January 10th, 2014
02:21 PM ET

What I'm reading: Do central bankers need economic rehab?

By Fareed Zakaria

“In the summer, both the Fed and the People’s Bank of China signaled their intention to normalize monetary policy,” writes Niall Ferguson for Project Syndicate. “Fed Chairman Ben Bernanke talked openly of ‘tapering’ the Fed’s policy of open-ended bond purchases, also known as quantitative easing (QE). PBOC Governor Zhou Xiaochuan actually did try to rein in his country’s runaway credit growth. But when markets in both countries reacted more violently than expected – with bond yields soaring in the United States and inter-bank lending rates spiking in China – the monetary authorities backed off.”

“It is a problem many a pop singer has encountered: After years of stimulus, rehab is just not that easy.”

“In 1970, when 11 percent of adult Americans had bachelor's degrees or more, degree holders were viewed as the nation's best and brightest,” write Richard Vedder and Christopher Denhart in the Wall Street Journal. “Today, with over 30 percent with degrees, a significant portion of college graduates are similar to the average American – not demonstrably smarter or more disciplined. Declining academic standards and grade inflation add to employers' perceptions that college degrees say little about job readiness.”

“There are exceptions. Applications to top universities are booming, as employers recognize these graduates will become our society's future innovators and leaders. The earnings differential between bachelor's and master's degree holders has grown in recent years, as those holding graduate degrees are perceived to be sharper and more responsible. But unless colleges plan to offer master's degrees in janitorial studies, they will have to change.”

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December 4th, 2013
06:59 PM ET

What I'm reading: Networked nature of gun violence

By Fareed Zakaria

“There are still huge pools of private wealth sitting on the sidelines that can be rapidly mobilized to support productive infrastructure. The government needs to help with rights of way before construction, and with strong regulation to protect the public interest afterwards,” writes Ken Rogoff for Project Syndicate.

“In his first term in office, U.S. President Barack Obama suggested the creation of an infrastructure bank to help promote public-private partnerships. It is still a good idea, particularly if the bank maintained a professional staff to help guide public choice on costs and benefits (including environmental costs and benefits). Even if Keynesian multipliers are truly at the upper end of consensus, mobilizing private capital for investment has most of the advantages of issuing public debt.”

“Even as the Suez Canal has become a touchstone of Egyptian nationalism, the great power of today – the United States – tends to see the waterway in similar terms as the colonial powers of the past,” argues Steven Cook in Foreign Affairs. “Like Disraeli, U.S. presidents and strategic planners have long regarded the canal as a means to another end – a critical component of global trade and a vital conduit for U.S. warships between the Mediterranean and the Persian Gulf. The question is no longer about control; Egyptian control of the canal is universally accepted. Yet as the debate about U.S. military aid to Egypt raged after the July 3 military coup, and as the subsequent low-level insurgency broke out in the Sinai Peninsula, analysts have begun to question just how secure the canal is – and whether that even matters anymore.”

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September 23rd, 2013
05:22 PM ET

What I'm reading: Why Saudis are wary over Syria war

By Fareed Zakaria

“The Syrian war presents the Saudis with a chance to hit three birds with one stone: Iran, its rival for regional dominance, Tehran’s ally Assad, and his Hezbollah supporters,” writes Fahad Nazer in the New York Times.

“But Riyadh’s policy makers are wary. They know that once fully committed, it will be difficult to disengage. And so they are taking to heart the lessons of another regional war that flared on their border 50 years ago.”

“To many observers, Glass-Steagall made no sense. Why shouldn’t banks be allowed to engage in any business they want, at least as long as we have regulators to ensure that the banks’ activities do not jeopardize the entire financial infrastructure?” argues Robert Shiller for Project Syndicate.

“In fact, the main advantages of the original Glass-Steagall Act may have been more sociological than technical, changing the business culture and environment in subtle ways. By keeping the deal-making business separate, banks may have focused more on their traditional core business.”

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July 25th, 2013
11:51 PM ET

What we're reading

By Fareed Zakaria

“There are many other examples of Syrian-Iranian coordination and the utter ruthlessness of both states in pursuing their objectives, such as the 2005 assassination of Lebanese Prime Minister Rafiq al-Hariri. During my time in Lebanon, we had a dark joke about ‘Hama rules,’ meaning there were no rules governing Syrian conduct,” writes Ryan Crocker in Yale Global.

“So this current fight didn’t start in the southern Syrian city of Dara’a in 2011. Nor is it part of the so-called Arab Spring. It began decades before. Lebanese, Palestinians, Iranians, Jordanians, Iraqis and Syrians – Sunnis, Alawis, Christians and Druze – all remember. Americans may not have ever really understood it in the first place. The history helps explain the ferocity of the fight on the part of both the regime and its opponents, and it illustrates why this regime is not like those in Egypt, Tunisia or Libya. It was ready for this war.”

“Whatever hope Egypt’s transitional government has instilled in Egyptians as it gets to work, it also faces an angry and resentful Muslim Brotherhood that is determined to do what it can to disrupt the political process,” argues Steven Cook in Foreign Affairs.

“The Brothers might ultimately be unsuccessful, but their sit-ins, demonstrations, and not-so-hushed rhetoric of violence and martyrdom vastly complicate the tasks ahead. The narrative of victimhood will stir a base that might have otherwise dissipated had the calamitous Morsi been permitted to carry on. Of course, the Brothers’ commitment to the ballot box has always been most pronounced when the group is under pressure. If the now-deposed president had stayed in office, he and the Brothers’ guidance office would likely have found a way to ensure the Brotherhood’s political power regardless of the group’s performance. It now seems unlikely that the colorless jurist who is palace-sitting has the ability to match the Brothers’ war of position with anything other than coercion. This portends a slide toward authoritarianism, not democracy.”

“The government is using a variety of instruments, including financial-sector credit discipline, to rein in investment demand. Essentially, the government guarantee associated with financing public-sector investment is being withdrawn – as it should be,” writes Michael Spence for Project Syndicate.

“But, to circumvent the restrictions in the state-dominated financial system, a shadow banking system has developed, raising new risks: economic distortions; reliance on excess leverage to drive growth in the consumer, real estate, corporate, and government sectors; and dangers associated with inadequate regulation. As a result, investors are worried that China could slip into the excess-leverage growth model that has served many developed economies so poorly.”

 

July 10th, 2013
10:30 AM ET

What we're reading

By Fareed Zakaria

“The reality is that the border is more secure today than at just about any time in this nation's recent history,” argues the Los Angeles Times. “The number of immigrants who entered the U.S. illegally at the nine major crossing points from California to Texas fell by an astounding 86 percent between 2006 and 2011, according to the Government Accountability Office. Overall, the number of immigrants coming illegally to the United States is at a 40-year low, having dropped from slightly more than 1 million in 2005 to fewer than 365,000 in 2012 and 2011, according to the Border Patrol.”

“The current Chinese system is a gigantic rent-distributing mechanism,” writes Minxin Pei for Project Syndicate. “The ruling elites have learned to live with each other not through shared beliefs, values, or rules, but by carving up the spoils of economic development. In a high-growth environment, each group or individual could count on getting a lucrative contract or project. When growth falters, the food fight among party members will become vicious.”
FULL POST

July 2nd, 2013
05:45 PM ET

What we're reading

By Fareed Zakaria

“Young French people need to go abroad, to work, to travel, to see how things can work differently in cultures and countries that don’t play by the same old rules — and then come back to France, and reinject some of the energy and enthusiasm they’ve absorbed to help reconcile the broader population with the global reality that France has shunned for far too long,” writes Felix Marquardt in the New York Times.

“Though it may be anathema to French pride that anyone would want to leave (and that evidently Ms. Merkel, France’s No. 1 partner and rival, agrees), young people voting with their feet and coming back with a new worldview could be the best thing to happen to France in 30 years.”

“If Mohamed Morsi falls or steps down, millions of Egyptians will view it as a victory. Perhaps he could be succeeded by a salvation government, and some kind of stable progress will ensue, though the Brotherhood can hardly be expected to quietly allow their project to dissolve around them, and it would likely mean the return of the army to a guiding role,” writes Evan Hill in the Globe and Mail.

“Revolutions come with chaos. History teaches us that many years may pass before a country comes out of such upheaval with a working government, satisfactory justice and reconciliation, and a consensus about national identity. But even in such a positive scenario, it is hard not to view the first two and a half years of Egypt’s revolution as a series of squandered promises.”

FULL POST

May 27th, 2013
05:27 PM ET

What we're reading

By Fareed Zakaria

For now, the post-Wall generation in Europe lacks a clear focus for its anger, writes Gene Frieda for project Syndicate. “New populist parties in Italy, Greece, and Germany reflect the direction in which politics is moving, not the final destination. Their ability to win support from both the left and the right suggests a shared aspiration to rebuild the protective national barriers that the post-War generation demolished.”

“Against this background, most European leaders are afraid that their electorates will reject anything that seems to imply more integration. It is a classic prisoner’s dilemma: all countries are better off if they contribute to a common cause, but the pressure of national elections impedes politicians’ ability to champion that cause. The ultimate test of leadership will be a commitment to EU treaty reform, with all the thorny negotiations and referenda that this entails.”

Our access to high-quality information has not, unfortunately, ushered in an age in which disagreements over conspiracy theories can easily be solved with a quick Google search, argues Maggie Koerth-Baker in the New York Times magazine. “In fact, the Internet has made things worse. Confirmation bias — the tendency to pay more attention to evidence that supports what you already believe — is a well-documented and common human failing. People have been writing about it for centuries. In recent years, though, researchers have found that confirmation bias is not easy to overcome. You can’t just drown it in facts.”

“In 2006, the political scientists Brendan Nyhan and Jason Reifler identified a phenomenon called the ‘backfire effect.’ They showed that efforts to debunk inaccurate political information can leave people more convinced that false information is true than they would have been otherwise.”

FULL POST

The real cyber threat
May 21st, 2013
09:05 AM ET

The real cyber threat

By Mark Sparkman, Special to CNN

Editor’s note: Mark Sparkman, a former senior officer with the CIA’s National Clandestine Service, is a senior international affairs analyst with the nonprofit, nonpartisan RAND Corporation.  The views expressed are his own.

The announcement by prosecutors that charges had been filed against suspected cyber thieves believed responsible for stealing $45 million in a matter of hours from ATM’s in two dozen countries should send a stark message to governments around the world – banks could be the most vulnerable front in cyber space.

Plenty of people have been warning us these days to worry about cyber attacks, but generally we have been worrying about the wrong things. Most “cyber Armageddon” scenarios focus on gaps in our physical infrastructure and even far-fetched scenarios such as infant incubators in hospitals being turned off. But major swathes of the United States have routinely gone without electricity and water for days following natural disasters. Soon enough, life gradually gets back to normal. Want real chaos? Destroy confidence in the banking system (or even a part of it), and just stand back and watch.

Since last fall, a series of Distributed Denial of Service (DDoS) attacks on financial institutions have temporarily denied customers access to their bank accounts, and U.S. officials have pointed an accusatory finger at Iran. Although the attacks were not devastating, U.S. officials are rightly weighing their response options. The fact is that the United States needs to gear up for the coming era of cyber threats – and start by ensuring its financial flank is not catastrophically compromised.

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Topics: Cyber • Economy
April 4th, 2013
05:53 PM ET

What we're reading

By Fareed Zakaria

The tragedy of Korea is that no one really wishes to change the status quo, writes Ian Buruma in Project Syndicate. “China wants to keep North Korea as a buffer state, and fears millions of refugees in the event of a North Korean collapse; the South Koreans could never afford to absorb North Korea in the way that West Germany absorbed the broken German Democratic Republic; and neither Japan nor the US would relish paying to clean up after a North Korean implosion, either.”

“And so an explosive situation will remain explosive, North Korea’s population will continue to suffer famines and tyranny, and words of war will continue to fly back and forth across the 38th parallel.”

China’s Communist Party has achieved something few had thought possible: the construction of a distinct national internet, The Economist says.

“The Chinese internet resembles a fenced-off playground with paternalistic guards. Like the internet that much of the rest of the world enjoys, it is messy and unruly, offering diversions such as games, shopping and much more. Allowing a distinctly Chinese internet to flourish has been an important part of building a better cage. But it is constantly watched over and manipulated.”

FULL POST

April 2nd, 2013
05:36 PM ET

What we're reading

By Fareed Zakaria

It’s difficult to find a more robust correlation in social science than the one between gun laws and gun violence, argues Adam Gopnik in the New Yorker.

“The cry comes back: ‘But those are just correlations. They don’t prove causes!’ And, indeed, the most recent damning study, published in that cranky, left-wing rag the Journal of the American Medical Association –which shows a clear correlation, state to state, between strong gun laws and less gun violence – ends with the orthodox injunction that the study could not alone determine cause-and-effect relationships, and that further studies are needed.

“But when a scientific study ends by stating that there’s uncertainty about whether a correlation proves a cause, it doesn’t mean that correlations are meaningless in every circumstance.”

In the mirror of Germany, “the French must ask themselves fundamental questions. Have they made the right choices in terms of leaders and policies in recent decades?” writes Dominique Moisi for Project Syndicate.

“Young Berliners cannot ignore where they come from. Yet, perhaps because the past still rings like a warning – and is still physically visible in the topography and architecture of the city today – Berlin is striking in its simplicity, its radiant modernity (symbolized by the glass dome of the Reichstag, a conception of the British architect Norman Foster), and, above all, its intensity.

“That positive energy contrasts starkly with the decadent beauty of Paris, a city that is on a path of ‘museification.’”

FULL POST

U.S., Europe: Get ready for estrangement
November 27th, 2012
05:23 PM ET

U.S., Europe: Get ready for estrangement

By Hans Kundnani, Special to CNN

Editor’s note: Hans Kundnani is editorial director at the European Council on Foreign Relations. The views expressed are his own.

The overwhelming feeling in Europe following Barack Obama’s re-election was a sense of relief. Although European approval of his administration’s foreign policy has dipped since he took office in 2009 – particularly over his increased use of drones and his perceived failure to put greater pressure on Israel – Europeans overwhelmingly preferred him to Mitt Romney. Indeed, according to one poll carried out in 12 European Union member states before the election, 75 percent said they would vote for Obama and only 8 percent for Romney if they could choose.

Still, Obama’s second-term foreign policy has the potential to divide Europe – and to divide Europe and America. Two developments in particular will shape Obama’s second-term foreign policy – deficit woes and a pivot towards the Asia-Pacific. Both will create tough choices for Europeans as they struggle to deal with the euro crisis.

FULL POST

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Topics: Asia • Barack Obama • China • Europe • Germany • United States
July 6th, 2012
04:39 PM ET

Coming up on GPS Sunday: Mexico's future, America's jobs crisis and the world's hot spots

Coming up on GPS Sunday at 10 a.m. and 1 p.m. ET, Fareed and his guests will discuss the world’s hot spots, Mexico’s future, China’s demographic problem and America’s unemployment crisis.

GPS will tackle a discussion on Europe, Syria and America with Kishore Mahbubani, Anne Applebaum, Mark Malloch-Brown, and Dominique Moïsi.

In the show's "What in the World" segment, Fareed will examine how China will struggle to compete in the future as it faces a demographic crisis.

Then the discussion will turn to Mexico, which elected a new president. Presumptive president-elect Enrique Peña Nieto will give his thoughts on the country's drug war, which has claimed 50,000 lives in six years.

Watch a short part of that interview.

Peña Nieto also weighs in on Arizona's SB 1070 law, which has controversial ways of dealing with illegal immigration.

Finally, the show will take a look at jobs in the United States. This week a new jobs report was released. Fareed asks: Who creates jobs in America? Is it the 1% or the 99%? Two guests with very opposing viewpoints debate the issue.

Topics: GPS Show
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