supposed to be several football fields wide. >> excellent. and this last little note this in myrtle beach, apparently, a come mer s, thought it would be rather inventive and funny to show one with a toupee, on the roller coaster, toupee flies off, not everyone likes it including someone who sells them. that is it for chat room. we are out of time. can you believe it? so little time. thanks for being with us. gps, zakaria. >> welcome to all of you in the united states and around the world, i'm fareed zack jar ykar. no big events, protests, explodes but much stirring beneath the surface, most striking aspect is an opposition movement which refuses to be

silenced. the former president, rafsanjani, ahead of a constitutional body, called for the release of all those in prison for a political reasons. that would include the friend of this program, the respected news week reporter maz ya ba harry in jail. khatami, another two-term president, calls for a referendum on the country's leader. the supreme leader, khomeini and ahmadinejad are battling over an appointment. finally, mousavi you the candidate who might have won the june presidential elections is going to create a large-scale social movement to oppose the government. what does all this mean? very hard to say from the outside but clearly there is a bitter contestation for power taking place in tehran. the stakes are very high. it does not appear the regime has lost any of its grip on the repressive backbone of its power, the military, revolutionary guard and the paramilitary, the basij but the

facade is clearly cracking that is why ahmadinejad can dare defy the supreme leader. a leading iranian paper allied with the opposition now refer tosco mainny as merely the leader of iran, having dropped the prefix "supreme" might seem like a small sign. imagine one day vatican newspapers stopped calling the pope "his holiness" we will speak to a prominent iranian academic, often seen as allied with the regime, very difficult to speak with anyone on the ground inside iran this is a rare opportunity. let's get started. joining me now from irvan is a professor of north american studies at tehran university. professor, welcome. >> thank you. >> let me ask you, professor, how do we make sense of what is

going on in iran right now? the only way in which with the regime has been able to maintain its control is to use fairly tough methods, brutal methods of repression it has used the basij, the rev lieu luciennary guard, arresting people acres resting june lists. this is not what the islamic republic of iran presents to the world as the basis of its regime t is turning into a military dictatorship, has it not? >> since mr. mousavi's people went to the streets day after day, it was causing trouble in the city of tehran. so the police really felt that they had to bring things back to normal. mr. mousavi took people to the streets in the heart of tehran where businesses were severely disrupted and damaged. ordinary people were hurt. he did it on a daily basis.

on the other hand, i think that mr. ahmadinejad was provocative in his victory speech after the election. but i think that as things settled down and the two sides become more level-headed and less emotional, supporters of both gentlemen, i think things will return back to normal. >> but they are not normal. mr. mousavi's brother-in-law is in jail. many of his supporters are in jail. he is under effective house arrest. you're making this sound like a normal disputed election where people are now happily reconciled, but you still have on one side, the a use of the basij, the revolutionary guard, house arrest, real eye rest. this is, i said, this has become a military clampdown and a military dictatorship, has it not? >> no, again, i don't agree, because if you go on the streets of tehran, things are very normal. i mean, you can walk around town. >> you can walk around -- you can walk around -- you can walk around north korea as well,

professor marandi. >> i think you also have to keep in mind the fact that some of the measures taken by the security forces have to do with the fact that there has been a lot of interference from outside the country. right now, you have almost 40 television channels in persian being broadcast from the united states and europe, funded by the american government and european governments or in some cases owned, which have played a very negative role over the past few weeks, turning people against one another. this sort of behavior and this sort of funding coming from the united states and its european allies really does not serve their interests. >> professor marandi, you can't possibly expect us to believe that here you have a two-term president of iran, rafsanjani, calling for opposition to the regime. two-term prime minister of iran, mr. mousavi, calling for the creation of an opposition movement. a two-term president, khatami, calling for a referendum.

you have people under house arrest. you have major clerics in quorum asking that ahmadinejad's election be boycotted. are you telling me all these people are doing this at the bidding of the united states? surely, you must realize that that is kind of a ludicrous claim? >> well, these not e rk, that'st i said. thonchts res the people asking the people to go out on the streets, not president obama. it is a president, all right, just happens to be president khatami and rafsanjani, not president obama. >> what i've been saying is that when external forces and governments outside of iran interfere in a country's internal affairs, it only makes matters worse and it only creates further tensions. i think it's extraordinary that the united states a allows itself to beam in tens of television channels, thousands

of television channels that beam into the country and in many cases, they called for riots and they called for violence. >> do you worry that you will be seen in history as a mouth piece for a dying, repressive regime in the death throes, 20 years from now, you will look back and the world will look back at you the way it did some of those smooth-talking, english-speaking soviet spokesmen who were telling us in the middle 1980s that the soviet union was all just fine and democratic and wonderful? >> well, fareed, i am an academic at the university of tehran. and i'm -- i would be very surprised to know that mr. ahmadinejad would be supportive of me because i've always been a critic of his administration, but i think it is my duty to be honest. fanned he has won the election, i will have to accept the results, just like when mr. hugo chavez wins elections in

venezuela, i think the people who oppose him have to accept the results. and also, i think that if we look back at my own personal history, i was a volunteer in the iraq is/iran war, when iraq invaded iran and i surprised two chemical attacks by the iraqi regime and those chemical when pops were provided to iraq's -- to saddam hussein by the european union countries and the united states. >> you know that that's not true. >> and i think that we -- >> professor marandi, you know it is not true that -- >> the technology and the support. >> you're trying to -- >> saddam hussein with support. >> agricultural credits. >> come on, fareed, you know that the united states did back -- you know that the united states did back saddam hussein. >> i said very clearly, provided agricultural credits, though that's not crem cal weapons, these are two separate things.

>> well, i think -- i think had history has shown that the united states did back saddam hussein at a time when he was carrying out brutal measures against his people, the own people of iran. i'm a survivor of the two attacks. at the end to of the day, what i'm looking for is a more realistic understanding of iran in the yand in order for rapprochement to again and if people in the politicians in the united states do not wish to understand the reality on the ground then there will not be an opportunity for the two sides to sit together and resolve their issues. >> thank you very much, professor marandi, i will only point out to you and that our viewers that one sign the regime looks very favorably upon you is that it is almost impossible to get anybody from tehran to -- and to be allowed to do so on an open satellite link. >> fareed, you invited me. >> that's my point, but it is

very hard to get these satellite links through in iran and the fact that -- >> a lot of people don't trust the western media. >> well, the -- >> no, fareed, a lot of people here don't trust the western media. they think it's biased. >> i would love to talk to prime minister mousavi, president khatami or president rafsanjani, but alas, we are not allowed to speak to them. the only person we are allowed to speak to is you. >> but you can speak to my colleagues at the university of tehran and you can speak to my students, hopefully if you get a visa one of these days. >> which i have applied for several times. >> you will see that it is a very different world from the one you believe to be. >> i anxiously await the day i will be granted a visa to tehran. it has not happened yet. >> if you think i am somehow the mouth of soren, i think you are mistaken. >> thank you. at some point, americans and foreigners are going to wake up to the fact that the u.s. is on an unsustainable path. it is clear in the budget that was produce ted beginning of

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good choice. only meineke lets you choose the brake service that's right for you. and save 50% on pads and shoes. meineke. are we done with this recession? here to tell us we have an economist, a historian and a businessman, each at the top of his field. eat con mist, nuria rube beanie is known on wall street as dr. doom. so when he says in a speech last week that the economy is likely to recover by the end of the year, stocks actually rose 1% in one hour. the billionaire real estate and publishing mogul, mortimer

zukerman is usually an optimist, last week he wrote in the wall street journal that unemployment and the economy is much worse than might think. yikes. as for harvard historian, neil ferguson, he has been in his words, a moderate doomster, warning on this program just a few weeks ago that the gigantic budget deficitities of united states could eventually have dire consequences. neil, what should we make of the fact with all of this bad news, goldman sachs had record profits, jpmorgan did pretty well? >> well this goes to show that in the darwinian world of finance there are winners as well as losers and the best-won banks are now in a position to make some serious money, particularly on proprietary trading, which has been one of goldman sachs strong suits. >> which is what to explain to people? >> making trades, transactions with the firms on cal tall. . they are playing this relatively cautiously, interesting to see the other banks, morgan stanley, for example, to report much more disappointing losses and reminds us that the banking crisis isn't

over it may be over for goldman and it maybe over for jpmorgan, but there is a whole tier of other banks, particularly regional banks that are still in real difficulty and the losses on real estate, particularly in commercial real estate, in fact, lie ahead of us. if you try map out when those losses will peak, it will probably be early next year. one can't say this is over, yes, green shoots in the stock market, results from well-run financial institution bus the systemic problems in the banking institutions are not over. >> now, you own one of the largest commercial real estate portfolios in the world. what is going to happen? >> well, i do think that is an area of the economy that is going to be very weak for certain kinds of commercial real estate. the particular companies that are going to be in trouble are those that have and buildings that have financing come due and can't get refinancing. that's what's going to cause the crunch t is not necessarily in terms of just the occupancy but in terms of the financial structure. >> but is it a large -- it is. it is. literally the hundreds of billions of dollars, the one i think is worse than commercial

real estate, not just because i do commercial real estate is credit cards there are gigantic numbers of credit cards that are going to go into default and that is both a business and a consumer thing. the number of credit cards for business went from 5 million in the year 2000 to 29 million. that is 300 billion dollars in exposure on that and they are defaulting the a rate even faster than individuals but it's in the hundreds of billions, even trillions of dollars and if you read the financial reports from the banks, the biggest losses that they were suffering with is credit card obligation and i think that is what is going to peak and what is going to put great pressure on the banks. they know the trouble they have in that category and that is why they are hoarding their cash and not lending very much because they have huge losses in commercial real estate and in credit cards that they are looking to and they know they have to cover that. so i don't think we are out of the credit crunch either. >> let me ask to you clarify, i gather you felt that the reports at the end of the recession from you were kind can of exaggerated, that was -- you

didn't quite mean to suggest that you were calling the end of the recession? >> well, be the recession technically might be over by the end of the year and it will last 24 months, three times as long, and more than six times as big as the previous two, but i think the question most relevant is not when the recision will be over today or in six months but rather recovers the strong or low, in my view you can the problems of the economy is a weak recovery. so it will feel like a recession even if we are technically out of a recession. for example, unemployment rate is right now 9.5. by year end, it is will be well above 10% and peak at 11% some time next year. so even if output were to recould have, the job market position will be awful. u.s. consumer is shopped out, saving less, debt burdened. so, i see a very weak economic recovery within a risk of a double-dip. >> now, you say -- at the end of the day the jobs numbers are the most important numbers because

it will determine spending patterns. you say that the unemployment picture looks a lot bleaker than people realize. >> yes. i think it is not just the absolute unemployment, but you have underemployment and if you add that to unemployment, the total people who are, in a sense, working less or not working at all is 25 million, 16.8%. and i agree with unusual yell completely, this number is going to group and in a range of 11% next year and we have had not just temporary unemployment. i've had companies like general motors and chrysler wiping out entire divisions and brands. you've had banks and financial institutions eliminating whole areas of business. these are jobs that are not coming back so we are going to have a much control slower recovery in terms of the employment going forward. that is what makes me worried answer think the risk that nour yell refers to, basically is there going to be a second dip and will the political system allow for another stimulus program after having, frankly, such a limited effect on the

existing stimulus program, which, in my judgment, was terribly badly structured to do what it should do, which is to get the money into the economy quickly, otherwise the economy feeds on itself on the downside. >> we have added $787 billion stimulus on top of a fiscal crisis that is structural in nature and has very little to do, in fact with this great recession. the fundamental problem is that nobody in congress wants to agree on any measure that is likely to bring the budget into long-term balance. republicans are addicted to the idea of tax cuts. democrats can't wait to spend more public money on new reforms that have nothing to do with combatting the crisis, whether it's on health care or climate change or you name it. so there's a major fiscal crisis building in the united states, it's been building for some time that is the biggest threat to any long-term recovery. at some point, americans and foreigners are going to wake up to the fact the u.s. is on an unsustainable path. it's clear in the budget that was produce ted beginning of this year that there's no plan to bring the united states'

finances under control and we are going to see a crisis at the level the states nixed. so, this is a real train wreck and i think a course of grave concern for everybody right now. >> we will be back right after this. >> if anything is set to blow this administration apart and turn barack obama into a one-term president it is a fiscal crisis somewhere in the middle of the administration. pr all day long. and it's not a steroid. announceit keeps my airways. to help me breathe better all day long. and it's not a steroid. announceit keeps my airways. to help me breathe better all day long. and it's not a steroid. announceit keeps my airways. to help me breathe better all day long. and it's not a steroid. announceit keeps my airways. to help me breathe better all day long. and it's not a steroid.

and we are back with our star-studded panel, neil ferguson, nuriel rubini and mort zuckerman. one issue you all agree, at the end of the day the american consumer doesn't get back into the market, you're going to have a very weak, anemic recovery. and it feels to me like this is almost a psychological question, which is when will the american consumer feel that he or she has saved enough to start spending again? as you point out correctly, the saving period is already up 206 or 7%, depending on how you count t historical 30-year averages 8 or 9% n the 1950s, it was 14%. so, what are you sensing on the ground that, you know, why do you feel like they are not going to get back into the market for a while? >> primarily because they have

lost such a huge amount of their net worth. the wealth destruction that has taken place, the evaporation of wealth, has been so large and so quick, they have lost money on the two main assets on the balance sheet of the american household, their homes, which was the largest asset. and home prices have gone down today by 30%. you assume an average mortgage of somewhere around 50 to 60%, they have lost anywhere to 60 to 75% of their equity in their homes. same true with the 401(k)s, people are just going to save, that means they are not going to spend. i don't see how that is going to change until there is a much larger anticipation of a growth in the economy and i don't see that for several years. >> one of the extraordinary things is if you look at the developed world as a whole, wealth, household wealth in relation to income is down to where it was in 11989, we have lost 20 years of wealth accumulation. what we haven't lost is the debt that americans and other countries piled on in order to keep their living standards growing in the past decade. the debt is not going away.

the amount of deleveraging since this crisis began is remarkably small, 2 to 3 percentage points of gross domestic product t there has to be a whole lot of saving done before anybody is going back to the shopping mall. >> one of the areas you have been pressing on this i will try to tweak you on one thing. you were very gloomy about the prospects of the emerging market countries being able to withstand the downturn in the united states and europe. and you were particularly grim on china's prospects. but over the last year, over the last six or eight months, china has seemed to do remarkably well. in fact, if you look on chinese growth, quarter on quarter, the last quarter, they seem to have grown 16% and that is largely because of this massive government is stimulus. but be that as it may, the chinese economy, the indian economy, indonesia, all seem to be doing a lot better than a lot of people had thought. >> right now, china is recovering about two-thirds of emerging market economies are feeling the recession. tough give credit to emerging

markets, on one side, their balance sheet was in better shape than a balanced economies that leverage in the houses of the financial system. because of that they have been able to do more monitoring, fiscal easing, the supporter of the economic growth. that is where we see the recovery of some of these emerging markets like china and india. however there is a caveat, the chinese model of growth, like most of asia and other emerging market is not on u.s. consumption is falling and our trade deficit is going to shrink, the trade system of china and other owe merging markets have to shrink. for these countries to go back to their own potential growth rate, they have to simulate domestic private demand. at the time, it is public demand. >> the question, make sure people understand this, can the chinese government get its people to spend? there is a limit how much the

chinese government can spend. what is your sense? the chinese consumer be able to bail out the world economy and the way that the american consumer has for the last, you know, decade? >> you can change from being thrifty to being prove flying gatt b -- profligate but not in a year, descendents of the puritans, it took a long time and bout of inflation in the '70s to persuade american it is better to get leverage than save. ordinary chinese households will not be turned into spenders into shoppers in a matter of 12 months, which is really all they havement. >> what do you think is going to happen between the chinese/american relationship that alliance that you talked about in your last book, "chimerica," we overconsume, they oversave it all sort of works out? >> well, as you know, "chimerica" what i coined before this crisis began, because it

seems to met crisis is the key to the boom and now that is it over, i think it is on the rocks. the chinese complaining repeatedly this year, back to the world economic forum in the winter about the way the united states is behaving and they fear that the dollar is going to lose its purchasing power, lose its credibility as anibler national currency and they worry about that one consequence of their export-led strategy was ate cumulation of a vast quantity of dollars in their international reserves. now the chinese are very concerned that the way we are going about our recovery, printing money like fuhr vicious ultimately going to pass the buck to them and the buck will be a devalued, depreciated buck. so i think the marriage is on the rocks because the spend thrift partner is in big trouble and the saving partner, the chinese saying it is time we cut those credit cards up, you've masked out, darling. >> now health care reform, president obama says you have to do it. what do you think? >> on one side, i believe that providing universal health care might be a worthy goal, but the crucial issues, first of all is

how you pay for it. this is additional spending over the next ten years. one way to think about financing it, by adding an additional tax on the wealthy. but the key issue with health care, you have to control costs. we are spending 50% more than any advanced economy in the world to cover the basic health care and the quality of output of health that we are with receiving in the united states is much worse than europe, japan and other countries. we have to do so much more to control costs, otherwise, you know, health care spend already one-sixth of the economy and could become even bicker in the next 20 years the ageing of the population. that is what we need to do control costs. >> when you look at this only advanced industrial country that doesn't have universal care, only advanced universal country that isn't able to rein in costs. can't we do something? >> it is highly desirable something like this be done to cover the uninsured. i remember the phrase from the beginning of the administration,

the administration shouldn't let a good crisis go to waste. it shouldn't waste the crisis but i think the crisis could waste a good administration. what is happening here is very predu predictab predictable. the administration will propose something and congress will not pay for t they will chip away at any tax increases proposed and end up being red ink making the deficit even larger. if anything is calculated to blow this administration apart and turn obama into a one-term president, it is a fiscal cries is cis somewhere in the administration. and anything that makes the deficit larger, health care or any other bill you mention, is a risk on that respect. >> on that, have a nice day. thank you all, nuriel rubini, mort zuckerman, neil ferguson. thank you all very much. we will be right back. dinner bell sfx: ping ping ping fancy feast elegant medleys tuscany entrées restaurant inspired dishes with long grain rice and garden greens is it love? or is it fancy feast?

now, for our "what in the world" segment, here is what caught my attention this week. it was the top republican in the

senate, mitch mcconnell, talking about health care. >> we have quality health care now. surveys indicate that americans overwhelmingly like the quality. so let's focus on access and cost and not try to scrap the whole system. if you look at the surveys and ask the american people what they think, they don't think quality is a problem. they think cost is a problem and access is a problem. >> very interesting point, senator mcconnell, but not exactly right. there is a gallup poll that says only about half of all americans are confident in their country's health care system. in fact, in all major advanced industrial countries, people have much more confidence in their medical care than we do. in france, in germany, in britain, and yes, even in canada. we only do better in public satisfaction than countries like slovakia, hungary and greece. and all this despite the fact that america spends more on health care per capita than any other nation, an astonishing 16%

of our gdp, yet on many key measures of health, life expectancy, infant mortality, and of course, obesity we do much worse than most of the industrialized world. let's listen to more of that interview with senator mccon willing. >> aid friend of mine in florida who called up recently and said he just lost a friend of his in canada because the government decide he was too old for a certain kind of procedure and apparently, accident have the money or the ability to get down to the united states for quality health care. i don't think that's the direction the american people want us to go, david. >> i find it very hard to believe that the republican leader of the senate is deciding major national policy based on anecdotes from a friend of a friend. the former health minister of canada, by the way, called mcconnell's claim absolute nonsense, quote unquote. and the basis of mcconnell's point that health care is going to be like canada if it legislation comes and passes is also untrue. health care is a complicated

problem. i don't pretend is an eased solution but too important a nation to be based on anecdotes, misleading statistics and outright falsehoods. and we will be right back. >> you know ex -- france is and the united states is like an old couple. >> what stage with we in now? 's. announceit keeps my airways. to help me breathe better all day long. and it's not a steroid. announceit keeps my airways. to help me breathe better all day long. and it's not a steroid. announceit keeps my airways. to help me breathe better all day long. and it's not a steroid. announceit keeps my airways. to help me breathe better all day long. and it's not a steroid. announceit keeps my airways. to help me breathe better all day long. and it's not a steroid. announceit keeps my airways. to help me breathe better all day long. and it's not a steroid. announceit keeps my airways. to help me breathe better all day long. and it's not a steroid. announceit keeps my airways. to help me breathe better all day long. and it's not a steroid. announceit keeps my airways. to help me breathe better all day long. and it's not a steroid. announceit keeps my airways. to help me breathe better all day long. and it's not a steroid. announceit keeps my airways. to help me breathe better all day long. and it's not a steroid.

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hello, everyone, i'm don lemon live at the cnn world headquarters in atlanta. more "gps" in a moment. first headlines. sarah palin is closing in on her last few hours as governor of alaska it has been a weekend of farewells for the republican who ran as john mccain's vice presidential running mate. she gathered with friends and supporters for a picnic in anchorage yesterday. moving advance moved up to the governor's mansion in juneau friday to remove palin's personal items before the new governor takes office later today. russian officials say they are perplexed by some new comes from vice president joe biden. biden suggested that the united states can take a firm stance in negotiations with the kremlin because russia's economy is withering. well, some observers say biden's blunt talk will hurt the obama administration's efforts to improve u.s./russian relations.

secretary of state hillary clinton tried to smooth things over today insisting thatted by san strong supporter of better relations with the russians. france's president is spending the night in the hospital after he fell ill while jogging. initial tests on nicolas sarkozy showed nothing be a norm a.m. the country's health minister said the president had fainted but his office later said it wasn't true. mr. sarkozy is an avid jogger who exercises regularly. those are your headlines now. fareed zakaria and "gps" in just a moment.

as the finance minister of france, kristen lee guard is a powerful voice in the global economic crisis. she has acted decisively and smartly to put french banks under control and argued frequently and loudly for world cooperation on strengthening finance aal regulation. even before assuming her current position, lee guard made history as the first female chairman of the international law firm baker

and mcken zitch and 2006, she was ranked the 13th most powerful woman in the world by "forbes" magazine. 13 sounds like an unlucky number it is a pleasure to have you on. >> thank you so much, fareed. >> now, how are people in france looking at this crisis? because at some level, it seems, you know, the popular perception, the french must be very happy, even though they are doing badly, they must think, you see these americans, they were so arrogant, they thought the banks rule the world and it has turned out to be a house of cards. so the french are vindicated in economic misery. >> well, not that bad. it's not that bad. but one sometimes wonders whether, you know, the world has gone french in a way. and -- >> in what sense? >> we have always have advocated that they there should be better, more comprehensive and more coordinated regulations and we are pushing that we are definitely in favor of both free market economy and capitalism. all we are saying is there has

to be rules, there has to be traffic lights, there has to be gate keepers, otherwise it is chaos in the jungle w he don't want the jungle. we don't want the zoo either but we want a park where people, you know, can expand, can express their talent and can achieve what they can achieve. be entrepreneurs more than speculators. >> let me ask you, as a senior french official, not just -- not just your finance portfolio, has the election of barack obama lessened french anti-mannerism? one of the things associated with france is france is going to be in some kind of sense in opposition to the united states on issues and they are going to look down on americans. has this atmosphere changed? >> you know, france and the united states, it is like an old couple. we have been at it for a long, long, long, long time. i think we were one of the first allies and certainly one of the strongest of the united states.

and our histories are bound. the bloods of our soldiers are, you know, very, very much together throughout our history. the foundation of this country, the freedom of france, all of that is getting us so close to each other that we are like an old couple. we have fought many battles together and we will continue doing so. >> what stage are we in now in the marriage counseling stage or are we out of it? >> no i think it's very good, actually. what i can tell you is that, you know, we, in france, have a very strong leader at the moment and i hope we keep it for a long time. when he was president of europe for six months, we achieved a lot. in this country, which i dearly like, president obama is a terrific leader. and if these two leaders actually join forces, which i'm sure they will, with in mind the

same common good, they can have fantastic results. i certainly hope so. by the way, i want to mention that, because it is a fascinating to me. there was a poll that was just conducted recently about -- >> in france? >> no, in the united states, about the opinion that american population has about france. and it was 61% favorable. so, 61% of the american population that was surveyed in that poll thought that france was great. >> must be -- this must be up from the bush years or do you know? >> well, all i can say is that it seems quite positive. and i hope we can do everything we can to convince the other 39% that, yes, france is a strong, reliant friend of the united states. >> do you think that the current administration, and tim geithner in particular, are doing a good job? >> it is difficult to pass a

judgment, franklism i think that he's in charge of such a big job at the moment and has to face all these issues while cooperating with all of us, what is going on on a consistent and comprehensive basis that he is doing the best he can. now, will it be good? will it be average? will it be bad? it's for the future to say and the same goes for me. if you were to ask anybody is she really doing a good job, it's too hard to say at the moment. i think it is in the pudding. the proof of the pudding is in the eating. that's how you see t at the moment, we are working so hard in building the regulatory system, in making sure that we have the discipline in place, that the financial stability board is capable of setting standards, that the imf can actually, you know, sort of analyze with a's going on throughout the world to send the right alarm signal, if there is a need for that. it's very much in -- a work in

progress. >> so, you really think that the jury is out for all of you, whether you guys are doing the right thing? until you see economic growth resume? >> you need to stimulate, at the moment, and you need to stimulate on the basis of what i call the triple t. it has got to be temporary, target and timely so that we don't really, you know, run the risk of having -- having public finances that for the long run, will be affected by massive criticism. we need to stimulate and do enough for the sufficient fund so that it kick starts the economy and then we can withdraw, because it is not our business to actually, you know, be actively involved in the functioning of the economy. at the same time, we need to regulate and we need to signal to our constituents that we are not going to tolerate, we,

spending taxpayer money, not going to tolerate what we have seen in the last few years. >> now this all happens, in some ways, in an awkward manner for you and president sarkozy. because you came into office reh economy. president sarkozy was quite happy to be called the american or the neoconservative. and when he came in to power, he was talking about he wanted glorify work and get away from things like the 35-hour week. you were often parodied as being an american in the french television. when they do satire, they always have you speak lots of english words because you're supposed to be an american. now here you are all of a sudden embracing the model that i thought i were trying to change. >> we're going to continue to change the monologue. but you have to look at it like that. the french economy was in a straight jacket. frankly, my country was dozing a little bit. what president sarkozy has managed to do is to try to -- is

release a bit of that straight jacket, open up, allow entrepreneurs to contribute to the economy and get their business going. do away with the 35 hours absolute cap by instilg the overtime flexibility that is now available to companies. we did an awful lot of reforms in the last 18 months and we're going to continue doing so, despite the fact that we need to fight the crisis head-on, despite the fact that we need to stimulate the economy, despite the fact that we need to properly regulate financial markets in a comprehensive and coordinated fashion, which means that we need to do is together. >> let me ask you about your personal story. one of the things that people tell me, friends of mine who do business in france, that france is a tough place for women to achieve great success in the corporate world. it is still a fairly patriarchal culture. what were challenges for you

working in france, being the head of a big company. >> i'll tell you a story. when i applied with law firms right after law school, i applied with french firms and i applied with international firms and i applied with american firms. and all the french firms that i applied with said in the main, ill-defined, you've got the right curriculum, you're okay but no expectations of partnership. i said, why? they looked at me. said, because you're a woman. that has changed. but that gives you an idea. when i joined baker-mckenzie, there bass a woman who was a leading partner, said, yeah, you're fine, you come in, you are he you work hard, you get clients, develop the business and you have a chance to get partnership. that's in the early '70s and it has change massively and there is plenty of opportunities, but it is still a fairly patriarchal society. and i think that it's a tribute

to president sarkozy to have been determined to have parity -- almost parity between man and woman in his government. 15 ministers, of which seven are women, eight are men. of the seven women who are not all in social affairs, health and education. i'm in charge of finance. one might have colleagues is minister of interior. another one is justice. he has given a very strong signal at the top. >> and is france changing in broader sense? we have an image of europe in the united states, perhaps unfairly, but the imf numbers again tell you why, which is that this is a place with a very large state, perhaps as a result of very good life for most people, but very little energy, very little vitality. as one senior official in the bush administration once said to me, he said it's the world's greatest outdoor museum, meaning its glor riz are behind it, it lacks the energy, vigor, to kind of confront the problem, the

world of the future. is that changing? is there a sense that that may always have been a caricature but there was some true to it. >> i said to you earlier that there was this straitjacket and that the country was a little bit dozing. that was a bit the case. there was -- we were very proud of our history, our monuments. we should be very proud of that, very proud of our cuisine and we should be proud of it. but i think president sarkozy's talent has also been about stimulating people, about encouraging, about -- for instance, we give a 30% tax discount for anybody who invests in research and development. we created the self-employed status where people can actually go about starting their business even though they are employed or retired or unemployed. that used to not be available as a status. those are sort of little examples of how actually innovation, energy, entrepreneurship, is very much part of the fabrics of french

society. >> on that note, thank you very much. we'll be right back.

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now for our question of the week. last week i interviewed the president of rwanda. he has transformed his country in 15 years from the chaos and genocide we all remember to a model of stability and growth. he hasn't always done this democratically and some have called him an authoritarian. i asked you, do some countries actually need a strong man? might it take a tough, autocratic leader to turn a country around as he did with rwanda? our viewers are largely foreign policy realists. you said yes. viewer joseph put it this way -- the good probably outweighs the bad in a case like rwanda. the u.s. must take a more nuanced approach in its support for democracy. barbara was one of the few

dissenters quoting a 19th century british power corrupts absolutely. for this week, do you think the recession is ending? not is it over, but can you see any light at the end of the trunl? let me know what you think. as always, i'd like to recommend a book. i don't normally recommend novels but it's summertime. david ignatius' "day job" is writing op-eds for foreign affairs for the "washington post" which he does very well. he moonlights as a spy novelist writing about foreign affairs. "the increment" is his latest book and it has me hooked. title comes from britain's intelligence services real-life unit. although they would will deny this. that has the license to kill, the famous james bond license. in this novel the unit is called in to help a cia agent get an iranian scientist out o