Fareed Zakaria GPS – CNN 05-08-16

Salient to Investors:

Fareed Zakaria said:

Trump has formidable marketing skills but commerce is different from government. FDR, LBJ and Reagan achieved the most with virtually no commercial background. George W. Bush and Herbert Hoover, despite commercial backgrounds performed much worse as Presidents.

Robert Rubin said the single overriding objective in business is to make a profit, but government has to deal with many legitimate and often competing objectives. Rubin said not even the president has the kind of authority every CEO does.

Dan Senor said that Trump will lose in November, and that history shows that parties can bounce back.

David Frum at the Atlantic said:

An immense wreck is coming: political and cultural.

Trump has a terrible work ethic, is unfit and dangerous to be President.

Globalization’s losers have to be more fairly compensated by the winners.

Ross Douthat at The New York Times said:

Returning to a conservative normalcy is unlikely given Trump.

Nationalism is resurgent around the world for understandable reasons: dislocation, globalization, terrorism, Successful politicians, especially conservative politicians, have to address that anxiety.

Emily Miller at Washington Times said:

What happened is the people decided the Republican nominee, not Washington, not New York.

The country is unfamiliar with the depth of Trump’s policies.

Trump has the temperament to be president: thoughtful, calm, direct, listens very well.

David Order at MIT found that between 2002 and 2010, congressional districts negatively impacted by trade with China were more likely to elect more ideologically extreme representatives, either left or right of the officials they replaced – benefiting conservatives much more than liberals.

A Gallup poll found that 58% percent of Americans view foreign trade as an opportunity, 34% see it as a threat.

Yanis Varoufakis said:

Europe is in deep crisis and falling apart. The EU is heading for a break up, and new borders are being erected.

Instead of banking union, countries are re-nationalizing debt. The probability of losing your money in an Italian bank is increasing, in a German bank decreasing.

Bassem Youssef said:

The West mistakenly believes that it is better to deal with a military regime than a religious one. Military and religious factions work hand in hand.

All authoritarian regimes need to fall back on a reason for failure.

The IMF predicts:

US GDP to grow 2.4% in 2016.

Venezuelan GDP to contract 8% in 2016, and inflation to rise to 720% in 2016 and to 2,200% in 2017.

Myanmar’s GDP to 8.6% in 2016, the world’s best.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1605/08/fzgps.01.html

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Fareed Zakaria GPS – CNN 01-10-16

Fareed Zakaria said:

The most significant trend in the Middle East is Sunnis versus Shiites, which will continue to limit the ability of any outside power to stabilize the region.

Saudi Arabia faces challenges from ISIS to domestic extremists. Plunging oil prices have collapsed government revenues so its generous subsidies to its people will be hard to sustain.

10% to 15% of Saudis are Shiite and live atop the kingdom’s oil fields.

The single greatest threat to America from the Middle East remains radical Sunni jihadists, many of whom draw support from Saudi Arabia.

Americans should root for China to succeed, else feel the pain at home.

The State of the Global Islamic Economy expects Muslims to spend $327 billion on clothing by 2020, versus $230 billion in 2014, ranked third after the US and China. Muslims spent $54 billion on cosmetics in 2014 and that will grow to $80 billion by 2020.

The Violence Policy Center says Alaska had the highest rate of deaths caused by guns in 2014, followed by Louisiana and Mississippi. Gunpolicy.org says Alaska had a higher rate of gun deaths than Mexico. Hawaii and Rhode Island had the lowest gun death rates.

Martin Indyk at Brookings said:

The US went along with the headstrong young leadership in Saudi Arabia into getting stuck in a war in Yemen. 50% of the Gulf states military capability is embroiled in war that is causing humanitarian crisis in Yemen, to the advantage of Iran.

Pulling out of Afghanistan all together is not a good idea because we at least have a leadership there that we can work with.

The US leverage lies in making clear to the Chinese that if they don’t pressure North Kora then we will have no choice but to boost our presence in their region to protect our allies, South Korea and Japan.

Vali Nasr at Johns Hopkins said:

The US invasion of Iraq in 2003 was the tipping point.

The whole geostrategy of the region changed once the US started talking to Iran and decided that it is not as committed to containing Iran as Saudi Arabia expected.

The problem is not containing Iran but the too many Shiites in the region who have to accept to live under a Sunni political order that existed before 2003 Iraq invasion. A Sunni order in which Iran will have absolutely no influence and the Shiites will have absolutely no ability to rely on Iran.

Afghanistan is going sideways and downwards.

Nawaf Obaid at Harvard said:

Saudi Arabia is taking on a much more assertive and aggressive foreign policy to defend themselves from Iran and loss of US presence and leadership in the region. The Saudis will increasingly battle Iranian presence and influence in the Arab world in the next several years.

You cannot have an agreement with a country, Iran, which supports a Syrian dictator who has killed 400,000 people, funds a Shia militia in Iraq guilty of the most atrocious things, and not expect the new deputy crowned prince of Saudi Arabia for irrational decisions. He did not have the luxury to stand still and await guidance from the US which was not coming in the first place.

Robin Wright at The New Yorker, US Institute of Peace and Woodrow Wilson Center said:

The Sunni-Shia schism is turning into one of the biggest divides in Islam in 14 centuries and playing out politically, ideology, strategically, ethnically, and virtually every range.

The crisis has begun to derail Iran’s desire to end its pariah status and restore its stature.

Both Iran and Saudi Arabia are in transition, which limits the influence of the outside world.

Without Chinese help, the prospect of any moderation in North Korea is unlikely. Their leader is 33 years old and very insecure.

Ruchir Sharma at Morgan Stanley said:

A global recession is due. Since the early 1970s, global downturns have struck every 7.5 years on average.

Every country will be affected by China’s policies in 2016. China is now the world’s biggest driver of economic growth. China’s debt levels have risen to 300% of GDP: no developing country in history has ever taken on debt faster than China in recent years. Furiously rising debt levels are the single most reliable predictor of financial crisis.

China’s leadership is so worried about angering its people with slowing growth and rising unemployment that it has been unwilling to stop goosing its economy.

Niall Ferguson at Harvard said the younger Henry Kissinger was not Machiavellian at all, but inept in his attempts for self-advancement and politically slightly naive.

Gary Kasparov said:

Russia is at a very dangerous stage because of Putin and things will get worse before they get better because of collapsing oil prices and the Russian budget. There is no visible positive scenario, only choices for lesser evil.

Putin will continue his aggressive foreign policy because his white knight propaganda needs these victories. Putin is a very capable KGB officer and excellent negotiator and poker player. If not for NATO membership, Putin’s tanks would be in Estonia and Latvia. Putin looks for the weak spot on the map and grabs it if he can.

The fundamental problem of the West is complacency after the collapse of the Soviet Union and the end of the Cold War.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ , listen at http://podcast.cnn.com/fareed-zakaria-gps/episode/all/TkwD3eujmTzNlz/fzgps-2016-01-10.html or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1601/10/fzgps.01.html

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Fareed Zakaria GPS – CNN 01-03-16

Fareed Zakaria said:

Trade accounts for 23% of the US economy vs. 71% in Germany.

The big trend in 2016 will be continued weak oil and commodity prices: the last dramatic decline of oil resulted in the collapse ofdemothe Soviet Union.

The stock market under Obama has compounded at nearly 14% a year but this cannot continue because we are overdue a recession, China is in a recession, Europe is going nowhere, and the oil-producing emerging markets have fallen off a cliff. At the end of the day the US always muddles through and looks better than everybody else.

In Rwanda, women comprise 64% of the parliament, 50% of the Supreme Court, 50% of the Cabinet.

Angus Deaton and Anne Case found that over the past 15 years, middle-aged US whites died in increasing numbers; caused primarily by suicide, alcoholism, and drug overdoses, partly because doctors and drug companies were far too eager to prescribe drugs. The case is worse for those with a high school diploma or less. Jeff Guo at the Washington Post said this cohort is largely responsible for Trump’s lead among Republican candidates.

Carolyn Rouse at Princeton said that non-white US groups might have lower income, standard of living, and social status expectations, while blacks cope with disappointment through family, art, protest speech, and religion.

WHO says 663 million people still have no access to safe, clean drinking water. UNICEF says water-borne illnesses kill nearly 1,000 children every single day.

Ian Bremmer at the Eurasia Group said:

At the end of 2016 the trajectory of US-Iranian relations will be better than US-Saudi relations.

To resolve Syria requires leadership, people who actually care, and the ability to coordinate, all of which are lacking, so we will be much farther away from a federated Syria in 2016 than we are in 2015.

Weak oil prices puts Middle East countries under much internal pressure, and they will more likely play nationalism which does bodes ill for peace in the region.

It’s either Cruz or Rubio for the Republican nomination. 2015 was the year of Trump, but 2016 will not be. Middle class anger is insufficient to get Trump the nomination: he is going after the losers, who historically in the US do not vote.  Hillary has no serious challenger for the Democrats. Who wins is a coin flip right now.

Expect many geo-political fat tails to impact the stock market, and we are due a recession. China is the big mover: the most volatile, the most uncertain, and the country with by far the most tools to kick the can down the road – and they want to.

Richard Haass at the Council on Foreign Relations said:

Weak oil prices will last through 2016 – excepting major instability involving Saudi Arabia – hurting oil producers, Africa, and Latin America, but a boon to India though not China, which has internal economic problems adjusting its economic model. Weak oil prices will be a mixed blessing for the US but a major blanket on world economic growth, feeding political uncertainty.

Saudi Arabia is the most underrated global risk because of weak oil prices. Yemen is the Saudis’ Vietnam, there are simmering rivalries inside the Saudi royal family, and the beheading of Sheikh Nimr has poisoned the already terrible relationship with Iran while exacerbating the Saudi position in Bahrain.

We are seeing elements of a “Thirty Years War” in Syria. ISIS will be rolled back a little in Iraq but not Syria, and it sees Saudi Arabia as an extremely ripe target.

On the Democratic side, Hillary will prevail but not easily.

In 2016, we have a good chance of passing the Transpacific Trade Partnership with the benefit of Speaker Ryan’s ability to get a budget deal. 2015 ended positively with the US showing the world it can function sometimes.

Anne-Marie Slaughter at New America said:

Expect a settlement of the Syrian civil war in 2016 resulting in a ‘federated Syria’ where the Kurds, Sunnis and others effectively have their own regions, but for Turkey this presents a huge problem. Russia will play nice because of both oil prices and its inability to handle rising casualties in Syria. Europe is completely focused on a settlement because of the refugee crisis, and everybody knows we have to solve Syria to be able to fight ISIS.

It will be a Clinton beating Cruz presidential election because the worse the world becomes, the more people want a President who knows the leaders and who projects competence. A Cruz-Clinton election is good for America in the world because it is between a woman and a Hispanic man.

The Transpacific Trade Partnership will happen in 2016 because it will be seen in more a security context than an economic context, thanks to ISIS and China’s maneuvers in the South China Sea.

The US dollar will rise and rise due to China’s instability, the euro, and the eurozone crisis.

Mariana Mazzucato at the University of Sussex said:

The narrative about Steve Jobs and Apple misses the fact that every technology that basically makes an iPhone smart was publicly funded, including the Internet, GPS, touch screen display, and Siri.

In industry after industry, key basic innovations were publicly funded, not indirectly like with tax incentives, but with basic research, applied research, and early stage, long-term financing. Most venture capitalists want to exit in 3 or 5 years versus the Death Valley phase for many innovative companies that can last 10 to 15 years. There is plenty of finance available, but not the right kind of finance for innovation.

The government has financed many winners, including biotechnology where the NIH has spent $900 billion since the 1930s on the basic technology. Private companies basically surfed this wave, which is today missing in the green tech industry.

Venture capitalists know that for every success there are 8 or 9 failures. Unlike public investors, private venture capital gets to reap the winners to cover the losers. Tesla received approximately the same public funding as Solyndra, yet gained massively for private capital, whereas the latter was written off by taxpayers. Israeli government investments take royalties through their public venture capital fund. In the US we see this as socialism.

Google, whose algorithm was funded by the National Science Foundation, Apple, Amazon, et al, pay little tax, despite tax rates that have fallen dramatically. NASA, founded when the top marginal rate was 93 percent, is not allowed to make money, yet SpaceX and Galaxy make use of its publicly funded infrastructure for free.

 

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ , listen at http://podcast.cnn.com/fareed-zakaria-gps/episode/all/TkwD3eujmTzNlz/fzgps-2015-12-20.html or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1601/03/fzgps.01.html

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Fareed Zakaria GPS – CNN 12-13-15

Fareed Zakaria said:

Muslims in America are well-assimilated, unlike in Europe.

New America reports that the number of Americans killed by Islamist terrorists on US soil since 9/11 is 45, or 3 people a year, versus 11,000 killed in gun homicides in 2015.

Left-wing populist governments, in power for over a decade in Venezuela, Argentina and Brazil (which total 66% of South America’s population) have all suffered serious setbacks because they have run their economies into the ground as the huge boom in commodities ended.

WSJ expects Argentina to grow less than 1% in 2015. FT expects Brazil to decline 3% in 2015, and which is having its worst recession since the 1930s. Venezuela is expected to decline 10% in 2015 despite sky-high inflation and bare market shelves.

Ian Bremmer at Eurasia Group

The Paris and San Bernardino attacks drew the most divisive responses in a developed state to a national cataclysm that I have ever seen in my 30 year career.

The US will get another more centrist US president in 2017.

The world considers Trump a clown, but clowns have been elected. Trump winning the nomination is very unlikely. The extraordinary antipathy towards the establishment of all stripes is new to America and is not going away.

Berlusconi in Italy and Jeremy Corbin in Britain are not considered serious actors.

The transatlantic relationship that has underpinned the global order for many decades is falling apart.

David Millibrand at Intl Rescue Committee said:

Populism is strong when the center left and right are weak. Centrists Trudeau, Merkell and Cameron are strong, but centrists in France and the US are weak.

Trump’s clownish behavior is dangerous because it feeds the narrative of the clash of civilization and aggrandizes those who would threaten society’s religious. Trump still has only one-third of the 20% of Republican voters: the majority of the minority does not make a majority.

The only way to fight anger is with answers, which all politicians seeking power need. To run in the slip stream of extremism only feeds it.

Bernard-Henri Levy said:

The French National Front’s big result on the first round will not be consolidated in the second round. The reactionary trend (to the attacks) is not as strong as people say.

Trump does not embody the Republican Party, the American dream, the shining city upon the hill in any way. Jihadists, Putin, Iran, all enemies of America all pray for Trump winning the primary and the presidential election.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1512/13/fzgps.01.html

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Fareed Zakaria GPS – CNN 11-01-15

Salient to Investors:

Fareed Zakaria said:

  • Most transitions to democracy bring bitter struggles, viz South Korea, Taiwan, Chile.
  • Tunisia is almost entirely Sunni so has no sectarian and tribal differences and has had wise political leadership.
  • The end of China’s one-child policy was an admission that its greatest obstacle to long-term economic growth was its demographics.
  • The global population is twice that of 1968.
  • The Pew Research Center reports 98% of the American Association for the Advancement of Science scientists believe in evolution theory versus 65% of Americans. Ben Carson represents the height of arrogance to believe that humans can understand God’s mystery.
  • The Defense Department says that in just 20 months China reclaimed 17 times more land than Vietnam, Malaysia, Brunei, the Philippines and Taiwan have claimed over the past 40 years combined.

Richard Haass at the Council on Foreign Relations said:

  • 50 US ‘so-ops’ in Syria is not the beginning of restoring Syria as a country but an effort to stabilize it to allow diplomacy to succeed. Success in Syria would be 4-6 enclaves. The US goal is not to restore Iraq or a functioning national Syria but to keep innocent people alive and the terrorists from gaining territory.
  • A Middle East where Sunnis are dominated by ISIS would not be a success for Iran, who, along with Russia, understand that Bashar al-Assad has to go eventually.

Ruchir Sharma said:

  • The UN predicts over 2 billion more people in the next 35 years, but the rich world, especially Europe, faces a population implosion. As countries develop, their birthrates plunge: work population growth that averaged nearly 2% per annum for decades is now down to 1%. Women average less than 2 children in 83 countries that account for nearly half of the global population. The fertility rate in India is down to below 3 from over 6 in 1960.
  • Countries will thrive economically only if they become immigrant-friendly or increase their fertility rate.

Ann Selzer at Selzer & Co. said

  • US political debates do matter.
  • A candidate can conquer Iowa but not a California or a Texas in a meaningful way.
  • I never make predictions because they always include a wish.

Richard Dawkins at Oxford said:

  • Evolution is a fact, as much of a fact as the Earth orbiting the Sun.  The most powerful evidence for evolution is molecular genetics.
  • That all the Republican candidates except one say they do not believe in evolution is a disgrace. Evolution is the bedrock of biology, which is the bedrock of medicine, so for Ben Carson not to understand the fundamental theory of his own subject is a terrible indictment.
  • It is arrogant to say we know what God does.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1511/01/fzgps.01.html

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Fareed Zakaria GPS – CNN 10-11-15

Salient to Investors:

Fareed Zakaria said:

  • We cannot solve Afghanistan without recognizing Pakistani army support for the Taliban. No counter-insurgency has ever succeeded where the rebels have a safe haven, so until this is dealt with, the Taliban will never be defeated. Pakistan pretends to help the US while supporting its most deadly foes.
  • Pakistan is a time bomb. It has one of the world’s largest armies, the fastest growing nuclear arsenal, and the most opaque. 5.5 million Pakistani children do not attend school. The US faces a strategic collapse as it withdraws forces from the region unless Pakistan’s military and its mindset are reformed.
  • Any US involvement in Syria has to be aimed at dislodging Assad from power, which would produce total chaos; viz. Iraq, Libya and Yemen.
  • Italy, France et al is the world’s greatest paradise: beautiful countries, amazingly rich, incredibly nice work rules, long vacations, ability to early retire. So why reform?
  • The Economist ranked the UK 1st out of 80 countries in the 2015 quality of death index, Taiwan 6th, the US 9th. Mongolia ranked 1st out of the low-income countries.
  • The US should abandon the outdated 9:00 to 5:00 work-week.
    • Henry Ford pioneered cutting back employees’ hours to make his workers happier and more productive.
    • One study found that people working 40 hours or less each week outperform on certain tasks those who work more than 55 hours per week.
    • A Stanford study found that the number of hours somebody works is not directly proportional to his output, while at 48 working hours, productivity falls.
    • Tony Schwartz says people work better in short bursts than long ones.
    • A 2014 Gallup survey found that American full-time workers averaged 47 hours per week, while almost 20% of Americans work 60 hours per week or more.
    • The OECD found that US workers worked more hours on average in 2014 than workers in many other countries, including the UK, Germany and Japan.
    • Alternet says white-collar knowledge workers have 6, not 8, hours of productive work in them each day.

Julia Ioffe at the Wall Street Journal said:

  • Putin is a tactician, not a strategist, but his economy is cratering and his military much weaker than the US military. Putin is moving into areas that the US has traditionally dominated; Iraq, Syria, Afghanistan.
  • Russian Muslims are all Sunni whereas Putin is aligning himself with an exclusively Shiite coalition and his Syrian move will inevitably blow up on him.
  • The US should take in many more refugees.

Bret Stephens at the Wall Street Journal said:

  • Putin is investing in Syria the way that Trump invests in real estate – with a very small investment for a potentially large payoff. His move into Syria helps distract the Russian people from its sinking economy.
  • Putin is a frog who jumps from lily pad to lily pad when he feels them sinking under his weight – from KGB agent to Leningrad technocrat to reformist president to patron of the Oligarchs.
  • Syria is a metastasizing cancer so the US has both a humanitarian and geopolitical interest. US no fly zones over northern Iraq in 1971 saved many Kurds and effectively helped create the Kurdish Autonomous Region – the single biggest American achievement in the Muslim world in the last 25 years.
  • Syria is many countries and just because we cannot solve it does not mean we cannot help its Kurdish areas become sustainable opposition.
  • The problem in Israel is the failure of leadership by Mahmoud Abbas, by Abu Mazen, in both tamping down and stoking violence.

Ian Bremmer at the Eurasia Group said:

  • Putin is in Syria to shore up Assad and not destroy ISIS. Taking casualties would be very unpopular in Russia.
  • Europe believes Syria is more important than Ukraine and that the only way to fix Syria is through Moscow, which could then ask Europe to back off sanctions. The cease-fire in Ukraine is working because Putin has got the paramilitaries there to back off their election. Europe and the US are moving farther apart every day.
  • Russia’s economy will contract by 4% to 4.5%, but its central bank has stabilized the rubble and during Putin’s tenure, per capita income has risen much.
  • 90% of Russians get their media primarily from state controlled TV with is pretty effective.
  • The problem with Syria is not Obama’s policy but that his rhetoric bears no reflection to his policy.
  • The Trans-Pacific pact is 40% of the world economy and a real pivot to Asia, the most important part of the world for the US – it is Obama’s most important successful foreign policy legacy. That TPP’s former architect Hillary Clinton is now opposed to it is astonishing.

Peter Beinart at the Atlantic said:

  • Putin’s move in Syria will increase terrorism against Russia by positioning it opposite the entire Sunni world and so cannot end well.
  • Obama is right not to get involved in Syria, and should not have done so in Yemen.
  • The rise in terrorism in Israel is a product of the fact that the two-state vision is weakening on both sides.

George Soros said the euro crisis has converted the EU from a voluntary association of free and legal nations, devoted to principles of democracy and human rights and willing to sacrifice some sovereignty for the common good, into an unequal relationship between creditors and debtors, who have difficulty meeting their obligations.

President Bill Clinton said:

  • The immigration/refugee problem in Europe can be turned into an opportunity: e.g. Syrians are overwhelmingly literate, productive, and historically secular, not super religious, and particularly not politically violent.
  • Ireland is the only European country that is younger than America and was growing like crazy, before its banking bubble, because it had many immigrants from Central and Eastern Europe, which made it even younger.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1510/11/fzgps.01.html

Fareed Zakaria GPS – CNN 10-04-15

Salient to Investors:

Fareed Zakaria said:

  • Russia’s move in Syria is a desperate effort to shore up one of its only foreign allies and risks making it the great Satan with jihadists everywhere. However, Putin has at least a clearer strategy in Syria than Obama.
  • An US army of less than 30,000 men could easily defeat ISIS but then own problem territory in Syria.
  • Historically, the US when allied with a local force that was capable and viewed as legitimate has succeeded, but without such local allies, has not.
  • Syria will never be an intermingled country ever again whatever happens.
  • Code.org estimates that by 2020, there will be only 400,000 computer science students to fill the 1.4 million computing jobs in the US.
  • Liberal arts are important in teaching creativity, analytic thought and the joy of learning.

Jeff Colvin at Fortune said:

  • Studying humanities could become as valuable as a science degree because some jobs will always be done by “relationship workers”, the ones that emphasize social interaction – the need to interact with others is connected to our very survival, which is why we would prefer to see a real doctor or choose to work in teams.
  • From 2001 to 2009, the McKenzie Global Institute found that jobs involving human interaction, e.g. nurses and lawyers, increased by nearly 5 million in the US, while transaction and production jobs fell.
  • Science and technology disciplines are still crucial, but the humanities strengthen the deep human abilities critical for the success of most people far more than engineering or computer science.

George Soros said that Europe is in a state of disintegration, which started in 2008 and has become non-linear with problems with Greece, Ukraine, migration, and Putin’s Russia.

President Bill Clinton said:

  • Not very long ago, Europeans were killing each other in large numbers. The EU is a miracle, but in times of insecurity, fueled by both political problems and the absence of economic growth, negative identity politics tend to trump positive identity politics.
  • The issue of negative versus positive identity when you have slow growth is also true in America.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1510/04/fzgps.01.html

Fareed Zakaria GPS – CNN 09-20-15

Fareed Zakaria said:

  • The US is more dominant globally than at any point since the Clinton era, with growth almost 2 times the Eurozone and 4 times Japan, and unemployment the lowest in 7 years. European businessmen are concerned with American dominance from technology to entertainment to finance. America’s big banks are more dominant than ever.
  • WSJ says JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs, and Morgan Stanley have increased their total value by $254.6 billion in the last 5 years versus $9.5 billion total increased value for Barclays, Credit Suisse, Deutsche Bank, UBS and RBS.
  • Japan is the poster child for economic stagnation and political paralysis.
  • Every Western country is experiencing greater anti-immigrant feeling.
  • We should not interfere in Syria.
  • The most serious place in politics remains the center because that is where the majority is.
  • Iran will accept the nuclear deal because Rouhani is the most popular figure there and Khamenei would not want to dash the people’s enormous sense of hope and expectation.

Ruchir Sharma at Morgan Stanley said:

  • The US has emerged from the 2008 crisis better than anyone, has reduced its debt more than Europe, and has outperformed all other equity markets. 9 of the 10 most valuable companies in the world are US. The US dollar is the currency of choice.
  • China’s debt is at extremely dangerous levels.

David Frum at the Atlantic said:

  • There is no end to the huge migration of people from all over the world. Migration in moderation could strengthen Europe but it is not happening in moderation and will transform Europe.
  • You cannot neatly distinguish between refugees fleeing for their lives and immigrants fleeing for better opportunities. You cannot screen out the danger to Europe because it has come from the second generation and from radicalization caused by unemployment, alienation and the inability to assimilate.
  • Germany’s decision on migrants was emotional, not thought through and has unanticipated consequences.
  • Europe has had very bad experiences with migrants: migrants have much higher levels of long-term unemployment, much more dependency on the state, and European prisons have a disproportion of second generation migrants.
  • European governments owe their first duty to their own citizens.

Danielle Pietka at the American Enterprise Institute said:

  • Western Europe must help the migrants, and Merkel has done the right thing, but there needs to be EU wide to make sure the people passing the screening are not shoved in voiliers in Paris or Saudi-run mosques in Hamburg.
  • Russia believes the US is not going to do anything over their involvement with Syria and are there to help Assad.
  • Letting hundreds of thousands of Syrians fight and kill each other is unconscionable, especially for the most powerful and richest country in the world.

David Milband at the International Rescue Committee said:

  • It is harder to get to the United States as a refugee than under any other program.
  • Employment for refugees up to 5 years is higher than for the rest of the population.
  • Merkel is responding to the reality that 350,000 refugees had already arrived this year and that the best way to get a burden sharing arrangement was to take the lead.
  • Migrants should not be confused with refugees, who have a well-founded fear of persecution and a right to international law.
  • The danger is that Britain thinks Russia is a declining power and Russia thinks Britain is a declining power.
  • Russia’s elevated support for Assad is a sign of his weakened position from a year ago. Russia could pull the rug from under Assad because he has become a problem for Russian concern over Islamic radicalism emanating from Syria.
  • In the solution for Lebanon, every community had a stake in government, which is impossible for Syria at the moment.

 

Thomas Erdbrink at the New York Times said:

  • It is getting harder to figure what Iran’s leaders want and which direction the country is heading.
  • Iran feels it was taken to the cleaners by the nuclear deal but will accept it. The bigger issue for them is whether or not to cooperate with the US in the region. Iran is the only stable state in a divided and troubled Middle East and a weakened Saudi Arabia.

Karim Sadjadpour at the Carnegie Endowment said:

  • Both Iranian supporters and the opponents of the nuclear deal believe their supreme leader agrees with their position. In the end, Iran will accept the nuclear deal because Khamenei does not want to stand between Iranians and economic deliverance.
  • Khamenei’s MO is to wield power without accountability and have a president with accountability but without power, so he will blame Rouhani when popular expectations of the deal are not met. Khamenei has emasculated Iran’s previous 4 presidents.

Gillian Tett at the Financial Times said:

  • Despite living in a hyper-connected world, we are as fragmented, if not more so, than ever before. We fool ourselves into thinking we are no longer captive to our social and cultural rules anymore, but we are.
  • Hyper specialization produces people who cannot see opportunities or risks.
  • Sony is an example of a company filled with bright individuals who did some really dumb things. Different departments did not collaborate with each other and instead cannibalized each other. The result is we now carry iPods and not digital Walkmans.
  • Every company says it wants employees to think outside the box yet almost every company deepens and makes those boxes more rigid. In the name of streamlining everything, companies eliminate opportunities for employees to stop, think, roam mentally or collide with each other. Facebook deliberately moves employees around and recognizes that a box or a boundary can also be dangerous without stepping back to think about the social structure created.
  • Having a background in cultural anthropology helps make sense of how modern companies or modern institutions exist.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/

or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1509/20/fzgps.01.html

Fareed Zakaria GPS – CNN 09-13-15

Salient to Investors:

Fareed Zakaria said:

  • China’s economy is nearly 2.5 times that of Japan so even if growth slows substantially, China will continue to have seismic effects on the global economy.
  • Henry Kissinger said Republican candidate China-bashing is dangerous and could create an atmosphere a la Europe before WW I – a war no one wanted but no one knew how to prevent.
  • China’s renminbi has appreciated substantially against the dollar and yen over the past few years so devaluing it due to market forces is wise, which is why the move was praised by the IMF. China’s inconsistent and ineffective policies in the currency and equity markets does not make it evil.
  • Germany has tried as hard as any nation in history to repent for its past, and is now an exemplary liberal democracy and model global citizen. Reuters said West Germany accepted 13 million people from Soviet-ruled Eastern Europe after After WW II.
  • The countries in the Middle East that have taken in refugees are often not the richest: Jordan has taken in over a million, Lebanon a huge number, Turkey 1.5 million, but Saudi Arabia and Egypt have barely taken any.
  • If you put fruits and salads at the start of a buffet, people are more likely to eat good things. If you want people to save money, make the saving the default option.
  • An Australian study found that the longer humanitarian migrants stay in a country, the more likely they are to start businesses than other migrants. Historical refugees include Chopin, Freud, Einstein and Madeleine Albright.

John Sawers at Macro Advisory Partners said:

  • The world is chaotic and dangerous due to the rise of ISIS, change in terrorist tactics to killing in shopping malls – much harder to stop – and cyber attacks, where we have no ability to deal with in a conventional way.
  • The great bulk of migrant refugees are people genuinely fleeing conflict. The bigger problem is our citizens visiting Syria and returning radicalized and terrorist.
  • The intelligence communities in America, Britain, France and elsewhere have been successful in combating terrorism, but one cannot have a 100% record.
  • Iran is transitioning from a revolutionary to a more normal state. Rouhani et al have a different vision for Iran’s security and future than the hard-liners in the Revolutionary Guard and Quds Force. Iranians, especially the young, have little respect for the concept of a revolutionary state, and just want a normal life.
  • Putin understands that any prospect of sanctions being lifted requires him to cooperate with the Ukrainian government, while the West has to understand that Ukraine holds a special place for Russians.
  • China is trying to change to a more market-led economy. The US relationship with China is key for global stability for the rest of this century. A failed China is a much more dangerous China.
  • Obama inherited the entrée from hell, but has been calm, steady and reliable. His initiatives on Iran and Cuba are important in normalizing those countries.

Naguib Sawiris said:

  • The war in Syria will not end in months or even years.
  • The whole world is united in identifying the enemy as ISIS, who are killers and gangsters.

David Halpern at Behavioral Insights Team said:

  • Peer pressure is effective in encouraging people to pay their taxes, especially if you tell them that most people in their area pay on time, and even more effective when you tell them they are one of the few who have yet to pay.
  • Most things that governments do actually concerns behavior.
  • People are much more likely to do something if they plan ahead, think more precisely and concretely, when, where and how they are going to do something. Asking questions in a different way makes people much more effective in their job search.
  • If you want people to save money, make saving the default option – as a result, more than 5 million Brits now save. 
  • Most healthy years lost are due to behavioral factors.
  • Economies bounce up and down because of what we think others are doing, and we are often wrong in those perceptions.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/

or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1509/13/fzgps.01.html

Fareed Zakaria GPS – CNN 08-30-15

Salient to Investors:

Fareed Zakaria said:

  • The US economy has recovered nicely.
  • A 2014 UCLA study found that many black and Latino students face almost total isolation from white and Asian students and middle-class peers.
  • Much more Saudi oil wealth has gone into pernicious causes over the last 30 years than Iranian oil wealth.
  • Tharman Shanmugaratnam says half of the Muslim population in Britain lives in the bottom 10% of its neighborhoods by income.
  • The UN estimates the average woman needs to have 2.1 children to maintain the population of a developed country. Every EU country is below that level, though France has one of the best rates in Europe. Demographers say that it is difficult to get people to have children using just financial incentives.
  • Pew predicts that by 2050, populations in Greece, Portugal and Germany will have dropped by double-digit percentages. The UN predicts over-65s in Europe will increase to more than 25% of the population by 2050, Japan’s will increase to more than 33%.
  • The US will be demographically vibrant and growing for decades. Pew predicts that America’s population will grow by 27% from 2010 to 2050 due to immigration and a relatively younger population. The CDC says the US fertility rate hit a record low in 2013.
  • The World Wildlife Fund says half of the earth’s wildlife has been lost in the past 40 years.

Elliott Abrams at the Council on Foreign Relations said:

  • Obama is turning away from America’s responsibilities around the world. Poland, Czechoslovakia, the Balkans, feel less safe facing Russia; Australia, Vietnam, South Korea, Japan feel less safe facing China; Israel, the Gulf Arabs feel less safe facing Iran.
  • The US is asking for nothing and getting nothing on human rights in the Iran and Cuba deals.

Peter Beinart at Haaretz, New America and CNN said:

  • The polls show Obama is much more popular around the world than George W. Bush, while America is more popular than it was.
  • The Iran nuclear deal is a major accomplishment akin to Nixon and China.

Meghan O’Sullivan at Harvard said:

  • Strategic restraint might make sense in a world where the US does not have much at stake, or US allies are active in promoting US interests, or where world order is self-perpetuating; but we don’t live in that world. International order is not in good shape and the Middle East is significantly worse off than 7 years ago.
  • The Iran nuclear deal has very real flaws; including the fact that Iranians get all their benefits up front in exchange for a promise to stick to the deal for a decade or longer.

Gideon Rose at Foreign Affairs said:

  • The international order is not fraying. The US is the world’s strongest power by leap years, with a defense budget equal to the next 7 nations combined. The US and its allies account for 75% of global defense spending. Core allegiances and alliances in the major industrial and economic centers are intact and thriving.
  • Much of the Middle East is no longer a core American strategic interest and US direct involvement there is not necessarily improving things.
  • The Iran nuclear deal is not great but is dramatically better than all the realistic alternatives.

General Stanley McChrystal said:

  • In combat, soldiers are much more frightened of the enemy than their sergeant.
  • You want personnel confident enough in their relationships and in what they do to be able to operate effectively.
  • Personnel must have confidence in the competence of their leaders, and more importantly their values.
  • The confidence of personnel is undermined when they see a difference between what senior management says it will do and what it actually does, or if they believe senior leadership is uninformed.
  • Key to being a leader is personal discipline and empathy.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://www.cnn.com/TRANSCRIPTS/1508/30/fzgps.01.html