Morning Brief: Welcome to the recession

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The staggering global economy took a few more shots to the gut yesterday.

The Dow Jones Industrial Average posted a 680-point loss as the National Bureau of Economic Research reported that the U.S. economy had already been in recession for a full year — since December 2007.

But that wasn’t the only economic news spooking investors Monday. A key index showed U.S. manufacturing activity as weaker than it has been since 1982, and similar indexes show declines in Britain, China, Europe, and Russia. Construction spending in the United States is falling faster than expected. And new-car sales are collapsing across the world.

“Economic conditions will probably remain weak for a time,” Ben Bernanke warned in a speech in Austin, Texas. The Federal Reserve chairman indicated that a new round of interest-rate cuts may be in the offing, though with the nominal benchmark rate at 1 percent, he suggested that more radical options might be necessary. Yields on 10- and 30-year Treasury bills fell to record lows as investors speculated that the Fed might begin buying the bonds itself to push down the cost of long-term borrowing.

Henry Paulson also made comments yesterday, in which the Treasury secretary said he was looking for new ways to spend the $700 billion bailout allocated to him by the Congress.

U.S. Presidential Transition

As expected, President-elect Barack Obama named his national-security team.

Americas

Venezuela’s Hugo Chavez is making a fresh push to strip presidential term limits from the country’s constitution.

At least nine people have been decapitated in Tijuana, Mexico, since Saturday.

A Peruvian general has provoked a minor diplomatic crisis by saying that Chileans in Peru should be sent home in body bags.

Asia

India has ruled out war, but is stepping up the pressure on Pakistan to hand over terrorism-related “fugitives” such as Dawood Ibrahim.

Thailand’s Consitutional Court ruled that PM Songchai Wongsawat must step down and also disbanded his political party. The airport seige has ended.

China is contending with reverse migration as jobs dry up in Chinese cities.

Middle East and Africa

An Iraqi court has slapped “Chemical Ali” with a second death sentence.

Jewish settlers are rioting in the troubled West Bank town of Hebron over rumors that some of them might be evacuated.

Cholera has killed nearly 500 people in Zimbabwe since August.

Europe

European finance ministers have gathered in Brussels to hash out an EU-wide stimulus plan. But German Chancellor Angela Merkel says nein.

European leaders have agreed to deep cuts in vehicle emissions.

The Netherlands have banned psychadelic mushrooms.

Today’s Agenda

U.S. Secretary of State Condoleezza Rice is meeting with NATO foreign ministers in Brussels. At issue: Georgia and Ukraine’s membership bids and NATO’s relationship with Russia.

Today is the International Day for the Abolition of Slavery.

The U.N.’s final report on the assassination of former Lebanese PM Rafiq al-Hariri has been distributed to member states and is expected to be released today.

Photo: Ben Sklar/Getty Images