captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> rose: we begin dramatic news from libya. moammar qaddafi, the former libyan leader, was killed today in his hometown of sirt. there are also reports qaddafi's son was also killed. qaddafi threat into hiding two months ago after his regime was toppled his death ends an eight month long war waged by web rell forces. he ruled libya for more decades. the prime minister said today we've been waiting for moment for a long time. president obama spoke about this today from the white house. >> today the government of libya nounced the death of moammar qaddafi which marks e end of a long and painful chapter for the

people of libya who no have the duty opportunity to determine their own destiny in a new and democratic libya. for four decades the qaddafi gime ruled the people with an iron fist. innocent civilians were detained beaten and killed. libya's wealth was squandered. the enormous potential of the libyan people was held back and terr was used as a political weapon. today we can say the regime has come to an end. the dark shadow of tierney has been lifted and with this enormous promise the libyan people have a great responsibility. to build an inclusive and tolerant and democratic libya that stands as the ultimate rebuke to qaddafi's dictatorship we look forward to the announcement of the quick and

stable transition to libya's first free and fair elections. >> reporter: despite the symbolic and significant moment there are many questions that remain about the future of libya. here to talk about that from waington david ignatius of the "washington post" and new york lisa anderson, president of the american university in cairo. hisham matar, author and wter of "anatomy of a disappearance." i begin with you, david. when we first heard about this i said this is a fasciting story for all kinds of reasons but first i'd like to know what happened. we've had a few hours since this story first broke. can you tell me what you have learned about how this came down? >> qadda was discovered hiding in a sewage culvert about three kilometers from sirte, which is his hometown where he'd been thought to be hiding out. he was apprehend there had precisely how that happened isn't clear. then the details of how he came to be shot and the nature of the

wounds are very unclear. >> rose: what do we make of this in terms of what the implications are for a new government coming togethern libya. >> this is a very important moment, but it's largely symbolic because things have been changed already on the ground before. i think we musn't miss its symbolism because like most of these incredibly fundamental national moments it has in all sorts of momentum and possibilities an invitation for what happens next. i think these possibilities aren't just for libya. also for other countries such as the united states. in the sense that i think conversation has been... what has been missing from the conversation is how has american complicity made this revolution more difficult for the libyans

in the sense that the whole... today following the news and listening to american commentators, it's been very fficult for me t hear this kind of tune that, oh, well an idiosyncratic leader who was a troublemaker and a nuisance in the world but we tried to weome him back into the fold and then... but once the arab spring started it was no longer possible to support him. which isn't exactly what has happened. but what has happened is that the american foreign policy has propped up qaddafi, has made the revolution more difficult for libyans in many, many ways, tangible ways. and has arguably extended the life span of this arcane, aggressive, violent regime. and the moment that that narrative changed was when the facts on the ground changed.

and it wasn't led by, you know, international diplomacy. it was led by the rs on the ground. and so i think we need to take a pause here and reconsider this narrative that tells the story as a kind of success of american foreign policy at this moment. and really see it as an invitation to start, to deal with libya in a different way. to end this whole parasitic relationship america has had with libya and start to reconsider the narrative from the point of view of a sense of solidarity between the american people and the lyan people. that the understanding that the engagement by and large of america with libya has made life for libyans on the grod very disappointing. so i see this as an incredibly significant moment and a wonderful invitation for men and women of culture and justice and people who believe in the

institutions of the law to start on both sides in libya and america to start to be vigilant with our government and to start to dictate to them or try to dictate to them at least the rt of future that we want. >> rose: do you hold your criticism and indictment only for the united states or other western countries that dealt with qaddafi? >> everybody. everybody that dealt with qaddafi. everybody has that has put the interest of corporations and so called national security in front the interestsf everydayeople. >>. >> rose: and would this have happened as soon ait did without the french and the united states and nato coming to the moment in which they were about to benghazi with a threatened massacre tha might have done great damage to the rebels? >> absolutely not. it wouldn't have. i believe the international

intervention was absolutely necessary and it really made this possible. >> ros how do you see this in terms of arab history, in tms of the arab spring, in terms of the future of libya and in terms of the role of the west in the arab world? >> i agree with hisham. this is a hugely important historical moment. mostly for libya but not only for libya. this is the end of... o hopes the end of a century of rapacious government in libya starting with the italian invasion in september, 1911. a terrible, terrible episode which not enough people know about. and in some respects qaddafi could build on that history history to exfend rapacious approach from his own people. i also agree with hisham that americans particularly... i think in general the

international community but the americans particularly were deeply, deeply cynical in their resumptions of relations with libya because of the libyan willingness to corporate in the war on terror. >> rose: now with this symbolic moment we can focus on the future of qlab and who might emerge and what kind of government and what kind of foreign policy that government migh have. >> the first task for this government and i think an important test of whether it can really govern libya will be to take the somewhat disparate collection of militias, many of them have tribal roots that have been part of the revolutn and try to build them into a single national army. a reliable army that can defend the country. it is important everywhere in the world, but that will be job one. the united nations is going to take responsibility for what we call nation building, working with the libyan transitional

government on governance structures, on rebuilding infrastructure, there will be several hundred people working for u.n. special representative. in all of these ways ma what's interesting to me, charlie, about libya is that this really is an illustration of a different kind of foreign policy venture in which the united states pla an important role but is part of an international coalion. is part of a nato force. indeed, after the first week takes a backseat i that nato force. part of the u.n. emission to help rebuild libya and assist with gornance. but it's not the domint natn builder. , i does this have any ramifications for bashar assad in syria? >> absolutely. i think it affect the whole reason and also this idea of... i mean what i think is absolutely significant about the arab spring is not just the fact of getting rid of dictators but it's that the entire landscape

of the human imagination, the political imagination has shifted. but my sense is that the fundamental underpinng of how america sees a country like libya hasn't necessarily changed or been challenged. anthis is as an american and a libyan and somebody who's... for most of my life i have been subjected to watching my two countries dealing with each other based on the principles of blood and money. i am very jealous about protecting this moment and saying that, again, this is a moment where we can question the fundamental underpinning of this relationship. >> rose: david, i'll let you respond on your own. people do remember what happened in baghdad in 2003 after the american invasion, the inability of the u.s. to deal with the way in which ord and trust in people amongst themselves begin. so people have been worrying about all these questions and what pleases them is they look at this is that the libyan

people themselves through this revolution have addressed the issues so all the contingency planning going on behind the enes for worst cases so that you'd be ready for them in the end wasn't necessary. and i think that's testimony to the deep roots of the revolution and also the abilityf libyans on the ground to maintain order and keep things together. revolutions are crazy periods. so, again, i don't know if that speaks to your concern but i wanted to mention it. >> rose: why didn't he leave, cad sni >> why didn't me leave? >> rose: yeah. >> he was going to die a marter to his revolution. >> rose: he always understood that? libya was certainly different from egypt, specifically where you are. >> indeed. >> rose: less civil institutions than in other societies, does that make it more difficultn terms of creating a new central force? >> absolutely. i mean, the challenges that libya confronts are, i think,

almost unique in the world in the see that the qaddafi regime systematically deliberately for four decades ensured that there was not a single military establishment, there was not a central bureaucratic public administration. all of those kinds of things were... wherever you saw anything like that appear they were destroyed. so now youave a country that's sort of shards on the ground. i think the thing that i find most heartening about this-- apart from the fact tt there's now an opportunity to build something new-- is somhing at is common in the arab spring which is we tend to think of these revolutions as demands for rights against authoritarian regimes, which clearly they are. but they're also demands for responsibilities. but these are regimes that never permitted the ordinary person to have responsibility for his community, his society or his country. and that's why you see people being able to pick up the pieces almost literally in a place like

qlab and say yes we can run benghazi, yes we can run hospitals, we can do this. so in that sense i think this is a historical moment in egypt and libya and tunisia where you see very different problems. but the impulse to solve them, to say yes as a citizen i am going to participate in this solution is common. and it's hard not to be optimistic in those circumstances. >> rose: i want to close with this on your father's story because clearly there are a thousand stories like this and part of the reason that people were prered to die to see this regime overthrown was because of what the experiences of people like your father. >> yes, in the sense tt this revolution has been a long time coming. it's not just the people who bravely fought and died on this time, but there have been people who have been fighting for a long time. >> rose: and killed. >> and killed. and disappeared. and that connection was actually

ma by the demonstrations, the early demonstration that they were carrng photographs of people like my father who had disappeared or had been killed or, you know, 21 years ago. and so, you know, in the sense what is fantastic about this moment is this... a return to sanity in the sense that one of the most difficult things about living under qaddafi i would argue wasn't just the visible signs of oppression, the killing and so on but also this reality where nothing really quite made sense. where huge actions were done and the consequences where somehow forgten or swept under the carpet. and the libyan revolution somehow made sense of our history. and returned us to sanity but also returned us to a place of confidence because this... you know, the sense of deep she

that libyans haveelt for a long time was very isolated. >> rose: the sense of shame or feeling like they could not overthrow the chains that qaddafi had wrapped around them? >> shame because we were reprented by arguably one of the most absurd, one of the most crue dictatorships in modern history. shame because the libyan dictatorship... method of oppression iolved very heavily humiliation. so it wasn't only content with silencing you but humiliating you on a daily basis. >> rose: thank you. it was good to see you on this stage. >> rose: ray dalio is here, he is the founder of bridgewater associates. created the investment firm in 1975 out of a two-bedroom apartment in new york city. today the company managed roughly $125 billion in global investments. its clients include foreign governments, sovereign banks, central banks and institutional

pension funds. over the last two years, bridgewater ranked as the largest and best-performing hedge fundn the world. in 2010, his returns were greater than the profits of google, amazon and ebay combined. i'm very pleased to have ray dalio at this table for the first time to lk about a perspective on t global economic scene and a whole range of issues having to do with where we see ourselves and also a look at his whole philosophy and his own opinions and the way he looks at th world. having said that, welcome. >> thank you. >> rose: great to have you here. >> great to be here. >> rose: what is bridgeter sociates? it's a global macro firm. we assess what the wor economy is like and what... how asset classes will change and we are managing money for pension funds and endowments like you described. the pennsylvania teachers, those types of pension funds for trying to keep them safe. >> rose: when you look at the world today, the global economic picture, i read today goldman

sachs had a disappointing performance. j.p. morgan didn't do as well as some hoped it it might be. what's happening with financial firms? >> i thi it's important to understand that we're going through a deleverageing. so we have to understand the big picture is... there's a deleveraging. three big themes. first there's a deleverageing secondly we have a problem with monetary and fiscal policy is running out of ammunition and thirdly we have an issue in term of people most importantly who are at each other's throats politically and globally in terms of having a problem resolving those. imagine you earned $100,000 a year and you didn't have any debt. you can go to a bank and borrow $10,000 a year. you ca spend, therefore, $110 a year. when you spend $110,000 a year, somebody else earns $110,000 and they can go to a bank and there's a self-reinforcing

press in which your debt rises in relationship to your income. and that goes on for a long time and that goes on for 50 or 75 years through history. we've had 50, 75-year cycles and then you reach a point where you can't anymore get more debt and the process starts to change. and you can't levera up. traditionally the private sector leverages up, we leveraged up then we got to a point in 2007 where we had a bubble and that same sort of bubble that happened in japan, same sort of bubble that happened in the great depression, meaning we reached our debt limits. europe reached its debt limits. so then we begin the process in reverse as you can't spend as much you... somebody else's income falls. and that process works in reverse. so we're in a deleveraging. so i think that this is important globally. that's what europe's in. so when we deal with goldman sachs or when we deal with banks and when we deal with europe i think you can break the world into two parts, there's the debtor-developed world which has

reached its debt limits and is going through a deleveraging. then there's the creditor-emerging world, the countries like china which are competitive and are beginng to have those big surpluses and they're lending us money. so we have this big imbalance in the world. you can break the world into two parts. debtor-developed countries and emerging-creditor countries and they have a big imbalance which is a debt problem. that's thenature of the beast of what's going on. >> ros and how long would the deleveraging take place? ten years? >> they take place over ten years. the key is topread it out as much as you can. make sure it's not disorderly >> ros let me talk about the dysfction issue, we can't solve our problems domestically in the united states unless there's some sense of respect for other people's views and some sense of it being able to come together and find solutions that are interested in the country, not necessarily always in the interest of the ideology or the party. >> yes. and i think that's the problem

so pervasively when we're talking about culture. it is... when people disagree and you can take thoughtful people disagree you have then the potential of learning a lot. if people who were disagree canning say why do we disagree, work through that conversation in an intelligent way to try to find out what's true you can learn, you can make progress, it can be a fabulous thing. when you instead have people who were talking behind each other's backs and all criticizing and all looking for blame, this is a problem. i think the real question is how we approach those... can we approach in a thoughtful way in which you work that through? let's say for example the government budget balance. >> rose: right. >> the government budget balance if you raisetaxes... if everybody just sucked it in a little bit, you raise taxes by 3%, you cut spending by%... i'm

using 3% as an example to say not much. everybody should be able to pay 3% more or you should be able to cut your expenditures by 3%. >> rose: the government did that... >> if the government did that, they would eliminate half the budget deficit... it's estimated about $8.5 trillion over the next ten years is what we're going to have as a deficit, they're going to eliminate that. >> rose: over how long a period? >> next ten years. >> rose: all right. >> now, i'm asking you if we could have every american... can everybody pay 3% more? can everybody just spend 3% less? you can make a heck of a contribution to that. instead we have a division that's going nonwhich the basic division is republicans will say that we shouldn't raise taxes. >> rose: or even reduce deductions. >> in that way of raising taxes. so we... and democrats say that

we must... we raise taxes because we can't cut the spending. so the delineati that as we ca into that was the debt limit issue, that remains the debt limit issue. and there's vested interests involved. 70% of the taxes are paid by the top 10% of incomearners, income taxes. and so... so what we have is a division here there which there's not a coming together, i believe,nd that means that in a deleveraging at a difficult time we're not dealing with hit in the best possible way, but it's human nature. >> rose: we are kicking the can down the road and not dealing with it. suppose the supercommittee does not reach an agreement in terms

of its requirement and therefore the mechanism... the trigger mechanism kicks in. what is your team... what does your team think about that and what impact will that be? >> charlie, i'm meant to be a realistic person and sometimes when there's concerns it's difficult to talk about difficult situation so i want to try to answer your question as honestly as i possibly can but i want to say that i'm very concerned not just of that. i do not believe we will find a political solution. i think that that would not be... i'm pessimistic about that. and we're only... >> rose: you have the same inion that standard & poor's had when theydit rating.

>> essentially. and by the way i think it's very important to understand that the government debt is the terrible challenging issue that we should talk about maybe but also more important is the private sector debt. so that resolving the public sector debt does not resolve the problem. that individuals face the same problem, meaning that they're overly indebted. and because they're overly indebted and spend a lot of their consumption through borrowing and they had a... it was like if you borrow you have a party and everything's good and you have a py you have your party, you hire the caterers, they're employed and everybody's happy. so that there's a private sector debt issue at the same time as the public sector debt. they're both. so if you resolve the budget deficit, you do not resolve the private sector debt issue. both of those things mean we're both overly indebted. we cannot... the amount we owe

and have promised in its various forms can't be paid. now we can accept is that right or wrong but i think we need to talk about forthrightly whether that's right or wrong and if it's right-- and i believe it's right-- then we have to tk calmly and logically about how we can approach that and deal with hit in the best possible way. without having this battle of one side or another. like the issue of is it better to have austerity or stimulus? the basic problem there is there's not a quality conversation on the subject. so if people who disagree could sit down and work on a television show or something, work through, how does the ma machine work, how does the economic machine work? what does it mean to each of those? how has it worked in the pt so that they can understand what exists, get past the ideology part of it and get on with

trying to say we have is very difficult situation and how do we deal with in the our best possible way together? we can't solve the problem easily because we still have too much debt. but we can move forward in being able to make the best of it. we can spread it out, we can keep orderl we have a situation now in which we have a very severe situation, not only because we have a leveraging going on, but cause we have a situation in which monetary policy cannot work the way it worked in the past, fiscal policy will not be stimulative. so nther the private sector nor the public sector and... >> rose: some people say that they describe that has that as there are no more tools than the tool kit. >> there are no more tools in the till coot. >> rose: in terms of fiscal and monitory policy. >> so that deleveraging means we're going to have more debt problems. no matter what is solved in europe you will have a

deleveraging. banks will lendess and lending less will mean a contraction. that's what i believe is the case, we should talk about whether or not that is the case. thoughtful people should discuss that. if it is the the case we should then approach how do we deal wi that? so i'm saying i believe there's a deleveraging going on. there are no tools in the tool kit and everybo's at each other's throats. so that there's not a quality conversation of what have is true, how do we best handle it? >> rosewe have had that debate about the need for growth-- which would be a stimulative impact on the economy-- and at the same time the need to reduce spending because of the debt and the deficit as well as the long-term debt. you need also to make sure to make investments for future in terms of science and research and a whole range of issues so that that the country... this country cabe competitive around the world. make sure trained scientists and doctors and people make a

positive long-term contribution to the economy what is your own analysis as to how we find the right balance between austerity and growth? our austerity and stimulus? >> i think it just comes back to the fundamentals for individually, the economics for government work the same as the economics pretty much for the individual that whatever we expend money on we have to make sure... there's certain things that are critical. first you have to make sure that it will... it produces an income to pay it back. investment. in other words in some fashion or another what we have to do is make sure that we put that money out and i believe you can build infrastructure and hire people who unproductive people... people who are idle, i think the worst thing now is not only the economics of it but i think the social impact of individuals who are not workingre living

beneath their potential is a dangerous thing. it's a social tragedy, it's not good for them, is not good for the society, it's aancer that exists. they have to be made productive. but you can't wast money doing it. so those jobs-- whatever they may end up being-- or those investments have got to have a payback. >> rose: is the stimulus program enacted by the congress after this president assumed office, did it make a ctribution to growth at all? >> oh, it made a huge... it certainly made a big contribution... >> rose: it did create jobs? some people would like to believe that stimulus didn't create jobs and you're here to say with your own alysis it did create some jobs. >> oh, a lot. but at the same time... and it created growth and some jobs. at the same time we have this overriding factor that it is depressing jobs.

so it created jobs in an environment... so let's turn to what is depressing jobs. >> rose: what is? >> what's depressing jobs is that the world supply and demand for labor has changed. in other words, there's a lot more people working as china came on and ind came on and they are competitive. there's a world supply of labor has increased and technology has had an effect. so we're in an interesting era because i think almost if you think of a person as... in a machine, an econoc machine, being tool, a part of that econom machine the demand for labor has changed in a very profound way. it's an interesting question. might enter into a period in which weon't need people as tools. so what does that mean? >> rose: the two reasons people are enormously curious about you

number one is simply the obctive success of what bridgewater has done and become and secondly there are interesting questions as to how you think about the world and how you think about investments you have mentioned a couple times the economic machine. give us a sense of what that means to you. because my understanding is that's central to a philosophy you have about the way the economy works. >> reality works in a certain way. you have to understand how reality works. if interest rates go to zero and you can't ease monetary policy, how does the economic machine work? okay, a central bank can make a purchase and get money in the hands of somebody else or blah blah blah blah blah. there is a certainmachine. it is operated... youan raise your debt relative to your income so far but you can't raise it more than that. and then when you reach that, that changes. so the private sector cannot...

there is such laws of economics, such realities of if... let's say europe. i'll give you another one. we have a debt problem in europe. you can either transfer the money from one which country to a poor country... >> rose: germany to greece. >> you can print the money. >> rose: can't do it. >> or the e.c.b. can say i'll find a way to do it, whatever. or you can write them down. those are the choices. >> rose: so-called hair cut? hair cut. >> rose: ma machine for you is a theory of the way things work? >> that's right. it's a description of reality. if i ski and i'm putting my weight on my downhill ski i will make a better turn than if i don't. >> rose: and you always make a point that you know what you don't know and that's equally valuable. >> more valuable! i want to say that... so this is the whole philosophy.

i so know that i can be wrong. look, we all should recognize that we can be wrong. and if we recognize that we're wrong and we worry about being wrong than what we should do is have a thoughtful dialogue. >> rose: okay, but. >> so the way i guess to success. it's not what i know. i've acquired some things i know along the way and they're helpful. >> rose: it's not what you know but is... >> it's knowing ma what i don't know or worrying i won't be wrong. i want people to criticize... i want to hold down. say i think thi but i may be wrong. and if you can attack what i'm saying-- in other words stress test what'm saying-- i'll learn. >> rose: so that everybody knows so that therefore people will be free to tell you what they think. >> rose: >> of course! >> rose: because you know it will not be held against you and

you can benefit from it. >> rose: >> that's right! >> rose: so anybody at a meet canning stand up and say ray you're absolutely wrong. >> of course! >> rose: and you have not been precise, and your assumptions are flawed. >> it's so essential. because the number e principle at our place is that if something doesn't make sense to you you have the right to explore it, to see if it makes sense. i don't want people around who do things that they don't think makes sense becaus i'm going to have not-thinking people. so that they have not only the right, they have obligation. don't walk away thinking something's wrong. >> rose: failure teaches you more than success? >> of course! one of my farite books "einstein's mistakes." >> rose: and because it showed you that even einstein, the most brilliant person of the censurefully common judgment made a mistake? >> the great fallacy of... i

think of all of mankind practically-- that's a big statement-- but the great fallacy is that people know more than what they do and there's a discovery process and so when you look at... that's the ocess for learning. the process for learning is to say i don't know. like, i'm totally comfortable being incompetent. i like being incompetent. i don't mind beg an incompetent. if i don't... how much can you be competent about? and so that whole notion of do you like learning? do you like finding out what's true and building on it without an ego? and that becomes the problem. how many statements do you listen to people that begin "i think this "i think that." where they should be asking "i wonder." >> rose: what's in here? and why did you write it because you wanted people to come to work with you top understand what your own philosophy was

about openness, about management about dialogu, about the machine. yes. so what... i think every place has to he a culture. the culture the values. and so for example the number one value is it has to make sense to you, we have to talk about it, we have to work it through in a nonegotistical kind of way. so it's an unusual place and culture. >> rose:re you offended when people sometes label it a cult >> i think that cult... when i think of a cult it means believe this. and it's the opposite. >> you're taken from on high. >> yeah. somebody's telling you believe this. is. >> rose: because i said so. because i have a superior wisdom. >>t's exactly the oppose of that, right? the number one principle is don't believe anything, think for yourself. and now let's go through a

process of what is true. together. but we can't stop that we go. we can't let barriers stand in our way. we're going to live in a culture in which we can do that. it's a belief system, in other words i'll ask you do you believe that we should operate this way with each other? if you want to call that a cult, i think it's the opposite of a cult, it means think right? speak up. don't hide it, don't talk behind people's backs. >> rose: did you have thes ideas for a long time or these ideas you came to through your own experience and your own living and your own sense of what you read and what you question and you came to this? of course throughy whe life. now as i say when i started at the markets, the knowing i don't know and the liking to have people challenge me. so when i was young i did like

that. to know. i did know that i'm an independent thinker and i know that for an independent thinker i like to innovate. we like to innovate. and there's a chance they'll be wrong and if you have to have an independent thinker they're going to have a different point of view than the next person. so if you're going to have innovation and independent think you're going to have to have the ability to disagree, to find out what's wrong and i learned through my whole experiencday after day that the cost of being wrong is a terrle thing. so i worry about being wrong because i worry about being wrong i want to kno what's true and we have a community here, i want to know what's true including my strengths and weaknesses so that i know how the deal with them and i want to

be in a community of other people who know how to deal with that. and that's connected to our performance. >> rose: you have this dialogue with members of the tea party on the reblican side and the members of the president's administration on the other side what would you tell them about the necessity for revenue in the next ten years. >> well, here's wh i would be telling them. >> rose: you've got to tell them more than just talk. >> but here's what i would say. can i, mr. president... mr. alternative republican... >>. >> rose: mr. cantor,let's say. >> okay, can we first just together sit down in a room together with whoever you want to bring in and go through an exercise of finding... i forget what we should do, just find out a discussion of how does the economic machine work? how does the machine work. and can we agree on how the

machine works? >> rose: you think they've done that or not? >> they don't do that. they don't... this is the big thing. everybody's looking at what to do a there's aebate... >> rose: this is about can they do... when i say do you think they've done that or not? >> no, no, no. >> rose: let's just test our assumptions about what necessary in the way the system works and the mhine works? >> no. so that's the interesting thing. everybody's looking about what to do and each approaches it with a bias and we've not in a conversation that's a quality conversation... >> rose: and part of the argument has to do with how you raid history. >> well, we could do it together. rose: read history together? >> and you can at a very nuts level i can take any peod of history and put it through my template. there's a template i wrote that describes how i think machine works. >> rose: when you have signed

"the giving pledge" with warren buffett and bill gates, have you not? >> yup. >> rose: when you look at the buffett rule as a man who has a huge income, how do you feel about the buffett rule vis-a-vis the way you look at it in terms of whether there needs to be more sacrifice on the part of ople who are at the highest level of the economic... >> so i... i think the answ to that is probably true. i think that... but i want to say more than this on the subjt. i think there's not enough discussion on people being... how do we get people to be self-sustaining? so the number one tng i want for my kids, the number one gift i can give my kids or the number one gift that i can give anybody is that you'reelf-sufficient.

it's not a matter of even living standards. it's the notion of if you're self-sufficient you have the freedom to make yo own choices... >> it's like a parable about giving fish and teaching how the fish. >> and you can make whatever choices in life you want to make but you're self-sufficient and on an ethical standard it means that what i'm giving is equivalent to what i'm taking. self-sufficiency, right? so what i want to dowhat i think we need to do is say this large percentage of the population, how do we make them useful? how do we make them self-sufficient. let's achieve on a goal on how to achieve that. so like my kids i don't want to just give money. i give... i'm going to give away a lot more tha half of my money. i'd be happy to give that to the government... >> rose: if? >> if the government put

togeth programs that were like i'm giving away to charity to certain programs in which i believe the money is sufficiently used to hp people. let's say for example if the government created a series of programs that said there's this education, teach for america. i canead these things off. of these types of things... >> rose: all those you suppor >> it doesn't have to be those. it just has to be good. okay? the if the government... >> rose: the result has to be self-sufficient? >> yeah. so for example arn dunk can... >> rose: secretary of education. >> secretary of education. he's a fantastic person for dealing with improving the quality of education in the united states and he... race for the top and such. >> rose: so you say i'd be happy for my taxes to be raised if i knew the money would go to be administered by someone like arnie duncan.

>> oh, man, or create a series of quality... will i will fund that opportunity. don't waste it. don'waste it. put it to good use for education for opportunity. so i'm... i think that what the country's most important thing to give anybody is opptunity. >> reporter: let me take this downtown to where there's an economic protest on wall street. you clearly have read about that. what do you think's at stake and what do you think they're saying to us. >> i think the number o problem is that we're not having a quality dialogue. so i wish i could sit down. >>ose: somebody should be listening and... >> we get together, sit here in a room like you with those thoughts and understand how... wh's going on and what's true so for example on that particular case i don't know

that i adequately know the rious points of view of are that are behind it. i certainly understand the ustration. understand the dilemma. i understand there's discontent. >> rose: about somehow feeling the... that that some people did better because of the way the rules were or some people did better because they had power to influence washington and they didn't. >> so i think we need to work ourselves through that. >> rose: go ahead. >> so i think not only do we have to work ourselves through that, i would say like the question really is also a question that should be designated for our legislators, our government. because if the government makes the rules people will... did they break laworid they not break laws? this is a question of how should behavior be managed? like i think iid everything right, you kno i... i did well for my customers

my customers are pension funds, teachers. i did well when others didn't and i'm going to say that they are very grateful. we have a wonderful relationship. 15-year wonderful relationship. what hapns is i happen to earn one-fifth of the profi so then... >> rose: you make 20%. >> i earn 20% of the profits. >> rose: and you take a 2% fee for doing it. >> that covers my overhead and a bit more. so i earn this money as a result. very similar to, i would say, any of those companies you mentioned, ebay and so on and so forth. i pay about one-third in taxes. i pay about... i give away about one-third. and i'm... and this's what i do and i follow the law. and if i'm doing something that is incorrect, that they thinkis incorrect i'd like to know that and i would also like to say should those laws... is that right or wrong. >>. >> rose: you want the people who work for you to tell you exactly what they believe and to be able to document the fact that it's

not just what they believe but it's what they have discovered. and you have to test those ideas in the marketplace of your own firm before you act on those asumss, credibility? >> yes. >> rose: what is it telling you now... and this f greece falls. that has the ability to leap across the atlantic and the u.s. economy. what is it telling you about whether china, for example, the level of economic growth it's had and avoid the kind of social conflicts that might exist in that society. what does it tell you about emerging nations and what it is that... what impact they will have on commodity pricesnd what does it tell you about the future of the dollar as a currency? all ose kinds of issues? >> you' got a bunch of questions. i'll do the best i can. >> rose: in my remaining minute. go ahead. >> i would want to say that

there is... there are two worlds. there's a debtor developed countries and there's emerging creditor countries. classically the united states and china. one is a creditor, someone a debtor. we're still borrowing, we're still in debt, they're still earning. then those two worlds can be broken into t. those that can print money and those that can't prynne money. so now when i'm giving you the total answer in my remaining minutes europe is... a lotf it can't print money. therefore it will have to deal with wheer there's a transfer of wealth, there's a limit to that transfer of wealth. and so we are going to deal with the questioof whether they would print money or get the hair cuts. i think they would do both. when looking at china, china because they can't raise

interest rates because of their existing monetary policy. they can't control credi growth in the normal ways we control credit growth. so there's a credit bubble emerging there and as... in other wos there's a quality of lending and it's bypassing the credit system. and that's something that the chinese will need to get a control of because it's a dangerous thing. and so that creates their risk. if i take then the united states we're in a position where there is this deleveraging. deleveraging is rky so for example banks are lerageed about 12 to 15, 17 times. ey're leveraged 15-1 and if they go down to one 15th, we have a capital problem and we're in a deleveraging. those problems... bank crisiss that have existed every ten years normally we can have a

problem. we don't have the ability to have the same effect of monetary policy as we did before because a central bank... it can buy a bond. therefore you can buy the bond. it gives that money to somebody who sold the bond and they were ing to buy something like a bond. getting hit in the hands of somebody who spends it on the cars and houses who really is probably too much in debt is not an easy thing to do f monetary policy so monetary policys not as effective and then we have this social tension. so we should be able to... there's this downward pressure of the deleveraging. we should be able to grow at a rate that's comparable to our income growth if we keep orderly and we work this through and everything is orderly. that means something between like 1.5% or 2% we should be

growing at maybe the 2% vicinity. the problem with the 2% vicinity is that tune employment rate remains the same or can trend higher. that produces social pressures, that produces tension which means that you can have a situation analogous to that existing in greece and more social pressure you create the more tension th is existing and emerging in various ways, not just a wall street piece. but it's existing in spain. so if we can keep orderly and not argue with each other and not do disruptive things and we don't go down and grow at that 2% then maybe it wl be okay. if we have disruption and we are not able to have a monetary policy and we can't have fiscal stimulation and you have a problem of what do you do... you can't recapitalize the bank.

i mean, if you shoulhappen to need to recapitalize the banks you can't have a tarp program again. >> politically not feasible. >> politically not feasible. so you have to have a plan. you need to be thoughtful, i think, how do you create that plan and not only it's a theoretical thing because you have to have agreement to implement the plan as i say sometimes the policymakers my job is much easier than their job. my job is that i have to anticipate that it has to be one step ahead. it's in the an easy job but it's easier than policymakers. they have to find a solution for the bad stuff not happening. that's not easy to find solutions and then even if they had solutions they have to get that solution through the political system. in which everybody's saying you can't do that, whatever that is and everybody blaming each other

>> re: a you optimistic or pessimistic? >> i suppose i'm... if i was... i'm concerned. i think it's a test of us. it's a test ofus in our society. it's a test of us. >> rose: on that note thank you for coming. >> my pleasure, thank you for having me. captioning sponsored by rose communications captioned by media access group at wgbh access.wgbh.org