Also, its been a recordbreaking summer, but not in a good way. Hottest heat waves. Biggest fires. Worst droughts. What does Climate Change have to do with it, and what can we do to stop it . President trump says the u. S. Economy is the greatest ever. The economy is maybe better than its ever been. That may be a stretch. But unemployment is low and markets are doing well. So why havent peoples wages budged . Well get to the bottom of the mystery. But first, heres my take. Were approaching the tenyear anniversary of the Global Financial collapse in september. And Financial Systems around the world appear healthier than anyone could have imagined. Turkey today is a rare exception. But even greece is doing well enough that on monday, after eight long years, the country will finally emerge from its bailout program. It certainly seems like the Global Financial crisis is a thing of the past, safely put behind us. And yet in a sense, that crisis never really ended. Steve bannon made this point when i interviewed him a few months ago in italy, where populist forces had won the recent elections. The implosion of those World Capital markets, right, has never really been sorted out, that the fuse that was lit then that eventually brought the trump revolution is the same thing thats happened here in italy. Lets remember, in the first months after the panic on wall street, world trade and Industrial Production fell at least as fast as they did during the first months of the Great Depression. This according to a new book, crashed, by economic historian adam tooze of columbia university. Global capital flows declined by a staggering 90 . The european and american Financial Systems were deeply intertwined and both were responsible for the crisis, tooze explains, yet it was washington that largely saved the day. The Federal Reserve became a guarantor of last resorts, not just for floundering american banks, but also european banks. The obama fiscal stimulus helped break the fall as well, along with automatic Government Spending like unemployment insurance. The whole rescue worked. And it worked better than almost anyone could have hoped for. Contrary to many predictions by do doomsayers and opponents, there were no run on the dollar or american treasuries, no hyperinflation, no double dip recession in america, no crash in china. American banks stabilized and in fact prospered. Households began saving again. Growth returned, slowly but surely. The governing elite in america certainly did not anticipate the crisis, though few elites have over the hundreds of years of capitalism, which has had booms and busts and bubbles. But once the crisis happened, many of them, particularly in america, acted quickly and intelligently. As a result, another Great Depression was averted. Here lies the unique feature of the crash of 2008. Unlike in 1929, it was not followed by a Great Depression. So it was not so much the crisis as the rescue, and its economic, political, and social consequences, that mattered most. What happened . On the left, the entire episode discredited the marketfriendly policies of tony blair and bill clinton and gerhart schroeder, disheartening the center left and emboldening those who wanted much more Government Intervention in the economy in all kinds of ways. On the right, it became a rallying cry against bailouts and the fed, given credence to an imaginary free market intervention that never had to be tried. Bannon is right, stagnating wages, widening inequality, a distrust of an elites. But the fact remains, no government handled the financial crisis better than that of the United States. Yet the backlash to the bailouts has produced the most consequential result here in america. So having led the world safely out of the financial crisis, the u. S. Is now leading the world in a wave of nationalism, protectionism, and populism that just might send everything crashing down once again. For more, go to web wcnn. Com fa and read my recent article in the New York Times. And lets get started. Nine days ago, the president of the United States announced, on twitter of course, that he was increasing tariffs against turkey. And a tit for tat followed. The lira has seemed to be in free fall at times, raising concerns about the stability of this nation of 80 million people. Turkey is a member of nato, hoest of an important american air base, and it sits as an important buffer between europe and the middle east. So is an unstable turkey what the world needs right now and are economics americas favorite new weapon . Joining me now, stephen cook is a senior fellow at the council of foreign relations. Rana fula is cnns Global Economic analyst. Stephen moore was a top economic adviser to Donald Trumps 2016 campaign. He is a senior economics analyst for cnn. Steve cook, let me begin by asking you to help us understand what is happening in turkey, because this is one of closest alliances the United States has had geopolitically for 60 years, and it feels like its sort of over. In ways, the relationship between the United States and turkey is coming to an end. The two countries have different strategic interests. They have different priorities, they have different goals. The turks have developed their relations with the russians. Theyve complicated americas fight against the Islamic State in syria, and have actually helped the iranians evade sanctions that are intended to arrest the development of Irans Nuclear program. I think what you have in turkey at the moment, though, is two separate crises. A lira crisis, an economic crisis, and a crisis in relations between the United States and turkey that the two leaders have connected. President trumps tweet, which seemed gratuitous, has provided president erdogan of turkey an opportunity to blame the United States for turkeys economic ills. And just take us through where erdogan is right now. Steve, this is a guy who came in, people thought he was a reformer, he wanted to join the European Union. At this point he seems to have turned into an authoritarian. Is turkey what is the trajectory for turkey . You wrote the book about i will about illiberal democracies. There was a lot of hope that turkey would join the European Union at least by now. Turkey is really an elected autocracy. It really is one of the most repressive countries in its immediate region. And its immediate region includes a number of tough countries including places like egypt, iraq, iran. Turkey holds tens of thousands of political prisoners, has engaged in a widespread purge and crackdown on opponents, real and imagined. And president erdogan has engineered a number of constitutional changes that have fundamentally altered turkeys political system, in which all the power flows to him. Rana, turkey is not that large an economy, 80 million people, but turkey realizes on short term debt and a lot of that is held by european banks, a lot of it by greek banks. Exactly. If this free fall of the lira continues, turkeys debt is essentially doubling, what does that mean and whats the danger . You pointed out the right things, its not a large economy. You could see a domino effect. This is part a bigger problem. Weve had ten years of easy money in the west, lower Interest Rates, and a lot of money flowed into emerging markets. There wasnt a lot of difference in terms of how people were perceiving risk. Thats all changing now. U. S. Interest rates are going up. Were at the end of that period of easy money. Thats going to make it harder for anyone who is weak, turkey but a country like south africa, for example, any number of latin american countries, anybody who has to pay down their debt in dollars is going to have a problem. You may see a Ripple Effect in emerging markets. China has got a big debt problem. If these issues spread to china, that could be a big issue for the global economy. Steve moore, let me ask you about what trump is doing. Whats always struck me about American Economic strategy, for the last recent since the 1920s, the United States has tried to act to stabilize. So when other things were going haywire, the u. S. Would step in and be the lender of last resort, the guarantor of last resort. It would cut Interest Rates, as Alan Greenspan did when the russians defaulted. This seems to be very unusual in that in the midst of an economic crisis with a nato ally and with a country deeply intertwined with the western economies, President Trump is actually exacerbating the economic crisis. Hes creating more instability rather than creating stability. Surely this is not the way the grownup in the room should be behaving. Well, lets start with the fact that right now the u. S. Economy is truly kind of the envy of the world. Were growing faster than just about any other nation. Ive always believed, and i think donald trump believes the same thing, that the best way that the United States can create prosperity, not just here at home but abroad, is to get our policies right at home, which at least for the first 18 months clearly has been the case. But im asking you about exacerbating an International Economic crisis, not about, you know, u. S. Right, but what im saying is, whats happening now is youre seeing a lot of capital from around the world thats coming to the United States. Weve become a pretty attractive place to investment in with the reductions in tax rates, the reductions in regulations. If you look back, for example, in the 1980s, fareed, what happened was that we sort of led by example. When the United States moved towards more free market policies, the rest of the world did, and we had an economic boom. I guess what im suggesting to you, and we dont know whether this will happen yet because its early in the game, that as we continue to get policies right in the United States, this will spread around the world. Now, you mentioned china. And china is certainly, you know, an area where theres a lot of uncertainty about what our policy is going to be with china. And incidentally, what happens in China Matters more than what happens in turkey. When we come back, what a chineseamerican trade war would look like. Fisher investments avoids them. Some advisers have hidden and layered fees. Fisher investments never does. And while some advisers are happy to earn commissions from you whether you do well or not, Fisher Investments fees are structured so we do better when you do better. Maybe thats why most of our clients come from other money managers. Fisher investments. Clearly better money management. Hawaii is in the middle of the pacific ocean. Were the most isolated population on the planet. Hawaii is the first state in the u. S. To have 100 Renewable Energy goal. Were a very small electric utility. But, if we dont make this move were going to have changes in our environment, and have a negative impact to hawaiis economy. Verizon provided us a solution using Smart Sensors on their network that lets us collect near Real Time Data on our power grid. colton this technology is helping us integrate rooftop solar, which is a very important element of getting us to our Renewable Energy goals. shelee if we can create our own energy, we can take care of this beautiful place that i grew up in. You wouldnt accept from any one else. Why accept it from an allergy pill . Flonase relieves sneezing, itchy, watery eyes and a runny nose, plus nasal congestion, which most pills dont. Its more complete allergy relief. Flonase. The first survivor of alzis out there. Ase and the Alzheimers Association is going to make it happen. But we wont get there without you. Join the fight with the Alzheimers Association. To put on our website . I mean i would have but im a commercial vehicle so i dont have hands. Or a camera. Or a website. Should we franchise . Is the market ready for that . Can we franchise . How do you do that . Meg oh meg we should do that thing where you put the business cards in the fishbowl and somebody wins something. Meg hi. Im here for. Im here for the evans wedding. Weve got the cake in the back, so, yeah. Meg thank you. Progressive knows Small Business makes big demands. Youre not gonna make it, youre not gonna make it ask her if we can do her next wedding too so well design the insurance solution that fits your business. On second thought, dont. Ask that. That fits your business. A place with 24hour fvalet servicee and a boutique salon a place with all day arts and crafts it even has a day spa a place thats so much like home, because well. It is home home instead senior care when you need Personalized Care in the comfort of home. My ci can worry about it,ine. Or do something about it. Garlique® helps maintain healthy cholesterol naturally. And its odor free. And pharmacist recommended. Garlique. ® and we are back with stephen cook, rana fula, and Stephen Moore. Steve moore, as a free market person, you cant be happy to see donald trump talking so much about tariffs and levying so many tariffs, specifically urging certain businesses to be favored. This seems a very corporatist, mercantilist, protectionist approach to economics rather than the free trade stuff youve been writing about for 20 years. When youre talking about a country thats protectionist and mercantilist, youre talking about china. For the last 25, 30 years, the United States has tried to nurture china along with a large and persistent trade deficit with them hoping this march toward free markets would lead to a good outcome. Now we are in a situation where china is a Richer Country than they were, you know, clearly 25 years ago. Theyre approaching the United States in terms of the size of their economy. And where i think trump has it right, by the way, youre right, fareed, i dont like tariffs, i am a free trade guy. But china has not been playing by the rules. They are becoming more mill tarristic. They have been becoming a cheater in terms of the trade rules and the protection of our intellectual property. And i think donald trump has basically said, enough, we cant go on with this kind of relationship, and i tend to agree with him on that. China is stealing a lot of our intellectual property. Fareed, you know more and more of what we produce in america is are intellectual property. Trump is basically using a club against china to try to get them to live by the rules. And by the way, i thithink at td of the day, even though its a risky strategy and precarious, i believe at the end of the day china will come hat and hand and they will make some concessions to the United States which they need to do. And at the end of the day, we may actually end up with freer trade, with lower tariffs and lower trade barriers. But were still early on in this game. So rana. Yes. Play that out. I certainly agree with steve moore that china is a trade cheat, as ive often said. The question is, is the strategy rate . Weve alienated the europeans and the canadians. Shouldnt we have brought them all on board and had a collecting position against china . In a word, yes. And stephen and i i think agree on this point. A lot of the same complaints that we have about china, the europeans have, the germans have. Absolutely, it would have been a great time to come together with the europeans and say, enough is enough, youll have to play by the rules of the global game. Thats not happening. Whats interesting is china is in a very, very tight position right now, because Rising Interest Rates in the u. S. , a falling chinese currency, is going to potentially create capital flight. But if the country moves to try and strengthen their currency, then theyre going to see a slowdown. And theyre already slowing down. So this is a very difficult political situation right now. And i think the Trump Administration could have played the timing of all these pieces a lot better, and we absolutely should have had the europeans on board in any kind of a trade issue. Can i just make one quick point . Again, we agree on this. And i think the kind of strategic mistake that donald trump i think has made with respect to, you know, confronting china, and by the way, i think the American People are kind of behind him on this, that china is a problem, but, you know, what is the lesson of history, fareed . You never want to fight a three or fourfront war at the same time. We do need to restore our trade relations with europe and with canada and with mexico and with japan so that we can kind of isolate china as the bad actor on the scene. That may still happen. Im hopeful well see a new nafta. Im hopeful well see the trade deal that trump got the handshake deal with a few weeks ago, that that will lead to a situation where we can couldnt on confronting china. I hope hes lis