>> i'm sorry to say have been given the signal to wind things up. this was done in a total fair fashion. we will be around later, the last question is after the collapse of wamu losing money, stock fall into a few cents from a field to jpmorgan, where it is a 20 million come from to pay bonus to kerry killinger? >> that is a great question. apparently there was just enough money last. >> where do i get a job like that? kirsten grind, the book is "the lost bank." thank you so much for being with us tonight. [applause]

>> ulysses is virtually published between march 1918 in december 1920 in an american periodical called the little

review and leave copies of all of those as well. the reason i brought these today's dietitian at the first edition coming ulysses, but of a tradition edition of ulysses that is extremely rare. in 1920 when the american government declared ulysses obscene and and the book was banned. people still wanted to read it, however, and we actually have copies of one of the pirated editions. if you notice the spines, alice in wonderland and the little minister. >> john kennedy once met with harold macmillan british prime minister and with the reportage today newspapers that discuss arms control or whatever and issues between the two powers, which they sure did, but only long afterwards we get the notes on what they said to each other

in private turned out to kennedy spent a lot of time complaining about bad press coverage. prices start from jackie and other things to macmillan who is a generational versus jack about what you care coexpression dos. it doesn't matter. you have other things to worry about. kennedy quite heatedly said that's easy for you to say, harold. how should i get the press said to your wife, lady dorothy was a drunk? mcmillon replied it was simply say, you should have seen her mother. [laughter] it's the kind of things that give you an idea what these people were like that she just can't learn in real time.

>> and breakout nations, richir sharma discusses his list of countries that will make up the economic success stories of the future. he spoke in may at the cato institute here in washington. >> welcome to the cato institute. my name is said to. everybody's always looking for the next economic success story. in the 1960s and 70s, that was supposed to be the sale and other times it is in the ivory coast, mexico, kenya, venezuela and a number of other countries but it turned out that less than stellar performances. instead, a sometimes surprising list of countries in the past couple decades have pulled ahead come including georgia, india, peru and has done enough. professional economists and investors, political scientists and also as a pundit are not

particularly good at predicting success. for that matter, many are not even good at looking back and explaining why some countries have succeeded in why some have failed. the inability to predict the future is understandable since that depends on all sorts of complex type errors and also the very frequent arbitrary decisions of politicians. there is however such a bang as protecting patterns of development and causes for growth. with the cato institute has done quite a bit of work with friends and colleagues at the fraser institute in canada on the importance of economic freedom in establishing prosperity. and while he published an index of economic freedom around the world, that does establish strong empirical relationships with human progress, that indexed by itself could not tell

you why some countries are more likely to reform or why some will stick to building the types of sound institutions that lead to growth. to do that requires a lot more detail about a particular countries circumstances and an eye for relevant information. i am pleased that today we have richir sharma, the author of breakout nation in pursuit of the next economic miracle who have developed precisely those skills to combine a good sense of what is the proper policy with two knobs ovation about what is going on inside of the country in terms of politics, social attitudes from economic trends and other factors that can determine where the country is heading. his book is a useful guide to understanding the growth potential of countries around the world in contains much insight in some unexpected

conclusion. forsyth business culture, for example is fundamentally different from that. vietnam is not in fact following in the footsteps of china as many people believe. business curtails explained by mexico markets are hot, stock market is hot, but its economy is not. in the future rail at greater than many people think in the united states and germany. breakout nation as a reminder that understanding the development process requires a lot of judgment about which intelligent people can disagree and that development cannot be understood by taking a technocratic approach. all the more reason why we should be skeptical of grand schemes coming out of agencies or other sources claiming to have the answers to the world's very diverse that of nations. for shelley, richir sharma doesn't suffer from a messianic approach. he suffers rules of the road,

which are very useful in the book. let me introduce you and allow you to judge for yourself his evaluations. richir sharma is that of global emerging markets and the head of global macro and morgan stanley investment management. he is a columnist at "newsweek" and writes for publications like "the walstreet journal" and other leading newspapers around the world. and he is a regular contributor to the economic times of india and has been writing financial columns since the early 1990s. please help me welcome richir sharma. [applause] >> thank you very much. it's a real pleasure to be here. untold this is the first time at

this auditorium as well. it's a real delight to be here. as steve mentioned that i've done an investor for the two decades in the developing world. i try and spend about one week each month in some countries, subsisting the substitute to be on the ground in some countries and to me with all the people there, the various players to corporate ceos, to local investors. and that is what i've done for nearly two decades now and trying to form a view in each country and a continuous basis. but i have been a writer for longer than i've been investor. i started writing back in 1991, when i started up back in india and those days when i started

out to right, there is further little in interest in india about what's happening in the rest of the global economy. i had this idea back then about writing a column exactly based on that. i was pretty brown when i started out, but because they talk about the global economy i managed to squeeze a column and in large part due to negligence. the editor was back at the economic time. but that's how i started out writing man. and then finally i said i've got to write my own book and that's what this up for that too. i spent much of last year putting together all my parts about emerging markets and try to write something in the form of an economic trouble loved, which is an impressionistic view of each emerging market, but a lot of it is obviously on some

economic observations gotten around to countries. what got me to write this book is the big idea that when you write a book community big idea behind it. the big idea that sort of struck me was in late 2010 in terms of what's going on and i'd be investigating emerging markets every two decades and i've seen a lot of cycles. as soon as physically started out investing in emerging market in the mid-1990s and then we had a series of crises after that more emerging markets between 1994 and 2002 were considered the problem child of the world economy. the crisis included the east asian financial crisis, the russian crisis in 2001 and then it all started with mexico in

late 1994. so that is where the history went to. and then there was this magical. in 2003 onward where every single developing country did well. from 03 until 2008. it is captured in a couple of statistics. between 2003 and 2008, the average growth rate of the developing world was 7.5%. and the global economy and recorded history have never gone through such a. with so many emerging markets grew in such a synchronous manner. so the growth rate of emerging markets and 1980s and 1990s used to be about 3.5% or so in the long-term growth rate of emerging markets in postwar history with about 5% element to this. from 03208 for the average growth rate was 7.5% and the rising tide of countries doing well left no country in its

wake. in 2007, the 108 economies tracked by the imf, only three economies tracked it in the surf e.g., congo and zimbabwe. in the history otherwise is that in any particular year, typically about 20% of economists report a negative gdp growth rate in any year on average but i'm 20%. and only one third of economies are able to grow at about 5%. that is described in terms of the peak year of the boom we had only three economies out of 183, which reported make it a gdp growth rate and we had more than 50% of the world's economy growing at about 5%. so this is a very exceptional. but the question is what causes exceptions i'm not about to the

history of development. one was the fact that these economies are catching up after very poor performance in the 1980s and 1990s and because of the poor performance, a lot of the balance sheets have been cleaned out in these economies to the macroeconomic finances have been put in order in indonesia, russia, to sort of pay pay down their debt and a lot of improvements took macroeconomic funds with their backs to the wall. soon after the crisis. coming these economies refined considerably, so they were catching up. the second most important point, which is underestimated is that as we know in the west are more in europe, there was a huge financial leverage of overall indebtedness. and a lot of that liquidity

flows through them so that liquidity helped create the housing bubble in the u.s., all other sort of problems in europe in terms of the housing boom in the southern european countries. but also led to emerging markets and lowered their risk returns in terms of what it takes the cost of capital rather than the very strong demand in the u.s. has triggered a big export whom. so this combination of fact or so catching up from a very bad. in the 1980s and 1990s, abundant global liquidity pushed lower the cost of capital and also the fact the u.s. consumer was strong of a big story says emerging markets has led the growth rate of emergent markets to the high levels from 03 to the other way. now after the craze says happen

in 2002 dozen men, some emerging markets were able to use some of the unspent to try and keep demand going for a while. so india, china, a lot of stimulus put in to try and keep demand going. but what is happening now is many of these countries experienced growth rate across emerging markets are slowing down quite a bit and i think this is what is setting the stage for a very different kind of outcome now in this decade. but i think they are reverting to the old emerging market experience, which is there will be some stars, but there'll be some some slumps as well. this is not going to be the exceptional. they had last decade when every single emerging market recorded high growth rates on the back of easy the quiddity, the rising

tide of liquidity is the longer they are for every single emerging market now. i think what we need to do here is start distinguishing again the long history of economics development is failure, rather than success as a rule and economic developments. the global economy with hundred 80, only 35 for developed economies. everyone else is emerging because they said i spent this period is imaged at the outset we have one particular economy or region and the economy falters because of the gain pecans or starts to reform our societies and they have their back to the wall. that's that development has been a process that i refer to as the game of snakes and ladders, we go up some, get bitten by a snake, come back down and start over again.

some are lucky to find a ladder but they leapfrog. but the game of doesn't happen. you go from the water to the top in a straight line. but that is exactly the kind of believe over the past decade because so many emerging markets did well. that is captured in the fact that they became very popular. the most popular misprint. the widest part become so popular? or capture the imagination as it was a full logistic economy in the world, in the developing world. and because at least the emerging market is doing well it seemed rococo maximum spotlight on them because they were the largest economies and they were all sort of going about the historic averages, so it seemed something special was going on. but they went on a non-after the most ridiculous when i heard that the end of the decade was

something called civics, which is some end the only reason he was fired was because it found that for the country, including colombia, indonesia, vietnam, each a. countries that have nothing to do with each other. packet well, get a good marketing firm. this works because every marketing was doing well. the matter would acronym you create it, it sounded to be innovative because everything was fine. so that is what was going on by the end of the last decade. i am an emerging market investor. i go out there and sell emerging markets, right? a lot of people are willing to buy the argument that because in an emerging market you're about to go faster and as for the opportunities vias come as to put more capital or a diversified that way in the desert road to becoming rich. but i find that as someone who

has invested for many years but she don't over the heard, that she basically distinguished and see what is the flaw in the conventional argument all the time. a couple of anecdotes took place in late 2010 that told me this has gone too far in this trend also goes down the way that many of the trends of god that has become very popular for one decade and rarely continue to be popular and the subsequent decade. in the 1990s was technology. 1980s, japan would rule the world. in 1970s, all the resource and inflation. inflation was the thing we all were concerned about. in the 1960s it was all about the u.s., the 50/50 as to call that here. they captured the imagination of the politicians of investors and by the time that everyone buys into it, it tends to sort of run out. so there's a couple of anecdotes

in late 20010. what were they? one had gone back to india as they frequently do for my visits and i was invited to one of these fancy parties, they call these farmhouse parties. the farmers have long left, but the farmhouse is, we still exist out there for many of the rich to have their fancy forms of air, the mansions which have also the fancy features. and when i went to for this party at a river running around it as part of the extravagance. and you get ships from all over the welcome which are preparing the food and its decadence. theorize that this party in late 2010 and got in a conversation with this young 25-year-old. he was wearing a tight black t-shirt, white shell and he was

the son of what they called to be an exporter, like a guy making some money on the? so this guy had only worked with his dad, 25. he very quickly certain figures out that i'm a global investor back in india, looking for opportunities and make us to name and goes, well says the the money go? you know, that such overconfidence that the west is in decline, the man is going to come here. where else is it going to go? and he was a thing to not only work with his belief, but what i think a lot seem to believe in the western decline and the money is down to flow to these places and that's where it's got to go. this along with another anecdote that happened to me in moscow shortly after about the coming decade. the other and it don't as i went

to moscow. there is a conference being organized out there and the prime minister, then putin wanted someone to represent him about the state of affairs in russia. so the conference organizers at putin's office asked if i'd make a presentation. i said fine i'll do it. so there i was making this presentation to putin and i didn't know was going to be the deal. here is being televised, the cameras were rolling at this conference. and i gave a pretty blunt assessment about russia, how is optimistic a decade ago when things were completely chaotic and values for cheap in russia and articulate at the per capita was $12,000 in russia basically was regressing rather than progressing, they just been replied to an oil gas is that enough. a rich country makes rich goods.

they better get some sort of a manufacturing sector going. it was a pretty blunt assessment of how russia was doing. and putin was there taking notes down as if he was actually listening and stuff. but the next day i found out what this is all about because the entire russian media went after me. and they're sort of take was who needs your money. the with all your advice. who really needs your money. in this sort of assured we have the attitude had changed from the country i visited quite frequently over the theories. i write thereafter there was the quiet conference we had organized for our clients. the client conference we invited george bush to be the guest

speaker as having a fireside chat with him. so i asked him, what is it that you sought input? she commented a decade ago -- that he would do many anti-i said what he said that you saw him that in still other believe? he said how the attitude of hooton had changed. he said he had first come to the white house back in the early two thousands. he would talk about what all he's doing and he said that he remembers one of the visits bush introduced him to his dog, barney or whatever. and he looked at it, didn't react much to it. he said in 2007 or so he went to

moscow and putin took him and by then his confidence was huge. he was really believing that russia had truly reemerged because of the mass of bone that had enjoyed. and so he said that, you know, like prudence questions are much more about mortgage-backed securities, which the u.s. had. then out of the blue, he says do to to meet my dog? he said the outcome of last meter dive. so out comes putin's dog. bigger, better, stronger. this is a massive change in attitude which had taken place despite his concern. he was telling me this about how the attitude had changed an emerging market within a decade ago when we had so emerging

markets, no one was going to look at us, valuations for really cheap than the alternative place appeared to be a big mess. and now a decade later, and he said the country with emerging market had hype around it. so that's it i decided i would rate this book. the idea of the book really was if you look at economic history come you've got to distinguish emerging markets, which are now nearly 40% of the global economy , you cannot treat them as a homogeneous entity. differences are incredible. you've got countries than africa with the per capita of a thousand dollars. large economies in india and then you got the likes of career with a per capita income of $20,000 plus. in the middle you have a whole bunch of countries like brazil, mexico, russia with a per capita income of 10,000 or $12,000. and even china, things have changed dramatically.

the per capita income $11,600. if you look at economic history, typically been countries get to the per capita income level, the growth exchange-rate valuation, growth tends to slow down. in china's case, that china in the 1970s in terms of its stage of economic development although korea and taiwan in the 1980s and 1990s. but these are the gold medalist of growth, countries that have gone on to successfully industrialized themselves. but even these gold medalists of growth ended up slowing down at that sort of per capita income level. and i think that to me is that something is happening in china as we speak. and yet the ankle in bias and such is that the more we speak, the more the nervousness is out there. because the project the next five years china's grocery will be more than 8%.

an assertive sociological game in town is the thing about when china will overtake the u.s. there's all sorts of arguments going on around there in terms of the 18th and will be 2020? ways that all based on the straight line extrapolation, 8% gdp growth. ..

this is the worst performing. it should be. why should people sort of make too much money for essentially zigging dirt out of the ground. that's what the commonty business is. a decade ago a number of

billionaires who came from the debt sector [inaudible] captivation off of the billionaires out there. as i -- [inaudible] in i try and come up with rules of the road. i think that the imf banks and others did a good job coming up with the, like, all the academic stuff, which is in terms of that institution, education and times also need investors pay a lot of attention to other stuff. one thing i come up in the book is a four-season index. we standed in the four-season hotels or luxury hotels and

often you look at the price of the hotels that tell you that a country is competitive in doing business or not. i find it shogging when you get to some places, you pay for high room rates at $1,000 a night. a and you're in places like east asia which is -- [inaudible] much better than china or korea or southeast asia, indonesia, thailand, you pay about $2 to $300 a night. to me it's what the entire problem in light brazil is. the currency appreciated massively because of the commodity boom and interest rates are relatively high leading a huge amount of capital. it's getting -- nobody is producing much in brazil. they're running on deficit even though they have a commodity boom to back them up. i shudder to think if what's going to happen to if i

anticipate they will in the coming few years. it could be a serious problem for the likes of brazil. same thing for russia. russia a decade ago the price of oil was $25 a barrel and they used to be pair nowed what if it get falls to $15 a barrel. they suffered from the experience in the mid 1990. today they cannot balance the budget at $1 10 a barrel. they should get embedded and that's what the problems arrive. and yet, the country that i see a bit more optimistic are countries like i feel are countries that i feel which are coming back from the [inaudible] countries that are reforming because they had head back to the war or need to attract cap tam. you want to be with the countries. one example which i find that i get a lot of push back from the philippines. they used to be the star of asia in the 1960s. it was a second richest country

in asia. and because of the political and economic turmoil since, it was a constant lag. this is problem with long-term forecasting as well. 1960s the biggest institutioned in the world said the next east asia would be philippines, beer ma, and sure lane can. they expect it to happen. [inaudible] i began to two years ago go to philippines and see there's a lot of society that be passed by every single east asian country in terms of their per-capita-income and for them, the final nail in the coffin was indonesia was surpassed thiment to be a bigger country. then you find out they were trying to throw up a leader out there more focused on economic reform and delivering some sort of an investment cycle again. that's what i makes --

[inaudible] whey find here is the destination is more important not as important as the journey. the journey is important. you figure out the rules and you need to be flexible. you can't get locked in to views for too long. and another thing i have a lot of contempt for is long-term forecasting. as say in the book the that forecasting used to be you make as many forecasts as possible and remind theme when you are right. to me the new forecast you forecast so far out in the future that neither you or i will know whether we were right. [laughter] , you know, like i hate to say ha. other books are written about what will happen to the world in 2030 or 2050. who cares. who's going to be around to figure it out? most of us live in a practical world. i wish i could find a client to tell me how it take a performance in 2013. politicians would say listen, you elect me in 2030 i if

deliver. the world doesn't work that way. the entire business, books which young like winest because something happened in the year 1400 or 1500 therefore that is a good guide for us tbenlt years from now. again, from all practical value. what i'm trying to do here is try to sort of keep the horizon to a practical one which is three to five years maximum. or decade. or be flexible about it. that's the problem with acronym pips see some of my counter parts twisting and turning all the time. trying to like defend -- [inaudible] because. defend russia because they're ready to an ak mom now. it's -- [inaudible] doesn't sound as cool. in to the stuff. the whole concept of breakout

nation which i put out here is you have to figure out which country will exceed expectations and which ones will point and be flexible about it. have some rules. as you travel the world some can be easy like the four season index some in wars assesses to which countries have their back to the wall and willing to reform. some of them, you know, political rules one thing i come up with which is a bit of a control argument with some of the, you know, like [inaudible] what we see people having -- [inaudible] trying to be objective it doesn't matter what your economic system can is that i looked at about all the high growth cases in the world over the past three decades and figured out what was a political regime. system backing it.

something starry eyed about how good the chinese is because of the control system. i said the control system that works, i can show you one that does not. the biggest disappoint the last four to five years has been -- [inaudible] which sort of the next china of the region and greatness prematurely and vietnam tried to copy everything china was doing. they come up with results that are disappointing. [inaudible] what you need is flexibility. some sort of rules about what will work and what will not. i think that's a concept of breakout nation. a and the last fact of a breakout nation which is a lot of attention to expectations. i mean, expectations are key. some people ask listen you don't site that china is a breakout nation even though you expect

the growth rates will be okay. another 6% it's growing faster than the western world. or if china 6% that's faster. but to me, if india go down to around 6 percent and china hitting below 8% and the domestic mood in the countries is rather bleak. not so much in china but india this morning i was in a debate on television and the fact that india depression in india question mark? because the growth rate is slipping from the highs of 8 or 9%. expectations are key. what makes a break out nation in the country is able to exceed expectations. that's what the politician, the investors, the business community has come to expect. it may appear to be high. with a country of per-capita-income of $15 ,000 you feel like a minidepression back home. the same thing with china.

china's economy has been a remarkable success and the economy now is matureing because it has grown quickly [inaudible] 120 million chinese move to urban areas over the past decade. now they have reached 50%. things begin to slow down. like the number you expect to [inaudible] to urban areas in the coming someday a faction what happened over the previous decades. things slow down because of the factors. i think what people forget is fact that chis tend to slow down naturally. when you ask people lying in my community the question like off and on will china have a hard landing? how do they define a hard landing? 7% growth or less. expectations get inflated and point the expectations it feels

as if it will be a real problem. i think that is whatted with the emerging are concerned. that's one thing i try to talk about that a decade ago, if i [inaudible] a lot of my colleagues tried to do in the middle of the boom here in the u.s. emerging markets from the u.s. because nobodimented to listen to that. but the middle of the decade [inaudible] every man and his dog raise money for the emerging markets. we ran on a stage where a dog. what's happening now is we have once again reassessing ourselves and [inaudible] with a should we do? for me the closing line in the book and the mantra when there is no wind -- [inaudible]

you can't exec to sort of converse [inaudible] now each emerging market need to reform and come up with their own sort of agenda to try and catch up with with the developed world. to me that is a main outline and the main argument of the book and happy to take any questions after this. thanks. [applause] thanks very much. it's my pleasure to introduce a colleague. he's a research fellow. he's a regular columnist at the times of india and the economic times in india. he has been a correspondent for the economist magazine. he is the author of a book called "escape" from zoo keepers can is a collection of the

essays and he is a prominent and frequent common at a timers in the major media in india and indonesia. please help me welcome him. [inaudible] listen to him it's a readable book. something that has all kinds of insight. it'll make you laugh and wonder why you didn't think of the things earlier. i have to tell you that apart from being a banker -- [inaudible] in india whr there's an election he takes a abandon of journalist along with him. and we go in to the areas, we watch the election we talk to him. and we have a vote on how many votes the party going get. who is going win? and let me tell over the last couple of gears [inaudible]

we had an enormous boom of that last decade. there was something utterly weird about it. i could see it was in a different way. we had a situation where the imf is which is supposed to be the rescue of bad economies. there was no bad economies for imf they had nothing to do. we had gone to a situation where the imf was -- [inaudible] saying, you know, we have nobody to lend to. why did you have knob to throned? because the united states and the huge deficit. [inaudible] i was very clear that india is 9% unsustainable. said in africa -- [inaudible]

when it came down, i as not surprised. the book a year ago almost. had he made the -- [inaudible] at that time it came out to be more controversial. [inaudible] the commodity many things predicted already happening. it's very clear. it seems he left out many things in the book. it it's mentioning them. the most interesting prediction he makes the guys going to be the breakout station nations very important ones are islamic

democrats. on these specifically turkey and indonesia are likely to be two countries of outbreak nations in the next few years. it's an interesting not just from an investment banker point of view. [inaudible] they came with the idea of civilization. i was among those who -- [inaudible] more people than the entire middle east sort of antimiddle east and huge area of [inaudible] and concentrate on the middle east you will understand what islam is. because the money was there, [inaudible] 150 million people there mostly muslims but they are -- indonesia had 200 [inaudible] the number were there. in a sense the economics success of the middle east.

[inaudible] even in bangladesh and indonesia women began to [inaudible] it never happened earlier from the centuries. [inaudible] the rise of military islam beginning to van effect on the areas of islam. if he is right, if we are going to see a fallen commodity prices, all of opec is going shrink. he mentioned that russia is going to be budgetary trouble. if the price of -- [inaudible] saudi arabia begin to [inaudible] the price fall below $70. if he is right, we have a situation with the oil produce ers? the middle east they are going

to shrink considerable belie within the islam world. the guys going rise up are turkey which is fundamentally secular and indonesia which is fundamentally secular. if terrorist a re-- [inaudible] more than americaned a venn chirrs in europe or -- [inaudible] or any other adventure in syria. he says that [inaudible] breakthrough companies he expected in europe are the disek republican and poland. okay. not countries that you immediately think of. he finds a large number of characteristics [inaudible] different from the other guys. they don't have -- [inaudible]

briefly -- [inaudible] they have the great recession in good shape for the czech republican. the reason why i think they are not to be wrong is the european banking system. i am asking the other day with the -- [inaudible] after all that happened the european banking system is so success it has to -- [inaudible] by $3 trillion. a lot of that money is [inaudible] is not necessarily a lot of is linked to latin america which is one more reason to be spent call about the future aspects in argue teen that. -- argue teen that. argue teen argentina i think he is gunning for the czech

republican. i think they are indigenous. in the european banking system collapse the whole world listen effect not just a couple of eastern europe countries. they will rescue the banking system one way or the never. [inaudible] commodity prices? i think he is right. there's been a huge boom everything kept going up fiveover six times. [inaudible] the reason i thing he's wrong what we are today is in an attention to the environment and environment [inaudible] which is never been in history before.

everybody wanted do this. you all kind of areas with the oil. we have the united states which is banned all drills on the east coast and the west coast. there are only three states in the country that allow drilling at offshore which is texas, louisiana, everybody else is forbade. we have a large gas perspective. [inaudible] okay. oil is -- [inaudible] gas prospects -- [inaudible] incredible reaction. yeah. how do you know you -- [inaudible] for the first time in history a striking oil has been a disaster. every other kind of mining.

[inaudible] india has the third largest oil reserves in the world. because of problems with the -- [inaudible] india has become one of the biggest imports of coal. i had to write a column saying something about it. a massive oil reserve we are importing because of the difficulty of it. [inaudible] we start wuf a -- [inaudible] the reason i think commodity will be more resilient that he thinks. except i would agree with him that oil and gas. the discovery of shale oil and shale gas in the united states. that together with technology is it can be replicated and enormous sthail depos it all over the world. china has the biggest.

[inaudible] once again become an export [inaudible] so for the 0 beck countries, not particularly gooded at all. if the commoditieses are constrained the perspective of large commodity exporters have -- [inaudible] because, i mean, both india and china in terms of trade effect. [inaudible] especially about india. a little bit of time on that. since we have both come from india. [inaudible] look at him. he's right in saying india on the political seats there's political or really paralysis. many things have gone wrong at the same time. yet -- [inaudible]

[inaudible] in the book about the demographic. india is a country which used to have a problem with explosion. the plosion has been revamped. a magazine -- [inaudible] tbhawbl have a complete effect the population growth especially the working group and the working edge is going to rise very slowly and actually going decline. india on the other hand they're

different to [inaudible] maybe 300 million people. not just numbers of people. the people clever. what pernlgt percentage are members of the work force. in the countries of the west it's typical up to 70% of the people in the work force. the figure from china is 80%. india is only 39%. the clines chinese are doing better. [inaudible] 83% of the working people in the work force -- [inaudible] from 60 to 70%. the thing happening in india is a collapse or female participation in the work force. and the question of why is it

happened. certainly [inaudible] say i don't send my women to work. as india has [inaudible conversations] fortunately the demographic shows that as women get more educated they become school goers they reenter the work force. i see a major benefit coming to india in the former of demography. that is a plus point. other thing that he touch on in the book, there's a question of [inaudible] indian yat is a poor country. the chances of catching up are high. [applause]

we have the sketch of possibility. even within india. we have a large number of [inaudible] which [inaudible] well below the national level. people are large [inaudible] independent country would be one of the large nest the world. and the -- it has begun to grow 7 percent. beyond all redemption 11 percent. this has been going at 10%. india has a modest problem. the biggest problem is in the -- which is back ward. it's one decade in 10%. [inaudible] a possibility of india is backwards state with

[inaudible] catching up with the existing that is a huge growth potential. i believe for these reasons india's perspective are somewhat better than what he said. logistics 5 to 6. if that's what the "the wall street journal" thinks i think they are better than that. [applause] thanks very much. we have time for questions. so if you have a question, raise your hand and wait for the microphone and identify yourself and who you are asking the question to. [inaudible] , all over the place and [inaudible] have you been to egypt and what do you see for egypt? >> i think the question back to

the guy you -- [inaudible] in india. so where do people go with the money now? [laughter] well, i mean, like egypt or something i have to say that -- with all humility it's a country we were warping up to before the outbreak of the crisis. the political crisis in, like, 2010 that was partly because i remember the meeting i had with governor mubarak in 2009, and this will give me optimism. it was march of it 2009 [inaudible] i went to a conference there and i met governor mubarak at the meeting in march of 2009 and there was so much talk in the world about the end of capitalism. the end of free market in the mist of the financial crisis out there. and i asked him about mubarak back then what do you out of all this the wars turn the back on opening up your globalization.

that was a fear. that was then. what he said to me something struck me. it made me more optistic. he said that the problem here is not we need more regulation. we need better regulation. more importantly there's no turning back. people like us in egypt we remember the bad experience we had with socialism. for so many years. out here. there is no turning back. [inaudible] open up the economy again. that gives me optimism that at that time -- [inaudible] shut itself down and move to globalization [inaudible] this is going to get better. so i think , i mean, egypt is concerned. it's disappointed because of the political chain or some -- change for the better. i see egypt has chance.

one thing which i was in turkey last year and i was spending time at the turkish leadership and they were telling me dc going to -- [inaudible] the muslim brotherhood in turkey would come to ask forked advice remember a decade ago the fear in turkey too that turkey would go down the fundamentalist way. and yet they focus very much on economic reform and set aside some of the hard line [inaudible] agenda. so i do see that egypt is a mess now because of, you know, couple of -- enabling but if you were -- [inaudible] in the year 2010. say now we are look at and still an optimistic road map for like egypt if it goes down the turkish way and sorts take the advice from the party despite the criticism that -- because

because a decade ago the same fears exist the about tour koa. i think that point that he made that if turkey and indonesia emerge as "breakout nations." there are fief -- join they are the next two one which is is what my forecast is that we baffle -- [inaudible] including for egypt. the question about whether people putting their money widely i hate to say that the party in india is still going on. so i don't know whether it's -- [inaudible] i have seen not -- [inaudible] even though the business is picking up that quickly. >> another question in the back. good afternoon. my name is robert sinners. my question was wayed on concept

of human right and some of these developing countries, and as the u.s. loses, i guess you say an ton my in global markets in more emerging markets gain prominence, how would you say that our relationship either with hard power or soft power will change toward some of the countries that may have historically -- [laughter] had issues with human rights repression, et. cetera, and personal rememberty -- liberty as well. how do you see our relationship with the former dictatorships, and education you say repressive democracy, if you might say. in the future. how do you think that will change? >> i don't know. i really sort of comment much on that. i mean, like -- the basic point that i made here it is the fact that i don't think that the u.s. sort of listened, i mean, i don't think these would, you

know, influence that much at any point in time. if you look at what happened over the past decade the high growth examples have come from some of the most repressive antidemocratic kind of regimes. subsequently -- mature and begin democratic -- [inaudible] i don't think that the u.s. influence on the countries has been that great anymore to go by the last 30 to 40 years. and the fact that, you know, the one -- freedom of enterprise, speech, et. cetera a hard conclusion is that to me that does not matter fur economic growth. it's 50/50. the quality of leadership at the top ma matters. i don't see it as a game changer either way in terms of i do sente the influence declining in the war has anything to do with changing the anymore system or

human rights anywhere in the world. the countries do exactly what they feel like. i don't see it having any m my indication for economic growth either. >> thank you. take a question in the center right there. yeah. right there. >> i came in a little bit late. you may have mentioned it before i came in. [inaudible] thank you. >> i'm curious how africa fit in to your description. there's two theories turn the corner [inaudible] the ore argument is no, it's a commodity boom. they haven't reformed. they are not in the basic supply chain and so on. india itself is trying to play a bigger role in africa. the chinese seem to get headlines. two-part questions one for each of you. what do you picture africa in your picture. and of course, is india going to

play a role in the countries or is it going to be a chinese decade or chinese fifty years, i don't know. those are the two questions. thank you very much. >> the first one the biggest thing africa surface from again is generalization and i think that's what happened. if you look at africa -- the economy in africa. i think that you are right that a lot of, you know, driive by the commodity boom going up and down. the example is -- [inaudible] the economist invents the -- so, i mean, if you look at the economist a decade ago, they had a cover -- [inaudible] commodity price were at their low. they had a hopeful continent. commodity pries would have been high. i think africa suffers from generalization. for me my entire approach in the

book with regard to africa you have to take the economies one by one. in africa an economy i feel a bit optimistic on is currently nigeria. this is exposed to commodity. people ask how come? they went through such a terrible time after discovering oil the classic cases it was before. [inaudible] the problem there was the political leadership was -- for the first time they got somebody out there that's been the history of any gear nigh jeer are nigeria. you have to study cases individually. and listen to the fact that some are of the economies are better than hay are because of the commodity book that may not last. it's back to the political and economic management of the country. rather than making generalization about africa is is a lot of us tend to do the continent.

>> yes? he's right. [inaudible] tan saddam hussein ya has i think they have, good perspectives probably muslim because they were done a lot of good work on the things even though they are not talked about as great commodities. [inaudible] you asked about the indians and the chinese. substantial indian press sense always in africa because they [inaudible] along with the british and set up shop there. they begin business people as a slew of business people they were hate bit local people. [laughter] with regard to the -- [inaudible] money lenders. they didn't have a good catch they. when -- [inaudible] many indians were forced to --

one way or the other. they were all nationalized. and expelled them -- [inaudible] the chinese department suffer from the -- basically. okay in the last seven or eight years, the chinese have gone in a big way with the investment. it made them important but not liked. if you want to [inaudible] they will bring in 5,000 chinese labors all the way from china in camps. it will be -- [inaudible] not nearly -- [inaudible] [inaudible] for various reasons. -- project after project in building roads and [inaudible]

more technical assistance and -- [inaudible] and that disappeared. and much later people like [inaudible] only wants to swallow money. [inaudible] [laughter] [inaudible] okay the chinese are coming in. they have done a lot of things. and they it has helped them. ly say in some sense because [inaudible] they got at the time of booming prices. and yet he is right if commodity prices are going to collapse, a lot of those things are going to look less comprehensive than right now. china has large [inaudible] american treasuries at 1 percent or do something else? i think part of that investment in africa has been a form of diversifying their [inaudible] india on the other hand is

poorer less than one-third of [inaudible] by way of pricks. there's no question of indian even attempting to match it. all they do is to the extend that we want to export some capital -- [inaudible] [inaudible] give up and indian [inaudible] there are a few champ ever examples like that of a successful indian entry. by and large there's no competition. the chinese are way ahead.

>> question right here? >> [inaudible] international business trading firm. my quick question is what dow think about the debt levels rising debt levels of turkey? because i know you are talking -- well of the turkish economy. i am worried about it. >> [inaudible] >> do you feel that way? >> it's an issue in turkey [inaudible] by the fact that this is one emerging market that has zero commodity. zero. i think that -- that fact -- a lot that will come off.

but like -- [inaudible] remain the pretty management. >> [inaudible] question what is your take on the middle income [inaudible] i know you spoke about middle income explorations but vietnam, brazil, russia, take your pick. is it something you mention in your book. where is the next growth going come from. question for both of you. >> i think that, you know, like my point about breakout nation is identify which countries will do better than we think and worst. i think that -- [inaudible] is 4.5%.

that is reasonable. the dispersion is going to be high. i think the countries i feel relatively more optimistic how they exceed expectationses which is the ones i mention south asia, philippines, thailand, as political situation there shows signs of settlings down. i think that -- turkey gets to -- [inaudible] the growth rates will remain high on a relative basis disappointment one expectationses are in terms of that. i think a lot of that adjustment already happening as we exec. and i think that some of the -- [inaudible] going to be broad coming from different places where expectations are exceeded.

>> [inaudible] where does the money go? >> unfortunately after the adjustment is over. what currently india is a risk of now -- [inaudible] do you believe in the motion of the middle income trend. >> i think that problem will be looked at for the purpose of the book is that it is so wide you can drive anything through it. like, you know, look at the history of economic development different countries with suffer -- [inaudible] after being at 10 or 15% of the per-capita-income level of the lead economy. you have others likes argue teen ya converge to 50 to 05% of the u.s. economy per-capita-income and then going regress. i think the problemmed with concept is there's a very lose concept which covers a huge range and [inaudible] all it suggests at some level of per capita they begin to stop. there's no specific point which

you can identify that. >> [inaudible] likely to commodity exporters. [inaudible] when it happies the rates get driven up. you have a situation -- [inaudible] on the one hand we're not as productive in america and the races are not as low as china or india. the guys in the middle get screwed. [inaudible] the blacks have been left behind. they are at 2,000 a year. and the blacks as of now 17 years of agency. and then they were -- [inaudible]

he turned puce and said i don't want to think about it. the truth is that productivity in some of the low range countries. >> i'm not sure i buy that. i have a question. what about argue argentina they suggested they're not doing so bad. look at the growth record over the past or so years and the people who actually criticize argue teen that for the policy are practices bad economics or just bad journalism. some of us, of course, have been criticizing their policies for a long time and suggesting this this can't go on. what's your view on that? it's too small to -- [inaudible] it's going off the cliff, you know, become a economy. who cares about it.

[inaudible] they are a bad economic virture because -- [inaudible] how about inflation as well. the growth rates are beginning to follow any economy can, you know, like do well for four to five years if you have a massive expansion in the debt and you clear it out of the system in that. what's happening today is the inflation rate is a -- [inaudible] i can't think of a tax on the boor than a high inflation rate. [inaudible] is coming from -- [inaudible] >> question in the back? my name is [inaudible]

i have a question for you. the indian stock market is -- [inaudible] you probably agree with that. >> right. >> how does it fit in the element of in your book. you talk about commodity. you talk about various aspects through your talk today. how do you explain the indian stock market given your contents of your book? i think it is no different than the emerging market in terms of other stuff. [inaudible] what i found is that getting the country gdp growth rate is the single most important thing. [inaudible]

as far as the stock market is concerned the problem is that [inaudible] it has growth expectations built in to of 8 to 9 percent. currently coming down the growth expectations of about 6 to 7 percent. and depends as to what -- [inaudible] gdp growth is going to fall below that. india is the only one that i'm 50/50. >> we have time for just a couple of more questions. okay. we will take a couple more questions. one from him and him. >> thank you very much. [inaudible]

my name is tyler 0 neil in the national journalism center. >> could you speak up. >> my name is tyler o'neal. i'd like to ask the question of the elephant in the room. earlier on you mentioned that you think united states what makes you optimistic? >> sure. okay. >> let's take a question from him, please. [inaudible] my name is [inaudible] and my question i'm with nie -- [inaudible] pakistan [inaudible]

falls apart [inaudible] after the great financial crisis the convention [inaudible] this is how they conclude the book. go down to war deny [inaudible] it's not a bad place. i think the reason for that is i think [inaudible]

last five to seven years. it's related to another broider point about technology. which that one thing the u.s. continues to the lead on even by the facebook ipo. it remains on the cutting edge of technology logical innovation. everything like new defining still happens in the u.s. some cloud computer to social networking to, you know, like the iphone and other things because one-third of the global -- [inaudible] in the worlded takes place in the u.s. one-third. it that's a very high number. it's quality really different if the japanese are -- [inaudible] japanese come out with products tend to be much more sort of centered around their own domestic market [inaudible] in the foreign marketplaces where more open society.

the other point about the u.s. is [inaudible] how cheap this place has become. the u.s. dollar is the cheapest it's been. in the history. if you -- [inaudible] just for the inflation. and i think that is why we are seeing some sort of a manufacturing [inaudible] take place in the country jobs are moving back in the manufacturing sector [inaudible] the fact that the wage growth is low. the fact of the matter is the [inaudible] [inaudible] gap nearly closed out in five-years time. so what's happening there's a big [inaudible] takes place and the wages adjust

for productivity. compared to what's happening in the u.s. for these reasons i feel optimistic as far as the u.s. is concerned. >> i think that as far as germany is concerned. the same reason, you know, like that it's not any of the excess is that the other countries [inaudible] relative expectations in the u.s. the average growth rate was 3.5%. i don't think we can get back to that. the indebtness is too high. the way we can award the japanese is 1% as well. because of the technology and all of the society and the cheap exchange rate. your last question, on geopolitics.

i think that, i mean, i've take in to account the political leadership -- [inaudible] put to a book the predictability is so limited. nobody sees these things coming in any which way. it's hard to forecast political economics. i talk a lot about politickings in the book how the average life of a political leader at the top is about seven to eight years. they begin to make mistakes after that. it goes in to that. what's agree owe political factor that you speak is a about is forecast to -- [inaudible] on that is difficult. >> gentleman [inaudible] i have no doubt u.s. will ultimately come out on top. the major reason is that germany -- [inaudible] does not attract people from asia, china or anywhere else. the united states is a great countries piet a lousy

educational system. now depend on american brands you are in trouble. they come from i think england, germany. silicon valley 50% of the start-ups are indian and chinese. the reason why america is on top -- i heard of this discussion back twenty years ago at american and guy from sing or. and the guy said you are -- [inaudible] we are going to overtake you. the american said we will win because your -- [inaudible] there's no other country with a statement -- [inaudible] that is the u.s. advantage. on the geopolitical thing. [inaudible] is the you know. i think the eurozone is fundamentally a bad idea. they put so much political capital in to it. it's going to a long difficult life. europe is going to be up the

creek for quite some time. >> time will tell whether your predictions will come true or not. it some of us will try to reremember. please help me thanking both of our speakers. [applause] [applause] all this week watch c-span for live gavel to gavel coverage of the republican national convention in tampa, florida. watch every minute, every speech. here on c pan two it's booktv all day every day throughout the convention with highlights from the past year of nonknicks authors and books. and c-span also throughout the convention, 24 hours of american history tv with lectures, oral histories, and a look at historical american sites and art facts. >> john kennedy once met with harled the prime minister of

britain they discussed arms control or whatever. issues between the two powers they sure did. we only long after wards did we get the notes on what they said exactly to each other in private. it turned out that kennedy spent a lot of sometime complaining about bad press coverage. they were being tough on jackie and other things. and mcmill less than choughs a generation older. why do you care? brush it off. it doesn't matter. you have other things to worry about. kennedy said that's easy for you to say, how would you like it the press said that your wife was a drunk? and he replied, i would simply say you should have seen her mother. [laughter] that's a kind of thing that later -- the fun thing to give you an idea what they're like. you can't learn it in real time. >> history wrans and biographer used advantage of hindsight to understand the subjects through a prison imof time. sunday your questions, calls,