captiing sponsored by acneil/lehrer productions ifill: good evening. m gwen ifill. president obama made his fit ublic statement about the failed plot to blow up an airane, and said the u.s. would keepp the pressure on terrorists. >> warne and i'm mgaret warner. on the newshour tight, the president outlid stepped-up security measures for air passengers. >> ifill: how dithe bomber get thugh security? and whacan be done to prevent another attack? we'll sort it out.

>> warner: th, authorities in iran arreed key opposition figures aftereekend protests at killed at least eight. >> ifill: a different anglen the health cardebate. ray suarez h the story from southf the u.s. border. >> thousands of america that can't afforthe health care ey need, are headi abroad to search foit, i'll have report from meco. >> ance end of the yar conversation abt the financialcollapse with >> warner: d an end-of-the- year conrsation about the financl collapse with writers andrewoss sorkin and john csidy. >> seems to be alive and well and frankly there hasn'been much reform out of washington. >>that's all ahead on night's cbs newshour. maor funding for the pbs newshour is provided by: >> what the world needs now is

energy. the energy tget the economy mming again. the energy to tackle challenges like clate change. what if that energy ca from an energy cpany? every day, chevron vests $62 millioin people, in ideas-- seeking, teaching, buildg. fueling growtaround the world move us all ahead. this is the power of human energy. chevron. >> we are intel, sponsors of tomrow. an bank of america. bnsrailway.

toyota. and by the alfred psloan foundatio supporting science, technoly, and impved economic performance and financi literacy in the 21st ceury. and with the ongng support of thse institutions and foundations. and... this program was made posble by the corporation for public broadcasting. and byontributions to your pbs station from viewers le you. thank yo >> ifil the u.s. government launched a t-to-bottom search for answers after would-be bomber tried to stroy a u.s. airliner on chrimas day. but every dayas brought new questions, an today, a claim of respsibility. >> the prson interrupted a chrisas holiday vacation in hawaiito offer his first public remarks on the attempts toringorthwest ailines flight 253 down. >> and aull investigation has beenaunched into this

attempted act of terrorism. d we will notest until find all who were involved and hold th accountable. >> mr. oa confirmed e goverent is reviewing screening procedures well as s watch list system of known and suspected terrorists. shortly beforee spoke, the group ala in the abian peninsulalaimed respoibility for at tempt sayingn an internet postinthat it came in response to u.s. strikes at its membe in yemen. inis remarksoday esident obama vowed to continue huntingl qeda. >> the united stes will me than simply strengten our defens, we will continue to use every element of our national power to disrupt, to dismantle and defeat the violent extremists who threaten us, whetherhey are from afghastan or pakista yemen or smalia, or anywherehere they are plottingttacks against the u.s. homeland. >> ill: what's known so

far? 23-year-old umar faro abdulmutallab bought his ticket with $2800 in cash on december 16th. he ecked no bags. he boarded the pla in lagos a cleared securit there as well as in amsterdamhere the flight made stop-ove the jet was on fin approach to detro when abdulmutaab aegedly tried to ignite explosives concealednder his clothing. authorities said he used a syringeo inject triggering chemicals into a smallag crystal even explosive knn as pn. instead of blowingp, the bag simply caught fire then pasngers and crew subdued the suspect. abdulmutallab was treated for bur and sent to a low-securityederal pli son in michigan, aut 45 miles south ofetroit. on sunday heland secury secretary defened the govnment's handling of the case. the system worked. everybo played an important le here.

the passengers and crew of the flight took aropriate action. within literally an hour to 90 minutes ofhe incident occuing, all 128 flights in the air had been notified to te some special measuresn light of what had occurred on the northwest airlines fligt. >> ifill: but by this mning napolitano did concede tt system failure. >> i don't any think secretary of homeland security wouldsit before y to say she was happy that someone got aboard a u.s. bound air carri as this individual did, carrying the material tt this individual was carrying. so have a lot of work to do. >> ifl: that statement came in the wake of reports tha abdulmutallabhad been barred from reenteing britai and that he was not on a similar li here. his mily in nigeria said today the m's father, a prominen banker had warned u.s. ahorities in octor out his son's increangly extremi views. almost immeately afr the

detroit incident, authories in the u.s. d abroad steppedup security during the bus holiday travel season. >> defitely a little bit more stressful flying today than i thought it was going to be. >> ifill: in it u.s. the transptation security adinistration began requiring passenge on flights from overseas to be screened a second time at the gate. >> rather safe than sorry any time, yeah. >> haveou gotten in -- you shouldn't have any proem with it. >> yeah. >> ifill: and during th final hou of some flights, passenge were instructed to sta seated with no personal itemsn their lap >> when we we on the plane we coul't have blanke or pillows in our laps. >> ifill:or domestic travelers ndom security chec have been ineased and air marshalls added. >> every single it was examined. they ook it out and used their sniffer teer, whatevethey were runing along, inside. th wanted everything out of the bagand examining the inteor of the bag. >> ifill: by today so of those procedures were already being eased a bit. this was the 6th terror

incident on commercial flight in the u.s. in ten years includin 9/11, that works out about one attack for every 15.5 million flights. but abc news reports abdulmutallab hatold the fbi that other op ratives are being trained in yemen toaunch new attacks. so it is easyo >> ill: it's easy to see why many questions remain aut the christmas day terrori attempt. we explora few of them now with larry johnson. he seed as deputy director of the state department's counr terrorisoffice in the early 19s, and now runs his own security consulting coany. douglas laird, a foer security dirtor at northwest airlis. he, too, is now consultant specializing in aviation security. d juan carlos zara served as deputy naonal security adviser for combattinterrorism from 2005 to 2009. he's now athe center for rategic and international studies. douglas laird, theuestion we all a wondering ishow come this n was n caught?

>> well, it's very simple. he wasn't caught becse the reeners are not provided th the technology that would enable them to find this llow. it's simple a that. the are a number oother things that wnt wrong. d i'm certaly hoping what the president saids correct and that ere will be a top to bottom investigation. because there's been som real serious errors made re. >> ifill: yosay they weren't provided with th technology. doethat technology exist? >> yes, ds. anwhat we're talking about is bkscatter x-ray is the most prominent. it's being tested by the@ñ t, theransportation secity administration. d what it does, basilly, shows what is on the surface of the body a in yur pockets. i have heard some diurbing news the blogs, and i not sure its correct, but that the tsa had banned the dutch authoritiefrom using dy scanning technology at the rport. if this is true, thatis -- someone needto look really seriously w that happened

>> ifill: thatirport in amsterdam. at you are saying whate have in place nowthe screeng process is just not adequate? >> oh, totally inadequate. younow, iheard on the ld-in that they were not oing checks at the now doing checks at t gate. unless you do aery trusive pat-down, i.e., you have toeel parts of the bodyhere people don't like to be touched , that's where peopl would hide the explosis. unless they do a pper search, i would call i a police search, e se event could happen tomorrow. >> ifill: larry johnson, we've heard some description of how the man planned to pul this off. an explosivethat was somehow concealed his ody that he attempted to ignite. what dwe know about th substance. >> not a lot rightow. the initial report of petn but as it goes they will find anoth elosive called tapt, whichas been a hamark, a snature explosive used by al qaeda. ious ef first used it in decemberf 94 en he put a

bomb on board an air philippines plane thatlue up. richard reed hadt in his shoe board with tetn that didn't blow up. and now thisguy. wht is interesting we hve these he dre did -- events december, they are few and far between. and what we haveeen with al qaeda, fortunately the ha not improvedtheir capabilityn coming up with a reliable detoner. you can't just st it on fire and ho it goes off. usual petn,f you set it on fire, normally you have to shock it, step on it or contain it r it to explode thaway. >> ifill: you say al qaeda h not improved its capabity but it doesn't sou like we have improved our capabili to detect it or have we. >> we havemproved our capabily in some areas. now we have professionals in tsa and secity check points. before wwere using the equivalent of mcdonalds workers. we now check, all checked baggages gets subjected to an investigation by ct tenology that can dect explosives. but doug is right, wen it comes to the kin of component that ramsyiousev

took a pla in 1994, you could do that toy. yo could put in the quar bags you are alled to take on which can have 3unces. six of those in aquart bag, ou can put a 1.3 und of liquid explosive on that bag. take if board. the detoter yousef ud s gun cotton, he ed a little light bulb from a dashboard and a d cell battery, that was engh. sparked it, detonatedit it blew up. that could be done tay. and unfortunately d not deploy t type of -- there artwo types of explosive detection systems, ace and bulk. they ve not been deployed th systemic purpose to prevent these kin of accidents, soit is possible. >> ill: so nothing has anged since the previous two attempts. >> correct, not o that. we have had nce 19 went through thelinton administratn, through the bushadminiration and now one year io the oba administtion and this is by bipartisan.

republican andemocratic ali have failed to p together an effective strategy to attackhis threat. >> ifil let's talk about the terrorism aspect of this. we have heard a lot tod abt the no-fly list and the watch list and allf the other protectio which e supposed to b in place. explain themo us and why wasn't he on any list that would ve put a red flag by his name. >> sure. i think the list disssion unerscores the importance of intelligence on t front d. the other guests are ght, you have to havethe right layered defense in technology to dtect potential bombs and oth materials used. but the realitis that the terorists are always innovating f it is not planes, it is trns, it is limsines. they are ing to find other ways to detonate devices and to attack us. and so the fundameal point here, i think, is we have to have the right telligence thatallows us topoint to the right individual that we needo focus on. the prlem we have he is th you had an individu

who is notifieto us byhis ther in niria, a prominent banker, notified the u. embassy ich is a little bit unusl. he didn't just gto his local authority, he went the u.s. embassy to tells that he w concernedbout his son. but thproblem is, there wasn't ough information yet about theindividual to put him on theore estrictive no-fly list. which allow th s. in concert with airlines toar individualsrom traveling on airlines to the u.s. so he was part of a brder database but tre wasn't enough infmation as of the point of his embarkationto allow authorities to notet him on thelight. >> ifill: what kind of information would youave neededn order to get bumped up from a mere wtch st to a don'tet him on this pla list? >> well, all authorities ha at least at theoint where e was put on at is known as theides list the terrorist identify data part environment, the itials don't mat e but he was put inhis broad dabase, over

500 names inhat database. what you ned to get on the no-flyist is more information aut a threat fromhe individua known terrorist ties, known to be operational, perhaps known have had training or ntact with al qaeda. me of that was notnown and one the questions that will come up in this review is whetheor not mo should haveeen done understand this individual's contt in yemen and nigeria and london before he got on to this flight. hidsight is 20/20hough. this is very difficult. people need to remember we get thousands of pieces of data fromalk-insnd other sources a the time. it's ver difficult to tria without more information. >> ifill: there are 500,000 peoplon that list, that is what you meant to sa >>00,000,hat's right. >> ifill: i wanto ask about yen. we see is afternoon the governnt of yemen said s, he traveledto our country and we hav heard that the al qae, this offshoot of alaeda bas appently in yemen has claimed

reonsibility. how ch of a proem or threat or worry is yemen e trainingrounds for people li this? >> this is a huge concern, gwe yemen has been on the radar scen for counterterrorism ficials for some time as a potential new safe haven fo al qaeda op rives. we know al qeda s high lel individuals who have set up shop thereith compounds and training. in general they haveeen local in the focus attacking terrist sites, taking hostages, but now i think the worse nightmare hasmerged which is a platform other thanockets on an afghanistan serving as sort of lilly pad from which al qaeda can th try to attack t u.s. and i thinthis now is kind of the straw that bke the camel's back. because we've h other concerns a incidentwith respect to yemn. i think this is the one that will garner the attention of s. offials re than any to date and i ink we're going to see more intensive focus on yemen as we have seen over

the last couple of weeks with rds in yemen agnst qaeda sa houses and cpounds. >>fill: i want to ask each of you ifou can givess a sensetarting with yo larry johnson, howfraid is our safety -- how freyed is our safety security netwok. >> it has some gaps, they haven't been closed but we have known for 20 ars. we made so improvements since/11 but there are still significant eas of gapshat we need tolose. >>fill: douglas laird, h freyed. >> one of the thin that ju-carlos said that caught my attention was when i w at nthwest we designed a program cald caps, cputer assisted prepasseng screening. that program was mdated by the faa to all u.s. carrrs. on9/11 theaps program we developed at northwest identified ten of the 19 hijackers. this is on 9/11,. whafailed on 9/11 we the fa policy and procedures

ith how to deal with thos selectee i have hed that since 9/11 the t has abaoned the caps progm. if that is the case, somebody should also investigate why. >> ifill: and you believe that is a hole in the safety net as well? >> oh, sure. >> ifl: juan-carlos zarae, where do u see the holes in e safety net if they exist? >> i tnk a mar issue that sti remains, it was an issue in the bush admintration, i think the bama administration will deal with this, the date databases we he with regard to suspects there a sti restrictions on us. law very imrtant res trictions on the blendingf some othat data. there are doubts out there that aren't initially connected in part becae of cil liberties and civil rights conrns. again ligei massbut i think we will could be frnt a time wn we will have to come to grips wth the inclusion of that information and me to grips with the fact th biomrics at the ends of the dawill be a much mre effective w of screening dividuals then a name-bad system.

fortunaty in this case he used s name. but that doesn preude soebody from using an alases or false passport. i think tat is somethi we ve to come to grips with. >> ifl: you think security eventuly will trump pricy on this? >> welli think wve seen pendulum sngs. recall whenever the last three yes there what been a hue and cry in terms of removing namesoff the list. huge amount o pressure from congress, for emple, to take and reduce he list on the no-fly and selectee list. so now i think youre seeing the pendulum swing the oth way with peop calli for folks on the tide liss to be incorporated ontheo-fly list. ere is a real cost to that in terms of commercial travel but also in terms of civil libertie and civil rights butwe've got to find aalance and realize the terrorists areinnovating, they are gobal. and the threats ce from all parts of the world. >> ifill: juan-carlos zate, douglas laird and larry johnsonthank you all very much. >> thank you. >> thank you. >> thank youso much

>>arner: and still to come on the nehour, the deadly cfrontations between authoriti and demonstrators in iran; america flocking to exico for medical care; and look back at theconomic collapse, oneear later. that follows thether news of theay. hee's hari sreenivasan in our newsroom. hari? >> sreenivasan: yemenowed today to steup its hunt for al qaeda inrgents after the attempted airler bombing in t u.s. thgovernment said 29 suspects have bn arrested since the incident on chrtmas day. they were not accusedf any dirt ties to the bomb plot. instea they're suspected of plaing attacks inside yemen. shiites atcked a suicide bomber killed at least 30eople and injuredozens more in pastan today. the bomb exploded at e beginning of a siite procession marking a mar religious holiday. this surity camera video captured theoment the bomber blew himself up in rachi. outraged iites set fire to buildin and cars and threw stones at security foes. israel now plans to bud 700 new aparents for jewish settlements in st jerusalem. at area is not included in a

temporary freezen new settlements in the st bank. palestinians cdemned today's anuncement. they've refused to reopen ace talks until israel stops l selement construction. a spokesman for predent obama warned agast steps that prmpt negotiations. thailand s closed down a refugee ca of more than 4,000 ethnic hmong,nd begun forcibly deporting them backo laos. gornment troops accompanied every truckload of portees today. the thai goverent said they are illegal immigrants and not political refugees. han rights groups said they fear thhmong will be persecuted in laos. the u.s. statdepartment asked thailand to stothe action. there was good newsoday for u.s. retlers. new data from master ca showed holiday spending was more than 3.5% over last yea and wall street gained todaas well. the dow jones industrl average was up nearly 27 pots to close at 10,547. the sdaq rose five points to close at 2291. those arsome of the day's main stories. i'll be back at the e of the prram with a preview of what

you'll find tonighon the newshour'seb site. but for nowback to margaret. >> warner: now, weurn to the confntation in iran. the regime struck at its oppotion again today on the heels oyesterday's widespread bloodshe >at least seven leading reformctivists were rounded up today in iran. state sponsored press tv made he announcement. >> ports say several political fures have been arrested over sunday' unrest in iran. among the arrested are secretary-general of the freedom movemen ofiran. and the senior aid to defeated pesidential candidate mouavi. >> state tv aso reported eight people were kild in sunday's violenc and nother 300 to 500 detained. the opposition saidolice hadpened fire demonstrators. confirmation wasmpossible due to govnment cur b on independent and forei media t much of the mayhem was recded on mobile pnes

and disseminated via the internet despite irann govement efforts to block the trsmission this utube video shows demonstrato clashing in the streetsof tehran with police and the sij run by the revolutiory guard. >>nother video purpored to show a member of the basij surrendering to pro testers, overs shod a police stationurning and demonstrators torching police motorcycles. all in all, it was the worst vilence since the disputed ection returned madinejad to the presency last june. among those kille yesterday s the nephew of mir moussavi, ahdinejad leading challengers in the electio moussavi was allegedly n over by an circumstancessuv and shot. he was taken tothe hospital but disappeared oveight. the family ys the government removed itto preclude a fural which ght spark more prosts.

the protes were not confined to tehran. unconfirme reports said four died. fierce clasheseportedly ao broke out inther towns. the ptests coincided wi the shiiteuslim holyay, honoringhe martdom of imamussein, a grandson son ofprot at the time mohammed. moussavi did notpeak out today but t other leading candidate did. he fiercely criticized the crackdown on a religious holidaywriting on his web sit how is it at a regime is now sending bunches of thugs to the stets and shedding people's ood on the day of assra. the crackdn brought wide spread international condemnation. resident obama spo today. >> wh is taking place within iran is not about the unted states or any oer untry. it is abt the iranian people and tir aspirations or justice and a better life for themselve. the desion of ir's leaders tgovern through

fr and tyranny willot succeed making those aspirationso aay. >> warner: there were scattered reports of new trouble today anpposition web site said polic fired ar gas disperse moussavi supporters outside a hospital i hran. and for mo on the volatile for more on the volaile situation inran, we go to trita parsipresident of the tional iranian-american council, a nonpartisan oranization promoting iranian- american particition in u. civic life. and karim sadjapours an associate at the carneg endownt for international peace. elcome to you both, karim benning with you, how significant a mome is this in this six and a half month clash between the government and the oppotion. >> it isncredibly significant,argaret. a few points which wou make. first the demonstrators were waed weeks in advance that there would be severe/( epercussions if they ntinued the protests and yet several hundred thound people stil took to the reets. i think cond, some of the skeptics of the process last june said well, these are

only t modern elitis youth of norern tehran who are protesting. and what we saw yesteay, were there were protests throughouthe country, not only tehran, n only in northern tehran. and if you w some of the imes, there were ao a lot of t traditional clashes. women wearing the chador. the moreraditional veil, men with beards. so six monthsater this protest movement is sll gng very strong. >> warner: an you wrote the dailyeast yesterda, trita -- trita rsi that you thought theselashes could end up poving the breaking poin for the gime. how so? >> well, because i think again as car impoied out, six months aer the elections the protests are continuing. even though the govement probably expected to be able to call em only in a couple of weeks. and ashey have connued, it seems like t momentum is on the side of the protestor it very interesting to see that the people who are cering their faces, ysterday, were not the protestors,ather

it was the security people. and also we saw ayou showed that there wre images of people who surrendered to the protestors a joined the protestors. we see that in larger nuers than in june. the moral of the the secity forces doesn't seem to where they wereack inune. whereas the moralof the proteors seem to be even highethan were back in je. >> warner: do you seehat, do you thi it's psible discern whether the curity forcesho really helped prop up this govnment, the revolutionaryuard andts militia are full engaged in this or are fises developing? >> i think certaiy in the case of the policeou can tell on their facethat they recognize tat they are defending the wng side. that th are on the wrong side of history. fear, however, that the regime still has plent of brutality left in it, particularly the basij and elemes of the revoluonary guard. so i think as me has passed six months laer, the ideology of the rgime is diluti. i think certainly themoral of the regi has

deteriorated sigficantly. and i thkhe moral as trita s saying of the opposition has been enhanced significantly >> warner: let'talk about the tactics each side or real the strategy -- cause as karim pointed o, th fact this would be a big day wasell-known, expecte, planned for in advance, this holy day. did each side also intd to have it move up to th lel of violence? inther words, police reportedly firing on e crowds of demonstrators while they were still, i think, peacefully demonstring but then also monstrators going after lice stations, poli motorcycles, ising threats against the supremeeader? >> ithink inoments like this, the discipline cant always be ke as either side wants it. but i think it's stillvery important to point out the protests are overwhelmingly nonviolent. the violence is the errorist world of the govement right now. they are the ones lling people. they are the ones putting them jail, ring them

and torturinghem. yes, policestations have been burd but you haven't seen oting. are you no seeing people going int the banks stealing, et ceter so by and largehis is still a nonviolent movemt. hopully it will be able to be keptthat way. it is asolutely critical i order not only to ensure at they can see change, but that they can seehange that was going to be positive and sustainle. so that we don't see the rept of what happened in 1979 where one brutal regime was replaced with anoth brutal regim >> warner: how do yousee this? whether th was delibere -- for instance, why would the government, mean they could have just letemonstrations go forward on this religious oliday. and not interfered. >> i think margat had they not interfered we wld have en protests in the millions in tehran. the regime does repreion very well. and tean is a city whi imore akin to l angele han say manhatta t is a vast city. and is easier for the governmento kind of blo off highways andajor thoroughfares and prevt people from congregating

one aea. one i thinknteresting distincti to make or imrtant distinction to make between the current elite the islamic republic and e shah's rime 30 years ago that whereas much of the shah elite spent their formive years studying in the united tates or europe, whenhe going go tough they can make their lives elsewhere. >> th bank accounts oveeas. >> the islaic republic ite the clergyr revolutiary guards spent their formative years the seminarees or the volutionary guards in the battlefront with iq. so it as long been said thathey are not going leave in without a bldy figh >> warner: so what are t options left to the government right now? >> i think it is runni out of options. theyave tried torture, th have tried intimidation had. they even tried potentially actual some targeted killings withhe murder of the nephew of mousavi. ithasn't worked. ix months later the opposition is still ther and it is eve growing. warner: but it did actually cause something a lull in the protests r a tie, didn't it? the show trials, the jling.

>> i think it is important to make adifference between weste media attention given to the oppositioand whethhe opposition actual had a lot. this is an oppositionhat is not just going out and protesti in these type of was. it has been continuing its defines of the gornment in many different way not allf them are capae to be caughon a cell phone. buit has still been tre and it is still continuing. and the strategeems to be simply depri the ahdinejad government of any sense of normasee, and that they seem to have achieved. >> warner: now do the government he an option here hich is to make so sort of step toward conciliation to at lest some ements of the reformists. >> i don't think so, margaret. eyea khamenei, the supreme leaderoperandi has beeyou never compromi 234 the fa of pressure. th will show weaknessnd invite more pressure. essentially a zero sum gn for him. i think one of the concerns that the regime has isthat again there is no option

left or them whether in the international ana or in the domestic arena. they could hav compromised maybe six months ag but if they coromise now, pople are going sense the weaess and more. >> warner: they cod go harder, impose martial law. >> ihink we may well see that. but i think one the concerns that they have i seeing factionalization amongst the security paratus like the revutionary guard. i'm not sure if tyre confident thathe security apparatus isn their side either. >>warner: it wouldelp them. before we go, just a brief comment fromou on how president oba's words tay you think will play in iran? > i think it will be met positively and isome ways --. >> warner: by who. >> by prot tsters and in some wayslong overdue. i think he president has been incorrect in not tring to take sides but at times there has been a perception of silence whent comes to condemnation of the human rights violations in iran. i think in the last cple of wes we have seenhe white houseectify that. there is more frequent and

much stronger condemnaon of the human rights violations. at needs to continue so that there is no questi of where the moral support of the united states going right now. >> warner: but is ere a danger,hen, kar sazjapour that makes it easy ferr -- easierfor the govement to say these protestors are an tool, an instrument of the wes >> i don't think so. not any longer. that was the criticism the bush admistration but the obama admintration has bentver backwards to try to engag the iranian regime. they suld continue to express solidity to the people, and make it car that the uited states is on th right side of history d wants to seehem succeed. >> warner: how do you thin the regime will read what he had to say. >>i think the reme is always going t paint the united states asrying to fomt the vvet revolution but i don't think the population believes the regime any more. > warner: you both predict more clashes ahead? >> absolutely. i think tis protest is going to continue. >> february 11th is going to be the celebration of the

revolution h th is going to be e next b date. every red day on the cendar is a potential protes day. >> warner: tritparsi, karim sjapour, thankou. >> thank u. >> ifill: now, as the health reform debate plays out ithe u.s., some americs are finding new ways annew places to get medical care. r suarez has the story. >> suarez: south of t border, tourist season is just beginning. beach-ling americans are headed to mexico seaside towns, reaching for the sunscreen, soaksing up the lol color. but this year's annual migrion has a twis thousands of americans ar coming to places like puerto vajallarta, not to tip thir to in the pas civic, p a margari, they arecoming for heal care, in many cases re they could never

afford to acqre in the united state tell me how you feel day. > a lot bette oh, yes, nderful. >> suarez: 55-ye-old stan packa flu to puerto vallarta to have his rip replad. >> -- hip replaced. >> we cght up with him as the llowup aointment with his mexin orthopedic sueon, dr. max. >> suarez: had you ever bn to mexico bfore. >> never, ner. just to a shot. pretty big step to take on your first trip to xico, fly down and come back wit new hip. >> something hato be done. >> suarez: packard and his wife own a hoe park in california thatspecializes in carriage rides. caring for all e horses ask a phically demanding j and one of stan's hips just didn't ho up. for years it was causing him pain. but the packards don't have health insurance. >> they toll i was for sure goingo need a hip,

then i knew i couldn't afford it in the stes. so we started lookingn the states. they said it was $80,000 to $0,000. >>retty soon you will be able to walk around without your walker. >> suar: packard went on the internet and found a texas-based company called med to go t lead him to the ctor's practice in mexico where stan paid $134 13,000 for allravel and -- medical practices. >> were you a little scar. >> i've ver been in a hospital, you know, under surgy. i never had a broken arm, nothing. so but i knew the pain i was having before iot here was unbrable. i wand it done more than i was scared >> thanks, doctor >> suarez: the doctor operates on mor aging baby

boomers every yar. they chooseexico for joint replacemt surgery not just for the cost-savingsbut al for the comfortsof a city like puerto vallar that already caters to toists. we have a whole te that receives them. we make sure that they get accommodated in hotels d that they are tnsported from the hotelsto the different appointnts or to the hospital. and then after surgery once thy are released fromhe hospital, we have nurses and physical therapists that visit them their hotel. and this way they can recover in beautiful place, loking at the swimmingool, the palm trees. suarez: greeg is a membe of t american academyf orth petic sueons and touts his state of t art cility. >> we ar using the same implants, se technique, but he we have a great advantage. weon't have th liality sts you canind in the u.s. i p orthopedic sueon abouone tenth of what my

cleague in the u.s. would payormalpractice insurance. >> suarez: and wi one million u. citizensow living in mexico, many of themetirees, prate hpitals now advertise american stanrd facilities. 10,000 americansive in puerto vallar. somany that local -- a holding a ries of town-hall style meetings about medicare benefits. >> we all know that medica won cover your healthare expenses whenou are outside of the united states. and we have tosk why no and the ct is tre is no od answer to thatuestion. would it co more to cover you in mexico? no. >> suez: a group called americans r medicare in mexico lobbying coness to amend medicar rules to allow for hlth-care verage inexico, where medical costs are much lower. >> it would ct the

meicare program about half as much to cover you here as it costs to cover you i the united stas. >> suarez: fmer senate staff paul christ now a puerto vallarta hotel owner is leading the campaig >> i think it is a gat deal for the taxpaye i actually see this as a win win, win, n. and i will ll you why. first of all, it i a win for the retirees that live in mexico. and for the retirees tha wanto retire to mexico. it is a win for medicare cause it saves money. it is a n for the mexican economy because an iluxof retirees wll create jobs, goodobs in mexico. >> suarez: but with mericans already consed by a debate over heah-care refom, the campaign may have a tough time getti attention in washingto in the meantime some retirees areaking aantage ofthe insurance ofred by the mexican governmt's social

secury system called imsf, for only $300, americans who can estblish residency are offered an array of medical serves with no deduible. susan witcherman rired to puerto vallarta 12 years ago and now teaches yoga here. she signed for the mexin social security health plan as a backup, but soon suffered an ar injury which required multie surgeries. >> all your spialists, i have seen traumtologists, gynecologists, psychiatrists, it allaid for. too good to be true. >> suarez: but the are litations to mexico's vernment plan. anyone with preexisting conditiois excluded. the facilities are not cutting edge. and if you re not in nee of urgent ca, the line are notoriously long. >> it's alws overload with patients.

there a hundreds of ople waiting on waiting lists. surgeries ar-- there are waiting lis for surgeries up to about six months. and so it's a systemhat you have to wait it out. >> suarez: t social securitprogram was originally set upor mexican workers. but so far foreigners have been welcomed. just over,000 americans in puerto vallarta alone are no enrolled. dr. uardo montero is direcr of the hospital in puertoallarta >> the tto here is cial security for all and as far the enrollment foreigners i don't -- i n't see a problem. >> suarez: ev so some health ficials here worry that uninsured ericans could quicklyverload an already burdened system. but as r as foreigners coming to pay for seices on their own indusry leaders are embracing th idea. there is even talk of buildi assistediving and nursing mes here so foreignercan capitalize on

mexico's cheaperabor rket. economic analysts say re tn one million patients worldwide cross inernational borders nually for medical treatment. d places like puerto vallarta em eager to hos this. >> ifill: ihis second repo tomorrow ray will >> ill: in his second report tomorrow, rayill examine how the mexican government is ting to improve health carfor its poorest tizens. >> warner: and finally toght, a year-end looat the fallout from the financial crisis, e big baouts and wall street's behavior. jeffr brown has our coersation. his discuson was recorded before r programs' recent redesign. >> reporr: a year ago the daily news and the daily fears were all about the financial crisisthen continug to unfold. year later the so-called great recession m or may note over, but the dete over the reasons for the collse and how torevent another one contins. two reporters we've turned to durg the last year have justome out with booksto take differnt approaches to explore the iues.

drew ross sorkin' "too big to fail" i a behi the scenesook at the actions of majo players on wall street and washingto john cassi's "how markets fail" sm theoots of the crisis in a histy of economic theory. e two authors join me, andrew rossorkin of "the new york times" and john cassidy of "theew yorker". well, maybe thplace to start is why y each che your parcular approach to the subject. drew, you first, why the insider approach. wt were you after? >> you know, i thought of this as a great myste, as one there on the fro lines trying to wite this stor day--day i felt that there was much more going on behind e scenes that i dn't know. that didn't think the public knew. and thought if we cou just get inhere we could mae understand what really ppened, why did lehman brothe, why were ty alloweto go and why was aig rescues. wh were the decisions in he relationships between all of thescharacters and howid that< fluence the ultiate outcome. and i think that actually b taking that approach, was

able to hopefully get at the human drama of th. to get the fallibility of the people. wheyou get into a scene you actually the is a sne where hank paulson literallyis vomiting because of the so of emotional turmoil that is all king. you really do get to s the ad hoc nature withhich this whole crisis was nfling and -- enveloping an how theyere trying to rescue the system. >> porter: john cassidy yochose to go back a explorehe underlng economics of the cris. why tha >> well, probably becae i'm an economic journalist an partly because i knea lo of people, arew included would be providing reting narratives of what happened. i li to think that andrew provides the fly on the wall view, and i provide the view from the orbing satellite. what i am ting too is explain how the difrent bits of the story fit tether,explain why it happened, and whate need to do to prevent a similar outcome the future. >> reporter: d john, as here a key insighthatou bringo this or came fr a of this? >> yeah, my agument ishat

ultimately this was a case of mipplied ideas. some good,ensible ideas about how free market enomies work were taken and applied toreas where they don't work properly, particularly the financial market so uimately i see this as anntellectual failure of policymakers, of people wall street, and of instors. >> reporter: an andrew, what ithe key insight y got from you reporting. i mean you a talking out ese moments, these amatic moments. >> well, i look at it, you know, you talk about institutions that artoo big to fail. i sort of look at it the oposite way. i thi about this as peopl who think that they e too big to fail. and really a stor about hubris and grd and power. and what all of that ant in terms of the decisi-making. in tes of the faure imagination really appreate the crisis at ended upaking place. >> reporter: this islmost a philoshical question here now betwn these two approachs. i mean betweenindividual -- individuals and stitutions and theies, so expand that

a ltle bit more for us. >> wel i think actual ou two books compleme eacother pretty well. if you wa to know what happenednd how the peopl felt who we involved, andrew provides an excellence sum aree of that, and provides a lot of new infoation. i really n't go down that route. wh i try and do explain how the different actors fit together from the people a the 3w09 om of the chain who we buying the mortgages, ese -- buying houses, taking t subprime mortgages up through mortgage the mortgage lenders, up tohe wall stet people who were securitizing theseoans and the investors whoere buying them and t regulators an supervisors who were supposedly overseeing them. i try to expin how all that fit together and w we ended up in the situion we're in now. >> reporter: and yodo, john, use examples, though. i mean with pray -- player making decisions, likethe subprime, for example. an example whe some players made decisio that were even againstheir better dgement. >> right. i mean i ed the exampof chuck pnce, the chairman of cigroup. my argunt was su there was greed invold but there

is always eed on wall street. at were the other forces which were at wor and it seems to me it was a probl not ultimately of individuals li chuck prince but the incentiv they faced in the market. the chaman of citigroup foreveral years tigroup didn't get involved in subprime secuties. t then at the start of 2005, -- did -- sorry the end of 2005 the board came to him and said look we're falling behind our competitors. they're making a l of money in this business. why aren't we int. we need to inease our risk prole. chu then had the choice of sang well, i ink citigroup is t, you know, too great a compa to be involved in this risky business which had sort of been his previs at toad. but he woul have probab got fired if he had ne that. he faced the bad incentives. everybodyas looking for short-term gains. i call rational irrationality. it 1udly becameational to take whatultimatelyroved irrationadecisions like making b bets in the mortge market. citigrp did that and they ended uplosing tens o billions of dollar >> reporter: so if now

come forwardto our own present mome here and think abouthat you guys have learned and wre we arnow, andrew forbes for example when y look at wall street you are talng to all these pple you have been talking to for aear, where are we now? i mean have lesson been learned. what are they telling yo no here is the sad news. having now lived with maye of these people for a year, very very, ry top in the corner office, i'm not sure much has changed at all. the culture has not changed. the ole ethos. the greed is go mentality seems to sti be ave and well. and frankly there hasn't been mucheform out of washington. when you talk to ceos on wall street th now think of temselvesoddly enough as survivor that is the word they use like a cancer suivor. and'm not sure they apprecie that they have been reued. did have an encoter with john mack who i the ceo of moan stanley who actually was probably the most lf-aware of the ceos who said cently that actuall wal street peoplecan't control themlves.

it was a remarkable statent. and hsaid we need to be conolled. almost li he was an addict and we needed to take the ack pipe away. and i thought th was remarkab but i will tell you, most other people on wall street, not only do they not have that view th are pushing ck on any view tha would put real reform in plac >> porter: john cassidy, whatould you add to that. srt with a view ofall street a washington. i want to k you about changesn economic, among economyists later bustart with what andrewas talking about. >> i think andrewit the nail on the head tre when he talked aboutohn mack saying we can'do this by ourselves. given the incentives the guys face who run these ll street rms, the way they make moy is by lendi to people and taking riss. and comting against ach other. they are always going to lend more and ta more risks. if mebody from the outside doesn't come in and sayto these guys tre are limits on what you can do, we're going t inevitably geback to where we beg. the only person, nobody wall seet can do that by themselves. we ed the government to

step in and set rules and regations for the firm. i think that is what john ack was driving at. said we need help. we can't do it by ourselv. the oama administraon has gone some way in tat direction proposing vaous lits on what the banks c . raing capital requirements. a variety of other restriions on their activies but none of it has en passed yet. as andrew sd 16 months after t collapse of lehman brothers weon't have any new regulatns on the book a no tmetable of when they areoing to be put on the book. >> but why, w are we in thatwe have talked out that on the prram here as we look at the various proposals so why h nothing ppened yet? >> i thin two things. i think the government did a prtty good job of inventing a complete financial catastrophe. they took the emergenc measure, the fed purposing money into the enomy, lending to banks tt needed it. the oba administrati introdung a stimulus pack ag all those measuesombined managed t prent a return to the 1930s whereas if we had been gaering sometime last year someeople would have been worried about.

but the authorit were concentrating on avoiding the a immediate crisis ey didn't take long-rm measures. now what we found is the economy is recovere, these big banks hav got labee pog we are again in waington. he politicalagenda has moved on all focus on health care and the wall street reform movement has been stymie it inot clear to meat all that we're ing to get an significant changes. >>reporter: andrew, what do you see, is there a ssibility for change. >> john's absolutely right. i think we areoing to get change but it is going be only on the margins. jn again is right when he says that the farthere get away om this crisis, the more we focus on other issues and rightly there are her important issueslike health carebut the farther e get away and the more the economy seems like it stabilized, thearder it really to get refo. and the memory on wall street, unfortunately, and franklin washington, are so ort that thereseems to be a re conundrum which meansan we change the underpinning of ll street.

and frankly we haven and m not sure we're goingto. >> well, john -- >> could say e more thing onhat. i mean ultimately i think as i try and arguen the book is an intellectual argument it sems to me this time last year we sort of accept the idea that markets failsometimes. a no needegulating. they need other supeision, as the market recovered, the economy recored people have reverteto their prious positions on that argument. d sort of forgotten the lesson that we thght we leaed a year ago that is why i say ultimately it is an intellectu argument. we ha to forget these ideas that rket can regulate themsves, that banks won't take risks because they dot want to harm themselves. that was basicall the greenspan arment of why wall reet doesn't need regulating. we tried that for ten years anended up with the worst recession since 19s and hundreds and billis and trillions of taxpayer mon poured into the nancial syst. sas i say, i think we need to remember t lessons we learned this time la year, nd not go back to our o

ways. >> reporter: all righ we will leave ithere, john casdy's book "how markets fail" andrew ss sorkin's book oo big to fa" thank you both very much. >>thank you,. >> thank you >> warner: ain, the major developments the day. president obama pmised a top- to-bottom search for aners, after a would-be bomber trieto stroy a u.s. airliner on christmas day. an al qaeda ofhoot in yemen claimed responsibily for the bombinplot. anauthorities in iran rounded up leading opposition gures, one daafter at least eight protesters ere killed. the newshour is aays online. hari senivasan, in our wsroom, previews what's ther hari? >>reenivasan: on our web site tonightwe ask four experts how the u.s. shouldcombat recent terror threats, and wget tips for tralers facing heightened security. you can see a ideshow of ages from the weekend protes in in, and find a link to

"frontline'stehran bureau for updates andideos about the cent tensions. and on our art beat pag watch a clip from thdocumentary "the woman behind little wen" about author loui may alcott, on the pbs series "american mters," later tonht. all that and more is on o web site, newhour.pbs.org. >>nd that's the newshour for tonight. i'm gwen ill. >> and i'm margaret warner. wel see you online, and again here tomorrow evening. thank you, and good nit.

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