 Well, good morning everybody. Thank you very much indeed for making it. I'm tempted to ask who is here on the way back from the Google party Given how late it ended But you don't have to declare your hand at this stage Let's get going because you've been good enough to turn up bang on time So it's our duty to to start on time as well and others will will join us but there are already 400 people out there watching this online and My experience earlier in the week is that that will build up very quickly And one of the things we would like to do is as part of this session, which will last literally one hour is To ask you to engage if you'd like to there is a hashtag up there hash weff pundits and We can Harvest your ideas from the floor and I'll come to you at certain points if necessary But we'll try and get some of those ideas into the discussion Your words of qualification your words of concern and indeed you may disagree with everything that's being said on the platform I have to remind you Kishore was here last year that this time last year on this Saturday morning Egypt was unraveling everyone was watching their iPad ones at that point Watching live streaming from Takria Square and obviously the question then was going to be what would happen Would it happen in Libya might it happen in Syria elsewhere? No one predicted anything of what has taken place would happen. So predictions pundits professors How accurate can people be it's a wild world at the moment and I'm in the news business and None of us can really foresee what's going to happen this week let alone next month or next year But there are certain trends and that's what I'd like to pick up black swans. We don't realize what we don't realize Well, let's hope from the platform that they realize the kind of things We're not realizing at the moment. It's the speed of events, which I think is taking us all by surprise It's the 10 years of history in 10 months is the way I would categorize The last year and I'm struck as well by even how the chiefs of defense are beginning to warn Whether it be the chief of defense in the United States General Dempsey or General Richards in Britain that it's no longer terrorism that that is the threat its social unrest and the implications of economic problems on Security in their countries and particularly what General Dempsey has issued a warning about for Europe So there is the hashtag. Matias at the back is harvesting that. Let me just remind you. I don't think I need to Who is here? We have Tom Friedman from the New York Times Kishomah Babani From the Lee Kuan Yew School in public policy in Singapore Gideon Ruckman associate editor chief foreign affairs correspondent a Commentator of the Financial Times Nouriel Robini Professor of economics and international business you all know him. He was on our BBC debate yesterday and Bob Schiller The Arthur Oaken professor of economics at Yale. Thanks all to all of you for for making it as well I'm not going to ask them to start to give a five-minute summary where they think the world is going to go I'd like to start putting some issues to them particularly. I think The issue of power and leadership which has come through in many of the consultant's reports here many of the discussions leadership Really struggling with the kind of models and realities of what is unfolding at the moment and the capacity of leadership The abilities of leadership at the moment Kishore you teach people how to do good governance What is the capacity of leadership? Let's go through all of you are on leadership, please. Well, I you know As you know There's too much euro pessimism In the world and my goal is to balance it with Asian optimism and The reason I guess to answer your question Why Asia is doing relatively well is because of a very quiet kind of unpretentious on How do you say? Constrative leadership, you know and let me just illustrate with just three ways and how this leadership is making Asia much better place one There'll be no major wars. In fact the likelihood of wars in Asia is probably the lowest has ever been Except of course if you include Iran and the United States Which of course if it happens incidentally would be a major geopolitical gain for China if the United States affects Iran But throughout most of Asia Wars are disappearing because leaders are connecting Secondly, even though there's rising inequality in the world The long-term trend towards less and less poverty is continuing In fact, the one of the few UN millennium development goals that the world will meet is the halving of global poverty by 2015 The trend in 2012 will accelerate and China and India will continue to contribute enormous numbers in terms of reducing poverty and thirdly of course The in terms of the shift of power to Asia Will also continue because the leaders in Asia Whatever else they may disagree on Actually, there's a very powerful consensus among all of them that this is our time This is our moment to make it Let's not lose it and that's why yesterday You know I chat two panels one on the future American power and the other on ASEAN and the one on ASEAN was so much better because you got from the ASEAN ministers a List of very concrete small Incremental steps. They are taking building highways from China down to Southeast Asia Having an open-skies policy, which was unthinkable three years ago in Southeast Asia Making Southeast Asia the most promising corner of the world today So there are things happening in Asia happening quietly under the screen because of the quiet Unpretentious nature of Asian leadership, but what about leadership because your country in May had an election which rather shocked the ruling PAP party? George Yeo was on the platform in Dalyan saying that this was a real shake-up moment And that therefore there's something else going on which I want to come to which is the nature of the empowerment from bottom up Quickly again, you've told us what we know from you already about the shift of power to the east But this issue of leadership and how you see the capacity of leadership and I want to open it up to everyone Whether you're in London were Washington, South Africa or Russia or anywhere at the moment this change of pressure on leadership Social media is also transforming Asia. I mean it's as you know It transforms Singapore at the last elections for the first time three ministers lost their seats in the elections It never happened before in 30 40 years and that's of course the result of the power of the social media But at the same time I can also tell you that the governments are responding to it Reacting to it listening to it and even even China surprisingly where the social media as you know is exploding The leaders in China now know that they got to pay attention to these and therefore as you know in Wukong Unusually instead of suppressing a demonstration They talk to the demonstrators and they diffuse it. They know they got to change to right Tom Your perspective particularly on power leadership the capacity of leadership at the moment Well, you know, let me just start by making one point Nick And I'm a big believer in looking at the plumbing to understand what's going on So I think you have to start by saying what what's going on in the plumbing and those of you've been on my other panels No, it's I believe the biggest thing happening in the world is in the last decade We've gone from a connected to a hyper connected world And it's actually changing everything including about leadership and I think it's changing leadership in two really fundamental ways One you could see in Tahir Square Where I was a year ago and and the other you can see in two news items that Coincided fairly closely together this year And one involved Netflix and the other involved Putin The Americans the audience are familiar with Netflix. It's the Amazon.com of a home home videos Incredibly fast-growing hot company Really, you know one of the hottest in the last couple of years Netflix CEO decided this year that he wanted to change their business model and change their pricing model and Simply announced it one day. They lost 800,000 customers in 48 hours Because their customers said excuse me I mean you may think you're still in a one-way conversation, but we're in a two-way conversation now And I think that's the biggest change that leaders around the world are discovering That the days of a one-way conversation whether you're the prime minister of Singapore the head of Netflix or In the in the case of Putin the prime minister of Russia because a few weeks later Putin basically said the same thing. I think that gosh, I think I'd like to have another eight years here and I think I'll be president next time and The Russian people said excuse me You're in a two-way conversation here now. Not just a one-way conversation. So that's the first I think big change with leadership We are all in two-way conversations now Second thing I would say and this you really saw in Tahir Square I have a friend Kurt Carlson who runs a SRI Stanford Research Institute and Kurt coined an idea which I've labeled Carlson's law and again the basis of it is the hyper connected world and The way I put it is like what what Kurt says is that the more connected the world becomes the more Everything top-down becomes dumb and slow and the more everything bottom-up becomes smart But chaotic okay, so you really saw this in Tahir Square Mubarak was dumber and slower every day than the day before The crowd in Tahir Square was smarter and more chaotic as I saw more innovation in Tahir Square in 18 days Then I saw in 18 years in Egypt and I think the challenge for both political leaders and corporate leaders is To understand the power of what can now be communicated and and generated from below And and meet it in the right place. That is the sweet spot for innovation now Whether it is policy innovation or economic innovation is moving down It's no longer this top day. It's actually moving down That doesn't mean though. It's moving and some of these social movements have discovered this it's moving all the way down We're a leaderless movement. Well, we've discovered that a lot of these leaderless movements end up like a leaderless movement That is that they they really don't go anywhere But I think that where you're going to see effective models is where leaders unleash enable and empower What's coming from below meet it somewhere with a vision of their own and Generate it in another direction, but the sweet spot for innovation in policy I think and in politics is moving down. Well, let's continue looking at this trend Look at what happened in Congress was so per with the massive Upward pressure within seven days the same thing happened in India with Anna Hazara It's happening all over the place and with what kind as well again move forward on this giddy in your perspective when it comes to the What what is the pressure now particularly on foreign governments and including a government in Britain? Which was under enormous pressure during last August when we had riots in the center of London Well, I think we are in a kind of fragile social moment in In Europe and arguably around the world that's it's been quite interesting that it's it's ephemeral and hard to To pin down but clearly there is a some kind of global mood of unrest collected to Tariah Square and You know then you saw in in Madrid that the people who occupied the square there actually perhaps rather Pretentiously but claiming the mantle of Tariah Square saying we're doing this here And then you had unrest in in my own country now in Russia You have a palpable nervousness in China. You had problems in countries as diverse as Chile and Israel And one of things that interests me is that I that in different ways both democratic and authoritarian governments are struggling to cope with this so that In Europe you've had a kind of admission of failure by the governments of Greece and Italy where they had to bring in technocratic leaders who are unelected to try to sort out the economies because It was felt that the Berlusconi and the the the Greek government's were not doing the job And that clearly has slightly worrying implications for those who hope that elected governments are capable of sorting out the economies And there's also the question of what happens if the technocrats fail if we then move back to a sort of You know the next election in Greece in Italy And if if if Monty and Papademos have not been able to produce the changes where do people turn to then so there's clearly Problems in in the functioning of of elected democracies in Europe and yet I Don't think you're seeing what you might see under other circumstances the kind of swing to people saying well Perhaps the authoritarian way the Chinese way that's the way to do it because they're not coping very well Either people are out on the streets of Russia. You've had a you know Obviously the Arab Spring sweeping away authoritarian governments in North Africa So that there's a crisis of confidence in democracies in Western Europe But simultaneously you could argue that we might be at the beginning of another wave of democratization beginning in North Africa And who knows where it spreads next? Bob what about the implications for economic policy here with the pressure From the street if you like in the way that we've just described nor a rabbini Well, the other speakers spoke about new power and new leadership coming to say from social media But there is also a crisis in traditional power and leadership both at the national level international level take the eurozone You have 17 countries 17 governments 17 coalitions They cannot agree even within the wrong coalition within the wrong countries that along coordinate the necessary action to be taken at The international level now what happened has been the last decade The G7 became obsolete the club of the industrial countries because we realized that to resolve Global economic financial fiscal issues. You need to have also the systemically important Emerging market at table now we have G20 that is the body of international policy governance where you have half of them Being emerging markets But to me as I pointed out in a article I wrote with you and Bremen for affairs last year This doesn't look like a G20 world It looks like a G zero world because on all these fundamental issues that require International coordination. They cannot be resolved at national level. There is disagreement and there is no leadership There is disagreement on monetary policy whether you should ease our Titan on fiscal policy on exchange rates on how to resolve global imbalances and how to reform the system of regulation supervision of banks and other financial Institution how to change the international monetary system and the role of the US dollar on global climate change on International trade on energy security on food security let alone on the geopolitical issues in the world From the Middle East Iran Korea and you name it so live in the world in which you have the rise of many powers The US cannot impose any more his own will used to be truly a G1 world not a G7 world You have other powers rising and that's good, but on all these fundamental issues we have massive disagreement So it's a world in which actually there is a situation of chaos that can lead to conflicts like currency tensions Leading to currency wars and eventually leading to trade wars. So that's the world we live in is a world of G zero So there is it not only there is a pressure coming from social media and the power of that one But traditional kind of power and leadership is fragmented and is divided and there is conflict across countries I Should just intervene and say because red kettington who's sitting in the audience a good panelist You're doing well at the moment, but where are the women panelists the occupied panelists I can't answer that we have a panel which was pre-ordained by others elsewhere So take that up with other people, but I hear your point Bob just picking up again on power And the impact on economic policy But we're talking about leadership here, and it sounds like a lot great goal a great thing, but what is it and I'm trying to think in terms of Sociological theory I'm thinking that Emile Burt Durkheim a hundred years ago wrote about the collective memory that we all remember the same things Now I think it's collective memories now. We have different internet communities were fragmented, but people Surprised me I meet people from a different community and they don't seem to know basic facts that I know so one thing is Another term that comes to my mind listening to you is Galbraith who wrote in 1957 about conventional wisdom and how about how pundits have a Impulse when they get up on stages like this to repeat what everyone already knows So and and it reinforces a collective memory where we forget Basic facts that might invigorate our thinking so it seems like leaders have to be How else can you be a leader you have to be a scholar or a student of history and you have to have time and That's what it's a bit. It's about Leadership is a personality trait that some people have which is to think about issues to spend time Understanding and then to just flout conventional wisdom and say it that's the only thing I can think of is is what a leader is And then somehow in our society another psychologist Stanley Milgram referred to an instinct for hierarchy We look we have an instinct for that. We're looking for that person Who is thinking independently? Unfortunately, most people who appear on stages like this don't have time to think independently Well one last comment about where we are now I was just talking to someone running for the US Congress and she was her experience was you know I don't have any time to think because I spend all my time raising money for the campaign And she said apparently in Congress. It's the same way after you get there. You don't have time to think You can't be a leader unless you have time to think and time to develop yourself as having an independent well informed judgment I really does anyone want to come in on this issue of leadership particularly if you're a woman Please microphones around otherwise. I'll keep going Can I have a little more light in here actually? It's very difficult to see Who is sitting there, but let me keep pushing this because Steven Kehoe? For example has tweeted does Kishelma Babani believe China will allow a freer social media in the next five years What would have to happen? But I'd like to keep asking all of you how our leaders going to cope with this speed of the pressure From the street whether it be the injunctions in Britain to stop footballers being named Over alleged affairs or whether it be the critical nature of politics and the pressure from from from the bottom up Gideon and please do disagree with each other. Well, can I just inject a note of skepticism? I mean, I think obviously what's happening with social media is incredibly interesting and so on But we sometimes talk as if you know, there was never a revolution in the past You kind of wonder how they managed to storm the Bastille without without Twitter You know The social media are are enabling people to connect in new ways, but you know There was a revolution in Egypt because people were unhappy with our economics at the speed Yeah, but the point is that it Manifest itself in a different way because of the speed of connection But we've had revolutions for centuries and they and they happen for similar reasons Which is that people are unhappy with their economic and social circumstances, you know tyrants are Where out there welcome and so on so the social media are a form of mobilizing and a form of expression and I'll go a little further Maybe they're away They make mobilization easier so we'll be seeing more of it But I think we should be wary of saying we're in a totally new world, you know We have had social and political upheaval for centuries Kishu and I have to press you you come from a country where this is not a comfortable issue for the for the leaders In Singapore, yeah, can I why do we challenge the questioner? Who asks whether or not? China will allow more social media because that reflects the Conventional Western wisdom on China, which I'm let me let me be extreme and say it's completely wrong And why do I say it's completely wrong because there's this Western assumption That is that are 1.2 billion People in China who being oppressed by a heavy despotic Chinese Communist Party and all they want to do is rise up and revolt and get rid of the Chinese Communist Party excuse me the last 30 years of China's development Have been the best 30 years that the Chinese people have enjoyed in almost 200 years The improvement in standards of living and quality of life in China For almost a billion people has been unimaginable and you may be surprised to learn That the majority of Chinese people are actually very happy With the trend of history that is happening inside China. Yes, they have problems. They have questions. They have challenges But this idea that somehow or other all of the world is just rising up to revolve I think doesn't understand that there are different streams of history happening in the case of China and certainly in the case of Singapore Since you mentioned Singapore, it's true that the ruling party lost votes But excuse me, they still got 60% and they won all the seats in parliament except six So they were surprised by the impact. They were they were absolutely surprised But the good news that I'm actually very glad that the ruling party in Singapore not just surprised I'm glad that the ruling party in Singapore got a shock Because that shock was a useful wake-up call and it's how you respond to that wake-up call and believe me All over the region in Asia, people are talking about this and they realize that they're dead By the same time I must emphasize one very important point to a Western audience, okay Within the Asian cultural fabric And I'm making a big point here There is an awareness that the role of government is important People are not trying to overthrow governments. They're trying to improve governments And that desire to have a stronger better government is part of the Asian culture psyche people would disagree with me But I'm telling you that's how it works. Please disagree Tom What's the question? I'm sorry. Well about how how profound this is going to be and how how significantly or not The leadership class will respond in the next few weeks months We'll be seeing this in Russia at the moment. We're seeing it elsewhere as well We may see it in France. We may see it in other parts of Africa Yeah, well, you know, I just to pick up on on some things that The other panelists have said, you know At the end of the day bang bang beats tweet tweet Look at Syria Look at Egypt There are still all the traditional indices of power and let me just come from Egypt one of them is Simple rules of economics like how much foreign reserves you have in the bank. Um, and right now, um, the entire Egyptian Uprising is imperiled By the the fact that the the government is going to run out of money number one and number two by Some much longer term laws of gravity. Um, you have in Egypt today the most dangerous Uh cohort in the world the educated unemployed who aren't really educated Um, not because of any problem on their part It's that they have not been exposed and given the chance to really get the kind of quality education and the tools one needs To thrive in modernity and and so I think You know after maybe the flush of this year and the Um, uh of all the uprisings may maybe make no predictions But maybe what this year is going to be about is the traditional laws of gravity asserting themselves on all of these movements On the economic front bob and nurel. Do you believe the traditional laws of gravity are going to apply? By the By the traditional laws of gravity, you mean coming back to the usual. I'm picking up what tom has said. Yeah Okay, the the question is will we be Will there be this seems to be of taking me off topic here? I'm not understanding what you're asking Well, what tom has said what tom has said is that with the traditional laws of gravity are going to apply Once we've been through the unrest created by social media or the or the or the new pressures And I'm coming back to you as an economist and asking are the traditional laws of gravity going to apply In the economic field as well as I'm asking you to predict what's going to happen in the next year Um, if I could start you know on that point, I think yes because um social media and protest and inequality led to these revolutions in the Middle East And that's good and they want democracy But there's not just a demand for democratic rights But there's also a demand for having jobs and higher income and welfare and whatever But the reality of the laws of economic is that takes decades in which you invest in human capital in physical capital In infrastructure you save more so that the economic pie grows higher and therefore everybody can have Higher per capita income one of the things happening throughout the Middle East right now is that the pie is small Everybody says I want a bigger piece of it. So the public employees are striking. They want higher wages The every private employee goes on a strike once higher wages Wages are higher Public spending is higher you finance it by printing money Eventually you're going to have a currency crisis eventually you're going to have a inflation crisis Eventually you're going to have a sovereign debt crisis. The point is that the demand is not just demand for political rights Everybody through the internet can see how we live and they want to live the same way But we know that the economics laws of gravity imply takes decades of investing in the future Like it happened in istasia where there was savings there was investment Education public role of the government until you had the bigger pie And I think that even in the success stories take the transition of eastern europe It took a decade of social political turmoil crisis bad currency financial until they got stabilized Right now because of the pressure of social media everybody wants a job Everybody wants a higher income in egypt in tunisia in libya in yemen in syria and so on and there'll be a delusion Because one thing is to change your resume one thing to have democracy and the day after there are still no jobs There's still no opportunities and there's a gap between what people want now and it takes 10 20 years of achieving it And that's going to be a source of social and political instability that's going to negatively affect economic growth So that's the thing we have to face, you know, just if I can pick up just to reinforce norio's point So I was in egypt for the last day of voting Um and in the last round of in the round of parliamentary elections I went to the poorest neighborhood in cairo a uh all women voting station They've they've segregated voting stations in some of these neighborhoods and interviewed Women who had just voted all of them were covered 99 percent of them we interviewed dozens Voted either for muslim brotherhood or soliface and then we asked why Jobs we're they're going to deliver jobs. They're going to deliver better roads They're going to live better schools They're going to deliver better security had I closed my eyes and this was a focus group You know, I never would have known I were speaking to people with a With a religious background and I think what norio said this mismatch Between what it will take And and and where they are starting from I think it's going to be a lot of what the story is about this year All right, there's frustration already being add on the tweets that you're not predicting enough So I'm going to press you on predicting Bob Your question took me back because we were transitioning from deep questions about Communication in society to the outlook economic outlook and there's a tendency for us to view those as completely separate things At least if you talk to professional forecasters who have their computer models They won't talk about the issues But so what you're prompting me to do is consider these together And the irony about the current economic situation is that a good part of the cause of it is Really sociological this is something that I firmly believe And economists don't confront that often enough So can I persuade you to predict then what that means for the coming year? It's okay It's not just that any the problem the reason norio is so good at that is he takes account of A whole host of things and it's difficult to do that problem It's not just based on sociology. It's based on european balance sheets as well But if you ask for my prediction I think that the eurozone Is going to be in recession this year It's going to be worse than the minus point five percent that the imf predicts the us may not the world may not It's not going to be a great year though Norio, can you out doom that prediction? Well on on prediction in forecast yogi bearer used to say it's very hard to make predictions Especially about the future so And there's even you've made it but you you've made a business out of it and And the other joke is that god created Economies to make astronomers and weathermen look good in terms of predicting the future as well So subject to those two caveats I would say some of the complexity making prediction right now has to do with economic and financial complexity first of all Secondly that Social and political factors matter and there's a complex interaction between macroeconomic developments market reaction Endogenous policy responses and how it fits with the real economy and the markets So we live in this very complex world and certainly because of News being so much faster the internet social media and also trading being much faster The interactions and the complexity becomes much more difficult to make if I to make predictions, I would say The biggest one is that in my view the eurozone is a slow-motion train wreck Not only Greece, but the other countries are insolvent and will have to Restructure cursory their public debts probably private debts as well And to that probably not all of the members of the eurozone are going to be able to stay in the eurozone But at least a couple of them and I would say first Greece maybe Portugal are going to exit from the eurozone If I would say Greece in the next 12 months Portugal might take longer But if a couple of the smaller country exit the eurozone survives If it gets to the point in which the disorder affects Italy and Spain in terms of that restructuring or eventually exit the next three years So you'll have a breakup of the eurozone and when you make prediction You have to assign also probabilities because they're all scenarios And I would say there is in my view at least a 50 percent probability that over the next three to five years Not the next two months 12 months the eurozone might actually break up Let's tell the eurozone get in Yeah, I mean I think that's as everybody says that the interaction Between the economics and the politics is where the kind of action lies in Europe I think that on the political side, we'll see a couple of things happening Firstly, I think you will see A radicalization of politics in a number of european countries I mean, I think one of the striking so far is that that hasn't happened that much So that you see in Spain even though they're under enormous economic pressure They move from a center left to a center right government same in ireland But if you look at opinion polls now in a lot of the countries that are under pressure And actually even in the credit of countries the countries that are writing the checks You see new radical forces coming up. I was just in in the netherlands earlier this week And the far left and the far right the predictions for the next parliament is that they will get over a third of the seats And we're talking kind of Marxists and you know the freedom party, which is anti-islam anti-immigration In fact, the socialist party, which is the equivalent of what we're called in britain socialist workers are now top of the polls in the netherlands And in Greece you have again far left and far right with about a third of the vote So I think if we have a continuing economic Near chaos in these countries, it's very difficult to believe that's not going to find political expression In elections and otherwise and I think the other the other trend to look at I'll be briefing it, but is the Potential for a backlash against the european union because if you talk to people in brussels and in berlin and so on They say well the answer to all this is more europe and you're seeing that indeed in the front page of today's papers A german demand for a commissioner to go into greece and essentially run their budget makes their tax and spending decisions I think that's explosive. I think once you get to that kind of encroachment on national sovereignty in europe The potential for the unraveling not just of the the euro, but of the kind of political structures that underpin the european union It's really quite real will there be an expansion of the bailout fund Look, I don't understand how they get to these numbers anywhere. They double count and so on. I mean, I think that There will be a small expansion probably in europe But it won't be enough and then a lot of the action will be in the imf Can they can they get other parts of the world to chip in will they be willing to But I you know that what we've seen so far is that they keep come saying We've got this big bazooka. We've got this huge figure the markets will be overwhelmed And they're just not and so then they have to come back with an even bigger figure and So they've never really had enough enough credibility Tom Friedman, the issue of the eurozone guidance saying yesterday It's still a matter of anxiety in the united states. Where do you see this going? Do you see a slow-motion rain train wreck? I'm going to pass on that. I just don't know enough about the eurozone to make any predictions Well, I'm glad that Nouriel spoke about the slow-motion train wreck because if the eurozone can somehow the stumble through And the world economy doesn't come crashing down Then I can tell you from asius point of view. It'll be another good year China will grow by eight to nine percent India will grow seven to eight percent indonesia will grow five to six percent and the region as a whole I can tell you the one big change that is happening As a result of what I call the western financial crisis of the last three years Is that more and more asians beginning to realize that to get growth? They have to rely on more and more themselves And more and more the region So china is trying to stimulate internal domestic demand Within the region I can guarantee you that if you measure the trade flows at the end of 2012 within asia They'll be higher than in 2011 And within the region. I think you'll continue to see The sort of positive movement forward as long as the global economy doesn't come crashing down as long as you have a slow-motion Processor the rapid train wreck but you're you're talking about resilience. Even if there is What christine lagarde is warning of is a 1930s moment approaching and also the global economy in the danger zone, Nouriel Um, yeah, I agree with the IMF and my Outro actually for this year is even more bearish. I think in the eurozone you're gonna have a very severe recession Not just in the periphery, but the latest number from france, germany fourth quarter suggest a recession outside of eurozone The uk's in recession The u.s. Economic growth is an amix up par below trend if you look at even the headline Yes, they have fourth quarter growth. They said it's 2.8 percent good news Two out of that 2.8 was an inventory change Final demand actually was going 0.8. That means in the first quarter of this year We might have close to negative economic growth. So even the u.s. Is not doing great Emerging markets and asia are doing fine, but I was recently india Significant slowdown of growth and they worry about it and even in china right now Exports are slowing down because of the eurozone problem Real estate commercial residential is slowing down sharply and deflating And even infrastructure spending was boosting growth now is slowing down because the railway ministry is bankrupt The provincial governments don't have any more the revenue from land sales and many of these SPVs that finance the infrastructure progress projects are also bankrupt So there'll be a significant slowdown of growth of china now This year we muddle through maybe because we're kicking the count on the road We're kicking the count on the road in the eurozone where we're not making the tough choices of saying a few counties are insolvent Let's restructure their debts. Some kinds cannot belong to the eurozone. They should exit We're kicking the count on the road in the united states where there is zero progress on our fiscal deficit Democrats vetoing spending cuts entitlement reform republican vetoing tax increases Eventually is gonna Be a payback especially next year. We'll have to face tough fiscal choices And even china because of their own political transition They have to choose the new premier and the new president at the end of the year is kicking the count on the road The model of growth of china as their own premier said is unsustainable is unbalanced and it's cannot continue this way Is unequitable as well too much exports too much fixed investment too much savings Not enough consumption and they keep on saying let's raise consumption share gdp for the last 20 years Not gone up has gone down and eventually even china could have a hard landing So maybe model through in 2012 but 2013 could be a perfect storm where you have a full eurozone crisis Where the fiscal problems of the us come to a head and where china keep on kicking the count on the road Cannot do it any longer when there is an investment bust and you have a hard landing in china as well Can i just check do you have any positive predictions? Well the positive predictions in my view are about the long run Keynes was saying in the long run were dead But the reality is that we could be dead in the short run because the eurozone crisis the us problem The chinese could lead to another global financial crisis and recession in the long run There are good news emerging markets is a long run story of higher growth and so on Technology, you know whether it's et energy technologies or bt biotech or it There's a huge amount of stuff is happening The balance is in the pnl of high-grade corporates are strong in the long run globalization and international trade is going to be beneficial There is so much new innovation coming from social media web 2.0 3.0 artificial intelligence You know cloud computing lots of good stuff could occur in the long run the problem. We might not be Alive in the short term might be that we don't resolve this financial problem. The long run looks brighter But we have to get there What about the let's pick up on what nurl has just said about the potential now for a hard landing in china tom Do you want to come in on this? Well, you know again i Who knows i i'm not going to make any predictions about that But you're here to make predictions. Yeah, well then then i'm in the wrong place you signed up Actually, they made me come um You know just what what strikes me and listening to to what nurl said and others is that You know if the world were a table with four legs the american economy the european union the arab world And china india what strikes me right now Is that all four legs are really shaking and they've never been more interconnected and interdependent and um So you know i can't speak to china all all i can speak to is Why i've been arguing it is so important that in such a world America gets its act together and address its own fiscal imbalances because there's every time we needed a stable american economy it's now And uh, there is one thing i will predict between now and our elections That's very very unlikely to happen absent a A crushing global crisis that basically forces us to address this and so what i fears will be back here a year from now We will have done nothing and the whole will be that much deeper I get in the issue the potential Wait a minute. Let me just ask you in first because i'm going to come back to you with another question Kishore, I'm getting this issue of a potential hard landing in china Well, uh, like tom i'm cautious about saying anything definitive about that. I mean clearly if you go to China you can see with your with your own eyes even in booming cities like like a Shanghai or Beijing that there appears to be You know, we've had good reports in the ft about huge empty apartment blocks about shopping centers Uh, that don't appear to have any customers So there's there's been a building boom and that will work itself out But I think if you are growing at uh eight to nine percent a year There's it's a slightly more forgiving environment in which to have a um financial problems because you can kind of absorb them amidst the general kind of growth Whereas if you're in an environment like the the uk or The eu Deliveraging is much more painful because the the trend growth is slower. So I'll just say that it's easy to to point to instabilities in china and They're clearly there But I've become skeptical about these predictions of imminent disaster in china because I've been hearing them for so long You know, I used to edit the asia pages of the economists in in 95 to 97 We were always saying china was about to crash You know, there were problems in the state and enterprises and so and I think I have a Still have a book on my shelves called the coming chinese bust and it was written in 1992. So, um You know, one doesn't want to be over sanguine. Obviously that there are difficulties in in the chinese economy But I suspect you're not going to have a hard landing Uh, kishore you I know you want to intervene, but I've got a tweet here from peter goodman, uh, if Mabubani honestly believes the chinese adore the ccp. He needs to get out more democracy abstract Land rights wages corruption. In other words, you're far too rosy about china Well, first of all, let me this is a fact. Okay, you can all check this fact use your google use whatever instruments you use Go back in january 2009 At a time when the world economy was supposed to go over the cliff Read what every western economist said Would be the china's growth in 2009 The figures range from minus 20 percent minus 10 percent maybe 1 percent And in that year china grew by nine or 10 percent India also grew by eight to nine percent. So be careful of what I call conventional western wisdom Now on china, I by the way, let me just emphasize for the record. I'm not a defender of the chinese party But I would like people to get in touch with the social and political realities of china However comfortable or uncomfortable. They may be if you have a country of 1.3 billion people and you don't have a few thousand protests daily Is not normal. They've had protests daily all the time It's about how you manage and handle crisis all the time And the one thing that the chinese communist party has done, which is quite remarkable Is that it has transformed itself. It is today Probably one of the most meritocratic political parties in the world And the quality of economic management and I've observed this going to beijing over the last 20 years The quality of mind of the professionals for managing the economy has grown by leaps and bounds They are aware of every negative prediction that comes china's way And everybody who by the way says that china's about to crash is doing china a big favor because and then they then sit down and analyze it Thoroughly to say he must know something. We don't know. Let's study his prediction And guess what in the course of studying it. They then realize this is how we react We've got 15 minutes to run. Let's move on to some other things iran tom The assessment at the moment. We know that to the iaa has said that they're up to 20 percent enrichment There appears to be a narrowing window particularly with the movement of the centrifuges into the mountain near com What's your assessment of the israeli options the american options the european options And where this could go because the critical window is within the next 12 months Well, there's no question that israel is keeping his options open They've they've made that very very clear and there's no question that the united states has made clear to israel But it does not want to see israel attacking iran right now At not only at this fragile moment in the global economy But also because the consequences could be so unpredictable and the deepest deepest american fear Is that israel would start a war with iran that america would be forced to finish And um So all i can point to nick are these two hugely countervailing Impulses out there right now You you read what barak and netanyahu have said they see themselves as responsible for the fate and future of the jewish people Nothing less than that as they've described it And that they're going to have to make they they argue a decision about iran because they believe iran Acquiring a nuclear weapon is an existential threat. I don't think that assessment is entirely shared by the united states But whether it is or not in the next 12 months america. I think has made it very clear They don't want israel to do something That will start something they will be forced to finish do you think iran's intentions are clear Do they want to weaponize or get to the threshold and stop? um I think one can only go uh nick by by what they've done so far and that is uh to you know put themselves on the threshold One screwdriver away, but uh always be in a position of being able to um plausibly argue that they uh Don't have a weapon and therefore not expose themselves To to some kind of retaliation giddy of the political options for traction for leverage against iran We're seeing what the eu is moving towards but iran is saying back saying back if you do that we'll cut oil supplies Yeah, I mean there is clearly there's a lot going on. There's a ramping up of sanctions There's also clearly a very active covert war with You know iranian nuclear scientists being assassinated strange computer accidents and so on I would say, you know, this is a debate that people who've come to davos They have every year, you know israel is israel about to attack and so on I was about to say I think this year it feels much more pressing and you talk to some of the people who will end up having to make these decisions And I was struck that there, you know, it's it's slightly alarming how how seriously they're taking the prospect of potential conflict with iran And tom was very interesting about the us one of the things that struck me about this crisis say compared with the iran one Is that the european seemed to my mind? Strikingly relaxed more relaxed than I would imagine about the prospect of a conflict with iran the french are pretty gung-ho the british Similarly are talking about it as a as a possibility. I mean it's not like they're pressing for war But they're certainly it's within the bounds of possibility that will end up with in conflict They're thinking about in those terms does anyone want to come in on iran with any further insight at all? Please write at the back Again, we're looking for predictions Yeah, my only comment is that in the 20th century We had preemptive behavior. So the soviet union decided that Eastern europe is a threat and so they invaded Similarly america went into let's say vietnam And ultimately nobody in america today would argue that there was a smart thing to do So I would have thought that we now have Global institutions in terms of the united nations whatever we may think about the un security council and the ability to act Should not the un security council We're in the situation on both the players. All right. Good On the can can you come in a tour with any contribution? Bob or norio on the economic impact if there were to be if this were to go into a conflict Can I say one thing and please tell me a question which is you know What strikes me about this moment is that the party that actually has the most ability to Influence iran right now, of course is china Huge customer for iranian oil and gas and if the chinese actually went to taran and said You know, we we want you to uh, you know put your program under You know tell to you in supervision and fulfill these Obligations reassure the world that's the only chance it could happen now What's ironic and I don't think the chinese have fully woken up to small news story that happened came out last week And the states america became a net exporter of oil last week And I don't you know, there's a real shift happening here. We're out of iraq We become a net exporter of oil and with all the gas and the fracking issues coming up The chinese are more and more dependent on iran, but they're still in that kind of mode of you know We don't do diplomacy and I think they're gonna have to wake up to this one norio I cannot predict whether either us is gonna attack iran, but the only economic implication I would say Most likely all prices will spike at least 50 percent And you can have a global recession. Let's not forget that for the last 30 years Most of global recession and being associated with a spike in price of oil that was due to a geopolitical shock in the middle east, you know the Israeli-arward yonkiput of 73 led to an olber embargo tripling of oil prices global recession in 74 79 74 75 the iranian revolution in 79 led again to cut in the supply of oil and led to the global recession of 80 81 Even the 1990 91 recession we saw in the united states and globally was driven by the fact that all prices spiked After the iraq invasion of kuey in august of 1990 And even in the last recession Let's not forget in addition to liman and the mortgage crisis by july Of 2008 oil prices not because of geopolitical risk But because of speculation other factors reach 148 dollar per barrel And the reason why we had the global recession was not just the collapse of liman and the contagious effects of it But once all was 148 dollar per barrel that was a negative shock on the income of us of europe of japan Of china of india and of any other advanced or emerging market was a net oil and energy importer And it was one of the tipping points of the global economy So if we decide that We need to attack iran Let's think about the consequence and the consequence is going to be a guaranteed global recession and a very severe one At the time there are economic and financial fragility coming from the fact that the exit from the previous Negotiation has been actually quite shaky and uncertain Let me again try to give the Asian perspective I think a nuclear iran will be a disaster For the world it will create trigger new arms race And the world should work together and I agree the UN Security Council should be involved in trying to prevent A nuclear iran So what's the best way of doing it? And here if I want to surprisingly nobody is Discussed much in Davos One of the most amazing things that happened in the year 2011 Is that for to everybody's surprise me and ma this close military regime Suddenly opened up and hillary clinton went to yangon So miracles happen now. Why why did that young? Why did that me and ma miracle happen? it was because of 20 years Of steady engagement by the asian countries With the drip drip drip process of transforming the thinking in me and ma So I suggest that that drip drip drip process can work on iran And if you can think the unthinkable, okay, and if you all agree, I think we all agree that a nuclear iran is unacceptable Why not do something completely out of the box and have the chinese foreign minister And the u.s secretary of state fly together To Tehran and say we've come here with a common message for you Believe me something as simple as dramatic as that who'd be a huge wake-up call And then you can build all the efforts that turkey and brazil and all did in the security council So there is there are other options available. Tom and giddy. Do you think that's realistic that that kind of bilateral approach From two major members of the security council Well, you know, it's certainly a I think a very legitimate idea We we need that kind of joint diplomacy at one level or another. I mean it does seem to me I'd be interested in uriel's view on this that the Sanctions are biting. I mean we've we've got iran's attention here, you know Yeah, and I can have a two things that sanctions effects are unpredictable It's clear that they are and the political effects are unpredictable It could cause iran to Radicalize its behavior. I mean you can see the way in which they're now saying, okay We're not going to export oil to to Europe. They could up the stakes themselves We're running short of time, but it brings us on to syria, particularly the role of russia particularly with the security council Reviewing it again this week after the arab league report again What's your feeling about what's going to happen in syria and what will happen to us sad tom? Well, yeah, I think the thing to keep in mind about syria is this my rule of the arab spring is the following Egypt implodes libya implodes tunisia implodes yemen implodes Bahrain implodes syria explodes We have not begun to see the full geopolitical impact of the arab spring until Syria explodes and you take out what is basically the geostrategic keystone of the whole Levant region Because what is really different about syria is that it's a big lebanon in the sense that Um, uh, you have all the countries around syria with fundamental interests in who rules in Damascus The israelis care about who's going to control the palestinians there the turks are obsessed with who controls the Kurds there The iraqis will be obsessed on the fate of the shiites there and the iraqi sunnis obviously will be very very interested in the rise of the sunnis there Um, all the states around the syria have enormous stakes in who rules inside Therefore the people inside will look to join with them to create leverage for themselves And there is the prospect if asa does not leave tomorrow of a full-scale civil war inside syria and when that happens You will see an explosion not an implosion. Can we make a prediction? Do you think or not? Can we make a pretty serious? Can there be a prediction? Yeah, all I would say is that um That I think what has been striking up to now about the arab spring is the absence of really You know G it has not in any way fundamentally changed the geostrategic map the interstate relations in the region yet I think if the lid blows off in syria My prediction is that you will see um some some real interstate tensions quickly noriel and gideon as well on syria I would say, you know, the issue goes well beyond syria in the following sense. The arab spring started in tunisia then egypt and libya syria Yemen There is still tourmal in Bahrain. There is a large minority in Kuwait that could lead to tourmal In the eastern province of Saudi Arabia The tensions now that we left iraq the three sides are starting to kill each other The tension between turk in syria turk in iran turk in israel turk in syprus The israeli palestinian issue and the risk of a military confrontation between israel and us and iran So there are lots of things that can happen in the middle east They're going to lead to actually tensions that could spike all prices even short of an outright military confrontation iran could react to these tensions by Sinking four ships in the straits and blocking the tankers. That's a potential reaction Let's not forget in the summer of 2006 There was a mild war between israel and hezbollah in southern lebanon And there was had no effect on the supply oil those worries that maybe is going to involve iran syria New name it and all prices in a matter of weeks went from 60 dollar per barrel to 80 dollar per barrel This was during the israel lebanon war and it was a minor one Right think what would happen if these tensions in the middle east are going to rise throughout the middle east All price already hundred dollar per barrel is started to bite negatively on growth Okay, it's leading to instability from nigeria to other countries that service we're facing again, but on syria particularly particularly the russian Let me attempt to prediction albeit with a health warning But if I had to guess what's going to happen I suspect we're going to end up with international intervention of some Sort in syria if Assad does not what kind well, that's a big question I mean there's deep reluctance to do another libya You know you talk to the western powers that involved they say that that's a one-off You know syria is a much more difficult case so they don't want to get dragged in But I think if it goes on and there's a real humanitarian disaster then There they'll be pressure on the west but they will try and palm it off and hope that the arab league Which is suddenly making much more interventionist noises than they have done in the past Might start Doing doing something it'll probably start with things like safe havens for refugees the turks might be involved in that sort of thing But the idea that this can just continue being slugged out within syria without the rest of the world getting involved If the humanitarian toll mounts i suspect it's going to come out an enormous pressure time is up But i'm going to keep just asking for predictions on two or three more things first of all the us election Particularly after what happened with between the gingrich and romney last last week There's an interesting tweet here will a republican president with a republican president the usa will attack iran One more reason not to let this happen. But first of all what's going to happen in the us election tom Well, you know If you if you forced me to predict um, I would simply make one prediction You know whoever wins this election will not will will not have a mandate to do what needs doing And who will win the election? I have no idea Get in I think it's looking much better for a bombardment than it did about a month ago Particularly if it's gingrich he was running against Well, I I I think frankly from the from the point of view of the rest of the world We may be better off with obama being re-elected because a second term american president Who's not running for reelection has a greater freer hand In fixing things and I actually hope that obama be re-elected bob schiller Well, I think that it's really close The irony of our elections we do all this talk But the outcome seems to be determined by the state of the economy If the economy is improving on election day It'll be obama right now. It's a toss-up. I I just can't predict one It's not gonna be a landslide either way Is it gonna be a toss-up? I think it's likely that obama is gonna win But regardless of who's gonna win the problem is that the u.s. Political gridlock is gonna be the same as before because If obama wins he's not gonna have 60 votes in the senate And the republican block everything and if romney or gingrich wins They're not gonna have 60 votes in the senate and the democrats can veto entitlement reforms or whatever else So the gridlock here is to stay in the united states france tom The french election freight. I'm gonna take another pass on that kishore You're disqualifying yourself from this panel next year you guys It's all right, bob. Let me come to the other end. Do you have a prediction for france on that? Nouriel Well, my prediction for france is that regardless of whether it's oland or sarcosa being elected The risk is that france that was supposed to be Member of the core of the eurozone is going to end up in the periphery We used to have the core or the hard core and the periphery right now There's a soft core of countries that actually may end up in the periphery. They're in purgatory and france is one of them Well, uh, actually, I mean I was speaking to some genuine french people and even they can't predict this genuine french people You know They're none of them up on the platform, but but You know they find it's it's it's splits four ways potentially the first round are a lot or a huge amount will depend on whether Marina penn manages to get through to the second round then whoever runs against her wins All right, i'm trying hard to get a prediction from the panel I wouldn't come to you first. Tom. What about russia Gideon you're about to go there. Yeah, well, I'll tell you when I've been no you tell me now Okay, um Particularly because and this is where we're bringing the whole thing back to where we started the pressure the new pressures From an empowered population You know bob schiller mentioned conventional wisdom at the beginning And I think the conventional wisdom at the moment is that putin will somehow tough it out And he will we will end up with president putin by by the end of the year But a lowest a lower support for him. Well clearly by the question is is it being counted properly? um, and You know the huge amount is going to turn on let's say the the election results is announced. It's putin He's back Does that bring people out onto the streets in in moscow and st. Petersburg and this time do they stay there? I'm not going to ask anyone else unless you want to volunteer prediction Uh, okay, um, we have to wind up has anything anyone got any wonderfully positive prediction for this year I thought I thought I began with a very positive prediction that uh, the world is going to get better and better by the end of 2012 We'll hold you to that in 2013 Um, can I say that where there is one that tweet here if the weft pundits were at the google party? They're doing very well. So even if you didn't uh, uh, maybe offer a prediction on certain things Finally, let me just ask. I know I'm being asked to wind up But emily coley curious to know what is predicted for the millennials the global shape as the next generation in the coming year Can you answer that in any way what is predicted for the next generation about should they be optimistic about And I do apologize that we haven't heard many if any female voices in the last hour But that's the way it has been this morning. Maybe my prediction for next year is this will all be women. Thank you very much indeed