harvard physicist. a look at the way your mind works and doesn't. fascinating conversation with nobel prize winner daniel kahneman. a big birthday but an awkward time to throw a big birthday bash. i'll explain. first my take. it's the start of the new year and we will do predictions on this show. i thought i'd try my own hand at some before asking others to risk their reputations. and in the spirit of keeping myself honest, i'm going to look back at what i said and wrote in "time" magazine at the start of last year and see how i did. it's always risky to stick your neck out and humbling to look at your predictions but here goes. the only indulgence i allow myself is to start with areas i did well. i said i thought china would moderate its foreign policy behavior recognizing its assertiveness and arrogance over the last year had caused jitters throughout asia. i think that happened. i said the taliban's momentum would be broken in afghanistan. it has somewhat. i said the drawdown of american troops in iraq would take place and would not cause great regional crisis or instability. all of that seemed to play out pretty much as i predicted. i said iran would continue to be checked by a large group of regional and global powers but there would be no american or israeli strike. so far so good. now, my misses. i said that europe would survive. it has taken europeans much time and many crisis to come to the realization they will have to bail out their spend thrift and unlucky partners in greece, ireland, perhaps portugal, spain as well. germany can afford the bill. well, europe has survived but the situation did not resolve itself nearly so easily as i thought it would. my biggest miss was probably the u.s. economy which i thought would recover more vigorously than it did. what do i think this year? i'm going to double down on my bets. i might have the timing wrong but the substance right. europe will deal with its problems, not in a clean dramatic way, not the way i thought, various complex mechanisms that will involve european central bank, some kind of bond insurance. i remain convinced germany will not let europe fall apart. if things get too dangerous germany will write the checks. it's trying to get the best deal it can, most reforms from countries like greece and italy before it does write the checks. as for america, i'm still bullish. i think american economy continues to have great strength, consumers have rebuilt balance sheets, savings rate from 0 to 3%. corporations are flush with cash. yes, washington remains dysfunctional. but remember there's a new dynamic at work even there. if congress does nothing, something it does very well, there are two questiosequestrat that came place. remember, bush tax cuts expire if congress does nothing. so all of a sudden there are pressures that can bring the budget deficit down. the deficit problem gets solved in a blunt, crude way but maybe that's how democracy works. it's easy to spot all the problems we face, but i think there are also some silver linings here and that's where i'm putting my money. so let's get started. you've heard my thoughts. i'm now joined by three experts who have agreed to gaze into their crystal balls for 2012. slaughter, teacher at princeton, previously did strategic planning for hillary clinton. ian bremmer president of you're arab group, global risk research firm. daniel franklin, editor of the economist magazine's world in 2012 special edition. welcome. so ian, you do this kind of thing for a living. let's first start with something simple like iran. is the united states or israel going to attack iran in 2012? >> absolutely not. i can't see the united states doing it. keep in mind, it's still obama no matter what happens with the elections in 2012 at least for that year. and the israelis are highly incented that an attack it could come if they aren't satisfied. if it's going to come it will come from the u.s. the two sides aren't coming together. it will escalate. a when you have british embassy being occupied, what that's telling you, there's a lot of internal instability at the top of the regime. there's risk takers and folks that don't like us but much more pragmatic. that plays out potentially in dangerous ways in 2012. that's very different from saying we're going to take out -- attempt to take out the nuclear program. >> one of the things i've heard in washington is there are a lot of people in washington who feel that the israeli belligerence is an effort to play us rather than a signal they are about to strike iran. do you think that's right? they are trying to say to us, look, we're getting really serious. unless you guys in washington do more, we might strike. >> i do, but i don't think it's working. i think everybody knows where everybody else is in the game. i agree with ian, i don't think there will be a strike. we'll just go ahead as we've been doing of the policy is not actually working. the iranians are getting closer and closer to a nuclear weapon but i don't see any overt attack, covert maybe. the one thing i will say, i'll go out on a limb here and make a prediction. i think there's a substantial chance ahmadinejad could be impeached and iranians would move more toward a parliamentary system. you are seeing tensions within the iranian regime. turkey is pushing very hard on iran. turkey is playing the role iran wishes it were playing. with the turmoil in syria, i think ahmadinejad, he has obviously allies. he's got a lot of opposition within the top clerical establishment. >> to the point about being impeached, the supreme leader made a very strange statement in which he said one wonders why we have a parliamentary system. there are certainly benefits -- why we have a presidential system, benefits. you look, he's had trouble with ahmadinejad, who was sort of his guy. he had trouble before that. he's had trouble before that. so he may be thinking, look, why do i need this nationally elected figure who inevitably becomes a rival. why not a parliamentary system where you have this low profile prime minister figure. really interesting would be the supreme leader, the longest serving leader in the middle east now, very old. if you were to die, would you have a new supreme leader or would that call into question the whole system. >> that would be a mess, in my opinion. do you. you have rural constituencies versus clerical constituencies. i'm not going to call that one. >> iran, anything? >> what's been painted is a benign scenario. the worst is avoided, the real showdown. if ahmadinejad were to go one way or another, that would obviously be a good thing as far as the west is concerned. my theory is it might not turn out quite as benign as that. at the very least i think and hope you're right that israel won't strike but things could go wrong. at the very least a ratcheting up. it is after all a very, very serious existential concern for israel. i think you could see some nasty moments in the coming year with iran. >> an-marie said the policy wasn't working in that iran is moving forward. what's your best sense as to what the trajectory is in terms of nuclear development. >> i think it's working for iran ya iranians. that's part of the problem. united states, brits, europeans moving towards tougher sanctions. you can't sanction on energy. in a a recession, low growth, that's going to spike recession. who is going to do that. can't get them to sign up meaningful. their nuclear program continues. the real question unlike north korea, would the iranians actually test a nouk. there's lots of reason they might not. one is that the israelis have a couple hundred nuclear weapons. they have never tested one. if the iranians do, what's the response? do they force sunni states to move toward their own weapons if they do so. strategic ambiguity from iranian is a good strategy. if ahmadinejad stays in place and there's a fight, there's potential for rogue action, which is destabilizing, what we've seen out of pakistan. doesn't mean israel will attack and doesn't mean we'll see a nuclear weapon any time soon literally on our horizon in 2012. >> you mentioned syria. is assad going to be in power by the end of 2012. >> i do not think there's any chance that assad will be in power by the end of 2012. who will be in power far more complicated. but i think the chances he will hold on for ood 12 months are nil. >> dan? >> i agree with that. we saw in libya how long these regions can be in falling. i think it's inevitable he goes but could be quite long and certainly messy. >> i say a little longer on balance. he has the military still behind him. in some ways the military is leading, not assad. it's not getting rid of one person. this is not the mubarak analogy. the opposition is still relatively inchoate, isn't well armed. domestic opposition and international opposition is separate. the international pressure is huge. the sanctions from the arab league are meaningful and starting to really bite into the syrian economy. i wouldn't be stunned -- i think he's going. i wouldn't be stunned if we have this conversation in 12 month's time he's still there. >> that's a pinpoint prediction. you can call us back in a year and we will know. what about looking at the region one last time israel. is anything going to change in israel, israeli-palestinian situation hasn't changed 30 years. i suppose this would be a safe one to say nothing will change. >> i don't see anything changing between israel and palestine. i think there's more likelihood of real internal protests within israel. we saw that this summer. i don't see that translating into major movement in any peace process. >> the change would have to come from israel, not just an american election. not going to be a huge amount of external involvement. >> fine on the israeli domestic environment. internationalally it is not a winner in this environment. you talk about presidential elections. you're not going to run on let's keep the peace treaty, run on let's support the arab streak. if that's true in egypt, also places like jordan, certainly turkey. a lot more pressure on the israelis, hard to imagine with the geopolitical environment turning that much against them will be able to forestall violence some place, breaking open with lebanon, maybe even on syria, certainly with more palestinian attacks both ways. that's something we need to be worried about. >> all right. we're going to take a break. when we come back, more predictions. china, pakistan, all kinds of fun, troubled countries coming right up. ok! who gets occasional constipation, diarrhea, gas or bloating? 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[oinking] [hissing] [ding] announcer: cook foods to the right temperature using a food thermometer. 3,000 americans will die from food poisoning this year. check your steps at foodsafety.gov. we are back with ann a marie slaughter, ian bremmer, dan. in the economist edition you edit, you say we spent the last years talking about the debt problems, get ready for china. we think of china as the world's greatest creditor. >> china massively supported our economy in the response to the credit crunch that happened in 2007, 2008. that is now a huge problem. they face the difficulty of controlling that at a time when the chinese economy is also slowing generally. bear in mind 2012 is a year of transition in china. they have a leadership transition starting at the october -- probably october party congress. so the chinese leadership is going to be struggling with a difficult situation at home while this delicate process of moving from one generation of leaders to the next is takes place. >> they have generally handled these problems, bank debt, real estate bubbles, because they have so many levers to control. do you think they will be able to get through this one? >> the chinese government as stable as it is, has more capacity to kick a bigger can down the road than anyones. long-term that's a greater problem, greater chance of hard landing. for 2012 i think china is relatively safe on that front. >> how do you feel internally but also externally. would we've seen over the last few years is china got somewhat aggressive a year ago. for the last six or eight months dialing it back. they realize that rattled their neighbors in asia. where do you think china is going first internally but also externally over the next year. >> i think there's a better than even chance there will be a naval incident between the chinese and either the vietnamese or the philippines. worse for the u.s. if it's philippines because they are a treaty ally. but it could be actually provoked by china. i'm more with daniel. i see more signs of instability, seesawing between trying to control inflation but realizing they are choking off credit and going back and tort. it's quite possible if they really get into trouble and could be connected with the leadership fight that they would provoke something. >> they are going to try to keep heads down in 2012 precisely because of this leadership transition. they have every incentive not to create any waves in the south china sea or elsewhere. if they can possibly help it, i think they will try to keep things very calm with their neighbors until this leadership transition is out of the way. >> they may be provoked. >> arab spring. what countries are going to be clearly successful or clearly fail by 2012. >> i don't think that degree of clarity is going to be easy to spot. what i do think you might well see is a spreading south of the arab spring to parts of sub saharan africa. the most vulnerable countries are the nine leaders in place for offer two decades now. countries like zimbabwe, guinea. i think that's where you will find this desire for change. among people who now see what's going on and have been following very closely what's been happening in north africa and have the mobile telephones and other means of communication to organize. i don't think carbon copies but very much a sense of the protest and possibility of protest. >> i think there's been a presumption among us in the west that the arab spring means authoritarian regions transitioning to something else. there's an enormous amount of economic pressure on democratic regimes as well. particularly about the periphery, i'm thinking about greece, hungary. those are places we could seed a lot more social discontent, populism that moves them in an authoritarian direction. they shouldn't lose sight and presume arab spring is just about countries we don't like. >> that brings us to europe. easy question, will the euro survive in its current form with all its members in 2012. >> i think there's probably now about a slightly just about even chance that it will survive but very uncomfortably large possibility that it won't. i say uncomfortable because the precipice that represents for europe is a very carey one. >> i would probably give it a little better odds than that, more in the 60 to 70% range. i think it's striking all the people have been predicting it would collapse. they wouldn't believe in june it was still around in december. they were sure it was gone long before. i do think not just that the europeans are looking at the precipice but so are the chinese. europe is china's biggest trading partner. i think there are other sources of funds. if it really comes down to it, there will be -- there's funds available to make this happen. the real danger is miscalculation of timing. >> miscalculation of the markets. >> exactly. the timing isn't this. >> what happens on the streets. necessarily in the control. goes back to -- >> a lehman-like moment. >> yes. >> even then if the chinese were to come in with a big bushel of money it would help. >> the chinese aren't going to come with a bushel of money. interesting when sarkozy went over and said let's help and they said let's be multi-lateral, which is chinese for no. going forward i think the eurozone actually stays together. but i also think in 12 month's time we may still be asking this question. the ability to continue to muddle through, especially if we have a slightly more benign economic environment in the united states and chinese continue to do we will is greater. we've seen central banks able to coordinate, make money, pump money in. if italy doesn't seem to be insolvent and technocratic governments stay in place and continue with austerity, germans, french, continue to press down. muddle through as unlikely as it seems right now may well be something we continue to see. >> technology, you in your issue have some interesting thoughts about what's going to high pressure in the world of technology. >> technology is always fascinating and moves very fast. i think you could imagine as a new territory to be fought over for technology in the year. there are incredibly rich pickings fought over by fascinating combination of the existing tech titans and new startups. you have new ideas, new exciting business models to take that sort of territory. >> do you think those new startups will, as has been true in the past, over the last 50 yearsers all come out of america? >> i think they will tend to. america is just such a huge market and has a potential for a company to grow so quickly. you have the whole infrastructure, venture capital, ecosystem of silicon valley. that makes america a good bet for commercialization of the ideas. >> america is where the entrepreneurship is, technology investments are. chinese turn out millions and millions of engineers that's different from folks creating new businesses. 50% of chinese millionaires want to live in the united states. look, steve jobs is dead but long live steve jobs. >> on that note, thank you very much. we will be back. 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[ male announcer ] yes, it is. that's the cold truth! britta olsen is my patient. i spend long hours with her checking her heart rate, administering her medication, and just making her comfortable. one night britta told me about a tradition in denmark, "when a person dies," she said, "someone must open the window so the soul can depart." i smiled and squeezed her hand. "not tonight, britta. not tonight." [ female announcer ] to nurses everywhere, thank you, from johnson & johnson. now for aour what in the world segment. 2011 ended just hours ago and it will likely be recorded as a year of historic change. mass uprising up ended government across the arab world. economic mismanagement in europe led to changes in italy, greece and spain. 365 days ago you couldn't have predicted these events. you couldn't have imagined so many leaders would lose their jobs. so what if i told you you can predict in 2012 a lot of leaders will say good-bye. i'm not gazi