August 10th, 2009
01:40 PM GMT
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Nobel laureate Paul Krugman is a famous man and particularly in Malaysia's political circles.

During the Asian financial crisis a decade ago, the American economist stunned most Western observers when he suggested that capital controls could be a viable antidote to a financial meltdown.

But that is exactly what Malaysia's Prime Minister Mahathir Mohamad had concluded as well.  Mahathir slapped capital controls on his country's financial flows to stop international speculators dead in their tracks. 

His decision was controversial at the time, but many of his critics now concede that Mahathir's tactic helped bolster Malaysia's economy rather than hurt it.  Krugman gets a lot of kudos here in Kuala Lumpur, too.

So how does Krugman suggest you track this global financial crisis?

1. Keep an eye on jobs.  "We can have a technical recovery where GDP is growing or industrial production is growing."  He told me, "But that's not going to matter for most people."  He wants to see countries worldwide adding jobs before he's convinced the economy is recovering.

2. Be wary of banks and oil.  Oil prices are hovering around $70/barrel during an unprecedented economic downturn.  "That's telling you that we've got a lot of pressure on oil supplies," Krugman said.  "And if the world economy starts to come back, oil prices will probably come up a lot, and that's a big brake on the recovery."

3. Consider working in health care.  Banking... not so much.  "Everybody's got real second thoughts about whether what's good for the trading floor is good for the economy," he said.  Trading floors are going to get "simpler" and "a lot more boring."

Veteran policymakers in Malaysia might think that would be a good thing, too.



soundoff (20 Responses)
  1. Yavor

    I know that world situation is difficult but have a some question. USA and west Europe make more production and is a have major manifactures. Can invest in new technology alternative energy and other to make using of petrol smaller. I have one idea and hope some day to patent it. I know easy way to make small quantity energy self every house.

    August 10, 2009 at 1:57 pm |
  2. Russ

    The cost of oil is lower in Euros compared to 10 years back is it not?

    It is the dollar that has gone down the toilet – not that oil has gone up so much.

    August 11, 2009 at 5:14 am |
  3. Nam(South Korea, Busan)

    I disagree....his view on China.....
    China is a big player.

    And he knows Adam Smith, Keynes..... but he don't know Confucius.

    August 11, 2009 at 7:06 am |
  4. Per Holmlund

    Countdown

    3. “FOR the first time since the Depression, the American economy has added virtually no jobs in the private sector over a 10-year period… Health care jobs continued to grow, particularly jobs that involve caring for the elderly… NYT

    And with a new health care formula jobs will continue to be created in healthcare. But hard to see how cost for health care costs will shrink with a booming health care job market. Can health care, particularly taking care of old people, bee the driver for future economic growth?

    And then natural with boring trade floors when capital is going to health care (keeping the old economy alive) and not to creation of a new economy.

    2. Have Focus on the dollar, bonds and gold. If things go wrong the big dragons will see it first and if they do it will weaken the dollar and bonds and strengthen gold. It’s like DJ US financials index during the spring and summer of 2007. They, the big dragons, didn’t have a clue?

    1. 2000 surplus, 2007 deficits and 20XX bigger deficits, 20XX when the recovery cycle of today is moving out of it’s peak . A recovery cycle in which job creation will be hurt by technology improvements created the last decade. Technology improvements that make it possible to rationalize white color jobs.

    But smart politicians will develop alternatives if things go sour. More governmental spending, bigger deficits and capital controls in US.

    August 11, 2009 at 12:09 pm |
  5. TheSteelGeneral

    Krugman is a hero. But I really love Repubs these days, who maintain the lie of the so-called liberal media in the face of Anti-Choice movies like Juno, Knocked Up and 17 Again.

    Banks, we need them, but why do they need to make more money than god?
    They're dealing with OTHERS peoples money, and aren't accountable like govt employees are ... That is, except for police and the military, they can pretty much do whatever they want, like TASER a 70 year old grandma and arrest a cripple for Contempt of Cop.

    The real problem these days is figuring out why poor whites are fighting for the wallet of the rich. Oh wait, they are being paid to do so? Well that sure explains a lot.

    August 11, 2009 at 12:39 pm |
  6. TheSteelGeneral

    Krugman is almost touching on the essence of the problem, which is that known Republicans, like the CEO's of banks and HMO's, are fighting AGAINST competitive capitalism. Obama wants to restore competition. The culprits make billions a year, it's not that crazy to try to protect that. And they don't care to break the law to do that. Their strategy is to rile up some poor schmuck so much that he will attempt and hopefully not succeed that some type of violent attack on Democrats. Then they will say: "See what you get with your ""'socialism""' ?? It's better if you just do what we tell you to, and become Bush light."
    FoKKKs news (and no the KKK is not exaggerated) is just waiting and hoping until they strike media Gold: political blood. Or rather: real physical blood from a Democrat.

    August 11, 2009 at 12:47 pm |
  7. Robert

    When will(anytime in the near future) the constraints impossed by the UN be lifted and Iraq economy be able to start adjusting to local countries? Currently working in Iraq, have see allot of improvements over the Last 2 years. I get off the base camps allot, 2 years ago streets pretty bare now lots of shops and people making a sparse living, lifting the constraints would greatly help the people and the move towards a better tomorrow.

    August 11, 2009 at 1:06 pm |
  8. jacob t. chachkes,M.D.

    An outstanding capitalist, Henry Ford, held similar views. As you no doubt know, he gave his unsolicited raise. When questioned by peers, he said,"If I don't give them a raise, who will buy my cars?". No business, including health (care), can survive if the people have no money with which to buy.

    August 12, 2009 at 12:27 am |
  9. Jahswill Ossai(Lagos, Nigeria)

    On a grand scale, I completely agree with Krugman's forecast. The impact of the global economic downturn may not have been overemphasized.

    If "rich" nations are losing so much liquidity, what would "poor" and developing nations lose?

    This is like collecting water from a river with a big basket!

    August 12, 2009 at 6:51 am |
  10. Andreas, Stockholm

    I hear what Krugman is saying but am still skeptic regarding the -regulation- direction that also seems to be coming around the corner. The problem as I see it is the plethora of 'instruments' that became ever more theoretical and esoteric. If scrutiny and risk assessment of these types of investment vehicles are handed over to some regulatory body then we will have learned nothing from this recent disaster. In a way it was precisely because everybody believed in the rating agencies' labeling of the MBS's rather than doing their own evaluation that led to the blind and wreckless issuance in the first place.

    We are still waiting for the final verdict on the rating agencies which is where real reform is needed IMO.

    August 12, 2009 at 8:16 am |
  11. mary_clyne

    Pres Obama needs all of you who want Health Reform behind him.He said that he was going to work.with the re-pubs but the re-pubs do not care about the poor or middle class .All they care about is themselves and being in control of your lives.Instead of being on this Site write the Pres ,Phone him,Email,Text . Tell him to forget about Bipartisanship and get Health care, Educacional care .Every thing he has to do to take Take power from the hands of the Politician and Corporations and put it back it back in the hands of the People .Get off these forums send your messages to him and other Dem's and then you come back here and encourage the rest SORRY ABOUT THE PREVIOUS POST

    August 12, 2009 at 9:59 pm |
  12. james hotz

    I agree with Paul, recessions are scary, and this one maybe worse than the one, in 1973. And that is scary.

    August 18, 2009 at 9:26 am |
  13. Dr. Debra Zerr

    I just received a letter from my credit card company that they were raising their rates across the board to 25% over prime. This is an effort to bilk the working public for as much as they can before the new laws come into effect. It is bad enough that they can cry and the government bails them out so that they can continue to travel the globe in their luxury jets and receive more in bonuses than those of us in the middle class will see in three lifetimes. Who will listen to our cries and bail us out as were are faced with ever increasing expenses and declining salaries. Where is the government for us?

    August 21, 2009 at 4:44 pm |
  14. Jeffrey

    Dear CNN,

    Will you push for the release of all 5400 names in the tax evasion scandal with UBS's cross-border case? This should be front page new and one of the most talked about instances of tax evasion in America, but I have heard nothing of the case from main stream media, why is that?

    Sincerely,

    Jeffrey

    August 27, 2009 at 5:40 pm |
  15. ginsengjohn

    How much and to who has China paid to protect its copper interests in Afgani land? Also, who is getting rich on the major increase in the supply of opium from Afgani land? Where is all the opium going? All that opium/heroin is the worst thing for a country. Ask China about the lessons of the opium wars?

    September 1, 2009 at 1:02 pm |
  16. jacob t. chachkes,M.D.

    the voting people seem to buy in to anger rather than thought. When we all realize that we can 'throw the rascals out' we will have a government of the people, for the people,by the people'.
    Or do we have that now, and 'the people' are self destructive, as with electing W twice, and ignoring that our deficit and middle east swamp is significantly due to his policies?
    2008 was a vote for change, but 'the people' seem to want services and military and energy etc without paying for it, or DEMANDING that the top 1% pay for the protection and services they get?

    September 20, 2009 at 7:34 pm |
  17. Greg, Ontario

    jobs , jobs , jobs...what a load of crap. This guy is suggesting that workers in the US and Canada should accept the slavery wages offered to workers in China and the likes of India and Pakistan? That would get that 10% back to work but what spending power would they have? Sense when is 90% such a bad thing? We were in the midst of a global economic crisis the likes of wich few of us are old enough to remember and the job losses are at 10.2 %. If that isn't putting up a good fight what is?
    What would really turn it around is immigration controls tightened (how often do we immigrate there?..very seldom), we start using our own Oil or offer 1 or 2 bushels of wheat for 1 barrel of Oil. We need to stand up to the Walmarts and countries like China, India and Japan and tell them we want a synchronised trade agreement and we want it enforced with equal standards. China needs to float it's currency like the rest of the world or the free market can set it for them.
    Unpatriotic corporations that send work out of the country should lose thier business license or be taxed to a level that moving is no longer cost effective. Any or all of these actions would have a seriously positive effect on the economy but it takes intestinal fortitude by the people and the government and there is the rub.

    November 16, 2009 at 5:47 pm |
  18. Stephen Paul

    I agree with Greg, Ontario more than he knows. I've been a part of this exodus of jobs for 30 years (unwillingly) and know what damage it has done. We (the USA and Canada) must go back to basic self protection. Not protectionism but a smart brand of it. It makes no sense to send our jobs away so that CEO's and board members and stock holders can become filthy rich. It seems they all have their own economy which isn't in our interest.
    Without jobs (manufacturing is where it's at) everyone suffers. A service economy will not sustain itself. Gregg's point on tax reform and taxing those who send jobs away is on target. If we don't protect ourselves who will? It goes to our basic societal needs and our safety. Without jobs the unemployed become desperate, crime grows, desperation breeds welfare so who wins? Bring jobs back. Stop using the employment index, use the FICA receipts on how the economy is doing; that will tell us all we know real time. Why don't we hear from CNN that bringing jobs back is all important. Consider that when job loss is the news of the day fewer numbers are found when there are fewer jobs to lose. Does the government believe we are idiots? Yes, they do and we're not. This can't continue like this for much longer, it's un-American. We started a micro business for our son but the government does nothing to help with this, only the richest are allowed to survive here. I have much more in a positive light but room here is so short. The common man as myself would like to have a real platform to talk to America about starting to fix this. It's not too late. I'd like to hear commentators talk about bringing jobs back, not creating new ones. That is not going to keep the dollar strong.
    Steve

    November 17, 2009 at 6:49 pm |
  19. Ray - Australia

    i noticed today that a major U.S. bank may put aside as much as 12 billion dollars for it's employee bonus scheme.
    yesterday i read a report that said nearly 49 million people in the U.S. struggle to put food on the table.

    we all saw the idiotic debt binge that resulted in the present financial position that the U.S. now finds itself.
    we also watch as the leader of the democratic world ships it's manufacturing base to asia. ( my country does this also ).
    at this rate " the business of America" will not be business.

    the founding fathers of America would be appalled at the whole scenerio!.

    what the hell is going on?.

    November 18, 2009 at 10:29 pm |
  20. Nader

    I don't know anyone who is alffiiated in alffiiated marketing. So I can't really answer that. but I do know, that you wouldn't be owning your own business unless you invest money into it. By means of a start up cost, or buying products yourself and re selling them, advertisement or something along those lines. Owning a business is not free. I wrote some things down that might help you to see for yourself if this is a good business to get involved in, using my business as an example. If on the list it checks out (you may have to do some research) but if it all checks out, then you can chose to do it. IF it's a business, don't just try it. You need to devote time and effort into it and build it. If your going to just try a business, you will most likely fail! So here's a few things that you should take a look at before getting involved in any company.1. How long have they been in business? We checked to see how long our company was around, at the time it was nine years old and now it's 15. Do you know when they started? If it's under 5 years, then their is a risk factor2. Are they registered with the BBB. Ours is registered. I think this is important one.3. Who's involved with the company? Like in ours Donald Trump, Robert Kiyosaki has endorsed our company. Many actors and actresses, business owners, government officials etc use our products. Check to see if anyone has endorsed this company. Also, meet with the co-founders. We've personally met our co-founders and found from our first meeting that they were incredible people with incredible visions. See if their's a time where you can meet them. If your going to be doing business, there should be a time where you should have the chance to meet with them.4. What is the compensation plan now, and what was it like before.See the history of the comp plan and see if increases and never decreases in it's history. We checked with the records in our business and found that in over the years, the compensation plan had only gotten better each year. As long as we've been involved, we've now witnessed the compensation plan always increasing. Check the history on yours.5.Have they been featured in magazine's? For instance our company has been featured in several magazines Like Success, Fortune, USA Today etc. Check to see if they have. You can get a lot of information on the company by reading about them.6. Has Inc 500 rated them? This magazine or slit rated our company the 22nd fastest growing company in revenue in it's first 5 years. Inc 500 shows the top 500 businesses in revenue growth. Check to see what Inc 500 rated the company your looking at.7. Do they have a physical address that you can go to? Check for an address not just a P.O. Box8. Where are their headquarters? Our world headquarters is in Farmington Hills Michigan, Personally been there, (If your here in the states) Other headquarters in different countries. and US headquarters in Charlotte.9. What does the start up cost take care of? If there is no start up cost, what will you have to be dishing out and for what? In my business headquarters takes care of all the billing for my customers, Inventory, Customer services, Order Entry, Employees, workman's comp, Cross referencing, Licensing, Insurance, paperwork, accounts payables, accounts receivables etc.10. What is the product and service you would be selling.Is the product and service in high demand? For instance we offer services that people are already using every day and paying for anyway, but at a lower cost. Things like Local and Long distance telephone services, Internet, video phones, digital phones, cellular phones through all the major cellular providers. We make a percentage every single month they pay their bills. Everyone uses them and everyone pays for them. When money gets tight, would they keep your service or be able to run to the store and be able to purchase them on sale? Leaving you to have to wait until they run out of what they just purchased, or wait until their finances get settled? This is what I mean by high demand.So many different things to check out in making sure a business is a good one to get involved in. If the business feels right to you, and all questions are answered and you feel good about it, then I'd say jump in. Running a business is different then a job though. You have to treat it like it's your child and not just something your going to try you have to believe in the product and service and go at it full force. This is your future your talking about, no one else's.I hope my examples of what we looking into with our business helps you be able to find the same answers in the business your looking into. Forget about asking the common question and asking someone how much they make in their business to determine if you'd get involved in this or not. In a business, it doesn't matter what one business is making over another. It only matters what you do in YOUR business. I hate it when people ask me how much I make. Because they're not going to walk into and start up their business making what I make. I've been involved with my business for over six years. So yeah, I will make more. If you tell someone how much you make, then it's a psychological thing that they expect to make that amount in a week, and that is just not going to happen. Six years of building a business verses 1 day. So don't even ask. Look at the possibilities for YOURSELF. If you have any further questions or need help,feel free to contact me at

    June 23, 2012 at 9:05 am |

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