service didn't know president reagan had been shot until they got him into the car. their escape and the moments following it were critical. see the rest of the story in an all new episode of crimes of the century tonight at 9:00 p.m. eastern at pacific. gps starts right now. this is gps, the global public square. welcome to all of you in the united states and around the world, i'm fareed zakaria. we have got a great show for you today. first up, is there new hope for peace in the middle east? or is it the same old dance. i've got key voices from both sides, israel and palestine to find out why this time is different. then wall street wizards meredith whitney explains why detroit is just the beginning. and dean baker disagrees entirely. also what in the world? we have created a new economic time bomb, except its under ice. i'll explain.

and presenting the world's newest superhero, is not even a man, get ready for feminism in a burqa. all that and more up ahead. but first, here's my take. if you were to ask me what international problem is least likely to be resolved in the next few years, i would probably say the conflict between the israelis and the palestinians. it takes no special insight to be skeptical on this, no one has ever lost money betting on the mideast peace process. i find myself cheering on secretary of state john kerry's efforts to revive the talks. the palestinians are dysfunctional and divided. for its part, the israeli public have largely given up on the prospects for peace and new political groups like those led

by naftali bennett flatly oppose a two-state solution. but there are people in the party that could push the negotiations forward. many israelis are unhappy over having to rule over palestinians in perpetuity. on the palestinian side, the most serious obstacle to peace remains hamas, but it is in bad shape. the group's popularity is declining and it is broke. hamas's support for the syrian rebels has damaged two of its major patrons, syria and iran, who are of course facing their own problems, sanctions, insurgency. and the new israeli government has cracked down on smuggling into gaza and none of the thorniest diplomatic problems, the settlements, jerusalem actually involve benghazi at all. they could come to an agreement and present it to the people on both sides, the israelis and the palestinians.

even though some elements within both societies will of course oppose it. i know, i know, the thorny problems are really thorny, and they have derailed negotiations in the past. it's easy to see how it could leave both sides disappointed and bitter. that's why these negotiations should be conducted out of public view with no briefings and keeping expectations very low. not great for me to say that, but i think that makes sense. choosing to take on this issue might steam like a fool's errand. but there are some practical reasons to pursue it. unlike with the constant goals for the united states to somehow magically stabilize egypt or stop the slaughter in syria, this is actually an issue on which washington still has enormous leverage and there is a clear path forward where the secretary of state's efforts

could yield results and success, even modest success would clearly change the atmosphere in the region and in the wider muslim world. so let's give kerry credit for using his political capital on one of the oldest, most intractable problems in international relations. i wish him very well. but if i had to bet, well, i guess i still don't like losing money. go to cnn.com/fareed, for a link to my time column this week and let's get started. you have heard my take, now let's hear from israel's ambassador to washington michael oren who's joining me. welcome, ambassador. >> always good to be with you. >> for a lot of people this seems like a change of heart. it seemed as though there was almost this conflict between washington and israel where the obama administration wanted netanyahu's negotiations

seriously, and after four years of prodding, what changed? >> well, nothing changed much from our side, we were always ready to enter into negotiations with the palestinians, without preconditions. that was the prime minister's position four years ago, it's his position today, we support a solution based on two states for two peoples. a jewish state of israel living side by side in peace and security and mutual recognition. what the palestinians state, it was not the palestinian position, the palestinians had number of preconditions, they were not willing to live in a situation of mutual recognition. we recognize the palestinians as a people endowed with the right of self-determination. what has shifted, i believe, is that the palestinians may be

considering dropping their preconditions and entering into serious talks on all of the outstanding issues, including borders, security, jerusalem and mutual recognition to reach that two state solution once and for all. >> that point about recognizing israel, not simply recognizing israel, which of course the palestinian authority has done for a long time, but recognizing it as a jewish state. is a condition that the prime minister netanyahu has put in place? no previous prime minister to my knowledge. explain why that's important. >> it goes back quite a way. but understand, this is not a precondition, we understand, and we're not asking the palestinians to do this up front. we know it's not easy for them. but when we say jewish state, what does it mean? it means that the jewish state is permanent and legitimate. we're not interlopers, we're not trespassers, we're not a transient state. when you sign the dotted line,

there's a real peace there. when we come up to the question of the palestinian refugees, and today in the middle east, there's about 6 million to 8 million children of the refugees since 1968. many of those who will be repatriated will be repatriated to the palestinian state. when you bring in 8 million palestinians, the israelis don't have that majority anymore. we're not asking them to do it up front. but clearly at the end of this peace process, the only true way to have a durable peace is on the basis of mutual recognition, the palestinians are a people, the jews are a people. both have a right of self-determination, and the only way to make peace is to divide this plan. >> to describe palestinian as a jewish state essentially renders them invisible and they're 20% of the population by some counts.

the israelis have a state, the palestinians have a state. why is it important to be a jew? >> because the jews have a right to self-determination, there are about 191 million jews -- >> those are national categories. >> the jew is also a national category. and unlike countries like denmark, that have a national church. unlike great britain who has a national church, we don't have a -- many of those nation states if not most of them have ethnic minorities that are loyal minorities, whose rights are respected. some of them have an ethnic affiliation with another state. it's very common, certainly in europe and there's nothing unusual. >> we have talked about the refugees, but the ones that

people often say is the thorniest are jerusalem and the settlements. do you envision a settlement in which parts of jerusalem are handed over to the palestinian authority, so that they too can have jerusalem or some part of jerusalem be part of their capital in the way that edward barack has presented them in 2000. >> we're going to keep this according to secretary kerry's guidelines, we're not going to talk about the peace process openly. and as our own president parish, he says there's two things you should never do in front of a camera, you shouldn't make love, and you shouldn't make peace in front of the camera. what prime minister netanyahu has said, again, in front of congress, he understands that the palestinians have a position on jerusalem, our position is it should remain the undivided capital of israel, but that with

creativity and goodwill, we can solve the jerusalem problem as well. >> and settlements, are you comfortable with the idea that in a final deal, significant israeli settlements will have to be dismantled? >> i'll go back to what the prime minister said in front of congress. we have to be realistic, we have to tell the truth in front of our own people. that is in the creation of a palestinian state, we will have to make painful territorial concessions. we hope that mahmoud abbas, the president of the palestinian authority tells the truth to his people. the palestinian refugees will be resettled in the palestinian state and the palestinian state is going to have to recognize the legitimacy and permanence of the israeli jewish state. >> michael oren, pleasure to have you on, thank you so much. up next the palestinian point of view, stay with us.

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are we in trouble? no, you're not in trouble. i just want to set some ground rules. like what? well, remember last week, when you hit vinnie in the head with a shovel? [chuckling] i do not recall that. of course not. well, it was pretty graphic. too graphic for the kids. so i'm going to have to block you. you know, i gotta make this up to you. this is vinnie's watch, and i want you to have it. you deserve it. no, thank you. t@at's really not necessary. no, no, come here... so you've heard my take, you've heard michael oren, the

ambassador to israel. secretary of state has asked them to keep a low profile, so they have declined to come on the show. so i'm joined by a journalist who's a columnist for our monitor, has written extensively for a number of western papers and he joins us from amman, jordan. welcome. what is it that has made the palestinian side agree to come back to negotiations? for a long time they said they wanted a settlement freeze, they were unwilling to get back to negotiations, what do you think changed? >> what i think the persistence of the secretary of state john kerry, the support that president obama has given to the idea of a palestinian state on a 67 borders and the seriousness that the european has -- these combined with the fact that the israelis were a bit more willing

to release some of the prisoners that were arrested and detained before the agreement, a combination of these things made it possible for the palestinians to be willing to at least discuss the issues of the negotiations. >> so let me ask you about some of the thorny issues and i asked michael oren about the requirement that netanyahu made that the palestinians recognize israelis as a jewish state, do you think this poses any obstacle for the palestinian state? >> the palestinian side is the plo and the plo is seen as -- the plo that were left in palestinian when israel was created. the palestinian citizens of israel are not jewish. and so by declaring israel a jewish state, i think it's a slap to fellow palestinians who are living in nazareth or in ifa or in najaf. it's an emotional issue and the feeling is it would add to the discrimination against citizens of israel who are not jewish.

>> do you think that on something like this, there is room for some kind of compromise? >> well, i think the whole issue of the palestinian israeli conflict is one that has to be resolved, obviously in private conversations, if there is serious interest in settlement that ends this conflict and there is a withdrawal of israel to the '67 borders, i think the palestinian side is willing to make verbal and other compromises to allow the israelis to accept the creation of a two-state solution. we are neighbors with the israelis, we want to be neighbors with the israelis this is not an attempt to create a religious war. palestinians just want to be free in their own country on their own land. the jewish people arsps, by the

islamic faith. there's no problem with the jewish people, the question is whether the state of israel is a state for its citizens or a particular religious group and i think this is where the problem is. >> what about the issue of the right of return? where will the palestinians go? will they go to israel proper or will they go to the new palestinian state? >> i think it needs to be divided into two parts, the recognition that there's a historic and moral right for the palestinians to return and israel needs to accept responsibility for the creation of the refugee problem. then there's the issue of the implementation of this right. most palestinians will not want to return to israel but will want to stay in the palestinian

state or maybe in the nearby arab countries or in a third region. so there's possibilities for compromise on this issue. the big question is where will the borders be or will the state of israel will viable. >> what about the question of hamas? here you have hamas still ruling the gaza strip. they do not recognize israel's right to exist. hamas would have said none of the things you just said in terms of the moderation and spirit of compromise. isn't that a problem? >> i don't believe the hamas issue is a problem. hamas has already agreed with the plo that the plo should represent palestinians in negotiations. they have also agreed with the plo that there should be some kind of a referendum, where all palestinians vote on the package deal that would be agreed upon between israel and the plo. so on this issue, i don't think it's going to be an obstacle to the talks.

i think the obstacle are the -- based on the '67 borders. on the hamas side, they might stay a few things against it, but at the end of the day, most palestinians by polls have shown that they're in favor of a two-state solution. >> lots more ahead on this show, including the world's latest superhero. a burqa clad pakistani. but up next, what in the world? the great conflict between china, russia and the united states. it's the new cold war, maybe it's not a war, but it's very, very cold. i will explain.

for anyone living in the northern hemisphere, it's been a sweltering two weeks. in fact last month was the fifth hottest june in recorded history. for more than 28 years, the earth has been warmer than

historic averages. take a look at what's happening in the coldest part of the world, way up north in the arctic, 28 years ago the arctic was covered by ice throughout the year, as it has been for centuries. now every summer, 2/3 of it melts to water. in 2010, only four commercial ships were allowed to sail the northern sea rule which connects northeastern europe to northeast asia through the arctic. this year with five months still to go, more than 200 ships have already been given the right to stale. is more water in the arctic a good thing or bad thing? nature magazine published an important study this week calculating the thawing in the arctic.

leading to the release of large amounts of methane, that means an intensification of the greenhouse gas effect and more extreme weather. the study's model climbs that the cost of this is more than $60 trillion, that's more than the global economy. whether or not this is accurate, this is something we have to deal with. but the melting ice is also an opportunity there's vast reserves of natural gas. russian planted its flag 4,000 meters below the north pole to establish its claim. in reality, no one owns the arctic. peace has been established by a group founded in 1996, the arctic council. it had eight charter members including the likes of canada, denmark, russia and the united states.

12 more countries have joined since. whether we like it or not, countries are going to be interested in any resources that exist in the arctic, and whether we like it or not, climate impacts are already underway. the important thing is to manage both aspects in a responsible manner. that is not has beening right now. and meanwhile, the united states has fallen far behind. russia, china and canada have advanced systems to deal with navigating and policing these waters. the united states does not. while 164 countries are signatories on the arctic peace treaty, the united states is not. it's a familiar story, gridlock in washington have made it

impossible for the senate to ratify the treaty, despite the fact that it has the support of the last three presidents, republicans and democrats. it's rare these days to have a mass of land or water that lies beyond the borders of settled area. the arctic waters are a gray area and it will get more contentious. but the united states will be out of the game, unless the senate can get off its -- well, unless the senate can ratify this treaty. up next, detroit has declared bankruptcy, but what then? i have a guest who says it's just the start of a wave of municipal bankruptcies. and someone who totally disdegrees. >> i think it's a wave coming forward, there's just not enough money to go around. >> i would say maybe a trick.

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one a 10-year-old girl found dead and still searching for the 48-year-old man. and in new york, the man who was driving the boat that crashed on the hudson river is now charged with first degree vehicular manslaughter. jojo john was a friend of the couple that was to be married. the bride was recovered yesterday. the best man still missing p four suffered head injuries. and in brazil --four suffered head injuries. and in brazil --four suffered head injuries. and in brazil -- a flash mob started dancing just before the pope celebrated mass. millions gathered to hear the pope speak and it was his final mass before his return to the vatican. the next is in poland in 2016. and the next hour, anthony weiner's sexing scandal.

we'll take a look at the different definitions of cheating around the world. gps continues right now. last week detroit filed the largest municipal bankruptcy in u.s. history. but is it one or are there more defaults to come? my guest says there are more to come. she predicted a wave of municipal bankruptcies in 2010. also dean baker, he is the co-founder for the center for economic and policy research. welcome. so meredith, lay out the case as to why you feel that, you know, we're going to see another wave of detroit-like bankruptcies? >> it doesn't have to come in the form of bankruptcy, but it certainly will come in the way of default.

the way i see it, and the way i saw it back in 2010, not that it would happen all at once, but that it would happen over the course of several years. the local towns and municipalities are being cut off from funding by both the federal government and the states. everybody's under fiscal duress. the local municipalities have to fend for themselves. states have run deficits in more numbers in the last decade. the one area in the constitution where state and localities can cut from the budget is all of the things we count on for public service. all of those as a taxpayer adds to the value of your neighborhood and you feel is a natural born right of paying taxes and living in this country. but because pensions and bonds have a constitutional backing that is greater than the social

services that you pay taxes for, they have gotten cut first. and my point in all this, as the money runs out, taxpayers will start to say enough's enough, why am i taking serious sacrifices when the pensioner is being paid 10 cents on the dollar and the bond market is being paid 100 cents on the dollar. clearly over the last couple of years, pensioners have been forced to make concessions, be it in rhode island, california and now in detroit. that's a wave coming forward, there's just not enough money to go around. >> first let's deal with this issue of, is there going to be a wave? in other words the magnitude of the crisis, isn't meredith right when she says there's a whole bunch of balance sheets that look as bad as detroits. >> we had river falls in rhode island, there's been a couple in california, some smaller cities. >> we had river falls in rhode island, there's been a couple in california, some smaller cities. we're going to see more of those, there's no doubt about

it, you do have some cities and municipalities that are in very, very bad shape, not a big optimist about the economy, but it is better today than it had been. the other side of the equation, these financial markets are coming back. >> the stock market is better, so these pension funds are going to have better returns so the balance sheet won't look as bad? >> they took a very bad hit like everyone else when the market plunged in 2008-2009. it doesn't mean they're out of the woods, you still have a lot of underfunded pensions, no doubt about it. but pensions are on the whole looking better in 2014, than they did in 2010, 2011. i won't be surprised if we see another incident.

but there won't be a tidal wave. it's very much a political decision, you are going to have people saying, no, i don't want to pay these people. but on the other hand obviously the workers themselves there,'s a lot of sympathy for the workers. >> i don't think anyone is disputing that the pensioners are asking for things that they didn't believe that they were promised. it's not the pensioner's faults, it's the politicians that promised things that they knew -- there's no accountability. it was a classic system of patronage and buying votes. and the consequence is very bad for pensioners who are not going to get 100 cents on the dollar and are going to have to make adjustments. >> that one point, because i think this is at the heart of

it, it seems to me. politicians decided that one of the ways to get votes was to be nice. the unions say, no, it will show up on my balance sheet this year. we will promise you stuff that you're going to get in the outyears when i'm happily required and on nbc, fox or cnn commenting, that's when you're going to get it, pension increases, health care benefits. isn't that a corrupt deal that was being made? >> the biggest issue is transparency, if you look at the total package, public sector workers are comparably paid. it is true that they tend to get less in wages, more in benefits. the issue here is transparency, as long as that's on the table, that's fine. >> i respectfully disagree. there wasn't transparency on

pensions until 2009. 2/3 of what you're ultimately going to pay off balance sheets. you had no idea what was at risk when you moved into a state, moved into a neighborhood. and that is only going to get worse next year when the accounting principles for states make things even more apples to apples so things are much worse than they seem. yes, the u.s. economy is coming back, but not in the areas that are under the most fiscal duress. the u.s. economy coming back doesn't help detroit or stockton,or so many areas that were blighted by the housing bust and blighted by just years of corruption, sometimes decades

of corruption. >> let me ask you what the effect is of all this, if detroit does scare people into settlements, whether or not they're fair or not. at the end of day, doesn't it mean crisis averted? >> crisis can be averted through a number of things i discuss in my book. we are so grossly behind the world in public/private infrastructure. we have a lot of stuff to sell. in europe in the 1990s when they privatized so much of their intra structure, and flying into madrid is different than flying into newark. the point being that there are a lot of options on the table, they require political will that we are sadly of a great deficit of. >> are you worried about the kind of macroeconomic effect here? >> i don't worry about the macro, it's a negative in that we're in a period right now where we really need demand in the economy. we're likely to continue to see that over the next few years. which is again one of the reasons i find this situation really silly, when people are serving and you can throw money

out there. the reason the economy is suffering is that we have a lack of demand. the fact that we're seeing pensioners seeing a large part of their pension disappear when there's plenty of money there. >> i see things very differently. there are parts where there is great demand. banks are growing loan balances in the high teens. and you have areas where there is no demand because there is high structural undevelopment. so it is a really, it's a tale of two very different countries under one umbrella. really hard times in other parts of the area that have high structural unemployment and the only thing to break that cycle of unemployment or poverty, worst-case scenario, is job creation and there's not enough money to retrain and retool the workforce that's there. but there's plenty of money in the areas where there's low

unemployment, so i think we're in the process of rebalancing as a country, and things are going to get better in certain areas and worse in other areas. >> pressure having you pleasure having you both on. up next, what makes a great president. how much of it is genetic? joseph nye, stay with us. so then the little tiny chipmunks go all the way up... ♪ [ female announcer ] when your swapportunity comes, take it. ♪ what? what? what? [ female announcer ] yoplait. it is so good.

what is more important in an american president? that he has a great transformative vision or that he be good at getting things done? or she, by the way. my next guest has given this topic a lot of thought. joseph nye is a political scientist at harvard university and he has a new book "presidential leadership and the creation of an american era." we had a great conversation about it, listen in. joseph, thank you for joining me. >> nice to be with you. >> when looking at this book, you focused on presidential leadership and foreign policy. you point out that when obama campaigned for office, he had almost no foreign policy experience.

one might have thought that he was going to be a big transformational president. why? >> well, he certainly talked big transformations in the campaign and his first speeches, cairo, prague, so forth, he's been found to be a transactional president. on the one side you have people like woodrow wilson or ronald reagan who make great announcements, want to change the world. transactional presidents like eisenhower or george h.w. bush, are more prudent, keep the train from derailing. those are the two extreme types and many leaders are combinations of the two.

but i think in the 21st century, we had a first president, george w. bush, who is largely transactional in the campaign, became transformational after 9/11. >> because after 9/11, he wanted to do big things. >> he was going to change the middle east, democratize it, and much like president obama, he was much more transformational in his first year, but given the realities of the world, he turned out to be more prudent and managerial. he turned out to be more like bush 41 than bush 43. >> which is better? >> some genetic in the future may be able to combine that managerial skill, with a transformational goal. at this stage, we know that since the two bushes shared the same genes, nature hasn't solved the problem.

so we would like to have some of both, but it's a hard combination. >> you point out that the surprising thing that while one is attracted to the rhetoric of the transformational president, when you look at the record carefully, it's often the pragmatic guy, who actually has a pretty good set of fired.

>> i have been struck by the power between eisenhower and obama. they are both very restrained. there were a lot of calls to get involved in the suez and in vietnam, in taiwan. he resisted them. >> eisenhower, when he was asked to help the french when the vietnamese had surrounded the french outpost, he said, if i said to my troops in there, they

will be swol lowed up by the divisions, even though he had strong views, he wasn't going to take that kind of risk, he also made another decision a year later which i call a nonvent. the chairman of the joint chiefs of staff said we are going to have to use this against china. he said, you boys must be crazy. we can't use nuclear weapons against asians. if he had, we would live in a very different world. if douglas macarthur, who also wanted to be president, he would have used them. he advised truman to use them. >> with this background, assess obama's foreign policy. >> i think you are right, obama has some of the skills of

eisenhower, trying to improve things at home, trying to be quite careful not to get imbroiled in things abroad, which is going to derail his presidency. when he has acted as he did in libya, he waited until had he had an arab and u.n. league resolution to make sure he had the legitimacy of soft power to go with the hard power of the no-fly zone and got the europeans to help participate in the use of hard power. i think he has done pretty well. >> pleasure to have you on, joe nye. >> nice to be with you. we tend to see the burqa as something that's oppressive. one girl has turned it into an assess. it is her superhero costume. when we come back, i'll introduce you to the burqa adventurer.

this week, pope francis made his first trip abroad to the country with the most catholics in the world, brazil. that brings me to my question. pope benedict took his first

trip abroad as pontiff in 2006. which country did he visit, mexico, germany, united states, or poland? stay tuned. we will tell you the correct answer. go to cnn.com/far reeed.com. you can go to itunes.com if you miss a show or special. this week's book of the week is "wealth and power" by shell and deluri. there are lots of china history books but this is really well done. it tells the story with lots of interesting historical characters and deep insights into the country. remember malala usef, she was the 16-year-old girl that was shot for promoting

education. she bravely recovered to continue the fight. she has another ally now. meet the burqa adventure. a new animated series that debuts on pakistani tv. she wears the burqa as not a sign of impression but as a ninja costume to keep her identity secret. each episode has a moral payoff and she uses her karate skills to fight off corrupt politicians and evil magicians. the series has the backing of top pakistani singers that perform in each episode. it is said that women are the stealth reformers of islam. in pakistan, now, they have the help of the burqa adventure. the correct answer to our gps challenge question was, "b," germany. benedict visited his home country first, as with pope francis this week. he was marking world youth day. i find it interesting to look at the countries with the most

catholics. brazil is number one, then mexico, the philippines, the united states. italy is the first european country but in fifth place with 49 million catholics. thanks for being a part of my program this week. i will see you next week. hello. so nice to have you with us. i'm pamela brown in for fredricka whitfield. here are some of the top stories we are following. the search for a member of a bridal party after a horrifying boat crash is now over. an intense surge is underway in north carolina. a man disappeared in the same spot where a young child got swept away by a current. >> in germany, a final push to hundred down dozens