"When written in Chinese the word "crisis" is composed of two characters - one represents danger and the other represents opportunity"
John F. Kennedy

I think one thing is finally becoming clear to most of the former critics- US Economy is slipping into a more than moderate (I don't know if you call it severe yet either...) recession. But what's actually more important for investors out there- the emerging markets "decouping" story is looking more and more like a myth...

Cracks are starting to appear all around, and absent a very fast and severe crash in the price of oil which does not really seem very likely to occur in the short term, what started as US/UK only recession, will probably end up dragging the entire world into a recession/slow growth. Look for many more real estate/bad loan related bank failures all over the world.

Strong Euro is killing hopes that Germany, France and Co will be able to avoid the recession and with both Europe and United States entering the zero growth zone, in my opinion, China and Co are going to cool off much faster than most people out there are actually expecting. Brazil and Russia will probably hold up a bit better, but that's only if commodities prices stay high, which simply can't last forever...

If you ask me- by the time it's over- US economy is actually going to hold up much better than our Asian and European counterparts, with weak dollar serving as a buffer to the "severe depression" scenario. Look for non auto manufacturing to make a major comeback in the next 12 months or so with smaller, non unionized southeastern states receiving most of the benefit...

Some quick headlines from around the world...

First one from WSJ:

The critical change has come in Germany. Stung by the strong euro and rising costs, Germany's previously booming manufacturers have suffered declining new orders for six months in a row. Blue-chip companies including engineering giant Siemens AG, consumer-goods maker Henkel AG and printing-machine maker Heidelberger Druck AG have all announced large-scale job cuts lately, blaming problems including the high euro, raw-material prices, slower global growth and the credit-market mess that has shaken confidence on both sides of the Atlantic. A stronger euro makes goods priced in the currency more expensive for buyers in the U.S. and other nations.

"I'm asking myself: Which markets are still functioning?" says Rainer Hundsdörfer, director of Michael Weinig AG, a midsize German company that makes wood-processing machines used to build furniture and fittings. He says new orders from the rest of Europe "are crumbling," weak business in the U.S. has been made worse by the high euro, and many customers in Asia and Latin America have stopped investing in new machines because they rely on exports to the slowing U.S. economy. A backlog of orders is keeping the company busy for now, but 2009 could be a difficult year, Mr. Hundsdörfer says.

Second one- first big failure from Spain today: from Financial Times

One of Spain's largest property companies yesterday filed for creditor protection owing €5bn ($7.9bn), spurring a Madrid stock market sell-off and forcing banks to admit to an initial €550m in related bad loan provisions. Martinsa-Fadesa said in a regulatory filing it had lodged a petition for court administration, marking the start of Spain's largest bankruptcy process since the introduction of new rules in 2004

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