World Staggers Under Economic Storm

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WASHINGTON - It was another day of plunging markets overseas with Japan's down 2.5 percent and South Korea's down more than 7 percent.

That came after Wednesday's 514 point plunge on the U.S. stock market.

Now everyone's battening down the hatches, preparing for a global recession.

Alan Valdes is vice president of Hillard and Lyons and a trader at the New York Stock Exchange.

"Will we get a protracted recession? It's possible," Valdes said. "Because you are seeing Yahoo for instance, Yahoo is laying off 1500 employees. That's going to ripple across the economy."

Even powerhouse economies such as Brazil's are staggered, with Brazil's market plunging so fast, trading had to be suspended Wednesday, for the fifth time in three weeks.

In China, the head of the European Union Commission said this economic storm started in America.

"But it is a global storm and there will be ripple effects all over the world," said Jose Barroso, president of EU Commission.

It's even hitting China, which has experienced double-digit growth for many years.

Now as customers across the world cut back on their buying, China's growth has slowed down to just 9 percent.

"China is depending so much on export markets round the world," said Tom Hardiman, European Representative to 7th Asia- Europe Meeting and Asia-Europe Business Forum.

For China, 9 percent growth may be slow, but that figure is the envy of the world as economies are starting to shrink rather than grow. That may be about to happen in the U.S.And new figures on foreclosures won't help.

The number of houses foreclosed on in this last quarter is up 71 percent over last year.

Roughly a third of homes for sale in the U.S. are now owned by the bank rather than a homeowner.

It's millions of financial deals over mortgages gone sour that's brought down so many financial giants in recent months and caused this economic crisis.

Congress is holding hearings to find out who's to blame for the mess, and why those who rate these financial giants gave them excellent ratings even as they were about to crumble.

Democratic Rep. Chris Shays charged, "You have so screwed up the ratings as to not be believable any more.

At the White House, the growing mortgage crisis has led the Bush administration to consider a plan where it would put some $40 billion on the line to help banks re-package troubled mortgages to make them more affordable.

It would be just the latest in a series of government measures to help ease the credit crunch and try to help get the economy back on its feet.

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