Transcripts For CNN Fareed Zakaria GPS 20110814

and an in-depth look at what's really going on in london, what's behind this week's unrest. first, here is my take. over the last week, liberal politicians and commentators in america took to the air waves and op ed pages to criticize the debt deal congress reached. but their eye was directed not at the tea party or even the republicans but rather at barack obama, who they concluded has failed as president because of his persistent tendency to compromise. this has been a running theme ever since obama took office. i think liberals grow up. as "the new republic's" jonathan chait brilliantly points out, there's a recurring liberal fantasy that if only the president of the united states would give a stirring speech, he would sweep the country along with the sheer power of his poetry and enact his agenda. in this view, writes chait, every known impediment to the legislative process, special interest lobbying, the filibuster, macroeconomic conditions, not to mention certain settled beliefs of public policy are but tiny stick huts trembling in the face of the atomic bomb of the presidential speech. this does happen if you're watching the movie "the american president" but not if you're actually watching what goes on in washington. the disappointment over the debt deal is just the latest episode of liberal bewilderment about obama. i have no idea what barack obama believings on virtually any issue, drew westen of "the new york times" writes. westen hints his professional experience, which is as a psychologist, suggests deep traumatic causes for obama's pathology. let me offer a simpler explanation. obama is a centrist and pragmatist who understands that in a country divided over core issues you cannot make the best the enemy of the good. obama passed a large stimulus package within weeks of taking office. liberals feel it should have been bigger. but, remember, despite a democratic house and senate, it just passed by one vote. he signed into law an unprecedented expansion of regulations in the financial services industry, though it isn't one that broke up the large banks. he enacted universal health care through a complex program that was modeled after the republican mitt romney's plan in massachusetts. and he's advocated a balanced aroach to deficit reduction that combines tax increases with spending cuts. now, maybe he just believes in all these things. maybe he understands that with a budget deficit that is 10% of gdp, the second highest in the industrialized world, and a debt that will rise to almost 100% of gdp in a few years, we cannot cavalierly spend another few trillion dollars hoping it will jump start the economy. maybe he believes that while american banks need better regulations, america also needs a vibrant banking system and in a globalized economy constraining american banks alone will only ensure that the world's largest global financial institutions will be british, german, swiss and chinese. he might understand that larry summers and tim geithner are smart people who in long careers in public service got some things wrong but also many things right. perhaps he understands that getting entitlement costs under control is, in fact, a crucial part of stabilizing our long-term fiscal situation and that you do need both tax increases and spending cuts, cuts, by the way, that are smaller than they appear because they all start from the 2010 budget which was boosted by the stimulus. is all this dangerous weakness, incoherence, appeasement? or is it just common sense? for more on this you can read my column in this week's "time" magazine or at time.com. let's get started. joining me now to talk about wall street's wild week, what it means or doesn't mean and what may lay behind it and what lies ahead of us. two of the world's top economists. paul krugman won the 2008 nobel prize in economics and he is a columnist for "the new york times." kenneth rogoff is a former chief economist at the international monetary fund, now a professor of economics at harvard university. welcome to you both. paul, let me start with you. the one thing we saw over the week was markets up, markets down, but the one trend that seemed persistent was there is a great demand for u.s. treasuries despite the fact that the s&p downgraded it. you've been talking a lot about this. explain in your view what does it mean that in moments like this u.s. treasuries are still in demand and what that does is push interest rates even lower than they are? >> well, what it tells you is that the investors, the market, are not at all afraid of what the -- if you like, the policy elite or people like standard & poor's are telling them they should be afraid of. we have all of washington, brussels, frankfurt saying deficits, this is the big problem. what we actually have in reality is markets are terrified of prolonged stagnation, maybe another recession. they still see government debt as -- u.s. government debt as the safest thing out there, and are saying, if this was a reaction as the s&p downgrade say it was, the market is saying we're afraid the downgrade will lead to more contractionary policy pushing us deeper into the hole. it's a reality test, right? we just had a wake-up call saying, hey, you've been worrying about the entirely wrong things. the scary thing is the prospect of what amounts to a somewhat reduced version of the great depression in the western world. >> ken rogoff, worrying about the wrong thing? >> well, i think the downgrade was well justified. it's a very volatile world, and the reason there's still a demand for treasuries is they've been downgraded a little bit to aa plus. that looks pretty good compared to a lot of the other options right now. it's a very, very difficult time for investors. there's a financial panic going on at some level. some of it is adjusting to lower growth expectations, maybe a third of what we're seeing. two-thirds is the idea that no one is home, not in europe, not in the united states. there's no leadership, and i really think that's what's driving the panic. >> but you wrote in an article of yours that you think that this is part of actually a broader phenomenon which is that people are realizing this is not a classic recession, not a classic cyclical downturn, this is what you call a great contraction. explain what you mean by that. >> well, recessions we have periodically since world war ii, but we haven't really had a financial crisis as we're having now. carmen reinhart and i think of this as a great contraction, the second one, the first being the great depression, where it's not just unemployment, it's not just output, but it's also credit, housing, and a lot of other things which are contracting. these things last much longer because of the debt overhang that we started with. after a typical recession, you come galloping out. six months after it ended, you're back to where you started. another six or 12 months, you're back to trend. if you look at a contraction, one of these post financial crisis events, it can take up to four or five years just to get back to where you started. so people are talking about a double dip, a second recession. we never left the first one. >> so paul krugman, what the implication of what ken rogoff is saying is spending large amounts of money on stimulus programs is not going to be the answer because, until the debt overhang works its way off, you're not going to get back to trend growth. so in that circumstance, you'll be wasting the money. >> no, that's not at all what it implies. i think my analytical framework, the way i think about this, is not very different from ken's. at least i certainly believed from day one of this slump that it was going to be something very different from one of your standard v-shaped down and up recessions, that it was going to last a long time. one of the things we can do, at least a partial answer is to have institutions that are able to issue debt, namely the government, do so and sustain spending and, among other things, by maintaining employment, by maintaining income, you make it easier for the private sector to work down that overhang of debt. >> ken, are you in favor of a significant additional stimulus in the way that i think paul krugman is? >> no. i think that's where we part ways on this. i think that creates a debt overhang in terms of future taxes that is not a magic bullet because it's not a typical recession. i do think, if we used our credit to help facilitate one of these plans to bring down the mortgage debt in this targeted way, and it could involve a significant amount, that i would definitely consider. that's how i would do it. now, obviously, you know, things go from bad to worse, then you start taking out more and more things from the tool kit, but i would start with targeting the mortgages, then higher inflation, try to do some structural reforms and, of course, if things are still going badly, i'm open to more ideas. >> i would say things have already gone from bad to worse. this is a terrible, terrible situation out there. we talk about it. we look at gdp, whatever. we have 9% unemployment and more to the point, we have long-term unemployment at levels not seen since the great depression. just an incredibly large number of people trapped in basically permanent unemployment. this is something that desperately needs addressing. i would be saying we should not be trying one tool after another from the tool kit a little bit at a time. at this point we want to throw everything we can get mobilized at it. i don't think fiscal stimulus is a magic bullet. i'm not sure inflation is a magic bullet in the sense it's hard to get. unless you're doing a bunch of other things. so we should be trying all these things. how did the great depression end? how did that end? it ended, of course, with world war ii, which was a massive fiscal expansion, but also involved a substantial amount of inflation which eroded the debt. hopefully we don't need a world war to get there. but we need this kind of all-out effort which we're not going to get. >> we'll have to take a break. when we come back, we'll ask what exactly should the worries about the deficit be? is that something to be taken seriously at all, when we come back. at exxon and mobil, we engineer smart gasoline that works at the molecular level to help your engine run more smoothly by helping remove deposits and cleaning up intake valves. so when you fill up at an exxon or mobil station, you can rest assured we help your engine run more smoothly while leaving behind cleaner emissions. it's how we make gasoline work harder for you. exxon and mobil. but when she got asthma, all i could do was worry ! specialists, lots of doctors, lots of advice... and my hands were full. i couldn't sort through it all. with unitedhealthcare, it's different. we have access to great specialists, and our pediatrician gets all the information. everyone works as a team. and i only need to talk to one person about her care. we're more than 78,000 people looking out for 70 million americans. that's health in numbers. unitedhealthcare. we are back with paul krugman and paul rogoff, talking about the economy, the markets, and everything else. paul krugman, before we took a break, you talked about the solution to getting us out of this crisis, and you compared it to the '30s and pointed out world war ii got us out of the depression. this was a massive stimulus, massive fiscal expansion. aren't we in a different world? we are right now, the united states, at 10% of budget deficit, 10% of gdp, the second highest in the industrial world. in two years our debt-to-gdp ratio goes to 100%. that strikes me as a situation where presumably there's some upper limit. you can't spend the money and incur these larger debt loads. >> i think those numbers are high about the debt levels a couple years out. it takes longer than that. the main thing is think about the costs versus benefits right now. basically, the u.s. government can borrow money and repay in constant dollars less than it borrowed. are we really saying there are no projects, that the federal government can undertake to have an even slightly positive rate of return, especially when you bear in mind that many of the workers and resources that you employ on those projects would otherwise be unemployed? the world wants to buy u.s. bonds. let's supply some more, and let's use those bonds to do something useful, which might, among other things, help to get us out of this terrible, terrible slump. >> ken rogoff? >> well, i think you have to be careful about assuming that these low interest rates are going to last indefinitely. they were very low for subprime mortgage borrowers a few years ago. interest rates can turn like the weather. but i also question how much just untargeted stimulus would really work. infrastructure spending if well spent is great. i'm all for that. i'd borrow for that, assuming we're not paying boston big dig kind of prices for the infrastructure. >> even if you were, wouldn't john maynard keynes say they're being productively employed, they pay taxes, so maybe boston's big dig was just fine after all? >> think about world war ii, right? that was actually negative for social product spending and yet it brought us out. partly because you want to put these things together, if you say, we can use inflation. ken and i are both saying that which is anathema to a lot of people in washington but is what the basic logic says. it's very hard to get inflation in a depressed economy. if you have a program of government spending plus an inflationary spending, you can get that. if you think about using all those things together, you can accomplish a great deal. if we discovered that space aliens were planning to attack and we needed a massive buildup to counter the space alien threat and inflation and budget deficits took secondary place to that, this slump would be over in 18 months, and then if we discovered, oops, we made a mistake, there aren't any space ali aliens. >> yes need orson wells is what you're saying? >> there was a "twilight zone" episode like this which scientists fake an alien threat in order to achieve world peace. this time we need it in order to get fiscal stimulus. >> ken wouldn't agree with that. the space aliens wouldn't work -- >> i think it's not so clear that keynes was right. there have been decades and decades of debate about that about whether digging ditches is a great idea. my read of the debate is when government does useful things and spends in useful ways, it's a good idea. but when it just digs ditches and fills them in, it's not productive and leaves you with debt. i don't think that's such a no-brainer. there are people going around saying, oh, keynes was right, everything keynes said was right. this is a different animal with this debt overhang that you need to think about from the standard keynesian framework. >> i just don't agree. the debt overhang -- that was an issue in the '30s, too, private sector debt overhang. we came into this with higher public debt than i would have liked. we're paying for the bush tax cuts and bush unfunded wars which leave us with a higher starting point of debt. the thing that drives me crazy about this debate, if i can say, is we have these hypothetical risks. all those hypothetical things are leaving us doing nothing about what's happening, mass unemployment, mass waste of human resources, mass waste of physical resources. what's happening is we are hemorrhaging economic possibilities and also destroying a lot of lives by letting this thing drift on. we're inventing these -- sometimes ghost ras r real, i guess. but inventing these phantom threats to keep us from acting. >> do you think the lesson from history, ken, in terms of these kind of great contractions -- other countries have had -- we have not had something like this since the 1930s, but there have been other examples -- tells you until you get these debt levels down, no matter what the government does, it's not going to get you back to robust growth? >> i do, because what happens as you're growing slowly, the debt problems start blowing up on you. that's happening very dramatically in europe. they had a philosophy and an approach of things are going to get much better, this is an ordinary but big recession, if we can just hang on we'll grow really fast, the debt problems will go away. guess what? they're not growing fast enough. the debt problems are imploding. that's slowing growth, and it's a self-feeding cycle. >> i guess i'm a little puzzled here because, again, the thing that's holding us back right now in the united states, although there are those peripheral european countries having a very different kind of problem, partly because they don't have their own currencies. in the united states what's holding us back is private sector debt. and yes, we're not going to have a self sustained recovery -- >> what you mean is that individuals have a lot of debt on their balance sheets. >> yeah. that's what's holding us back. we do need to bring that down, at least relative to incomes. what you need to do is have policies to make incomes grow. you need -- and that can include government spending, which is going to add to public debt, but it's going to reduce the burden of private debt. it can include inflationary policies and deliberate forgiveness. the idea that this has all faded, that we can't do anything to grow because we have to wait for some natural process to bring that debt down, that doesn't follow from the analysis. it is -- there is no huge overhang of debt which is, at least i see it, exactly the reason why we need very activist government policies. >> kenneth rogoff, the last word. >> i think the debt of the government, of course it's important, the concerns over future medical spending. a lot of businesses and people who could invest, could hire people, are worried of where the government is going, where taxes are going, what's going to happen. >> there's not a hint of that in the data. >> i don't think it's such -- not a hint of that? people aren't hiring. there's a lot of -- >> because they can't sell. >> a lot of surveys. >> i'm sorry. >> i mean, interest rates are always low before a crisis. you can't necessarily say that that tells you it's not going to happen. >> i guess i'm still in this position of seeing that things that we have no evidence for that are supposed to be dangerous are being -- you're blaming, as lots of people are blaming them for something which looks to be straightforward, there isn't enough spending in the economy. >> we have centuries of examples. >> i don't read that history the same way. >> all right. we'll have to leave it at that. paul krugman, ken rogoff, we'll have you back to see which way the wind is blowing. thank you. we'll be right back. introducing the schwab mobile app. it's schwab at your fingertips wherever, whenever you want. one log in lets you monitor all of your balances and transfer between accounts, so your money can move as fast as you do. check out your portfolio, track the market with live updates. and execute trades anywhere and anytime the inspiration hits you. even deposit checks right from your phone. just take a picture, hit deposit and you're done. open an account today and put schwab mobile to work for you. matter which position i am in i wake up feeling good. it fits you so perfectly... it fits you. you wake up and you're revived and rejuvenated. it's just like wow! tempur-pedic the most highly recommended bed in america. tempur-pedic is rated #1 in comfort. sleep satisfaction. and back support. it fits the curvature of your body but you don't sink in and it is firm. proprietary tempur material suppresses motion transfer. this means that when you get in or out of bed, you won't disturb your partner. that's amazing. that's amazing. tempur-pedic, the most highly recommended bed in america. call the number on now for our "what in the world" segment. what struck me this past week was china's reaction to our credit downgrade. its state-run media thundered that america needed to cure its addiction to debt. read on the mainland ran this a hong kong newspaper widely read on the mainland ran this front page with a banner saying "the american dream is over." it went on to report that washington owes every single chinese citizen about $900 u.s. dollars. another editorial said washington's solution to its debt time bomb was to make the fuse just one inch longer. that kind commentary has hit a nerve with the chinese people. after a drop in the shanghai's stock market, bloggers took to social media sites. one wrote, the u.s. suffered a downgrade, why did we become the biggest victim? another said, it was a huge mistake to buy u.s. bonds with chinese taxpayer money. we must hold those who are involved responsible. here in the u.s. you hear many people worried the chinese government might stop buying american "t" bills. i think these fears are vastly overblown. the economic situation between china and the united states is the financial version of mutually assured destruction, that cold war dock strin of nuclear deterrence, if you destroy me, i end up destroying you. let me explain. let's start with the facts. china is indeed america's biggest foreign lender. it owes about $1.2 trillion in debt, more than japan, the uk, and brazil. a little known fact is most of america's debt, $14.3 trillion and counting, is actually owned by americans in social security trusts, pension funds and by the federal reserve. it is the marginal buyer that matters so china is very important. now, imagine that china were to sell off those $1.2 trillion of u.s. treasury bonds or even a substantial portion of them. it's a huge hypothetical. let's play out the disastrous chain of events that would happen if china began to divest. it would trigger panic selling of the dollar. that would, in turn, hurt the u.s. economy which is china's number one export market. not a good idea if you are the beijing government trying to keep your workers occupied in factories across china, producing goods that americans are going to buy. you see china is addicted to a strategy of export-led growth which requires that it keeps its goods cheap which means keeping its currency undervalued which means buying u.s. dollars. but could china slow the purchase of american debt even if it doesn't stop it altogether? yes. but even here it has fewer options than people think. as china's export growth continues, it will have to keep adding to its foreign reserves which are now $3.2 trillion. so where can it park that money? does it want to invest in japanese debt and make the y a reserve currency? anyone who understands the deep animosity between china and japan will see this is unlikely. euro denominated assets are possibility, though there's not really something such as a european treasury bill. even then, do you really want to put all your eggs in the euro basket when the future of the currency itself looks shaky, much more shaky than six months ago? can you be confident the euro will be around 15 years from now? as for british pounds, swiss francs, you can buy those, not in the vast quantities china needs given the cash it generates. if china were to stop buying treasuries, remember ,the value of the yuan would rise. chinese exports would become more expensive. unemployment in china would fall. at thevery point china's bloggers and state-run media were blasting the u.s. government, guess what beijing was doing? it was buying u.s. treasuries. the reality is that china is trapped in a cycle of buying our "t" bonds, no matter what in ratings agency says, no other bond market is as big or as safe for china. so ignore all those theories about china doing america a huge favor. the reality is they have nowhere else to go. we're probably doing them a favor. by the way, in terms of who is paying whom, data from the congressional budget office shows the u.s. pays out some $74 million to china in interest payments on debt every day. that means washington is paying beijing $833 every second. and we'll be right back. i think what we've seen in the last couple months since the killing of osama bin laden, we've seen a real meltdown. thas before the first bell. [ bell rings ] it's time for recess... and more pills. afternoon art starts and so does her knee pain, that's two more pills. almost done, but hang on... her doctor recommended aleve because it can relieve pain all day with just two pills. this is lisa... who switched to aleve and fewer pills for a day free of pain. and get the all day pain relief of aleve in liquid gels. e you wondering about your options? with over 30 years of medicare experience, unitedhealthcare medicare solutions can help. just give us a call. the annual enrollment period to switch your medicare coverage is earlier this year, from october 15th to december 7th, so now is a great time to review your situation. i'm looking for help paying for my prescriptions. [ male announcer ] that's a part d prescription drug plan. choose a stand-alone plan, or combine it with a medicare supplement plan. it's all in our free guide. is there a single plan that combines medicare parts a & b with medical and drug coverage? [ male announcer ] absolutely. many medicare advantage plans can give you doctor, hospital and prescription drug coverage all in one plan. remember, the annual enrollment period is earlier this year. call unitedhealthcare now or visit us online to get this free answer guide from unitedhealthcare medicare solutions. call right now. i'm fredricka whitfield. tim pawlenty is the first casualty after yesterday's critical straw poll in iowa. the former minnesota governor dropped out of the presidential race today after finishing a distant third in the ames poll. that is an incredible sight there. a stage collapse at the indiana state fair, the death toll climbing too five. more than 40 other people were hurt. a massive wind gust blew through the grandstand as concertgoers were getting ready for a performance by sugarland. the stage crumbled, trapping people in the rubble. and family, friends, and classmates of a navy s.e.a.l. killed in afghanistan gathered at his former high school in stamford, connecticut, yesterday. they play preyed, lit candles and remembered chief petty officer brian bill. he was among the 30 troops killed last weekend in the downing of an army helicopter in afghanistan. that's a look at the top stories. join me in the newsroom at the top of the hour for more news and headlines. "fareed zakaria: gps" continues right now. the united states will soon begin its drawdown from afghanistan. as that happens, greater and greater attention will be focused on next-door neighbor pakistan. that is where much of what remains of al qaeda's leadership lives. it is, of course, a nuclear nation that is in terrible turmoil, filled with bombings, assassinations and what often seems like just chaos. to talk about it all, i'm joined from the finest journalist writing in pakistan, ahmed rashid. the latest news out of peshawar, this female suicide bomber wearing a veil detonates herself. even for pakistan this is unusual. >> very unusual. we've had one or two female suicide bombers, but they've been invariably been chechens or central asians. this is the first time i've heard of a young packing stanni woman becoming a suicide bomber in the center of peshawar, one of the largest cities in the country. this is very much a new development. >> do you look at what's going on right now and feel as though there is some kind of system in place to deal with this rising militancy? is the army now finally mobilized? is the political class mobilized? >> on the contrary. i think what we've seen in the past couple months since the killing of osama bin laden, we've seen a meltdown. the army has felt humiliated, embarrassed, and demoralized to some extent. the politicians have kind of abandoned the scene and told the army, you sort it out, this is not our problem. there's a huge rift between the government and the army and the americans. that is, of course, affecting economic confidence because we have no deal with the imf nor the world bank or any of the usual big donors who should be giving money or pledging some kind of funding to pakistan at this stage. so there are a whole raft of issues that have arisen which are worrying people enormously. >> let's talk about the rift between pakistan and the u.s. of course, some of it, the most recent bout of it stems from the osama bin laden shootings. what is the civilian government doing? what is the army doing? >> first of all, this has been building up for quite some time. the real sort of icing on the cake has been the death of osama bin laden because that is an operation carried out i think largely without pakistani knowledge or involvement. and the army did feel very embarrassed and humiliated. that, of course, has created this wave of anti-americanism, both in the public and the army and has forced the army chief to also show a very hard line towards the americans. at the moment we have a complete breakdown. in the midst of this, president zardari has abandoned the stage. we haven't seen any leadership from him. since bin laden's death, he hasn't made a single statement on terrorism or anything like that. >> would it be fair to say because of this rift in relations, the pakistani military is not pursuing the kind of militant, the haqani faction, those mill tanls who kill afghans and american troops and coalition troops? >> well, it certainly is not going to pursue it right now with this complete rift between the pak military and american military. they're barely on talking terms. >> how do we get out of this? how do we get back to some kind of working relationship? >> i think there's a huge problem here, too. that problem is there doesn't seem to be a central figure. since the death of richard holbrooke, who will deal with pakistan. you've got admiral mullen, the chairman of the joint chiefs, who has been very up front in dealing with pakistan. but you need a senior member of the white house or the state department to be running the policy. unfortunately, it appears from pakistan's side that the people running the policy here are the cia and the military. there's no political strategy from the american side, no political equivalent of holbrook or with the secretary of state or the deputy secretary of state or somebody getting involved in talking to the pakistanis. >> while all this is going on, the militancy in pakistan, the fundamentalism, the jihadis seem to be thriving as the suicide bombing suggests? >> absolutely. remember right after bin laden's death we had the attack on the naval base in karachi. two huge aircraft were destroyed. that, too, was extremely embarrassing and humiliating for the military. secondly, how are we going to turn around this huge wave of anti-westernism, anti americanism in an army which for the last 60 years has been totally dependent on the americans for arms, for weapons, for aid? something like $20 billion has been given in the last ten years by the americans, a lot of it to the military for conducting operations against the pakistani taliban and the extremists on the border. now, who is going to pay for these operations? are we in a position to pay for a billion dollars operation over three months to chase pakistani taliban? i don't think we're in a position to pay for that kind of operation. so that is going to mean the operations will be reduced. there will be increasing use of air power, less use of manpower, and the extremists are going to be taking advantage of this. >> in a strange sense, pakistan may be getting a whole lot more unstable. >> i think what is urgently needed is for the u.s.-pakistan relationship to return in some shape or form as quickly as possible. cooperation between the cia and the military and at the political level to resume. at the moment right now we've got a very hostile american congress who are very anti-pakistan. that has to be turned around. that can only be turned around if the relationship between the obama administration and the pakistan government improve. >> ahmed rashid, thank you, fascinating, somewhat depressing conversation. thank you. we will be back. at exxon and mobil, we engineer smart gasoline that works at the molecular level to help your engine run more smoothly by helping remove deposits and cleaning up intake valves. so when you fill up at an exxon or mobil station, you can rest assured we help your engine run more smoothly while leaving behind cleaner emissions. it's how we make gasoline work harder for you. exxon and mobil. new splenda® essentials™ no calorie sweetener with b vitamins, the first and only one to help support a healthy metabolism. three smart new ways to sweeten. same great taste. new splenda® essentials™. with less chronic low back pain. imagine living your life with less chronic osteoarthritis pain. imagine you, with less pain. cymbalta can help. cymbalta is a non-narcotic treatment that's fda-approved to manage chronic musculoskeletal pain. one pill a day, every day, can help reduce this pain. tell your doctor right away if your mood worsens, you have unusual changes in mood or behavior or thoughts of suicide. antidepressants can increase these in children, teens, and young adults. cymbalta is not approved for children under 18. people taking maois or thioridazine or with uncontrolled glaucoma should not take cymbalta. taking it with nsaid pain relievers, aspirin, or blood thinners may increase bleeding risk. severe liver problems, some fatal, were reported. signs include abdominal pain and yellowing of the skin or eyes. talk with your doctor about your medicines, including those for migraine, or if you have high fever, confusion and stiff muscles, to address a possible life-threatening condition. tell your doctor about alcohol use, liver disease, and before you reduce or stop taking cymbalta. dizziness or fainting may occur upon standing. side effects include nausea, dry mouth, and constipation. [ male announcer ] ask your doctor about cymbalta. imagine you, with less pain. cymbalta can help. go to cymbalta.com to learn about a free trial offer. welcome back. this past week, the world watched london burn. rioters set fire to buildings, smashed high street shop windows and looted everything from tvs to toothpaste. how did that happen in britain and why? joining me now, two british writers and thinkers who can help us understand. david goodhart is the editor at large of "prospect" magazine which he founded. he joins us from london. all the way from brazilia, british writer theodore darlrymple who worked as a prison psychologist for many years and wrote about it. there is something for most of us a kind of -- a sense of cognitive dissonance. when we think of the british, we think of people queueing and afternoon tea and things like that. of course, there is another side to britain. when i was young there were the brick stone riots and all that kind of thing. what is going on? why is this happening in britain right now? >> well, it may just have been a kind of one-off moment of mayhem. it may be a lot more serious than that. we may now start to see this on a regular basis. we clearly do -- we've known for a long time, we have a lot of deep problems in our inner cities. the economic boom over the last ten or 15 years has partly covered that up. but there's a whole culture of nihilism amongst a hard core of people in the inner city. a lot of it comes from the black hip-hop and rap culture, picked up by a lot of white kids as well. this idea that you can't make it in straight society, so violent transgression is really the only thing to do. >> theodore, i saw a piece or an interview i think you did in the "wall street journal," and you seem to feel that british policing or lack of policing, i suppose, is partly to blame. >> yes. one of the things that these people will have learned is impunity. our levels of punishment, our levels of detection are so low that actually the mystery as to why it doesn't happen more often, not why it happens at all. why people don't go burgling all the time, i can only assume is that they can't do the arithmetic that allows them to calculate the odds of getting away with it, which are extremely high. but if people feel they have nothing to fear and they are correct in that, almost -- one can almost say the only people to fear the british police now are the innocent, then this is is this sort of -- that britain has gotten too soft and squishy toward criminals? >> there's something in that, although actually crime has fallen quite sharply in the last is 20 or 30 years. i think the really interesting question is, can that liberalism produce a kind of tough love. >> but theodore darlrymple, you would say the tough love should be a kind of traditional tory police -- tough policing, correct? >> well, i think that's one of the things that can be done. but i'm obviously one doesn't want a society in which the only reason people behave reasonably well is because a policeman with haul them off to prison the moment they do something wrong. that's probably not entirely practicable. but what we must not also forget here is that the -- these people grow out of a culture, and that culture is not confined to them. every british town and city, every friday and saturday night is a scene of debauchery and potential violence. this is not an exaggeration. i see it in my own little town. the only thing that the counsel can think of doing in the face of repeated vandalism by drunks at 2:00 in the morning is to extend the licensing hours to 4:00 in the morning. if we cannot even deal with something like mass public drunkenness, which actually is easy to deal with, if we can't deal with that, we're not going to deal with more difficult social problems. >> david, what about another cause that people look at? and i've seen some mention of a paper put out by the center for economic research and policy which looks at austerity measures over the last hundred years and says every time you have sharp cuts in government budgets, sharp cuts in social services, you see rioting and instability. i'm summarizing a very long paper, but that's the basic idea. do you think the british budget cuts are in some way responsible for this rioting? >> no, absolutely not. the truth is the cuts, such as they are, have not begun to bite yet. they're in their infancy. a lot of money has been spent on the inner city in the last 15 years. in conditions there, both economically and in terms of education and in a sense sort of socially and culturally are miles better than they were. it's a great challenge. this is not a normal policy issue that can be solved by policy wonks. >> theodore, finally, let me ask you, what david is suggesting a actually a remarkably conservative idea, that there are cultural roots to this violence. is there a cultural solution to it then? >> well, in the long term that's the only solution to it. so i agree with him wholeheartedly that it is a culture. but it's a culture that has actually come, i'm afraid from intellectuals. >> so david, it's your fault. >> i don't think that's entirely true. i think at least the black side of this -- it has a perverted root in a genuine struggle for justice. i think some of the -- a lot of that -- a lot of those struggles have been won. but the grievance has been preserved by kids who just don't know how lucky they are. >> we'll have to leave it there. this is a fascinating conversation. i certainly hope it's a one-off. we will have to see. gentlemen, thank you very much, very much appreciate the conversation. >> thank you. >> we will be right back. review ms. cooper's history. and i want to see katie before she goes home. [ male announcer ] with integrated healthcare solutions from dell, every patient file is where dr. ling needs it. now she can spend more time with patients and less time on paperwork. ♪ dell. the power to do more. what if we designed an electric motorcycle? what if we turned trash into surfboards? whatever your what if is, the new sprint biz 360 has custom solutions to make it happen, including mobile payment processing, instant hot spots, and 4g devices like the motorola photon. so let's all keep asking the big what ifs. sprint business specialists can help you find the answers. sprint. america's favorite 4g network. trouble hearing on the phone? visit sprintrelay.com. yup, we had a good year at chevy. they gave us a consumers digest best buy award. then they gave us an iihs top safety pick and you... well, you gave us your approval. so we thought, why not give a little back. the chevy model year wrap up. get in on our greatest model year yet. and now, very-well qualified lessees can get a low mileage lease on a chevy cruze ls for around $169 a month. our greatest model year yet is wrapping up. but sometimes i wonder... what's left behind? [ female announcer ] introducing purifying facial cleanser from neutrogena® naturals. developed with dermatologists... it's clinically proven to remove 99% of dirt and toxins and purify pores. and with natural willowbark it contains no dyes, parabens or harsh sulfates. dirt and toxins do a vanishing act and my skin feels pure and healthy. [ female announcer ] new purifying facial cleanser from the new line of neutrogena naturals. what makes us number one in motorcycle insurance? we love bikes. we love riders. and most of all, we love to ride. perfect hair every time. leading the pack in motorcycle insurance. now, that's progressive. call or click today. [oinking] [hissing] [ding] announcer: cook foods to the right temperature using a food thermometer. 3,000 americans will die from food poisoning this year. check your steps at foodsafety.gov. [ male announcer ] want to pump up your gas mileage? come to meineke for our free fuel-efficiency check and you'll say...my money. my choice. my meineke. this week the dalai lama stepped down as the political leader of tibet. that brings us to the question of the gop challenge. what makes the new thibetan pm different than other heads of state? a, he's 9 years old, b, blind and deaf, c, doesn't live there, go to cnn.com/gps for ten more questions. check out our website and find smart interviews and takes of our favorite experts. you'll find our favorite shows on there. if you've missed one, will you find it. follow us on twitter and face boong. the events in london this week reminded me of a book that explores britain and it's our book of the week. it's bill buford's "among the thugs." britain successfully got that problem under control. can they fix the current problem? read this beautifully written book for some insights. now for the last look, the adventure of vladimir putin. why most world leaders were drowning under multicrisis this week, vladimir putin went diving with tv cameras rolling what is that? he discovered these two ancient

Related Keywords

New York ,United States ,Peshawar ,North West Frontier ,Pakistan ,Japan ,Shanghai ,China ,Germany ,Afghanistan ,Brazil ,Boston ,Massachusetts ,Minnesota ,Beijing ,Indiana ,Syria ,Brussels ,Bruxelles Capitale ,Belgium ,Washington ,District Of Columbia ,London ,City Of ,United Kingdom ,Connecticut ,Harvard University ,Iowa ,Hong Kong ,Bank Or ,Switzerland ,Karachi ,Sindh ,Americans ,America ,Chinese ,Afghans ,Pakistani ,Britain ,German ,British ,Swiss ,Syrian ,Pakistanis ,Japanese ,American ,Barack Obama ,Carmen Reinhart ,Al Qaeda ,Dalai Lama ,Richard Holbrooke ,Paul Rogoff ,Ken Rogoff ,Tim Pawlenty ,Vladimir Putin ,Fareed Zakaria ,Kenneth Rogoff ,Paul Krugman ,Tim Geithner ,Jonathan Chait ,Ahmed Rashid ,