Driving around the Chinese town of Yi Wu, my crew and I were listening to the radio when an ad came on encouraging listeners to trade in their old TVs and washers for new ones.

"You can get a 13-percent rebate!" the speakers blared.

The government is going all out to promote its rebate programs and get its citizens spending. The manager of Xin Hong Electric, a store selling electronics and appliances, told us his sales were up as much as 30 percent. Not only can Chinese get discounts on new refrigerators, dryers or microwaves but cars too. Car sales were up nearly 80 percent in October compared to a year ago, driven in part by tax breaks and China's version of the U.S.'s "Cash-for-Clunkers" program. China is expected to overtake the United States as the world's biggest car market this year.

At Xin Hong Electric, I was struck by how many people were taking advantage of the rebate. We met up with a paper fan maker who had just bought a new fridge to add to his recent purchases: a TV, an air conditioner, a washer, and a microwave. He told us he had wanted to upgrade his appliances, anyway, and thought, why not do it now and save some cash?

That savers' mentality is said to have contributed to the imbalances in the world economy. Americans have been taking on too much debt and overspending, while Chinese (and certainly many other consumers in Asia) have been saving for a rainy day. Many economists say the government trade-in programs have had some success, but getting Chinese to feel comfortable spending will take a lot more work. They say the government will need to improve its retirement and health care programs so that people don't have to worry as much about paying large potential medical bills. The bottom line is consumers need to feel confident enough in the future to open their wallets today.

How confident are you in your home country's economy?

If you thought that lavish bonuses for the financial industry would be a welcome casualty of the current financial crisis, it is time to think again. The New York-based executive search and compensation consultancy, Options Group, put that notion to rest for us in a new report.

Watch CNN's Ali Velshi explain what underlies the return of big bonuses on Wall Street.

Options Group predicts bonuses at financial firms worldwide will increase by an average 40% this year, just months after many of these firms were teetering on the brink of disaster and begging for bailouts.

The report, released this week, says that managing directors in high-yield credit sales will see the biggest bonuses, along with those in commodity sales units. They’ve apparently had a heck of a year. In fact, it is an incredible turnaround in fortunes which came, of course, thanks to a life raft the size of Manhattan!

Still, how could it have happened so fast: A return so promptly to business and bonuses as usual? Interviewed on Monday’s edition of World Business Today, CNN’s Ali Velshi told me, “It’s unusual given the times we are in. It’s less unusual if you’ve been tracking how this market has been doing. When you look at the money these banks are making, they’ve actually made it on trading…. Buying things cheap and selling them high.”

Velshi also points out that many of the big banks making money now have paid back the taxpayer funds they borrowed, and taxpayers have made a profit on those transactions.

However, seven of the big financial firms doling out bonuses are not off the taxpayer’s hook. Their bonuses will reportedly be less handsome.

Velshi says, “Major profits have been taken at companies that have paid that money back… and they want to be free to pay their people. It’s quite a remarkable situation. You wouldn’t have thought six months ago we’d be talking about bonuses that were bigger than last year.”

Some analysts point out that financial firms will offer more in stock and defer more cash payments because of public pressure, and pressure from regulators to pay tie to long-term results rather than rewarding short term risk. That might placate those who believe excessive rewards for short-term risk helped cause the financial meltdown.

Professor Peter Morici, of the University of Maryland’s Robert H. Smith School of Business, says, “These bonuses show Wall Street is arrogant and insensitive. These bonuses were earned by investing cheap taxpayer funds, and the profits really belong to all Americans. This entire episode is an outrage.”

The U.S. Federal Reserve is planning to review the 28 largest banks to ensure compensation is not rewarding risk; however, global leaders have tried and failed more than once in the past year to agree on what constitutes excessive risk or excessive compensation.

“You only know it,” explained Barack Obama’s pay Czar Kenneth Feinberg a few weeks ago, “Once it’s staring you in the face,” and by then, of course, it’s too late.

So what’s the message here? Let’s just get used to it? The punch bowl is full once again on Wall Street. To paraphrase the much-maligned quotation attributed in London’s Sunday Times to Goldman Sachs chief Lloyd Blankfein, God’s work is being done. Phew!

So let’s just grit our teeth and pretend we haven’t learned a thing in the past year. There’s no need to wonder what’s going on now; no need to worry about what might be laying the groundwork for the next financial crisis. After all, we’ll know it, once we see it.

Hong Kong, China - As long as there are free markets and humans remain emotional creatures, there will always be financial crises.

So says renowned British historian Niall Ferguson. The Harvard University professor and I had a chance to meet in Hong Kong at a recent investors' conference. He shared his observations on the current economic crisis.

CNN: Is there anything unique about this recession?

Ferguson: This isn't a recession is the first point to make. It's a near depression. In fact, I am calling it the Slight Depression to distinguish it from the Great Depression of 1929 to 1933. And the unique thing is that we nearly repeated history. In other words we nearly repeated the Great Depression, but we avoided it with massive monetary and fiscal stimulus. So we are in new territory.

CNN: When does government intervention work?

Ferguson: We need to be very careful when we talk about government intervention. That covers a multitude of sins. There was a lot of government intervention in the Soviet Union and we know how that story ended. So we are talking very specifically here about two policies: one is the use of central bank money creating power to avoid a liquidity crisis that crunches the entire banking system. So intervention by the (U.S.) Federal Reserve beginning in 2007 and escalating in September of 2008 was primarily designed to avoid massive bank failures of the sort that made the Depression so serious in the early 1930s. And I think there is no question that we have learned from history and Ben Bernanke, as chairman of the Fed, has learned from history, that it's a good idea to avoid a generalized collapse of the banking system.

CNN: When does government intervention not work?

Ferguson: The other kind of government intervention, which is slightly more problematic, is the sort in which the government runs a large deficit in order to stimulate the economy by building roads and building bridges in order to get people back to work in the hope that in doing that, it will generate a recovery. This is the model developed by John Maynard Keynes back in the 1930s and it's been used by countries around the world to varying degrees. And to some extent, this has been effective. But the problem is, in the United States, you are adding a stimulus on top of an already huge structural deficit in the public finances, and the prospect of a trillion dollars of new borrowing every year for the decade ahead, that scares me and it should scare everybody.

CNN: There's been a backlash against the financial world, especially Wall Street. Have we seen the same level of fury after past crises and where does that vitriol lead?

Ferguson: It's not, by any means, the first time that people have felt furious of what they have seen going on in Wall Street: a financial speculative bubble that bursts and causes a recession which drives other people, ordinary folks out of jobs. The question is just how far this populous backlash is going to go in the United States and indeed around the world now. My suspicion is that it's got a ways to go. Each time an American loses his or her job, not surprisingly, he or she looks around and asks who's to blame for this. And when they see on Wall Street, the banks paying out million-dollar bonuses with what appears to be, and in some cases is, taxpayer money from the TARP fund, I am not at all surprised that people feel mad. And when they feel mad, they turn around and they say, 'How can I express this anger? Who can I vote for who is going to articulate my feelings of frustration?' And I wouldn't be at all surprised to see, as we approach the mid-term elections, more and more politicians, particularly Republicans, trying to articulate that sense of popular grievance.

What lessons have you learned from the current economic crisis? Tell us what your experiences are.

LONDON, England (CNN) - Just over a year ago, the heart of the financial system nearly stopped beating. The collapse of Lehman Brothers triggered a massive collapse in confidence, the worst economic downturn since the Great Depression, and an unprecendented response by governments and central banks.

Now given J.P. Morgan's best earnings in two years and the announcement of massive profits at Goldman Sachs, one has to ask: Crisis, what crisis?

Especially if you look at compensation levels. According to the Wall Street Journal, staff at major U.S. banks and securities firms will make as much as $140 billion this year - a record high - more than the previous peak of 2007.

Now there's nothing new about big amounts of money being earned on Wall Street. But given that we the taxpayer funded the bailout of Wall Street, and will be paying for it for generations, it does beg the question about sharing the pain with Main Street.

To be fair to J.P. Morgan Chase, it didn't get caught up in some of the reckless behavior that other big players on Wall Street did.

Goldman Sachs is another extremely well run bank, but has become the poster child for Wall Street's perceived greed, what one writer described as "a giant vampire squid wrapped around the face of humanity."

Its expected bonus pool this year, some $23 billion, hardly seems like a chastened Wall Street. It's a fair target because it was bailed out by government, and that makes it fair game for criticism.

Business may be rebounding smartly for Wall Street but until Main Street's pain is over, Wall Street may want to think twice about paying hefty compensation.

What do you think?

LONDON, England – Based on fundamentals, the markets shouldn't be at the levels they've reached. Some hard cold realities have been reminding investors that the long awaited recovery may turn out to be more anemic than anticipated.

Have markets over-heated?

Take last week for instance. U.S. stocks fell worst than expected on monthly manufacturing numbers and a horrific employment report.

The number of U.S. workers on payrolls fell by 263,000 in September - much worse than expected - and the unemployment rate rose to 9.8 percent, a 26-year high. To make matters worse, the average workweek fell to a record low of 33 hours, hardly encouraging to those who have been buying stocks on recovery hopes.

Nouriel Roubini, who predicted the financial crisis, is bearish on the market. "Markets have gone up too much, too soon,too fast," he said in an interview over the weekend with Bloomberg.

"I see the risk of a correction, especially when the markets now realize that the recovery is not rapid and V-shaped, but more like U-shaped, that might be in the fourth quarter or the first quarter of next year," he said.

Roubini is not alone in his thinking. The head of global bank HSBC, Michal Geoghegan, is worried the economic recession could be worst than some anticipate.

"Is this a V recovery or a W?" Mr Geoghegan asked in an interview with the Financial Times. "[I think] it’s the latter. [If I’m right] we have to be very careful we don’t grow the balance sheet so far before the recovery has come only to write it back into the impairment line later on. I’m cautious about growing too fast."

And economist Lena Komileva of Tullet Prebon said the weak data, specifically referring to the manufacturing data out of the U.S. last week, "do challenge the market's optimism that this year's capital markets rally is the bellweather of a V-shaped economic recovery and it forces a negative revision of future quarters growth projections, which challenges current valuations."

In simple talk, the markets are ahead of themselves. The global equity rally has added about $20 trillion to the value of stocks worldwide since this year's low on March 9, according to Bloomberg.

Governments have spent about $2 trillion on stimulus, while central banks have taken extraordinary measures to try and get growth moving again.

All that liquidity and hopes of a global recovery have pushed stocks substantially higher, more than 50 percent for the S&P 500, and nearly 50 percent for Europe's Dow Jones Stoxx 600 index from their March lows.

While markets are off their best levels, they are still too high based on economic reality. I suspect the disappointing economic numbers last week, won't be the last. If Roubini and some others are right, markets have much further to fall.

Do you think the markets are too high?

“My accountant says I did this at a very bad time. My stocks are down. I'm cash poor or something. I got no cash flow. I'm not liquid, something's not flowing.” - Isaac Davis in Woody Allen’s “Manhattan.”

There are a number of metaphors that can be used to describe liquidity in the financial markets. One is to think of every object of value – cash, stocks, houses, art – as pieces of ice, frozen in value. Its liquidity can be measured by its ability to melt and reconstitute itself in value while changing hands.

Cash is highly liquid, because there is little change in value when sold or exchanged – so it melts and freezes quite nicely. Rare objects of art are among the most illiquid – they are auctioned and transferred back into cash once every few decades.

A way I prefer to think of liquidity as is oil. What caused the global economy to sputter last year was the commercial paper market, a financial tool as mundane as the motor oil that sits in the engine pan of every automobile. Imagine, however, the oil in every car in the world suddenly drying up below manufacturer specifications – poorly maintained cars start choking, creating traffic jams worldwide. Even Ferraris begin to ping and rattle.

The commercial paper market keeps companies running day-to-day because a going concern’s accounts receivable rarely matches its accounts payable. Large companies regularly borrow millions for one-day, low-interest loans so they can, for example, make payroll while waiting for clients and customers’ checks to clear. When Lehman Brothers went bankrupt, however, the Reserve Money Fund – the market’s oldest money fund that is fed daily by the commercial paper – “broke the buck”. For the first time ever every dollar invested in the fund was worth only 97 cents.

When you hear about “the collapse of the world financial system,” this is the ground zero event. Investors in the traditionally safe fund suddenly run for cover, exacerbating the crisis. Well-run, profitable businesses with no connection to the subprime mortgage debacle suddenly face a liquidity crunch.

Like Isaac Davis in “Manhattan,” the world banking system found “something’s not flowing.” And many of the efforts of governments around the world are to keep the spigot going.

LONDON, England - When it comes to the number three, there are two conflicting philosophies: The first says everything comes in threes, the second says third time lucky (or unlucky.) This weekend the G-20 leaders have been meeting for their third meeting in a year.

G-20 leaders are all smiles, but for how much longer will the unity last.

For an organization that had never met before at heads of state or government level, this is something of an achievement. But then rarely have they had to ride to the rescue of the global economy that was about to collapse.

Twice before when they met, they agreed to halt the blame game of how we got into this mess. They worked together to get us out of it. This was no mean feat since it involves countries from communist China to capitalist America and all shades of political persuasion in-between. Their ability to coordinate and cooperate has been noted time and again as one of the great advances in summitry.

In Washington last October, they ignored the fact President George W. Bush would be out of office within months and built a plan, calling it "The Washington Action Plan." By the London meeting at the beginning of this year, trillions of dollars had been spent and the leaders met to coordinate how their posh-sounding plan was performing. They tinkered and tweaked and gave some more money to the IMF and carried on cooperating. They didn’t have any other choice. Now, with Asia decoupled from U.S. and European growth, what next?

Everyone agrees it is too soon to take away the stimulus that is keeping developed economies afloat. Everyone agrees that they will have to coordinate their exit strategies when that time arrives. Oh yes, they even agree banks need to have some strict reform of the rules (and, yes, that includes big bad bonuses.) This is all done on the basis that "we are not letting this happen again."

But the issue is whether they can keep agreeing. France, for instance, is keener on stricter regulatory reform than, say, the UK. Britain has much to lose if Europe’s financial headquarters, the City of London, becomes over-regulated. French Finance Minister Christine Lagarde told me that restricting bankers’ bonuses was a symbolic way of proving no more business as usual. Only by imposing discipline and regulatory systems could we reign in the financial world, she said. Such a view of course, is very much at odds with what might be expressed in Washington.

The G-20 now finds itself rather like a group of passengers who have just been rescued from a sinking ocean liner. When facing disaster, all classes from captain’s table to steerage, share laughter, friendship and love. Now as the good will of rescue starts to disappear, old rivalries resurface and political ideologies put to one side are restored.

Which brings me back to my first point. Can the G-20 hold it together for a third time? They probably will, simply because this crisis is not over yet. Longer term, as the G-20 presidency passes from the UK to South Korea, the axis of power shifts. Well, I have more doubts.

Crises breed cooperation. Recovery may well breed resentment. Even if the third summit works, don’t bank on success for the fourth and beyond.

LONDON, England – On a quiet summer day in August, when many in London's financial district are away, or wishing they were away, comes a lightning bolt from the head of the Financial Services Authority.

Adair Turner proposes the idea of a special tax on financial transactions.

Adair Turner, the man in charge of regulating the City of London, has said that some parts of the financial sector have grown "beyond a socially reasonable size," and some of what it does as "socially useless activity."

In short he thinks financial services account for too much of Britain's output, robbing other sectors of some of the best and brightest.

To underscore his point, he looks at what “percentage of highly intelligent people from our best universities went into financial services." And then goes to say, "Unless you've got a theory that explains why financial intermediation suddenly needs all this extra resource, there is something of a conundrum. Is it really the case that financial intermediation today is a more complex thing that a decade or two back?”

He proposes the idea of a special tax on financial transactions.

His is not a new idea.

Originally, an economist named James Tobin suggested a special tax on foreign currency transactions to curb speculation. Then in 2005, then president of France, Jacques Chirac, placed a "Tobin tax" on financial transactions to deal with what he perceived to be the excesses of "liberal globalization."

"If you want to stop excessive pay in a swollen financial sector you have to reduce the size of that sector or apply special taxes to its pre-remuneration profit," Turner said.

It's clear that freewheeling capitalism didn't work, that policymakers need to devise ways to curb excessive risk taking. Higher capital requirements should be the first line of defense.

Unsurprisingly, Turner's possible solution and open questioning of whether the financial district is too large, is already provoking sharp debate and response. He even went so far as too suggest that London's competitive advantage as one of the world's premier financial hubs shouldn't be defended at any cost.

The head of the British Bankers Association Angela Knight, did not mince words in response. "I think that if we say we do not want to have an international, competitive industry here, then we will do to financial services what we have done to manufacturing and engineering in the past and that is have it as a minor industry and lose it to others," she said.

I agree with Knight.

Yes, there have been excesses and recklessness in the financial sector that will take decades to unwind, including eye-popping amounts of money bailing out a financial system that could have been put to much more productive use.

But haven't they acknowledged the excesses? Let's not further undermine an economy already on its knees by making it less competitive and attractive. Let's first start with better supervision.

Do you agree there should be global taxes on financial transactions as a way of curbing excesses? Would such taxes be effective?

LONDON, England – The nomination of Ben Bernanke to a second term as chairman of the U.S. Federal Reserve comes as no surprise. The surprise would have been if U.S. President Barack Obama nominated someone else. The financial markets are satisfied with the job Bernanke is doing. In the middle of a crisis, you don't want to be changing the man responsible for steering the economy back on course.

U.S. President Barack Obama has again nominated Ben Bernanke, left, as chairman of the U.S. Federal Reserve.

Does it mean that Bernanke has done everything right? No, of course not, he hasn't - and he has admitted that he was mistaken early on in saying that the subprime crisis would be contained. But once he recognized how severe the crisis was, he and the Fed acted with boldness and innovation.

Bernanke also came under criticism for, among other things, allowing the failure of Lehman Brothers. But he defends the decision, saying the failure was unavoidable, that a buyer couldn't be found and that Lehman didn't have enough collateral to meet the criteria for a large Federal Reserve loan to stay afloat.

One area of concern is the massive amounts of liquidity the Fed has pumped into the system and whether those will lead to a re-emergence of inflation further down the road.

Bernanke is acutely aware of those concerns, and today pledged to work to the utmost of his abilities to "help provide a solid foundation for growth and prosperity in an environment of price stability."

His nomination to another four-year term still needs to be approved by the U.S. Senate. He will receive some tough questioning at his confirmation hearings, including why the Fed didn't do a better job of supervising the banks that got us into the subprime mess to begin with. The Fed's exit strategy from its ultra-loose monetary policy will undoubtedly be another area of questioning.

But at the end of the day, Bernanke will be reconfirmed. He has steered the Fed and the U.S. economy through unchartered territory. It's a long way to a full fledged recovery, but at this point, Bernanke deserves the chance to finish the job.

But what do you think – should Bernanke be reappointed? What is your biggest concern regarding the Fed as it goes forward?

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.