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CNN STUDENT NEWS For July 26, 2002

Aired July 26, 2002 - 04:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: You're watching CNN STUDENT NEWS seen in schools around the world because learning never stops and neither does the news.

SHELLEY WALCOTT, CO-HOST: The economy of Argentina is in the spotlight for Friday's "Lead Story."

MICHAEL MCMANUS, CO-HOST: Northward we go to "Chronicle" the expectations of Catholic youth.

WALCOTT: Religion in the front half and art in the back. We feature an African art show in "Perspectives."

MCMANUS: And finally, we take a turn with the boys of summer.

WALCOTT: Welcome to CNN STUDENT NEWS. I'm Shelley Walcott.

MCMANUS: And I'm Michael McManus. Thanks for joining us.

Argentina's economy struggles as a four-year-recession pushes banks to the brink of collapse.

WALCOTT: Argentina's bankrupt government has defaulted on $140 billion in debt and was forced to devalue the nation's currency six months ago. Half of all Argentineans now live in poverty, an issue we'll look at more in depth coming up.

In an effort to help the situation, a group of financial experts from the International Monetary Fund went to Buenos Aires this week. The IMF is an international organization of 184 member countries. For more than 55 years it has, among other things, promoted international monetary cooperation, fostered employment and provided assistance to countries in need. Despite the IMF's strict regulations, many people hope its experience with money will translate into a solution for Argentina's financial woes.

We have two reports now beginning with Carolina Cayazzo.

(BEGIN VIDEOTAPE)

CAROLINA CAYAZZO, CNN CORRESPONDENT (voice-over): For 10 years, Argentina pegged its currency to the U.S. dollar, one peso equal one dollar. That was the strategy used to help the economy. In December of last year, the government here changed that. The peso was devalued and the economy went into a tailspin. Argentina has been desperately trying to negotiate loans from the International Monetary Fund, but politicians here don't like the requirements set to get the money.

A panel of experts met with President Eduardo Duhalde, Economy Minister Roberto Lavagna and a group of legislators. Former president of the Bundnis Bank, Hans Zehetmair (ph), told them that the old policy caused major problems.

"He clearly said," Senator Ricardo Gomez tells us, "that the failure of Argentina had been that the convertibility system was financed with public debt. He made a very strong point that dollar rising the economy is not the solution for the crisis."

The group included Pierre Maier (ph) of Germany and the former president of the central banks of Canada and Spain and the chief manager of the Bethlaya (ph) Bank. They also met with members of the business and banking communities.

This Argentine banker tells us the experts were worried as to how in the future the banks will recover the trust of the people after the banks have confiscated their money. And they were also concerned as to when the banks would be able to finance production in order to reactivate the economy.

(on camera): The experts also expressed concern for the autonomy of the central bank in Argentina. An independent central bank is a must, they say, to any healthy economy. The Council of Notables, as they are called, will report their findings to the International Monetary Fund, another piece in the puzzle for Argentina's economy.

Carolina Cayazzo, CNN, Buenos Aires.

(END VIDEOTAPE)

(BEGIN VIDEOTAPE)

ANDRES REPETTO, CNN CORRESPONDENT (voice-over): Eighteen million people, half of Argentinean population live under the poverty line, unemployment is over 20 percent and there has been recession for more than four years.

In the province of Buenos Aires, the most important of the country, poverty surpasses 50 percent. Poverty has converted itself into proper (ph) hunger for millions of people. Images like this can be seen daily today in the street of Buenos Aires.

To mitigate this horrendous situation, in the last years popular dining rooms have a racing war (ph) unemployed people have at least the possibility of eating once a day. These dining rooms function thanks to the heart of volunteers and the nation's. Some schools have become dining rooms, and to many children, it is the only place where they can have their single daily meal.

Poverty and hunger strikes are not only the province of Buenos Aires but also in the rest of the country. In the north and north and east of Argentina, unemployment reaches up 60 percent. Some days ago, an image was shown in the media which shocked the country at large because it show not only a matter of hunger but of malnutrition. These babies are an example of the many children who suffer in the northern province of Tukuman (ph); but unfortunately, this occurs in many other regions of the country.

This last image, like many others, demolishes the memory of those people who still have a mind on Argentina where eating was not a luxury. Proper measures have to be taken so us to end with this appalling situation.

(on camera): Now within Argentina, the gap between the rich and the poor, it's become bigger and bigger.

This is Andres Repetto from Telapino (ph) for "CNN WORLD REPORT."

(END VIDEOTAPE)

WALCOTT: One step forward on Wednesday, a small step back yesterday. That was the pattern with the markets as the bottom got a bit deeper on Wall Street. The Dow Jones industrial closed down about five points to end the day at 8,186. The Nasdaq was down over 50.

The semiconductor sector and accounting worries continued to concern investors. The most actively traded stock was AOL Time Warner, the parent company of CNN. Though reporting a second quarter profit on Wednesday, it was hit hard by the news of a SEC fact-finding inquiry. The company's shares tumbled $1.76 to a 52-week low of $9.43.

Michael is back with us, and he'll be back with us later with a wrap of the week on Wall Street, including what Congress is doing to legislate corporate responsibility.

MCMANUS: That's right.

WALCOTT: But before we go to that, let's talk about personal finance.

MCMANUS: Shelley, people are beginning to ask how low will this market go and where should I invest my money? Now if that is you, listen up, we have some advice.

Seems like the markets are behaving a lot like summer weather, wait five minutes and it's probably going to change. Finances are a tricky subject as it is and you add a roller-coaster market to the mix and it gets downright confusing.

Christy Jones (ph) produced this financial explainer with money expert Scott Macolino. He tells us how to save, how to invest and what exactly to do with your money.

(BEGIN VIDEOTAPE)

SCOTT MACOLINA, MONEY EXPERT: We seem, in this country, to have a concept of immediate gratification. And immediate gratification syndrome brings with it a lack of savings. So the more someone goes out, again, immediately gratify their need for toys, big homes, cars, et cetera, the lower their savings rate's going to be.

Why pay yourself first?

Now what I've done is ever since I was a young -- a young kid is, and again I had paper routes and I worked in restaurants and I waited tables, again, I just put away a predetermined percentage of my pay since I was 15 years old. And that money has never been spent and it's grown and grown and grown over time.

Paying yourself first is, I think, an easy concept to understand. Because, again, for teenagers or younger people, the temptations to go out and buy clothes or CDs with the money that you get, we have found again you'd be much better off to take that -- some of those dollars and first put it away in some sort of savings plan, an organized savings plan, and then buy those things that you don't really need. Over time, we have found that those who start saving at a younger age, No. 1, developed the better savings habits and those habits will stay with you pretty much for the rest of your life.

What about savings accounts and CDs?

Savings accounts and CDs are very different. Savings accounts provide the individual with complete flexibility. You can put your money in today and take it out tomorrow. As a result, they give you a lower level of return.

CDs are a little different because although they guarantee a certain rate of return, your money is locked up for a certain period of time.

CD stands for certificate of deposit. Usually with larger financial institutions, an individual will take their dollars, give it to, for instance, a large bank. The bank will take those dollars, invest it for a person and guarantee a certain rate of return. However, there's a little bit of lack of flexibility there because there's sometimes a back end penalty for taking your money out early.

And usually CDs will run from three months, six months, a year. Some CDs even go as far out as five years. The longer you go out, the higher rate of return you're going to get.

Are you ready for the stock market?

The stock market is a way for individual investors to own parts of the biggest and best companies in the world. So an individual goes out and buys a stock, they're actually owning a piece of a company. And it's great for young investors to start and form those kind of habits. Because we found over time, and I say time I say 7, 10, 15 years, over those longer periods of time, we have found that the stock gives superior performance and superior returns to other forms of investment.

Young people, I think, have an awesome opportunity if they start investing in the stock market at a very young age. Because, again, the stock market over longer periods of time will give you superior performance. However, associated with that better performance is a higher level of risk. As we've seen in the last couple of years, the market doesn't always go up. It can go down. So if an individual wants to get in the stock market, they just need to understand if their timeframe is less than five years with that money, my rule of thumb is it shouldn't be in the market, it should be in some other form of investment.

What are mutual funds?

Mutual funds are a wonderful way for younger investors or those investors who don't have a lot of capital to get in the market. A mutual fund is an investment that owns a lot of other investments, smaller investments. Mutual funds can either be invested in stocks or bonds. And in a mutual fund, you own a series of stocks or a series of bonds, not just one stock or one bond.

The big advantage for smaller investors is that it gives you the ability to diversify or spread your portfolio over perhaps hundreds of different stocks or hundreds of different bonds with an insignificant sum of money. So for younger investors or smaller investors, mutual funds are wonderful. But remember, you don't actually own the shares of Merrill Lynch or General Electric, you own shares of the mutual fund. So it's an indirect form of ownership.

Get started.

I think it's wonderful for young people to start with small amounts to get invested in the stock market. Remember the stock market can be for everyone, especially young people. Young people should be encouraged, again, to get the highest rate of return they can over longer periods of time.

(END VIDEOTAPE)

WALCOTT: Tens of thousands of young Catholics turned out to greet Pope John Paul II in Toronto Thursday. The pontiff is in Canada to preside over World Youth Day, a festival he started years ago. John Paul says young people are the future of the Catholic Church, but some teens say these days they often have to defend their faith.

Jim Bittermann reports.

(BEGIN VIDEOTAPE)

JIM BITTERMANN, CNN CORRESPONDENT (voice-over): At a time when conspicuous faith is not necessarily fashionable, when the Catholic Church, especially in the U.S., has been through a lot, the best thing for many of the young who have come to World Youth Days is just finding other kindred spirits. Because being young and Catholic is not always easy.

JIM OBERG, SIOUX FALLS, SOUTH DAKOTA: I get a lot of grief from my friends about, you know, the Catholics, the priests and the jokes, you know, always go around. But, you know, I just tell them no one's perfect. NIKI FERGEN, PIERRE, SOUTH DAKOTA: It's like peer pressure. It's kind of hard when everyone's like making fun of you and, or whatever, asking you questions about your faith. And it's just hard to all stand up when you're not with your youth group at all times.

BITTERMANN: So young believers came to Toronto searching reinforcement from their church leaders and others of like minds on issues of faith and conscience. One in four are Americans and sometimes they look for answers to the sexual abuse scandals that have rocked the U.S. church.

CARLA HORSLEY, SIOUX CITY, IOWA: When non-Catholic people come up and ask you questions, particularly now with the scandals going on in the U.S., how are you supposed to handle that?

BITTERMANN: Carla Horsley of Iowa was delighted she had the chance to put her question to the point man on the U.S. scandals, Bishop Wilton Gregory.

HORSLEY: I really liked how he said we've always been a church of sinners and saints. And it just proved that there are sinners in the church and we are humbled by that.

BITTERMANN: But the exchanges taking place here are a learning experience for young and old alike.

BISHOP WILTON GREGORY, U.S. BISHOPS CONFERENCE: The next generation is prepared to assume its role of leadership and that makes me feel pretty good about today, but even better about tomorrow.

BITTERMANN: The bishop would, no doubt, find evidence of that in the many young people here who have said the sex scandals in the U.S. church have ironically made them stronger in their faith as they've had to defend it.

(on camera): From their beginnings 18 years ago, these World Youth Day gatherings have always attracted some of the most highly motivated Catholic young people, people who the church needs now more than ever.

Jim Bittermann, CNN, Toronto.

(END VIDEOTAPE)

WALCOTT: He's an 82-year-old on his 97th trip abroad. Know who I'm talking about? For a few more clues, click on over to our Web site, CNNSTUDENTNEWS.com and play "Who Am I," an interactive game.

ANNOUNCER: Exploring our world, here now is CNN STUDENT NEWS "Perspectives."

MCMANUS: Art is an important aspect of just about every society in the world. But what we're about to show you is an exhibit featuring African art. The works displayed celebrate the achievements of various men and women and the healing of divisions following apartheid. Take a look.

(BEGIN VIDEOTAPE)

SUZANNE TALBOTT, MUSEUM CURATOR: The title is "Apartheid in Today" contemporary South African art (ph). We're representing artists who worked both during apartheid before 1994 and after during the new democracy.

The themes are primarily sociopolitical themes, the terrors and the restrictions during the segregationist government of the apartheid government initially and then later social theme for the people to come together and to heal all of the divisions that occurred during apartheid.

The artists are both black and white and folk artists and trained, highly skilled, internationally-recognized artists.

These three works come out of a series called "A Few South Africans." And it's a series of finely crafted collage prints, and they celebrated South African women heroines.

Virginia Meningioma (ph), and she was -- she was a heroine because she organized successful bus boycott for the workers who lived in Alexandra.

After the -- after apartheid ended, it was believed that by exposing all the crimes and injustices of apartheid and by bringing them out in the open a healing could happen and the country could begin to grow together again.

This one is called a "Constitutional Hill Scroll." And it is a -- it is a document, a confession, a personal statement by a prisoner named Shante Naidoo (ph) who spent, as you can see here from the scroll, 371 days in solitary confinement at this prison which was called the Old Fort Prison. And it happens to be the same prison where Nelson Mandela and before him Mahatma Gandhi spent time also.

A lot of the artists after apartheid moved away from the sociopolitical and they did a lighter, kind of more colorful, lighter genre.

I like this particular artist, Zen Delli Goshe (ph). And this work is a line of cut (ph) called "Meeting of Two Cultures." I like the fact that it -- what it represents, the coming together of the -- of the country, you know, the healing and reparation I guess you'd say, harmony.

(END VIDEOTAPE)

MCMANUS: From African art to U.S. stocks now. Blue chips swung in and out of positive territory Thursday, but the Dow finally ended the day just about even.

Our Joel Hochmuth has a look on a lively week on Wall Street.

(BEGIN VIDEOTAPE)

JOEL HOCHMUTH, CNN CORRESPONDENT (voice-over): What would prove to be a volatile week in the financial world got off to a rocky start Sunday. WorldCom, the nation's second largest long-distance company and the largest handler of Internet data, announced it was filing for bankruptcy. WorldCom lists more than $107 billion in assets, making this the largest bankruptcy filing in U.S. history.

JOHN SIDGMORE, CEO, WORLDCOM: While this is not the path we wanted to take, we think it's clearly the right thing to do for our future with this company. With integrity, communication and focus, I firmly believe we will ultimately benefit from this period.

HOCHMUTH: WorldCom's move was widely anticipated after it disclosed in late June it had a $4 billion accounting irregularity. While the announcement doesn't necessarily mean the company is going out of business, its shares right now are virtually worthless. The entire stock market was left shaken.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: What I'm worried about on the WorldCom bankruptcy is employees that work for WorldCom. I'm -- you know I worry that people will lose work. But the market has already -- I suspect, has already anticipated the WorldCom decision.

HOCHMUTH: Indeed Wall Street reacted in a big way with the Dow Jones industrial average finishing sharply lower on the next two consecutive trading days. Monday, the key index of stock prices dropped nearly 235 points. Then Tuesday, it dropped another 82 points to close at just over 7,700, its lowest close since September 1998.

Experts put the best spin on things, pointing out that history often shows it's after dramatic drops like this that is the best time to buy.

JOE BATTIPAGLIA, CIO, RYAN, BECK AND CO.: You don't need to be a wise and old investor to know about these -- 1987, 1990, 1994, and of course, the doozy in 1998, where the world's currencies were just going to melt down to zero. Each and every time, panic set in, no rhyme or reason to the selling. There's anticipation that the worst will get even worse. And then, of course, the clouds clear, the market starts to move again. And I think we're setting ourself for a similar position today.

HOCHMUTH: Those words turned out to be prophetic, at least for one day. Wednesday, the Dow jumped 488 points, the largest one-day percentage gain since the crash of 1987. The rally came as lawmakers in the House and Senate agreed on legislation designed to curb widely publicized accounting abuses that have shaken Wall Street in recent months.

REP. JOHN LAFALCE (D), NEW YORK: We must restore integrity in our markets and the perception of integrity. And the only way to restore integrity and the perception of integrity is a good strong bill. HOCHMUTH: Among other things, the bill will create a new regulatory board to oversee the accounting industry and lengthen jail time for certain corporate crimes. President Bush says he will sign it shortly after final congressional approval.

Still, the stock market's roller-coaster ride continues. At one point Thursday, the Dow was down more than 240 points before rallying to close nearly even; proving the only thing certain on Wall Street is uncertainty.

Joel Hochmuth, CNN STUDENT NEWS.

(END VIDEOTAPE)

WALCOTT: Well if you're not making money investing, have you considered Major League Baseball.

MCMANUS: Shelley, did you know the average Major League ballplayer makes over $2 million per season? Now unfortunately most players spend years trying to just get on a Major League roster.

WALCOTT: And as our Student Bureau reports, the road to get there is quite bumpy.

MCMANUS: Take a look.

(BEGIN VIDEOTAPE)

WILL FRAMPTON, CNN STUDENT BUREAU (voice-over): Matt Belisle is a top prospect in the Atlanta Braves farm system. Matt signed with the Braves out of high school. And after three years in the Minors, he's a starter with the AA Greenville Braves. If he stays on track, Matt could join the Major League Atlanta Braves in another year.

MATT BELISLE, GREENVILLE BRAVES PITCHER: I think about the big leagues all the time. It's true. It's in the back of my head and dream about it and I mean there's no hiding it. That's what I want to do and that's where I want to go.

AARON MCCREIGHT, ANNOUNCER: His potential is unlimited. When he's going good there -- there is no better pitcher in the southern league than Matt Belisle.

BRIAN SNITKER, MANAGER, GREENVILLE BRAVES: I think he's got a genuine love for the game and wants to get better. He's going to -- he's going to be a Major League pitcher someday.

FRAMPTON: Belisle's chances are better than most of his Minor League teammates.

JOHN SCHEURHOLZ, GENERAL MANAGER, ATLANTA BRAVES: That of a hundred, about 4 percent is what -- is what we're talking about, on average, making it to a Major League roster. And then a smaller percentage of that are the guys that actually make it into uniform and play a game out on a Major League field.

FRAMPTON: Montreal Expos catcher Michael Barrett spent three- and-a-half years in the Minors.

MICHAEL BARRETT, MONTREAL EXPOS CATCHER: A lot of guys get buried at the Minor Leagues, and it's not fun. When you're a guy that's spent, you know, eight or nine years in the Minor Leagues and you -- and you never get an opportunity to sniff the big leagues, it can be frustrating.

FRAMPTON: The Minor League life Belisle has lived for the last three years hasn't been a cakewalk. Unlike the airline travel enjoyed by Major League teams, Minor Leaguers are faced with long bus trips between games.

BELISLE: That can be brutal. They can be so bad, but they can also be great. It's part of it.

FRAMPTON: In the Minors, players sometimes are given other duties when they are not on the field. When he's not pitching, Belisle often sits in the stands with a radar gun clocking the other pitchers.

BELISLE: I hate sitting in the stands because you know I'm not a -- I want to be in the dugout. I hate sitting in the stands, hate it, but I have to do it and that's another incentive to get to Atlanta.

FRAMPTON: Matt sat in the stands all of last season because of a lower back injury.

BELISLE: This back was tough. It was tough because when I allowed myself to sit and think some nights, you know that I am losing a year of experience, at one point I thought I've played really two years of pro ball when everybody out of my same draft class has played four. That kind of hit me.

FRAMPTON: But a pitcher needs a positive attitude in order to find success on the mound.

BELISLE: I couldn't dwell on it, you know. I would think about it. I can't lie, I did think about it. But I thought if I was thinking about it too much that was a little bit of a negative emotion so I try to forget about it, channel everything into the rehab. Because I believe things happen for a reason and figure I was just getting all the injuries out of the way early.

FRAMPTON (on camera): Matt Belisle's next summer may be spent in Richmond, Virginia with the Braves AAA team. If he can stay injury free, the question for Belisle isn't so much if he'll make it to Atlanta as it is when he'll make it.

Will Frampton, CNN Student Bureau, Atlanta.

(END VIDEOTAPE)

ANNOUNCER: "Where in the World" there are 47 countries on this continent, Eritrea is this continent's newest country, the Nile, the world's longest river is located here? Can you name this continent? Africa. MCMANUS: Shelley, I've got some fun statistics for you now. There are about 10,000 ballplayers in baseball's Minor Leagues and a million or so on school and youth teams, but only about 60 or so a year make it to the Major Leagues.

WALCOTT: Wow! Well next week in our "Science Report," we'll tell you about a sports medicine clinic using technology to help aspiring pitchers improve their long odds of making it to the show as they say.

MCMANUS: Yes, definitely catch next week's "Science Report" for the full story and look for us back here on Monday.

WALCOTT: Until then, have a great weekend.

MCMANUS: Bye-bye.

WALCOTT: Bye.

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