Transcripts For CNNW Fareed Zakaria GPS 20160410 : vimarsana

CNNW Fareed Zakaria GPS April 10, 2016

Yellen, bernanke, greenspan and volken. We will bring you the highlights. Also the Panama Papers have been out for just a week and they have already taken their toll on World Leaders. But this is only the start of a growing trend. Data dumps that embarrass the wealthy and powerful. We will tell you where it will go next. Finally, we will teach you how to sleep, not while watching the show of course. Arianna huffington has a new book out that she hopes will have you snoring. Again not now, but ill let her explain. But first, heres my take. In an interview during the 2008 campaign, barack obama explained that Ronald Reagan had changed the trajectory of america in a way that Richard Nixon and bill clinton had not. Clearly he aspired to be a transformational president like reagan. At this point its fair to say that he has succeeded. Look at whats happened during his tenure to the country, his party and most telling, the opposition. The first line in obamas biography would have to do with who he is, the first africanamerican president. But what he has done is also significant. Obamas signal accomplishment is healthcare of course, where he was able to enact a law that has resulted in 90 of americans now having health insurance. While the law has its problems, it achieves a goal first articulated by Theodore Roosevelt 100 years ago. Then theres the transformation of Americas Energy policy. The administration has made investments and given a variety of incentives to place the United States at the forefront of the emerging energy revolution. Just one example, over obamas term as president , solar costs have plummeted by 70 and solar generation is up 3,000 . Obama has also pursued a new Foreign Policy informed by the lessons of the last two decades that limits americas involvement in establishing political order in the middle east, focusing instead on counterterrorism. This has freed the administration to pursue new approaches with countries like iran and cuba and to direct attention and resources to the asia pacific, which in just a few years will be home to four of the worlds five largest economies. In that 2008 campaign interview, obama pointed out that reagan didnt change the country single handedly. He took advantage of a shift in the national mood. The same could be said about america today. Years of stagnant wages, rising inequality, and a big financial crises all created a new political atmosphere, one that obama has helped shape. The biggest impact of his presidency, however, can be seen in his opposition. The Republican Party which is the midst in an idealogical breakdown. Surveying the scene, Daniel Hennen jer, the conservative columnist, writes in the wall street journal that obama is now close to destroying his political enemies the Republican Party, the american conservative movement, and the Public Policy legacy of Ronald Reagan. Obamas success in this regard, if it can be called that, is a passive one. He led his opponents to selfdestruct and never overplayed his hand. From the first month of his presidency, the g. O. P. Decided that obama was a socialist radical who had to be opposed no matter what. Obama didnt take the debate, governing from the center left. Perhaps unable to paint him as a socialist, perhaps for other reasons, many republicans rhetoric about obama quickly became personal with insinuations about his origins, race, religion, faith, and loyalty to the country. Again, obama never lashed out, demonstrating discipline even as his opposition grew wilder. As obama kept his cool, the Republican Party descended deeper into the politics of identity, flirting with racial, religious, and ethic grievances and moving away from its core tenants of living government, free markets and free trade. The result has been an idealogical implosion, and it is still unclear what will emerge from the debris. Barack obama has repeatedly maintained that one of his principles in Foreign Policy is, dont do stupid stuff. It looks like it works in domestic politics just as well. For more, go to cnn. Com fareed and read my Washington Post column this week. Lets get started. On thursday evening, i participated in an extraordinary event, a conversation with all of the living chairs of the Federal Reserve, current and former poll voluntary kerr, allen greenspan, ben bernanke and of course janet yellen. The group was gathered by a residence and Program House in new york city founded to turn todays scholars into the next global leaders. Its a great organization. I sit on its board, and i was honored to moderate such an important discussion. First up, my conversation with the current chair of the Federal Reserve, janet yellen. Many believe that shes the second most powerful person in america, second only to the president. She rarely sits down for an interview, so listen in. Let me ask you to start. You look at the economy very carefully. Are we in an economic bubble . Is the economy as perilous as some people on the Political Campaign trail are suggesting . So, i would say the u. S. Economy has made tremendous progress in recovering from the damage from the financial crises. Slowly but surely the labor market is healing. For well over a year weve averaged about 225,000 jobs a month. The Unemployment Rate now stands at 5 . So were coming close to our assigned congressional goal of maximum employment. Inflation which my colleagues here, paul and allen, spent much of their time as chair bringing inflation down from unacceptably high levels. For a number of years now inflation has been running under our 2 goal and were focused on moving it up to 2 . But we think that its partly transitory is claiming oil prices and the strong dollar that are responsible for pulling inflation below the 2 level we think is most desirable. Although Interest Rates are low and that is something that can encourage, reach for yield behavior, i certainly wouldnt describe this as a bubble economy. We have relatively weak Global Growth, but the u. S. Economy has been doing well and domestic strength has been propelling us forward in spite of the fact that were suffering a drag from the global economy. In december, you raised rates. Many people, including summers, paul krugman, martin wolf, very distinguished economists, felt it was a mistake. In retrospect, was it a mistake . Well i certainly dont regard it as a mistake. We set two criteria to boost the funds rate that led to the december decision. One was we wanted to see substantial progress in the labor market, and we felt that had been satisfied. And we also, recognizing that inflation was running below our 2 objective, wanted to feel reasonably confident that inflation would move up over the medium term back to 2 . We all felt, i think, that those conditions were satisfied in december and justified taking a step. But weve tried to make very clear, theres not a preset course of rate increases. We will watch very carefully what is happening in the economy and adjust policy as appropriate. So we took one step. Now, the u. S. Economy has continued to progress in a sass satisfying way. That was our expectation when we raised rates in december. We indicated that we thought the path of rate increases would be gradual, and that remains our best guess and expectation, that if the economy continues on the path its on of recovery, that further rate increases will be justified, but for a variety of reasons, particularly a set of headwinds that are the legacy of the financial crises that we suffered and weak Global Growth and the strong dollar that has gone with that, that the level of rates that is sometimes called the neutral rate, a level of shortterm rates that would neither be particularly stimulating the economy or holding it back. One of the regional fed chairs, neil cash carry, made a speech very recently in which he said the big banks need to be broken up. Do they . Well, we have been very focused since the financial crises and the dodd frank act has directed us to Pay Attention and try to put in place policies that will deal with too big to fail. So we certainly i certainly share president cash carrys concern with too big to fail. I feel more positive on the progress that weve made. First of all, weve put in place policies through supervision and regulation that has greatly enhanced the safety and soundness of the banking system. We have more capital, Higher Quality capital, more liquidity. We do rigorous stress tests in our supervision, so i think the odds of failure of large Financial Institutions is lower. Next on gps, well get into some of the more human aspects with the rest of the fed chairs, bernanke, greenspan, volker, on the politics and the psychology of being chairman of the Federal Reserve. Allen greenspan, i recall once at a Senate Hearing i think it was, the senator said, i think i heard you say clearly, and you interrupted him and said, if i said it clearly, senator, i must have misspoken. Did you were you trying to be deliberately incomprehensible at times . I thought i succeeded marvelously. 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Joining me on stage in new york were the current chair, janet yellen, her predecessor, ben bernanke, and paul volcker who served from 1979 to 87, Alan Greenspan who led the fed for almost 20 years joined the group from a d. C. Studio. Listen in to some of the highlights. Alan greenspan, when you were running the Federal Reserve, people would sometimes describe your performance there as god on a good day. I think senator john mccain said that his strategy to succeed you was to have a dummy made up of Alan Greenspan and put him in the Federal Reserve chair like weekend at bernies, that movie. In wall street they would celebrate your birthday with cakes and things like that. Did that go to your head . No, but it sure enough embarrassed me. I very much appreciated that. I got past the embarrassment very easily. Paul volcker, you had a very different situation. You were hung in ef agee when you raised Interest Rates because people thought you had single handedly plunged the American Economy into a recession. How difficult was it to deal with that . I thought they were cheering me. You thought they were cheering you . Look, to answer your basic question, whats it like to be the chairman, you got a board, youve got a public. Youve got reserve Bank President s, quite a few you quite exactly do what you want without a lot of people being encouraged to agree with you and sometimes disagree. So its not quite so absolute as you suggest. Look, i always get asked this question about circling the Federal Reserve and so forth. We wouldnt have survived without a lot of public support. People thought there was a big problem and they didnt know all the answers, but people were unhappy with malaise and inflation rate going up by a couple of percent every quarter. They were unhappy and i think they gave us some rope to hang ourselves. They felt we were doing something. They were going to be patient for a while. Did you feel like because inflation was very high. You raised rates to break the back of inflation. Did you feel did you worry that you would run out of time, that the public would lose patience . We had a longer period than i would have anticipated, yeah. Did i worry . I worried all the time. This rug on the floor of the Federal Reserve office shows where i was walking up and down it all the time. Is it still there . Ben bernanke, when you adopted your extraordinary measures to save the American Economy through this global recession and crises, you faced a lot of people from what was in a sense your own party. You were appointed by a republican president and you had republican congressmen, republican senators. You had the republican governor of texas saying that you were engaging in treason. How did that make you feel . It didnt make me happy. You described the job as powerful. I think more of the responsibility side and we had very huge responsibilities, all of us in different context and different events to try to use the power of the Federal Reserve along with our colleagues and the staff. Its a wonderful institution. Its not a singleperson organization. There are a lot of people, wind working together. We had to try the address these terrible risks and i think its a good thing that within reason that the Federal Reserve does have some independence that we could do what was needed at least as long as we could maintain broad support. That was our strategy. So i didnt take the job for acknowledge lags and certainly if i had it wouldnt have worked. Theres really no alternative to doing what has to be done in your best judgment to try to address whatever problem you see. And then theres the issue of communication, how do you communicate the views you want to communicate but at the same time you want to leave things you want to give yourself room to maneuver. Alan greenspan, i recall once at a Senate Hearing i think it was the senator said, i think i heard you say clearly, and you interrupted him and said, if i said it clearly, senator, i must have misspoken. Were you trying to be deliberately incomprehensible at times . I thought i succeeded marvelously. When we come back, the Panama Papers have already created turmoil in governments around the world, from iceland to pakistan to panama itself. Why have no prominent americans been named . Its not why you think. Ill explain. I am totally blind. I lost my sight in afghanistan. If youre totally blind, you may also be struggling with non24. Calling 8448442424. Or visit my24info. Com. It was always just a hobby. Something you did for fun. Until the day it became something much more. And that is why you invest. The best returns arent just measured in dollars. Td ameritrade. We need to be ready for my names Scott Strenfel and r im a meteorologist at pg e. 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