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General Electric (NYSE:GE) has looked to Asia as an engine for growth in its infrastructure business, which is the company's largest division. Management has repeatedly talked about offsetting slowing growth in the U.S. and the EU with increased business in developing nations, with China, the world's most populated country, out in front. Despite its GDP growth, China is still behind many other countries in building large projects to provide energy and transportation.

GE's plans got a blow when its most direct global competitor, Siemens, (NYSE: SI), announced that its business was being hurt because of cutback in spending in China. According to The Wall Street Journal, "Heavy government spending on infrastructure to boost economic growth has the potential to benefit Siemens because its portfolio includes transformers for ultrahigh voltage power lines, control systems for high-speed trains, and oil and gas equipment." But now it sees those orders slowing quickly.

The news has to be a significant blow to GE. As the recession spreads, its entertainment business, NBCU, is likely to be hurt along with its huge medical devices business. Its financial arm is already experiencing trouble due to the credit crisis.

The last hope for rapid earnings growth was the world's continuing need to upgrade infrastructure. It appears that opportunity is walking out the door with the rest of GE's business.

Douglas A. McIntyre is an editor at 247wallst.com.

If economist David H. Wang had predicted earlier this year that oil would fall to $40 per barrel in 2009, "I would have lost my reputation as an economist in standing," he said.

Or, "they would have probably said I was in need of 24-hour observation," he added.

Well, $40-per-barrel oil in 2009 doesn't appear to be that outlandish now. In fact, in the view of one research operation, it looks downright high.

Merrill Lynch said oil may fall below $25 per barrel in 2009 as a global recession takes hold, Bloomberg News reported Thursday, reducing demand for the world's most important commodity.

The dreaded China slowdown

Equally significant, the global recession may further slow China's economy, creating an even larger surplus in key commodities. Further, even though Merrill reiterated its November forecast that oil futures will average $50 per barrel in 2009, Wang said if China's GDP growth, currently in the 6-8% slows to 5% or below, all bets are off regarding commodity prices.

"Today's oil prices assume continued, solid, if not double-digit growth in China," Wang said. "If China's economy slows further, and we start see real year-over-year declines in oil consumption in China, not just cuts in the level of oil consumption growth, oil prices will fall well below $40 and that $25 forecast will come into view."

Oil dipped 44 cents to $46.35 per barrel in Thursday morning trading. Oil has fallen a stunning $100 since hitting a record high of $147.27 per barrel last summer.

Just call it another data point confirming the breadth and depth of the global economic slowdown. Freeport-McMoRan Wednesday suspended its dividend and cut production by 5% in 2009 and 11% in 2010, due to a sharp decline in prices, the company announced (pdf).

Freeport said it will reduce capital spending by $1.2 billion, a gargantuan 50% reduction from its previous estimate for 2009 capital spending. The company also suspended its $2 annual dividend.

Shares of Freeport (NYSE: FCX) Tuesday closed up 91 cents to $21.82 amid a broader market rally, but are declining $4.02, or over 18%, in premarket trading (8:27 am).

For the cutbacks, Freeport cited a large decrease in key commodity prices stemming from declining demand. Copper prices have declined to an average price of $1.69 per pound in November, compared to a nine-month average of $3.61 per pound as of September. Molybdenum prices have decline to $9 per pound as of December, compared to about $30 per pound in mid-October.

"Agricultural commodities have been hurt in the recent turmoil," says growth stock expert Stephen Leeb. In The Complete Investor he looks at Mosaic (NYSE: MOS). a world leader in fertilizers.

"Mosaic has been decimated in price despite reporting record earnings. The company is the world's second-biggest producer of fertilizer components and the leading producer of potash.

"It's also the largest maker of processed phosphates, which gives it a lot of leverage to the rapidly growing markets of China and Brazil, and is an exclusive marketer of 1.2 million metric tons of nitrogen products.

"Since its high in June, the stock has lost three-fourths of its value and now trades at just 3 times next year's earnings. The sell-off came despite Mosaic's highest-ever earnings ($2.65 in the latest quarter vs. $0.69 a year earlier) and expanding gross margins (38.1% vs. 26%).

"The apparent reason was that those record earnings were slightly below some analyst estimates. Also, investors perhaps feared that farmers wouldn't be able to obtain credit to buy fertilizers.

"Once all the added liquidity puts these fears to rest, and given that the worldwide inventory of soybeans, corn, and wheat is forecasted to keep declining into 2009, we think demand for Mosaic's products will be strong.

"Long-term investors should use any temporary softness in fertilizer component prices as a great buying opportunity for Mosaic's shares."

Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.

Oil prices got a boost today from the news of a large interest rate cut in China, which analysts believe should have the result of lifting oil demand for the country.

China is doing all it can to keep its booming economic growth alive. The country announced its largest interest rate cut in 11 years, as the People's Bank of China slashed rates by 1.08 percentage points.

Oil prices, which have been in a virtual free fall since their record high levels over the summer, moved up as high as $52.76 earlier in the session, and are now trading up $1.40 a barrel to $51.75.

The move by China should help the country rebound from the current slowdown it is seeing in economic growth. The massive expansion of the economies in China and India are a major reason why oil prices moved so much higher in the past couple years, and if today's announced cuts have the intended effect of increasing economic activity, then the country should indeed see an increase in its thirst for oil.

Why should you care what's going on in China? It makes many of the products we buy -- particularly the ones sold at Wal-Mart Stores (NYSE: WMT). And it has been recycling the profits it makes due to its relatively low labor costs into buying American debt. In fact, without its willingness to purchase our Treasury bonds, we would probably not be able to afford the $8.2 trillion worth of bailout plans that we've created so far -- or the additional $20 trillion we might need in the future.

If we were in the ninth inning of this financial collapse, instead of the second, then China's slowdown would not matter so much to our future. But if we need an additional $20 trillion over the next several years to put a floor underneath this economic collapse, we are not going to be able to rely on China to help foot the bill as we have in the last year. That's because China is slowing down; it has been growing at 12% a year for several years in a row, but that rate is likely to slow to at least 5.5%.

That would be a great growth rate for the U.S., but it represents a huge slowdown for China. Forty five percent of China's GDP growth is due to fixed asset investment -- like construction of houses and manufacturing plants. And a big part of that business is steel -- whose prices have lost 36% of their value since the peak, dropping from $768 a ton in June to a low of $490 a ton this month. One steel plant is cutting production by 15%. This means that global suppliers of commodities -- such as iron ore, copper, and cement -- around the world are suffering. What does this have to do with U.S. debt?

There's perhaps no more-telling policy implementation difference between a democracy and a one-party state than a plan expected to be announced by China soon.

China is shortly expected to implement both wage increases and tax cuts to promote consumer spending and economic growth.

The National Development and Reform Commission is considering the measure, which would affect about 6.5% of China's employees. The policy will help keep the nation's economy growing at an adequate rate, so says economist David H. Wang.

"In a classic development trend, China is incorporating more and more people from the countryside into its cities, and therefore needs a high rate of growth, just to absorb these additional workers and maintain social stability. That means a GDP growth rate of a least 6-7%," Wang said. "These measures give China a reasonable, 50-60% chance of attaining that growth rate in 2009."

Prior to this year, China's problem had been runaway growth, which contributed to domestic inflation, construction sector excesses, and commodities price pressure, worldwide. But then the global financial crisis hit and both emerging market and U.S. economic growth slowed -- the latter slowing China's economy considerably, due to reduced demand for exports in the U.S. Further, global economic conditions deteriorated in latter 2008 to such a degree that China's GDP growth was in danger of falling under 5%, Wang said, "a rate tantamount to a recession in emerging market China."

This week, some of the top veterans in private equity -- TPG's David Bonderman, Carlyle's David Rubenstein, and KKR's George Roberts -- got together at a conference in Hong Kong. And, all in all, it was fairly depressing (hey, I guess that's what happens when you lose billions and billions of dollars).

Take Bonderman. He thinks the downturn will be protracted, calling it an L-shaped recession (the more common description is a V-shaped recession, which means there is a strong snapback). In fact, he thinks U.S. unemployment will hit 10% or so.

Then again, keep in mind that Bonderman lost about $1.3 billion on his six month investment in Washington Mutual.

Despite all this, Bonderman still has an appetite for investments. For example, he's focusing on the debt securities from hedge funds. Because of massive redemptions, the prices are at distressed levels.

Rubenstein also gave a grim presentation (he thinks the downturn can last several years). But, he is still bullish on some opportunities, especially in Asia. For example, he thinks China offers some compelling valuations and that the country may become more open to outside investments.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market. He is also the founder of BizEquity, a valuation website.

Time provides the advantage of not only additional events, but also the ability to the compare these events to conditions and issues in previous eras -- an argument against 'instant-analysis' and a major reason my Ph.D. advisor said, "Don't study any public official's decisions until he or she has been dead for 20 years."

Hence, time is naturally providing more evidence and perspective on the recently-ended period of global economic growth, and increasingly the evidence is showing that it was a global economy of unsustainable imbalances -- balances that policy makers mistakenly ignored.

2001-2007: a policy void

First and probably foremost there was the oil price imbalance. Whether they were driven up by speculators, by institutional investors seeking a return on equity, global energy demand, and/or by other factors, economists had warned for years that the U.S. and global economies could not continue to grow at adequate rates with oil above $80 per barrel. In fact, every previous oil shock in the modern era was followed by a recession in the United States. Still, little was done from a policy standpoint to stem oil's price rise.

Similarly, the U.S.'s then-increasing trade deficit, a good part of which had been fed by purchases of imported oil, and the notion that U.S. consumers could serve perpetually as the growth engine of the export-oriented developing world, was unsustainable, given stagnant U.S. incomes, and its nadir savings rate. Yet little was done to address this imbalance.

The growth in China's exports has slowed. In October, its U.S. export/import balance showed a $17.5 billion surplus, a record produced not by soaring exports but by falling imports. The country, fearing repercussions of a downturn in spending here and abroad, announced a $586 billion economic stimulus program to prop up its slowing economy.

While I'm not a expert on foreign trade, I would like to send along an idea for the consideration of the Chinese government. If you really want to stimulate Chinese manufacturing and export, why not use that money to send each of the 300 million Americans an $1,800 gift card to Wal-Mart (NYSE: WMT)?

Imagine the consequences, all good for the Chinese economy. Chinese factories will once again be busy making plasma screen TVs, basketball shoes, thongs and wax lips. Chinese ships will again carry jam-packed cargo containers to the U.S. And, as Americans snatch up the Wal-Mart goodies, the stimulus cash will come flooding back to China. Then they can loan it back to us so we can give our own people a stimulus package and buy yet more foreign goods.

The odd thing is, the idea isn't all that crazy. But it should be.

China's decision to spend about $586 billion or 4 trillion yuan in fiscal stimulus is likely to increase international commercial activity and global GDP, economists generally agree, but there may be a downside for the United States.

"There is the potential that U.S. interest rates could rise," economist David H. Wang told BloggingStocks Tuesday.

Wang said a key variable in U.S. interest movement will be whether China will need to repatriate capital deployed in the U.S. for investment back home in China.

"Right now, the initial models suggest investment pools in China will be sufficient to meet the additional capital that will be needed for the increase in public works projects," Wang said. However, Wang added that only five of his economic models have been completed in his study of investment flows, and five other scenarios with different assumptions still have to be run.

"Assuming what we know about U.S., European, Chinese and other economic growth rates for the first half of 2009, we should only see a slight increase in U.S. interest rates," Wang said. "On the other hand, China may seek to repatriate some U.S. investments as a safety mechanism of 'just in case things go worse than we plan.' "

China is worried that its own growth is slowing so much that unemployment in the big country will rise and GDP expansion will slow. It makes sense. Exports are off because the large nations of the West are importing less as they go through their own recessions.

To offset these problems, China's government will initiate a $585 billion stimulus package. The money will be used to build infrastructure, low-cost housing, and to help industries particularly hard hit by the export problems. Since China's GDP growth is not being driven by demand from outside the country, perhaps the government can create demand for goods and services within its own borders.

According to The Wall Street Journal, "Beijing has long held that economic growth of at least 8% is needed to provide the improvement of employment and incomes the ruling Communist Party relies on for popular support." Writing a huge check may work, but it may only work for a brief time.

A recession in major developed countries could last nearly two years. There is some evidence that GDP in the US could contract all next year and that corporate earnings could fall during the same period. Unemployment may well move over 8% marking a recession as bad as the ones in 1974 and 1982. The demand for imports could drop as sharply as it has in three decades.

In the teeth of that kind of slowing in the US and EU economies, China may be able to do very little to "save" its economy from dropping to GDP growth below 5% or perhaps even a contraction of economic activity.

Six hundred billion dollars seems like a lot until one looks at the headwinds.

Douglas A. McIntyre is an editor at 247wallst.com.

The global aircraft business sure is complex. Big companies are both suppliers and customers of each other. There are only two major competitors -- but one new one, backed by the Chinese government -- threatens to alter the structure of the industry. And aircraft are so expensive that financing is the critical fuel that keeps the industry going. Meanwhile, the global economic slowdown threatens to cut demand for air travel and slice that capital flow.

This complexity comes to mind in analyzing a General Electric Co. (NYSE: GE) threat to Boeing (NYSE: BA) -- which it leveled by placing a $750 million order for five aircraft -- with an option to buy 20 more -- with China's Commercial Aircraft Corporation of China (CACC). CACC was formed earlier this year through the merger of China's two state aircraft makers, AVIC I and AVIC. And the expansion does not stop there -- today China announced plans to acquire a foreign general aviation aircraft maker to "shore up its technology capabilities."

GE's CACC buy is hurting one of GE's biggest customers -- that's because GE Aviation sells billions worth of engines to Boeing. And GE's aircraft financing unit -- GE Capital Aviation Services -- is in competition with American International Group's (NYSE: AIG) aircraft financing unit, International Lease Finance Corp. -- which is one of Boeing's biggest customers.

In China, the cows are badly malnourished, and the routine spiking of dairy products with melamine and other illegal substances has been an "open secret" for years, says the Wall Street Journal today in a detailed look at the dairy system there. At the root of the problem is a dairy industry rife with farmers who have no idea how to feed or care for their cows, and even if they do, would always choose the cheapest possible option; whether feeding them with straw instead of corn, or (it seems obvious) allowing them enough room to graze naturally.

That melamine should be added to milk is only the most deadly in a string of unethical practices, starting with ill-treatment of animals and continuing through routine addition of "protein powder," a nutrient-booster made of animal parts, soy, and other ingredients. This powder was added, not to contribute to the health of the customer, but instead to fool inspectors.

It wasn't foolish enough; inspectors learned to identify the additions, as well as the "fresh-keeping liquid" of preservatives and antiobiotics. Were the farmers upset about their lack of ethics? No, they were just concerned the milk would be returned to them and be "wasted." Enter melamine.

Melamine, a scrap byproduct of many Chinese factories, mimics protein in lab tests. And it is extremely cheap.

This post is part of a feature on companies and products that our bloggers think are in need of a makeover. See all 26.

Founded in 1945 in a garage workshop in southern California, Mattel Inc. (NYSE: MAT) is now the world's biggest toy maker, with a market cap of about $5.2 billion. Number two Hasbro Inc. (NYSE: HAS) has a market cap of about $4.2 billion. Mattel produces from everything Barbie and American Girl, to Hot Wheels, Fisher Price toys, Scrabble, and the Magic 8 Ball, as well as tie-ins with Pixar, the Dark Knight, Harry Potter, and Nickelodeon. However, in 2002 Mattel shut its last factory in the United States, and since then most of its products have been produced in China.

That decision came back to bite Mattel when, beginning in the summer of 2007, it was forced to issue a series of recalls of Chinese-made toys that contained lead paint. The company is still reeling from that PR disaster, which for some reason included an apology from Mattel to the Chinese people. The situation prompted BloggingStocks contributor Tom Barlow a year ago to suggest (tongue in cheek) that Mattel merge with Waste Management Inc. (NYSE: WMI) so that toxic toys could go directly where they belonged, bypassing the middleman (i.e., the children). That would be one way to make over the company, I guess.

As Christmas of 2007 approached, it looked like the worst might be behind Mattel. The year-end numbers were respectable, and some investors were beginning to eye Mattel again. But first quarter 2008 results were disappointing, and by mid year, expectations were very low. The share price has continued to slide since the recalls, reaching a multi-year low recently. While there was a copyright infringement lawsuit settled in Mattel's favor (though they didn't get as much out of it as they wanted), and they are no doubt hoping for the Dark Knight and other tie-in merchandise to help boost what otherwise looks like it could be dismal holiday season for retailers, the newest thing Mattel has to contend with is claims by some parents that one of its dolls secretly promotes Islam, which Mattel denies.