the many globalizing trends that diluted byality -- reality. angelic forms of purity, dictatorships the relativism brands of ahistorical fundamentals on ethical systems lacking kindness and intellectual discourse are wrapped up with them is a life is a challenge in the present historic moment. the true democracies and political will of the people must not be allowed to collapse under the pressure that multinational interests which are not universal, which weaken them and turn them into uniform systems of economic power at the service of unseen empires. [applause] this is one of the challenges which history places you before today. to give your pope means more

than simply acknowledging the centrality of the human person. it also implies nurturing the gifts of each man and woman. it means investing in individuals and in those settings in which their talents are shaped and flourish. the first such area is that of education beginning with the family, the fundamental cell and most precious element of any society. the family united, fruitful and indissoluble possesses the elements. [applause] possesses the elements which are fundamental for fostering hope in the future. without this solid basis, the future ends up and builds on-demand with dire social consequences.

it's also important stressing the importance of the family should mean not only giving direction hope to new generations but also to many of the old who often have to live alone and abandoned because there is no longer the warmth of the family home that can accompany and support them. alongside the family there are the various educational institutes, schools and universities. education cannot be limited to providing technical expertise alone. rather it should encourage the more complex process of assisting the human person to grow in his or her totality. young people today are looking for a suitable and complete education which can enable them to look to the future with hope rather than disenchantment.

there's so much creative potential in europe in the various fields of scientific research. some of which are yet to be fully explored. we need only thing for example of alternative sources of energy, the development of which will assist in the protection of the environment. [applause] europe has always been in the vanguard of efforts to promote ecology. our earth needs constant concern and care and attention. each of us has a personal responsibility to care for this creation, this precious gift which god has entrusted to us. this means on the one hand that nature is our disposal to enjoy

and to use properly. but it also means that we are not its masters. we are not stewards but not masters. we need to love and respect nature but instead we are often guided by the pride of domination, possession of manipulation and exploitation. we don't preserve the earth. we don't respect it. we don't consider it as a freely given gift in which to look after. respect for the environment however means more than not destroying it. it also means using it for the good. i'm thinking of above all of agriculture which provides sustenance and nourishment to the human family.

it is intolerable that millions of people around the world are dying of hunger while tons of food each day are discarded away from our tables. [applause] respect for nature also means recognizing that man himself is a fundamental part of nature. along with an environmental ecology, there is also a need for a human ecology consisting in respect for the person and that is what i have tried to emphasize in addressing you today. this second area in which people's talents first is in work. it is time to promote policies which create employment but above all there is a need now to restore dignity to work by ensuring proper working

conditions. [applause] this implies on the one hand finding new ways of combining market flexibility and the need for the stability and security of workers that are indispensable for their human development. it also implies a suitable social context geared not to the exploitation of persons but to ensuring their ability to create a family and educate their children.

we cannot allow the mediterranean to become a vast graveyard. [applause] the boats landing daily on the shores are filled with men and women who need acceptance and assistance. the absence of mutual support within the european union runs the risk of encouraging particularistic solutions to these problems, solutions which don't take into account the human dignity of the migrants and thus contributed to slave labor, continuing social tensions. europe will be able to confront the problems associated with immigration only if it is capable of clearly asserting its own cultural identity and

enacting proper legislation that protects at the same time the rights of european citizens and to ensure the acceptance of immigrants. only if it is capable of adopting fair, courageous and realistic policies which can assist the countries of origin in their own social and political development and in their efforts to resolve internal conflicts, the principle cause of this phenomenon, rather than adopting policies motivated by self-interest which increase in feed such conflicts. we need to act on the causes, not only on the effects. [applause] mr. president, your excellency's's, ladies and gentlemen awareness of one's own identity is also necessary for a positive dialogue with the

states which invested the part of the union in the future. i think especially of those in the balkans or which membership of the european union could be a response to peace in the region which has greatly suffered from conflicts in the past. awareness of one's own identity is also indispensable for relations with other neighboring countries particularly with those bordering the mediterranean, many of which are suffering from internal conflicts, from the pressure of religious fundamentalism and combat of global terrorism. u.s. legislators have been tasked to protect and nurture europe's identity so that its citizens can experience renewed confidence in the institutions

of the union and in its project of peace and friendship that underlies that union. knowing that the more the power of men and women increases, the greater is their individual and collective responsibility. i encourage you to work so that europe rediscovers the best of itself. an anonymous second century author wrote that christians are to the world what the soul is to the body. the function of the soul is to support the body to be its conscience and its historical memory. a 2000-year-old history links europe and christianity. it is a history not without conflict and air but one

constantly driven by the desire to work for the good of all. we see this in the beauty of our cities and even more in the beauty of the many works of charity and constructive cooperation throughout this continent. this is a history in large part that will still be written. it's our present and our future. it's our identity. europe urgently needs to recover its true features in order to grow as its founders intended, in peace and harmony so that i can be -- and that is not yet free of conflicts. dear members of the european parliament, the time has come to work together to build a europe, a europe which involves -- revolves not around economy but

around the sacredness of the human person. [applause] around inalienable rights. in building a europe with courageously embraces its past and confidently looks to its future in order fully to experience the hope of its presence. the time has come for us to abandon the idea of a europe fearful and self-absorbed in order to revive and encourage a europe of leadership, a repository of science, art, music, human values and faith as well. a europe which looks to the heavens and pursues ideals. a europe which cares for, defends and protects every man, every woman. a europe which this drives the earth a precious point of reference for all humanity. thank you. [applause]

[applause] [applause] [applause]

[applause] [applause] [applause] [speaking in native tongue] >> translator: thank you very much ladies and gentlemen. it is clear that pope francis has reached many, perhaps all of us and i would like to express our thanks to him for his spee

speech, for this great encouragement that he has given. i think what you have said perhaps encourages us in the european path and it's a path that leads to a great great future people together. it gave us some good side points on that path. i would like to thank you and repeat what i said at the outset. you are a person who gives guidance in a time where we have lost our compass and we are eternally grateful that you have come here and have spoken to us and thank you colleagues for attending and for applauding his holiness and i think that we have many jobs in common and if we heed the words of pope

francis that would be good. thank you very much. [applause] [applause] [applause] [applause]

"the wall street journal" ceo council recently hosted its annual meeting in washington d.c.. a multi-day event includes interviews with lawmakers, military officials and leaders in government. this year's meeting began with international monetary fund managing director christine lagarde. she discussed the imf role in addressing global economic issues. it's 40 minutes. [applause] >> that was last year. what an extraordinary 12 months we have witnessed. who would have forecast the price of oil and engine oil was up $2. in the midst of the isis crisis is now 60 something dollars. who knew -- who was depressing

person understood that connection and precisely how much did that press make by shorting oil? [laughter] and think back to when kerry too was merely a very large ship before was hijacked by central bankers and then we have had qe3 and possibly even qed for but it's pretty fair to say that was qed it's not qed. since we last gathered india, indonesia have both gotten new reformist leaders. china's xi jinping has become newly assertive. those three countries together bring together 2.9 billion people and that transition and trajectory of those countries sometimes collided or fashioned

a future for many the people on our planet. it's a the year of anniversaries. a particularly poignant one is literally 25 years ago this month that's december 1989, they -- it just over 38,900. today it closed at 17,600. on present trends that will reach its former high at around 2039. and given contemporary longevity we will all be here to witness it. [laughter] on the other hand probably not as ceos because the average lifespan of the ceo is 4.6 years. [laughter] for those of you have been to councils i will let you do the math.

anyway there are people to whom we must give particular thanks for their particular contributions. first of all to rupert murdoch. rupert has been behind the resurgence of "the wall street journal" and the reincarnation of new score. quite frankly he helps all of us at the journal admits go and at fox in ways that are perceived and some that are not even imagine. to the new chief executive of dow jones unfortunately another former editor, he is leading dow jones with energy and advocacy. to the two jerry's. they sound like a stand-up comedian act and in part they are. that's jerry baker the distinguished editor-in-chief of "the wall street journal" and dow jones. he is rectifying his predecessors grievous mistakes. [laughter]

much work to do he said on that score. and leading the paper boldly into the future. two jerry side, the washington bureau chief of "the wall street journal" you will meet many influential washingtonians in the next 24 hours. he will meet a few with as much clout as jerry sighed. to john busey and to dorothea and are committed capable conference team we would not be here without you. there is one distinguished group that deserves our particular collective thanks without whom we would certainly not be here. they're not just sponsors, they are optimists and they are making possible the magic. they are the apollo education group, bnp bonobo nasdaq and -- up we could give them a collective round of applause. [applause]

now to work. washington is still the center of the world. for the next 24 hours you will be at the epicenter. the coming year will be profoundly fascinating and important. there'll be an unfolding new configuration of congress and a president confronting institutional impermanence. you hear and the world outside will hear from those who are influencing the poor policy debates but this has to be a dialogue active, not passive. so please, please participate. to start the conversation we are extremely fortunate to have with us jerry baker and the managing director of the imf, christine lagarde. thank you very much. [applause]

we do have a chair for you christine. it's not quite a hostile environment as that. thank you very much robert byrd is extremely kind remarks and we -- "the wall street journal" and new score which has been extraordinary and appreciated by everybody who works there and lots of people elsewhere. kristine thank you very much indeed for being with us. thank you for making the time to be with us. i know you're very busy. christine is literally dashing off after this to catch a plane to the country somewhere. not only when the managing director of the imf is catching a plane it's not good news for the country but i know in this case that's not the case. let's start up we may put looking at the global economy and i want to look particularly at something topical right now which is a very dramatic move that robert mentioned that you have seen in oil prices and energy prices.

40% roughly declined since the summer in oil prices. when you have seen these things in the past when you see these dramatic turnarounds these dramatic shifts in market particularly something as crucial to the global economy is oil and energy it often results in quite, a lot of dislocation of countries balance payments problems financial problems elsewhere. what are we seeing so far as you look at this, this really dramatic change we have seen prices erupting today what are you seeing this far is the stresses and strains is producing as well as the benefits is producing the local economy? >> i think what we do first is try to analyze where it's coming from whether a supplier demand effect and in the present circumstances what we are seeing is predominately a supply. the 80/20, 80% supply, 20% demand so that's pretty good news.

then we look at the aggregate effect that is going to have on the global economy. if i was to address an audience in saudi arabia, qatar or kuwait i would not look at exactly the same way. there would be winners and losers but on a net basis it is good news for the global economy. we have a rule of thumb that is based on analysis of what is taking place but essentially if we have a 30% decline and we have a bit more than that. assuming we have a 30% decline it's likely to be an additional .8% for most advanced economies because all of them are importers whether you look at u.s., japan, china big driver of growth all of them are net oil importers. if you add .8% to each of those countries probably only .6% for the u.s. because it is less critical for this economy it is a net booster on an aggregate

basis. so winners and losers, exporters are taking a hit. for some of them my assumption is that the calculated hit but in that net is good. >> obviously mad at is a positive but look at some of those futures. let's take russia. russia is going through period of extraordinarily economic dislocation right now. the rubel has to climb dramatically and continues to evolve, has been today. how fragile is russia what kind of threat does its fragility posted the global economy? >> i think it poses significant threats but not just from an economic point of view. if you were to ask me what i'm concerned about at the moment certainly the geopolitical threat created by the current endeavors and i'm putting endeavors with an s of russia is high on my list. the burden that it is taking as a result of the price of oil

going down is adding to their fragility and vulnerability and they know it. so it remains to be seen what the action will be but it is certainly something that is an add-on to the ruble depreciati depreciation, to the sanctions actually affecting the russian economy as well. you have now three factors at play really operating on the russian economy. >> do think the imf is going to need to be looking at what's happening with some of these energy and net exporting countries? are we seeing whether it's in the opec countries is there going to be in need do you think for some intervention by the imf? ..

need help from this country to our quota and our volume of capital to be engaged as loans to the countries be increased, as is expected from the rest of the world association need your help. >> want to comb home -- come them to the reform issue. it's go around the world, much of the world is helped by this crisis but let's look the global economy, the global hot spots

starting with a place dear to your open heart, europe. it looks like, accord together latest data, it's in or very close to its third recession in five years. this is a continent that seems now to be reliving japan's experience, over the last 20 year seems not to be getting any better anytime soon. what this outlook for europe? what needs to be done. >> whys what i've called the risk of the new mediocre, between low growth,.ly 1.3% next year, low inflation which is bad news for countries where debt to gdp ratio -- >> risk of outright deflation? some conditions are already -- >> some countries already into deflation but for the moment it's more sustained low inflation. it might get worse because of the price of oil, but we're

talking about nominal inflation. the question is, dot is translate into core inflation as well, which it might. pass through, at least a portion. and high unemployment, which is the other very bad phenomenon of this new immediate oak kempt look at that and -- mediocre. if you look at the other end, at much lower price of oil, so cheaper energy, you look at a euro that has clearly been depreciate over the course of the last three or four months, and if you look at the banking sector, which has been sanitized, cleaned, streets-tested by the d stress-tested and where remedies have been taken, you have the three come points that should be moving -- i'm not a assaulting this is -- suggesting this is a walk in the park, europe is a piece of cake. no, it's not. it's a complicated landscape, and one where the political

gains -- there were hints how politics should improve. certainly that's an area where at the european level politics should play a positive role, positive role for growth, for good and for the people. >> but there's a very intense debate in europe right now about what needs to be done. a strong view from some there should be aggressive monetary stimulus, they have not followed the route of the bank of england and in the bank of japan and the fed buying government bond. there's the german, strongly resisted by the germans, who say we need structure reform. not getting anywhere by constantly injecting adrenaline into the economy in this way. where do you stand? where do you stand on that desenate do you think the ecb would shoo do -- should do more? >> we're talking about the -- u.k. is differently. but the eurozone has to fire

with all cylinders. not a question of a little bit of reform and then see whether other form of innovative monetary policies. where they are at the moment they need use all available tools. so that means growth and fiscal policies that can afford it, monetary policy that is innovative and quite aggressive, and it means, absolutely, structural reforms hey have been talking and just get on with and it do it. >> but the never do it. they talk about it's lot. >> you can't say that. some of them do if you look at spain, for instance, a lot has been none spain. a lot has been dune in -- done in ireland. >> france. >> i don't take it personally, i can assure you. but. >> thank you. >> very significant structural reforms particularly concerning the labor market and job market

have to be not just talked about. >> the euro -- struck by pope francis, went to the european parliament last week and gave a speech. even the pope, who is -- one assume pope is there to speak truth. he said europe is haggard and elderly. >> he said it's a grandmother. >> that's right, like a rather sick grandmother. it's like that. >> i'm not privy to his way of thinking and i'm -- [laughter] >> have a try. >> well, i actually will have a private meeting with him next week, so i'll ask him what he meant by this haggard grandmother. i think what he wanted to do was to give a little kick, and say, come on, i'm challenging you. you can do better than that.

you, not be that haggard grandmother. there's something in the belly of the europeans that can be stirred to good fire. >> forgive me for saying this, the euro is making it worse, the creation of the euro was a terrible mistake. >> you know, i believe -- >> that was question. i'm sorry. [laughter] >> i think you know what -- i think the mistake was to have assumed that by moving into a monetary single currency, everything else would follow. and the fiscal union would be a given. which has not happened. so, if you have a currency union without a fiscal union, without a banking union, it's like not having all cylinders to fire with and that's what i hope they're going to be working on. >> let's move on. china, very interesting things again, as robert mentioned in his opening remarks, significant

reforms just in the last week, you're seeing more financial reform of the financial sector, significant economic reforms-perhaps tackling the question of state-owned enterprises and all this carrying on when growth is slowing. official numbers say seven and a half. others say it's not as strong as that. itself china going to be able to pull off this trick -- more a trick -- this balancing act of reforming its economy, making those market, pro market reforms clearly seems to want to make, while maintaining enough growth to keep people fed and happy and in jobs and from fighting in the streets. >> many of us have for many years in a way suspected china of not being able to deliver, and many have shortened china, and the truth of the matter it actually delivers, and what it plans on doing, it does. so, when they say, not -- they

might be using slightly different devices and tools and policies than what we're used to, but when they say they will deliver 7.5%, and they are gradually being more confident with it being 7 than 6.5 and gradually fading to a more moderate growth rate, i think that is what they are going to do. and we look very carefully at the mon tier policy, very carefully at the structural reforms, and this is just happening. >> how stable is the financial sector in china, particularly related to the real estate sector. a lot of concern about overbuilding, overaccumulation, every has worries about the scale. how much of a threat to global financial stability does china's financial overhang represent? >> i think what the chinese monetary authorities are particularly concerned about is -- the expansion, the

unreined expansion of credit, particularly the local communities and the housing booms or former booms that have taken place outside the big cities. they're also concerned about shadow banking, and that is an area where they want to use, as i said, sometimes unconventional tools to bring shadow banking under control and use shadow banking to the point where eventually interest rates can be freed as a result of the pressure of shadow banking. >> japan, lots of interesting thing goes on there. abe's economic experiment two years. going to have another election in a couple of weeks. new route of monetary easing from the bank of japan, but it looks like that big experiment is -- despite all the excitement and the nikkei having doubled and a period of rapid growth for a year or so, all seems to be falling apart again. what is your sense of what is

actually happening in japan? are they going to get it back on track? >> you have to give them the credit of trying something that was really hard, and trying something that is still very hard, because i don't think that prime minister abe has given up on the three -- certainly the governor is very keen on just staying the course, continuing -- corrode da is extremely strict, vigorous and continues to say he will do what it takes to make sure inflation goes up to 2%. where it's a bit short on the delivery is both under structural reform and on the fiscal commitment. our sense is that once the election is over and done, and hopefully its hand will be stronger as a result of those elections. he comes back to the fiscal plan, give a very clear indication and a solid indication of the timing of the

consumption tax increase from 8% to 10% as was planned before the end of the year in 20 15 so there is no uncertainty. everybody understands what will happen, when it happens, and they can anticipate -- our sense is when they do that, which will give sort of standing revenue going forward and hopefully will bring that debt, which is currently at 245% to gdp, when they give that indication, they can certainly for the short term put in police a stimulus that will -- put in place a stimulus that will compensate the immediate effect we have seen in april when they increased from 5% to 8%. on that fiscal front they have to do that clearly. structural reforms, they have to get on with it. for the moment, there is no slack in the japanese economy. when they do stimulus, put money into the construction business, for instance, there's nobody to build because the labor market is so tense. so they have to -- and prime

minister abe signaled for the first time they have to open up not only to women -- and i hope they do that because women, japanese women are very talented -- but also too immigration. i a have to open up a bit. >> let's bring it back home, the united states. he relative bright spot here, every agrees, two and a half percent growth, but growth rate of two and a half percent after the kind of recession we had in 2007, 2009, is not very impress and if it's been delivered in large part by a massive monetary stimulus. the largest we have ever seen. every expected that stimulus to be steadily withdrawn over the next year, fed is probably going raise interest rates. is the u.s. economy strong enough still to stand on its own feet without that amazing amount of support from the central bank? >> if we include the effect of the oil price reduction, our forecast for next year is going to be 3.5%.

and that should be strong enough for the monetary policies to follow it course, which clearly has been indicated with good communication by the president of the fed. and i think they're putting out some many senses and so many indicators to identify when it's the good time for actually beginning to raise interest, but they will do that very delicately, very sensibly. they will give the right signals to market. that's our assessment for the moment, and 3.5%? not bad. >> one quarter. the year -- >> but i'm talking about next year. next year forecast -- the second quarter was 4.5, annual rate and 3.9 for the fed. so it's not bad. >> we'll be hear from the vice-chairman of the fed tomorrow but from what you're saying, the u.s. and japan and europe, my question is a broader one, which is hasn't the whorled

become so dependent on these central bank injection for so long, and again, what growth we have seen does seem to have been system late by -- system system late by this ultimately destabilizing injection of demand you have seen for liquidity for central banks and we haven't really seen in the developed world at least, haven't seen sustained growth based on structural factors, the kind of reforms necessary. we just seem to be -- are we just not dependent continually on these repeated injections of monetary stimulus? >> it has been most help inflame the -- helpful in the last two years and had it not been around we would not be talking about this growth in the u.s. in particular, nor england for that matter, and it has been necessary, it's been helpful, and now it's a question of gradually phasing out, and i think by the same token, all the

regulators and the supervisors in particular have to be extremely attentive to the evenal formation of -- eventual formation of bubbles so they can use tools to hold the bubbles down. but i take your point. monetary policy is fine but it cannot go -- it has to be supported by structural reformes, by a focus on productivity and focus on sound fiscal policies as well. >> the monetary policy stimulus lets those governments off the hook for making those reforms, they just actually can rely on the stimulus and not have to do the really hard stuff, like making people work harder and take some tough -- >> i think that's what olestra bankers are saying at the -- all central bankers are said, we have done everything we could. over to you, and please do the job. >> quickly, i want to ask you about financial -- broader

financial conditions in the world. we are six years on from the financial crisis. a huge amount of regulatory changes, tough regulation imposed on the financial sector. are we confident that we are now pretty well safe from the kind of financial disaster that we saw six years snag have we done the right things? >> a lot of progress has been made. i think it -- despite the market trepidations and despite the hostility of some of the banks, some who are represented in this room, the fight that we addressed it from a capital liquidity leverage point of view, having some regard but not too much regard for the banks generated modellization, and -- a risk weighting method was the right thing to do, and all the

respectable governors of the big central banks will say he same thing. it might seem a little bit basic but more core capital is the best remedy to potential risk. now, what has happened is that because that sector has become much more regulated, much more supervised as well, you have seen, we have seen the development around that regulated segment, shadow banking developing, growing, nicely. and to the extent that this particular part of the business, which can be defined anywhere from very narrowly to very broadly, that segmentales has to be supervisessed and check because it's the creation of credit and the creation of money. >> one more segment. >> i know the regulation issue is a tricky one. what us always important,

whatever it is, they want certainty. they want to know what the landscape is. they don't want this sort of variations, maybe it will be nine percent, maybe over such period of time. everybody needs certainty in business, and i think that have now certainty to have put to bed and have the efforts be in charge of making sure that its implemented is good. >> you don't think it's gone too far? you talk to bankers here or in europe. they are crawling with regulations. banks these days -- banks have regulators and compliance teams and responsibility, all kinds of regulation still being create. amazingly three years after the passage of dodd-frank, dodd-frank rules are still being devised and implemented, and guess what? banks seem to be reluctant to take risks, reluctant to lend, reluctant to do the things necessary to keep a healthy economy going you don't think it's gone to for a. >> some would argue they're

reluctant to lend because anywheres nobody to lend to and there's no demand. that's a debated point. >> one quick final point and then die want to open it up for questions and come back to your point about the imf and its changes, the changes you're trying to make. you're in the middle of a big debate with mostly with the u.s. congress. we have a new congress coming in now. trying to get the congress to agree to this changing quotas. now, we don't even want to go into details but the fundamental change would be essentially to give more voting power to the emerging countries, particularly like china, the system you have is still -- is reaching back in the past but the fear here, the u.s. and understandable fear, is where does that leave the u.s. -- u.s. is still the largest shareholder, pay nets most amount of money, still is responsible -- still carries the can when the world needs that support. does the -- is u.s. going to be

able to have the influence it needs to have to look after its itself interest us. >> absolutely. with the changes desired by the u.s. and n the first place, the u.s. keeps its veto right, has more than 15% shareholding in the institution and as a result the imf will saginaw washington for as honk as that is the case and will continue to have a big say in whatever the institution does. but instead of having china as the sixth ranking member in the institution, china needed to move a little bit up to be -- to be just representative of the role it plays in the economy, and to see currently the membership of the imf with a weak u.s. leadership, is painful. it is painful. it's the largest economic player in the world, the largest defense player in the world, the largest financial player in the world and around the table at the imf it is a weak partner,

and it has to be a strong partner. we need u.s. leadership. >> in order to achieve that you actually promised last month you would go up to capitol hill and belly dance. is that right? >> yes. >> is that -- >> once they pass -- >> anybody taken you up on that. >> i'm practicing heavily. but as soon as they pass it, i will, promise. >> thank you. questions. we have time for a couple of questions before you get to enjoy dinner. anybody? i think there are microphones circulating. >> could you identify yourself. >> as the global firefighter, could you tell us what you're looking at as you think the crises that are going to come or what you're worried about that people aren't focusing on now? >> we have -- we currently have about 40-ish programs underway. and when i say programs

underway, mean countries to which we are lending because they have balance of payments difficulties and are prepared to actually reform themselves in order to have access to loans. we're not in the business of giving grants. we give loans and get our money back because we have privilege status because we hold the money of the word. not the money of the u.s. but the money of the 188 members. so we currently have those countries under -- in the program. where it is difficult, certainly ukraine is one country that is a big issue, and where a lot more financing will be needed if we want to deliver and support a government that at least for the first time from our perspective, as imf, is serious about reforming the country and about trying hard to eradicate some of what is plaguing it. all countries that will be

affected significantly by the decline of oil price, which are producers of oil, massively, i think should be under watch, and venezuela is clearly one country where it could be difficult. i would watch very carefully at central and eastern europe as well for all sorts of reasons, and a couple of other countries which are difficult. >> we may have to bail out venezuela? wouldn't be a way to endear yourself to the u.s. congress. >> no, no, no i'm not suggesting that it would have to be bailed out but it's a country where there is instability and that instability is not desirable for all sorts of reasons. >> one more question. please wait for fro microphone. >> good evening and thank you for being here. >> good evening. >> from your perspective, would

you mind commenting on where you see the trend line of free trade versus protectionism and how the current practice in global economies is affecting that trend line. thank you. >> thank you so much for raising that. as one of -- it's one of my big positives. you have the u.s. economy, the price of oil, and the focus on growth that the g20 decided to elevate to adding another 2.1% over the next five years, but trade is a big plus and can deliver massively. there are varying estimates, whether you look at what the oecd or the institute have immigranted, anywhere between 400 billion to a trillion dollars over the course of the next five years or so, but this trade facilitation agreement that has been reached by the wto as a result of the deal between

the u.s. and india, because there was that gridlock which had to do with india being able to stock and store food much more so than would have been authorized under the wto rules, that has opened up the gate to the trade facilitation portion of the round and that can unleash activity and hopefully quite a lot of jobs. now, more needs to be done, as always, and the round needs to continue. it's an encourage development from my spiff. what is happening on the intellectual property and information spectrum between the u.s. and china is also a positive. and i think it will be sufficient to overcome this slight increase we have seen over the last year in protective measures that are more not in the terrorist world but they are

nonterrorrists interest in phenomenons here and there that are intended to protect markets. i predict we will be seeing different trade agreements from now on, different regional trade agreements and different dialogue between the members of the wto, which will not focus so much of terrorists because there's not much more terrorists to be reduced except some very specific cases or countries, but overall terrorist have again down massively. we'll see much here harmonization between norms, between standards, between products so that products can flow more efficiently. >> i'll ask one final question if i may. there are more than 100 ceos represented in the room, several trillion dollars worth of revenue between them. their companies, i mean, not them individually. [laughter] >> although, who knows. you have met you're running this extraordinarily important global institution that there is when the world looks in crisis.

do you have a message for what -- how you like a working partnership with corporations around the world? >> i think talking to each other understanding each other's motives, proposals, planned strategy, how we can help each other, how the policymakers can actually facilitate either by refraining from doing things or by actually being engaged and active in certain areas, i think that's the solution to something where everybody should have vested interests. investing, developing activities, generating profit, working for the stakeholders, first of which the shareholders, all of that is to the benefit of the companies and keeping stability and keeping the social fabric of society vibrant and creative i think is also in the interests of all the people in general. so, yeah, we have to continue the dialogue constantly, and

many in this room are actually my former clients. >> that's a good word to start. ladies and gentlemen, she is literally dashing off to catch a plane -- >> i have time to eat something. >> but please join me in thanking her very much for doing this. [applause] >> jeb bush was foot featured speaker and discussed immigration, foreign adespairs the 2016 presidential race. this is 45 minutes. >> you want me on the left. >> governor bush is on the

left -- >> to your right. you're to their right so it's okay. you brought your coffee so you can get overcarve nateed as we talk -- overcaffeinated. that would be good. thank you for being with us. governor bush has to go back to miami where you'll miss the cold wave by leaving just in time tonight. thank you for being with us. i appreciate it very much. a lot of familiar faces in the room. getting ready for the conversation i read some speech you have been giving lately and discovered that one of the significant developments of 2014 was that you became a grandfather for the third time and you told me you're about to be a grandfather for the fourth time. congratulations. >> what was in my speeches? it was in one. >> i can tell you, had the privilege of covering the -- when i tell people in my bureau i covered the bush white house, they think i mean your brother, and i mean george h.w. bush, and

i had the privilege of going to ken any -- ken any bunk port and there's plenty of room there for children and great-grandchildren of every age. >> can i bring up a point of privilege and pride which relates to my dad and my first granddaughter, jeb and sandra's granddaughter is now three years else, tri-lingual. her name is georgia, helen a, walker bush, and her nick name is 41, and georgia represents the new america that i know at least on the editorial side of "the wall street journal" they believe in, and i am passion not about this as well. the new america is an america that doesn't have hyphens. an america that -- where your work and your effort is your definition, not some identity,

political form of things. so, in political life -- she is a -- eye ima taxn by birth, my wife is from mexico, sandra is a canadian by birth, jeb was born in florida. sandra's parents were born in iraq. that is the america that we should aspire to, not the one that we're like dividing ourselves up to find where we're different, but the fact that you're from a different place or you've got a different origin is totally irrelevant. so when georgia fills out the form, she'll say, not applicable, and that wail be good news for our country to be honest with you.

>> in reading those speeches -- i actually did. i was struck by something you said a couple of times in recent months when you have been talking to groups. you said this. you said this nation is experiencing a crisis of opportunity. >> right. >> tell me what you meant by that and what it means for people in washington. >> i think we're missing the opportunity to take advantage of our skill sets, of our strengths. we focus on our weaknesses. and yet this is the most extraordinary country in the world. this country is so much better when you hear the director general of the imf talk about the places in the world. the united states should not be in any category, remotely close to a problem kind of country. we have everything that is necessary, abundant and natural resources, the moat creative place in the world, a work --

labor laws unique in the colder world, big place full of chances to expand, the history of productivity, all this stuff has just been cast aside temporarily and we're moping around like we're france, with all due respect. [laughter] >> and the french have a lot of great things going nontheir life. i don't want to by disrespectful. but we're not france for crying out loud. and we're missing -- the crisis of opportunity is we're not seizing the moment. we're not aspiring to be young and dynamic again. and if we fix a few really big substantive things, then we run -- not little things -- we could be american again. >> which big substantive things? >> you want them in order of importance or -- >> your choice. >> i'll give you five right off the bat and then we get to the bigger one. but i'd say an energy policy

based on american innovation and north american resources, all in. all in. no -- we should be energy secure with mexico, canada, and the united states, within five years. if we aspire to that we can do it. a regulatory system based on the 21st century economy, north the 20-inch century -- we're putting rules, old complicate rules on top of old complicate rules, creating more complexity than perhaps any developed country in the world. we lost our dynamic nature because -- i've asked this question a lot of people that have made it. most of you -- all of you have. could you do what you've done, particularly if you talked to entrepreneurs, could you do what you have done starting over now? and a lot of people would admit they couldn't because the beyers to beg successful today are deeper and more complex. so, figuring out a way to transform how we create rules around every aspect of human

endeavor in a 21st century way is one of the great challenges. simply identifying the tax code. so that we take power aaron dnr away from washington and give it back to people to let them mick decisions how investments take place, out in how washington wants. so if you want do worldlined albanian tax credits are like the norm or rent croatian tax at the ducks are okayed, come to period. rather than lowering taxes, eliminating as men deductions as possible to let freedom ring. that would be the third thing. the fourth thing i would say is immigration reform. because it is something that is unique and special to this country. if we would create an economically driven immigration system where we control our borders and there was certainty that would happen and we moved away from family reunification

being the sole driver of how people come to this country, 7 75 to 80% of legal immigrants come from family petitioning, and dramatically expand economic immigrants and we have the captainability of doing, we could create an america with a lot of other issues that have to go lining with this -- we could create a country that would have the first 200 or 300,000 first-round draft picks. we'd be like fred. aren't you an owner of the -- trying to be an owner of the football team, weren't you? >> still he's trying to forget that. >> you could be the equivalent of fred smith, trying to be an owner of a football team. you could pick who you whatnot to come to this country, and they would come and it would create economic vitality the likes of which people around here have no include. this -- no clue.

and we need radical transformation how we educate the next generation. it's not working. reform is important but i'd say transformation should be the bigger argument, and we're not even close. this is a place where i'm completely frustrated. so, if you -- those five big things, get us to a point where if we started doing some of those we could actually do the other big thing, which is not going to happen anytime soon, which is entitlement reform. which we desperately need as well. no western -- no developed country in the world has been able to achieve this, and if we do it, we'll be young and dynamic and emerging again rather than a developed country, we'll be the first country in the world that will be a brick but will have to chance the acronym. what do you call it. but we'll replace the r, night likely that russia under its current path will be a brick

country but we could be that, the first anytime world history and that's worth aspiring to i think it will be the means by which we see rising income for the middle class again and our spirits will be lifted, much less' is in stick about the future. >> let me pick up on the two of the items, immigration and education, just quickly. so, the reality is that the road block to comprehensive immigration reform in this town for the last year has been actually been your party and the house. where is the gap between what you just said and the reality on the legislative ground in washington which is that's why this hasn't happened. >> you don't think when the profit the united states uses powers he may or may not have, but clearly knows there will be more than provocative to use executive order powers, to try to deal with immigration, that's not provocative and that's not a denorthwestern. >> but the -- >> you don't think --

>> but the problem came from arguably came in the preceding year, not now. >> okay. well, would argue that there's enough blame to go on both sides and i would say we have missed opportunities on our side to shift the focus away from the argument solely exclusive on controlling the border, to how do we shift to an economically driven immigration system. that's the missed opportunity for republicans. i think that there's no trust anymore that the executive will enforce the laws, so we're stuck. and it's a shame because this is actually the easier thing of the five things i mentioned, it's the one that is the least complex, where there's less political discord in my opinion, and it's a huge shame because it's also probably the easiest way to get to sustained economic growth, which is what we desperately need. so, hopefully the republicans rather than have their heads explode with the president's

executive actions, which i think are -- i'm not a lawyer so i can't say they're unconstitutional, let's call them extra constitutional. they're a stretch. a stretch way beyond what the executive authority by nye president has been used, and the idea that, well, reagan did it, my dad did it, they did it on a much smaller scale and with the consent of congress. there's a lot of differences between what happened back anyone 30 years ago and what happened now. this lack of trust makes it harder for it to happen and it's a shame. >> is your problem with what the president did -- the subpoenas of what he proposed to do or the way he proposed to do it. >> it's the way, fit of all. i don't know the exact details -- i mean, frankly, to do something -- he didn't permanently change things because he doesn't have anywhere mere close that authority to do it. he extended -- granted a

deferral of the execution of a law for a couple of years. so these people are still in limbo. what we need to do is to get to some certainty for people, 11 million people that are here, five million of which he dealt with. we need to find some way, certain -- some certainty to get them some legal status, and move to a system that is more economically driven. the system we have today -- we're the only country in the world that has spouse, minor children, adult siblings and adult parents as the definition of family. every other country has spouse, and minor children i'm aware of. please don't politifact me. if we can emulate the canada model, which is totally economically driven. 13% to 15% of their immigrants come through family petitioning and 70% to 75% come for economic purposes based on economic needs. they actually believe it

or not canada is sophisticated enough to know where they're shortages of labor are. wow, what a radical innovation to be able to know that. i imagine we could probably figure that out with people in this room alone in the united states. if we had the same system, we narrowed family petitioning and dramatically expand dish call it an aspirational class where people can come here and make an immediate impact on our economy. guess what, we would grow at a hire sustained rate and i don't know why, liberal or conservative or democrat or republican would be opposed to that. >> let's talk education for a minute. you -- frankly, the last several years we have done this, people in this room raise education a lot as a barrier to economic growth. you thought about this more than most people have. in your estimation, where did the u.s. education system go off the tracks and what is the -- 10,000 feet what is the way to get back in the direction it

ought to go. >> we haven't evolved away from local school districts being the governing model. i'm not suggesting getting rid of them. i'm suggesting getting rid of the mon -- monopolistic nature of them, the o'hill sized, unionized that puts the economic interests of the adults in the system, which in many communities in the country is the largest employer, just for those that don't live like in washington or new york, if you go to -- in tennessee or texas or florida, outside of the big urban areas the number one employer in miami the number one employer by far and away is the miami-dade school district. so it's got a big economic interest rather than focused on how do you customize the learning experience for this diverse group of kids gain the power of knowledge? and that is the problem. the problem is the governance model is designed for the adults rather than the children. and reforming it on the edges isn't going to change that. i've lost my patience on this to

be honest with you, because i don't see the change necessary to get to the model we can get to. if we started from scratch, we wouldn't have this system. we wouldn't have unionized, politicized, government-run monopolies as the means by which children learn. we would have something that would be child centered, customized for their needs, and we would use technology, not just kind of to sell -- for vendors to sell computers to school districts, which is a great business if you can get it. but have it be at the core of learning, where you learn at your own pace, at your own time, where time is the veriable and learning is the constant, rather than 180 days with the butt in the seat being the means by which the school system is funded whether you learn or not. the constant is time and where the variability is whether you learn. that's a radical departure from where we are and there's no place in the country that's come close to achieving that.

and that's what we need to strive for, and yet now we have this weird coalition that is protecting the status quo for different reasons, an alliance that is quite powerful politically that doesn't agree on anything other than we shouldn't be able to dramatically change how we educate kids. i think there is a path, starts with high standards, but it doesn't end there it starts with that and then empowers parents to make decisions for their children. it argues for the learning experience to be completely customized. where digital learning can occur, which requires a big change in how we collectively bargain because god forbid if the content is provided by someone in seattle for a student in miami. there's all sorts of changes that require big-time fights politically and not a lot of people on the front lines right now. >> speaking of big-time fights politically you have been

willing to engage in on two of those on this front. one involves common examiner standards and the second involves testing. you have argued both those things are part of the answer here. >> sure. >> well, common core standards or higher standards, so itch a state wants to be honest and say that their standards are tenth grade level and they need to raise them to that -- look, here's the deal. y'all know this because you're concerned about it. in your states where you work, where your employers work, a third of our kids maybe, 40%, at best -- that's only because i'm going to be checked -- 40% at best are college or career ready. we spend more per student than any country in the world than two or three, maybe four at the best. and we have those results? in the video before hand, general dempsey talked about 25% pass rate. that's not just because of the

test. that's also because of obesity and too many tattoos to be honest with you on visibility putt barts for visible body parts for people to get into the military but the pass rate level is 35% at best. these are visible numbers. this is horrific numbers. yet there's no one marching in the streets, no one saying, the end is near because of this, but the fact is the end is near if we can't fix this. if we just cast off large numbers of people, young people, saying, well, it's their family circumstances, it's poverty, it's -- we validate this. we encourage it. we actually make it more real that it it's going to happen more often and it is a tragedy that i think we should not accept. so, high standards is part of this, and how do youif you don't measure, you don't care.

nonmeasurement is the great way to make sure that it doesn't matter. that kids can be cast aside. and so the unions oppose -- joe client is a friend of mine, saying republicans oppose national and -- national standards issue guess, even though these're national, the common core standards, democrats oppose -- actually republicans oppose national and democrats oppose standards. so there's this coalition now that wants to keep what we have even though people cannot defend the results we have. so we have to figure out a way to create a new coalition, perhaps more radicalized and with a greater sense of urgencies to get to a better place. all the other things that are doing dooable aren't going to -- do-able aren't going to solve the social strains withthe have and have-nots because children

have not gained the power of knowledge. >> let me shift to the washington scene for a second here. we gather here at a time of fairly significant change in the way that this capitol is going to work. what do you advise the new republican majority in congress to make their agenda? what taught be on their list -- what ought to be on their list of to-dos and not-to-dos. >> not to do is to focus a lot of energy on things that are not even -- just going to create -- make a statement, make a point. i think republicans have gained the majority in increased the majority in the house -- we don't have to make a point anymore as republicans. we have to show we can in an adult-like way govern, lead. whether the president signs up for what the -- what the republicans in congress offer up is up to him. it shouldn't be too much of a worry for the republican

leadership in congress. they should lead. that shy take the things that are possible to achieve, they should try to forge consensus with democrats in the congress, and they should start passing bills. there were 360 or 70 bills that passed the house that never got a hearing. not one hearing in the senate in this last or soon to end congressional cycle. it's unprecedent it. never happened before that i'm aware of in american history where democracy was shut town in the senate. now republicans need to go back to regular order way, to allow for bills to be heard, to encourage amendments on the floor to allow for the debate to take place, to get back to the point where we are starting to complain that the senate is a deliberative body again because right now no one can claim that. no one -- they do nothing. and so showing the adult centered kind of leadership,

where you start dealing with -- even if it's not the huge big things, which require presidential action, but it could be the xr pipeline, it could be accelerating on energy, accelerating the leasing of federal lands and waters for exploration. it could be consideration of the lifting of the ban of exports of crude at the appropriate time when we don't have the refining capacity to take on the light crude that is fast being produced in our country. it could be accelerating the permitting process for l and g plants to use the tool to create a better balance of payment situation, more economic activity for the billions of dollars invested in the jobs created in our own country and deal with the problem with russia because of the blackmail potential in sure because of

natural gas. a lot of things republican can do and we shouldn't worry what the president will react. my guess he will engage. republicans need to show they're not just against things. they're for a bunch of things and there's a lot of stuff to be done, whether it's on internet protocol or net neutrality. or patent protection, or tort reform. there's a lot of things that republicans, i think, have the ability to garner 60 votes in the senate on, healthcare reform. not just to repeal own kaz but replace it with something that fits the 21st century work force. this ooh be a time of incredible possibility for republicans to show what they believe in. >> you were obviously a two-term governor. you were a chief executive you. department with lots of different legislative combinations. what is your advice to each part

of this dysfunctional relationship in washington, the president on the one hand, and to the congress on the other, on how to get beyond what everybody agrees has been an unsatisfactory dynamic. >> i think the president has the upper hand here because the presidency is occupied by one person, and the president could change the culture almost immediately if that was his wish. it would require sucking it up a little bit. it would require -- it's hard because he -- the way i'm sure he views it, is that everything that i propose, everything i believe in, the republicans oppose and so i'm going to react to that. but he has the upper hand because it's one person that can do it. the presidency still matters in the country. so, whether he does it or not i'm certainly no expert. i think the leadership of the congress is on the right path

based on my conversations with them to focus on things that can be done and do them. a budget, first time in five of six years. that sounds like a really radical idea. but i think it will -- pass a budget. they'll actually go to committee. they'll talk about the priorities. and they'll go through the regular order way during the next year, which will be quite hopeful that we get back to a place where people can have different views and they sort those things out through the process where a budget is created and hopefully with a less of a deficit going forward, and the president can respond to that, and if enengages it will help his legacy but if doesn't it sets his stage for a '16 election that be different than the previous he lexes which, the republicans are a party of no. we're for progress you. can't shay that if you're opposed to any action the congress takes. so it's a huge responsibility

and a great opportunity for republicans to show what it looks like if conservative leadership gets back into washington. >> okay. you said 2016. so, as you know, i will have to none my white house correspondents association cashed if i don't ask. what do you think about 2016 and yourself? >> be personally in. >> yes. >> i thought '16 its like any other year. >> kind of like any other year. >> i'm thinking about running for president, and i'll make up my mind in short order, not that far out into the future. i don't know the exact timeline. it's the same decisionmaking process that i've always had, which is can i do it in a way that -- die have the skills to do it in a way that tries to lift people's spirits and not get sucked into the vortex? and that's easy to say, harder to do. die have those skills in and

i've got to really do a lot of soul searching to really make that determination, and perhaps more important, can i do it where the sacrifice for my family is tolerable. every person that runs for office, at any level, it's a big sacrifice because it's a pretty ugly business right now. i'm not saying, woe is me here, but there's a level under which i would never subject my family because that's my organizing prim, that my life, and i think people kind of appreciate that. so, i'm sorting that out. and i don't know if i'd be a good candidate or bad one. i know -- i kind of know how republican can win, whether it's me or somebody else. and it has to be much more uplifting, much more positive, much more willing to be practical now in washington, lose the primary to win the general, without violating your

principles. it's not an easy task be to honest with you. >> it's a question that is kind of reverberated throughout the last couple of republican nominating cycles. the things you need to do to win a republican nomination contrary to the things you need to do to win a general election? >> fraternally, -- frankly no one knows that because is hasn't been tried recently. [laughter] >> i mean, my personal opinion is, mitt romney would be -- would have been and would be a great president right now. i honestly believe that. he's a problem, solver, his life experience was designed to -- here's a problem, let's fix it. put aside the ideological differences. let's form consensus around -- this is a problem how do we go from point a to point b to fix it. i can imagine lots of power point presentations. point a to point b and fixing things and that would be pretty healthy right now. our government isn't working in

a 21st century way. put aside democrat, republican, ideological challenges there's a big gap, a big divide in our country. it's just not working. it's just not working at the level that you would expect. and it's because we've never transformed how government works for people. every one of your businesses is radically different than it was two years ago. much less five years ago. yet if you walk into the halls of government today in washington, it looks kind of like 1975. and it's got -- we got figure out a way to get to the point of beginning to fix this stuff, and so i think you have to take that risk. >> let me ask you one last question and then i want to open it up to these good folks for questions. does your gut tell you that the 2016 election, regardless of whether you're involved or not, is it about the domestic situation of the u.s. or going

to ultimately be more about the u.s. role in the world? >> sixths ago i would have said it might be a continuation of the focus on domestic issues because they're big and challenging. but i think there's a growing awareness we can't withdraw from the world, that there's an unraveling taking place and it impacts our -- not just our security interests but our economic interests as well. so, i do think the foreign policy and a -- maybe a re-evaluation of what the role of the united states is in the world will become important. and there are competing forces in both parties to deal with this. i would argue that an engaged america is better for america than a disengaged america. i would argue that a president needs to speak few words but those words need to be -- they need to real estate nate, need to be real. taken to the bank by friends and faux alike. ...

and i think that probably could become a bigger issue. >> let me see you out there has a question that they want to ask. right there. there. you could even wait for the microphone. >> thank you, governor bush, for your thoughts. just to go back to the.you touched on a minute ago, trendlines seemed to suggest a time of extraordinary opportunities across all vectors of human enterprise. i think american will be pivotal to whether we are able to capitalize on the trendlines or whether we will give way or succumb to the headlines. the question, i would be interested in your thoughts.

>> absolutely. we have done it time and time again. the key to this to get to a. where american is accepted, we are growing economically. if you ask the asked the former head of the joint chiefs of staff for the current one with the great threat for america is, they would say the deficit. it is not that we are incapable of defending southeast asia. we still have military superiority that is certainly second to none. if we started to grow economically instead of having declines, we have had

a recession, instead of of having that we have rising median income with the middle class that is optimistic, i think there would be not just an acceptance, but an embrace of a more active, engaged american foreign-policy. who has the capability of providing security and stability in places that are being disrupted by all sorts of changes, cultural, religious, technological? the world is being disrupted , some in good ways and some in really bad ways. but for us there is no source of stability. my hope is that people are

much more optimistic about our role in the world because there life is getting better, and now sustains a a foreign policy that is more naturally suited which yesterday still the only superpower in the world. if we act accordingly i think i think we create a more prosperous and secure world. >> right there. >> governor bush, you know, lately in the news some from the democratic side have started to question the focus of the political capital after the 2,008 election. where the democrats have focused their agenda. you brought up five areas. i guess there are things like energy and regulation and energy and tax. well, political realities limited you no what would you focus on? >> well, the two easiest

things, successful and then you can create a climate where you can be more successful. it doesn't work that way. you can't ignore these issues. i would say the two big things that would be the quickest way to jumpstart investment that creates higher wage jobs is an energy policy that celebrates this incredible revolution that has taken place, something that should be marching bands for rather than a concern about, the energy renaissance in the innovation that is being applied to make it even more beneficial. getting out of the way of that and encouraging it to happen.

and immigration reform, something that if we could give people confidence we can control our border and shift from a broken immigration system to one that allowed us to have the first 250,300,000, the other issue becomes easier to fix. we are growing. so those so those would be the two things that i think are less politically challenging issues that allow us to get to a place to deal with the bigger issues. in the interim their are possibilities of dealing with some of these issues on a smaller scale. my guess my guess is there we will be efforts to reform corporate taxes. my deal with the worldwide income challenge might do

with this reversion of certainty. if we are going to have an inversion of certain to it ought to be the other way around. foreign companies by us businesses. we should be the beneficiary of absurdity. and it could create the chance to bring brack $2 trillion in cash. cash. many of the companies have cash overseas where their shareholders would punish you. it you. it might be that for your life expectancy might go to three based on shortsighted policies if you could move to a strategy that allowed us to bring back some of that money at a fixed rate. perhaps you could reduce the deficit and create an infrastructure fund where you could match it with pension fund money and create a half a trillion dollars of infrastructure money. now i am just talking out loud.

caveat. please caveat this. $500 billion, and hundred billion dollars, and you created 50 projects of national importance, don't you think that that would lift the spirits of america are? bottlenecks would be resolved, broadband could be brought to every school instead of taxing people more on there cell phones, which is the proposal that is in front of the fcc right now. there their are ways to solve problems in a bipartisan way and get to a.where the complexity of our tax code doesn't retard economic investment in our own country. so and that is a small thing. that should be done already. that should have been done three years ago. if the president wants to engage that is something that republicans and he could agree on. >> @think we have time for one last question.

right here. >> gov., maybe just a a comment or two on the united states and china and how you see this playing out and what that relationship could evolve to. >> it could evolve to a really ugly place, particularly if we pull back in a permanent fashion. you know, the threat of that is there, and we should be cognizant of it. it also could yield economic benefits if we are fully engaged across the board. i thought that hank paulson's efforts to create, and i think the obama administration has continued this, to create constant dialogue by sector, private sector as well as government to government, secretary to secretary kind of arrangements where the misunderstandings, lessons

are hugely important. i have traveled a lot to china. my last trip was last year. every meeting i had, i believe it was right after the summit in palm springs, which by reading the wall street journal, it looks like it was a pretty good summit. summit. i don't know. generally there seems to be good dialogue. every every person that i met brought up the fact that this was -- mrs. obama wasn't at the summit. it made no news here. she is a mom. a pretty hard existence.

probably had to do the science project. normal motherly things that she had to do, and that is the american way. the chinese did not view it that way. they viewed it as an insult to their glamorous first lady. when you have such big cultural differences, and if you have had experience in shiny know this better than me, you have to be completely immersed, completely engaged to eliminate the stupid things because their will be big things. they will disagree. i think that ought to be the first effort, to have full, comprehensive engagement. you can't ignore china as it emerges as a world power. the second thing i would say , if you reach that., and

i am not an expert, but we ought to encourage china to take a role in helping solve global problems. they need to play up a constructive role in a lot of different ways that today they don't feel compelled to do. i know for a fact retrenching will create misunderstandings. perhaps this china grows militarily. >> we're out of time. help set up all the conversations.

>> thank you for the invite. >> next, a conversation on strategies with retired general stanley mcchrystal and lieutenant general michael flynn. the "wall street journal" ceo council meeting, half an hour. >> we will diverge a little bit from politics and

economics to talk about something that is of great interest to ceos, and that is. we will do that in the context of what is going on in afghanistan and iraq. we have two excellent people to talk about those two topics with. general michael flynn and general stanley mcchrystal. so, this is something that the military makes a real.of actually developing. and the military is seen as the place where skills are honed and there is a great deal of expertise. gen. mcchrystal, you you now are out with these lessons, teaching at yale university of course, speaking to a number of these ceos, coaching them. and. and i wonder if you could

just for a moment to tell us what they are doing right and what they are doing wrong. >> a loaded question. what i see is sort of the same thing that i saw in the military. you rise you rise to a senior-level and start to focus on strategy which is difficult and important, but at the end of the day what i find the biggest problem, an organization can get the strategy right but then can't execute it. if you look at the plan monday had a pretty good plan but he did not have an army that can execute it. what i see in many firms is a silo owing across different parts of the geographic, difficulty communicating because of cultural barriers and distance and other things. problems with decision-making in terms of people we will meet and then not make a decision or they

we will make a decision and then it won't be implemented it is it is the execution of the organization, and while that seems mechanical it is really an art. there is not a straight science. it is relationships and processes that make that an organic effective. you say in your writings that are real leader should not be a decision-maker. a decision facilitator. that sounds sounds like it could be somebody who is waffling. is that the dna that we now have, or is that a knew model ceo? in other words, is this a a transitional group to a knew type of ceo? 's. >> i i think it has to be. what i found, mike and i were their.

so my tendency was to want to make decisions on operations. they bring together intelligence. in reality things changed enough for i did not have the most expertise. what i had to do was when i finally got word that it was closer i made very few decisions. i i was a ringmaster for this constant conversation across the command. i could force that. and everything worked worked fine because if i tried the hierarchical way, by the time the information got to me even if it was right when i made it it was now wrong because the situation changed too much. one of the things we're facing today is the speed in

which information is almost bombarding the decision-making processes that we are faced with. and i think that for me personally in the last couple of years when i i describe is trying to maintain her fingertip feel for your organization and the operating environment that therein, at the same time making sure that everybody understands that we have one big strategy that we're trying to achieve , and i think for the ceos of today and tomorrow, they are dealing with a decision-making process that has fundamentally changed because of the speed,, the volume of information, and then how they are able to precisely drive their organization to get them the right type of information at

the same time as the ability to empower the organization down as far as you can to the.where you are almost uncomfortable allowing decisions to be made at a certain level. and when you are uncomfortable you're probably doing the right thing. >> you have written about this topic, the speed, the volume of information. intelligence has informed rightly or wrongly some of our decisions and national security of the last 15 years. you went so far as to write a paper with two other individuals called fixing intel. and it was very controversial. controversial. you took the intelligence gathering process of the united states to task and critique it openly, and you did something else, published a paper outside of the military.

tell me about the decision that went into writing that critique to begin with. >> we saw that we needed to move much faster. and the intelligence system in the united states was not responding to the needs at that time as fast as we needed to respond to the needs of essentially a hundred thousand plus forces , international forces it just wasn't responding rapidly enough. and so the other part of it, it was not very clear as to what it was that the intelligence community needed to respond to. that was essentially the genesis of the concept of the paper. why outside? and i always tell the story.

counter threat financing and how i got no cards and letters on that one. so it was -- there was a means, the organization that we published it through, and voices from the field. and what i what i felt it needed was an immediate sort of cold bucket of water on the head approach to responding to the needs that we had in a combat environment. >> and it got that response. >> it definitely did. >> rabble rousing. >> very much so. it changed the the way the intel community responded to the war fighter. it changed the way -- and it also caused us to think about other aspects of our

intelligence system that supports our us government. frankly, we are still involved. i was in the middle of a phone call this morning with some folks still talking about some of the impact that we are trying to address. we can see them. the title of the paper was fixing intel, a blueprint for afghanistan. you could say north could say north africa, south africa, central america or cities in this country. >> you have talked about teams and the importance of that kind of organic piece driving decision-making. what does that mean? how do you talk about teams with executives in general's who are managing tens of thousands of people? when does the team suddenly become a department or a battalion? >> all of us have been on teams. the reality is, a team tends to be small because there

has to be trust and common purpose. you have enough familiarity that you had a common sense of what you were about. the problem is, that is not scalable. when you get beyond a small group you really have to go to something i i call team of teams because it can be one big team. instead, you create a number of small teams. then you have to link them so there is a shared consciousness. >> this is what you did with special operations. >> that's exactly right. delta force, seals, rangers. great cohesive group. the reality is internally they hated each other. there other. there were no diplomatic relations. they were too much like. we had to create those

really good small teams but let them together. you had to change the culture. and that became the biggest part of what i did. >> tell us about the style of al qaeda, the taliban, isis? what have we learned. >> well. we are facing an incredibly ideological organization, and in many cases individuals, a very -- i would describe it a bit differently. their belief system is something that most, 99% of the people in this country don't truly understand. they are very, very adaptive, extremely adaptive

they have networks and subnetworks, and their ability to leverage technology should not be taken for granted. very smart, enlightened in some cases. how they function and how they connect to each other, how they get their message out, how they internally speak to themselves, how they learn. they are a learning organization and an organization that pays very close attention to their failures as well as their successes. >> they share lessons learned. >> they share lessons learned. very little of what they do is truly secret. they publish everything. online magazines, thousands

and thousands of followers. it is an interesting organization that is very adept, and if there is one thing that i would just offer over the years, we have always gone after the leaders. they knew that right up front. so their ability to nurture sub leaders or small groups of teams to be able to take on the cause is actually very good infrastructure. so they are organized in a way that would not be unlike some other organization. it is just how they operate. >> you received those papers , taken in a bottom on what did what did we learn from that about these

organizations? >> they communicate frequently. they definitely viewed what we were doing and shared what we were doing on a fairly frequent basis. they saw again, again, as i just said, they talked about their failures and how they could correct those failures in order to, you know, basically continue on with this movement that they have they looked very hard. >> was there a hand a hand of isis potency? >> they looked at what happened, the failure of al qaeda in iraq, particularly iraq, particularly after zarqawi was killed, and some of the things that he had done, and they basically communicated with each other to say, here are the things we need to be doing. again, they are seeing -- they see themselves as a

long-term capability and a long-term threat. and we should look at it like that. we should not think that they are of flash in the pan at all. >> what lessons should we take from the american experience in iraq and afghanistan? quex@think their are several, and they, and they are probably self evident to most people read we did not do due diligence. we did not understand the problem to the depth that we needed to, we did not take our time, time, and we did not nurture the experts. we could probably fit all the apostate speakers on the stage. we stage. we trained more than 5,000 military members to speak japanese. we have not made that level of effort. we go at this with different parts of our government. yet everyone wants to keep 1

foot on the base. every agency wants to help, but they want to protect their equity 's. you cannot do a complex endeavor like this unless you can build a truly integrated team on which everybody is focused. we had a great efforts to try to do that and made a lot of progress, but it was always difficult. i think part of that is interpersonal, part of that is organizational. but it limits our effectiveness. you can sort of see that in the press today, the challenges of building truly cohesive teams. >> so if you had the chairman of the joint chiefs of staff and the president of the united states now, a new president, if you had them in a room and it was just the three of you, what would you advise them?

what to do now in afghanistan. >> yeah. i mean, the first thing is it's interpersonal relationships. we are not viewed from the outside is a particularly cohesive team. >> military in general. >> not just military. i would tell them to go white water rafting, get three cases of beer. it sounds like a joke, but they have got. when you give the national security council room and you are in their, and you're thinking, i made it. you look around and your not really a team. you are polite polite to each other, but think about it. we are fighting a war. you spend you spend months preparing a football or baseball team, but we take the most senior leaders and put them in a run and expect them to be a