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Fareed Zakaria GPS

Replay of Old Interview with James Baker; Ruchir Sharma Talks about U.S. Economy and Stock Markets. Aired 10-11a ET

Aired December 02, 2018 - 10:00   ET


[10:00:06] FAREED ZAKARIA, CNN HOST: This is GPS, the GLOBAL PUBLIC SQUARE. Welcome to you in the United States and around the world. I'm Fareed Zakaria coming to you live from New York.


ZAKARIA: Today on the show, the death of a president. George Herbert Walker Bush, succeeded in helping to end the Cold War and wage a limited war in the Middle East. And yet failed to win re-election. Bush's best friend and secretary of state shares memories.

Also this week, the G20 Summit in Buenos Aires. The greeting and the meetings, the highs and the lows. What was accomplished, what was not. I'll ask an all-star panel.

And a sneak preview of my newest documentary, "PRESIDENTS UNDER FIRE: THE HISTORY OF PRESIDENTS AND IMPEACHMENT." It airs tonight Sunday at 9:00 p.m. In it I explore what the experiences of Andrew Johnson, Richard Nixon and Bill Clinton can tell us about this moment in history.


ZAKARIA: But first, here's my take. The G20 Summit in Argentina took place at a moment when the United States still stands at the center of the world. The U.S. economy is booming, the dollar is all mighty, American tech companies continue to dominate the new digital economy and the U.S. Military remains the unrivalled master of land, sea and sky.

But there are forces both short term and long term that are working to erode this hegemony. As Morgan Stanley's Ruchir Sharma points out, "The economy is looking like peak America." U.S. stocks have outperformed the rest of the world this decade, and that sort of trend rarely lasts.

The current recovery is now the second-longest in history, and it is due for a down turn. Interest rates are rising. Corporate profit growth is slowing. And budget deficits are surging. Even President Trump seems aware of the likelihood of a dip, which is why he has been preparing the ground for it by blaming the Federal Reserve for raising interest rates.

But there are broader structural realities at work as well. While the United States continues to outperform other advanced economies, the rise of the rest also continues, with China, the world's second- largest economy, growing at three times the pace of the United States. A quarter-century ago, China accounted for less than 2 percent of the global economy. Today, it is 15 percent and rising. China boasts nine of the world's 20 most valuable tech companies.

This economic reality is having a geopolitical effect. China is the largest trading partner of major economies in Latin America, Africa and Asia. That gives it clout. Its "Belt and Road Initiative" is designed to extend Beijing's influence across Asia and beyond, creating not just a market but also a string of allies and dependencies. It has expanded its control over the South China Sea in ways that neither the Obama administration nor the Trump administration has been able to block or counter.

Foreign leaders also note that the U.S. is also likely to be increasingly constrained by its mounting budget woes. The "Financial Times's" Gillian Tett points out that the U.S. federal government now spends $1.4 billion a day on its debt, 10 times more than the next major industrialized country does.

As interest rates rise and more Americans reach the age of collecting Social Security and Medicare, the federal government will be tightly constrained. Ezra Klein has quipped that the American government is, "an insurance conglomerate protected by a large, standing army," and soon that might well be true.

American retreat will not produce a better world. It will be messier and uglier. At a time when these forces of entropy intensify, when America does face real constraints on what it can do internationally, the wisest strategy would be to bolster the international institutions and norms that Washington built after World War II. Both to maintain some degree of stability and order, but also to preserve and extend American interests and values.

The smartest path to constraining China comes not from a head-on policy of containment, but rather from a subtle one that forces Beijing to remain enmeshed and interdependent with other countries.

China recognizes this and tries hard to free itself of multilateral groups preferring to deal one-on-one with countries where its power will always overshadow the negotiating partner. And yet nothing animates the Trump administration more than its opposition to multilateralism of any kind. And so as the world gets more chaotic, the forces that could provide order are being eroded. And as is so often the case, China simply watches quietly and pockets the gains.

[10:05:06] For more, go to and read my "Washington Post" column this week. And let's get started.

I want to talk about George H.W. Bush's legacy, but also this weekend's big G20 meeting with our panel. Richard Haass was on George H.W. Bush's National Security Council as senior director for Near Eastern South Asian Affairs. He was then director of policy planning at the State Department under the younger President Bush. He is now the president of the Council on Foreign Relations. Ian Bremmer is the president of the Eurasia Group, a global risk

consultancy. Anne-Marie Slaughter is the president and CEO of think tank New America. She was also the State Department's director of policy planning but her tenure was under President Obama.

Richard, let me ask you about your former boss. You wrote a wonderful appreciation of him and you touched on something that I think was the hallmark of Bush as a strategist, as a policymaker, which was a certain restraint. He was always able to be restrained so when everyone was telling him, as he put it, to go and dance on the Soviet Union's grave when the Soviet Union essentially surrendered at the end of the Cold War, he was very restrained. He didn't want to rub Gorbachev's nose in it, he didn't want to humiliate the Russian people.

When Iraq happens, everybody told him, go to Baghdad and he was very restrained about not doing things like that. Do you think that came partly from a certain kind of -- I don't know, kind of patrician mentality that said to him, look, I don't have to pander, I don't have to go with the flow, I know I have an internal core?

RICHARD HAASS, PRESIDENT, COUNCIL ON FOREIGN RELATIONS: I think you're exactly right, Fareed. He knew who he was. And there was also a strong sense of modesty. He didn't have to go through his life bragging or proving things to other people. At 18, he showed his courage by, you know, volunteering for -- to fly in World War II. And you mentioned, I think, the two most extraordinary moments in the foreign policy of his tenure, the peaceful end to the Cold War. And I think he was sensitive to Gorbachev and then Yeltsin's predict.

He didn't trigger any kind of a nationalist backlash with the Gulf War. On one hand, he was very firm. Much firmer than the U.S. Congress. That what Saddam did ought not to be allowed to stand, to use his immortal words. At the same time, he was aware of the importance for limits.

One of the things we talked about at the time was Truman and McArthur's mistake. That when in the flush of tactical gain during Korea in 1950, they went beyond their mandate and they decided to liberate the peninsula by force. That brought China into the war, as you know. It cost another 20,000 American deaths. And we were very conscious, the president was very conscious, about sometimes what you don't do can be every bit as wise and as consequential as what it is you do do.

ZAKARIA: One other thought, Richard, which is that on the domestic front, the extraordinary thing he did again there, it seems to me, was he compromised in terms of what he wanted to do, recognizing the budget deficits run up by his predecessor, Ronald Reagan, and he approved a tax increase. He knew this would drive the right wing of the Republican Party crazy. It did. Newt Gingrich launched a savage attack on him. And it may have had something to do with the re- election, costing him that loss of support on the right.

Did he ever -- I know you were on the foreign policy side, but you were very close. Did he ever express regret for having done that? HAASS: No. He thought it was the right and necessary thing to do.

The economy benefited tremendously, both the growth as well as the elimination of the deficit. And I think you're right politically. It brought Buchanan into the primary process which hurt the president. Any time a sitting president faces an internal challenge, he pays a price. It brought Perot into the general election in part and, again, I think that helped explain the outcome.

But the president was comfortable. I think where he could have done more, ironically enough, was talking about it. I think, Fareed, if he had gone on television and he had said to the American people, I broke my promise, but here's why, it was difficult for me, but here's why I believe was the right and necessary thing to do, I believe he might have been re-elected. We talked about it, and Ben Scowcroft and I, who was his National Security adviser, talked about it.

And the president came from a school of manners or of style where often he thought it was enough to do the right thing, and he didn't feel it was necessary always to talk about the right thing. And actionably, this might have been one instance where he paid a price for his modesty.

ZAKARIA: All right. We are going to talk more about George H.W. Bush with his best friend, James Baker, who was also his campaign manager, secretary of State, chief of staff, various things.

[10:10:07] So let's get to the G20.

Ann-Marie, what is the point of the G20? Does something like this make a difference? You know, what is your thought of just the basic idea of having all these people there?

ANNE-MARIE SLAUGHTER, PRESIDENT AND CEO, NEW AMERICA: The way to think about the G20 is that it's bigger than the Security Council and far smaller than the General Assembly. So you have more of the world's nations there who need to be around the table. You have India, you have Brazil, you have Indonesia, South Korea, Australia. That's important. That's -- if you did try to reform the Security Council, you would probably have some of those nations there. But, of course, it's small enough to get things done.

But fundamentally, like its predecessor, the G7, which then became the G8 and the G13, it's there for crises. So when -- after the financial crisis in 2008, there were two very consequential G20 meetings, where Obama and the Chinese and the Japanese, the world financial system, was able to do a lot of repair. But in the downtimes, there's not a lot that happened in this meeting.

In fact, all the Americans see are three lines in the communique. It was support for a rule-based order, but on the other hand we're going to reform the WTO and something about climate change. The rest of it is about the future of work and financial inclusion and infrastructure. Nobody pays any attention. So what it is, is there as a bulwark for the next crisis.

ZAKARIA: The one thing that didn't happen that everyone thought was going to happen, Ian, was a meeting between Trump and Putin. He says it was because of Ukraine. Highly implausible explanation. Why do you think they didn't meet?

IAN BREMMER, PRESIDENT EURASIA GROUP: Yes, let's keep in mind that at the last G20 meeting in Hamburg, the one big surprise was that the one guy that Trump wanted to talk to and ended up spending almost an hour at the dinner was Vladimir Putin. He gets up, he goes around the table, that's his buddy. This time around he says at last minute, actually, I'm cancelling the meeting, because of Ukraine.

First of all the Russians weren't even told, they found out on the tweet. They found out from the public setting. Secondly it comes on the back not of the Ukrainian challenges with grabbing these ships but comes on the back a week later from outcomes of the Mueller investigation, where it turns out that people have been lying, including Trump's personal attorney, about how long conversations were going on with the Russians on specifically the Trump Organization's attempt to build a Trump Tower in Moscow. But did not come to fruition. But certainly Trump didn't want to deal with that.

So, yes, he ignores that meeting. He cancels and sidelines a couple others, makes them just pull-asides, the South Koreans and the Turks. Probably the biggest embarrassment for Trump in the course of the G20. But let's be clear, this was Trump's best summit so far of his presidency.


ZAKARIA: You're grading on a curve.

When we come back, we're going to talk about whether the trade war between the U.S. and China is over. When we come back.


[10:17:24] ZAKARIA: And we are back with Ian Bremmer, Anne-Marie Slaughter and Richard Haass.

Anne-Marie, the Trump-Xi meeting, the truce, there have always been two views about Trump. One that he's a businessman, he wants a deal, he's going to cut a deal. The other is he's been very tough on China and he's been a protectionist for most of his life. Does this mean he's the businessman who wants to deal?

SLAUGHTER: I do think he's the businessman, in part because of the political costs of the Chinese counter tariffs. But I don't think it's clear whether this is a truce that will lead to a deal or to a cease-fire. What I do think is that he's pivoted faster than he otherwise would have, because he needs a win domestically.

This is the only place out of the G20, out of this whole week with the Mueller investigation, that he can point to a win. I think there was a good chance before he was going to go through January, raise the tariffs to 25 percent and then pivot. That's his negotiating style. But because of where he is domestically, he did it sooner.

ZAKARIA: And does that mean that the problem is solved with the U.S.- China relations, Ian?

BREMMER: The problem is not solved. I mean, this meeting was baked to go well. They have been engaging in advance, including a direct phone conversation between Trump and Xi for some time right now. So I'm not surprised that they made actual meaningful progress at the G20.

Trump, I think, does want to show that he's the guy that can get a deal done with Xi Jinping. He never beats on China all the time, never beats on the Chinese president directly. That's unprecedented in terms of looking at how Trump deals with other people.

ZAKARIA: That's very true.

SLAUGHTER: That's interesting.

BREMMER: But the actual relationship between the U.S. and China, especially in terms of technology trends, and especially in terms of China writing all of these checks and getting countries to have to choose between the United States and China, that's actually getting to be much more difficult to manage. And over two more years of a Trump administration, even if Trump and Xi are doing well personally, I think the pressure is on the most important bilateral relationship in the world are actually growing significantly.

ZAKARIA: And it's on both sides. I think the U.S. is turning and China is also feeling like the U.S. is trying to constrain it in various ways.

BREMMER: No question.

ZAKARIA: Richard Haass, let me ask you about the G20 in general, but the -- you were the director of Middle East policy, so I wanted to come to this one point. MBS, the Saudi Arabian relationship, we have now had for a month the U.S. Secretary of State and Defense calling for a cease-fire in Yemen to end what is the world's worst humanitarian crisis. 12 million people on the verge of famine.

Was it a missed opportunity for President Trump to having supported and subcontracted U.S. foreign policy to Saudi Arabia, to finally push them to do something at this summit?

[10:20:10] HAASS: You know, Fareed, to paraphrase the former Israeli Foreign minister, Abba Eban, when he spoke about the Palestinians when it comes to Saudi Arabia, the Trump administration never misses an opportunity to miss an opportunity.

It's clear to anyone who is willing to look at it straight that the crown prince had a direct role in the murder of Mr. Khashoggi. The administration has not leveraged that to get the Saudis to change their behavior on Yemen or anything else. Indeed, one of the many frustrating things of the G20 was the two people who ought to have been the biggest pariahs, Mr. Putin, for what he's doing in Ukraine, his new aggression, and MBS, for what he's doing in Yemen as well as the murder of a journalist, essentially neither one of them was shunned. They both got away lightly. And the big accomplishment of the summit again was something that was

avoided. In this case, the escalation of the U.S. trade war. I would just say, though, that going from where we are over the next 90 days to actually dealing in an enduring way with the differences on the trade front and on the economic front between the United States and China will be extraordinarily difficult, because so many of the issues on the agenda don't lend themselves to an easy bilateral negotiation.

So I would not exaggerate what this G20 meeting showed. If anything, it really showed what the G20 is not able or willing to do.

ZAKARIA: And do you think with regard to the Middle East and MBS in general, do we have the ability to stop Saudi Arabia from prosecuting this war? I mean, they're using American weapons, they're using American intelligence, they're using American training. Is that a reasonable expectation to say that Washington could put pressure on Saudi Arabia and do something?

HAASS: We absolutely could. We could refuse to give them the intel. We could refuse to let them use the arms. We could let it be known through some private envoy that we don't believe the -- you know, the crown prince is someone we can work with. We're essentially choosing not to do any of that. For some reason, we continue to see Saudi Arabia not simply as critical on oil, I get that, Fareed, but is critical against Iran.

And we ought to be very careful that Saudi Arabia and the crown prince do not use the known American animosity towards Iran somehow to help bring about a crisis with Iran that would force us to come in behind them and ignore our difficulties with the crown prince. I actually think Iran and the Saudi, Iran, Israeli relationship or triangle is probably emerging as the most dangerous hot spot in the world for the coming months.

ZAKARIA: Richard Haass, Anne-Marie Slaughter, Ian Bremmer, fantastic conversation. Thank you.

Next on GPS, George H.W. Bush as remembered by his best friend and one of the last people to speak to him, James Baker.


[10:26:59] ZAKARIA: As first reported by Peter Baker in the "New York Times," former Secretary of State James Baker stopped by to see his very close friend, George H.W. Bush, on Friday, just hours before Bush died.

Here's what the "Times" said transpired. "Mr. Bush suddenly grew alert, his eyes wide open. Where are we going, Bake, he asked? We're going to heaven, Mr. Baker answered. That's where I want to go, Mr. Bush said."

Now I've had the great pleasure of interviewing Baker on a number of occasions. On one of them, I asked him to reflect on the legacy of his best friend.


ZAKARIA: Describe him as a president. How would you describe him? You have seen him work with so many.

JAMES BAKER, FORMER U.S. SECRETARY OF STATE: Well, I think -- I think history is beginning to understand and appreciate the significance of his presidency. The world changed in the four short years that he was president. I am biased, of course, but I think he was the best one- term president we've ever had and among the most underappreciated of all of our presidents. And I think history is correcting that.

When you look at what happened on his watch, the Cold War that we had fought for 40 years ended. And it ended peacefully because of the adroit way in which he managed its end. He got criticized strongly for not being more emotional, about the Berlin wall coming down. He was criticized for not in effect dancing on the wall. He said, wait a minute, we're not going to do that. We've got a lot of unfinished business with Gorbachev and (INAUDIBLE) to make sure the Cold War ends with a whimper and not with a bang.

And it did. His adroit management. He promptly set about to unify Germany in peace and freedom as a member of the North Atlantic Treaty Organization in a narrow window of opportunity over the objections of the Soviet Union, and the initial objections even of France and Great Britain. It was a significant diplomatic achievement. He then brought all of Israel's Arab state neighbors to the table to talk peace with Israel for the first time ever. And the Madrid Peace Conference. That was not an easy thing to do.

Then when Iraq invaded Kuwait, he didn't dither or wait or -- second day, he said, this will not stand, this aggression against Kuwait. He told the world what he was going to do. He marshaled an international coalition to support it, including Arab countries. Got a resolution from the U.N. Security Council, authorizing the use of force against a member state. The first and only time it's been done, won't be done again probably for a heck of a long time.

And set about doing what he said he was going to do. And after a very effective and efficient military campaign, guess what he did? He got other people to pay for it. Now, I say that's a textbook case of the way to fight a war politically, diplomatically and militarily.

BAKER: He did other things, of course. Apartheid ended on his watch. Apartheid in South Africa ended on President Bush's watch. So many things happened.

So, now, there were things on the domestic side, too. We can talk about those later.

ZAKARIA: But, you know, the thing about what you describe, they are big accomplishments. They're all foreign policy accomplishments. He did do things domestically. But people often felt his heart was in foreign policy.

BAKER: Well, he knew foreign policy. His experience was in foreign policy. Presidents have greater power in foreign policy than they do in domestic policy. They don't have to share as much of it with the Congress. And he had been ambassador to China, director of the CIA. And he had...

ZAKARIA: Ambassador to the U.N.

BAKER: Yeah, ambassador to the U.N. He'd been -- he had extensive experience in foreign policy. He enjoyed it. He knew it. I've often said that our foreign policy team was the exception to the rule. We -- you didn't see the fighting and the backbiting and the leaking on each other that you saw in other administrations, both Democratic and Republican. Why? Because we had a president who made sure that that didn't happen.

ZAKARIA: You said once that George Bush was the most competitive human being you'd ever known.

BAKER: He's very competitive, extraordinarily competitive human being. If he hadn't been competitive, he would never have been president of the United States. He would never have run. He was an asterisk in the poll, and he filed to run for president against luminaries like Ronald Reagan, John Connally, Howard Baker, Bob Dole. George Bush -- whoever heard of George Bush?

ZAKARIA: You were secretary of state of the United States, one of the great storied offices in the country, an office that Thomas Jefferson held. You resigned that post to run your friend's...

BAKER: Yeah.

ZAKARIA: ... what turned out to be his last presidential campaign.

BAKER: Yeah.

ZAKARIA: Why did you do it?

BAKER: I did it because he was my friend, and he needed the help. And he came to me and he asked me to do it. And I was not about to say no.

ZAKARIA: Did you -- did you...

BAKER: Did I want to do it? No, I didn't want to do it. And he knew I didn't. And I knew I didn't. And -- and he sent me a number of notes and told me on any number of occasions how much he appreciated it. But it was what I should have done. I would never have been secretary of state of the United States but for him. I frankly would never have gone into politics and public service had it not been for his compassion toward me, his friend, when my wife died of cancer at the age of 38.

ZAKARIA: Tell -- tell that story.

BAKER: Well, he came to me after that -- he and Barbara were the last two people to see Mary Stuart before she died, other than her family. And after she died of cancer at the age of 38, he came to me; he said, "You know, Bake, you need to take your mind off your grief; how about helping me run for president?" (LAUGHTER)

I said, "Well, that's great, George, except for two things. Number one, I don't know anything about politics." I'd never done any politics. "And number two, I'm a Democrat." Because in those days, everybody in Texas was a Democrat. You were either a conservative or a liberal Democrat. I was a conservative Democrat.

And he said -- quickly, he said, "Well, we can change that latter problem." And we did. But we won -- we won Harris County; we lost the state generally. But that was my introduction to politics. It never would have happened but for his compassion toward me and my family.

ZAKARIA: You've known him for...

BAKER: I've known him since 1950, personally known him since 1959.

ZAKARIA: What kind of a man -- if you were to summarize in a sentence or two, what do you think of when you think of him?

BAKER: Well, I think he's a unique -- he's a unique character, when you consider that here's a man who became -- against all odds, great odds -- he became president of the United States by being nice to people. Now, isn't that something for our politicians today to focus on? He became president of the United States by being nice to people.

He knew that we judge our presidents on what they get accomplished. He knew how to reach across the aisle. He had many friends on both -- you never -- you won't hear anybody say bad things about George H.W. Bush, because nobody believes bad things about him, because he was a genuinely beautiful human being, a wonderful person, a very compassionate, thoughtful and kind person.

ZAKARIA: What was it like for him as a father to watch his son in the Oval Office -- obviously pride, but there were issues on which they disagreed?

BAKER: He was very proud, extraordinarily proud of his son and of his son's accomplishments. And I don't think there is any better example that I've ever known of the love between a father and a son than the love between 41 and 43. His position with 43 was, look, "I've been there; I had my time; we did certain things; he's president; if he asks me for advice, I'll give it to him." Sometimes he did; sometimes he didn't. "But above all, I support him."

ZAKARIA: But on Iraq, there must have been -- he must have been distraught to see where his son ended up.

BAKER: I don't -- I can't say that that's the case, Fareed. It may well have been the case. I know that there may have been some reservations initially about doing it, but he was not in a position to judge the intelligence that said that we -- that Saddam was building these weapons of mass destruction. The son went to the United Nations to seek authority from the U.N. Security Council and got it in a 15- to-nothing vote, the way his father had recommended and the way his father had done it when he went in there. So I don't think there was a lot of -- I mean, I know this. There was

no -- he was motivated simply by his love and concern for his son. They didn't have, as far as I know, open debates about the wisdom of this or that or the other. Did he have reservations? Maybe so. He wouldn't -- he wouldn't talk about that.

ZAKARIA: Even to you?


ZAKARIA: This is a guy who has gone skydiving in his 80s.

BAKER: Yeah.


ZAKARIA: What does that tell you about him, and did you ever -- were you ever tempted to join him?

BAKER: I was never tempted to join. (inaudible) asked me, "When are you going to do -- when are you going to do -- when are you going to take your skydive?"

I said -- this was when I was 75 or 80 years old --I said, "I'm not old enough yet."


ZAKARIA: But it says something about the -- I mean, just the physical courage of doing something...

BAKER: Oh, yeah. Well, he -- how about the physical courage of enlisting in the Navy at the age of 18, the youngest fighter pilot in the Navy at the age of 18, and going off to fight in World War II and getting shot down?

I mean, why did he do it? Because it was right.

He did so many things because it was the right thing to do. He was such a gentleman. Some people said he was too much of a gentleman to be president. I disagree with that. Here's a guy who got to be president by being nice to people. What a lovely thought that is. How could we get back to that today in our politics?


ZAKARIA: Thank you, James Baker, for that great remembrance.

Next on "GPS," have we reached peak America? That is what one of the smartest economic thinkers I know believes. He will explain in a moment.


ZAKARIA: Now for our "What in the World" segment. The American economy is doing very well, as President Trump is happy to remind us all. Unemployment is the lowest it's been in decades. Consumer confidence is high. People from all income groups are spending. So why is the market up one minute, down the next?

On Wednesday, stocks rose after Fed chairman Jerome Powell calmed investors who were worried about interest rate hikes. But before that, stocks had plunged, led by a tech selloff.

There are the usual explanations for the market gyrations, the variations of investor nerves, optimism, the changing winds of tech. But the real reason for what we're seeing could be much bigger. We may have reached peak America. I mentioned this point at the start of the show.

Here to explain what that means is Ruchir Sharma, chief global strategist at Morgan Stanley, investment management, and the man, of course, who coined this phrase.

Ruchir, what you point out is that we are at a -- at the end of a very long trend, where America has outperformed the world.

RUCHIR SHARMA, CHIEF GLOBAL STRATEGIST, MORGAN STANLEY: Yeah. You know, this has really been America's decade, both in economic terms and especially in financial terms. America as a financial superpower has probably not been this powerful as it is currently.

ZAKARIA: So let's look at the -- at the data, because you have an amazing chart, the cumulative return for the stock market since 2010. The United States' stock market has basically tripled.


ZAKARIA: And look at what the rest of the world has done. And that -- that second line is the entire rest of the world combined, right?

SHARMA: Absolutely. So that's what's been going on. And that has major implications, both for businesses, for investors, you know, like in the fact that, if this trend is about to turn -- and I think there are lots of, sort of, little signs to suggest that. One thing we have spoken about even previously, that today the market value of America's largest companies such as Apple or even Microsoft is equivalent to some of the large emerging markets all put together.

ZAKARIA: The entire economy?

SHARMA: Yeah, exactly, literally the market value. So, for example, you put all the Southeast Asian markets together, Philippines, Thailand, Malaysia. For that, you can get just one company in America. So that's how extreme things have become out there.

ZAKARIA: One of the signs of this becoming unsustainable is the U.S. market cap, that the value of the stock market as a percentage of GDP, is now at essentially an all-time high. But what I'm struck by is, if you look at that graph, there are only two points in history where it's been that high, 1929, before the crash of '29, and 1999 before the crash, the tech bubble burst.

SHARMA: Right.

ZAKARIA: So that's pretty ominous.

SHARMA: Yeah, but in terms -- I hope it's not, you know, going to be that ominous. But the big, sort of, strategic decision that people have to make is to, sort of, go much more international. Because, you know, what happens is people get so caught up in terms of what's worked, and then there is an entire, sort of, temptation to extrapolate this. And so I think a lot of American investors, too, are, sort of, very relaxed and complacent that we can be home; this is where we want to be, because nothing else has worked in the world. And my point is this could exactly be the time when you need to, sort of, shift much more overseas.

ZAKARIA: Another sign of it being unsustainable: if you look at what America's market share in terms of, you know, what is its percentage of the global economy, you point that we're at about 24 percent. But our share of global stock markets is 55 percent.

SHARMA: Right.

ZAKARIA: Now, is that -- the U.S. has always had a big stock market.

SHARMA: Yeah. But this gap has never been this large. So in terms of, like -- America, sort of, sharing the global economy has been, sort of, declining over time. I mean, depending on what you take as the sort of starting point. So the gap is 30 percentage points. And the only time in history I can remember when there was such a large gap was in the late 1980s when the Japanese economy, you know, was on the rise, but its share was, like, 16 percent, 17 percent. But the share of Japan in the global market cap had risen to 45 percent, a 30 percentage point gap. So we have a similar disconnect which has taken place in America today.

ZAKARIA: And for you, the sign -- the first real signs of this downturn are when you look at what the projected earnings growth -- now, this is what companies themselves are often projecting. More often than not it's analysts projecting it. But look at where the S&P 500's earnings per share growth. So if that happens, that begins the process of this perhaps collapse of the stock market, or at least a significant correction?

SHARMA: So the really shocking thing this year is that the only major economy in the world where growth has actually accelerated this year is America. And this is because of the tax cuts, the deregulation, the other stimulus which has been put into work. And that has also helped the earnings of companies.

My point is, from next year onwards, those effects begin to fade. And when that begins to fade, the rest of the world, sort of, you know, much more attention will be paid to what's happening in the rest of the world, rather than this obsession with just America.

ZAKARIA: Ruchir Sharma, pleasure to have you on again. Thank you so much.

SHARMA: Enjoyed that -- thanks.


ZAKARIA: It seems that other countries are now following President Trump's lead on climate change, and it brings me to my question. Which country said this week it was withdrawing its offer to host a major U.N. climate conference? Was it Brazil, China, Russia or India? Stay tuned and we'll tell you the correct answer.

I don't have a book of the week today because I want to highly recommend you watch my latest documentary, "Presidents Under Fire: The History of Impeachment." It airs tonight, Sunday, at 9:00 p.m. Eastern on CNN. In the hour, I look at what lessons can be drawn from previous presidents and previous impeachments, including the extraordinary events of the early 1970s that led to the resignation of Richard Nixon. For the Republicans who turned on their president, it was not a simple decision. Take a look.


ZAKARIA (voice over): Committee Chairman Peter Rodino was a Democratic machine liberal from Newark, New Jersey. He was new to the job. Some doubted whether he could handle it.

FMR. REP. PETER RODINO, D-N.J.: A highly partisan prosecution, if ever there was one.

ZAKARIA: Many Nixon loyalists were angry and still immovable.

(UNKNOWN): The essential question...

ZAKARIA: For Republicans, impeaching their president was tantamount to political suicide. So they kept holding out for more evidence.

(UNKNOWN): The weight of evidence must be clear. It must be convincing. And let's keep to those two words. You can't substitute them for anything else. Clear and convincing! But you cannot and you should not under any circumstance attempt to remove the highest office in the world for anything less than clear and convincing.

ZAKARIA: But as emotions began to run high, the facts were calmly recited and documented. And something surprising happened.

FMR. REP. LARRY HOGAN, R-MD.: There's an obstruction of justice going on. Someone's trying to buy the silence of a witness.

ZAKARIA: Nixon Republican Larry Hogan, the father of Maryland's current governor, was moved by the evidence.

HOGAN: The thing that's so appalling to me is that the president, when this whole idea was suggested to him, didn't in righteous indignation rise up and say, "Get out of here; you're in the office of the president of the United States; how can you talk about blackmail and bribery and keeping witnesses silent? This is the presidency of the United States"?

But my president didn't do that. He sat there and he worked and worked to try to cover this thing up so it wouldn't come to light.

ZAKARIA: One by one, rock-ribbed conservatives who had revered the president put conscience over party.

(UNKNOWN): I cannot condone what I have heard. I cannot excuse it. And I cannot and will not stand still for it.

(UNKNOWN): I wish the president could do something to absolve himself.

ZAKARIA: Perhaps the most conservative Southerner was Walter Flowers of Alabama. He had served as the segregationist George Wallace's campaign chairman.

FLOWERS: I wake up nights, at least on those nights I've been able to go to sleep lately, wondering if this could not be some sort of dream. Impeach the president of the United States?

ZAKARIA: But he did vote to impeach, even though Walter Flowers said it gave him an ulcer.

Again, "Presidents Under Fire: The History of Impeachment." It airs tonight on CNN at 9:00 p.m. Eastern. Don't miss it.

The answer to my "GPS" challenge question is A, Brazil. It announced it is withdrawing its bid to host the COP 25 Conference in 2019. It cited budgetary reasons and the transition to the upcoming government. In the new year, that government will be headed by President-elect Jair Bolsonaro. According to Reuters, he plans to open up the already shrinking Amazon rainforest, a critical absorber for global carbon emissions, to more industry and more infrastructure projects.

Thanks to all of you for being part of my program this week. I will see you next week.