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tv   Charlie Rose  Bloomberg  May 14, 2015 9:00pm-10:01pm EDT

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>> from our studios in new york city, this is charlie rose. charlie: marco rubio the republican senator from florida announced his plans to run for president last month. he sits on foreign relations the and and hence committee and outlined his foreign-policy doctrine today at the council on foreign relations. i spoke with him following those remarks, including questions from the foreign relations. in previous conversations with me you have said that we are trying to fix 21st entry -- century problems with 20th century ideas. yet all of the men you cited
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where of the 20th entry. senator rubio: there are timeless truths. the sun still raises in the east and america is still a power. today we face multiple challenges. it is not just a conflict with a different powerful nationstate the soviet union which we faced , at the end of the cold war. we faced traditional nations like china with its own ambitions and russia putin , wants to be the president of a great country, so he tries to achieve it militarily. but that we also face rogue nations. north korea's basically governed by a criminal syndicate. iran, a nation governed by a radical shia cleric, and nonstate actors with increasing capacity, both isis, al qaeda, etc. the challenges -- the need for american leadership is still true. the challenges are different and require a different approach. charlie: should we be the world's policeman? marco: that is not the title i would advocate.
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but i do think the world -- these problems require a global response. but a global response requires someone to convene the world to take action, and only america is capable of doing it. in the absence of american leadership, our european and nato allies cannot come up with a strategy to confront the aggression from russia, nor can the allies in the middle east or for that matter, allies in the asia-pacific reason -- region. american leadership is necessary to confront these challenges. charlie: talk about meetings in two different ways. this weekend, a meeting of the president and arab leaders to do about the middle east and the problems of the middle east. there were reports from bbc that a drone missile strike has killed the number two leader of isis. because the number one leader has already been disabled by a drone strike. those examples seem to ask -- american leadership. suggest marco: first, think it's good we have leaders of the gcc
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meeting at camp david with the president. i think it should have happened a while ago. i regret the king of saudi arabia is not among them. i would have extended it beyond that. charlie: there may be a series of reasons he's not here. marco: i would expand that beyond the countries that are in the gcc. i would also extend that to egypt and jordan. sunni governments who have a shared interest because they have two primary challenges. one is the rise of extremism sunni extremism, and only sunnis , can come in and defeats in the extreme isn't. -- extremism. and the other is that iran wants to dominate the region. that is a perfect example of a group of nations that could come together to confront both of these challenges, but it will require america to bring them together. that meeting, i hope, should have happened a while back, but i suspect that much of these meetings will be dedicated to bringing these countries some place of ease with regard to iran.
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charlie: about the effort to reduce the impact of isis. do you give the president bad marks? senator rubio: i think there could have been much that could have been none and instead if we had instead become engaged in the syrian conflict earlier. the vast majority of the people were rebelling against leadership of that country. i advocated at the time that we should identify people we can work with on the ground in syria and empowered that. in the absence of doing so we would leave a vacuum and that would be filled by foreign fighters, primarily radicals. that is exactly how it played out. those are the conditions that allowed isis, and al musra, a group on the rebound, to come back. once isis began to emerge, i did not consider them -- i thought they were much more of a potent threat than the president gave them credit for. i argued for an earlier engagement, both targeting their for logistical operations, but
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ways also transit points. i think it's good that we are conducting airstrikes. the truth is, we probably need more. but i think it's critical that a sunni force confront them on the ground. and part of that can be an iraqi force. i see they are starting to train some. but it's also important to go to the jordanians, the egyptians, the gcc countries that are willing to also put forces on the ground to help stabilize the country. charlie: there's no doubt in your mind they are willing to put forces on the ground in iraq. the saudi's have asked egyptians and others to help in yemen and the egyptians refused to send their own ground troops in. marco: there are two areas of concern. i think they are willing to be more helpful with a combined force. the problem is, need logistical support and air support. they will not do it on their own. charlie: should we offer support in yemen? marco: the saudi's, it is telling that they did it without
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really notifying us. charlie: but the u.s. gave them some advice. marco: we have given them increasing advice, but not to the level that it should've been. the complexity of the situation involves iran, but also al qaeda and other countries. in terms of confronting the spread of the regional influence by iran yemen has just become a , flashpoint. a joint sunni force that could stand up to extremism and iran's ambitions could confront these challenges with u.s. logistical and air support. charlie: and advisory support on the ground. marco: yes, you put in special operations forces to help them improve their capabilities. ultimately these countries expressed a willingness and understand it is their fight. they are not just fighting for territory. they are fighting for the identity of what it means to be a sunni muslim and they are confronted by a very serious
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challenge. there was an interview a couple months ago in the wall street journal where he said his important that they understand they are a muslim state and that it needs to be confronted and defeated because extremism does not just threaten the world, but islam. charlie: when you look at the strategy of the president today against terrorism your move to , iran, the significant difference is what? marco: i think he viewed american engagement abroad as a cause of friction. the notion that we had problems around the world because of a grievance against the united states because of something we had done. in fact much of these are ideologically taste not grievance-based. iran's problems with america are not just a grievance. it goes deeper than that ideological. they want to be the dominant power in the region and they want to export their revolution to other territories. so that the president during the green revolution in 2009 when he refused to take a side and would
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not interfere in the sovereignty of the country, meanwhile iranians were in the streets protesting. charlie: what should he have done? marco: the president should have firmly stood on the side of those iranians that desired true democracy in their country and real political change. charlie: you have said that u.s. is holding back against isis, is it is not want to upset iran? marco: absolutely, iran is on the ground heavily. not just advisors, but iranian fighters embedded with these shia militias. they are largely agents of the iranian government. iran does not want a u.s. presence in iraq of any kind. they have tolerated airstrikes because they cannot do anything to stop them, and to the extent that they are killing people far into isis territory, and there
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are outrageous rumors that the u.s. is actually helping isis and that we helped invent isis. they don't want us there. i believe these shia militias on the ground pose and extraordinary threat to americans. they are embedded side-by-side with regular iraqi forces and have full access to all the iraqi government buildings, etc. i believe if the u.s. had taken a more aggressive position -- charlie: against isis or iranian presence question -- or iranian presence? marco: against the iranian presence in iraq, it may have triggered it in time to avoid these attacks from these shia militias. charlie: what is your primary objection to the deal on the table now? marco: my primary objection is that it could allow iran to be
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capable of enriching nuclear energy. there are multiple other countries that have nuclear energy. the ron desantis. -- iran does not need it. not many other countries do it by imported the material. the fact that they can retain, a country that has had sponsored terrorism all over the world a , country that is developing long-range rocket, a country that we know has been working on acquiring nuclear weapons capability, despite their lives, and has always had a secret component to their plan, is now going to retain a structure to enrich you run them -- -- uranium and reprocessed plutonium. charlie: there is a reduction in terms of the centrifuges and what they can do and in terms of new research and development. people like the secretary at -- secretary of energy have laid this out clearly. marco: sure, but here's the problem. they will retain all of the infrastructure to break this caps. second, enforcement requires open and full inspections.
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iran is saying it will not allow access to military facilities. that is problematic. charlie: the u.s. has not acknowledged that will be the reality. they say these would be the most intrusive inspections yet, and if the iranians stop them, then they have a year to stop any iranian development. marco: we should not have retreated from the statement that iran does not have the right to enrich plutonium and we should have stopped long-range missile technology that has no other purpose than to place a warhead abroad. and we should have insisted that they be open about all of their secret programs of the past and monitoring activity. they know that one of the international sanctions are lifted, there is no way they will ever be reimposed. they believe they can evade sanctions over inspections. especially once the world's attention is diverted to another topic. they have learned from the north koreans.
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i'm convinced that some point they will pursue a nuclear weapon capability. in the meantime they will exploit any ambiguous language any ambiguities or the polls in this deal to advance their -- loopholes in this deal to advance their nuclear position. charlie: when you look at the iraq war, after finding out there were no weapons of mass destruction, if you had known that, would you have been in favor of the iraqi invasion? marco: not only would i have not been in favor of it, but president bush had said that he regrets the intelligence was faulty. charlie: vice president cheney and others have said, we don't want to go ahead notwithstanding. senator rubio: president bush said he regrets the intelligence was faulty. i don't the congress would have voted in favor of the authorization. but let's be fair, the context. there was faulty intelligence. but there is always a history of iraq of evasion. there were mobile units that have been used for chemical of -- weapons and biological capabilities. it was a country that actively not so far in the past at that
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moment that the decision was made had invaded a neighboring country, kuwait. it was a country that had open disputes with international bodies allowing inspectors to come in and view things. ultimately, i do not believe that if the intelligence has said iraq does not have a weapon of mass destruction capability i don't believe president bush would have authorized moving forward. charlie: with respect to israel, you obviously have people across the country who are republican. is your view of iran any different from the prime minister of israel? senator rubio: i view them as the same threat. the difference is he lives a lot closer. he is the prime minister of the leader of a country every friday afternoon iran says they want to destroy israel in their prayers. and the president has posted on his twitter page a 12 point plan to eliminate them from the
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face of the earth. obviously the threat he faces is more immediate. my interest is not about people that will support me. it is a long-standing believe and it is to part. the first is a moral one. israel was created as a homeland for jewish people in the aftermath of the holocaust so never again would there not be somewhere for jewish people could not seek refuge and peace, especially in the face of persecution. and the other is this. it is the only free enterprise democratic, pro-american country in the middle east. if we had more democratic free enterprise democracies in the middle east, my list would be shorter. charlie: do you think a two state solution is possible? marco: the conditions at this moment do not exist. that is the ideal outcome, but the conditions do not exist. charlie: we should forget about the possibility of a two state solution? senator rubio: as i said, that is the ideal outcome. charlie: but the reality and you
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think there cannot be a two state solution. marco: there is no responsible leadership in the palestinian government. they teach children that it is a glorious thing to kill jews. they mismanaged the government they have in place today. and they have rejected offers of peace. the conditions simply don't exist. the most recent hope for -- charlie: what is the alternative? marco: in the short-term, to continue to hope that the palestinian authority and the enforcement agencies will provide a level of stability in that territory so they will be allowed to grow their economy and prosperity. and ultimately conditions will rise up with new leadership that will allow that to happen. charlie: i brought this paper with me, because the pope as you know, has said that we should support a palestinian state. he also seemed to be part of the renewed relationship with cuba. raul castro went to see the pope and raul castro said, i will consider returning to the
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church. you are a good catholic, try to be. marco: that is going to be a pretty long confessional. [laughter] charlie: what is wrong with the pope? marco: the pope is the shepherd of the faith. his desire is peace and prosperity and wants everyone to be better off. he is not a political figure although he is the head of a sovereign state in the vatican city. his desire is to shepherd the flock. there are many roman catholics on the island of cuba and he desires a better future and anything he can do to open up more opportunities for them he , will pursue. my interest as an elected official is the national security of the u.s. and embedded and that is the believe that it is not good for our country, nor the people of cuba to have an anti-american dictatorship 90 miles off our shores, a nation that harbors terrorists and advances intelligence gathering facilities for china and russia.
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charlie: if elected, would you undo the things the president has done? senator rubio: i would reimposed sanctions that could only be lifted by reciprocal steps. in essence, if they want more telecommunications opening, then they will have to allow freedom of the press. if they want more engagement with american business as an travel then allow more democratic opening for groups of society. the embargo, which is separate from what the president has done, could be lifted tomorrow. charlie: but those things have been in place for 50 years and have achieved none of the things you want to achieve. why not try something new? marco: because that is not true. what he is saying is not accurate. number one, the sanctions he is talking about -- if he is talking about the embargo, the purpose of the embargo was not to topple the regime of raul castro. that was the purpose of the bay of pigs. it did not work. it was to prevent the trafficking of stolen goods. if you travel to cuba, you stay in a hotel and you are staying in a stolen property.
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another point, there is no japanese embargo on cuba. there is no south korean embargo on cuba. why isn't cuba. -- full of samsung phones or full of toyotas? charlie: why? senator rubio: because they are incompetent. because the leadership views themselves as the leaders of a plantation of 1300 people that they can control. the entire country is run by raul castro's son-in-law, his company. the hotels, the rental cars, everything is underneath that umbrella. we do not have an opening to cuba. we have an opening to him. charlie: let me end this so it can give people an opportunity to talk to you. this is in today's new york times. it is a philosophical question and says the following. it talks about what you were saying earlier in the session. it is a new mood of overreaching uncertainty and profound anxiety, talking about america today, and it is so ingrained at this point that we tend to overlook it.
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and he continues, if one of the aspirants can get voice to america's incredible insecurity, and trace a believable path out of it he or she will almost , certainly be victorious in 2016. marco: frank bernie's piece. he's right. that is exactly what has happened. for a decade americans have been getting a bad news. we had an american century. my parents came here and had no skills. they were immigrants. they were able to achieve a middle class last time. -- lifestyle. they owned a home, raised a family, and were able to retire with dignity. they were able to leave their children better off than themselves and they took enormous pride in what america achieved around the world and here at home. and now there is the feeling that none of that is true anymore. globally we are no longer appearing to be able to shape events like we once did. and the millions of people that are working hard, maybe a same job they had 25 years ago, but now they are no longer only in the middle-class and the live
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paycheck to paycheck. why did the old ways of doing things the longer work? -- no longer work. why can't anybody tell us the new way? the answer is the world is undergoing an historic , transformation. we need help with that transformation. charlie: what is your believable path? marco: i think the 20% three has -- 21st century has the potential to be better than the 20th century, but it will require us to have better things. that is why energy reform in dealing with debt is important. technology has rapidly change the nature of work. all of the better paying jobs in the 21st century require better education, but we have an outdated higher education system. it goes back to national security. in a globalized economy, foreign affairs has never mattered more from an economic perspective. ♪
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charlie: let me take questions. >> china has been aggressively building airstrips and ports into disputed territories in the south china sea. they have not denied that they can, in fact, be used for military purposes and that appears to be their purpose.
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how would you show american strength and leadership in the asia-pacific with respect to this type of activity by china? what would you do? senator rubio: great question. there are not just building airstrips, they are building entire islands. secondly, it is in the legitimate claim. that they owned a part of the world -- it is an illegitimate claim, that they own that part of the world. i'm encouraged that the military is thinking about challenging that. we should never accept as truth that they can control that. i would come in fact, take all sorts of naval actions, not military action per se, but military vessels transiting through that zone to show that this is international waters open for transit for anyone who wants to go through. beyond that, it is critical for us to create a stronger alliance truly to pivot to the asia-pacific region. we need to increase the military alliance that expands beyond just japan and korea, and includes working with australia
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and the philippines and other nations to change the calculus that china would have to face if that's japan would have to face if they move forward trying to act on their territorial claims that are illegitimate. and prove the capacity of the nations to defend themselves. and completely change the cost benefit analysis. one more point i would make is that military spending is critical in this realm, because china is investing billions of dollars and is designing technology designed to make it too expensive for aircraft carriers to get to that region. anti-access capabilities. charlie: yes, sir. >> senator, mark rosen of bank of america, merrill lynch. charlie: stand up, please, sir. >> president putin has invaded georgia some years ago, and crimea and all the border problems as well.
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governor romney, when he ran for president, said that he thought that russia was the major foreign-policy problem for the u.s. and was laughed at? it turned out to be much more accurate than it was deemed it then. how would you deal with the threat of russia, and apparently it's expansionary policies? marco: let me clarify the threat. it is not the russian people but vladimir putin who wants to be the leader of a great country. and to put behind him what he feels is the humiliation of the 1990's and reestablish russia on par with the u.s., and potentially even china. and the result is that he cannot do it economically, so he is doing it militarily. by making it very clear any nations in his periphery must never turned westward. i think the sanctions that have been put in place, although i would like to see an increased particularly on the part of the u.s., the sanctions will prove to be long-term devastating, and already have been for moscow and the russian economy and their
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ambition. but beyond that, i think it is critical, whether it is the baltic states or even ukraine, who is not a member of nato, to have been this their agreement to provide defense of their own territory. for many years, what we told those nations as we want you to increase your capacity to help us, help us in afghanistan and other far-flung places, but these nations did not invest in their own protection of their territory because they felt the cold war was over. we now see that is not true. and now we see that putin feels he can take his aggressive action in ukraine and other countries that have russian speaking populations under the guise of moving into protect them because he feels there is , no consequence for doing so. he does not believe that these nations will be able to inflict enough pain militarily that he will have to pay the price domestically.
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that's one of the reasons why they have been so paranoid about covering up the deaths of russians. an opposition group revealed over 200 russians died in ukraine over the last year and a charlie: you welcome ukraine in half. nato? marco: i am open to ukraine in nato. but there capacity -- if we want to provide offensive military capabilities, to say that will join nato is even longer reach in terms of this administration. we need to be able to help then defend themselves. >> senator, zoe baird of the how foundation. you recognize the extraordinary growth in the markets around the world with the growing middle class. and you also have acknowledged that most of the job growth in the u.s. comes from small businesses. can you talk about how you would get americans in mall businesses -- small businesses to understand that the world is
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their market, and how we can transform the culture of this country to be part of the world? marco: we as americans are only 5% of the world population. there is only so much prosperity if we sell things only to each other. we need people around the world who can afford to buy the products we make and the services we provide. and for that unique global stability, which is why american leadership is important. without it, there is no global stability. and we need to have access to other markets. that is why i support free trade agreements. they need to be finalized and we need to see the details, but if we don't have trained agreements with the pacific rim, which includes latin america and others, then we are walking away from access to 1.5 billion people or more. these are rapidly growing markets. we are not engaged in the fastest economically growing area of the world, then all of our businesses will not prosper. i come for miami.
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-- from miami. in south florida, many businesses are directly impacted by global affairs. for example, the colombian free-trade agreement has been a bonanza. i think it is important for us to explain how critical it is we have access to millions of people around the world who can afford to become customers. today, you can buy things online. charlie: yes, sir? over here. >> neil ferguson. senator, i was delighted to hear you refer to radical islam as one of the threats we face. the great ideological base -- threat that kennedy and reagan faced were communist. his radical islam the threat that we face? what is your strategy for defeating it?
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senator rubio: that is an interesting question. these threats have different characteristics. communism was an economic and political view that tried to create nationstates that would implement those policies. radical islam why -- while there is a desire to create a caliphate, is more diffuse. groups that do not necessarily have a governance idea behind them. the history of these radical groups is once they take over your town, they do a terrible job picking up the garbage. they are very brutal and how they govern. libya has become a premier operational space. it has become a safe haven. iraq became a safe heaven. syria before that.
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9/11 was possible because al qaeda had a safe haven in afghanistan. the first part of our strategy is we can't allow safe havens to emerge anywhere in the world. ungoverned spaces were groups can set up camp and establish themselves. do not underestimate where isis is involved. they are actively trying to absorb al qaeda elements. taliban elements in afghanistan and pakistan. they are present throughout all of north africa. they have extended their reach into virtually all of the countries of the middle east in some capacity. they do have individuals that have never even traveled abroad that are sympathetic to their cause radicalized online. denying them is a safe haven is a key part and acting in that regard. i thought being involved in syria early and not providing a safe haven was critical to preventing the growth of isis. charlie: richard.
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>> hillary clinton supported early intervention in syria. you were critical of her just before. can you tell us where she went wrong as secretary of state? senator rubio: what are the successes of her tenure? russia was a disaster because we misunderstood putin's motivations. i don't know that she was openly supportive of the libyan engagement. i'm sorry. syria. i thought the libyan engagement was not handled appropriately. the united states intervened in a very short time. i believe it was 72 hours. the rest was left to loyal allies that do not have our capabilities. the results of libya were conflict, leaving behind the conditions for the rise of multiple militias that refused to lay down their arms. i traveled to libya after the fall of qaddafi.
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i warned that if we allowed the conflict to go to law, did not get engaged that only would libya become a failed state but i haven for extremists to take root. i thought they were negligent. very little discussion about how to improve our standing in the region, particularly countries that are doing well or moving in the direction we think the world should move. mexico and chile and peru. we ignored the situation in countries moving the opposite direction. argentina ecuador, venezuela. i do not believe there are many successes they can point to in her tenure. she was the chief spokesperson of a foreign policy going down history as a disaster. charlie: in the back. >> spoke beautifully early on about the importance of holding
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other nations to high standards in terms of human rights and our moral authority around the world. i think many would argue that has been eroded through continual opening of guantanamo bay, our criminal justice issues in the united states. can you talk about your view on how to resolve guantanamo? senator rubio: i believe innocent people deserve to have their rights respected. i think terrorists who plot to kill americans and are actively engaged in plots to attack america deserve to be in prison. that is the role that guantanamo plays. it is the only place where we could gather intelligence. charlie: it has been a great pleasure. [applause] ♪
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charlie: mohamed el-erian is the chief economic advisor at allianz. he was previously ceo at pimco. i am pleased to have him back at the table. welcome. let me begin with this. this is wall street journal this morning as we take this on may 7. janet yellen warns of a bloated stock. she weighed in on a growing
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debate among investors and market economists, suggesting that your long stock rally may have german prices too high and raising concerns that market investors are taking excessive risk. she said that in a conversation with the head of i am a. -- imf. mohamed: i think she is right. there has been too much risk-taking. it has been encouraged by the fed. it is the only way they can promote economic growth. what you see here is a dilemma the fed has. on one hand, it wants to promote economic growth. and it is using an instrument with too much risk-taking. charlie: what is the balance? mohamed: the balance is only struck if other policymaking entities step up. the fed is the only game in town right now. it does not have the instruments
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to deal with what ail western economies. the ecb is in the same position. they need help from other policymakers and they are sideline right now. charlie: what about greece and the eurozone? mohamed: i put it 45-45-10 a few weeks ago. i would say 5% now. holistic solution where greece and its european partners are together in trust and both are willing to commit to what needs to be done. both sides have to give. i give that a 5% possibility. germany gives on more financial support. greece agrees to meaningful structure reform. together, they agree to some reduction in austerity. the solution is technically there. charlie: it has not changed since the crisis developed? mohamed: but they cannot agree
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on the past and present, let alone the future. the 50% probability is that we get an accident. greece ends up out of the eurozone not because someone made a historic decision. no one wants to go down in history books as having made that decision. the accident happens underground and greece has no choice but to exit. that is a 50% probability right now. charlie: when would that happen? mohamed: it is happening day in and day out. there are little things going on. people are withdrawing money from the banks and putting them in their mattress or taking them out of the country which means you are sucking oxygen out of the system. secondly -- charlie: not spending, but taking it out of the country. mohamed: and the government is running out of money.
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the minute they issue at iou we see that dynamic we saw in argentina. you can see this accident starting and ultimately politicians will lose control. charlie: take me back to the u.s.. we thought we were on our way to a recovery. now people are saying we are not so sure. you think nothing has changed. mohamed: he will do slightly better than last year. you will grow at 2.5%. the first quarter we were impacted by the closure of ports of west. the first quarter is typically week. i do not buy into we are looking at a year worse than last year. it will be slightly that are, but not escape velocity. slightly better is 2.5% to 3%. charlie: when do we get to 3%?
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mohamed: it will take a while because washington is not helping. charlie: because of gridlock? mohamed: yeah. there is no active decision-making on economics other than the federal reserve and they do not have the instruments. charlie: what would be a fiscal fix? mohamed: to match the wallet with the will to spend. the second fiscal fix -- charlie: the wallet is generating revenue? mohamed: right, inequality has gotten so high that the people who are capturing incremental income is the rich, who spend less income. support, who -- the poor, who have a desire to spend, do not have the wallet. charlie: we put more money in the hands of the poor to create growth.
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mohamed: exactly. the second element is clarity on corporate tax reform. people know there is some sort of reform coming, but they do not know what it looks like. if you are a company, that is material. companies do not see the clarity and cannot reposition as quickly as investors can. the second way fiscal can help is by giving clarity on reform which is key right now. charlie: reforms having to do with? mohamed: mainly the tax system. when we have a texas of that is anti-growth -- tax system that is anti-growth and a system that republicans and democrats agree you needs to be reformed but no one wants to collaborate with the other side -- charlie: i want you to balance
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politics with economics. here is a candidate who wants to run for the republican nomination which presents political things. what is the ideal policy would like to see a political candidate run on? what would you like to see in him or her? what would they recommend to the country as the best way to find sustainability and wrote -- growth? mohamed: that person would need one objective in mind -- the handoff from artificial growth to genuine growth. the question is, how do we pivot from a legacy where he mistakenly fell in love with finance? he fell in love with finance believed that could deliver economic growth.
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we believed we were entitled to debt we could not afford. wall street became entitled on a standalone basis rather than being a financial service industry. charlie: providing capital to grow. mohamed: exactly. we need to give it to a new growth model. that will only happen if full realized just like they did in the late 1950's, when the soviet union and sputnik, suddenly it was a national priority to catch up. charlie: a man on the moon project. mohamed: where economic growth is right in the middle. charlie: what are the elements of that? mohamed: investing in engines of growth, infrastructure. we have horrible infrastructure. interest rates are really low. it makes sense to step up infrastructure. charlie: wasn't that part of the
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stimulus plan? mohamed: it was, but the mistake we made in 2009 was that we thought this was a cyclical mountain. i will give you an example. when we came up with the concept of the new normal, we were signaling the recovery was going to be hard. structurally, there was something wrong. you drop your phone, turn it back on, it will not come back on. we were called fatalistic. today, the term has acquired elegance because it is called "secular stagnation." i do not believe you can run the american economy for another five years. something will break. we will either tip into a better world or find we get lower growth and what janet yellen and others are worried about -- financial instability. charlie: the likelihood of that?
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mohamed: it is a junction. there are two paths out. both are probable. and we have the ability to shift probabilities, but it requires a political will. charlie: we cannot fix it until we fix our politics. mohamed: exactly. and that is what people get worried. charlie: it is a muslim president has given up on congress. mohamed: whatever he introduces -- charlie: it is almost like the president has given up on congress. mohamed: whatever he introduces -- it will be more of what we have been doing. charlie: china and india india is growing faster than china. that is amazing to me.
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how did that happen? mohamed: you cannot grow at 10% forever. it is really hard. china's soft landing of 6% were 7% is almost natural. it is just over 7%. india has been chronically underperforming. if you look at the global economy the example i use is the following. you are a student and your headmaster says, i have good news. your class will be on average a little bit better. you say this is great. a better class is more engaged, easier to teach. your headmaster says, hold on. i have bad news.
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it is going to be a much more dispersed class. the good students will get a little bit better. there will be some students that are average. they will not disrupt you. if you are going to have a hard time, the troublemakers, russia, ukraine greece venezuela -- suddenly, you feel less good. you cannot predict how good your classes going to be. even though the average is slightly better dispersion is much higher. that is what is happening in the world. this version getting bigger, including four businesses being disrupted by things they never had to think of before. it will be interesting to see how the system adapts. charlie: you are writing a book about central banks. what is the theme?
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mohamed: the proposed title is "the only game in town." it looks at the world from the eyes of central banks and institutions that went from being euros -- heroes under alan greenspan to have naively enabled malfeasance and asks the question -- becoming responsible for all the heavy lifting we discussed. it looks at the world from that perspective. it comes to a conclusion that central banks cannot continue being the only game in town. which means that you and i -- charlie: monetary policy will not do it? mohamed: you are coming close to the point where benefits are starting to be exceeding --
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exceeded by the cost and risk. we have been experimenting for seven years. if i had sat here a year ago and told you that in europe, three chilean euros of debt -- three chilean euros of that would be trading at negative levels means you are paying the borrower for the benefit of risk. but it is fact. if i were to tell you the central bank of switzerland would end up shocking markets in january and closing a 40% low in currency, it would have been unlikely. but all that has happened. charlie: corporations have been sitting on a lot of cash and not investing. they would argue it was because of the lack of stability predictability and how they invest.
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it is one thing to make a significant capital expenditure. why not generate increased market share? mohamed: that is the biggest factor. economic risk taking is a high. investors cannot change their mind quickly. it is the illusion of liquidity. you think you can change your mind. companies need clarity on demand, which they have not got. they need clarity on how they will be taxed and operated. there is something really interesting going on. it is very exciting unless you are the one being disruptive. you get disrupted from another world.
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airbnb has created more hotel rooms without building a single hotel than starwood and hilton have combined. charlie: the sharing economy. mohamed: uber disrupted. they take core companies alien to the industry and disruptive. companies feel like they need to be able to respond. they do not know what is going to hit them. put together not enough demand, not enough clarity on the environment, plus a feeling they can be disrupted, and they become less interested. the problem is, shareholder say give the cash back to me. you see shareholders -- activists get involved. companies are planning it very hard. they do not want to spend cash
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but are under tremendous pressure. charlie: our active is a good or bad thing? mohamed: on the whole, i think they are good. on average, it is good. it does not mean every activist is good. but you need someone to remind a ceo and the board, because they can be co-opted. there is a notion of active inertia. you think you are active, but you are doing more the same. it is good to have an outsider a cognitive diversity from the outside. charlie: when you left pimco, what did you want to do? mohamed: what i am doing now. when i made the decision to leave in june of 2015 -- 2013, i was looking for the ability to spend more time with my daughter by gaining control of my schedule.
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and do that by doing a number of interesting things. i am a part-time adviser to a parent company of pimco. i write for bloomberg. it is wonderful to discipline my thoughts. i have the privilege of sharing president obama's global development council. i got involved in a startup which has been an eye-opener. i am a dinosaur, so being with people who have the passion for startups is amazing. and i'm spending more time with my daughter. it has been a privilege. charlie: you can be a good thing. -- it can be a good thing. mohamed: i have been privileged. i know many people cannot. charlie: mohamed el-erian thank you for joining us. ♪
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rishaad: this is trending business. a look at what we are watching with sharp falling off a cliff in tokyo. they are withdrawing from some television markets and seeking a lifeline. there are reports that chinese banks are being told not to offer high deposit rate despite the ceiling being raised. another sign that chinese reforms are struggling.
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some harsh words for noble. there are reports that they are "a very bad company took of --." the jakarta session will be in focus. but here is a look at what is going on elsewhere. reporter: markets looking mixed, but stocks are getting a lift from a strong performance in the u.s. overnight with the s&p 500 closing at a record index. on same -- hanseng now up .4%. there are reports that banks are being told not to offer higher deposit rates.

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