>> narrator: bear stearns, geithner concluded, was "too big to fail." a bankruptcy could undermine confidence in every major wall street firm. >> they were all very afraid of the possibility of a bank failure. they didn't know what it would lead to. >> narrator: the precipitous collapse of bear stearns had taken federal regulators almost entirely by surprise. >> what became clear as you look at the record is the extent to which the people who were charged with overseeing our financial system really didn't have a sense of the risks that were embedded in that system. they didn't see the fundamental rotting in the system that had manifested itself for years. narrator: a year later, phil angelides would chair the financial crisis inquiry commission. in their report, the commission concluded regulators at the federal reserve, the sec and other agencies ignored evidence that wall street was flirting with disaster. >> you would think that the people who were in charge of our financial system would have a grip on the key risks that were in it. and if they did,

morgan did with the government of italy. >> narrator: j.p.morgan declined to discuss the deal, but des pallieres says the bank did nothing to fool regulators or other european countries about italy's financial health. >> smith: did the deal with italy change the perception of the nation? >> absolutely not, absolutely not. and, furthermore, every transaction that we were involved in europe-- every transaction we were involved in europe-- were not hidden to the other european partners. >> narrator: des pallieres insists that his deals for j.p. morgan were all aboveboard. he won't vouch for other banks. but in 2003, nick dunbar published a story in risk magazine uncovering a secret deal between goldman sachs and greece. the article revealed that goldman had sold greece several giant swaps to help greece meet its targets. >> smith: what was the reaction when your story came out? >> what happened was complete silence. i think i did one radio appearance and the story was just buried. nothing happened at all. >> narrator: the silence was surprising.

>> narrator: but geithner completely disagreed.thought the banks were vulnerable, and that summers was playing with fire. >> if you're going to take over one of these institutions, that's like pushing a boulder off a... down a hill. you have to make sure that you have enough firepower to stop that boulder from rolling all the way down. >> narrator: on march 15, they all gathered with the president. summers versus geithner-- a showdown. >> it was an extraordinary meeting. it was literally a six-hour murder board in which you had the president of the united states, sometimes aided by larry summers, really asking the hardest questions, raising every criticism that was being raised from the outside. >> narrator: summers and his allies argued that geithner's stress test plan was not aggressive enough. >> the stress tests are a part of a confidence game. many people in the administration, and out of the administration, were worried that the stresses that the system would be put through were not real stresses. >> i was one who was critica

and that's just what they did. >> narrator: the d.e.a. was swamped by thousands of bogus companies applying for licenses, and, short on staff, began issuing temporary permits. before long, companies licensed by the government were making millions selling pseudoephedrine to the superlabs. the d.e.a. effort to track down the bogus companies was halting and underfunded. but by the time the agency shut down the last of them, the purity of the meth on the streets had plunged. >> we looked at the statistics on deaths and injuries, because my view has always been if you're having success, you're going to see a fall in deaths and injuries. and we saw that line dropping to the floor so beautifully. >> narrator: once again, the meth cooks in the central valley began to grow desperate. then, bob pennal noticed something very unusual. >> now we start finding these 60 milligram thousand-count white bottles with no markings on them. and you'd always have markings on them. you always lot numbers. you always had some type of identifier. but now we had no

that was what i was brought to do. >> narrator: previously j.p. morgan had written credit swaps on single companies like exxon. duhon was asked to write swaps on bundles of debt. >> the idea was let's put together a portfolio of credit risk. a portfolio of names. >> narrator: her first trade was a credit default swap on 306 corporate names on j.p. morgan's books. >> and that list of 306 entities, they were very highly rated. they had very low credit risk. >> smith: and the credit default swap was ensuring p. morgan against default by those 306 entities. >> that's correct. >> smith: many of them fortune 500 companies or other... >> it would have been your... some of your most well-known household names. and so we were giving investors an opportunity to, in effect, invest in our loan portfolio. >> j.p. morgan did a lot of work, did a lot of due diligence to assemble this portfolio of loans. and you can get it in one easy, bite-size piece. >> narrator: and the bank facilitated this by slicing up the portfolio into different risk levels, or tranches.

>> narrator: ghaith asked to be taken to see the prisoners. after hours of negotiation, fouad got word he could bring him, but blindfolded. >> he said, "i will have to blindfold you," and immediately inside you as a journalist you realize, "ah-hah, that's the point when we're being kidnapped." you're very scared, but you can't run away. you are in the middle of that. we were driven for 50 minutes, and taken to this compound, very, very well guarded. the soldiers there were different from the soldiers we'd seen. they were more aggressive. >> narrator: ghaith was then taken to see the detained prisoners, held in a series of small rooms. the prisoners told him they were in fact the yemeni soldiers capture in the attack near jaar. while the camera was rolling, they pleaded for the government to agree to demands for a prisoner exchange. many claimed the al qaeda fighters had been better armed and supplied. >> it was a very, very difficult situation to be tasituation to a journalist to interview prisoners. i have been detained before, and i know how

(narrator) i met a young woman shi-chi. at 24 years old, she has taken a leap of faith to pursue her dream of running a coffee shop. she said, if she doesn't do it now, it will be more difficult when she gets older. she voted in the 2000 presidential election, but plans not to vote for the upcoming election. she is not excited about any of the candidates. my parents were her age when they left for the united states, to try a dream and forget about the political turmoil, or at least keep the children sheltered from it. but they never really forgot. at their first chance, they bought a satellite dish to watch taiwan news, and soap operas of course. this has become a daily ritual.

narrator: in 1995, french identity politics ca to a head with the provinceide rere narrator: in 1995, break away and form its own country? the vote was very close: by a margin of percent, the residents chose to remain canadian. the spatial pattern of the votes reveals much about social and economic divisions within quebec. in northern areas of the province, native americans voted "no" to sovereignty. so did quebecers living near the canadian capital in ottawa and along the u.s. border. but "yes" votes predominated in most of the other ridings, or counties, in quebec, the heartland of french canada. most divided was montreal itself. here, the darker the color, the higher is the percentage of english speakers. so it was no real surprise that these west side districts voted "no" on the sovereignty question. here, the darkest colors represent the highest percentages of french speakers. as predicted, these northeast districts voted "yes" for sovereignty. but how would the remaining areas vote? here are the areas of the city where people live whose mother tongues are neither french nor engl

narrator: of the 200 volcanoes in ecuador, 30 could erupt again.uagua pichincha has devastated quito, the capital, several times, so scientists monitor emissions of sulfur gas with gat concern. in 1985, a massive eruption in neighboring colombia melted snowfields, causing mudflows that killed more than 23,000 people. throughout south america, scientists study the tragedy and vow to prevent the next one. they may get their chance here, in ecuador. the ngurahua volcano threatens a town of 17,000 at the base of the mountain. it is called baños. although baños is very near the equator, its elevation in the andes gives it a mild climate. add spectacular scenery and soeothermal hosprings and you have aibrant tourist economy. on the surrounding hillsides, adequate rainfall and fertile volcanic soils sustain agriculture. but the same natural forces that sustain the economy are also a source of danger. hoping to avoid a agedy, geographer patty mothes maps and monitors several volcanoes for ecuador's geophysical institute, inclu tungurahua. she is looking fo

narrator: victorlopeu isearning english.ave come with their parents from eastern europe to escape an unstable economy and political climate. okay, next day... narrator: from romania, the plopeanus headed west to search for a better life in canada. they settled in french-speaking quebec, in the city of montreal, homeo est english-speaking community in the province. montreal is divided into two relatively distinct areas: the english on one side, the french on the other. the plopeanus have chosen to settle on the city's english side, for they believe that english is the key to success for their children. but for immigrants in quebec, choosing english has a price. dan plopeanu is paying to send his sons to this private english nursery school. although english public schools exist in the area, the only free education available by law to immigrants is a french one. tvharacter: feel like dancing? sorry, i only dance with the boss. too bad. narrator: in spite of these laws, english is still readily accessible to victor and tudor. ea

narrator: los angeles county is beginning

narrator: but they're not all classic minority neighborhoods.arty nee is a leader from south boston, on the harr, narrator: but thwhere most residentsc are white irish-americans.s. maybe the face of poverty in boston is not just black; maybe it's not just hispanic; maybe there's a broader face of poverty that we need to look at. woman: one of the reasons for that, too, is... narrator: the census maps bear him out, and today, nee joins leaders from other neighborhoods at a meeting called by linda haar. the goal: to review a draft proposal to the federal government. it looked like... narrator: joyce stanley presses her case for dudley square and adjacent grove hall. grove hall has more social service agencies than any other community, dudley also. narrator: the historical geography of boston's diverse neighborhoods is full of conflict. but the competing leaders know they can win only by uniting and drawing a politically- inclusive map. so parts of south boston join roxbury, chinatown and other areas in thempowerment zone proposal. but therare othe

narrator: without half of its water supply, the city would shut down. for nearly 40 years, new york has been in the process of constructing a solution. man: this project is water tunnel number 3. we started on this project in 1969. i'm a sandhog. i've been a sandhog for 37 years. narrator: sandhogs are the men of local 147, who work deep below the city. they began building the infrastructure of new york in 1872. from the subways to the sewers, the water tunnels to the highway tunnels, new york city thrives because of their work. ryan: you got one little hole in the ground, and nobody knows we're here. see the empire state building, right. that's 1,000 feet. so you figure, you go down 1,000. how high that is -- that's how far we go down. narrator: stretching more than 60 miles under the city, tunnel 3 is taking generations of workers to complete. ryan: i don't even want to imagine what my father had to go through. when we first started, it was a rough job. everything was dynamite. now, they have these machines called "moles." it's like a big drill, and i

narrator: below the farms, uned irrigation water eventualws backo e umatil narrator: which explains whyhere is enough water downstream. but here in the river's midsection, two different ways of life compete over a scarce resource. the farmers' water rights go back to the 1920s, when the government funded irrigation canals like this. but the tribes' water and fishing rights are based on 150-year-old treaties that include these historic locations on the columbia. armed with the senior water rights and a desperate desire to restore umatilla salmon, the indians threaten legal action. if they want, they could destroy the farm economy here. pryor: without water in this area, we virtually have no way to raise any kind of a crop that we're producing now, except dryland wheat, which is not really viable in this area. its not that we will not litigate, its just that we want to tryo work it out first. but if we have to litigate thent itto say the least,nt these negotiations have been tor'sargestllerster-- itto say the least,nt these negotiations have been there'huge u auge downs, and even upside-w

narrator: corey is a junior in college majoring in psychology. he played basketball in high school, but as ushers has changed his vision, he now prefers a less-competitive game-- solo or one-on-one. translator: my visual field is about this big. i can see about this much in the center. over here, though, i can't see anything at all. i have some residual islands of vision where i can see a little bit back over here and here, but my best vision is right here in the center. off to the side, there's nothing here at all. even though the individual is experiencing night blindness, they still have good daytime vision, but when the peripheral field starts to close in, then that leads to the next hit--driving. narrator: driving a car is the hallmark of american adolescence, but for ryan, now in his third year of college studying computer science, that dream was shattered during a routine visit to the eye doctor. translator: well, i rembmber going into the doctor's office. i was having a visual field test where they measure how much vision is left. i went

(narrator) and the times were changing. the '60s pop artists andy warhol and roy lichtenstein shunned the previous generation's idealism to engage with popular culture, ti w and irony gh than idealism. minimalists like danlavin developed a severe, abstract style that intrigued critics and artists. suddenly, henry moore seemed old hat. british artist bruce mclean, a student of anthony caro, created a series of photographic parodies, placing his own body in positions that mocked moore's reclining figures. there's this sense of moore the artist, moore's work, perhaps even being obscured by list upon list of commission and prize. certainly, he was very proud of that. he always claimed to be somewhat perplexed by all the attention, and he certainly did evolve into an artist celebrity. i mean it's very rare that a sculptor's face graces the cover of time magazine. (narrator) bre nauman created several works referring to moore: seated storage capsule for henry moore, henry moore bound to fail, and light trap for henry moore. (bruc

narrator the u.s..n.s., or immigration and naturalization service, records each apprehension on standard forms, including one entrywith hid: it was the migrants' home towns inexico. that's whabringseographe richard jones tohe i.n it was the migrants' home towns with a novel reseaplan. jones knows that economic conditions vary greatly om region to region in mexico. he suspects that some places drive out-- or "push"-- many more migrants to the u.s. than others. his investigation begins inly90s aris hom inanoniotes. his ijos lieveson begins many secrets are stored in i.n.s. files like tse. can they reveal where most migrants come om? can the answers help both countries keep more ople ahome? cjones sampless every tenth record, writing down the area of origin within mexico. back in his office at the university of texas, he enters the values into a map of mexico. jones marks in blue the wnships that send an above-arage number of migrantso e u.s. jonea pattern emerges that reveals much about thchangi econocag

narrator: the lower rates of deforestation e based onovernmen ctivrcin narrator: the lthe environmental on the books. brazil has received some help from some new technology and from other ecologists, including chris uhl. uhl is the founder of imazon, a research institute located in the city of belém. the law in pará state says that 50% of all private land must be maintained in forest. until recently, that was very hard to monitor. now, using a system of satellites casearcher carlos sousaiing s, cadoust that. okgps is realowhat it allows us to do is to pickp signals from the satellites. and through ocess of triangulation we can locate oursels verr and through ocess to within about ten meters. four... ey've gour sateites now. we are... probably... in this... area. mm-hmm. narrator: if the government chooses, it can use gps to locate property lines on satlite photographs of the landscape. they can then determine how much of a farmer's land has beenleared but enforcement is stty. anotg problem is thenefficient way the cleared land is being used. the most common farming and grazing method he

narrator: in the lab, lonnie's team analyzes the ice cores.xygen isotope ratios provide a proxy for the temperature when the ice was formed. these records are consistent with other studies that reveal, going back 1,000 years, a long-term warming trend, beginning about 150 years ago -- the dawn of the industalge. carbon dioxide measurements taken directly from bubbles trapped in the ice reveal ever-increasing concentrations of co2 over this same time period. adding to this wealth of information, lonnie's team can detect droughts by measuring chemical traces in the ice, blown in from dry lake beds. dr. davis: well, that's what i was just wondering about. one of the easiest historic records to track in an ice core are drought events. so anywhere you see sulfates indicate that the environment got very dry. here it is. right here was a drought. in calcium, there was an increase here in the '60s. and then you go down. here's another increase in the '30s. it was contemporaneous with our dust bowl period. actually, you know what that is? that's these.

narrator: atlanta is a rapidly growing urban area. its primary source of drinking water is the chattahoochee river, which also provides water to many downstream communities. but its infrastructure is dangerously old, without outdated facilities and combined sewer overflows polluting the watershed. the city faces strict consent decrees and lawsuits, along with a severe lack of funding. man: when i started working for the city of atlanta in the late '70s, we were approaching that point in time where a lot was going to be needed, in terms of rehabilitation and upkeep. most of the very large pipes were at least 80 years old. we had needs that were identified in the '50s and in the '60s and in the '70s that were deferred. woman: we are urging that we all try to find a way to overcome the obstacles and limitations that might exist. woman: when i was running for office, i met someone who knew mayor hartsfield, who, in the late 1960s, said, "i don't know who the next mayor will be, "but i know they'll have to fix the water and sewer infrastru

narrator: over 300 million people live in the united states. and each person uses an average of 100 gallons of water every day. man: what it takes to actually make clean water is somewhat a mystery to most customers. woman: so how does water get from the river into your house, or here at school? woman: somebody has to bring that water to us, and somebody has to take it away when we're finished with it. man: the water infrastructure is vital for disease protection, fire protection, basic sanitation, economic development, and for our quality of life. man: you just can't visualize all the assets that are under our feet. we have about two million miles of pipe in this nation. if you're walking around in an urban area, you're probably stepping on a pipe. man: our grandparents paid for, and put in for the first time, these large distribution systems. woman: and in many cases, it's not been touched since. man: we're at a critical turning point. much of that infrastructure is wearing out. narrator: our water infrastructure is made up of complex, underg

. >> narrator: this is a story about a bet that went bad.like all stories about wall street, it starts with the pursuit of profits and the risks of getting it wrong. >> pay for at least 50, 12.68 for at least 50. >> narrator: it's one of the latest in a stream of missteps, meltdowns and scandals that blow up, it seems, every few months. >> two mortgage companies under government control... >> the federal reserve is bailing out bear stearns... >> narrator: it's a familiar cycle. customers are outraged. lawmakers promise change. then it happens again. >> mf global, down almost 39%. >> an increasing number of investors are betting the stock has farther to fall. >> of all of the collapses that occurred during this financial crisis, the collapse of mf global, in my mind, is the most egregious. this did not have to happen. >> it is a wall street morality tale in some ways. how can something like this be allowed to happen? how can one individual completely shape the destiny of this firm and ultimately its demise? >> narrator: this is the story of j

(narrator) the napoleonic war ended in 1815 at waterloo. duke of wellington had called the battle "a damn close run-thing." the fragility of civilization intrigued turner throughout his career. the decline of the carthaginian empire depicts the crushing penalty rome inflicted on the carthaginians. the architecture is elegant but the messy dockside suggests the end of a defeated imperial power. the women of vanquished carthage are bidding farewell to their men as they sail towards rome, human spoils of war bound for slavery or death. in 1818, turner was 43. in the twenty years that britain had been at war, he had become a public figure, his reputation based on art and enterprise. the new classes made wealthy by the industrial revolution were eager to buy his works. and he was favored with patronage from landed gentry like walter fawkes, who invited him to stay at his yorkshire estate. one morning at breakfast fawkes asked him to make a drawing that would convey the huge size of a man-of-war. fawkes' grand niece recorded how it was done. (rea