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FAREED ZAKARIA, CNN HOST:

But, first, here my take: We are all going to watch over the next year or two one of history’s great political experiments. It will test the proposition does authoritarian capitalism work?

For the past few decades, the Chinese economy’s meteoric rise, faster than any large economy in human history, has dazzled the world. It has made many people wonder if China’s model of a pro-growth dictatorship is the best path for developing countries.

Some have questioned whether Western democracies, with their dysfunctions and paralysis, can ever compete with China’s long-range planning.

Now, as its growth slows to almost half its pace in 2007, its political system faces its most significant test.

Over three decades, China’s growth has averaged 10 percent a year. Crucial to Beijing’s success has been its ability not to pander to its people to gain votes or approval.

You see, unlike most developing nations, China spends little subsidizing current consumption, food and fuel subsidies for example. Instead, it spends massively on export-free zones, highways, rail systems and airports.

It is also investing in education and training and soon will turn to health care. No developing democracy has been able to ignore short-term political pressures and execute a disciplined growth strategy with such success.

But the Chinese model is no longer working that well. Partly, this is the product of success. China has become the world’s second- largest economy; its per capita income is that of a middle-income country. It cannot grow at the pace it did when it was much poorer.

But growth has dropped faster and deeper than many had predicted and it could slow further because the truth is, China’s authoritarian system has made significant mistakes in recent years.

When the financial crisis hit in 2007 and growth began to drop from a giddy 14?percent, Beijing responded with a huge expansion of credit and a massive stimulus program. As a percentage of gross domestic product, it was twice as large as the 2009 stimulus bill in America.

These two forces have created dangerous imbalances. To economists, the solution is obvious. Stop favoring state-owned behemoths and exporters, open up the economy, encourage the Chinese people to spend more money at home.

But all the subsidies to companies over the past decade have created entrenched industries and sectors that will resist any change. Can Beijing turn off the tap in the face of opposition from economically powerful groups, many of whom are politically well- connected, even related to members of its Politburo?

Now, to be fair, the above critique could have been made by China’s new leaders. Li Keqiang, an economist who became premier in March, has given several surprisingly frank and critical speeches.

The reforms he outlines in detail would open important sectors of the economy to market, reduce the state’s role and provide incentives for domestic consumption. The question is whether these goals can be met and whether the reforms will be implemented after opposition gathers, as it surely will.

Reform is hard in any country as can be seen from Italy to Brazil to India. Countries are very reluctant to impose short-term pain for long-term gain. China had been the exception to this rule, but now it faces its biggest test.

Success will suggest that there is still life in its unique brand of authoritarian capitalism and will extend the power of its ruling Communist Party. And if it fails, well, China becomes just another emerging market with a model that worked for a while

http://transcripts.cnn.com/TRANSCRIPTS/1307/21/fzgps.01.html

Posted July 22, 2013 by tmusicfan in Politics, Quote of the Day

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Fareed Zakaria (CNN)
First, here’s my take. Some American commentators want summit meetings between China and the United States, such as the one in California this week, to turn into a kind of G2, a relationship of equal powers to manage the world’s problems.

But that’s not the way to think about this relationship. China is not the world’s other superpower and we should not treat it as such.

China has always played a weak hand brilliantly. In February 1972 when Richard Nixon went to China and restored Sino-U.S. relations that had been broken for 23 years, Beijing negotiated as if from commanding heights.

In fact, China was in the midst of economic, political and cultural collapse and chaos. Its per capita gross domestic product had fallen below that of Uganda and Sierra Leone.

Now, today, of course, China has tremendous assets. It is the world’s second largest economy and, because of its size, will one day become the largest. But power is defined along many dimensions and by most political, military, strategic and cultural measures; China is a great but not global power.

Its military spending, for example, is not even a quarter of America’s. Perhaps, most crucially, it lacks, for now, the intellectual ambition to set the global agenda. The scholar David Shambaugh, who has always been well-disposed toward China, put it this way in a recent book, “China is,” he wrote, “In essence, a very narrow-minded, self-interested, realist state, seeking only to maximize its own national interests and power.”

“It cares little for global governance and enforcing global standards of behavior, except its much-vaunted doctrine of noninterference in the internal affairs of countries.”

“Its economic policies are mercantilist and its diplomacy is passive. China is also a lonely strategic power, with no allies and experiencing distrust and strained relationships with much of the world.”

Now, Beijing wants good relations with the United States and a general climate of external stability. That’s partly because it faces huge internal challenges.

Chinese leaders want to embark on a serious program of reforms at home and they’re searching for ways to generate greater legitimacy for the Communist Party of China, experimenting with both a return to Maoist rhetoric and a revival of nationalism.

Also, Beijing wants to rise without creating a powerful anti- Chinese backlash among Asia’s other powers like Japan and India. For its part, the United States is right to seek good and deep relations with China. They would mean a more stable, prosperous and peaceful world.

Further integrating China into an open global system would help maintain that system and the open world economy that rests on it.

But this can happen only if China recognizes and respects that system and operates from the perspective of a global power and not that of a “narrow-minded” state seeking only to maximize its interests.

In other words, when China starts acting like a superpower, we should treat it like one.

http://transcripts.cnn.com/TRANSCRIPTS/1306/09/fzgps.01.html

Posted June 10, 2013 by tmusicfan in Politics, Quote of the Day

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Stewart “Four weeks, ladies and gentlemen.  Just twenty some days.  Our country will be heading over the fiscal cliff, that we ourselves dug, and put in our way.  It’s the set of automatic spending cuts and tax hikes that can only be averted if our nation’s leaders are able to display bare bones competence, and middle-school maturity.  So, is there a deal?”

Reporter 12-4-12 “There’s, of course, no deal.”

Stewart “Of course!  Is there a prospect for a deal?”

Reporter “There’s not a prospect for a deal.”

Stewart “Of course.  But, the ongoing talks?”

Reporter “There aren’t even very many talks going on.”

Stewart “You’re killing us.  Give us something.”

Reporter “But, for the first time, there are numbers on pieces of paper from both sides.”

Stewart “Numbers on paper!  We have numbers on paper.  From both sides.  We’re going to be OK.  How were negotiations being conducted before they decided to put numbers on paper?  Were they communicating by pheromones, like ants? … Were the two sides just spray-painting the side of a camel and hoping it wanders past the other sides office, or other equally absurd examples of something?  So, tell us about this paper, with numbers on them?”

Reporter 2 “$4 trillion of deficit reduction over the next 10 years.  It includes $1.6 trillion in higher taxes on households making more than $250,000 a year.  There’s also $400 billion in cuts to entitlement programs.  There’s also some fresh new spending, $50 billion next year in stimulus spending, all for infrastructure.”

Stewart “All right.  So, we’ve got a little tax hike here, a little entitlement trim there, basically telling the government it needs a mix of diet and exercise if it wants to reduce its chances of succumbing to heart disease, or a swollen prostate… Basically, this plan is around, somewhat, what Obama said he was going to do about the budget, while he was on the campaign trail.  I guess we could put that another way.”

Rep Jim Gerlach (R-PA) 11-30-12 “The proposal that came forward yesterday, really is a joke.”

Sen John Cornyn (R-TX) 11-30-12 “I’m not surprised that my colleague Senator McConnell laughed at that proposal.”

Sen Lindsey Graham (R-SC) 12-2-12 “The President’s plan does nothing but damn us to becoming Greece.”

Rep Ted Poe (R-TX) 12-2-12 “So ridiculous.”

Sen Orin Hatch (R-UT) 12-1-12 “Disastrous.”

Sen Kelly Ayotte (R-NH) 12-2-12 “Very disappointing…disappointed…I’m very disappointed.”

Stewart “Really?  ‘Cause you really don’t sound that disappointed, quite frankly…To their credit, though, the Republicans didn’t just complain about the President’s plan.  They put forward, on paper, numbers of their own.”

Luke Russert (MSNBC) “You see the offer there on your screen.  $800 billion through tax reform.  $600 billion in health savings.  $300 billion in mandatory savings.  $200 billion entitlement scale revision.  $300 billion further discretionary savings.  That nets to a total of $2.2 trillion in savings.”

Stewart “All right.  So, the GOP proposal is, if I’m adding that up correctly, is $1.2 trillion in cuts, $1 trillion in savings, and they leave the tax rates alone for the top 2%, and they, wait a minute.  The fiscal cliff, the thing we’re trying to avoid, had $1.2 trillion in cuts, but half of those cuts were going to be defense.  This has $1.2 trillion in cuts, but they’re just saying, why don’t we just make the whole thing cuts to entitlements and domestic spending, and not cut defense at all.  Basically, they’re trying to entice Democrats through saying, I don’t want you to fall off this cliff, so why don’t you voluntarily jump off this steeper cliff, but don’t worry.  Your fall will be cushioned by lava.  Now, obviously it’s a negotiation.  People take a hard line position.  It’s a starting point.  With the tax bite being the lowest it’s been in America since the 1950’s, most likely we’re going to raise it back to the rate it was in the 90’s, for the upper 2% at some point.”

Speaker of the House John Boehner (R-OH) 11-9-12 “Raising tax rates is unacceptable.”

Stewart “OK, so what exactly is your idea of a negotiation?”

Boehner 12-2-12 “The President’s idea of a negotiation is, roll over and do what I ask.”

Stewart “At least, once he has you on your back, he asks….I cannot wait until the Democrats get a hold of this Republican proposal.  They’re going to tear it to shreds.”

Rep Chris Van Hollen (D-MD) 12-3-12 “The good news is, he’s put something in writing.  The bad news is, it doesn’t really get us moving forward.”

Rep Xavier Becerra (D-CA) 12-3-12 “The Republican plan failed the very first test of fairness.”

President Barack Obama 12-4-12 “Unfortunately, the Speaker’s proposal, right now, is still out of balance.”

Stewart “Out of balance?  Fails the fairness test?  Where’s your hysterical rhetoric?  Where’s your I laughed in their bleeping faces?  Where is your DISAPPOINTED?  Where is your this proposal is an insult, this proposal will destroy America?….You know what?  Maybe it’s just time to stop this back and forth of offers.  It’s pretty clear that Republicans aren’t ever going to come to the table with anything even remotely reasonable, so I’ll be the one to say it.  I know it would be disastrous.  I know it will doom our economy for years to come.  But, let’s just go over the bleeping cliff.  Fine.  Let’s just go.  Just leave the negotiating table and send us over the cliff.  “Cause you know why?  At least, for a few seconds, it’ll feel like we’re flying.”

 

http://www.thedailyshow.com/watch/tue-december-4-2012/cliffpocalypsemageddonacaust—totally-solvable-budget-problem—numbers-on-paper

My letter to Speaker John Boehner   Leave a comment

Dear Mr Speaker,

As a citizen of the Unites States of America, I am saddened by the way our government is spending so much time and money fighting itself.  I am writing to you, in vain hope that you may be able to improve this situation.  When you say no deal will be reached by January first to avoid the upcoming tax rise, it makes me understand why Congress has such low approval numbers.  We the citizens are tired of you guys fighting each other.  You can tell what the people of the United States want, by the way we elect our representatives.  If you hold a rigid ideology that works against our will, how could you know that you are doing the right thing?
In the debt ceiling debacle Congress spent 18.9 billion dollars on nothing.  No one got tax breaks with that money.  No one got any benefits.  No infrastructure was built.  It was thrown away on a stupid political argument.  Nothing more, and nothing less.  Since you are on the verge of doing the same thing again, I feel I must write to you and implore you to stop.  When everyone’s taxes go up on January first, money will come out of the economy.  The extra 10 or 15 dollars in my paycheck that I no longer have, will not be spent in our economy.  When you add me to the millions of other Americans, it is obvious that it will begin to shrink our economy immediately.  If you think this contraction is good for America, please continue on your present course.  If you think America should be expanding and growing, please seriously reconsider your position.  We can turn this economy around if we work together.  As the poet once said, divided we stand, together we rise.

Thank you for taking a moment to consider my position.

Sincerely,

Tim Lewis

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Fareed Zakaria “But, first, here’s my take: The International Monetary Fund’s latest World Economic Outlook makes for gloomy reading. Growth projections have been revised downward almost everywhere, especially in Europe and the big emerging markets like China.

And yet, when looking out over the next four years, coincidentally the next presidential term, the IMF projects that the United States will be the strongest of the world’s rich economies.

U.S. growth is forecasted to average 3 percent, much stronger than that of Germany or France at 1.2 percent or even Canada at 2.3 percent.

Increasingly, the evidence suggests that the United States has come out of the financial crisis of 2008 in better shape than its peers because of the actions of its government.

Perhaps the most important cause of America’s relative health is the Federal Reserve. Ben Bernanke understood the depths of the problem early and responded energetically and creatively.

The clearest vindication of his actions has been that the European Central Bank, after charting an opposite course for three years with disastrous results, has now adopted policies similar to the Fed’s and, thus, averted a potential Lehman-like collapse in Europe. Kenneth Rogoff and Carmen Reinhart, the leading experts on financial crises, argue that the United States is performing better than most countries in similar circumstances in history.

Consumers are paying down debt and consumer confidence is at its highest levels since September 2007. Every American recovery since World War II has been led by housing, except this one.

But, finally, housing is back. Two weeks ago, Jamie Diamond, the chief executive of JP Morgan Chase, declared that housing had turned the corner and predicated that, as a consequence, economic growth in 2013 would be so strong that the Fed would have to raise interest rates.

Corporate profits are at an all-time high as a percentage of gross domestic product and companies have $1.7 trillion in cash on their balance sheets.

American exports, which have climbed 45 percent in the past four years, are at their highest level ever as a percent of GDP.

The key to long-term recoveries from recessions is reform and restructuring and U.S. businesses have been quick to respond. Government intervention, believe it or not, has assisted this process with banks, with auto companies and even in housing.

Banks had to undergo stress tests and had to raise capital. The Economist Magazine, which had initially opposed the auto bailout, reversed itself because of the manner in which General Motors and Chrysler were forced by the government to cut costs and become competitive.

Now, all these good signs in the economy come with caveats. Europe continues to weaken, the fiscal cliff looms ominously. But compared with the rest of the industrialized world and with the arc of other post bubble recoveries, the United States is ready for a robust revival.

This is partly because of the dynamism of the U.S. economy, but also because of the timely and intelligent actions of the Fed and the Obama administration.

The next president will reap the rewards of work already done. So it would be the ultimate irony if, having strongly criticized almost every measure that contributed to these positive trends, Mitt Romney ends up residing over what he would surely call the Romney Recovery.”

http://transcripts.cnn.com/TRANSCRIPTS/1210/28/fzgps.01.html

Posted October 29, 2012 by tmusicfan in Politics, Quote of the Day

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Fareed Zakaria “But, first, here’s my take. The second presidential debate has been studied and analyzed mostly as a prize fight, who punched hard, who missed a swing. That’s fine.

But there was a substantive aspect to the debate as well. President Obama actually showed up this time and he was engaged and articulate, as was Governor Romney.

As a result, we got a sense of the issues and there is an important and honorable difference between these two candidates. The central question in this election is what will grow the American economy.

Governor Romney’s basic answer is lower taxes and a more streamlined tax code and fewer regulations. President Obama’s answer to the same question would be investments in education, infrastructure, science and technology, as well as support for important sectors like energy and advanced manufacturing.

Both arguments have merit to them so the question is which is our more urgent problem now? Well, the United States is the 7th most competitive economy in the world, according to the World Economic Forum. It’s dropped a bit over the last four years.

Overall, however, whether compared with our own past of, say, 30 years ago when airlines, banks and telecommunications were tightly controlled by government rules or compared with other countries, the United States remains a pretty business-friendly place.

The U.S. economy boomed in the 1950s with tax rates that were much higher than today and Germany, the country that has come out of the current crisis best, is not exactly known for low taxes and low regulation.

As I’ve often pointed out, America is worse off than it was 30 years ago in infrastructure, education and research. The country spends much less than it did on infrastructure.

And, by 2009, federal funding for research of development was half the share of GDP that it was in 1960. The result is we’re falling behind and fast.

A decade ago, the World Economic Forum ranked U.S. infrastructure 5th in the world. In the latest report, we were 25th. The U.S. spends only 2.4 percent of GDP on infrastructure, the Congressional Budget Office noted in 2010, whereas Europe spends 5 percent and China 9 percent.

In the 1970s, America led the world in the number of college graduates. As of 2009, we were 14th among the countries tracked by the OECD. Reversing that decline will cost money.

In other words, the great shift in the U.S. economy over the past 30 years has not been a dramatic increase in taxes and regulation, but rather a decline in investment in human and physical capital.

Now, we should really push on both fronts; a better tax and regulatory system and more investments. But, on the substance, Obama is right to emphasize investments.

You may still think he’s not a good president, but, by the way, Governor Romney, as he pivots to the center, now talks about spending money on retraining and education and boosting manufacturing and exports.

So let’s hope that whoever wins, America gets the investments it sorely needs. Let’s get started.

http://transcripts.cnn.com/TRANSCRIPTS/1210/21/fzgps.01.html

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Bill Maher “We all wind up living with this fictional picture of America, that actually would be more appropriate for the year before Obama took office.  Remember 2008?  Yea, I do.  That’s when Lehman Brothers collapsed,  and the markets froze, and they were measuring GM for a pumpkin lot.  And, when you opened your bank statement, you saw the drowned Japanese girl from the Ring, and then you died.  And yes, I am saying we can keep blaming Bush for that.  It’s the same as blaming rats for the black plague.  Just because you’re sick of hearing historians say it, doesn’t mean it stopped being true.  George Bush left a flaming pile of dogsh*t on the White House steps, and now it’s gone.  And, Mitt Romney has a hell of a nerve running on the idea, I’m going to fix the economy by restoring the policies of the party that destroyed it.”