http://profitableinvestingtips.com/investing-tips/what-happens-in-asia-does-not-stay-in-asia What Happens in Asia Does Not Stay in Asia The Chinese and other Asian economies are slowing and the effects will be felt right here is the USA. Unlike Las Vegas, what happens in Asia does not stay in Asia. This writer´s father was just starting out as a small town Midwestern businessman when the stock market crashed in 1929. He recalled that the immediate consensus on Main Street was that New York was far away and what happened there would not affect the heartland. That first take on the 1929 crash was wrong and should provide a little insight for investors in a world that is much more interconnected than it was 86 years ago. Our concern for the US economy and American stocks is that what happens in Asia does not stay in Asia. Is Recession on the Horizon? Foreign Policy asks if China is about to plunge the world into recession. Here are a few comments from the article. >Global markets have appeared rattled, with major media outlets repeatedly invoking the specter of financial “contagion” from falling Chinese stocks and with major equity indices of the world’s biggest economies mostly retrenching in the days following the recent RMB devaluation. How real is the threat of a global recession led by a deteriorating Chinese economy? Foreign Policy asked several experts to respond to the recent hand-wringing. >It puts especially severe pressures on resource-based economies (such as Australia, Brazil, and Canada) as well as on producers of components and parts (largely in East Asia) that drive exports through China-centric supply chains. The sharp correction in global commodity prices is a direct outgrowth of the cumulative weakening in China’s old model of commodity-intensive economic activity. >China’s over-investment boom inflated the price of inputs like copper, iron ore, and oil – but it deflated the price of all kinds of finished goods. >A recession with Chinese characteristics thus looks like one we’ve feared off and on since the 1930s: deflation triggered by beggar-thy-neighbor behavior. It wouldn’t be as sharp as the Depression but would have multiple similarities: a major producer (United States then, China now) reacts to a bubble popping by trying to squeeze gains out of its trade partners. Seeing as they are already running large deficits with this large and suddenly irresponsible actor, the trade partners show no hesitation in retaliating. And off we go – though again, not in the same devastating fashion as the 1930’s.