captioning sponsored by wpbt >> reform is coming. it is on track; it is coming. we have tried for decades to fix a broken system, and we have never, in my entire tenure in public life, been this close. >> susie: vice president biden announces a deal with the nation's hospitals to cut $155- billion in health care costs over the next decade. coming up, what the effort means for health care reform. >> jeff: it's google vs. microsoft. as the web search giant develops a computer operating system. and the software giant goes after the web search market. >> susie: another nasty quarter for alcoa, as the aluminum giant kicks off earnings season. the metals maker says it's facing the most serious downturn in the history of the aluminum industry.

>> susie: tonight's "street critique" guest says he's not sure there ever were any economic green shoots. he's paul larson, equities strategist at morningstar. i'm susie gharib. this is "nightly business report" for wednesday, july 8. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. thank you. >> susie: good evening, everyone. more funding today for president obama's ambitious healthcare reform plan. the nation's hospitals agreed to give up $155 billion in medicare and medicaid payments over the next ten years to help pay for

the plan. vice president joe biden announced the agreement at the white house, saying the administration's overhaul of health care is "on track, it is coming." the administration is pushing for a comprehensive bill to be signed in the fall. stephanie dhue reports. >> reporter: the $155 billion the obama administration has wrung out of hospitals sounds like a lot. but that's over a decade. and $45 billion less than the administration was looking for. vice president joe biden says hospitals will make up for the lower payments. >> as more people are insured, hospitals will bear less of the financial burden of caring for the uninsured and underinsured, and we'll reduce payments to cover those costs, in tandem with that reduction. >> reporter: the agreement is contingent on health reform becoming law. the pharmaceutical industry has made a similar agreement, and will spend $80 billion over ten years to lower prescription drug costs. physicians, labor unions and

insurance companies are also being asked to do their share. chip kahn, who represents investor-owned hospitals, says today's deal puts a cap on the amount hospitals will have to give up in the debate. >> there are a lot of moving parts for hospitals in health reform, and this gives us sort of a sense of security about the big picture that we can then work with the committees on the details. >> reporter: health policy analyst jon glaudeman says the agreements buy a period of calm before the storm. >> these deals, as they are staggered out over a period of days and weeks have the effect of dampening the public opposition, that might otherwise arise from these organizations, and essentially postpone that day of reckoning until we have an actual piece of legislation. >> reporter: lawmakers are wrangling over how to pay for the health care bill. proposals to raise revenue by limiting tax deductions for employers or increasing medicare payroll taxes are unpopular. and reducing provider costs further will also meet resistance. chip kahn says hospitals are concerned a public insurance

plan would cut costs simply by paying below-medicare rates. >> those rates are frequently insufficient and the last thing we need is to get both new people covered or people who have coverage now, have them covered by another payer who's not paying well enough. >> reporter: if health care reform a patient, it would be in critical care today. the next month will decide if will survive this year. if health care reform were a patient, it would be in critical care today. the next month will crucial to determine if reform has a chance of passing into law this year. stephanie dhue, "nightly business report", washington. >> jeff: we'll talk health care reform tomorrow night with health and human services secretary kathleen sebelius. >> susie: leaders from the group of eight leading industrial nations say their economies are still in serious economic trouble despite some encouraging signs. meeting in l'aquila, italy, g-8 leaders including u.s. president obama, said they'll take all steps necessary to restore growth and maintain financial stability. however, they also pledged to begin planning a withdrawal of stimulus measures adopted to combat the financial crisis.

>> jeff: another sharp decline in energy prices once again capped any real bullishness in equities. the dow lost about 60 points in the first half of the session. that tracked a sharp 4% decline in oil prices, a nearly $3 slide to $60.22 a barrel. but the selling appeared to bring in the proverbial bargain hunters. the nasdaq rallied and so did the dow back to break-even levels. buyers flocked to the treasury's $19 billion sale of 10-year notes. that lead to a huge rally.

>> jeff: as the u.s. continues to pour troops into afghanistan, another battle is emerging: the fight against cyber crime. several government websites in the united states and south korea, including the white house and u.s. secret service, went down in recent days. cyber attackers also targeted the "washington post," the nyse and the nasdaq, in some cases making it tough for users to access the infected sites. south korean intelligence agents say north korea or its sympathizers may be behind the cyber assault. whoever the culprit, the bigger question seems to be whether the u.s. is ready for more powerful attacks. tech expert james lewis says no. >> this attack, as primitive as it was, showed that some u.s. agencies are not prepared. so if the most basic attack could take them offline, what would a sophisticated opponent do? that should worry us.

>> jeff: president obama unveiled a cyber-defense plan in late may but many of the details are still unclear. in the meantime, the u.s. government says all sites are back up and running. it's also working to confirm whether north korea is in fact responsible for this assault. >> susie: there's a cyber battle of a different sort underway and its pitting two tech titans against each other. google said today it's preparing to launch its own operating system for personal computers a direct assault on rival microsoft. as scott gurvey reports, the bold move is latest in a series of skirmishes between the google and microsoft. >> reporter: the way google has been attacking microsoft, you'd almost think it was personal. maybe it is. google's announcement that it will deliver an operating system to compete with microsoft's windows comes just weeks before microsoft sends a final version of windows 7, to computer makers. "7" is the incarnation of its bread-and-butter product. but while google's announcement certainly stirs the competitive pot, its chrome o/s is targeted at netbooks.

the small lightweight computers which exploded on the market last year. scott kessler of standard and poor's says google is not meeting microsoft head on. >> don't get me wrong that's a very kind of exciting and compelling area with a lot of growth potential but it is really not a major part of microsoft's revenue and profit base a this point. >> reporter: the google operating system is just one of a number of areas where the monster of mountain view is attacking the dominator of redmond. google is also competing with microsoft office, its application suite, and with its internet browser, which is bundled with windows. microsoft has struck back with several search advertising products, the latest called "bing", all to compete with the phenomenally successful google search engine. the companies also battle in areas where neither dominates. both have mobile telephone operating systems, microsoft is believed planning a version of windows 7 designed for netbooks. and both compete with others to provide services through networking, which is called cloud computing.

google won't deliver its chrome operating system for a year but we do know it will be based on linux. there have been linux based desktop systems on the market for years and pcmagazine.coms lance ulanoff says there are good reasons why they haven't dented windows' market share. >> one of the reasons that windows is sometimes seen as so big and difficult to use is that microsoft is forced to support 90% of the computers in the world. 90% of the configurations where businesses rely on things that they have and that are still working. if they get the new version of windows everything will still work. i don't know how google can promise that kind of reliability. >> reporter: google may be sidestepping that issue buy targeting the netbook. scott kessler says buyers of netbooks, may not insist on the same user experience as desktop users. >> this is going to be largely an additional, low cost pc that people are going to use maybe in connection with a desktop or another laptop or what have you.

so we think people maybe more inclined to take a chance or experiment with google especially if the price and the experience are right. and susie, microsoft and google are also doing battle in the halls of government here and abroad. where both firms are encouraging investigators to look into the competitive practices of their chief rival. >> susie: we just got a news flash while you were delivering yourer to that google says its chrome will be available to users at no cost. so what do you make of that? >> well, that was not unexpected. it certainly one way to build market share. it's going to be very interesting to figure out in the long run how google makes any money from this. google really hasn't made any money from any of its applications. it makes a phenominal amount of money from its web search and the advertising with that. but nothing else it has done has been profitable. how will it make money this way. will it put advertising on the desk top of chrome users? and what will the anti-trust people think about this?

it raises questions. >> susie: but we know that google is very popular with most users, they love the search engine, they love the e-mail services. seems likes it's going to be an easy sell to get consumers to use the new chrome. >> maybe consumers, maybe the people who like to try out new things. but, you know, have you to look in the long run at this thing. the linux based systems have been out for a long time, we'll have to see if they have the support for applications and when businesses look at these things they're going to look at that, and as some of our commentators see in the story, they're going to look to see if they can deal with the centralized control and the security, the kinds of things that have been built into windows over the few years. >> susie: so are you saying that microsoft doesn't need to worry about google? >> microsoft can never sit back and not worry. it's the king of the hill and everybody will be nipping at its toes. where they do have to worry, i think the net book is a short timer, i think we get bigger

and better mobile phone smart phone devices, and google is a big player there, so is microsoft. so is palm, apple, there are a lot of players there. that could be the next wave. >> susie: i'm sure you'll keep us post on all that. thanks, scott. thanks scott, new york bureau chief scott gurvey. >> jeff: remember how the government was planning to buy up those toxic mortgage securities held by banks? well, a plan to do that is finally getting off the ground. but it is starting off small. the treasury announced today that nine big wall street players will handle the bulk of the work.

the federal government will kick in up to $30 billion in debt and equity to start. one big name not on the list: pimco, the giant bond fund manager. they pulled out of the program. wall street money managers now have 12 weeks to raise the money they will need to bring to the table. >> susie: alcoa marked the start of earnings season today, reporting its third straight quarterly loss after the bell. the aluminum giant lost 26-cents a share in the second quarter, much better than the 38 cent-a- share loss that wall street expected. but, it was still a sharp decline from last year's profit of 66 cents a share. alcoa's poor performance comes on weak global demand for aluminum as well as depressed prices for the metal. and, jeff, alcoa's ceo calls it "the most serious downturn in the history of the aluminum industry." >> jeff: susie, alcoa's shares rose 50 cents in after hours trading. the stock was among the nyse most actives. we'll see it as we take a look at our stocks in the news tonight.

atonight's street critique guest says the markets are on edge for a reason. paul larson of morningstar, welcome back to "nightly business report". >> thanks for having me again. >> jeff: there's always a lot of questions as we go through the seasons here about how long does this recession last, and when we talk about economic green shoots, are there any real economic green shoots to speak of. >> well, i think you can characterize the economy and the economic indicators as being less bad. things are certainly not as bad as they were back in the first quarter. but there's a big difference between less bad and good. and we are most certainly still in that less bad phase, still going in reverse, still experiencing economic contraction. >> jeff: what do we make of the rally we've seen these

last weeks and months? >> well, i think that a lot of the rally that we've experienced was simply a multiple expansion rally, meaning that the valuations just got so low in the early march lows and that a lot of the rally that we've seen is just been a rebound, and not necessarily reflecting any meaningful economic recovery. there has been, you know, some talk of these green shoots, but i don't think that there's a whole lot of substance to the economic expansion theories that are out there right now. >> jeff: so if we're still looking to put money to work in the markets long-term, you at morningtar focus on what you call wide moat stocks. what do you fe fine as a wide moat? >> well, when we talk about wide moat stocks or companies with wide moats, we like companies that have some sort of protection that is going to protect profits over the long

term from competitors. and we think that these are the companies that are the really good place to focus right now. these are the companies that hold the high ground, which is really important as you're going through what you might call an economic flood that we're experiencing. >> jeff: let's go on with the first one you have for us, it's proctor and gamble. >> this is a consumer tightening with numerous billion dollar products, very strong brands in the portfolio. i also like that this is company that has roughly a third of its sales coming from emerging market sources. and these emerging markets really are not necessarily affected by the ongoing economic malaise that we are experiencing here in the u.s.. >> jeff: then you have a second one, novartis. >> yes him the stock market seems to be painting the entire health care sector with a very broad brush right now,

worried about health care reform. but this is a very diverse health care giant, with big businesses and generics, vaccines, consumer products. and we think that it's going to escape any major damage from health care reform. it's a high quality company trading on the cheap and that's a combination that i really like. >> jeff: the third and final one, the home improvement retailer lowe's. >> yes, this is a little different. this is a company that is experiencing some very strong stress right now, negative same store sales at the moments due to the entire situation in the housing market. but the stock market seems to be taking today's very difficult situation and assuming that's going to last in perpetuity. well, i don't think that economic recovery is imminent, i don't think that this condition is necessarily going to last forever. and if you think that a recovery will eventually come, lowe's is certainly very cheap right now. >> jeff: any disclosures to

make for us? >> certainly. the cook is most certainly eating the cooking here at morningstar, and i own all three of these stocks, both personally as a well as in the portfolios i manage for morningstar. >> jeff: thank you, palm, appreciate your time on the program. >> thank you. >> jeff: our guest paul larson of morningstar. >> susie: tomorrow, an update on oil earnings as chevron gives its midyear outlook. >> susie: texas billionaire t- boone pickens is back-burnering plans to build the world's largest wind farm. the problem: financing. pickens says he's still planning to install more than 2,000 wind turbines at a site in the texas panhandle. but until he can get the cash lined up to do that, he's considering a smaller project elsewhere. pickens is a big backer of alternate sources of energy including wind and solar power. >> jeff: ritz camera is fading to black. the bankrupt chain of photography stores is heading to auction on the block later this

month. ritz now has about 400 stores, half of what it owned when it filed for chapter 11 earlier this year. court documents show there are two potential buyers likely to keep the stores open. but it's also possible the stores could go out of business altogether.

in the "money file" tonight, why risk doesn't have to be a four letter word. here's jonathan pond, author of "safe money in tough times." >> after what we've been through since the beginning of last year, it's no wonder that risk is viewed by many investors as something to be avoided at all cost. as a result, huge ams of money are sitting on the side lines earning element nothing. of course, during the last bull market, investors loaded up on risky stocks and eschewed money market funds. it's time for a change. long-term success requires a consistent approach, avoiding too much risk in ebullient markets and too little risk in dour markets. rather than invest at the extremes, loading up on stocks after the markets have risen or loading up on treasury bills or the like after the markets have fallen, you should strive to include investments in between those two extremes.

for example, move some of the money that's earning a pittance in cash equivalents into short- term bonds or short-term bond funds, to earn more interest without risking much, if any of your principal. while there's no such thing as a no-risk stock, you can reduce risk by avoiding speculative stocks and sector plays and instead spreading your money among a variety of u.s. and overseas stocks with index funds or exchange-traded funds. most importantly, keep in mind that risk doesn't have to be a four-letter word. in fact, the biggest risk in investing is taking no risk at all. i'm jonathan pond. >> jeff: that's "nightly business report" for wednesday, july 8. i'm jeff yastine goodnight, everyone. and good night to you, susie. >> susie: goodnight jeff. i'm susie gharib. we hope to see all of you again tomorrow evening. "nightly business report" is made possible by:

this program was made possible by contributions to your pbs station from viewers like you. thank you.

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