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Fareed Zakaria GPS

Putin Meets the Press; Putin's Play for Prominence Around the World; Roy Moore, Populism and Donald Trump; A Trump Boom or a Trump Bubble?; Aired 10-11a ET

Aired December 17, 2017 - 10:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[10:00:19] FAREED ZAKARIA, CNN ANCHOR: This is GPS, the GLOBAL PUBLIC SQUARE. Welcome to all of you in the United States and around the world. I'm Fareed Zakaria.

(BEGIN VIDEOTAPE)

ZAKARIA: We'll begin today's show with my take on the tax bill.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We want to give you, the American people, a giant tax cut for Christmas.

ZAKARIA: We'll follow that up with a tour around the world, starting in Russia, with President Putin's press conference. It went on and on and on for almost four hours so there is much to discuss.

Also, Iraq declares victory over ISIS. All that, with a terrific panel.

Also, Steve Bannon's candidate loses the race for Alabama's Senate seat. Is the pool of populism fading in America? How is it doing on the other side of the Atlantic? We'll take a look.

Then you've heard all the horror stories from women in the workplace. We'll tell you why they're important for a whole different reason. An economic reason. I'll explain.

And --

TRUMP: The stock market is at an all-time high.

ZAKARIA: The Dow, S&P and Nasdaq keep hitting record highs. Is this a Trump boom or is it a Trump bubble ready to burst? The top experts, Morgan Stanley's Ruchir Sharma and Goldman Sachs' Abby Joseph Cohen, will debate.

(END VIDEOTAPE)

ZAKARIA: But first here's my take. If the Republican tax plan passes Congress, it will mark a watershed for the United States. The medium and long-term effects of the plan are clear. A massive drop in public investment, which will come on the heels of decades of declining spending as a percentage of GDP on infrastructure, scientific research, skills training and core government agencies. The United States cannot coast on passed investments forever and with

this legislation we are ushering in a bleak future. The tax bill is expected to add at least $1 trillion to the national debt over the next 10 years and many experts believe that the real loss to federal revenues will be much higher.

We can expect big spending cuts in the near future, which would happen on top of an already dire situation. As Gary Burtless of the Brookings Institution points out, combined public investment by federal, state and local governments is at the lowest point in six decades, relative to GDP.

The United States is at a breaking point. In August, the World Bank looked at 50 countries and found that America will have the largest unmet infrastructure needs over the next two decades. Look in any direction. According to the American Road and Transport Builders Association, the United States has almost 56,000 structurally deficient bridges. About 1,900 of which are on interstate highways and all of these are crossed 185 million times a day.

There is no better indication of the U.S. government's myopia than the decline in funding for research. Research and development topped 10 percent of the national budget in the mid-1960s. It is now under 4 percent. This is happening in an environment in which other countries from South Korea, to Germany, to China are ramping up their investments in these areas. A new study found that China is on track to surpass the U.S. as the world leader in biomedical research spending.

When I came to America in the 1980s, I was struck by how well American government functioned. When I would hear complaints about the IRS or the FAA, I would often reply, "Have you ever seen how badly these bureaucracies work in other countries?" Certainly compared with India where I grew up, but even compared with countries like France and Italy, many of the federal government's key offices were professional and competent.

But decades of criticism, congressional micromanagement and massive underfunding have taken their toll. Agencies like the IRS are now threadbare. The Census Bureau is preparing to go digital and undertake a new national tally, but it is hamstrung by an insufficient budget and has had to cancel several much-needed tests. The list goes on and on.

Now there are genuine problems beyond underfunding. The costs of building infrastructure in America is astronomical. But during the Depression, World War II and much of the Cold War, a sense of crisis and competition focused America's attention and it created a bipartisan urgency to get things done.

[10:05:12] Ironically, at a time now when competition is far more fierce, when other countries have surpassed the United States in many of these areas, America has fallen into extreme partisanship and embraced a know-nothing libertarianism that is starving the country of the essential investments it needs for future growth. Those who vote for this tax bill, possibly the worst piece of major legislation in a generation, will live in infamy as the country slowly breaks down.

For more, go to CNN.com/fareed and read my "Washington Post" column this week. And let's get started.

One of the most highly anticipated events every year for foreign affairs junkies is Russian President Putin's annual press conference. The 2017 installment was held on Thursday and it was a classic Putin spectacle, lasting right around four hours. During that time, he answered dozens of questions. There was even a question about GPS. Alas, it wasn't our GPS, instead about the legality of putting a GPS tracker on a cow.

Anyway, we'll talk about the substance of the press conference and much more with today's terrific panel. Susan Glasser is the chief international affairs columnist at Politico, a former Moscow bureau chief for "The Washington Post," and the co-author of "Kremlin Rising."

Luke Harding is a "Guardian" foreign correspondent. He has a new book called "Collusion: Secret Meetings, Dirty Money and How Russia Helped Donald Trump Win." And here with me in New York is David Miliband, the former foreign secretary of the United Kingdom. He is now president and CEO of the International Rescue Committee and he has a terrific new book out called "Rescue: Refugees and the Political Crisis of Our Time."

Susan, let me start with you. What struck you most about the conference? Certainly to me, the references to Trump personally and the Democrats were pretty unusual.

SUSAN GLASSER, CO-AUTHOR, "KREMLIN RISING": Well, I think they were extraordinarily unusual. I mean, Vladimir Putin of course often talks about the United States and in the year-end press conferences usually to bash them or to accuse the United States of encircling Russia or -- and engaging hostile acts in some ways. He definitely has not used it as a platform in the past for praising the president of the United States for the good performance of the American stock market. And it was so directly on theme with the kind of message that Donald Trump is usually telling us about himself. It was as if they had coordinated.

ZAKARIA: Luke, and then Trump's phone call back to him, it all -- it felt bizarre, as if this was a kind of personal bond, you know, and a very partisan one. Putin attacked the Democrats.

LUKE HARDING, AUTHOR, "COLLUSION": Yes. This is one of the great mysteries of the 21st century, why is Donald Trump so nice to Vladimir Putin, chatting on the phone, agreeing on everything when he's so rude about practically every other world leader, including Theresa May in Great Britain. He doesn't much like Angela Merkel and yet they chat on the phone. And it's curious. It's curious.

And I think the answer is firstly that Putin has leverage over Donald Trump. I really think that's the case. And, secondly, I think he has what you might call kind of psychological mastery, as Susan was saying. He says the kind of things that Donald Trump wants to hear. He says that these attacks from inside America are an attempt to delegitimize Donald Trump. And, of course, that's what Trump himself thinks.

ZAKARIA: David Miliband, do you recall a head of state taking -- kind of entering into a domestic dispute in quite the same way? And Putin really attacked the Democrats, said this an attempt to delegitimize Trump. Trump is doing a great job, he's brought the stock market up. I can't recall this kind of --

DAVID MILIBAND, FORMER UK FOREIGN SECRETARY: Well, I certainly can't recall the chief booster -- the chief international booster of a U.S. president being a country that has been trying to destabilize its democratic institutions.

One thing occurred to me. I wonder how successful Vladimir Putin really thinks his play has been. Because obviously he has caused a lot of instability. But remember, if we'd been meeting a year ago, we would have said, are the Russia sanctions really going to carry on? Where is American opinion going to be on the Russia sanctions? Will Congress stand up for that?

And if you look at the end of the year, he hasn't actually had sanctions relief, which was one of the top things that he was looking for at a more specific level than the general undermining of Western democracy.

ZAKARIA: But, Susan, he has managed to get a certain kind of breathing space because Trump is so involved in other things and Trump is withdrawing American -- America's role in the world, which does give Russia more scope. Did you get that feeling from the conference?

[10:10:08] GLASSER: Well, absolutely. Look, remember, Vladimir Putin is facing a reelection no matter how much already it's already a foregone conclusion in March. And I think it sets himself up to be the alternative to American power around the world. He's clearly kind of hey, the leader and the peace maker in the Middle East for example now, and ratifying the victory of his proxy Bashar al-Assad in Syria.

At the same time here in Washington, you know, you have this incredible spectacle, incredible spectacle of basically Donald Trump's administration pursuing one Russia policy and the president of the United States basically not being on board with it.

ZAKARIA: Luke, let me give you a chance because you have you this book out where you believe that the leverage that Putin has over Trump is real. What is the strongest case you would make about that collusion, as you describe it in the -- in your book?

HARDING: Well, I think it's financial. I think Robert Mueller is looking very actively at what dealing Donald Trump did with Russia in past especially after 2008 when he was broke. I think that's the whole question that's being debated all year of kompromat, compromising material, alleged buggings of what may have happened during Trump's kind of Moscow visit in 2013.

And I think there's the sort of basic question of the sort of Russian influence on the Trump team. Wherever you look, whether it's Rex Tillerson, the U.S. secretary of state, who has an order of friendship from Vladimir Putin, or Michael Flynn who's now admitting lying to the FBI. He was taking money under table from Russian interests.

It seems almost as if Trump's Cabinet was put together from Moscow and we still haven't seen a single occasion when Trump has criticized Russia or Russian foreign policy or Putin personally. And I can confidently predict we will not see that.

ZAKARIA: That is really the central prediction. It would be so easy to dispel some of these rumors by doing that and yet he doesn't.

Anyway, we have to take a break. When we come back, we're going to switch courses somewhat. Iraq declares victory over ISIS. Is it real? What is happening in the Middle East? I'll ask David Miliband among others.

(COMMERCIAL BREAK)

[10:16:46] ZAKARIA: And we are back with Susan Glasser, Luke Harding and David Miliband.

David, two years ago, we were all obsessed with the idea that ISIS was taking over the world, Syria was falling apart. You know, the situation seemed pretty bleak, particularly with regard to ISIS. Is it fair to say, as the Iraqi prime minister now says, that ISIS has been defeated, it is essentially destroyed?

MILIBAND: Well, I think it's been defeated militarily, but it hasn't yet been defeated politically and ideologically. The fight for the soul and the allegiance of Sunni communities across the Middle East is very much alive. We've got people on the ground in Syria, in Iraq, across the region and there's no doubt that the danger of ISIS 2.0, 3.0 remains because, although there's been a significant degrading of its military capacity, although its ability to occupy parts of Iraq has been ended, it remains a force that has the ability to project power and project military power in a dangerous way.

ZAKARIA: Your book is about refugees and about the responsibility we should all feel around the world. Do you get the feeling 2018 is going to see a let-up on -- in the extraordinary flows of refugees we've seen over the last two years?

MILIBAND: Well, I wish. And the truth is the trends are driving the refugee crisis, the crisis of diplomacy, that means wars are burning for longer. The extraordinary tumult within the Islamic world that we've just been talking about, the weakness of the international system, our U.N. and other institutions weaker, the never defragmentation in the Security Council, all those trends point to long-term displacement and growing numbers of people.

And of course, one of the things that is striking is not just the political crisis produces humanitarian crisis. Untended humanitarian crises then become the source of political instability and just last month the king of Jordan says his country is at boiling point from the refugee crisis, that it's 600,000 refugees in Jordan. So I think that 2018 portends real danger that the root of these crises isn't going to be addressed. The diplomatic world is in status, that's the danger at the moment. But also that the destabilization from these humanitarian crises continues.

ZAKARIA: Susan, one of the things Putin has said is that he won in Syria. He's quite -- he was boasting about that. Is that a fair assessment, do you think?

GLASSER: You know, I also heard that from many people around the region who believe that Vladimir Putin won. And that now what he's turned his attention to is dictating, if you will the terms of the piece. And I thought it was an incredible moment a few weeks back when he hosted Assad, who came out of Syria, for one of the only times during the civil war, came to Sochi to talk to peace terms, if you will, with Vladimir Putin.

He also had a phone call then with Donald Trump. This was right before American Thanksgiving. And it seems to me that this is a clear cut example of Russia and Putin directly taking on a role that in the past would have defaulted to the United States.

ZAKARIA: Luke, do you see Putin as taking advantage of -- how would you describe it, American distraction or lack of strategy in the Middle East?

[10:20:03] HARDING: Yes. I mean, I think Putin, over the last 17 or 18 years, has been on a great patriotic project to make Russia great again if you like. And that's gone through several phases. Sometimes less successfully. Sometimes more successfully. We've seen wars in Georgia and we've seen Putin grab Crimea in 2014. And now I think the international stage is largely free for him to do pretty much as he wishes.

And this has been his goal for so long, to have Russia as a kind of equal pole to the U.S. to -- I mean (INAUDIBLE) talk candidly about how they want a kind of multi-polar world and he's pretty much kind of got that now and he's taking advantage of Donald Trump's internal weakness.

ZAKARIA: David, he -- well, he has been in power now for 18 years. He will be in power for another six, at least. You've conducted diplomacy at the highest levels. It matters when you have that much experience. I mean, this guy has been around the block several times when there's no -- nobody else is running a major country who has been around for 18 years.

MILIBAND: Well, not just the 18 years he's been but the six years that are coming. And I think it's important to see the Russia-China relationship, not just the Russia-America relationship. The temptation is that we look at the bilateral. But of course, this is the year 2017, in which President Xi Jinping committed that China would be the status quo power in the international system. He went to Davos and he said I want to boost the multi-lateral institutions and I am looking next year to see how does the Russian leader with six years ahead of him, how does the Chinese leader with at least five, many people think 15 years ahead of him, what sort of relationship do they have?

Because in a way, it's a marriage of convenience at the moment. And a rising China is going to find Russia a pain in the same way that a challenged America finds Russia a pain.

ZAKARIA: It really is a whole new world with all these countries trying to search for the influence that the United States, in a sense, has ceded.

Thank you all very much. Fascinating conversation, David Miliband, Susan Glasser, Luke Harding.

Next on GPS, we will explore why all of the mistreatment of women in the workplace that we've been hearing about recently is not just bad legally, morally, ethically, but it could be hurting the United States economically. I'll explain when we come back.

(COMMERCIAL BREAK)

[10:26:54] ZAKARIA: Now for our "What in the World" segment. As more and more allegations of sexual harassment, predation and misconduct come to light, the United States, in particular, is beginning to have important conversations about what effect these incidents have had on women in the workforce. And it turns out that this is actually a conversation that is crucial not simply for reasons of fairness and morality but also for economic productivity.

According to a new report out by Standard & Poor's, women who leave the workforce or never enter it have cost the United States greatly. S&P says that the U.S. economy would be $1.6 trillion bigger today if women in America entered and stayed in the workforce at the same rate women in Norway have.

What does that mean? If we look at the OECD numbers for labor force participation rate of women in Norway and the United States, we can see that the two countries had essentially the same percentage of working age women in their labor forces in 1972. But after that, Norway's percentage of women working grew much faster than America's and stayed much higher.

Indeed the past two decades, American women have gradually been staying at home as the country's female participation rate dropped by nearly three percentage points. During the same time period, female workforce participation rate in countries like Estonia, France and Canada, were up by more than six percentage points.

So why is America lagging behind? Well, the study's author told GPS there are many reasons from male gender bias in workplaces to tax disincentives for a second income earner in a given household. Of course, there are also reasons that have nothing to do with gender. And it's important to note the male participation rate dropped as well.

But the study's authors also note that the United States remains the only OECD country with no legally mandated paid maternity or parental leave. S&P highlights countries like Sweden, which offers subsidized daycare, generous child care support and workplace flexibility. If the United States had implemented similar policies, according to a paper cited in the report, the participation rate among women aged 25 to 54 in 2010 could have been 6.8 percentage points higher than it actually was.

And such policies might have women enter more lucrative fields, work more hours, and get promoted to higher levels, all of which would help narrow America's pay gap between women and men.

The Bureau of Labor Statistics predicts that the downward trend of women age 16 and older in the workforce will continue for the next decade. One other trend for while not downward remains too low is women's participation in the sciences. Companies are reportedly desperately searching for women to fill STEM jobs, science, technology, engineering and math, and just can't find them.

Only 14 percent of women age 25 to 64 in the U.S. have studied a STEM field to begin with, a recent OECD report shows. Next year some 2.4 million STEM jobs will go unfilled according to the Smithsonian Science Education Center.

So the solution to America's growth problems might be simpler than we think. Women and particularly women in STEM. Remember, America's super sized growth that continued for many decades after World War II was due, in no small part, to demographics. The nation had a relatively high birth rate. It was a nation that was highly attractive to immigrants. It was a relatively young nation.

But today, America's population is growing at a slower pace. So the best path forward would be to better utilize the people who are already here. Get more women into the workforce and then sit back and watch the economy boom.

Next on GPS what do Alabama's new Senator-elect Doug Jones and France's president Manuel Macron have in common? Find out when we come back.

(COMMERCIAL BREAK)

[10:35:25] ZAKARIA: I am guessing that is pains former Trump White House adviser Steve Bannon to congratulate his ideological opponents of the Democratic National Committee but that is just what he did on Wednesday, saying the DNC did an amazing job of organizing.

He was referring to the incredibly contentious, controversial and close race in Alabama over a Senate seat. Bannon and his former boss, President Trump, backed Roy Moore, a conservative Christian candidate who has been accused of several women of pursuing sexual relationships with them when they were teenagers and a lot worse.

More or less, Doug Jones, a Democrat, will be the first senator from that party to represent Alabama in some 25 years. So have we hit peak populism in America or elsewhere?

Joining me out Zanny Minton Beddoes, the editor-in-chief of "The Economist." She joins us from London. And David Frum is in Washington today, he's a senior editor at "The Atlantic." His new book, "Trump-ocracy: The Corruption of the American Republic" comes out in January. David, can we make too much of the Roy Moore loss? Is this an unusual

case after Trump won Alabama by 28 points. Roy Moore was, as I said, a very bad candidate. And yet he is within a -- you know, a point of winning.

DAVID FRUM, SENIOR EDITOR, THE ATLANTIC: Roy Moore, who is 70 years old, is a backward looking candidate. His overwhelming issues were the place of evangelical religion in society and restoring repressive a sexual morality that he may not have practiced but that he'd certainly talked a lot about.

ZAKARIA: But does it tell you, David, that the Trump coalition is waning in some way or is it still strong and this was just a bad test case?

FRUM: Well, Donald Trump's own personal popularity is obviously an issue. In some exit polls Trump was showing himself at 48 percent approval rating in Alabama, one of the most conservative states in the country. He is obviously dragging down his own fit for performance. But the power of the issues Donald Trump discovered, both in this country and in Europe, those issues do seem still to have a lot of power.

We saw, for example, the performance of the far right parties in the German election and, although that populists were defeated in France they are doing twice as well approximately as they were doing just 15, 20 years ago.

ZAKARIA: Zanny Minton Beddoes, when you look at this from Europe, do you think that those issues that David Frum talked about, which after all it is immigration which is at the heart of the rise of this right- wing populism in Europe. Is that still strong? Has it peaked? Is it waning? How would you describe it?

ZANNY MINTON BEDDOES, EDITOR-IN-CHIEF, THE ECONOMIST: You know, that's a really good question, have we hit peaked populism? And it's one that people like to ask themselves constantly on both sides of the Atlantic. And like David, I would caution reading too much into Alabama where there was a peculiarly awful candidate. I would also caution too much -- against reading too much into the relative quiet we've seen in Europe.

David's absolutely right that, you know, the AfD, the far-right party in Germany, did remarkably well, but we have seen Emmanuel Macron's victory in France, he beat the populist Marine Le Pen and indeed his approval ratings are rising. So I think it's been a sort of plateauing perhaps this year? But it's worth remembering that this is against an environment of remarkable economic growth, kind of on both sides of the Atlantic, the economy is doing very well.

On both sides of the Atlantic, people's real incomes are getting better. And those underlying cultural questions that are driving much of the populist backlashes are still there. So I think of this as a sort of multi-year phenomenon and it's certainly not going away.

ZAKARIA: Zanny, let me ask you about one thing you talked about, which was Macron's rising approval ratings. They've gone almost from 25 percent to 50 percent while he was announcing very tough economic reforms, some bitter medicine. What do you attribute that to?

MINTON BEDDOES: Well, I think Macron -- history will look back and Macron will be deemed to be one of the most extraordinary figures in Europe right now. Now he may be a complete failure. He may not end up being able to achieve what he's laid out. But he came from nowhere, as you know. He basically broke up the traditional party structure in France. He came in once promising a Jupiterean presidency, somewhat arrogant. His poll ratings plunged. And as you say, he's brought that back now because I think people are, to some degree, buying into his sort of infectious confidence about France and about France's future.

And it's remarkable when you come -- when you go from London where I live, to Paris, and where for many years you will be going from, you know, a country -- a city of London that prided itself for being the sort of center of the world's global capital to a rather sort of sneaky backwater in Paris.

[10:40:02] It feels somewhat different right now. Paris people are incredibly confident. People feel that France is sort of awakening again. And that's in large part due to Macron.

ZAKARIA: David Frum, is there a lesson from Macron for centrists, for establishment candidates? You know, is there something we can learn?

FRUM: I think there are two things you can learn from Macron. The first is, Macron has been a voice for -- I mean, neo-liberal has been a bad term for a long time. But he is promising, at least, market opening economies, measures in France, in order to deal with the problem of chronic youth unemployment. Just as the great problem in the United States is while you can get work, you can't get paid. In Europe -- and especially in places like France, young people can't even get work, although they do get -- they do collect pay of various kinds.

He has also shown a very tough face on immigration and he has been willing to steal the issues. Go a certain measure to steal the issues from these populists. I mean, populists don't get to be populist by talking about things people don't care about. They talk about things people do care about. They talk about them irresponsibly, provocatively, you know, in ways laden with all kinds of ugly feelings but their seize on real issues.

And the challenge for responsible candidates is to say, how far can you go? The analogy I keep invoking is the way politicians of the center right in Europe dealt with the challenge from communism in the 1940 and '50s. They didn't say the communists were talking about nothing. They built social insurance networks to take the communist supporters away from them.

ZAKARIA: Zanny?

MINTON BEDDOES: There's one interesting comparison that I think playing with, which is -- David is absolutely right. Macron is in some ways himself a populist. He has -- he's really got an agenda, which in its substance is very, very different to Donald Trump's. But in the sense that he wants to make Europe great again, it's not entirely dissimilar. And the comparison I've been playing with is whether Macron is a bit like Teddy Roosevelt. Back a century ago, a man who wraps the progressive agenda in a kind of cloak of national greatness. And in Macron's case it's sort of European greatness. And I think there might be something to that.

ZAKARIA: And Zanny, he's an outsider. That's fascinating. So a different kind of populist to beat populism.

Thank you both very much. Fascinating conversation.

FRUM: Thank you.

ZAKARIA: Next on GPS, the Dow Jones Industrial Average set multiple new record highs this week. Stocks aren't alone. Almost every asset class is booming right now. So is it a Trump boom or a Trump bubble about to burst? A great debate when we come back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

[10:46:48] TRUMP: You remember the world bubble. You heard it here first. I mean, I don't want to say I'm rude, but I hope if it explodes it's going to be now rather than two months into another administration.

(END VIDEO CLIP)

ZAKARIA: That was Donald Trump at an Iowa rally two years ago in December of 2015. Well, Trump now feels very differently about the same elevated stock prices. They're, in fact, even higher. He tweeted in October, "Stock market hits another all-time high on Friday. $5.3 trillion up since election. Fake news doesn't spend much time on this."

Well, this real news program otherwise called a news program is going to spend some time on it. Is this a Trump boom or a Trump bubble?

Joining me now are two terrific experts, Morgan Stanley's Ruchir Sharma and Abby Joseph Cohen from Goldman Sachs.

Ruchir, put this in context. How do you describe the -- you know, the situation right now with markets all over the world.

RUCHIR SHARMA, MORGAN STANLEY: Exactly. So I think that the -- there's been a stock market boom which has been going on really since 2009. This being the weakest economic recovery on record and yet the strongest stock market boom on record.

We have never had a boom which has been this calm and in terms of this big. Relative to how poor the global economy has done. And over the last year, it's been double charged a bit because the global economy has had its best year since the financial crisis ended in 2008. ZAKARIA: But you're still saying that the growth levels are -- don't

support this kind of massive rise in stocks, bonds?

SHARMA: Exactly. One statistic here, which really concerns me, 30 years ago, the size of the global economy and the size of the financial markets across the world was about similar. Today, the size of financial markets, stocks and bonds mainly, is 3 1/2 times larger than the size of the real economy. And so now for me, that really is the big risk. It's not the economy but the stock, the overgrown size of financial markets across the world led by the U.S.

ZAKARIA: Abby, how do you see it? How do -- what do you think of the economy and the markets?

ABBY JOSEPH COHEN, GOLDMAN SACHS: I have a somewhat different view. In large part because it's important to say what was the starting point? And in 2009 share prices were extraordinarily depressed. If you look at valuation models you basically say at the prices then in the markets, what was being priced in was another five to six years of severe recession. That didn't happen. And so when we take a look at value models, looking at earnings, cash flow and revenue, we would say the stock market is not cheap today but we don't think it's over priced.

ZAKARIA: But when you look at the markets' rise in the last six, seven months, you know, we are taught is the market is meant to reflect economic fundamentals. So what has changed in the last six months that is producing this massive rise?

COHEN: There are two things. Number one, before the election in the United States, as it often does, the stock market pulled back a little bit. And we think that regardless of the election outcome, there would have been a noteworthy rise in share prices just because the election was over, number one.

[10:50:02] Number two, there has been a re-acceleration in U.S. economic activity. It began before the election and it has become more apparent since and very importantly I think we're at the point where we have sustainable economic growth, thanks to the improvement in jobs.

ZAKARIA: Final thought, Ruchir, which is that you point out it's not just stocks that are up. All asset classes almost are up.

SHARMA: Right. Yes, so that's the difference, which is that historically when you had a bubble in the market you could sort of see it because there was one sector or one sort of asset class which was up, like stocks in 2000, real estate in 2007. The problem this time is that all asset classes are up simultaneously. That's never happened before in terms of the valuation. And the entire underpinning is low interest rates forever and lots of liquidity from the central banks.

You get any disturbance in that sort of underlying equation and I think that we have a big negative feedback loop which comes to haunt the economy. And I feel that risk is there next year. That all central banks across the world are going to start withdrawing this liquidity that they have pumped in out there and this very wide gap between the economy and the stock markets, I think that runs a risk of basically closing in.

ZAKARIA: I admire both of you for actually articulating very clearly what you think. We will, of course, have to have you back, about six months from now, to see where we are.

Thank you both very much.

Next on GPS, tick, tock, tick, tock. Still need to shop for some holiday gifts? Well, I will give you my recommendations. The GPS top 10 for books and films that you'll surely enjoy.

(COMMERCIAL BREAK)

[10:56:08] ZAKARIA: The rise of right-wing populist parties across Europe has been the subject of much discussion on this show. And now a study has mapped out that collective progress with fascinating precision.

It brings me to my question, on average, how much has the vote share of European right-wing populist parties grown in legislative elections over the past 20 years? Is it 50 percent, 80 percent, 130 percent or 220 percent? Stay tuned and we'll tell you the correct answer.

Now for "The Last Look." Hanukkah is almost over and Christmas is nearly upon us. In case you've been naughty and haven't shopped for the video files on your list yet I thought I would give you some suggestions. Consider it a GPS top 10.

We'll start with an author recommended by President Obama right here on GPS, (INAUDIBLE) "Homo Deus: A Brief History of Tomorrow," fascinating look of how technology is changing what it means to be human."

For the history buffs on your list I'd recommend Nigel Hamilton's "Commander in Chief: FDR's Battle with Churchill 1943." This is the memoir that FDR would have written had he lived.

"Seven Brief Lessons on Physics" by Carlo Rovelli explains complex concepts like quantum mechanics with grace and clarity. Derek Thompson's "Hit Makers: The Science of Popularity in an Age of Distraction" tackles big questions like, why did "Game of Thrones" take off?

"The Vanity Fair Diaries" was my guilty pleasure for the year. In it author extraordinaire Tina Brown describes what it was like to live at the center of the roaring '80s in New York City.

Fiction fans will love "The Remains of the Day" by Kazuo Ishiguro. It is one of the best novels by a living author that I have read. And for the political junkies out there Edward Luce's "The Retreat of Western Liberalism" is about the decline of the democratic order in the Western world. Very sobering. There's one last book to recommend. My own, "The Post American World

2.0." I wrote the book long before the rise of our current president but Donald Trump has made the book's predictions come more true than I ever have imagined.

I'd throw in a few films and television shows to round things out. "Deutschland 83" is an absolutely gripping Cold War spy thriller from Germany. You can find it on Sundance and iTunes. I promise you it is worth the subtitles.

Documentary fans will not want to miss "I am Not Your Negro," a fascinating window into America's race problem told through the words of the profoundly gifted James Baldwin.

And "The Novitiate," a film from Sony Picture Classics, it's my final movie recommendation of the year. It is a beautiful film about a young nun who tries to make sense of a changing Catholic Church in the 1960s.

Finally, don't forget to treat yourselves, subscribe to our digital newsletter, "Fareed's Global Briefing," it's a present that will arrive for free in your inbox six days a week with the best insights and analysis about the world.

The answer to my GPS challenge this week is D. According to a study released by Bloomberg, right-wing populist parties across Europe have on average increased their overall share of vote in legislative elections from 5 percent in 1997 to 16 percent in 2017, and where are they the most influential? Hungary.

Together Prime Minister Viktor Orban's Fidesz Party and the even more right wing Movement for a Better Hungary or Jobbik won about two- thirds of the vote in Hungary's latest parliamentary elections.

In the European parliament the gains of the populist right have been even more staggering. It now controls 15 percent of the seats, five times more than it did in 1999.

Thanks to all of you for being part of my program this week. I will see you next week. Merry Christmas, Happy Hanukkah and season's greetings.

BRIAN STELTER, CNN ANCHOR: Hey, I'm Brian Stelter. This is RELIABLE SOURCES. Our weekly look at the story behind the story.