♪ ♪ moving our economy for 160 years. bnsf, the engine that connects us. >> and by the alfred p. sloan foundation. supporting science, technology, and improved economic performance and financial literacy in the 21st century. >> and with the ongoing support of these institutions and foundations. and... >> this program was made possible by the corporation for public broadcasting. and by contributions to your pbs station from viewers like you. thank you. >> woodruff: a security breach at the height of the holiday season has exposed millions of target shoppers to data theft. the retail chain said today that some 40 million credit and debit card accounts may be affected. it urged cardholders to monitor their statements for suspicious charges. we'll get the details and explore the risks right after the news summary. the u.s. economy turned in some lackluster numbers today. home sales fell in november for the third straight month. and first-time claims for unemployment benefits last week were the highest since march. on wall street, the dow jones industrial average gained 11 points to close at 16,179. nasdaq fell 11.92 at 4058.14 the nasdaq fell nearly 12 points to close at 4,058. from moscow today, a surprise announcement. after a lengthy news conference, russian president vladimir putin announced he'll pardon the man who was once his leading opponent. oil tycoon mikhail khodorkovsky has been jailed on corruption charges for more than a decade. we'll have a full report on the putin news conference and reaction later in the program. the president of ukraine had his own session with reporters today and defied his opponents at home and abroad. victor yanukovich announced plans for partially joining an economic union led by russia, despite weeks of protests against the move. in a televised interview, he also criticized western officials who've visited kiev and supported the protests. >> ( translated ): it is very important that no other countries interfere in our internal questions and that they do not consider that they are the masters here, anywhere, on this square or anywhere else. i am categorically against anybody coming and teaching us how to live here. >> woodruff: yanukovich challenged those leading the protests to "wait for elections" if they want to change ukraine's government. security forces in egypt today intensified their crackdown on key figures in the arab spring uprising. mohammed adel led a youth movement in the drive to oust then-president hosni mubarak. he was arrested this morning. meanwhile, two of mubarak's sons were acquitted on corruption charges. a former prime minister was cleared, as well. a jury in london has convicted two men in the sensational, daylight murder of an off-duty british soldier. the two were self-declared soldiers of allah, inspired by al qaeda. we have a report from lucy manning of independent television news. >> the british soldier who had gone to war for his country, the man who murdered him, who called themselves soldiers of allah who fought their wore on the-- war on the streets. the shocking pictures from that day, a scene so ode as a woman walks by with her shopping, yet so unbelievable. michael adebolajo, blood on his hands, hatred from his mouth. >> the reason we killed this man today is because muslims are dying daley by british soldiers. and this british soldier is an eye for an eye an tooth for a tooth. >> reporter: moments earlier they had been waiting for a soldier to kill. that soldier on his final walk was lee rigby. in his help for heroes top, he walked down the road outside the baracks and as they spotted him, they accelerated and hit him. it wasn't enough for them just to knock lee rigby over. the actual details are too graphic, but in the middle of the day they repeatedly stabsed and slashed lee rigby's neck and that still wasn't enough. they then dragged his body into the road. they wanted martyrdom to go to paradise. instead they'll go to jail. lee rigby's family dignified yet clearly still traumatized, shed more tears in court as they heard the words guilty. >> this has been the toughest time of our lives. no one should have to go through what we've been through as a family. we are satisfied that justice has been done. but unfortunately, no amount of justice will bring lee back. >> reporter: but there are questions about the murder, both had already been in prison and they were known to the police for a number of years. michael adebolajo taking center stage at an islamist demonstration. >> and he claimed to have been approached by mi-5 as recently as this year, so were they missed, parliament is now investigating. part a london theatre collapsed evening during a performance injuring more than 80 people. 7 of the injured were seriously hurt. several had to be rescued from beneath piles of plaster, wood and dust. there was no word on the cause. in iraq shiite in iraq, shiite pilgrims were again the target of suicide bombers today, and at least 36 were killed. the attacks came as thousands of people made their way to the shiite city of karbala for a major muslim holiday. at least three bombers struck at different points along the route. al qaeda and sunni muslim insurgents often target shiites on the pilgrimage. u.n. investigators say the syrian military and its allies are systematically seizing people who are never heard from again. a report today said thousands have been taken away. separately, amnesty international reported rebels linked to al qaeda have tortured and killed people at secret prisons in northern syria. president obama commuted the sentences of eight convicted drug offenders today. in a written statement, he said their prison terms were unduly long under a law that treated crack cocaine more harshly than powder cocaine. a more recent law has reduced the disparity. before today, the president commuted just one sentence in his five years in office. new mexico is now the 17th state to legalize gay marriage. the state supreme court ruled today it is unconstitutional to bar same-sex unions. new mexico law never directly addressed the issue, but, until recently, county clerks historically denied marriage licenses to gays and lesbians. still to come on the newshour: a massive data breach at a major american retailer; surprise leniency for dissidents in russia; what the budget deal means for life outside of washington; north korea's leader tightens his grip on power; and putting a value on priceless art in a bankrupt detroit. >> ifill: the retail chain target confirmed that hackers breached tens of millions of credit card and debit accounts at the height of the shopping season, just before thanksgiving and right up until december 15. the theft occurred when people swiped their cards in store, not online. the retailer confirmed that customers' names, credit card and debit card numbers and security codes were stolen. it's the latest in a series of major breaches in recent years. we explore them with two experts: steve surdu is with mandiant, a cybersecurity firm; how did 40 million accounts get compromised? >> well, we don't know the details at this point in time. they're still investigating am but obviously information had to be siphonned off from the organization. attackers almost certainly came in from outside, put software if place that allowed them to aggregate the information over time and then remove it so they could use it. >> ifill: put software in place in each individual store or some central server? >> that's also unknown. either one is possible. in order to have as much of impact as they've had with 40 million cards it would seem likely that they've had access at the centralized part of the organization in the central network that maybe allowed them to reach into the individual point-of-sale systems, or at least distribute the software from that central point into many point-of-sale systems. >> ifill: and an inside job, perhaps? >> not likely. there are a lot of situations like this that we've seen over time. and it's never been an insider, not in our experience. we've dealt with hundreds of these situation. >> ifill: let's talk about these kinds of situations. you say that this happened before. this is only unusual in its side? >> yes, i don't know if it's's unprecedented but in the past breaches like the tjx breach jz which is t.j. maxx stores. >> yes. hannaford, there have been other not just retail breaches but breaches of financial institutions, payment processors, that are similar in that the attacker came in from the outside, aggregated information and removed it. >> ifill: let's talk of the hardware for a moment. why does it make a difference that it happened with people who swiped their cards? would it have handed if you just handed your card over in some other way. >> just handed your card over-- . >> ifill: to the cashier, they're going to swipe it too, i guess. >> you're to the going to get-- in order to do this large scale it has to be automated. >> ifill: and so what period of time are we talking about here? we heard from before thanksgiving until december 15th. but would it take long tore get that many or is it just because the shopping season is in full swing. >> well, it's high volumes now, so this is the royalty time to do it. i think it's still really early in the investigation. my guess, because it sounds like they only said they were able to condition taken it as of the 15th, my guess is they discovered it relatively recently, put the brakes, the stops son whatever activity was going on, and i think now they should be deep into an investigation which may take a considerable amount of time still. >> ifill: now a lot of the people who are watching this story who perhaps have just gotten home from doing a little christmas shopping are thinking to themselves, who is liable. who gives me back my money if i have fallen victim to this? >> well, the card brands make sure that the individual consumer doesn't have that type of liability. if you contact your credit card organization, your issuing bank as quickly as possible if you see fraud charges you're always indemnified from that. so that shouldn't be an issue that anyone needs to worry about. >> ifill: is the store itself, is the chain itself responsible? >> well, responsible ultimately they would have financial obligation to the card brands. there typically would be fins if they were found to be in breech of the payment card industry security standard. >> ifill: and what responsibility do consumers have to make sure that, to protect themselves, or is there anything they can do at all to protect themselves from this kind of intrusion? >> in this type of situation there isn't much a consumer can do. they're really putting their confidence in the institution they're dealing with. and all they can do is check their cards, their statements to make sure that if they see inappropriate activity they respond to it quickly. >> ifill: are you saying even after all the hacking episodes we have seen, we have survived, that technology is such that there is no way to protect against something like this happening? >>. >> oh there are many protections. there are many different things that you can do to ward off it. but there aren't any guarantees. you can't ever say that you're absolutely secure. security is an assymetrical type of issue where you can protect yourself in thousands of different ways. and attacker only needs to find one way in. >> ifill: give me an example of one way to protect, for the company, to protect its consumer. >> a company typically would perform assessments of their environment to determine whether they had vulnerables the attackers could take vac of in their web sites so they could test them to see if they have problems. they would evaluate their computers to see if they configured them appropriately. because there are known ways to take advantage of systems, so they would be self-inspecting those types of things. >> ifill: so the very first thing is there is self-inspection from the retailer or as i saw today the secret service gets involved in this? >> the secret service would be involved to help them investigate but wouldn't be there to help them defend themselves. pain, almost all major organizations have full-time security staffs where they are always looking at their environment and trying to make sure that they're up to date on their software that if they find a problem they fix it. but it's a tough thing. the larger the environment, the more difficult it is to find and resolve the issues. >> ifill: okay, steve suddeno from mandiant, thanks so much for helping us out. we have more how you can guard against credit card thieves you can find a best practices guide on our home page. >> woodruff: russian president vladimir putin presided over his annual news conference today, and, despite the marathon session with reporters, he held back the most news-making announcement until after it was over. the tightly choreographed event attracted hundreds of russian journalists, with some holding signs-- and even stuffed animals and dolls-- hoping putin would notice and call on them. but the russian leader saved his biggest headline until the four- hour-long news conference finally ended, announcing he will pardon the jailed oil tycoon, mikhail khodorkovsky. >> ( translated ): he has already spent more than ten years in jail. it is a serious punishment. he refers to circumstances of the humanitarian nature; his mother is ill. and i think that, bearing in mind those circumstances, it is possible to make that decision, and i will soon sign an order about his pardon. >> woodruff: khodorkovsky was once the wealthiest oligarch in russia, but he was arrested at gunpoint in 2003 after criticizing putin and funding opposition parties. he was convicted of tax evasion and embezzlement in cases widely viewed as part of putin's campaign to silence critics. today's pardon announcement was coupled with amnesty for two members of the punk rock band pussy riot, jailed after an anti-kremlin protest at moscow's main cathedral, and for 30 crewmembers of a greenpeace ship who protested russian oil drilling in the arctic. >> ( translated ): it is not a revision of the court's decision; this is a general decision about the amnesty which covers them, as well. it is not connected to greenpeace or to this particular band. it is not my decision but the decision of the state duma. >> woodruff: all of this as putin is trying to tamp down criticism of russia's record on human rights and political freedoms. the russian president also tried today to ease strained ties with washington. he denied russian intelligence has pumped edward snowden for information since the national security agency leaker was given asylum in august. >> ( translated ): we do not work with him and have never worked with him. and we don't bug him with all those questions as to what was being done in relation to russia or how it was being done at the agency he worked for. >> woodruff: putin also said he believes u.s. surveillance efforts are needed to fight terrorism if there are clear ground rules. but on iran's nuclear program, he warned that new american sanctions against 19 iranian companies could hinder progress toward a comprehensive agreement. >> ( translated ): as for sanctions, i'm certain that this is a counterproductive decision. it will not lead to anything good in terms of final agreements on solving this issue. >> woodruff: at the same time, putin defended russia's agreement to offer a $15 billion bailout to ukraine as merely helping a partner in need. >> ( translated ): this is not linked neither with the protests nor with talks between ukraine and the european union. we just see that ukraine is in a fficult state and it is necessary to support it, and we have this opportunity to support them financially. >> woodruff: putin's news conference comes as russia prepares to host the socchi winter olympics in february and just over a week after he was criticized for shutting down a state news agency which attempted to include the voices of the country's opposition in its coverage. the exact timing of the release of khodorkovsky and the others is still unknown. now, to help us understand what's behind putin's announcements, i'm joined by: dimitri simes, president of the center for the national interest, a foreign policy think tank; and angela stent is director of the center for eurasian, russian and east european studies at georgetown university. her latest book is "the limits of partnership: u.s. russian relations in the 21st century." welcome to you both. angela stent to you first, why the khodorkovsky pardon? >> well, i think it reveals two things. one of them is that putin clearly doesn't feel threatened any more by khodorkovsky sow doesn't have to keep him in jail. and i think there's a lot of-- it that it's been ten years but i think secondly it has to do with all the things we heard in your important. the upcoming sochi game, the criticism russia for many of the things that putin has done recently but particularly the so-called homosexual propaganda law, which has people really riled up about what will happen at sochi about the treatment of athletes am so i think this a gesture to show that russia listens to some of the outside world's concerns, that it isn't just imprisoning people t isn't negative and it's supposed to symbolically show that russia and that putin himself have become more open to some of these issues. >> woodruff: dimityi simes how do you read what he has done for khodorkovsky. >> exactly right but to put things into perspective, khodorkovsky was supposed to be released in august is so now he will be-- . >> woodruff: this coming august. >> this coming august, after then kear-- teniers in jail. so now he will be released a few months earlier. it's very good in terms of public relations for putin but it doesn't change much. the pussy riot. >> woodruff: this is the punk rock women's music group. >> exactly, which had an interesting performance, very provocative, they were arrested for that but anyway, they're now under amnesty but they would be released anyway in march. so putin got a lot of publicity but he conceded very little. >> woodruff: so you are saying that it's not that big a deal what he's done with these pardons. >> that is not that big a deal. angela, i think, again is right, saying that putin wants to look reasonable, and demonstrate russia is a country of law. sometimes the level of russian repression is overstated in the united states and the west in general so putin wants to look sensible and calibrated. >> woodruff: angela stent, do you see what he did with regard to the members of the pussy ri ot band and the greenpeace pens, members of the greenpeace group as all as a part of the same effort to for public relations. >> it certainly is i agree with dimitri, their term was coming to an end in a couple months. let me say about khodorkovsky that were rumors last week a new case would be brought against him and he wouldn't be released in august as he was supposed to bement so one of the things putin has done is push that back and say no, no, there won't be another trial and by the way i'm magnan muss an am releasing him now. the pussy ryeout is the same thing. this very been in jail, for particularly bad conditions, one in a labor camp and has bloingd about t he looks pag than muss t is a pr gesturement but as dimitri says they would have been released anyway those two women in a couple of months. >> woodruff: so this is a four hour long news conference, he covered a lot of territory during that time. he also talked as we said about edward snowden, about what the nsa, the u.s. national security agency is doing. he basically seemed to be defending whatever they're doing at the same time as something that is dealing with a lot of controversy here in this country. >> well, he is defending the existing practices. and he also is engaged in a delicate blaing act. he is very tough, in defending russia initial interests as he understands them. he would frankly be fully prepared to challenge the united states on syria, as he has done before. >> woodruff: on syria. >> certainly on iran when he said that he is opposed to sanctions, particularly unilateral american sanctions but at the same time he wants to a per reasonable. and he particularly wanted to make clear that he can work with president obama. angela and i were at an event with putin several months ago. and putin went out of his way to be magnan muss with o bam -- obama after he-- he wanted to say no, obama had choices, he made courageous choice, principal choice, he does not want to create an impression that the russian lead kerr not work with the president of the united states. >> woodruff: angela stent, why is that, go ahead. >> i would say that is after making a decision to give snowden temporary political asylum which made sense, a wonderful prop band-- propaganda coup which says the u.s. has no right to criticize russia for listening to its own citizens phone calls since the united states does that itself. he could have not given him asylum, he did. after that obviously president obama decided that he was to the going to go and have a sum wit president putin. and in fact, since snowden has been in russia, tremendous damage has been done to the united states's relations with its european allies. i mean the worst for a very, very long time. and these are all revelations that come from snowden. so yes, i would take skepticism the claim that the russian government has not been working with mr. snowden but to put that aside, the damage has been done. all the documents, documents are still being leaked. so it's quite easy for president putin to say well, he wants to work with president obama. i done think he's going to find much of a response there, because it's quite clear that the white house has made its own conclusions from what happened earlier this year. >> woodruff: a couple more things i want to ask you both about, but before i do, dimitri simes, did you get any new sense today of whether russia is going to be willing to work more with the u.s. or iran, on the nuclear, trying to get rid of their new clear program and on syria? >> well, putin clearly did not yield anything of substance on either of these issues. in my view if you want to understand putin's new flexibility, you have to look at one figure, 1.4%. that is the level of russian gdp growth, lower figure than anyone expected in 2013, the ambitions are great, the economic development imposes a straight jacket on what he has to accomplish. so reluctantly he has to display some common ground with the united states. >> woodruff: angela stent -- >> well, i was just going to say and with that very low-growth rate he has just now promised $15 billion from the national welfare fund to president yanukovych who may or may not spend it wisely, one understands the political reasons but this will be some economic burden on russia whose economic outlook for the next decade is to the good as russian economists themselves have said. >> woodruff: angela stent, we know as we reported just a few days ago, putin closed down one of the state-run media organizations. how free today finally is russian society under vladimir putin? >> well, in some ways, there are still freedoms, clearly. people have personal freedoms. they can travel and they can, by the way, leave russia and go and live somewhere else which of course they couldn't do before. the internet is still pretty free in russia. print media, there are very critical print media, there is one radio station that is very critical, electronic media are controlled by the government. and are going to be even more so since the abolition of the news agency. so there are some freedoms that they've clearly been curtailed in the last couple of years. >> woodruff: an dimitri simes, are we to understand that it is going in the direction against freedom under putin. >> i think it is quite contradictory. even the russian electronic media has several different stories. if you are talking about cable channels, they are almost completely free. and you have some of them have owners which are very critical of putin. they call putin a crook, a tyrant. stream tv channels which control to the government are much more constrained but even they have a lot of critical opinions. i would say putin is making two-steps forward, and one and a half steps back. >> woodruff: all right, we hear you. that is a measurement we can all understand. dimitri simes, and angela stent, we thank you >> ifill: there's been a lot of talk about the politics behind the bipartisan budget agreement. we take a closer look now at the devil in those details. senate democrats were happy today to tout the budget deal headed to the president's desk. budget committee chairwoman patty murray said the agreement was about more than just funding the government. >> we showed the american people that members of congress can work together, that we can listen to each other and get into a room and talk frankly without trying to hurt each other politically. secondly, by breaking through the partisanship, we finally ended the seemingly never-ending cycle of lurching from one crisis to the next. >> ifill: the budget plan averts another government shutdown like the one this past october that lasted for 16 days. it also gives the pentagon some relief from automatic spending cuts and restores billions of dollars to domestic programs, including scientific research. the $62 billion price tag will be paid for, in part, by scaling back benefits for military retirees under the age of 62. but already, there is talk from both sides about finding the money somewhere else instead. the deal won nine republican votes yesterday, but others-- including tom coburn of oklahoma-- argued it does more harm than good. >> i want to describe who it's a compromise for. it's a compromise for the politicians. it's not a compromise for the american people, because what it really does is increase spending and increase taxes. >> ifill: at the white house, aides to president obama released a statement after the vote, saying, in part: "it's a good first step away from the shortsighted, crisis-driven decision-making that has only served to act as a drag on our economy." the agreement now awaits the president's signature. here to walk us through some of the lingering debate about the budget deal is lori montgomery of the "washington post." welcome back, lori. >> thanks for having us. >> does this deal show that the buling cuts have been iced. >> no, they have not been permanently eased. this is a very modest deal. and paul ryan an patty murray said they weren't going to try to solve all the world's problems so what they've done is for the current fiscal year they've walked back half of the sequester cut, so $45 billion goes back to the agency, 45 billion in cuts stays in place. next year there is a slightly smaller relief from sequester and after that sequester stays put. so republicans have won something in the sense that they have maintained the spending cap that will reduce spending for the next ten years. but in the short term, for now, there's going to be a big boost in spending for domestic agencies and the pentagon that they hadn't been expecting ides so when you raise that cap and you talk about domestic spending for the pentagon there are other agencies which imagine benefit as well, somebody got a benefit out of this, among them, for instance, during the shutdown we heard a lot about the national institutes of health, and children being turned away from medical trials. do they now get more money? >> well, see, all of that has yet to be decided. and it's been a little premature celebrating around here. we've all been saying oh, this avoids another government shutdown. in fact, they have yet-- they have to pass another bill to avoid a government shutdown. which could still happen on january 15th. i mean, in a rational world it wouldn't because republicans and democrats have now agreed, okay, here's the number, this is what we're going to spend on these things this yearment but they still have to, like, portion out all this extra money that they've just decided to spend. and that will happen over the next mondayment and they will pass that bill, hopefully when they get back in january. >> ifill: but the way things look now, for instance, we say somebody benefit, somebody pays. are military retirees paying, there has been a lot of talk about that this week. >> yeah, so this is by far the most controversial paid for in this package. this package doesn't give away any extra money, but it does identify all of the savings that allow us to spend more now. this $85 billion in cuts, fees, airline passengers paying more, a bunch of stuff. but by far the group that is yelling the loudest and getting hit most dramatically are military retirees. civil service workers, nonmilitary workers will also see a reduction in their pension, but that's just for new employees. in the case of military retirees, if you are currently retired, and you're under the age of 6-- 62, will you see a 1% knockoff of your cost-of-living increase. >> ifill: so for instance, we know a lot of military people especially here in the washington area who retired after 20 years in the military. they weren't even 50 years old yet, an they're the ones who would be targeted in something like this. >> exactly. and so the argument is well, these people are still of working age. they're under the age of 62. they can retire as young as 38, 40, an many of them go on and currently have second careers. so you know, they can afford to give away 1%age point reduction. but the arc on the other side, and it's been coming primarily from the republicans in the senate, but i think democrats are starting to concede, okay, maybe you have a point, is that these people have planned their lives around thee benefits and they see it as a breach of trust for them now to take a hit, you know, sort of retroactively. >> ifill: isn't there a defense authorization bill going through as well, that also has its protectors. is the pentagon one of those uncutable agencies? >> well, the pentagon has seen its share of cuts. it's to the getting all of its money back. it's getting half of its money back this year. but there's also a commission dedicated to military pay and benefits which s you know, we talk about social security, that's almost nothing compared to cutting the benefits of our active duty an retired militarimen. and that commission is supposed to report next year. because entitlements, you know, retirement and health care is eating the pentagon alive as it is in so many other parts of the country. >> ifill: if this stays in place, is there any way to calculate how much the average retiree would have to pay extra? >> it's not-- it's what they don't get. so -- >> a little backwards. >> yes so, they would-- this year, for example, the cost-of-living increase was 1.5%. they would have seen a .5% increase instead of a 1.5% increase. and it can add up to real money. the union that represents military officers has said that this could be a hit of like 7 o-- $70,000, $100,000 if are you in that sort of doughnut hole from age 40 to age 62, for the entire period. >> ifill: let's talk a little bit about another area of the budget that might affect real people assuming it stays in place as it is now planned. which is payment to medicare providers. this is not-- we don't necessarily know how much this might trickle down to the actual patient. but doctors and clinics might be-- have to pay more. >> so the real danger here, this is another thing that is already in place. this is a part of a sequester that will not be relieved. and what it does is it cuts across-the-board, a 2% reduction in payments to providers of all types. hospitals, nursing homes. >> ifill: that was a part of the original across-the-board cut. >> and it stays in place and it's to the going it away. so what this agreement does is it says we would like to continue the sequester for medicare providers for two more years. and 2022 and 2023 t say huge chunk of money. you know, it's way out in the future. the complaint about this is it may never happen so we may never see those savings. but you know, the danger of macking these kind of cuts is really, you know, whether doctors choose not to treat medicare patients. >> ifill: well, the one thing that we know is true about all of this is this is maybe a temporary patch and we might be facing another challenge very quickly. what happens next? >> okay, so first we have to pass the funding bills and actually keep the government open, you know, per this agreement. on january 15th. but then on february 7th we hit the debt limit again because the last deal we made says we open the government after we shut it down in october, well a suspend the debt limit but only until february 7th. so we've got this new potential debt limit conflict coming. republicans in the house are saying you know, we really don't want a lot of fuss. it's an election year, we would like to get through this easley, this is the modest bipartisan budget compromise, this is a model. maybe we can do this again. but you've got all those republicans in the senate who are facing tea party challenges. and are you starting to hear from the senate, oh no, we want to fight, we want to cut spending again. >> ifill: back on the merry-go-round once again. >> exactly. >> ifill: well, i hope you and the other reporters on capitol hill get a little time off for the holidays to prepare for the next round. >> thank you, i hope so too ooz lori montgomerie of "the washington post", thanks. >> woodruff: this week, north korea's supreme leader, kim jung un, just began his third year as head of one of the world's most isolated countries. today chairman general martin dempsey comment be on kim's execution of his high ranking uncle said this kind of internal actions by dictators are often a precursor to provocation. defense secretary chuck hagel called it concerning to everyone. tonight senior foreign a fare-- affairs correspondent margaret warner takes a closer look at the erratic 30-year-old. >> warner: n.b.a. hall-of-famer dennis rodman returned to pyongyang today to renew what he calls his "basketball diplomacy" and his curious friendship with kim jong-un, north korea's young leader for the past two years who remains a mystery to the outside world. the visit comes a week after kim staged a theatrical and deadly powerplay. he had his uncle and presumed mentor, jang song-thaek, arrested in public, tried for treason and executed. kim's summary dispatch of his high-ranking relative perplexed and disturbed foreign governments and longtime observers. secretary of state kerry spoke on abc last sunday. >> it tells us a lot about, first of all, how ruthless and reckless he is. he is spontaneous, erratic, still worried about his place in the power structure, and maneuvering to eliminate any potential adversary or competitor. >> warner: yet, on tuesday, a smiling kim was front and center, marking the second anniversary of his coming to power after the death of his father, "dear leader" kim jong- il. early western hopes that the younger kim jong-un might govern differently haven't been borne out, says joel wit of the u.s.- korea institute. >> one of the narratives when he took over was, because this guy seems to have been educated in switzerland, is younger, he might be more likely to pursue reform in north korea. and, of course, that hasn't proven to be true yet. >> the way he moves around with his wife socially, his interest in things like basketball and ski resorts and amusement parks. so, in that sense, quite different. >> warner: north korea's economy is in desperate straits, yet kim hasn't moved toward the market reforms embraced by his fellow communist neighbor, china. but kim is not different on issues that matter, says victor cha of the center for strategic and international studies. >> two years in government, no sign of economic reform, any serious economic reform. >> warner: do you think he's a serious person? >> you know, it's really hard to say. at least, in policy, doesn't seem to be interested in the things that the country really needs, whether that's food or energy or hard currency or some sort of economic growth. >> warner: while much is not known about kim jong-un after these two years, two trends in his leadership appear clear and worrying: the internal instability revealed by the way kim's uncle was purged and executed; and north korea's ongoing build-up of a nuclear weapons and missile arsenal that could threaten the world. on the day jang was killed, a state tv newscaster recited a litany of shocking charges against him. >> ( translated ): the accused jang committed hideous crimes, such as attempting to overthrow the state by all sorts of sabotages and despicable methods with a wild ambition to grab the supreme power of our party and state. >> there's an incredible admission of infighting in the country, and factionalism, which has been completely unheard of in north korea. there are two incredible admissions for a country that tries to keep a very public profile of them having everything under control. >> warner: kim's ostensible enemies weren't named, but this former north korean military, intelligence and workers' party official who defected to south korea just before kim jong-un came to power offered some insights. we agreed to conceal his identity and name. >> ( translated ): military officers generally were outraged that they had to accept kim jong-un as the new leader. do they think the military is all stupid? discontent among the military elites began soon after kim jong-il demanded we transfer our allegiance to his son. the feeling of betrayal turned into anger. >> warner: military and party officials scorned kim for his inexperience, the defector said, and his rudeness to subordinates. >> ( translated ): his father had more confidence and so was more relaxed because he earned the power. but kim jong-un did not have the chance to learn and prepare for the leadership. this is why kim jong-un heavily relies on intelligence office to control and spy on his people so to suppress dissent. >> warner: jang was the ideal target, the defector said, for kim to eliminate a potential rival and offer a scapegoat for two years of little economic progress. >> ( translated ): the ruling elites became very disappointed at the new leader, and the dissent began to set in. jang song thaek perfectly fit for the bill as the scapegoat. everything can be blamed on him and spare kim from criticism for not delivering the powerful nation he promised. >> warner: victor cha found the whole episode unnerving. >> instability in north korea would be probably one of america and the region's worst nightmares, because we don't have any sense of how things progress or happen inside the regime, because they do have a stash of nuclear weapons and fissile material. i think it would be a big concern if there were some sort of instability inside the country. >> warner: kim jong-un has continued his father's nuclear and missile programs, following the warhead tests of 2006 and 2009 with one of his own this past february. it's estimated that north korea has between six and nine nuclear warheads >> those programs have a lot of momentum behind them. >> warner: what about proliferation? >> right now, we don't see any signs of it, but what i would argue is, as their stockpile grows of nuclear weapons, as their missile capabilities grow, the chances that they'll be exporting the kinds of technologies we don't want them to export will grow also. >> warner: victor cha says the north's missile program is a particular danger. would you say north korea now when you talk about missile capable is more or less threatening than it was two or three years ago. >> it's certainly more threatening. the last major test they did was successful in terms of putting a payload vehicle into orbit, which is something that they have been trying for years to do and have not been capable of. that is a very important step in terms of developing indigenous long-range ballistic missile technology with which they can target the united states. secretary gates two years ago said that he believed north korea could pose a threat to the u.s. homeland within five years, so that is within the term of this president. so, i think there's good cause to be concerned. >> warner: all this has caused deep worry in neighboring south korea among the public. >> ( translated ): kim jong-un was educated in europe, so i thought he could be more open, more flexible. but he's worse than his father, and so i'm very disappointed. he's really cruel. >> ( translated ): looking at the way he's killed his uncle, i think he's not just bluffing. many of my friends are in the army, and when i talk to them, they tell me how scared they are. they talk about there could be war anytime. so, it does scare me. >> warner: and it also alarms those in government. after the uncle's killing, new south korean president park gyun-hye warned of the danger of a new provocation from the north. >> ( translated ): we cannot rule out emergencies such as reckless provocations. considering the gravity and unpredictability of the current situation, the government, army and civilians, the entire nation should be thoroughly prepared. >> warner: practicing the sort of vigilance the south has been forced to maintain for decades. and with this new, untested leader to the north, there's no end in sight. >> ifill: finally tonight, more fallout from the detroit bankruptcy story. residents now face the prospect of losing art masterpieces owned by the city itself. jeffrey brown fills in the picture. >> brown: it's one of the country's great museums now in a most unusual and potentially dire situation. the building and several thousand works of hart in-- art in the collection of the detroit institute of the art are owned by the city and the at this manager overseeing the bankruptcy has said it's possible that some those works could be sold to pay off creditors. our colleague's at detroit public television produced a documentary about the museum and its might in this excerpt museum directors argue against such a move. >> we were the first art museum in america to acquire a van gogh in 1920. we were the first art museum to acquire a matisse in 1922. we have the finest collection of italian sculpture in the western hemisphere. we're still the only major art museum to have a department of african american art. the argument more tends to be, "well, you've got four van goghs, why don't you just sell one of those because you'll still have three?" it's a total failure of public trust to do that. it's the most damning admission of failure. there's no precedent of a city selling a collection in that way. there would be the argument from the attorney general that you can't sell that stuff. it doesn't belong to the city the way that a fire engine does. it belongs to the public. that's why it was given, why works of art was given. we're going to stop you from doing it. >> imagine a facility like the d.i.a. that embraces and celebrates european art and african american art and latin or hispanic art and asian art and arab-american art. that's the uniqueness of the american experience, and the fact that everybody's here and everybody's welcome. >> these are things you can't buy nowadays. if you don't have them, you can't buy them. >> brown: just today, christie's completed its report for city manager kevin orr on some 2,800 city-owned artworks, setting a value for them at between $450 million and $870 million. the auction house also presented orr with several other options that could avoid selling the work. mark stryker covers the arts for the detroit free press and joins us now. mark, we just heard some of the arguments against selling the art. how much pressure is there to at least look at selling some of it, and where is it coming from? >> well, there's extraordinary amount of pressure to look at selling the art. the fact is the city does own the art, which is unusual. most civic museums are not literally owned by the city. they're independent nonprofits. but here the collection is owned by the city. and that makes it a city asset which means in bankruptcy it's vulnerable to sale. and you have creditors, including city pensioners and retirees who are pushing for a sale as well as bondholders to recover more of their losses. kevin orr, the emergency manager has been charged with restructuring the city finances. he has to find money. there's a big pool of it at the dia. he needs to put together a plan that creditors will accept and that the judge in the bankruptcy court will approve. and he doesn't think can do it without monetizing the art in some way. and so he's essentially told the museum he wants $500 million from them, however he can get it whether selling or some other mechanism. >> pirro: well, so cristies took a look at some of the work, right, just a very small percentage of the actual collection. tell us what they found. >> well, cristies looked at about 5% of the total collection of those 66,000 roughly works, so we're talking about 2800 works. these were workings that were bought directly by the city. mostly in the 1920s when the city was flush with auto cash. and what they found was as much as almost 900 million dollars worth of art. most of the value is included in 11 really stand out signature works in the museum, these are things like the wedding dance, valued at 100 million to 200 million, and van gogh's remarkable self-portrait which was valued somewhere between 80 million and 150 million. the matisse, the window, a rembrandt painting, an extraordinary michelangelo drawing, degas, monet and the like, these are among the top works. they valuated, essentially they gave, in the report, line item individual values for everything in the museum that was city bought, over 50-- worth more than $50,000. >> brown: and cristies, i saw also, as have others in recent months, offered some alternatives, i guess, for what could take place. what else is on the table as possibilities? >> well, the most frequently cited kind of alternatives for sale are things like using the art as collateral for loans. trying to rent parts of the collection. trying to maybe some sort of a scheme where wealthy patrons would buy the art and then loan it back to the city, rather loan it back to the museum. all of these things, though, the museum would argue, and much of our reporting, frankly, with the free press is borne out that all of these kinds of things with would still leave the art vulnerable to sale. it would still put in jeopardy the collection. it wouldn't raise nearly the kind of money that people think it might. and one of the most important factors here in detroit is that there is a tricounty tax millage, property tax that funds the museum. and right now accounts for about 70% of the museum's budget. and if there is any art sold or a move to monetize in any way, the counties have said they would repeal the tax. and that effectively could shutter the museum. so it's a very delicate, very difficult situation. >> brown: now i know that all of this has the museum world, and i mean outside detroit, in a state of outrage over the possibility. how much pressure is, from the outside is being felt in the city. and what kind of response is there? >> well, the pressure outside is not nearly, i think, the issue as the pressure inside. i mean the fact is that the emergency manager needs to get a deal. and he has to put together a plan that the judge will approve. the emergency manager by the way in this case is the only one who can sell art. the judge neither in a municipal bankruptcy, neither the judge nor the creditors can literally force the sale. but they can put pressure on or to monetize the art, they can put pressure on the judge to deny a plan if they think it's not fair. and then among the city residents, you know, you have different factions, there is a great outpouring of sport for the museum. but at the same time, there are folks particularly city pensioners who represent maybe 20,000 or so of the 700,000 people in the city. and those pensions for those retirees and municipal fire and police are at risk. and people think that if it comes to art or pensions, you should go with pensions. >> brown: and just in a word or two in our last seconds, do we know when a decision will be made or some kind of deal made? >> well, there are two things. one, the emergency manager said he wants to have a plan in place, or submit a plan by early january. at the same time we have a side mediation going on with members of national local foundations trying to raise money for the museum that might create a way out where the foundations would put up as much as 500 million dollars, it would go to pensions. and that would take the art off the table. >> brown: mark stryker of the "detroit free press", thanks so much. >> you're welcome. good to be with you. >> ifill: again, the major developments of the day. the target retail chain confirmed that up to 40 million credit and debit card accounts have been compromised by a data breach. and russian president vladimir putin announced he'll pardon oil tycoon mikhail khodorkovsky, who's been jailed on corruption charges for more than a decade. >> woodruff: on the newshour online right now, we told you about how one school in metro detroit turned homework on its head with "flipped" classroom instruction. now you get to weigh in. could this new teaching technique work in your child's school? join us tomorrow for a twitter chat on the topic. the details are on our homepage. and it turns out that "lord of the rings" author j.r.r. tolkien was quite the climatologist. read about research that accurately models middle earth's mythical climate. that's on our "science" page. all that and more is on our web site, newshour.pbs.org. >> ifill: and that's the newshour for tonight. on friday, we look back at what congress did and, in many cases, didn't do this year. i'm gwen ifill. >> woodruff: and i'm judy woodruff. we'll see you online and again here tomorrow evening with mark shields and david brooks. for all of us here at the pbs newshour, thank you and good night. >> major funding for the pbs newshour has been provided by: >> my customers can shop around; see who does good work and compare costs. it can also work that way with healthcare. with united healthcare, i get information on quality ratings of doctors, treatment options and estimates for how much i'll pay. that helps me and my guys make informed decisions. i don't like guesses with my business and definitely not with our health. that's health in numbers. united healthcare. >> and with the ongoing support of these institutions and foundations. and... >> this program was made possible by the corporation for public broadcasting. and by contributions to your pbs station from viewers like you. thank you. captioning sponsored by macneil/lehrer productions captioned by media access group at wgbh access.wgbh.org . this is "nightly business report" with tyler mathisen and susie gharib brought to you in part by. >> thestreet.com, up to the minute stock market news and in depth analysis. our quantity ratings service provides objective independent ratings daily on over 4300 stocks. learn more at the street.com/nbr. the day after the taper, yields are higher, the dollar is stronger. which stocks could get a rush of money, and which 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