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TAYLOR: Yes, absolutely. And it's not really a surprise. I mean we've seen stocks pull back a little bit after what was really a very healthy rally on Friday. And a little profit-taking is pretty normal considering the gains that we've seen of late. Keep in mind, stocks have been on a steady climb now pretty much since the lows that we saw back in March. The Dow itself has risen in each of the last four weeks and actually it's up about 43 percent since its all time low on March 9th. So that's a pretty healthy gain. No kidding people are going to take some profits off the -- off the table in the beginning of the week, and especially before we hear from the Federal Reserve, which begins its policy meeting tomorrow. And we're likely to see the interest rates remain unchanged, at their target level of between 0 and .25 percent. So let's take a look at where the markets do stand right now, with just about an hour and 20 minutes left in the trading day. The Dow is off pretty much at its lows of the day, about 2/3 of 1 percent. The NASDAQ Composite is off 3/4 of 1 percent. And the S&P is also off about 2/3 of 1 percent. So the markets -- I'll be taking a look at some headline comments from a Nobel Peace Prize winning economist. Paul Krugman saying that the aggressive stimulus spending by governments around the world has helped the world to avoid a second great depression. However -- and this is probably something that you were referring to a little bit earlier -- Krugman also believes that the true story about this recession is far from over. We're not going to have a real recovery for about two years. And Asia is likely to recover faster than either the United States or Europe, because of that recovery in manufacturing exports. So, there you go, a quick look at the market -- back to you.

QUEST: And as I look at what's happening in -- in New York at the moment and -- in terms of the markets, let's be honest, we are in the dog days of summer and, really, there's not a lot of corporate stuff out there.

TAYLOR: It's August.

QUEST: Yes.

TAYLOR: Yes. There's not that much coming up. I mean this week we've got retail sales numbers. Wal-Mart is going to be reporting. But that's pretty much it for the week. I mean we don't have a lot of news to trade on, except -- oh, but this is -- this is pretty interesting. Freddie and Fannie -- shares of Freddie Mac nearly doubled today. That's after the mortgage finance giant reported a quarterly profit. And it says that it won't need anymore financial help from the government. So that's some pretty good news. Shares of Freddie Mac right now are up about 70 -- 79, 81 percent and it's trading at $1.34.

QUEST: I'm not touching that with a 10-foot pole. Once bitten, twice shy. Felicia Taylor, many thanks, indeed. Now, (INAUDIBLE) Felicia was just talking there about the Nobel Peace Prize winning economist, Paul Krugman. He says the worst may be over. That's been moving the markets -- a cautious outlook. You're going to hear from Professor Krugman in just a moment, because he's in The Biz Clinic.

QUEST: The Nobel Prize winning economist Paul Krugman says the world is avoiding a second great depression. His writing in the "New York Times" said, "Government spending, of course, is driving the recovery. We invited him to what we call the "Biz Clinic." We get the experts to put the economy under the microscope. Asia business editor Eunice Yoon asked Professor Krogman what signals we should be looking for as we wait for the recession to come to an end.

(BEGIN VIDEO CLIP)

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.

EUNICE YOON, CNN INTERNATIONAL BUSINESS EDITOR: What cold hold up a rebound?

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 go 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, but it was $70 a barrel. With the world economy in a deep slump, that's telling you that we still have got -- we've got a lot of pressure on oil supplies 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 a 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 knows, 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 part way back toward 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 risk.

KRUGMAN: Well, it's not really the job of a banker. We use to think that were people who would, you know, speculate in stocks, that was fine, but banking, which, you know, was offering people liquid assets, offering people ready access 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 that, you know, we had 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 although China is enormous and China is the economy of the future, it is not yet the economy of the present. China is still substantially small that the European Union or the United States. It still, actually, doesn't have as much purchasing power in the world as 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.

(END VIDEO CLIP)

QUEST: That was Professor Paul Krugman calling, pretty much, an end to, if you like, a bottom to the recession, but also warning of what's likely to come in the future. Now, you are key to the "Biz Clinic," we want to hear from you about what's puzzling you in the world of business and finance. And there's a Web site, it's CNN.com/bizclinic. And you can send us your thoughts and questions while you're there and read more about the interview -- Eunice Yoon's interview with Paul Krugman. That's CNN.com/bizclinic. The weather, at the moment, well, there's one particularly very serious storm, tropical storm, area of concern. Guillermo Arduino is at the "World Weather Center." I'm grasping for the correct words, here, Guillermo exactly as to how one would describe this, but help me out.

Originally broadcast, 8.10.09