The fact people are binge on house of cards. That didnt start with house of cards, that started with box sets. You talk to anybody, what did you do, i stayed in and w567d two seasons of breaking bad, dexter, mad men there seems to be this d the audience is telling us that they want the control. Rose fisher and spacey next. Funding for charlie rose was provided by the following . Rose additional funding provided by these funders. And by bloomberg, a provider of multimedia news and Information Services worldwide. From our studios in new york city, this is charlie rose. Rose Stanley Fisch certificate here, hes one of the worlds most respected economists. He was the governor of bank of israel for the path eight years. He are signed from his position in june. Stanley fischer has taught some of the most illustrious minds in global Monetary Policy including Federal Reserve chairman person bernanke and mario draggy of the central bank. He citigroup, the World Monetary fund and the world bank. Im pleased to have him here at this table. Welcome. Thank you. Rose lets talk about the Global Economy. Okay. Rose ill take your lead. Where are we now coming out of the kind of enormous shock to the system we had in 2008, 9. Were beginning to see growth in almost all the advanced economies. Including europe which is surprising. The Second Quarter data came in quite well. Britain is showing some growth which didnt look like it was going to happen for a long time. And the famous bricks, the leading emerging market economies are slowing down a little relative to what we had gotten used to before. So theres a Slight Movement in favor of the advanced economies. Rose interesting you say that because when we talk about that, were talking about brazil, russia, india and china. Correct. Rose let me speak to china most of all. Whats happened . Well, they have grown faster for longer than anybody in the history. You dont find previous examples of countries, particularly of any size but their size growing at Something Like 9, 10 for 30 years. It just doesnt happen. But it happened in their case. Rose and why did it happen . It happened because they let they had kept the system suppressed. They have the people, which is quite well educated, many parts, and they took the constraints off the economy. Not off the political system. And they have a very entrepreneurial population and they let them be entrepreneurs. And they did very well with government help. And with government connections. And they integrated them into the world economy. They grew through the world economy, as exporters. And they did that very well. Rose and was it essential that they had the government play the role it did . I think given where it had started, namely it was all government, they had to play a role. Whether they need to continue being so much in control is less clear. But when it started and for 10, 15 years they had to do that. Rose and will they be able to turn from a exporting economy to a domestic consumption economy in a reasonable amount of time . Thats what they want to do. And they keep talking about it. But it hasnt happened yet. I would like to add run thing. The chinese economy of today is more than double the size it was ten years ago. When its growth declines to 7 , 7. , its adding more to Global Demand than it did when it was growing at 10 10 years ago. Because 7 and a half percent of a big pie. Right. Has been growing. Rose and the United States . The yoobted states managed, although its hard for americans to believe, managed the crisis better than the other advanced economies. The many things which were reviled, the top, and things like that, actually were successful. The United States got the Banking System back into shape quicker than anyone else, the europeans still havent done that. Right. Rose and the system banks are at risk because of loans they made. Yeah. And the system is coming back to working. Now in that process, the u. S. Ran huge budget deficits. And through a very inelegant process, namely the sequester and so forth, the budget is now in pretty good shape. The u. S. Has got its budget back to where it closer to where it should be than any of the others. Rose so we have a sustainable deficit, is that what youre saying . Not yet. But the progress that was made in the last two years is very impressive. And if the u. S. Continues and doesnt exaggerate by trying to get back to a balanced budget or 2 deficit too quickly, this growth will increase. Its about 2 , a little less now. It can go up to 2. 5, and get back to what is regarded as normal which is around 3 . Rose you got there because Bebe Netanyahu now the Prime Minister was then finance minister, called you up and said how would you like to come back to israel, or come to israel and be the head of the central bank, correct . Correct, yeah. We were sitting our anniversary is in decemberment and we were in the caribbean celebrating our anniversary. The phone rings and this request. I said this is not going to work. He said it will work. And. Rose now was it his decision or was this some decision that had come through other members 6 the Prime Ministers cabinet. As far as coy tell it was his decision and as we talked it was clear that my first meeting with Prime Minister who was ariel sharon. Rose how did that go. It went exceptionally well, actually. And he was very, seemed pleased by the whole thing. And he was i didnt know him that well, i had met him a few times. He treat immediate well and he accepted me. I wasnt a citizen when they made this offer. Some of us who are very much sort of obsessed by International Politics and strategies wonder what might have happened ifities ago rabin had lived and if ariel sharon had not have had what happened to him happened to him. Rightness because they had a different kind of political courage. Oh, very much so. And they were people who made a decision and stuck with it. Rabin decided to go for peace. And there were lots of setbacks on the way. But he just kept even to the point of shaking hands with arafat at the time. He just kept up with thatnd and sharon surprised everybody by getting out of gaza. And it wasnt clear what was going do next. But it was thought that he might do something similar on parts of the west bank because he understood the demographic argument made, sharon did. He understood that and he understood relations with the rest of the world and particularly with the United States for israels future does netanyahu understand that . Well, hes been more aggressive in pushing the United States and im not sure he had the same appreciation. He lived in the United States for a long time, Prime Minister netanyahu. Rose and when he was out of power he came here a lot too. Yeah so his attitude seems different. It is also a generational difference. Sharon is 20 years older. Rose does it show that keynes was right . That at a bad time you better stimulate your economy . I think so and i think that people who werent quite certain about that should be certain about that, about that now. There was a lot of belief in what was called an expansion refiscal contraction. And the british did that. Some people just simply are focused on austerity. Yeah. Well, however you fiscal contraction sounds better than austerity. Rose it does. But anyway, yeah, and turned out that by all the data, and this is not just people putting their finger in the air this is people actually looking at the data. That the fiscal policy really mattered. And you could do a lot with Monetary Policy. But you couldnt get the economy growing fast again. Rose with Monetary Policy. Yeah w Monetary Policy. You needed the fiscal thats become clear. Rose an there seems to be a floor in terms of how low you could make Interest Rates. Well, technically i think some countries have been playing with how to make Interest Rates negative. And technically you can do that. But it hasnt really been done to any extent that makes a difference. But youre confident, you really are confident that sort of the worst is that sort of that the Global Economy has moved up, notwithstanding some of the emerging economies we talked about. But especially focusing on whats happened in the in the u. S. In particular. Rose more advanced economies. And you are secondly saying that you very much agree with most of the decisions made by the secretaries of treasury and both the bush and the obama administration, and as well as a continued judgement of the Federal Reserve. Yeah. I am sorry to disappoint by saying those things but i think thats what happened. And i think that the very Rapid Reaction of the u. S. Treasury both at the end of the Bush Administration and continuing, and the decision to fix the banks immediately, were critical. And the ability to stay with those programs, when you look at the politics, it looks very hard to imagine that theres been consistent approach but there has been. Rose but as you know also it created criticism here because people said look, they care more about the banks then they care about main street. Yeah, well, im still surprised that so few bankers have been have been holed up for what they did. And its beginning to happen. But its a surprise. Rose you mean in terms of legal action against the banks. By the government. Rose youre surprised there havent been more. My guess is that at the time of the crisis, nobody had enough time to go and look into these things. They want to get on and straighten it out and say well have time to worry about what the longer term consequences are. But yeah, you know, people have to be responsible for some of the things they did. Rose this is maureen daud of the new york times. Summers of our discontent. I have no doubt that Larry Summers can speak truth to power. Indeed, i see him yawn at power. Then she goes on that talk about the possibility of Larry Summers being the successor to ben bernanke. We know that the president went to congress and had a session with some of the members of congress and in a sense made, if not a case for a defense of Larry Summers, who was getting alot of criticism, especially on the democratic side, we know that people frequently point out that janet yellin has a much higher rate of predictions being accurate, than then many others. So who should be the next chairman of the Federal Reserve. And even people who suggest that you would be a very fine choice. Well, on the summersyellin issue, i mean they are both very good economists. They would each be a very good chairman of the fed or whatever, chair of the fed. And janet has more experience in the fed. Larry has more experience in the government. And its very hard for an outsider to know. I would say that larry is really one of the outstanding economists of the euro when he was still an academic economist. He won the prize for youngest. Rose i think it was youngest tenured professor at harvard. And he won the prize of best american economist under 40, and all that. Hes really very, very good. He hasnt done as much central banking. He must by now know central banking very well. And janet is. Rose if he hasnt he has been asleep. And january set a very safe pair of hands. And you want the central bank to be in a very safe pair of hands. So i think both of them would do this job well. Rose do you know did ben bernanke simply not want to stay. De say that look, ive been here enough, or did he feel like that the president maybe wanted to make a change. I actually dont know. And ayes years is a long time. Rose thats what the president said when i asked him, eight years is a long time. Well, i did eight years and i can till, eight years and two months. And i can tell you. Rose you mean running the central bank in israel. Yeah. And ben has done a superb jochblt i think when history is written, ben will be one of the worlds Great Central bankers. Rose one of the worlds Great Central bankers. In history, yeah. We thought at the beginning of this event, at least a lot of the central bankers i know thought we were heading for a great depression. Rose at the beginning, 2008. 2080, after leeman brothers. Rose thought we were heading for a depression that would equal the depression of the 1930s. Something that would take us around there. The Rapid Reactions on the u. S. Both on the fiscal side but also on the monetary side where they cut the Interest Rate to essentially zero. Paulson really went for. Rose on the fiscal side. Yeah, at the end of his term, the end of the governments term. And ben has been innovative throughout. And he has kept the u. S. Economy with the highest Unemployment Rate b 10 , thats terrible. Its not 25 which it was in 1933. And ben has done to my mind really an outstanding job and when i listen as i used to every two months to the central bankers of the world explaining at the bank of the International Settlement what theyre doing, he is a very impressive, very quiet expositier of very brave, policy. Rose has draggy done a good job. He has done a miracle. Rose a miracle. With one sentence he has. Rose he said i will not let or we will not let. We will not let, yeah. Rose is that what it was. We will not let any we will do what is necessary to preserve the euro, is essentially what he said. Rose right. And he changed the dynamics remark blooep. Now he hasnt they havent been called upon to do anything yet. I mean do anything to stand by that. Rose so all those people that thought the eurozone would be split, that all the dreams of sort of both economic, financial and political unity were dying on the scholls of the 2008 crisis were wrong. The eurozone survives, the eurozone i think the eurozone will survive. I think the europeans had to make a judgment decision as to whether they wanted to work with a smaller, inner core 6 safe countries. Or whether they wanted to preserve the existing eurozone. And there was a lot of discussion. And then at one point it became clear, it was over grease that they were not going over greece, they werent going to let it collapse. The reason why, is because of those dynamics. You let one country out, what the market will do to the other weak sisters, you really dont know. And you could be touching off, you could be lighting a flame that is very, very dangerous. And they decided not to do it. And so far so good. There was new data yesterday, greece is actually improving a little bit. Which for the first time. Rose are you encouraged by what mark carney has been saying at the bank of england . I think theres more continuity in policy than people are making out. And i think what hes doing is very good. I thought what his pred ses der was good. Mark is trying to push this commitment sort of bernanke like commitment or fedlike commitment. Rose right. To saying were not going cut the were not going to raise the Interest Rate until unemployment gets to a certain level. Rose who you were an academician, at the world bank, advisor to the imf, certainlies ahead of the central bank and israel, developed a sense that making policy is more fun than studying policy. Well, being an institutions where you make policy on the basis of having very Good Research done, which is what happens in the three institutions. I was the number two in the imf as well for seven years, where you have the ability to ask questions and have really qualified people go out, look for the answer, give you something plausible. It is a fabulous experience. Because you are not just shooting bullets into the air, not knowing where theyre not knowing where they are going to come down. Youre building the knowledge which will enable you to make good decisions. And that is a very nice way of thinking about what economists can do if they are given an opportunity. Rose so asking questions is central. So if you had here sitting at this table the president of the United States and the head of the Federal Reserve, the president of china and the head of their central bank, the president of the Prime Minister of japan and the head of their central bank, what questions would you be asking them . What questions well, on a nice list there, on the japanese, thats the easy one to deal with. He had a 3 part strategy. One in which was to fix the various aspects of the economy, the structural reforms, as they call testimony havent done very much there. Are you going to do these because all this monster monetary stuff is helpful in the short run. You need other things for the long run. That would be his question. And those are difficult things it. Things to do. And then on china, its, theyve been superb. Every time people say this place is going to blow up, they do things. And frequently what they do is expand credit like crazy. Right. And i finally figured out what their banks, how they do this. They tell the banks, you give credit here, there, every well. And the banks do it. If the guys repay, fine. The banks are okay. If the guys dont repay, the government puts money into those banks. And so in a sense, the banks are doing part of chinas fiscal policy. You know. We want to encourage spending here, thats how we do it. And they now think theyve sort of run out of their capacity to do that. And the question is, are you going to go back to the question you asked. Domestic demand. How are you going to get that to grow. They consume this. And