Fareed Zakaria GPS – CNN 06-05-16

Salient to Investors:

Fareed Zakari said:

Remains skeptical of an American military solution to Syria.

The US is no longer the world’s humanitarian leader and has become an international embarrassment.

The UN says 4 in 10 people do not have access to adequate sanitation and that every dollar spent on sanitation produces a return of $9. Water Aid says over 770 million Indians and 329 million Chinese do not have access to a toilet at home.

Richard Haass at the Council on Foreign Relations said the US has more often than not benefited from interventions in the world: mistakes have been self-inflicted, viz Vietnam, Iraq.

Ruchir Sharma at Morgan Stanley Investment Banking said:

Since 2009, the number of billionaires has risen 80%, equally distributed. The US has had one of the biggest increases in billionaire wealth to 15% of GDP versus the historical norm of 10% due to easy money producing one of the strongest stock market gains in history. The rich own stocks in a disproportionate manner.

The public mood against wealth turns negative when that wealth is being created in corruption-prone industries in countries like Russia and Mexico.

More than 50% of billionaires in India inherited their wealth. The US ranks OK on this metric which is why Trump is able to run for office.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1606/05/fzgps.01.html

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Fareed Zakaria GPS – CNN 02-21-16

Salient to Investors:

Fareed Zakaria said that in the next few years, 1 billion Indians will get access to the Internet, most for the first time.

Tom Friedman at the New York Times said:

A EU fracture would be a negative strategic trend for the US.

Putin looks for sugar highs to distract from the radically shrinking Russian economy.

When the price of oil is low, freedom eventually flourishes.

James Fallows at the Atlantic said:

America is basically a big forest in the east, a big farm in the middle, and a big desert and mountain range in the west.

The seeds of a second reform age are being sown around the US, just as the first Gilded Age led to reforms.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1602/21/fzgps.01.html

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‘Don’t overburden central banks,’ says India’s Rajan – BBC News 08-25-15

Salient to Investors:

Raghuram Rajan at Reserve Bank of India said:

  • Central banks’ use of cheap money to tackle economic problems, rather than painful reform, has to stop and continuation risks doing more harm than good.
  • Central banks cannot carry the whole burden and may not have the tools to deal with demographic change and deep changes in productivity.

Read the full article at http://www.bbc.com/news/business-34056740

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Back to Fundamentals in Emerging Markets – Project-Syndicate 08-13-15

Salient to Investors:

Dani Rodrik at Harvard said:

  • Emerging markets may be seen to be in deep trouble but do not deserve the doom-and-gloom treatment they are getting. Stronger economic headwinds ahead will make it easier to distinguish countries that have strengthened economic and political fundamentals from those that have relied on false narratives and fickle investor sentiment.
  • The 3 key growth fundamentals of developing economies are acquisition of worker skills and education, improvement of institutions and governance, and structural transformation from low-productivity to high-productivity activities. Countries that rely on steady, economy-wide accumulation of skills and improved governance may grow less fast but they are more stable and more likely to converge with advanced countries eventually.
  • China grew by filling factories with uneducated peasants, and so generated an instant boost in productivity. China’s political and institutional challenges are much greater than those of democratic India so offers much higher uncertainty for long-term investors.
  • India’s medium-term growth potential is well below that of China in recent decades because skill-intensive services absorb only a tiny portion of India’s largely unskilled labor force, so it will take many decades for overall productivity to rise significantly.
  • Brazil’s political crisis demonstrates democratic maturity as prosecutors are able to probe the highest ranks of Brazilian society and government without political interference – a sign of strength more than weakness.
  • Turkey’s corruption has gone untouched and so will cause greater long-term damage.

 

Read the full article at https://www.project-syndicate.org/commentary/emerging-market-growth-by-dani-rodrik-2015-08

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Fareed Zakaria GPS – CNN 08-09-15

Salient to Investors:

Fareed Zakaria said:

  • Obama is an optimist about the world and America’s place in it – historically, optimists have tended to be right.
  • Iran’s Gulf enemies outspend it militarily by 8 to 1, America by 40 to 1. Iran is being forced to fight on two fronts to preserve its security – not a sign of strength.
  • The US has made many mistakes when it acted out of fear, but when it has patiently organized allies, negotiated agreements with adversaries, built its internal strength, it has prevailed in the end. The US has outlasted monarchy, fascism, revolution and communism, and will outlast radical Islam andcope with Iran.
  • The UN the global population will increase 2.4 billion to 9.7 billion by 2050. Before then India’s population will surpass China. By 2050, Nigeria will be the world’s third most populous country, and its 9th largest economy in the world by 2050 , up from 20th in 2014, according to PWC.

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

at http://transcripts.cnn.com/TRANSCRIPTS/1508/09/fzgps.01.html

Fareed Zakaria GPS – CNN 06-07-15

Salient to Investors:

Fareed Zakaria said:

  • In 2014, 190 million Indians used the Internet versus 60 million in 2009 and 7 million in 2001 – by 2018, there will be 580 million users.
  • Boston Consulting Group estimates the number of Internet jobs could quadruple in the next 3 years, with rural internet users growing to 40% to 50% from 29% of the population in 2013.
  • Reuters estimates India’s 250,000 villages will be connected with broadband cable in 3 years.
  • Nick Kristof says it takes 25 gallons of water to take a bath, 1,800 gallons to make a pound of beef, 468 gallons for chicken, 880 gallons for a gallon of milk.

Stanley McChrystal said:

  • ISIS is not a traditional terrorist or religious movement but an organization taking advantage of the political and social erosion in the Middle East and which uses the new technological environment to seem like they are everywhere and know everything.
  • It will very difficult to produce any kind of lasting solution without a team of teams by nations in the Middle East region, all being stakeholders in the need to get Syria, Iraq, and others back into effective equilibrium, then empower them to execute – which means letting go of some control.

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

at http://transcripts.cnn.com/TRANSCRIPTS/1506/07/fzgps.01.html

Fareed Zakaria GPS – CNN 03-22-15

Fareed Zakaria said:

  • The greatest vulnerability for Israel is its legal jurisdiction over 4.5 million Arabs who have neither a state nor a vote – a situation that cannot last in a democratic society.
  • The Stockholm IPRI says Israel’s defense budget is larger than that of Egypt, Jordan, Syria and Lebanon combined.
  • The UN says the US has taken in the equivalent of only .08% of its population in refugees, versus 1% for Sweden and 9% for Jordan.
  • IHS Global Defense Trade Report says the worldwide defense market rose more than 13% to a record $64 billion in 2014; Saudi Arabia overtook India as the world’s top importer and China was third.

Martin Indyk said Netanyahu has alienated just about every world leader including Israel’s closest friends Merkel and Sarkozy, by doing many things which contradict the promises that he has made them.

Elliot Abrams said the situation with Israel is the worst in a very long time because of Obama’s terrible personal attitude toward Netanyahu.

Michael Lewis said:

  • The technology is almost getting rid of Wall Street, but the resulting complexity and opacity still needs gatekeepers.
  • In the 1980s, the kind of young person who went to Wall Street changed from being one who was in the bottom of their class at Yale to one who was at the top and who can cause a lot more trouble – very bright people without a particular ambition except to be a success type.
  • Wall Street women are kept largely separate from the risk taking decisions. However, after the financial crisis, women rose to positions that were sufficiently senior that they could be plausibly blamed when things went wrong and were.

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

at http://transcripts.cnn.com/TRANSCRIPTS/1503/22/fzgps.01.html

Fareed Zakaria GPS – CNN 03-15-15

Salient to Investors:

Fareed Zakaria said the NSF reports the US share of global R&D at 30%, down from 37% in 2001. China % of GDP spent on R&D is on track to surpass the US in just a few years.

Charles Bolden at NASA said a multi-planet species can survive in perpetuity; single planet species will die away.

Dr. Steward Williams at University of Louisville said we can now take an adult cell and transform it into other types of cells and will be able to print an entire heart within 10 years.

ITER says there is enough hydrogen in the ocean to power humanity with fusion for millions of years – fusion reactions do not produce any carbon emissions. China is making cables for the super conducting magnets which the US is building, and India is making the steel structure that will surround the magnets.

Michio Kaku said:

  • We have learned more about the brain in the last 10 and 15 years than in all of human history combined.
  • We can now photograph a thought and communicate it to a robot or a computer. We can see desire, self-awareness or a guilty conscience.
  • If we can upload our brains into a computer, we could outlive our frail bodies and perhaps achieve immortality.

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

at http://transcripts.cnn.com/TRANSCRIPTS/1503/15/fzgps.01.html

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

Zanny Minton Beddoes – Charlie Rose 02-10-15

Salient to Investors:

Zanny Minton Beddoes at The Economist said:

  • The economy’s fundamental drivers, particularly rapid technological change, means that the rewards disproportionately go to the top.
  • The latest IMF research suggests that you get stronger and more lasting economic growth in societies that are more equal.
  • The last time we had this huge a technological change – the Industrial Revolution – we also had huge changes in public policy.
  • The world has incredibly low interest rates and a big need for more spending on infrastructure so it is a no-brainer to do that.
  • India is the shining example of a country with remarkable economic growth and devotion to classic liberalism and to free markets.
  • A lot of China’s growth came from liberalization but more recently from debt-fueled investment binge. China is naturally slowing because it is richer and aging fast.
  • The US economy has accelerated in the last 6 months. Inequality and an aging population are challenges so rapid growth is going to be lower than it was 30-40 years ago.
  • Europe is still a mess. Japan shot itself in the foot with its consumption tax. The emerging world, including Brazil, is slowing.
  • The difference to the last time the Saudis let oil prices stay down for a while is that this time the shale investment time is much shorter than for traditional oil drilling. The oil market economics has shifted from one of OPEC domination to one that is supply and market driven.
  • Putin’s paranoia is under-appreciated as is the depth of his desire to remain popular.
  • Venezuela is headed for default quite soon.
  • The disproportionate losers from lower oil prices are also the tricky regimes, like Nigeria, Russia, Iran.
  • The short-term risk to the global economy is too much reliance on one engine, the US, an echo of the 1990s. Longer term, the risk is political economy fueled by stagnant living standards for the majority.
  • We are nearer the beginning than the end of this huge technology revolution.

Watch the video at http://www.charlierose.com/watch/60514294