political reporting, tap dancing. can you find the "new york times" article along with analysis, web exclusiveives, and much more at our web sites, cnn.com/sotu. thank you so much for watching state of the union. i'm candy crowley in washington. up next for our viewers in the united states, fareed zakaria "gps." this is a special edition of "gps" the global public square, from switzerland. welcome to all of you in the united states and around the world. i'm fareed zakaria. we have a very important guest to start off this week, timothy geithner, the secretary of treasury of the united states. all eyes were on him this week in davos. are we really seeing bright spots in the u.s. economy? what can be done about the euro zone crisis? i'll ask him all that in an exclusive interview. then we'll go on a tour around the world with a global panel. neil ferguson, kishor and wada. also, how in the world did one

of the world's greatest sellers in the global bazaar lose its mojo? i'll explain. first, here's my take. president obama spoke forcefully in his state of the union about the importance of reviving manufacturing in america. if you talk with economists, they'll tell you it's a very complex problem involving tacks, trade, regulatory policy, exchange rates, educational skills. it is all those things, but when you move from high level policy to specific cases, you will often find within element that is rarely talked about. a government's role in boosting its domestic manufacturers. in a front page story last week, the "new york times" detailed how apple's iphone ended up being made outside america. "the times" wrote about the apple executives who visited a factory in china to see if it could cut the glass precisely for the phone's touchdown screen. when the apple team got there, the factory owners were already

constructing a new wing. this is in case you give us the contract, the manager explained. how could they afford such an extrav gantt gesture? it turns out, "the times" noted that they received subsidy from the chinese government. that one incident is part of a pattern. in 2009, for example, bridgelux, a light emitting chip manufacturer in the united states was searching for a new factory site. the company considered the cost of building in the u.s. and elsewhere. the government of singapore offered to pay half the set-up cost of the plant. why can't we do that here in the u.s.? the ceo bill watkins asked. andrew, the ceo of dow chemical, has been arguing for a national policy aimed at reviving manufacturing. in his book "make it in america" he argues that not only would a manufacturing policy produce good long-term jobs, it would upgrade the jobs skills that are crucial to keeping innovation

alive. innovation doesn't just happen in laboratories by researchers, he told me. it hams on the factory floor. the process of making stuff helps you experiment and produce new products. if everything is made in china, people there will gain the skills, knowledge, and experience to inovate, and we will be left behind. companies can't compete with countries, he said. take solar energy, an industry largely invented in america in which the manufacturing has largely moved to china thanks to massive state subsidies. or consider wind turbines. china's biggest windmill makers have received more than $15.5 billion in credits from state-owned banks. as a result, despite many concerns about quality, they won their first major foreign orders in the past year. over time they will gain experience, improve quality, and further reduce costs. industry after industry, the same pattern emerges.

i'm deeply skeptical of government industrial policy. government doesn't know how to pick winners and losers. it makes mistakes. the process gets politicized. yet, when i look around the world, particularly in asia, i see governments playing a crucial role. they do make mistakes. they seem to view it like venture capitalists. their role is to seed many companies, only a few will succeed. once successful, the government helps these companies to compete against big american and western multi-nationals. there used to be a joke among marksist economist who's would say of a deviation from pure communist economics, it might work in practice, comrade, but it doesn't work in theory. that's what industrial policy looks like these days. the theory doesn't make much sense, but it's hard to argue with the results. for more on this, you can read my column in this week's "time magazine." let's get started.

zirchgs it's a great pleasure to have timothy geithner, the treasury of the secretary. >> nice to be here, fareed. >> let me start with an easy question. what is the united states economy going to grow at this year? >> there are no oracles in economics, and it's still a pretty uncertain world, but i think that conventional view of the u.s. now is that we're growing between 2% and 3%. i think that's a realistic outcome as long as we see more improvement in europe and as long as we don't see a lot of risk come from iran on the oil front. >> that scenario of 2% to 3% growth seems a little different from what ben bernanke thinks growth is going to look like. have you read the statement the

fed put out, and it was a very bearish statement. to be willing to almost guarantee that rates will be kept where they are until the end of 2014 suggests they don't see any growth of any robust growth for a long time. are they wrong at the fed? >> i'm not a forecaster, so my view is not worth much, but if you look at the -- both the fed's forecast and the consensus of private forecasters in the business community among economists, people are pretty close clustered in that area, but it's still very dependent on how the world unfolds. again, i think it's worth recognizing that, you know, we still face tremendous challenges as a country. we're still repairing the damage caused by devastating financial crisis. that still has huge lasting impacts on the basic fortunes of most americans. unemployment is still very high. housing is still very, very weak. construction is very weak. people still have too much debt. they're bringing that down, and that's still going to take a

while to repair. >> you know, there is a very well established narrative now among the business community in the united states that there would be much morrow bust recovery. the u.s. economy would be growing much more vigorously if there were greater certainty and businesses could invest and the reason they are not is a kind of tsunami of regulations, uncertainty about tax policy, uncertainty about the deficit, but perhaps above all, the sense that the economy is being thrown this huge new wave of regulations in health care and finance and energy and that that is what is keeping the economy back. >> i don't think there's much basis for that view, although it is true that we are putting in place very tougher reforms in the financial sector. we're trying to improve how the u.s. health care system works, and we're trying to change how americans use energy, and those are necessary, desirable, very important long-term reforms for the united states, but i think if you look at the evidence we

have about how the economy is doing and how the business community is doing in particular, the reality is not justifying that sense. so just look at the things you can use to measure -- basic health, business health. you know, profitability across the american economy is very, very high. profits are higher than the pre-crisis peak. if you look at investment as a measure of confidence, private investment and equipment of software is up more than 30% since the trough in the first half of 2009. exports are up 22%. there's broad-based strength in ener energy. i was at a plant in north carolina this week, which is building staem and gas turbines and generators, and for exports. they're doing that because they see in the basic fundamentals

the proximity of the united states even with all our challenges pretty compelling, competitive vantage relative to where else they produce. if you look at the basic health of the american business sector, it's much stronger than i think anybody would have thought at the peak of our crisis. sgrool while business profitability is up, productivity is up, unemployment still remains a huge challenge. many businesses have become more prukive because they've taken costs out of the system. they've managed very efficiently. the biggest determiner of how fast we grow now is going to depend on the two fundamental factors. one is what happens in the world. meaning in europe and in the

gulf, and because of oil. congress decides they want to legislation things good for growth in the short-term, so we think the right economic agenda for the country is for us to legislate a set of investment incentives, investments in things that matter for long-term growth, rebuilding america's infrastructure, more education, more spending on innovation, basic science and research, better skills for americans tied to long-term fiscal reforms that restore sustainability, and if we were able to legislate progress in those things in the short-term, that would make a big difference for confidence. it would make a difference for the rate of growth of the american economy in the short run. but to be realistic, it's going to take a long time still for us to fully repair the damage particularly unemployment that came as a cause of the crisis, but the private sector has

created 3.2 million jobs since job growth resumed. that's pretty strong job growth compared to the last two recoveries, and it's pretty strong given the after shocks of the crisis. we all want it to be stronger, though. >> most people who look at the american tax code, which is with regulations and rules, 10,000 pages, one of the most complicated in the world, believe that the key to reforminthe tax code is broaden the base, eliminate deductions and loopholes, lower rates. isn't the president's proposal in the state of the union taking us in exactly the opposite direction? >> not at all. the president's proposals, which are phobinged on a set of investment favorable reforms in the corporate tax system, manufacturing and investment, and on a modest but necessary increasing the effect of tax rate paid by the richest americans, those two things are only going to come. i think realistically in the

context of broad reform. what we're trying to do is lay the foundation for tax reform so that we can produce a more simple system, lower rates, more simple, less distortions. >> not why just propose tax reform? >> because i think you have to start with principles for a pram work, and what we're trying to do is be specific on what should dominate the debate. i wish it were different for us, but the basic feud fiscal realities of the united states now and we have to recognize we have to govern within those limits, means that when we do tax reform, we're going to have to be helping contribute to deficit reduction. we don't have the ability of offering the american people or the american business people community a net tax cut. that is beyond the capacity of anybody realistic about our constraints, but, again, just to put in perspective, our fiscal problems are daunting for us in the long run. they are much more manageable problems than faced by almost any major economy around the

world, and it's important not to lose sight of the fact that given the high level of unemployment, given the very bad outcomes for median income in the united states over the last 30 years, 20 years, ten years, given the -- just appallingly high rates of poverty in the united states, given the competitive challenges we face, that's going to require pretty significant investments in infrastructure and education innovation, you have to take a much broader approach, and we're not going to solve our problems in the country by thinking their centrally about how we restore fiscal sustainability. that's part of it. it's not the dominant challenge we face as a country. >> we will be right back from davos with the secretary of treasury of the united states timothy geithner. >> you made news a couple of days ago when you made clear that you were not going to serve

in the second term of the obama administration. is that his choice or yours? cut. cut! [ monica ] i thought we'd be on location for 3 days -- it's been 3 weeks. so i had to pick up some more things. good thing i've got the citi simplicity card. i don't get hit with a fee if i'm late with a payment... which is good because on this job, no! bigger! [ monica ] i may not be home for a while. [ male announcer ] the new citi simplicity card. no late fees. no penalty rate. no worries. when we were determined to rate. see it through. here's an update on the progress. we're paying for all spill related clean-up costs. bp findings supports independent scientists studying the gulf's environment. thousands of environmental samples have been tested and all beaches and waters are open. and the tourists are back. i was born here, i'm still here and so is bp.

but my nose is still runny. [ male announcer ] truth is, dayquil doesn't treat that. really? [ male announcer ] alka-seltzer plus fights your worst cold symptoms, plus it relieves your runny nose. [ deep breath ] awesome. [ male announcer ] yes, it is. that's the cold truth!

and then treats day after day... well that's like checking on your burgers after they're burnt! [ male announcer ] treat your frequent heartburn by blocking the acid with prilosec otc. and don't get heartburn in the first place! [ male announcer ] one pill a day. 24 hours. zero heartburn.

>> we are back here in davos, switzerland, home of the world economic forum. more of my exclusive interview with timothy geithner, the secretary of the treasury. >> when you look at your -- mr. seasoning, you look at the growth projection that is are coming out, and they are lower than what was projected, when means that the deficits are larger, which means that the debt to gdp is larger. the debt to gdp is larger in almost every case, not because the debt has gone up, but because the gdp has gone down. not that -- the denominate over has shrunk. does that suggest that austerity is not a path to growth? >> i think the debate about austerity and stimulus is mostly divorced from a much more

practical reality. the prop ownents of stimulus i think today now probably exaggerated its power and its reach now it is true, however, though for parts of europe for a long period of time there's going to be no alternative to very substantial adjustment in budget deficits in the size that the government has made. there's no alternative to that. for those reasons, though, they need support and financing and they need to be complemented by reform that is are also helpful for growth and competitiveness over time.

if there's not a stronger commitment of financial resources standing behind the european endeavor and without that those reforms will never work, and you're right, countries will face the work that every disappointment and growth will be met with an aughts airport that will feed deet cline xshgs that's a cycle you have to rest if you saw financial crisis. snoo when you were in china, did you talk about u.s. china trade in a way that you think you will see results because the president in his state of the union was pretty tough on china. do you think there was a path here, a construct i path forward? >> well, you'll have to see. we measure people by their actions. you know, china does present a unique and formidable challenge to the global trading system because the structure of its economy even though it has more of a marked economy is more overwhelm leg dominated by the state, by state enterprises and china systematically

subsidyizes, the price of land, and its kept its exchaunk rate below fundamentals for some time, although it's appreciating gradually. what that means is china, even though in many ways it's starting to have a world class manufacturing sector is supporting that ambition with the set of policies that are very damaging to not just the commercial and economic interests of its trading partners, but to the political support around the world for sustaining a more open trading system, and they are moving on some fronts. we just like to do more. we'll have to see. >> i think -- i do think china believes that it's in its interest to try and make this broader system work. of course, it depends a lot on its access to our market and other markets around the world, and we hope that provides enough incentive for them to make more progress in these reforms. >> let me ask you a final question. you were surprised that you made news a couple of days ago when you made clear that you were not going to serve in the second

term of the obama administration. that his choice or yours? [ laughter ] >> that's an excellent way to pose that question. you know, generally anybody who takes these jobs is at the pleasure of the president, and at a time when we face so much challenge, so much pressure, if the president asks you to do these things, have you to do them. when he asks me to stay and i thought it was the right time to leave, i agreed i would say stai. i agreed i would stay through the balance of his term, and he accepted that aspiration of mine. that's where it's going to come out, i think. >> what are you going to do next? >> it feels like a long way away. again, we're in europe. i know the -- we are living with terribly challenging and hugely consequential economic policy choices. we have a lot of unfinished business even on the financial

reform side, and a lot of foundation laying for better policy outcomes on the things that are good for growth investment and not just for the long-term fiscal -- we have a long year of hard work, and i know it's a political moment in the united states, and people are skeptical about whether we can do anything, but our judgment is that we still have a chance in some of these areas to make some progress, and i'm going to focus on that as long as i can. >> tim geithner, pleasure to have you. >> myself to see you, fareed. thank you all. >> we will be right back with a story you won't want to miss. why one of the world's greatest exporters is now buying more goods than it's selling. a fascinating reversal of fortunes in asia. [ male announcer ] from our nation's networks... ♪ ...to our city streets... ♪ ...to skies around the world...

♪ ...northrop grumman's security solutions are invisibly at work, protecting people's lives... [ soldier ] move out! [ male announcer ] ...without their even knowing it. that's the value of performance. northrop grumman. 8% every 10 years.age 40, we can start losing muscle -- wow. wow. but you can help fight muscle loss with exercise and ensure muscle health. i've got revigor. what's revigor? it's the amino acid metabolite, hmb to help rebuild muscle and strength naturally lost over time. [ female announcer ] ensure muscle health has revigor and protein to help protect, preserve, and promote muscle health. keeps you from getting soft. [ major nutrition ] ensure. nutrition in charge!

wherever you are in the world, you have probably used or coveted some japanese product. a honda four-wheeler, toyota prius, a panasonic tv, a nikon camera. from the 1950s japan's exports have flooded the world and fueled the american-led home

making that country -- one of the world's great export engines has run out of gas. what in the world is going on? in simple terms that, means japan imported more than it exported last year. now, this is not that unusual for some rich countries. the u.s. has had a trade deficit since 1975 and, yet, we've grown. but the u.s. economy is not built on exports. japan's economic rise on the other hand has been almost entirely powered by exports. so what has changed in japan? the japanese government would like to blame one-off events. last year's earthquake and tsunami crippled factories and shut down nuclear energy reactors. the off shoot of that was decreased economic output. plus, they needed import expensive oil from the middle

east. natural disasters have only highlighted and accelerated existing trends in japan. a decline in competitiveness and an aging work force. china and other ease asian country with make cheaper products and in greater quantities. add to that a rising yen, and japan's exporters have been at a disadvantage globally. it doesn't make sense to manufacture in japan. add to this japan's demographics. between 1990 and 2007 japan's working population dropped from 86 million to 83 million. at the same time americans between the ages of 15 and 64 rose from 160 million to 200 million. in a global marketplace this is a major handicap for tokyo. look at this chart. between 2001 and 2010 japan's

economy grew at .7%. less than half the pace of america's. it was also well behind europe. contrast that with growth per person or gdp per capita, and japan actually outperforms america in the euro zone, so while japan has been hurt by this lack of workers, for the average japanese income is still up and quality of life is still very high. that's why the country has not felt the pressure to reform. now, it's easy to extrapolate from the data that japan's low growth is not a failure of economic policy, but just a reflection of its demographics. that's too simple. in reality japan's industry is becoming less competitive and even per capita incomes will start slowing down. tokyo's policy makers have failed its people. they could have opened up many of its closed sectors to economics, reformed its labor laws to make japanese lake more

attractive, allowed more immigration. the country could have put the country on a path to reduce its massive debt burden. instead we're entering an era where one of the great manufacturing nations of history faces a looming current account deficit. with its debt at 211% of its gdp, if the cost of its borrowing increases, tokyo will face an even greater crisis, a default. keeping a rich country competitive is very hard. especially in a democracy where interest groups keep asking for more. more benefits, more subsidies, more protections. they want to be shielded from competitive forces. it is happening in america just as it happened in japan. it's easy to forget how powerful a growth engine japan was in the 1960s, 1970s, and 1980s, but eventually it was unable to change its way, reform, and get less rigid. the result was decline. we will be right back with a special "gps" panel the likes of

which we couldn't put together anywhere else but here in davos. stay with us. specialists, lots of doctors, lots of advice... and my hands were full. i couldn't sort through it all. with unitedhealthcare, it's different. we have access to great specialists, and our pediatrician gets all the information. everyone works as a team. and i only need to talk to one person about her care. we're more than 78,000 people looking out for 70 million americans. that's health in numbers. unitedhealthcare. beth! hi! looking good. you've lost some weight. thanks. you noticed. these clothes are too big, so i'm donating them. how'd you do it? eating right -- whole grain. [ female announcer ] people who choose more whole grain tend to weigh less than those who don't. multi-grain cheerios -- 5 whole grains, 110 calories. creamy, dreamy peanut butter taste in a tempting new cereal. mmm! [ female announcer ] new multi-grain cheerios peanut butter.

[ male announcer ] you never know when a moment might turn into something more. and when it does men with erectile dysfunction can be more confident in their ability to be ready with cialis for daily use. cialis for daily use is a clinically proven low-dose tablet you take every day, so you can be ready anytime the moment's right. ♪ [ man ] tell your doctor about all your medical conditions and medications and ask if your heart is healthy enough for sexual activity. don't take cialis if you take nitrates for chest pain as this may cause an unsafe drop in blood pressure. [ man ] do not drink alcohol in excess with cialis. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury seek immediate medical help for an erection lasting more than 4 hours. if you have any sudden decrease or loss in hearing or vision, stop taking cialis and call your doctor right away. [ male announcer ] ask your doctor if cialis for daily use is right for you. for a 30-tablet free trial offer, go to cialis.com.

time for a check of today's stories. the protesters broke into city hall and damaged displays and burned an american flag.

about 200 people were arrested as a result of clashes yesterday between protesters and police. systems 34 people were killed in syria today according to a government opposition group. one day after the group says at least 98 people were killed. president bashir al assad's government is under pressure to stop a month-long crackdown on the anti-government protest rising that began last year. egyptians are voting for the upper house of parliament. today's voting comes after the muslim brotherhood won a majority of seats in egypt's lower house late last year. those are your top stories. "reliable sources" is at the top of the hour. now back to fareed zakaria, "gps." i'm here in davos, and we are joined by neil ferguson, the professor at harvard and author of many, many books, the dean of the lequann youth school of public policy and the director general of al jazeera and is now

running a kind of version of davos in qatar. let me start with you, neil. when you look at the global economy, is it fair to say that the american economy's prospects seem relatively speaking better than a lot of the other ones and that one of the reasons -- you get a feeling that president obama is feeling a little bit more confident these days is that there is some good news coming out of america. >> some good news did come out in the last quarter of 2011. though, if you look closely at it, what is going on is that the savings rate was going down, and americans had essentially stopped deleveraging and gone back out shopping. whether that is sustainable or not, i really don't know. i think it's, therefore, a bit too early to say the recovery is here, happy days are here again, and re-election is assured for obama. i don't think we're by any means out of the woods in a whole range of different areas, not the least of which, housing. that's, i guess, a qualified

answer. what's certainly true is that things are going way better in the u.s. than in europe where we may yet see that big double dip that people have been worrying about all through this crisis. in fact, i think the double dip officially is here for the euro zone, and it could dip even deeper if the crisis over the greek debt explodes, which it could very well do in the course of the next few days. >> just atmospherically, do you get a sense that people are looking at america with somewhat less jaundice eyes, because you have been coming here in many,many years, and there's a sense that america was the problem. it was the country that had caused this crisis. it was still a certain amount of hangover from the bush years.

mro. >> i'll be honest with you, i think people are taking a wait and see attitude. they're not sure whether america has really turned the corner, and pour fundamentally, by the way, nothing has changed in terms of long-term trends, you know? in terms of the shift of power to asia, asian economieses will continue to grow and europe will continue to slide, and the united states, we're not quite sure where it's going to be, but the president the union speech, very dramatically, you know? all those who say america is on the decline don't know what they're talking about. it takes super performance by america and underperformance by the rest of the world. the under performance of the rest of the world is disappearing, and the super performance of america is. you are moving to a new world order, but if america remains strong, that's what the rest of

the world actually wants and doesn't want to see a weak america. >> you know, one of the things that i have always noticed in those public opinion polls is that while obama was wildly popular in much of the world, and in europe certainly had changed the image of america, there was one place in which it didn't really make much difference, which is the middle east. the first year obama went up, particularly, the second year of obama were not particularly good, and they remained even after the arab spring not particularly unchanged, so does the -- do you think people in the middle east look at america pretty much exactly the same? do they want it to get stronger and exercise power in that region? do egyptians want america to help consolidate their revolution or is the attitude just stay away? >> when obama came, people were relatively optimistic. when he did a speech in cairo

and before that in istanbul, he was talking to the muslim world, new language. maybe they have been anticipating some action that they have not seen. it's undoubtable that what we see at this point in time is not what we have been thinking of maybe three years ago, so that issue is definitely the -- yes, there is disappointment, but on a wider scale, yes, people are adopting wait and see, and maybe they would like to see some respect to the choices and to their future in a way that doesn't put doubts about their place as they see it. >> before we leave america, let me ask you about the campaign. you wrote a column in "newsweek" in which you were talking about how the right has to take the whole issue of inequality which president obama spent so much time talking about in his state of the union that the right

needs to take it seriously as well. >> yeah. i think obama knows he is on to something. he tried to decide, of course, late last year in kansas at the core are of the state of the union address. he thinks he is likely to be up against mitt romney or for that matter newt gingrich whose personal finances don't look particularly average. it's also because he knows that the republican party does not have an answer to the question. why has the united states been so much more unequal to a society than it was 30 years ago? the response for the republicans have come up with so far is to say -- don't talk that way. in other words, they're in denial. most americans are well aware of this social trend. they live it every day. they see it every day. what we need to see from the republican candidates is a credible response to the argument that the federal government has to do more

through taxation, more tacking of the rich, and through deposit programs. now, there is a republican answer to that, which is, no, that's not the way to address the problem of inequality, but right now we're not hearing it. we're just hearing denial, and i think that's a weak and dangerous response for the republicans. >> we will come right back to all this when we come back. we're going to talk about the euro crisis, and we're going to talk about china, and we're going to talk about the arab spring. when we return. cut. cut! [ monica ] i thought we'd be on location for 3 days -- it's been 3 weeks. so i had to pick up some more things. good thing i've got the citi simplicity card. i don't get hit with a fee if i'm late with a payment... which is good because on this job, no! bigger! [ monica ] i may not be home for a while. [ male announcer ] the new citi simplicity card. no late fees. no penalty rate. no worries. can you enjoy vegetables withe. sauce and still reach your weight loss goals? you can with green giant frozen vegetables. over twenty delicious varieties have sixty calories or less per serving and are now weight watchers-endorsed.

try green giant frozen vegetables with sauce. at liberty mutual, we know how much you count on your car, and how much the people in your life count on you. that's why we offer accident forgiveness, where your price won't increase due to your first accident. we also offer a hassle-free lifetime repair guarantee, where the repairs made on your car are guaranteed for life, or they're on us. these are just two of the valuable features you can expect from liberty mutual. plus, when you insure both your home and car with us, it could save you time and money. at liberty mutual, we help you move on with your life,

so get the insurance responsible drivers like you deserve. call us at... or visit your local liberty mutual office, where an agent can help you find the policy that's right for you. liberty mutual insurance, responsibility -- what's your policy?

we are back with niall ferguson, and kisho, and sung pour and the former director general of al jazeera. you have long been an left armist. somebody who said that the europeans have ineffect stuck their head in the stand. they've sort of muddled through and they'd muddled through by essentially, correct me if i'm wrong, but using the european central bank as a kind of secret mechanism to stabilize things, to -- can they keep this up? >> you called me an alarmist. i have been warning of the dajs of monetary union since the very insinges of the idea. i think the warnings have been not alarmist, but absolutely

correct. what unfold the in europe was a banking crisis. the europeans refused to deal with it. it mutated into a sovereign debt crisis and ultimatesly into a major political crisis. now, we are at the point which i would call the cliff edge where greece is concerned. if it is impossible to reach an agreement on who should bare the cost of writing down greek's enormous public debt and we're in the course of very frought negotiations about this, if there's no agreement on that, and the headlines scream disorderly default, nobody knows where the contagion effect will be. i'm not just talking about portugal or spain. i'm talking about italy and the entire euro zone system. they've mudzled themselves through to the edge of a press pis, and we are very close to the moment of decision. the only thing that stopped them going over the edge has been the european central bank finally, finally, printing money the way that the fed did in the united

states. you should its new president, mario, the ecb is behaving the way the fed did. >> why are we at a cliff's edge now? >> because that solved the liquidity problem, but the underlying problems of sole vensy of both banks and states, those have not been addressed, and nobody yet has an answer as ho to how these problems will be solved. where will the money come from? the jerpan taxpayer says not from me, and if it's not from the german taxpayer, i don't know where it comes from. >> one answer that people have floated myself included is that actually there is not enough money in europe to do a prob proper bail-out, and you need to get the imf involved, but for the imf to raise capital, it has to go to its main stake holders, that is the united states, but the principal soarings of new capital would, of course, have to be china. do you think the europeans would go for a solution like this, but do you think that the chinese

are in the mood to contemplate some greater kind of global responsibilities because after all, if what neil is describing happens, it's terrible for everybody, including the chinese economy. >> well, i would give a two-part answer. the first part clearly china, india, the rest of asia does not want to see europe go over the cliff because, as you said, nobody knows what's going to happen. if the euro zone cracks up, all bets are off. nobody wants that scenario to happen. as you saw in the london summit when they had to inject new money to imf, china came up with $50 million where everyone else, and that scenario where you are at the edge of the cliff, everybody else is putting -- i think china, other asian companies, will put their share in proportionately, of course, but the answer is far more important and that's that the long-term solution for europe is to go to what's real find growth, long-term growth. what you need is a change of

mindset. they never ever understood all the raisian leaders, and, hey, come invest in my country. this is why you should invest. this is the benefit, special economic zone, tax benefits. it's worked. why doesn't europe try that? that's what asians say. you start that, and we will invest in you. >> it's one year since the arab spring that captured the imagination of the whole world, and i would say i think it's fair to say people are a lot less optimistic one year out than they were at the time. chaos, around dictatorships that are not really seeding power as in egypt, the rise of islamic parties. how would you assess? give us a state of, you know, is there a way to assess this young revolution one year ain? >> one year ago if we have this

kind of meeting and talking about the arab world, we would have very grim, depressing, picture. that whole discussion about arab world was about that time the survival of the small elite and control of power and certain sectors of the society who are wealthy. now at least we have choice. we have the will of the people. i entrust the people on the future. those who have made the revolution are the people on the street. at least now we can do something. we can talk about it. we can design the future as we would like to see it. i think, yes, the arab world is definitely going into the right

direction. >> do you give the united states credit for showing the world that democracy can work? the electrics that set this ball in motion only happened because of the u.s. intervention, and the overthrow of the first dictator to go down, and that was saddam hussein. do you give them any credit at all for that, the americans? >>. >> the near conservative position was not to do that. the neo conservative said stop doing that, and we should change the game in the middle east, and many some ways that near conservative argument which we associate with people has turned out to be right because by overthrowing saddam, a domino effect did set itself in motion. >> that has proven wrong because the actual path to democracy in the arab world started from within the public from within the people.

and the will of the public. what happened in iraq, it was imposed from overseas and interjected by the public, and the democracy of iraq is not functioning, because of the -- of the, you know -- this kind of foreign element in it, and in my opinion, what happened in iraq delayed the arab spring, and we will have to end on that note. i think inevitably iraq comes up again and netably people disagree on it. thank you all, wonderful panel. we will be right back. >> making them afraid of it and telling them who is to blame for it. >> making you afraid of and telling you who is to blame for it. [ male announcer ] feeling like a shadow of your former self?

c'mon, michael! get in the game! [ male announcer ] don't have the hops for hoops with your buddies? lost your appetite for romance? and your mood is on its way down. you might not just be getting older. you might have a treatable condition called low testosterone or low t. millions of men, forty-five or older, may have low t. so talk to your doctor about low t. hey, michael! [ male announcer ] and step out of the shadows. hi! how are you? [ male announcer ] learn more at isitlowt.com. [ laughs ] hey! ♪ [ multiple snds ng melodic tune ] ♪ [ malennounc ] at northrop grumman, makthworld a feplace. th's value performance.

northr gruan. but my nose is still runny. [ male announcer ] truth is, dayquil doesn't treat that. really? [ male announcer ] alka-seltzer plus fights your worst cold symptoms, plus it relieves your runny nose. [ deep breath ] awesome. [ male announcer ] yes, it is. that's the cold truth! metamucil uses super hard working psyllium fiber, which gels to remove unsexy waste and reduce cholesterol. taking psyllium fiber won't make you a model but you should feel a little more super. metamucil. down with cholesterol.

president obama's state of the union speech on capitol hill this week marked the 225th time a u.s. president has delivered an annual message to the congress either orally or on paper. that brings me to my question of the week, which is what major american foreign policy initiative was announced to the u.s. congress in a state of the union message? was it, a, the monroe doctrine, b, the marshall plan, c, the containment of commune im, d, the global war on terror? stay tuned. we'll tell you the correct answer. go to cnn.com/fareed for ten more questions and while are you

there, check out our website, the global public square. we have lots of content from davos, and there's also fresh insights and analysis from all over the world. you can also follow me on facebook and twitter to get my latest thoughts and notes on interesting things i have seen. remember, if you ever miss a show or want to save one for post airport, can you now find full video episodes of gps for sale on the itunes tv store. go directly there by typing itunes.com/fareed into your browser. this week's book of the week is actually a movie of the week and want just any movie, but as of this week, an oscar nominated movie. a separation is a beautifully made iranian film. now, this is not about politics or policy. it's just a great character study. it offers an uncommon lens into the lives of ordinary iranians. en only was it nominated for the best foreign film oscar, but also for best original screen play. now for the last look. had enough of executive branch

speeches this week. here's one more from down under. one click away. you see a mundane speech by a cabinet minister and becomes remarkable but when only played up against clips of michael douglas as the president in the great aaron sorkin film "the american president." take a look. >> we have serious challenges to solve, and we need serious people to solve them. >> we have serious problems to solve, and we need serious people to solve them. >> it's not the least bit interested in fixing anything. >> bob rumson is not the least bit interested in solving it. >> he is only interested in two things. >> he is interested in two things. >> making those afraid of it and telling them who to s to blame for it. >> coincidence? i'll let you be the judge. the correct answer to our gps challenge question was, a, the monroe doctrine, warning