an update on our top story this hour. queen elizabeth ii was taken to the hospital today after experiencing symptoms of gastroenteritis. the stomach bug. she is expected to stay at london's king edward vii hospital for two days and her official engagements this week will be postponed or canceled. in florida, demolition of the home where a man was devoured by a giant sinkhole has ended for the day. jeff bush was in his bed when the ground beneath him collapsed

thursday night, creating the 50 to 60-foot deep hole. authorities called off the search for his body saturday because of dangerous conditions. crews will resume demolition operations tomorrow. you are looking at live pictures of a brunch in selma, alabama, where vice president joe biden will be delivering the keynote address at an event commemorating the 1965 voting rights march. the vice president will join others retracing the walk across the edmond pettis bridge. it was 48 years ago this month that alabama state troopers attacked a group who attempted to march from selma to montgomery in support of what would become the voting rights act. >> cnn will follow these stories throughout the day. thank you for watching "state of the union". if you missed any part today's show find us on itunes. fareed zakaria gps is next for our viewers in the united states.

>> this is gps, the global public square. welcome to you until united states and around the world. first, was there a breakthrough in the nuclear talks this week? is a deal possible? a rare response from the iranian government. i have an exclusive conversation with iran's ambassador to the united nations. then, the automatic spending cuts have kicked in, but are they so bad? maybe not. i've got a great battle to hash it out. with italy's bizarre election results this week, is the euro crisis back? and why is silvio berlusconi so popular? we'll talk to italy's premier journalist. but, first, here's my take. secretary of state john kerry is making news on his first foreign trip swinging through nine countries in europe and the middle east. he's talking about european trade deals, about providing greater assistance to the syrian opposition and he's talking about iran, of course.

these are all important issues. but i wonder if kerry should, instead, just visited two countries on his first trip. china and japan. that's where the most significant and dangerous new developments in international relations are unfolding and where america diplomacy could make a big difference. the world's second and third largest economies have been jostling for months over territory, reviving ugly historic memories and making clear that in the event of a crisis, neither side would back down. trade between the two countries, which usually hovers around $350 billion a year is down substantially. an accident, miscalculation or unforeseen event in the east china seas could easily spiral out of control and that would mean conflict between great powers in the fastest growing region of the world. the kind of problem that always has global consequences. the obama administration came into office determined to

make a share priority, topped by its ties to china. hillary clinton's first trip as secretary of state was to asia. the administration wanted to engage china as a partner. china's reaction to these overtures was confused and muddles. beijing worried that it was being asked to involve itself in superpower diplomacy, which would distract it from its single-minded focus on economic development. some in the elite wondered if it was a trap forcing their government to rubber stamp decisions that would be shaped out of washington. as a result, beijing's response to the obama administration's initial diplomacy was cool, sometimes even combative. meanwhile in asia, many of the continents other powers had worried about a new china from japan to vietnam to singapore, governments in asia signaled that they would welcome a greater american presence in the region. one that would assure them that asia was not going to become china's backyard.

the obama administration shrewdly responded with this pivot in 2011 combining economic, political and military measures all designed to signal that the u.s. would strengthen its role in asia, balancing any potential chinese. >> while enhancing our presence in southeast asia. >> the result was to further strain u.s. relations with beijing. today china and the united states maintain mechanisms like the strategic and economic dialogue between senior officials, but formal and ritualistic. no american or chinese officials have developed genuinely, deep mutual trusts. beijing views the pivot as a containment strategy and believes that rising japanese nationalism tolerated by washington is responsible for the crisis in the east china seas. the lack of progress in u.s./china relations stands as the single greatest vacuum in president obama's otherwise reasonably successful foreign policy. whoever is to blame, the fact remains that the only doable

path to peace and stability in asia is a strong relationship between the united states and china. the two countries are not always going to agree, but they need to have much better and deeper ties. so, when he gets back from his trip, secretary kerry should start planning his next one to asia. for more on this, go to cnn.com/fareed for a link to my washington post column. but up next, iran. let's get started. expectations were not high for this week's nuclear talks with iran, but then the chief iranian negotiator said the meeting had been a turning point. and secretary of state kerry called the talks useful. by the standards of these meetings, this is giddy optimism. so, what happened? and what can we expect in the next round of talks? joining me now in a rare and exclusive interview is iran's

ambassador to the united nations mohammad khazaee. welcome. >> thank you. great pleasure for me to be with you. >> so tell me, what specifically iran sees as a turning point in these negotiations. is it the issue of the nuclear facility that it does not have to be shut down, but merely suspended? is it the issue of the 20% enrichment uranium? what is the turning point? >> thank you, that's a good point. eventually, in my view, none of them makes the negotiation a turning point. in my view, as far as i am informed, both sides are getting closer to each other. and the proposals put on the table by the five plus one were much closer to the realities on the ground, to the kind of a sense of having bitter

cooperation with iranian. with the five plus one. so the whole idea was largely unrealistic than before. so, therefore, i think that both sides have found some grounds for cooperation in futures. >> let me just spell it out. so, the things that encouraged you is there was some talk about relaxation of sanctions and some understanding that you did want some 20% enriched uranium to be used in the teheran research reactor for medical purposes. so, these you regard as steps forward. >> definitely, definitely. you know, we have to have a realistic approach in the negotiation. of course, the details should be discussed from the technical point of view in the course of next couple of weeks and next few months, which they will discuss both sides. but the feeling that iranian

have negotiation that both sides are getting closer to each other. that's the main point. it doesn't really matter about the details to discuss right now. the details could be discussed later on. when they decide to negotiate with each other with more comprehensive simultaneous steps should be taken. these are the important points. so, for example, how much stockpile iran can have or how much enrichment at what levels should be in iran. those are, in my view, a small, technical point that should be discussed. besides that, my understanding is that iranian will be able to enrich uranium at least up to 3% level at least what they need for more than 1 million patients. so, these are the good and positive signs that we can take. of course, we still have a far way to go ahead to fulfill

iranians' expectation from the other side, from confidence building measures. but, i think over the last few years it was a turning point in the negotiation. between iran and five plus one. >> one of the things that disappointed many people here was a turn of events that took place about two weeks ago and you were in tehran at the time and you have access to all the top leaders. let me ask you this. vice president biden raised the prospect of direct talks between the united states and iran. atoll lo khomeini the supreme leader of iran, seemingly responding to that said, you know, we're not going to do things like that. the u.s. is pointing a gun at iran and wants us to talk to them, the iranian nation will not be intimidated by these actions. so, my question to you is, does iran want to have direct negotiations with the united states on a broad range of issues? >> iran is for negotiation.

and definitely we welcome any kind of dialogue and talk with the united states as well as any other countries, all other countries around the world. this is the principle of iranian foreign policy. so, if you have also the statement made by ayatollah the supreme leader of iran, which i have his statement. he says, we are reasonable. all officials are reasonable. all people are reasonable. we understand reasonable deeds and accept reasonable views." the americans should show that they do not try to threaten. they should show that they do not speak an act unreasonably. and then at the end, he says, this is the way to engage islamic republic of iran. americans should prove their goodwill. if they do, if they do, then

they will see that the iranian people will answer in an appropriate way. it's a clear message. >> what is the message? >> i can tell you. the clear message of iran is if we see that the united states is serious and is honest about this proposal for negotiation, cooperation, direct talks with iranian, iranian will accept it and we will welcome it. definitely. there is no doubt about it. i can confirm it here with you and also for your distinguished audience that iran welcomes negotiation and talks with the united states. provided that we make sure the u.s. is serious and do not act differently. but let me go to sentence by mr. -- but let me go to statement first by vice president biden. with due respect, what he says here exactly just one sentence. he says, "there is still time.

there is still space for diplomacy. that's fine. we welcome this path. "backed by pressure." it doesn't work that way. the most important point is that some officials in the united states should understand how to speak with iranian. you heard secretary john kerry. he was talking about mutual respect. we welcome that. mutual respect doesn't go along with pressure. >> we'll be back in a moment with iran's ambassador to the united nations. when we come back, i'll ask him exactly what the united states needs to do to get direct talks with iran going. roc® retinol c. the power of roc® retinol is intensified with a serum. it's proven to be 4x better at smoothing lines and deep wrinkles than professional treatments. roc® max for maximum results. these are sandra's "homemade" yummy, scrumptious bars. hmm?

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and we are back with iran's ambassador to the united nations mohammad khazaee a rare, exclusive interview talking about the prospects of a deal with iran. you are saying as the representative of the government of iran, iran would welcome direct talks with the united states, as long as it shows it's serious. what is the sign that the united states needs to show, to show that it's serious about these talks?

>> you know, the system here is very complicated. >> also in your country. >> also in my country, but some differences. iranian have been victimized by u.s. policy. american have not been victimized by the iranian policy. >> you took our hostages. but let's not get into this. tell us what is the sign -- >> even that one, even that one. if some american complained, compared to what iranians received from the u.s. policy is different. i don't want to get into that. >> for the future, what should the u.s. do? >> look, asking for guided talks with iran. at the same time, i'm not saying it is necessarily the policy of president obama or secretary of state or is the policy of the congress here because there are some differences, you know, among their views and their approaches of iran.

i don't want to talk about or blame anybody. but my point is, as soon as we say we are ready to talk to you, but at the same time, we punish you and put pressure on you and your people. iranian cannot accept it. let me make it clear here. as long as pressure continues on iranian, nobody in iran will dare to talk about negotiations. but if iranians see a single, small indication that, okay, today the united states is going to talk and act wisely vis-a-vis iranian, i can assure you that talking to the united states or any other nation around the world is a welcoming approach and policy by the iranian. and not talking to u.s. is not holy book or something like that. no. it's because of the hostility. >> so, you just want to see some

sign that the united states sends a signal. maybe some relaxation of sanctions or some indication that this is not just pressure. >> of course, we are not right now negotiating here, obviously. but the point is, iranians should make sure that america is not using pressure on iran for negotiations. negotiation should be for negotiation, talks for talks to find common ground and solve if there is any misunderstanding or problem that, obviously, exist. may i add just my own experience. >> sure. >> and i am not a politician, put it this way. i'm talking from the bottom of my heart. let me put it to you this way. eight years or nine years we were under attacks by saddam hussein. the imposed war which was supported you remember by countries, even some arab countries. i remember those years every day you could hear the strange noise

of bombs and things in tehran and other cities. i had three kids. it was difficult to even find similac or milk for your baby in iranian market. from milk to many other things. but iranians stood against the pressure and head germany off against them. we are a nation that withstood about eight years fighting and defending ourselves. so, therefore, with such a nation and the history that you know very well, talking about pressure and putting about and threatening iran is not going to work. >> we have to go, but i have to ask you. you are one of the officials who was part of starting the iranian film industry. all these movies that won awards many, many years ago, you were one of the guys that were funding it. >> that's right. >> i have to ask you what did you think of the movie "argo"? >> thank you very much, as you rightly mention it, i was a

member of the festival films for five years when i was in iran. from the technical point of view to be honest with you, if i was a judge, the movie is a very weak movie. >> weak movie. >> i'm not saying it's just really weak or not compatible with other kind of movies which hollywood produces, but compare to "lincoln" and compare to "life of pi," compared, it did not deserve to receive oscar prize. first of all. there are many mistakes in the movie. for instance, you are familiar with our culture. even the producer or the director, they were not familiar with iranian culture. you know in iran, when we want to say hello to someone, we say salam, but when we say good-bye, even the movie, they were going

to say -- they were saying salam, even that much the producer or director of the movie were not familiar with the iranian culture. and to be honest with you, whoever in iran saw the film, they felt insulted by america. it was politically wrong and technically wrong and i think the producer of the film that is known as ambassador of peace, as i heard, should be ashamed of producing such a film that from the technical point of view, political point of view was wrong. as well as insulting a big nation like iran. i would like to invite the producer and the director of the film to travel to iran and when they travel to iran the day after they will apologize from the big nation of iran for producing such a weak film. >> ambassador, always a pleasure to have you on.

# >> thank you very much. pleasure to be with you today, fareed. up next, a different movie. we're going to talk about a world leader who doesn't even want to watch an oscar nominated film from his own country. what in the world is next? i've discovered gold.

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now, for our what in the world segment. this year, oscar nominated movies have had a strong tie to real geo political events and they have everyone watching and talking. "zero dark thirty" was all about the race to catch osama bin laden and senators and cia directors have all weighed in on the movie. "argo" told the story of six american diplomats who managed to escape iran at the height of the hostage crisis and michele obama presented it with the best picture prize. but there is a major world leader who says he has no interest in watching an oscar nominated movie about his own country. i'll get to the world leader in a moment, but, first, the movie. it is "the gatekeepers." it is about israel's internal security service. no one has ever interviewed any one of its leaders on camera. "the gatekeeper" talks to six of them. the last six directors to retire.

it is unprecedented to hear top israeli spies discuss issues like collateral damage or the morality of killing terrorists, but in this film, they do. they are honest about the methods they had to use, deadly, brutal, effective. [ speaking foreign language ] all of them believe these matters were justified, given israel's circumstances, ruling over millions of palestinians with terrorist groups operating among them. but what was stunning to hear is that all of them believed the only real solution for israel was to end the occupation. now, take a look at these clips from the film. this is a former director who says israelis have become cruel.

[ speaking foreign language brx [ he goes on to say the army has become a brutal occupation force, similar to the germans in world war ii. another says this, we win every battle, but we lose the war. and this -- >> one man's terrorist is another man's freedom fighter. >> these are the kind of words you'd hear from left-wing dubs. the film is getting some attention there. more than 50,000 israelis have seen the film, a pretty substantial number for a documentary. but as i mentioned earlier, one very important person hasn't watched it. and says he has no plans to. the prime minister of israel. benjamin netanyahu is likely to form a coalition and begin a new term as prime minister this month. one of his first big projects will be to welcome president obama to his country. obama will make his first visit to israel as president. what will they discuss?

for sure iran and, of course, discuss syria and the unrest across the arab world but "the gatekeepers" is a reminder that the question of what to do about the palestinian territories that israel has now occupied for almost 50 years should also get on the agenda. at least that's the message i got from the last six directors. men who have devoted their lives to defending the state of israel. maybe they know something. when we come back, that nine-letter word that everybody knows but doesn't quite understand. sequester. i've got a great panel to talk about it and europe. [ male announcer ] this is bob,

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[ shouting in japanese ] we work wherever you work. now, that's progressive. call or click today. hello, everyone. i'm fredricka whitfield. take a look right now, we're talking about a place, king edward hospital in london and that's where queen elizabeth ii is now being treated. buckingham palace says she was taken there as a precautionary measure after experiencing symptoms of gastroenteritis. the queen's official engagements this week will be postponed or canceled. on to florida now today, crews are tearing down the house that was partially destroyed by

a sinkhole. one of the resident's, jeff bush, is missing and presumed dead after he disappeared into the sinkhole thursday night. demolition crews moved things from the house to the streets to help people try to recover some of their belongings. president obama is phoning members of congress in hopes of resolving the spending cuts. lawmakers go back to work monday. federal agencies and the defense department will begin implementing cuts. and marking the anniversary of bloody sunday. civil rights acty vigs campaigning for voting rights beaten as they tried to cross an alabama bridge. lessons in courage lie from selma at the top of the hour. i'm fredricka whitfield. "fareed zakaria gps" continues right now. first we went over the cliff and now we have been sequestered all in the span of two months. how bad are these automatic spending cuts economically in the short term and long run? how bad does the united states look to the rest of the world.

we will ask all this to our panel, zanny minton beddoes economic editor of the economist, david leonhardt and roger atman has done two stints at the highest levels of the u.s. treasury and then went on to found evercorp partners. welcome all. david, you wrote a piece in which you said, this isn't so bad after all. that's sort of what the republicans are saying. so, let me give you the opposite view which is, you only have seven months to squeeze all these cuts in. while it looks like it's 2%, since so much is exempt, it is a lot more than 2% and because it's done in this cleaver-like fashion you can't scalp, so, in fact, this will look pretty bad. >> all depends on what your priorities are. if it won't matter, clearly won't matter. if will this send us into a recession or fiscal cliff, it's not as bad as that. i think a big part of the problem as you point out is the pakeup of the cuts.

not just the size. as a percentage of gtp it's not horrible. but the problem is it's so arbitrary, you listen to economists, so many of them use words like dumb and stupid, not exactly technical words to describe this. it's going to be hard for agencies to react to it. >> roger, you describe this, this is like being attacked and by -- by al qaeda. >> invading iraq when the attack came from afghan. >> explain why. >> the way to think about all the stuff we should be cutting in the budget is sacro sanks under the sequester and the stuff we shouldn't be cutting are the stuff we are cutting. >> the two big problems to the united states, are the growth in entitlement spending which isn't addressed by the sequester and the degree to which revenues in relation to gdp which remain too low isn't addressed by the sequester. >> what it cuts instead is infrastructure, science, research -- >> which first of all has been cut by $1.1 trillion through the

budget control act of 2011. that's a lot. in terms of gdp, the nondefense portion of discretionary, which is substantially affected by the sequester is approaching a 50-year low. so, it's in effect shooting the wrong victim. and that's why it's so stupid. >> zanny, the latest gdp numbers, the revised numbers suggest that the economy is barely growing. so, isn't it possible even though this is not a large part of gdp, this could actually have the effect of tipping the united states into something like a second recession? >> i don't think it will tip the united states to a second. but i think what could have been a rather more vigorous recovery will remain lackluster, at best. overall, it's not as bad as had we gone off the fiscal cliff, but it's still a lot of fiscal tightening coming this year. i think the biggest of any major economy. so, it's really not what the

u.s. economy needs because as roger says, this doesn't solve any of the u.s.'s real problems which are medium to long-term spending, it cuts stuff that's actually good for the economy and it weakens a lack luster recovery. on all accounts, it's dumb. >> one thing that is fascinating is the financial markets, you can see it in the stock market, which is off to the best start in something like 17 years, is looking right through this. it's essentially saying we got through the fiscal cliff, no serious economic effect. all the threats of the debt limit, that's off the table. we're going to get through the sequester and the risk of a government shutdown and the financial markets are looking ahead to roughly the end of 2013 and seeing a transition towards a stronger economy. >> but what about people like your colleague paul krugman you say, the economy is still terribly depressed, on the range of 20 million people unemployed or underemployed what you need far from moderate austerity programs, you need a big fiscal push and spending plans. >> we've now got tons of

evidence that austerity does not work after a financial crisis. the united states in the '30s, japan, europe, this time relative to us, and yet, the united states has turned after really being aggressive in 2009 and to some extent early 2010 turned towards austerity. it's remarkable to see that the united states has been cutting government employment over the last few years. something it did not do during the reagan years or the '90s. the idea that the best combination here some short-term investment, take advantage of the low interest rates and put people back to work, and long-term austerity is pretty widely accepted and we're not going to get it for political reasons. >> i completely agree with that. what strikes me in this debate is often people on the left don't really want to do the long-term entitlement reform. i think we could have a different debate. you're absolutely right on the stupidity of short-term austerity, but even if we had, from the administration or certainly from commentators more focus on long-term entitlement reform and the u.s. would say, look, we

solved our problem and put the house in order and not doing dumb, short-term cuts. >> the question is your time frame. right? over the next few years the deficit isn't our problem. over the next 20 years the deficit is a problem and it's important to acknowledge that, as you say. >> you, on the other hand, are bullish about the u.s. economy, so you think that even by next year, growth will be strong enough that the fed might have to raise rates or some of these cuts would be fine. >> i'm not sure about when the fed will change monetary policy. actually, i think the president maximum ease policy will remain through the end of next year and probably into 2015. but i do think one of the things that people miss about the debate in austerity, i want to be very clear that i don't think the 2008 financial collapse was a good thing. nor the recession. it was too much anguish and pain and so forth. but it tends to have a dramatic restructuring effect. it had that in the united states and about to begin to have that or is beginning to have that in europe. i want to focus on the private sector because it had a

tremendous structuring impact on the private sector. you see u.s. manufacturing is improving, you see this, as zanny said, this housing boom. i think it will be a boom. this breathtaking turnaround in u.s. oil production just passed 7 million barrels a day and some think it will get to 10 million barrels a day. we have 100 years of supply of natural gas. tremendous competitive advantage. you see the american household finally coming to the end or about the end of deleveraging and seen the statistics of households beginning to borrow on a net basis for the first time since the crisis, and the point is that the convenients of 2008 and the great recession have had a big, call it cleansing effect, on the private sector. it is now beginning to kick in. so, i think we're going to have quite a strong economy, give or take beginning in 2014. some people think the beginning and some people think the middle and that's one of the reasons why you see financial markets so strong. >> we need to take a break, but when we come back, we go to italy. what the elections there mean. do we have another euro crisis

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after this week's italian elections, italy is essentially leaderless, according to my next guest. he says between the pope's retirement and soon to be

retirement of the president of italy and a hung parliament that will be unable to pick a new prime minister, no one will be in charge. bepe is a columnist and author. he is one of italy's most respected journalists, i'm, of course, also joined by my panel, zanny minton beddoes and roger altman, and david leonhardt of the "new york times." does it matter that no one is running italy? you know, the line in italy has always been, the government sleeps and the economy grows. >> well, no, it does matter to be honest. it does matter a lot. we're not worried. you shouldn't be worried. i think things will be sorted out and we'll go how into a little bit. don't panic. i remember i was in aspen for the festival in late june 2012. panel on europe. everybody was talking about the

doomsday, and everything is over, and i told them, keep quiet. let's see what happens. and, in fact, it turned out that things got better. so, before we decide that it's over, i think the expression, it's not over until the fat lady sings, it examines from opera, opera is italian, don't forget that. >> but let me ask you, beppe, why did the italians do this? it is one thing to reject austerity and things like that. but you've elected one or two clowns, depending on one's estimation of silvio berlusconi, what are italians say? >> out of four italians. one didn't vote, one voted for berlusconi. one voted for the center left and one vetted for grillo. that's why we're in a stalemate. beppe grill o is a wrecking ball and to be honest, some of the italian political building needed to go down. political parties asked for it.

the question is, will we be able to build up something to replace what we pull down? >> roger, your point about europe, as i understand it, is particular countries like italy. it doesn't matter what they say and how much they protest, they're going to have to put in place some of the austerity measures that have been demanded because it's the market that's demanding this, right? >> of course, there have been austerity measures already begun in so many countries, look at ireland for instance. but, yes, i find some aspects about the debate austerity is good, austerity is bad to be a little misguided because at least initially, looking back a year ago at the worst of the eurozone crisis, it's the global of capital markets that demanded changes in the financial conditions or fiscal paths, debt paths of some of the peripheral paths. there was no choice when a

borrower loses market access, or virtually does, there's no choice but to restructure. restructure means consolidating your finances and other steps that are seen as austerity. so, i don't think if you look back on it, there was a choice whether or not to have austerity. the issue is how much and over what period of time. >> what do you think? >> i have a slightly different view. i think italy has big problems and i think the problems are not primarily fiscal. primarily, that the italian economy hasn't grown. italian productivity is terrible it's not a competitive economy, per capita income has performed poorly since the introduction of the euro. what does italy need? it needs huge reforms of its markets and it needs to open things up and all kind of deep fundamental reforms to kind of energize the italian economy. it needs huge political reforms, too, because there is a sort of outrage at the italian political elite. austerity by which i mean tax increases of

which there have been a lot and hitting short-term deficits is the source of the problem. i think the emphasis is to make the point more broadly within europe, it's been much too much hitting short-term deficit targets. -day slightly disagree with you in terms of emphasis. i think much more emphasis on growth would have made the economics of the reform program more sustainable and would have helped the politics. >> in a way it seems that you needed less austerity and more structural reform. but the structural reform is the hardest thing to do. that's when you're breaking up gills, you're taking on unions. you're opening up protected sectors of the economy. frankly we haven't done that much of it here. >> on the one hand, italy's problems are clearly worse than ours, we haven't had had any demands from the global markets to restructure in the way italy has. but we also haven't done any

sort of trurkt url reform. one of the things i worry about and you hinted about this before is the sequester effectively hit things that apply to future economic growth it leems all kinds of benefits that may be valuable like medicare and social security and don't contribute to economic growth. and growth is the best way to solve deficits. it's italy's problem and our problem as well. >> beppe, what about the issue that italy has done a fair amount of austerity, but very little reform. if you look at unit labor costs, they've barely changed in italy. where they're down substantially in laplaces like spain and grooens. if you look at the structural reforms, they haven't done that much with all of mario monti's efforts. >> it's very important for people looking at the program to understand how we get there give me ten seconds. when all the crisis hit every country who acted in different

ways. you in america, on the left, people occupied whatever it was, free to occupy a tea party on the right, in greece they clash in the square. in france they took to the street. in britain, they enjoy swearing at their bankers. in italy it was very quiet. and people accepted mario monti's bitter medicine. it's the reaction, a bit delayed. they manage to put together, we need to go into structural reform. berlusconi was a disaster. between 2001 and 2011, only a few countries in the world grew less than italy. eritrea and zimbabwe. how is that possible? we sell prada, we sell maserati and ferrari. we're a good big money manufacturer. bigger than britain in terms of manufacturing. we need to go back to what we

can do to restructure. maybe is the time to do that. they're so scared, the political party, they'll do everything. beppe zani, roger altman and david leonard. thank you very much. up next, why are the people of egypt and tunisia shaking? and why might those nation's leaders be shaking as well. [ man ] i've been out there most of my life.

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pope benedict xvi left office on thursday. we all await the election of the successor. did you know that person will take up two jobs? the papacy, but also sovereign of the vatican city state. that brings me to my question of the week. the vatican is a small country. but how small? how many official citizens does the vatican city state have? a, 450. b, 4,500. c, 450,000, and d, 4.5 million. stay tuned and we'll tell you the correct answer. go to cnn.com/fareed for more of the gps challenge and follow us on twitter and facebook. remember if you miss a show or a special, go to