World Economy

Transfixed by the daily spectacle of dismal economic news and wild Wall Street swings, few Americans have looked up to see what a wide array of economists say lies beyond the immediate crisis. And with good reason: The picture isn't pretty. The sleek racing machine that was the U.S. economy is unlikely to return any time soon despite the huge repair efforts now underway. Instead, it probably will continue to sputter and threaten to stall for years to come.

As President Obama heads for his second economic summit in three months, lingering skepticism about U.S. leadership threatens to produce a policy stalemate that could undercut prospects for recovery at home and abroad. Behind a veil of traditional diplomatic courtesy, leaders of the other wealthy economies are all but certain to resist any major new steps to stimulate global economic activity.

Trade at international ports is on track to drop more than 10% this year, one of the steepest declines ever, according to a new maritime industry report. Cargo ships will carry 27 million fewer containers by year's end than they did in 2008 -- a reduction roughly equivalent to all of the cargo containers handled by the five busiest U.S. seaports in a typical year, according to London-based Drewry Shipping Consultants' Container Forecaster Report. "There has never been a decline like this before.

Could the world's currency of choice have the face of Mao Tse-tung on it, not George Washington? Quixotic or not, the Chinese are preparing for that day. In a series of what might be called baby steps, Chinese officials recently have moved to globalize the yuan and promote its influence overseas, with Shanghai designated as command central.

The financial crisis that has sent economies reeling the world over is finally seeping into Iraq, with potentially grave implications for the stability of the country. Car sales have plummeted. The once-booming property market has skidded to a halt. Electronic goods that were flying off the shelves a few months back are staying put. And in a country still threatened by an insurgency, more than a quarter of men ages 18 to 29 are unemployed.

The breakdown of two of Detroit's Big Three is bringing urgency to the scramble among the world's automakers to forge alliances with former rivals, carve inroads into new markets and shop for well-known brands. The turmoil has led to a flurry of deals realigning the automotive playing field. Italian automaker Fiat's bid to become a truly global player by acquiring control of Chrysler and eyeing General Motors Corp.'s European operations is only the most obvious move.

In another sign of how deep the global recession has become, the ports of Los Angeles and Long Beach on Friday reported their worst combined import statistics for September in nine years. September is often the busiest month at the nation's biggest port complex, making it one of the best barometers of the health of the economy and international trade. The port of Los Angeles received 309,078 containers packed with imported goods in September, representing a decline of 16% from the same month last year and 27% from September 2006, L.A.'s best month ever for imports.

The Obama administration's proposal to overhaul financial regulations, aimed in part at restoring global confidence in America's economic system, triggered a welcome but largely wait-and-see response from overseas investors and analysts. From Beijing to Brussels, Obama's plan was greeted as a good first step. But many remained cautious about how effective the U.S. plan would be -- especially because crucial details have yet to be worked out. "It's important . . .

The Mexican peso plunged to new lows against the dollar Monday as global investors again rushed for the perceived safety of the greenback despite the horrid U.S. economy. The peso was trading at 15.47 per dollar for large transactions between banks, compared with 15.15 on Friday and 14.5 two weeks ago. Retail buyers and sellers would be quoted different rates, but the trend is the same: more peso weakness.

At a time when the U.S. and other traditional economic powers are weakening, China is flexing its muscles, signaling it will seek a much more assertive role in shaping the future of the world financial order. The apparent shift in Beijing's approach is likely to be displayed at the Group of 20 nations' summit today in London, as China presses for changes in a global finance system long dominated by the U.S. and Western Europe.