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

Can Kickers United – Why It’s Getting Downright Hazardous Out There – David Stockman’s Contra Corner 08-22-15

Salient to Investors:

David Stockman writes:

The real danger comes from the official institutions who have lapsed into empty ritualism and contrivance while the global economy and financial system becomes more unstable by the day. No sane person would inject $95 billion of new debt into busted Greece, or consider another round of fiscal stimulus in Japan to add to their one quadrillion yen of debt, or fix China’s bankrupt local governments by swapping trillions of bank loans for equivalent mountains of new municipal bonds.

The Fed is still manning the emergency fire hoses despite the US economic ‘recovery’ being 74 months old and much longer than the post-war average. The real reason the Fed doesn’t raise rates is that it fears that its first increase in nearly a decade will upset Wall Street.

ZIRP is the mother’s milk of Wall Street speculators, who know that the Fed would never allow the money market to become illiquid or allow a temporary surge in the overnight rate to clear their speculation. No businessman with productive inventories would be foolish enough to fund his working capital in the overnight markets.

The FOMC telegraphs to traders exactly what it intends to do for months in advance, thereby removing risk entirely from the oldest sin of finance, borrowing short and investing long, creating an endless inflation of financial asset prices, and depriving the real economy of true risk capital.

The ratio of the market cap of the Wilshire 5000 to GDP is now 133%, higher than the 112% in the dotcom bubble and the 104% in the housing blow-off.

US households reached peak leverage in 2008, and are still at 180%, which is way above historically proven healthy levels. ZIRP merely subsidized the most imprudent of household borrowers and transferred income and wealth to borrowers and gamblers at the expense of savers and producers.

There is no evidence that real output and wealth increase faster at 2.0% inflation than they do at any inflation rate. The BLS has been under-measuring housing inflation since switching methodologies in the early 1980s in order to save money on indexed government transfer programs. Market rent has risen at a compound annual growth rate of 3.7% over the last 15 years versus 2.5% calculated by BLS.

Stephen D. Williamson at The FRB of St. Louis said:

  • Zero interest rates since 2008, designed to spark good inflation, have only produced the opposite.
  • The Fed’s “forward guidance” has been a muddle of broken vows that has only confused investors.
  • QE have at best a tenuous link to actual economic improvement, while there is no proven link between QE and inflation and real economic activity – QE has been ineffective in increasing inflation.

Read the full article at http://davidstockmanscontracorner.com/can-kickers-united-why-its-getting-downright-hazardous-out-there/?utm_source=wysija&utm_medium=email&utm_campaign=Mailing+List+Saturday+9+AM

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Fareed Zakaria GPS – CNN 07-19-15

Salient to Investors:

Fareed Zakaria said:

  • History shows that the more countries integrate within the global community, the less incentives they have to be spoilers.
  • Iran and the US share common interests on the threat from ISIS, the stability of Iraq and Afghanistan.
  • The most successful and dominating countries in the Middle East are all non-Arab: Iran, Turkey and Israel.
  • In 2014, the number of global refugees reached 60 million: 20 million had to leave their own countries, 40 million had to move within their own county.

Robin Wright at the Wilson Center said:

  • The majority of Iranian people and voters in Iran were born after the revolution, and very much want to be part of the 21st century.
  • Diplomacy failed to prevent the last four countries from joining the nuclear club – Pakistan, India, Israel and North Korea.
  • Iran is one of the most stable states in the region.

Bret Stephens at the Wall Street Journal said:

  • Iran put its 2009 midlife crisis in jail. We are not dealing with the Iranian people but an Iranian regime that thinks it is winning regionally and internationally on many fronts.
  • The nuclear deal will turbocharge Sunni-Shia competition – the Saudis are not going to take this lying down. Expect more radicalism and more regional confrontation as a consequence of the Iran nuclear deal.

Vali Nasr at Johns Hopkins said:

  • Iran’s major headache in the region is ISIS. Iran is very much in a defensive mode and why they wanted the nuclear deal.
  • Iran spends less in absolute terms per capita on defense than all of its neighbors who have much more technologically advanced weaponry.
  • Want ISIS defeated but not by the Iranians or for the benefit of the Iranians.

Patrick Radden Keefe at The New Yorker said the escape of El Chapo will be a huge problem for security cooperation between Mexico and the US.

Paul Krugman at the New York Times said:

  • The Greek bailout deal humiliates Greece and does not end the crisis. The strategy of cut, cut, and austerity your way back to solvency remains unchanged: it was not working, has never worked in this kind of situation, and will not work. The trap that the euro has turned into, along with the austerity policies imposed to try to keep Greece in the euro, are really responsible for the disaster.
  • In the end, Greece will get either the enormous debt relief it is not getting now or have to exit the euro, which would have huge implications for the future of the EU. Greece would start to recover, which would encourage other challenges to he euro. But no repeat of 2008.
  • This is not a Lehman-like crisis. A Lehman event would not cause a Lehman-like event now because of buffers since erected.
  • Despite the holes, Greece collects a lot of taxes – a higher share of GDP than the US. Greece is not as overregulated and problematic an economy as it once was and has done far more reform than people think.

David Miliband at the Intl Rescue Committee said:

  • World political fragility is not surprising given that a country like Niger, twice the size of France, has an average per capita income of $1 a day.
  • 30 to 35 fragile states in the world cannot contain ethnic and political and religious difference within peaceful boundaries and lack the anchor of either regional or international sponsors to keep order. Globalization is operating with an assertion of local, ethnic, religious identity.
  • There is no real poliitical power that will bring a diplomatic solution in Syria. This is has become a Syria and Iraq problem and is worse than a year ago and will be worse again in a year because the humanitarian catastrophe is feeding the political instability.

Nicholas Kristof at the New York Times said:

  • The rise in world refugees reflects the decline of the Cold War where states are no longer pawns to be supported in a larger game.
  • There is a weariness, an exhaustion, with these crises around the world.
  • US food aid programs are not based on saving people from starvation but are essentially US agriculture support programs and US shipping programs.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at  http://transcripts.cnn.com/TRANSCRIPTS/1507/19/fzgps.01.html

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The Curse Of The Euro: Money Corrupted, Democracy Busted – David Stockman’s Contra Corner 07-17-15

Salient to Investors:

David Stockman writes:

  • Germany has set fire to the Eurozone in order to save it. Lending another $96 billion to a bankrupt country makes no sense, while the fiscal targets set for Greece are ridiculous. Greece has a de facto public debt of $400 billion vs. $200 billion of GDP. Within days the entire banking system of Greece will be taken over by the ECB, meaning that depositors will be given a big haircut. Greece will become an outright debtors’ colony and its government will function as page-boys for the Troika occupiers, resulting in political and social upheaval which will spread throughout Europe as Greece implodes.
  • Another recession is coming to Europe. The Eurozone is a fatally flawed monetary union. If any sovereign state of the EU cannot pay its debts, those debts need to be written off or restructured.
  • The euro is the doomsday machine, or more precisely the rogue ECB behind it. The euro will eventually collapse and Keynesian policies will be repudiated and dismantled, but not before European prosperity is extinguished for a generation.
  • Europe had a de facto common currency before 1914 under the fixed exchange rates of the gold standard, which helped produce a multi-decade of prosperity not seen before or since.
  • The ECB printing press has fundamentally falsified the price of debt, produced phony economic growth in the early years and fiscal profligacy after the growth bubble burst after the 2008 crisis, resulting in only 0.9% annual rate of nominal GDP since. The EU-19 debt ratio has climbed steadily towards 100% of GDP since the financial crisis vs. the 60% debt-to-GDP target of the EU treaty.
  • Bond market discipline is fully compatible with national sovereignty and democratic fiscal governance and is a requisite for Europe.
  • Merkel was conned into believing that the original bond sell-off was due to the same speculators who supposedly caused the great financial crisis of 2008.
  • The burst global credit bubbles of 2008 and euro bond crash of 2010 and after had the same cause – central bank financial repression causing government bonds to be underpriced and global investors to scramble for yield; speculators could surf the financial bubbles on the back of cheap carry from the central bank pegged money market.
  • Superstate bureaucrats cannot meaningfully elevate economic growth rates and so enable insolvent state borrowers to grow out from under unsustainable debt. Portugal, Italy, Ireland Greece, Spain – PIIGS – and France prove that quasi-socialist welfare states in the contemporary European setting prove this.
  • When you destroy honest bond markets you eventually end up with Stalinist governance in the name of the free market.
  • Speculators who rode the Draghi bubble made hundreds of billions of profits buying PIIGS debt on 95% repo, and were then positioned to sell their bonds back to the ECB at the first sign of a market break.
  • Spain’s real GDP at the end of Q1, 2015 was still 6% below early 2008, but its debt ratio has risen sharply to near 100% of GDP. There is no possibility of honest fiscal governance in a social democracy like Spain when its debt price is blatantly falsified. Spain’s budget deficit in 2014 remained at 5.8% of GDP so won’t survive another recession, and will be bailed out fueling radical popular movements a la Greece.

Read the full article at http://davidstockmanscontracorner.com/the-curse-of-the-euro-money-corrupted-democracy-busted/

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When It Comes To Total Debt, Greece Is Not That Much Worse Than France (Or The USA) – Zero Hedge 07-17-15

Salient to Investors:

Tyler Durden writes:

  • The IMF has admitted Greece has an unsustainable debt problem.
  • French PM Hollande’s sole focus in the Greek crisis was to preserve near-term stability and his job at any cost – he is guaranteed to lose the 2017 French elections.
  • Once the current generation of French workers retire and realizes their retirement entitlements were a lie, France will have two choices: violence or the more likely printing press.
  • France has had 80 consecutive months of record unemployment and its fiscal and solvency situation will deteriorate dramatically over the next 2 years.

Albert Edwards at SocGen says:

  • Greece’s net government liabilities as a percent of GDP are rapidly approaching 1000% vs. just over 500% for the US and 5 times for France, the most unstable core nation.
  • Germany, Finland, Holland and Austria are traditional fiscally conservative.
  • France’s debt dynamics and sustainability is highly questionable, with worse unfunded liabilities to GDP ratios, along with the US and Germany, than Spain and Italy
  • When adding in off-balance sheet liabilities which are only now coming onto the balance sheet as populations rapidly age, the US, France, Germany and the UK are worse off, in that order. The likely policy response will be a combination of inflation, default on pension and medical promises, and severe fiscal retrenchment, and for the US and UK, QE, devaluation and the printing press.
  • Within the euro zone, the Greek settlement shows that austerity and reform will be the likely solution imposed from above.
  • Germany has net overseas assets of 50% of GDP to call on to pay its unfunded bills. France is a net debtor by 20% of GDP.


Read the full article at http://www.zerohedge.com/news/2015-07-17/when-it-comes-total-debt-greece-not-much-worse-france-or-usa

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Urgent Warning: 6 Signs the Great Crash Is Upon Us! – David Stockman’s Contra Corner -7-16-15

Salient to Investors:

Harry Dent writes:

  • All the signs point to the end of the global bubble. The greatest trigger will be the bursting of the massive, unprecedented China bubble. China’s stock market loss of 35% in less than 30 days signals its stock bubble has peaked: a drop of 30% to 40% in short order is a clear sign of the first wave down in a major bust and the greatest sign that the next great global crash is imminent.
  • China’s stock market will bounce in the coming weeks and then crash again, with real estate and its economy to follow.
  • The Greek default proves that endless quantitative easing idiocy has proved unable to create sustainable long-term recoveries in highly indebted developed countries with poor demographic trends. Greece did the wrong thing by again kicking the can a little further down the road.
  • US stocks could be the last major market to make a new high before rolling over.
  • Oil prices will fall, killing the fracking industry, a $1 trillion investment with $600 billion of junk bonds and leveraged loans – much larger than Greece.
  • Emerging markets have led the global slowdown and are about to break to the downside out of a 4-month trading range.
  • Long-term rates for sovereign and Treasury bonds are rising despite governments stimulating and guaranteeing their economies. Rising long-term, risk-free rates hurt stock valuations and real estate even harder due to higher mortgage costs.
  • Gold will continue to fall but will have a minor bounce.

Read the full article at http://davidstockmanscontracorner.com/urgent-warning-6-signs-the-great-crash-is-upon-us/?utm_source=wysija&utm_medium=email&utm_campaign=Mailing+List+Mid+Day+Friday

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Fareed Zakaria GPS – CNN 07-12-15

Salient to Investors:

Fareed Zakaria said:

  • The Economist says Connecticut bankrolls the weaker states in America: 5% of their GDP over the last 20 years has been net income transfers to states like Mississippi and Alabama.
  • Allen Cooperman says the nuclear deal will only take Iran from 2 months away from breakout to 3 months.
  • Bloomberg says the Shanghai index mirrors the Dow Jones near the beginning of the Great Depression.
  • The Shanghai index is still up 90% over the last year, despite the recent collapse.
  • Gavekal Dragonomics says 5% to 10% of China’s households have stocks vs. 50% percent in the US.
  • Economists say China’s intervention in its stock market screams of panic.
  • The Guardian sees a ridiculous government overreaction, and says there have been up to 1.4 million new investors per week, many of which are novices. Ruchir Sharma at Morgan Stanley says 2/3 of new investors in China’s stock market have no high school degree, and even rural farmers have established their own stock exchanges.
  • Italy has the most UNESCO world heritage sites, 51, followed by China with 48, and then Spain, France and Germany. The US is tenth with 23 sites.

Jonathan Powell said:

  • Historical conflicts like Afghanistan have ended only through negotiations and not military victory.
  • Terrorism reflects an underlying political problem that almost always needs to be addressed politically.
  • Governments usually wait too long to negotiate with terrorists because they wrongly believe that one last military push will put them on the defensive – little evidence to show this works.
  • ISIS is successful largely because it has attracted disempowered Sunnis in Iraq and Syria.

Ken Rogoff at Harvard said:

  • The Greek referendum, which Paul Krugman urged them to do, was very irresponsible and was spitting in the Germans’ face. Never default on a debt when somebody is still giving you money.
  • If you cancelled all Greek debt, they is still a need to close a 10% gap of GDP in their deficit. Greece cooked their books and lied about their debt and deficit. The necessary changes have to come from within Greece, which has shown little will in wanting to become a modern European state. Greece needs to write down the debt more.
  • Everybody made very optimistic projections of Greek growth, including the IMF and the Europeans.
  • Things are looking better because what doesn’t kill you makes you stronger. Europe could handle a Greek exit, though the political fallout is very unpredictable.

Rana Faroohar at TIME and CNN said:

  • The German public never believed the Greeks would reform and wants to let them go this time.
  • Greece is not a Lehman-like moment so we will not see major international dominos toppling. But it does threaten the political integrity of Europe, with questions next about Portugal, Spain, Italy, though not right away. China creates a new Greece every 6 weeks.
  • Europe’s core, with Germany at the center, is very strong. Germany is incredibly competitive. France could be more competitive by making relatively easy changes. Europe needs one integrative fiscal policy.
  • The European economy is looking a lot better than the politics. The concern is if other nations stir up more trouble in the periphery should Europe be perceived as being unable to get its own house in order.

Zanny Minton Beddoes at The Economist said:

  • The Greek problem has moved from the realm of economics into politics. Many people in northern Europe, not just the Germans, think a Greece exit is better, while France and Italy are very keen to keep the Greeks in. The German Finance Minister wants the Greeks out.  However Merkel will in the end want to keep them in because she does not want to be the chancellor who presides over the breakup of the euro.
  • The US has a much more fiscally integrated system than Europe. Europe created a single currency without creating the economic integration and the fiscal integration that was necessary for that to survive. Europeans are champions at kicking the can down the road.
  • Greece should have written the debt down in 2010 instead if kicking the can down the road. But Greece is no longer the systemic, immediate problem to Europe that it was a few years ago, so a Greek exit would not wreck the euro overnight, but would become a real problem again.
  • The US is looking stronger. The European economy is not great but not that bad, and in many ways improving. 

Joe Cirincione at Ploughshares Fund said:

  • A nuclear deal with Iran is almost certain, likely tomorrow. Most of the serious, big issues have been settled. The deal lengthens the breakout time to at least a year to make the material for at least for one weapon.
  • There will be inspections of Iranian military facilities. Prohibiting arms in or out won’t be lifted right away. Sanctions will remain on the ballistic missile program and for their terrorism and human rights violations. 

Karim Sadjadpour at the Carnegie Endowment for International Peace said:

  • A nuclear deal is likely.  Iran is experiencing a perfect storm economically, with sanctions on top of a collapse in oil prices on top of sustaining the Assad regime in Syria.
  • The Iranian supreme leader has control over the main institutions in Iran, but is not an absolute dictator like Mao was. 2500 years of Persian civilization makes the current isolated Iran an anomaly of history and geography, but 36 years of the Islamic Republic raises concern that a nuclear deal could empower hard-line forces in the short-term. 

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1507/12/fzgps.01.html

Alexis Tsipras—-Angel Of Mercy Or “Trusty” Of The Central Bankers’ Debt Prison? – David Stockman’s Contra Corner 06-23-15

Salient to Investors:

David Stockman writes:

  • Keynesian central banking has created a worldwide financial bubble.
  • Soaring bond yields and the fear of losing debt market access are the one force that can cause governments to sober-up and acknowledge the facts.
  • Reagan did not want Volcker to ease the intense upward pressure on interest rates and private investment that the giant US deficits imposed. Three decades later, the world is upside-down, with sovereign debt markets becoming financial whore houses, all due to Keynesian economics’ unrelenting falsification of bond prices using QE and ZIRP. Much of Wall Street loathed monetization in Reagan’s day, but today feast on and worship it.
  • The 10-yr German bund trading at 0.05 % and long-term Italian (a quasi-bankrupt country) bonds trading at under 1% is absurd.
  • The Greek showdown is a striking example of how monetary evil-doing imperils political democracy. Greece bankrupted itself years ago using a debt market falsified by the ECB and remains a notoriously corrupt, inefficient, special interest dominated economy.
  • The Greek economic expansion between 2001 and the 2009 peak of 10% nominal GDP growth was unsustainable because it was a debt fueled bubble of public and private construction investment, new household consumption and drastically increased pensions and other social welfare programs.
  • Greece’s current public debt ratio of 180% of GDP cannot be serviced over the long haul. Greek Prime Minister Tsipras’ left-wing statist economics would cause Greeks catastrophic suffering if it were ever implemented but he is absolutely correct on the matter of political self-governance.
  • The Greek default drama provides an opportunity to deal a death-blow to today’s malignant regime of Keynesian central banking. There is no way that the euro and ECB could survive a Greece exit, nor could worldwide Keynesian central banking survive the blow of their demise.

Read the full article at http://davidstockmanscontracorner.com/alexis-tsipras-angel-of-mercy-or-trusty-of-the-keynesian-central-bankers-debtors-prison/?utm_source=wysija&utm_medium=email&utm_campaign=Mailing+List+AM+Tuesday

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IMF asks US Federal Reserve to delay rate rise – BBC News 06-04-15

Salient to Investors:

Christine Lagarde at the IMF said:

  • The Fed should delay any rise in interest rates until 2016 and wait for more tangible signs of wage or price inflation.
  • Pockets of vulnerability in the US economy could cause serious trouble for the wider economy.
  • The IMF predicts US growth of 2.5% in 2015 and 3% for 2016; versus the OECD prediction of 2% growth in 2015.
  • The US dollar is moderately overvalued.
  • Greece will keep its word on the debt payment due on Friday.

Read the full article at http://www.bbc.com/news/uk-33011262

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Fareed Zakaria GPS – CNN 02-15-15

Salient to Investors:

Fareed Zakaria said:

  • The IEA said Russia faces a perfect storm of collapsing oil prices, international sanctions and currency depreciation.
  • The IMF predicts the Russian economy will contract by 3% in 2015.
  • Putin does not respond to higher costs in a rational calculating manner.
  • Military aid to Ukraine would stoke Russian nationalism, and the loss of men and money in a military operation will not deter it. No one believes that Ukraine can win a military contest with Russia. The consensus believes the only possible strategy is to raise costs for Russia.
  • Paul Krugman at the New York Times says Greece is only asking for what the Germans asked for in the 1950s.
  • Within 5 to 7 years, 800 million Indians will be connected to the Internet, versus 100 million today.
  • Steve Ratner said most southern European economies are fundamentally uncompetitive – there are 2,700 pages of labor laws in Italy.
  • Within 5 to 7 years, 800 million Indians will be connected to the Internet, versus 100 million today.

Bill Browder at Hermitage Capital Mgmt said:

  • The Russian oligarchs and government officials were stealing all the profits out of the companies he invested in.
  • Putin arrested the richest oligarch and told the others that if they did not want to be arrested they needed to share their money with him. Putin is the biggest oligarch and the richest man in the world, worth $200 billion in property, Swiss bank accounts, shares, and hedge funds.
  • In Russia, whoever has the power to arrest people is the person in power.
  • The one thing in Washington that everybody could agree on was that these Russians were bad.
  • While in power Putin will run Russia into the ground and cause the West many problems.

Zanny Minton Beddoes at The Economist said:

  • The Greek crisis will go down to the wire. The limited solution is relatively simple and that is more reform in return for debt relief. Greece cannot possibly repay its debt. Germany is wrong in demanding austerity and refusing to think about the debt.
  • The Greek economy has bottomed and is beginning to grow, but just as it appears they have got through the worst, they are throwing baby out with the bath water.
  • It is not clear that there would be massive contagion if Greece left the EU.
  • We will get the typical European solution which is akin to kicking fudge, but the odds of an accident this time are the highest in a long time.

Gillian Tett at Financial Times said:

  • Greece is only asking for what the Germans asked for in the 1950s and which has enjoyed a lot of debt relief in the last century.
  • The question is this Europe’s Lehman Brothers moment or will we see a chain reaction that could be extremely bad for the economy? The chance of an accident is rising.

Rana Foroohar at Time Magazine said:

  • Germany has benefited more than any other country from being in the euro zone, and will benefit from ECB QE because that will make the euro more competitive in the international market. Eventually the Germans will blink but expect much pain along the way and the problem not being fixed this time around.
  • Germany has done enough to create a consumption economy and bolster wages.
  • The political solution in Europe is a United States of Europe with real fiscal integration and more power in Brussels with Berlin holding the purse strings.
  • The periphery European economy needs to have a comfort zone in which they can reform.

Freedom House said:

  • Democracy has been declining for 9 straight years and is under greater threat than at any time in the last 25 years
  • 40% of the world’s population is free, 24% is partly free, and 36% is not free. In 2014, 61 countries saw their freedom deteriorate from 2013, versus 33 countries that saw freedom improve. The Middle East and North Africa are the least free.
  • Autocrats are no longer paying as much lip service to democracy and are returning to old 20th century modes of oppression: e.g. Russia’s invasion of Crimea, while China is detaining activists under stricter conditions than just house arrests and televising people’s confessions, and Egypt sentenced hundreds of political prisoners to be executed in sham trials.
  • Azerbaijan, Vietnam and Ethiopia do not receive the full ire of the free world despite their oppression.

Bill Gates said:

  • We are innovating at a wonderful speed and we will be reducing inequity for the basics faster than ever before.
  • Economists have always had a hard time with innovation because it is exogenous.
  • China’s growth is lower than it was but is still at a level that the US and the world would love to have.
  • Improving economic fundamentals will accelerate in the next 15 years.

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

at http://transcripts.cnn.com/TRANSCRIPTS/1502/15/fzgps.01.html