secretary gates last year went to brussels in his speech criticizing europe for not doing more for its own defense raised eyebrows but was no different than any speech in american defense secretary has given to europe to increase its investment. how will europe be able to step up its own investment in such tough economic times when citizens themselves don't feel threatened? >> i think the first thing is we wish not to expect an increase in defense spending anyway. the crisis is that it's a fact we need to make better use of the money our nation is ready to spend on defense which is why we have engage in many initiatives the most well-known of them being small defense. and the -- is not to do more with less but to do better and to do better we have to do it together. >> before we get into that because i want to spend time talking about the specifics in smart defense later in the show. from a europe reassurance standpoint each country in europe and in the alliance has a different view of this. herein european nations are the ones most disturbed by it. they feel that sort of the territori

we will be going to slovenia and portugal to visit our two capitals of culture in europe. do not go away. >> welcome back. thank you for staying with us. every year, the european union names the city as its cultural capital. the aim is to showcase the rich local heritage. this year, but cities have been chosen. the city of guimaraes in portugal shares the honor with the slovenian city of maribor. let's go first to maribor. a writer takes us around the city. >> like an embrace, then you're- covered -- vineyard covered hills. on the streets, as libyan mingles with german at -- slovenian mingles with german and plenty of english. industry has collapsed and unemployment is high. some sikh culture as a ticket out of the crisis. -- some see culture as a ticket of the crisis. >> over the past 20 years, maribor has become more provincial. with the status of european cultural capital, we want to turn that around. we want to open the city up and put maribor on the map of the world's leading cultural destinations. >> to do that, he is confronting the town's crisis head-on. he has scoute

is it also recognized in europe? do they have different standards? >> the answer is yes to all of the above. they encourage interested parties and other nations to develop their own organizations, and they could have their own standards. however, lead is still most recognized, and a home in san francisco. it is meaningful globally, but it is a u.s. standard. >> ok. so what do we have to do for these new residential buildings? it would be hard not to get 25 points. in 2010, you need to be rated, and in 2012, you need to make sure that you get a minimum. and also meet storm water management guidelines. it requires serious consideration early in the process. that will not meet guidelines. we really need you to integrate back into your overall building. midsize, the standards are virtually the same as a small residential acceptance, up at 2011 instead of 2012. and for the high-rise building, we have been talking about the difference, and most high-rise residential buildings fit more reasonably in these larger complex buildings. so you get to choose. the

while we cannot control what congress or what europe do, we must prepare as well as possible here in virginia for the future changes that are certain to come. so that's what i try to do i in. the budget i proposed does not raise taxes, but forces state government to set priorities. live within its means and plan for the future. something i wish our federal government would also do. [ applause ] >> so i'm asking you this year to put $50 million from a newly created fund. this fund will help us handle impacts from necessary and future federal spending cuts and take prudent action to help our economy on defense in federal-related spending. i'm proposing we enhance our cash reserves by doubling the rainy day fund to $600 million by the end of 2014. we will also eliminate the accelerated sales tax this session from 96% of all merchants by allocating by 2012. my goal is to get rid of that unfair policy before i leave office but not before. together, these budget strategies provide structural balance. they reduce unfunded liabilities and increase transportation and higher education. these id

and europe continue to pressure iran. i think they do that for home consumption so i think they're in any case you know building a propaganda case to you know pacify the home populations nobody in the word believes that the last report from i.e. a was in any way correct it was based on rumors on false and fabricated documents and i was there in vienna when the director general presented his paper and he said well we thought you know the pressure from this nuclear program is building so we fired this report and in fact like this he explained why he was using all this bad information which day his predecessor in this job very wisely had never used so this is the situation we have with this fake report the bad report damaging report and the report which makes you know steps by the u.s. against iran more likely but that this is all show the real thing is america's and a high pressure it's bankrupt in a way they need more billions of dollars to be generated in as a steady flow in trade this is you know in fact being damaged by this embargo th

uncontrolled trafficking may end up somewhere in the south of africa or somewhere in the south of europe do you think the fight for don't mean nation over at the african resources could destabilize the region well the it's not the fight it's an out of competition. suddenly many countries which forgot about the african continent during the ninety's to recognize that africa is the only continent in the world where you can get the assets for their real price or sometimes for the price which is under the market and today we see competition between many countries in the african continent it's not chinese domination like it was in the ninety's we see turkey was iran we see russia we see western countries we see brazil we see other players india malaysia i mean all the new economy is there and all the new economy is all the emerging economies want to buy to peace how much thank you very much thank you so much indeed. the e. to to shoot to the beasts want to. keep the sum up the female alabama. was. in a. minute thank . you. damascus rejects are of the calls for president assad to step down and for

and military intervention in around sure a very good evening what message does this move send to europe do you think now. well i think there are three main points to guarding the initiative by the rain in parliament one is that the grace period that they had in vision for six months for it is going to take place may actually not be that graceful so iran is taking matters into his own hands another issue is that it shows the complex city of feeling in domestic politics and the power that iranian parliament holds and that is accountable to its people and it's not going to just sit back and watch of us going to happen to the national sovereignty of iran and then the it shows the disconnect between. his harlem and him people because this is a model is not something which is going to be to the benefit of european people and there's also a disconnect between european governments and their parliament as well sure the big three awards that iran would try and close as they threatened the whole move straight this kind of looks no the maybe backing away from that with this new preemptive move. well n

you think europe doing enough to make you feel it is a temporary situation? >> our view on going back to europe in the third quarter is we thought we'd see them in recession in the fourth quarter of 2011 and first quarter of 2012 beep think that will extend out into the second quarter of 2012. we edge courancouraged by the m to strengthen the banking structure. we're have to see the overall fiscal reform to occur to get those deficits down. our view is that we come out of a fairly shallow recession in europe and start to see some stabilization in the second half. that's what's in our forecast. >> get all the stuff in the table. brazil. you talked about a market a little bit weaker in brazil bufl we often think of the brazilian market as one that is resilient. do you see a comeback in brazil in the prebuy problem, in truck sfs. >> what did we see in brazil and china? both in 2010 were dealing with very big inflationary pressures. they've increased interest rates and slowed those economies down. we saw the brazilian economy slowing through the third quarter. it

because uncontrolled thinking may end up somewhere in the south of africa or somewhere in the south of europe do you think the fight for don't mean nation over at the african research this could just have a lasting well the it's not the fight it's a kind of competition. suddenly many countries which forgot about the african continent during the ninety's recognized that africa is the only continent in the world where you can get the assets for the real prize or sometimes for the prize which is on the the market and today we see competition between many countries in the african continent it's not chinese domination like it was in the ninety's we see turkey was iran we see russia we see western countries will see brazil we see other players india malaysia i mean all the new economies of there and all the new economies all the emerging economies want to buy to peace thank you very much thank you so much indeed. well into the future this month charged by particles that make up the fabric of the universe find what you're looking for. with the help of lasers and fibers pull out your tablet of a new gam

we'll announce which two they are. >> with all due respect, there's only two heavy brigades in europe so we can do the montana ourselves. >> we'll announce in a couple of weeks. >> this will be the last one. >> following michael's question, have any of your counter-parts in europe or germany expressed specific concern about not just with drawing the army but all the families and their economies are tough there, too. then specifically about the drawing down the 80,000. when will that start? is that going to begin before the war in afghanistan is going to end allegedly at the end? >> first we've been working very closely with admiral who is working with them. we've been talking about this several months, how we would mitigate this. i think they are somewhat pleased with the mitigation strategy in place. i think we'll be able to work through that. the thing i would tell you about the drawdown is there's two hinges i was concerned about when we started this discussion we get to the 490 was important to me. we'll start this year. we had committed to going down to 520. we're starting to take some struct

do that again. >> a few good words for his father. for more on the states, i am joined by the north american editor. i have to ask you, you have come here from europe, what do you make of all of this? >> up and down the united kingdom, all over europe, big sports stadiums in the surveys, i have never covered a rally of the raj before. they had tires and rusty tools. this intimate nature is fascinating and really quite important. in this race, the effect has been to push people to the right, moderates is an insult. >> in iowa, people get to see the candidates up close, and that matters, too, doesn't it? >> if he does become a candidate, ron paul is stressing the anti-war message. what people make of that character is as important of the policies. people are judging not just to the contents of what they will do with the economy -- >> it is tempting to look at this primary process and think, wake me up when there is a nominee. ron paul, mitt romney, newt gingrich o have a chance. >> politics is destruction testing, really putting them through it. they all have something slightly different to offer. newt gingrich is the most serious challenger, but he

europe? are we going in the direction of the united states of america? how do you see the future of europe if a young man or a young woman were to ask you today what would you were look like in 20 years' time. what would be your answer? >> translator: i actually think that we are a model in and of itself. a very unique model. the united states of america so quickly will not be a sort of role model to follow. but i think what we really need is a very clear commitment among ourselves that we wish to coordinate our policies as closely as possible. as regards the relationship between the nation state and europe, we will have very difficult debates ahead of us, because particularly in germany, there are very strict rules that are laid down and also monitored. but the federal and constitutional court as to the very structure of a nation state. i would say to young people in a few year's time, you will be able to change residence as students do these days. quite often you will be able to take your pension rights with you. you will be able to take out insurances. you w

what do you see europe's debt crisis doing?it get to the point that it could actually kill this recovery that we might be in right now at a critical time for an incumbent president? could it create an opportunity for his opponent? >> europe is a mess. make no doubt about it. but i'd say it's maybe four to one that it won't be decisive, that they'll muddle through for another year with maybe their central bank printing money. that's not a long-term exit strategy, but it might make it through 2012. >> will, of all the economic issues, you say, you know, you might be right on this, you say europe is going to end up having the greatest affect on the outcome of the presidential election, but that very few people here will know why. what are you talking about? >> right, right. look, man, this euro thing is no bueno. the world bank said developed countries' economies should prepare for the worst. >> yeah. >> that's not good. germany is officially in a recession. it's not just europe, by the way. chinese demand is down. all these littl

really serious for europe and do you consider brain drain a problem at all where a scientist says it is a man of men of the world i would say see united states is it myra brew into doing research and some weeks ago it's ok to speak to people from harvard university and i was really very much. to learn city here for the medical school sixty one billion dollars away labor and we're coming also to the carter me images seem we have it's a one hand side we have a fantastic wizard medical research into your might it stage and send we have on the other hand side a very lousy poor vision of some medical service and nothing so normal standard is not very brisk taking is european science really competitive with the united states today now i would say partially yes see it depending because to the people in the don't forget we have for example from germany where first some lower price wieners why not it's a we have further to support people who are keeping able to make good research and she says our main question but the brain drain is something very very. sad and i'm also a victim of a brain dr

do nation states still important in europe bullies to be important twenty first century or is europe moving towards federalization are we moving towards the united states of europe something that. you know i would say first of all we need unification sits a clear but. i will ts or all of system is a very very important to support to from our research and i think there's it. and found it and we need much more funds because if funds is a good in wasted money this is a future for our grandchildren. one of the problems that exists in science and you mention is that one of your interviews that i read is the problems of into disciplinary dialogue well i mean that there that the enormous complexity of each given science to sell is so today that there that people for the scientists find it difficult to communicate with each other is it true to stall because when you don't really into this serious in everybody speaks in his own language and send you in a situation where you can't understand the one so modern sciences and is one of our take this in so i mean to be into disappearing and out of

that's the theory obviously the plan is to do the greece what america and europe used to do to let america in third world countries in the nineteenth century when a country couldn't pay the creditors would send in a gunboat and they would literally occupy the customs office or they could collect tariff revenues and repay the bondholders so what you have to go a is a decision that. finance capital and extracting money to pay the bankers is incompatible with democracy a few months ago when the elected prime minister of greece by grails was about to sign an agreement with europe to say ok we're going to sell off fifty billion euros worth of replanned this water and sewer systems of athens and others that is on the market by rest maybe even the parthenon if you island yes the prime minister said well we've got to put this to a referendum and let the people of what about it and angela merkel said now you get every referendum if you have a referendum they'll go out now and immediately the greek popular population went out into the streets to demonstrate and say look there is no way that a nation

but the united states and europe do not believe this. >> shirzhad, thank you for joining us. >>> respectivem people who are right there. they know what's going on on the street. they talk to people around them. get a pretty clearview of how folks are reacting there. >>> meanwhile, in north korea. a new directive for the new year. the country's annual new year's message called on people in that country to defend the new supreme leader to the death. the message said the army, the ruling party, and people should, quote, become human rifles and bombs to defend that man, kim jong un. he took over as north korea's leader after the death of his father kim jong-il last month. >>> miami dolphins star running back reggie bush won't be in the lineup against the new york jets today in the final game, but you won't believe the gift he got for his entire offensive line. it may make you wish you had decided to play pro football for a career. >>> and he's back. we're talking about banana sam. the san francisco zoo welcoming back the missing monkey. where was he, who found him, and how did he get back there

the larger sense i also don't agree with because it would imply what we are going to do and asia what we did in europe and i draw difference between what we have to do in europe with what is needed in the far east because we are not going to dominate the far east. let some kid ourselves. we don't need to engage in some sort of a cold war with war with china. if we are smart, and china needs us, just as we need china. we will do much better by doing what written did in europe during the 19th century which is try to balance between the major asian powers. hopefully thereby maintaining a situation in which no one sees itself so powerful that it can use force and that we at the same time do what we can to promote what we help to promote in europe. we helps to promote in europe franco-german -- that and interned that the german polish, polish russian reconciliation might be next on the agenda. i think we could do a great deal also while protecting japan and remaining its ally to promote the japanese chinese reconciliation. the chinese might welcome that. we can do the same maybe between china and india but

how much exposure do you have to europe? do you see happening in china as investors and traders look at your stock move of 55% in the last 1/2 weeks and wonder whether to get in or get out? >> there are a couple of new dynamics coming down. intel has new server platforms coming out. our particular products are design on the new servers. we are seeing the opportunity for broader business expansion. even if there is more or flat server growth completely. we have the opportunity to go even within a flat market there. obviously keeping an eye on europe and trends there. we are heavily diversified around the globe, about 75% of our revenues in the u.s. we watch that closely. china has been a high growth market, as well. >> it's a pleasure to have you on the show. thank you for making time for us. >> good to be with you. >> ceo of emulex. zach, a trade here? >> this is attempting one. if you look at this over a multiyear, they're more of a comeback story than they are a suddenly-surging story. they are up a lot because they were d

europe. now it is very resilient. in the 1990s finland and sweden very serious banking crisis. now doing relatively well. decade. i think this is an encouraging example of the importance of structural reforms in europe and global. >> we have to get two questions in here on the second row and then minister baroin with a comment. first in the second row and then i'm coming in the back. >> thank you. i want to take advantage of the joint presence of the spanish economic minister and of commissioner rehn to ask the question leveraging on what was just commented today. i see that the spanish minister said it basically wants to do all you want, all you can to keep it in order and commissioner rehn the five letters in the past two congress. now, unfortunately, you know, we need -- we spoke about the reassurance, the confidence in the market but we as market participants would like to know the spanish economic minister what they are going to do to put their house in order this year. as you know on the last day of last year there was a substantial overshooting of the deficit, and now we are hearing some comments w

but i'm surprised there's been no recovery given what's happening in europe. >> john, do you agree? europe has been a back burner issue here for six weeks or so. we had those swap lines put into place at the end of november of last year. then we had the long-term refinancing operation in december, december 21st. since then europe's been on the back burner. we always thought it would come back. it's come back sort of a mild case today. i expect europe to continue to be sort of a simmering problem this year. we don't expect quite the same volatility out of europe as we did last year. i think both of those bold policy moves we saw at the end of last year kind of take the worst case off the table in europe. but i think three months from now, six months from now, nine months from now, we're still going to be talking about europe. might not just be in a crisis mode. >> i would like to get both of your views on the following hypothesis. friday's gdp number at 2.8%, you can look at it one way and say it was better -- the economy's doing better than that number would suggest because there wa

are today's downgrades a vote of no confidence in what europe is doing? >> well, it's a matter that i think it's two things we should look at. one is on the fiscal side we don't see the issue as being primarily a fiscal one. we see it more as being one of a level of divergence, of competitiveness between the periphery and the center. and you're going to need fundamental economic reform for this to be arrested and partly reversed. and that of course, is even more problematic when you have issues in financial market integrate-- integration. >> but with the downgrades isn't it going to make it even more difficult for these countries to grow, to borrow money and to do commerce? isn't it kind of a catch-22. >> we think that investors are best served when we give timely opinions on the prospects of default risk, when we take steps that are measured. we've got 21 rating steps between aaa and sc. four ratings today went down by two notches. another 5 by a single notch. seven were affirmed. if you look at these rating actions in the perspective of our overall scal