CNN International: World Business Today, August 10, 2009

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STEVENS: And just quickly on the commodities markets and the price of oil remaining above $70 a barrel still within a couple of dollars of its high for 2009; they have actually hit last week. Right now a barrel of crude is changing hand at around about $70.21 on NYMEX it's down 72 cents on Friday's close. The cost of crude has almost doubled since February and we're still far off those highs of nearly $150 a barrel we saw back in July of last year. In the currency markets, the pound is down around half a percent against the dollar and the euro a little change at $1.41. Bad news to Japanese exporters the yen currently up by about of one percent. Well, the Nobel Prize winning economist, Paul Krugman says the worst now maybe over for the global economy but he is still cautious in his outlook.


PAUL KRUGMAN, COLUMNIST, PROFESSOR OF ECONOMICS: The plunge is probably over. We're not falling off the cliff into the abyss anymore. Things are kind of stabilizing but it's really hard to see what leads us out. Consumers are over-stretched; they've got debt, their houses are not worth what they used to be worth. Businesses got exits to pass (ph) to where are they going to invest. Where is thing, where is the recovery going to come from?


STEVENS: And we're going to be hearing a little more from Paul Krugman later in the show. And the latest installment of our new series, "The Biz Clinic" which breaks down those complex issues in finance and economics to make sense of it all really. That's coming up in about half an hour from now. So stay with us for that. And Charles, it's interesting that interview with Paul Krugman, Eunice Yoon, a business editor asking him what he needs to see to the sort of really see those proper signs to recovery. He said there are three things: jobs, jobs and jobs.

HODSON: Ok, good so let's move on to corporate news. It's hard to disagree with Krugman, I certainly wouldn't want to do so. . . .

CHARLES HODSON, CNN ANCHOR: Now, it's a member of the oil exporters cartel but Angola isn't one of OPEC's most high profile countries. Now though, Angola's oil is on the table in talks with the United States. We catch up with the Secretary of State's visit to Africa. Plus -


PAUL KRUGMAN: There's no argument that says we actually need bankers to be a little bit less interesting than they've been lately.


HODSON: As we told, Paul Krugman is indeed talking to "World Business Today." We've got the latest edition of what he's saying in our "Biz Clinic." Stay with us. . . .

STEVENS: In "The Biz Clinic," some words of wisdom from a Nobel Prize winning economist on what we need to do next to survive the global downturn.

HODSON: Welcome back, you're watching WORLD BUSINESS TODAY.

STEVENS: Now, welcome to "The Biz Clinic," where we'll have answers to questions about this complex financial landscape. And today, insights from none other than the Nobel Prize winning economist, Paul Krugman. Our Asia business Eunice Yoon sat down with him Sunday in Malaysia and she asked him what the average investor or job seeker should be watching for that the global economy is starting to recover.


PAUL KRUGMAN, NEW YORK TIMES COLUMNIST: Jobs, jobs and jobs. Because there's other stuff that we have -- we could have sort of a technical recovery where GDP is growing or, you know, industrial production is growing, but that's not going to matter for most people. For the last year, a lot more people have been being fired than being hired, and so, the total number of jobs out there has been shrinking. We need to start adding, and states we need to probably add more than 100,000 a month before you start to feel any relief. You know, we're still losing.


KRUGMAN: First of all, the financial system is not in great shape. The banks are still troubled. You know, they don't look like they're about to bust but they're not in good shape. They can't actually do a whole lot of lending. I'm worried about oil. It's amazing that oil is sort of -- I don't know what it is right now, right, but it was $75 a barrel with the economy -- with the economy in a deep slump. That's telling you that we still have not -- we've got a lot of pressure oil supply. And if the world economy starts to come back, oil prices will probably come up a lot and that's a big break on recovery.

YOON: For those working on the trading floor, how is the world of finance going to change for them?

KRUGMAN: It's going to become simpler and more boring. That is, I think what's going to happen, when all is said and done, is there's going to be more regulation because everybody's now got real second thoughts about whether what's good for the trading floor is actually good for the economy. And so we're probably heading at least partly back towards the kind of system we had 30 years ago, which was much more regulated, much less exciting, much safer.

YOON: But part of the job of a banker is to take risks.

KRUGMAN: Well, that's not really the job of a banker. We used to think there were people who speculated in stocks. That was fine. But banking, which was offering people liquid assets, offering people ready assess to their cash was only supposed to be invested in relatively safe things. And this idea that bankers should be -- you know, borrowing trillions of dollars in the repo market and then investing it in securities that nobody understood, that's a relatively new development. And it's almost destroyed the world. So there's an argument that says we had to actually -- we need bankers to be a little bit less interesting than they've been lately.

YOON: A lot of people these days are talking about a China recovery. What does that mean for your average person in Chicago or Berlin?

KRUGMAN: Less than you might think because, even though China is enormous and China is the economy of the future, it is not yet the economy of the present. China is still a little substantially smaller than the European Union or the United States. It's -- It still doesn't have as much purchasing power in the world as, say, Japan does, even now. And so even though China is pushing along -- they've had a much bigger stimulus than anybody else, it's not -- China isn't a big enough player yet to be the world's locomotive.


ANDREW STEVENS, CNN HOST: Well, you heard that there from Paul Krugman. It's interesting, Charles, listening to him. He's obviously still fairly cautious about the economy. And listening to you, because I've been away for a couple of weeks, you, too, sound pretty cautious about the markets. You think they've gone too far too fast too, do you?

CHARLES: Well, obviously, we're talking about two different things here. And I think that definitely you've got to be quite cautious about what's going on in the broader economy. And, you know, Krugman picks up on an awful lot of very wise points there in who's going to lead us out, how big really is China, can it be a locomotive in the same way as the United States has. But in terms of the markets, certainly I know that wise heads around here are pointing to the fact that it is an established pattern in long- term bull markets -- bear markets, rather, that you will get big rallies, and sometimes up as much as 45, 48, 49 percent. And then you get a sell off and you then get really some quite lackluster trading after that. It is an established pattern. Wise heads around here are talking about a smallish sell off, maybe 5 percent, but we'll have to wait and see. And you're our key to our "Biz Clinic." We want to hear from you. Tell us what's puzzling you in the world of business and finance. There should be plenty. Head to our web site. The answer is Send us your thoughts and questions. While you're there, you can read more about Eunice Yoon's interview with the economist, Paul Krugman, who of course won the Nobel Prize. Well, let's head straight over to the New York Stock Exchange for a look at the early moves on Wall Street. And trading began a short time ago. Felicia Taylor joins us with the latest. So we were off about a half of a percent last time we looked. How are we now, Felicia?

Originally broadcast, 8.10.09