a mysterious volcanic island, is me to stories oforture. >> it's certaiy one of the wot countries that i have se. the prison conditionis as such

inhuman and degrading. >> an american aassador who spoke out received aeath threat - tossed from a car >> the docent that had been thrown out of the hicle desired th i go home in a ffin. >>nce, the scramble for africa was about ory and slaves. now it's about oil. a dot on the coast of west africa, equatorial guine supplies the u.s. th more than 20 million brels a year. u.s.il companies like exxonmobil invested billions this is the newfound bonanz of oiln the planet. >> china too wanted a share. it wouldelp build obiang a new capital ty. >> but it sn't just the great powers thahad their eye on obiang's oil.

so did a gang ofercenaries. >> but y just knew there was a bulous amount of oil here? >> yes. >> enough to make everyboda veryich man? >> absolutely,es. fst! >> reporter: they'd fly in a ne esident, and kidnap or kill obiang. itain and spain knew in advancbut did nothing to stop them. >> butou're going there with the best mility force in africa, with the backingf serious western governments, yeah, this is a od gamble. >> reporter: t mercnarieses antheir backercould become asich as obiang and hislan - if their coup succeeded. >> you gamble withour life and you uld make a fortune. sotimes it's better to live ke a lion for one day than a sheep for 100 da, as the old sang says. >> check your local liings for "we angle." you can also find it onle at pbs.org/wideangle. and that's "worldfocus" for is

wednesday. i'm martin sidge in new york. always, we thank you for joining us. anwe'll look for you back here again tomorrow and anytime on e web. until then, have a good nit. "worldfocu is made possib in part by the llowing funders -- -- captions by vic -- www.tac.com jor support has also been provided by the peter g. petersonoundation dedicated to promoting fiscal rponsibility anaddressing key economic challenges facing amera's future.