Japan, the world’s second largest economy, officially entered into a recession in the third quarter, as growth shrank at an annualized rate of 0.4% after posting a second-quarter contraction of 3.7%. Japan’s downturn is worse than many economists had expected and could worsen, as consumers in the United States continue to retrench. “Downside risks to the economy are growing further,” Kaoru Yosano, Japan’s finance minister, told reporters. “Japan is in a very serious situation.” Japan’s domestic economy remains weak with declining wages and rising unemployment. But the greater danger is a sharp drop in exports, especially to the United States. Net exports shaved 0.2% off of growth, as imports outweighed a slight increase in overseas shipments. Exports rose just 0.7% in the third quarter, less than the 1.2% forecast. Meanwhile, imports climbed 1.9%, as the cost of oil spiked in the July-September period....

This week is shaping up to be another active one on the bailout-and-financing front. First and foremost, Congress returns to work this week to consider a once-unthinkable proposal: Put up billions in taxpayer-backed loans so that Detroit’s “Big Three” can be saved. Expect a fight, however, as the bailout debate finally moves past banks to focus on General Motors Corp. (GM), Ford Motor Co. (F), and Chrysler Corp.

The situation is dire. GM is burning through cash at a pace that could mean bankruptcy, and all three players are struggling with high costs, weak vehicle sales, frozen credit lines and dwindling cash reserves calling into question whether they can survive much longer without government help. The answer, of course, is that they probably can’t.

But it’s here that the debate turns political, the Detroit Free Press reports. Congressional Democrats are pushing for some form

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Really. It’s too much. Yesterday, George W. Bush told foreign leaders “Our aim should not be more government, It should be smarter government.” Didn’t Bush just spend the past eight years embodying the exact opposite? Where was the smart part creating an “ownership society” with phony money? Where was the smart part of running up record deficits? Or the war in Iraq?

- But W. didn’t stop there. Apart from wanting governments to be “smarter” (who doesn’t?), he called for called for leaders to recognize that “government intervention is not a cure-all” for economic problems. So what was Fannie and Freddie all about? Or Hank Paulson’s Troubled Assets Relief Program. Or the bailout of AIG? If government is not a cure-all, then why has Bush orchestrated the biggest government intervention in the free markets in history? Is he really that unaware of

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Really. It’s too much. Yesterday, George W. Bush told foreign leaders “Our aim should not be more government, It should be smarter government.” Didn’t Bush just spend the past eight years embodying the exact opposite? Where was the smart part creating an “ownership society” with phony money? Where was the smart part of running up record deficits? Or the war in Iraq?

- But W. didn’t stop there. Apart from wanting governments to be “smarter” (who doesn’t?), he called for called for leaders to recognize that “government intervention is not a cure-all” for economic problems. So what was Fannie and Freddie all about? Or Hank Paulson’s Troubled Assets Relief Program. Or the bailout of AIG? If government is not a cure-all, then why has Bush orchestrated the biggest government intervention in the free markets in history? Is he really that unaware of

...

Paulson reworks financial bailout: New targets for investment… even you can apply! Markets plummet… Bill Bonner on when stocks will be cheap enough to buy. OECD predicts global recession… Germany admits contraction has already begun. Wall Street CEOs forecast “rapid,” “deep” U.S. recession. Joel Bowman on a peculiar hissing sound emitting from the Middle East.

For an erudite debate over the Paulson doctrine, we turn to our friends at The Onion this morning:

The Money Hole.

It’s not any more complicated than that, is it?

Indeed, Paulson and company announced a TARP switcheroo yesterday. Now the Treasury’s Troubled Asset Recovery Program (TARP) is suffering a serious case of the STD “mission creep.”

Instead of purchasing troubled assets from banks, the Treasury,

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Swiss banks are being targeted by EU officials desperate to blame someone for this financial crisis. But Bob Bauman says the country is strong enough to resist external calls to reform its bank secrecy and tax laws.

This from The Sovereign Society:

Last week, tax-hungry officials from the increasingly socialist countries of Germany and France declared another round in their long running war on Switzerland.

Their aim once again was against traditional Swiss bank secrecy, which the Franco-German politicians claim is little more than a cover for massive tax evasion. As usual, they didn’t offer any proof for this claim.

Over several centuries and during two World Wars, peaceful Switzerland always has maintained its traditional neutrality. It’s kept out of numerous wars involving both France and Germany, usually with the latter attacking the former.

The last time a war of sorts

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On the one hand ...EU Pushes for Overhaul of Postwar Financial System EU leaders called for a global summit as soon as next month to rewrite the 1944 Bretton Woods accord that paved the way for Europe's post-World War II reconstruction and set up the institutions that oversee the world economy today. XX Sean's note -- that sounds like the EU is gearing up for an attack on the US Dollar's status as world reserve currency, doesn't it? And yet, at the same time ...Trichet Urges Return to `Discipline' of Bretton Woods European Central Bank President Jean-Claude Trichet said officials reshaping the world's financial system should try to return to the "discipline'' that governed markets in the decades after World War II. XX This leaves me totally confused about what the Europeans want to accomplish ... and I suspect they are ...

Spain Hedge Fund Guide1 Page Guide to Hedge Funds in SpainHere is a short collection of articles on the hedge fund industry in Spain. I am always looking for more valuable online tools and resources to add to these geographical hedge fund guides to the hedge fund industry. If you have a white paper or PowerPoint that I can include here please send me an email and I will post it for everyone's benefit.Spain will authorize domestic sales of hedge funds this year, provided they publish trading prices at least every six months and meet other requirements, the Economy Ministry said Wednesday. A ministry spokeswoman, who declined to be identified, said an initial investment of at least $50,000 or $60,000 will also be mandatory and fund managers must ...

A year ago, the prevailing forecast was for oil prices to decline to the mid-50’s for more than a year. Opinions have changed in the face of the reality of high current prices.

Natural gas, which was at historic highs, was used as justification for utility companies to obtain rate increases for their electricity and natural gas customers. Gas has managed do come down considerably since then. We won’t hold our breath expecting those same utility companies to request rate decreases now that gas prices have declined.