It was an historic day when Rio de Janeiro was chosen as host for the 2016 Summer Olympic games -- the first emerging market ever to host the games.

It many ways it marked a formal "coming out" party, if you will, for emerging markets. It was a statement -- a confirmation -- of the the developing world's improved status in the early globalization era. It said, "We've arrived."

The dollar fell to an eight-month low versus Japan's yen Monday, down about one-quarter yen to 89.37, and placed into the currency market spotlight the season's most compelling question to-date: will the Bank of Japan intervene to stem the yen's rise versus the buck?

Those who say central bank officials will intervene to weaken the yen argue that export-dependent Japan will be hurt if the yen appreciates more against the dollar. The yen has already risen about 20% versus the greenback in the past 12 months, and further yen increases, assuming Japan's exporters raise prices to protect their dollar-denominated profits, will result in lost sales, as Japanese goods --- particularly autos --- become too expensive for American consumers.

I recently attended a Lakers' basketball playoff game and took notice of the fact that Toyota Motor Corp. (NYSE: TM) was a major sponsor advertising at Staples Staples Inc (NASDAQ: SPLS) Center. This, while our home grown car companies are all on the verge of collapse.

As we write stories on the depressed economy readers frequently comment about "buying American" as a theme that will help the greater good by keeping jobs and money in the United States.

This patriotic notion got me thinking about what would happen if we carried it further? Would we stop advertising and promotion of foreign products? Would we restrict discussion of foreign products in the media all together? Would we limit the production of foreign products here, even if they are providing jobs for Americans?

From the sound of selected analysts' research, you'd think that the U.S. economy would never recover. To be sure, there's much work ahead, particularly on the toxic asset removal and credit market fronts, but if you think the U.S. stock market's steady rise in March is a sign that financial institutions are starting to position themselves ahead of the typical investor, you're correct. And with the aforementioned in mind, Union Pacific (NYSE: UNP) is worth an evaluation.

Union Pacific is the leading rail freight carrier in the United States, transporting coal, chemicals, industrial products and freight over an enormous track network: 32,000 miles of route track in 23 states in the western U.S.

Investors received yet another indicator Monday that this is not your father's recession.

The global economy will likely contract in 2009 for the first time since World War II -- including a decline in trade - - the World Bank announced in its most recent report.

China apparently will announce a new fiscal stimulus package in an attempt to jump-start growth in the world's third largest economy.

Chinese Premier Wen Jiabao is expected to announce "a new stimulus package" in his annual address to the nation's legislature, Li Deshui, ex-statistics bureau head told reporters in Beijing Wednesday, Bloomberg News reported.

Many economists agree the U.S.'s pronounced recession, and the global recession, to some degree, were triggered by a series of imbalances. One of those imbalances is correcting now.

The U.S. trade deficit declined again in December 2008, by 4%, to $39.9 billion -- the lowest level since February 2003 -- on a substantial decline in imports, the U.S. Commerce Department announced Wednesday.

Further, for all of 2008, the trade deficit narrowed to $677.1 billion from $700.2 billion in 2007. In 2008, exports increased 12% to $1.84 trillion, while imports climbed 7.4% to $2.52 trillion.

It's as if every major economy in the world's emerging markets structured its economy to take advantage of U.S. consumption, and only U.S. consumption.

Of course, we know this isn't the case. Asia-to-Europe and Latin America-to-Asia trade, etc. expanded during the past decade, but then why is it that the end of the housing boom in the United States, and its accompanying slowdown in consumer spending, slowed demand seemingly everywhere -- in China, Brazil, Russia and in Europe?

Similarly, how is it that a banking crisis primarily rooted in the United States was able to propel a global financial crisis, in a multi-polar financial world? Economists and others speak of the great financial centers of the world -- London, Frankfurt, Hong Kong and Tokyo -- in addition to New York. How is it, then, that when New York has a problem -- admittedly its biggest financial crisis in generations -- the global financial system nearly freezes up, as we saw in the credit markets last fall? What ever happened to decoupling?

It's an axiom of business theory that change is continual in market economies, but as economist David H. Wang points out, there's change that corporations and citizens can prepare for, and then there's change that few expect.

The latter is, by its nature, Wang says, more disruptive - - driving companies out of business, compelling triage-like changes in business models of others, while also triggering wholesale changes to family budgets, career paths, and students' educational objectives.

Wang groups change in three categories: cyclical (as in the business cycle), technological (such as the Internet, car, telephone, electrification, railroad etc.), and structural (globalization, Cold War, Marshall Plan, Bolshevik Revolution, the Enlightenment, Protestant Reformation, etc).

Oh, relax, it's only January.

That was one China expert's evaluation of the impact of U.S. Treasury Secretary-designate Timothy Geithner's comment that he believes China is "manipulating" its currency.

China's currency, the yuan, which China allows to trade in a tight band, and not float freely in the currency market, has long been been viewed by Congressional lawmakers, business executives, and analysts as a tactic by China to artificially depress the value of its goods, in order to increase exports sales. Critics argue China is creating an unnatural competitive advantage for its companies. The yuan closed Thursday at 6.8380 to the dollar.

China counters that it must keep its currency fixed to protect its young, immature industries and developing economy.

Taking it with a grain of salt

Further, while the Bush administration did not push the currency issue much with China, and Geithner's comments suggest otherwise, economist David H. Wang, a China expert, said China is likely to disregard Geithner's comments.

"China's leaders have developed an increasing sophistication regarding the American political system," Wang said. There is a phrase you hear a lot now in Beijing that translates roughly to 'Don't pay attention to any comments from America from November thru January.' And, for the most part, that's a good rule to follow."

Like all good marriages, the union of Barack Obama and the American people will start tomorrow with the best of intentions. The problem is that it won't last, particularly when it comes to the economy.

The president-elect already is at odds with House Speaker Nancy Pelosi over whether to repeal the Bush tax cuts before they expire in 2010, according to the Wall Street Journal. The economic stimulus package is expected to top $850 billion as part of Obama's pledge to create jobs and reducing taxes. Meanwhile, the housing market continues to stink and the stock market continues to be dreadful.

Improving the economy is going to be a long, painful process. Think turning around a super-tanker and you get the idea. Good news is going to be hard to come by over the next 12 months. Bad news will be plentiful. Here are some predictions of the troubles that lie ahead for the economy no matter despite Obama's best intentions.

• Corporate bankruptcies -- Experts are predicting one of the biggest waves of corporate bankruptcies and restructurings in years. Already, Circuit City Stores Inc. (OTC: CCTYQ) has bitten the dust and the year is just getting started. Loads of retailers who are already operating on the razor's edge of profitability may be pushed over the edge. I doubt that enough credit will be unlocked by government fiat to address this problem.

Can the U.S. government run $1 trillion budget deficits for two, three years? Indeed it can, Financial Times columnist Martin Wolf argues, and the deficits can even be higher, for a while. After that, there's more work ahead.

The specter of $1 trillion budget deficits may be vociferously opposed by Republicans and other economic conservatives, but Wolf, in so many words, says what other choice does the United States have? What would be the alternative? Simultaneously raising taxes now to lower the deficit? Hardly prudent. Doing nothing? Another dreadful idea. So, it's prime the pump, or sit there at the well and await nothing.

Up ahead: two bigger tasks

What's more, Wolf sees two additional tasks (structural changes) that are just as important to the goal of U.S. economic recovery -- but that may be even harder to implement: removing toxic assets from the banking system and reducing the U.S.'s structural current account deficit (the trade deficit).

The first is the forced write-off of bad assets, fiscal recapitalization of the banks, or debt-for-equity tactic, and it should be done comprehensively and quickly. Slow, gradual bad-debt reduction is not the correct policy, Wolf argues, as it would delay the economic recovery.

There have been almost no positives in the U.S. recession that has resulted in millions of job losses, and also hurt corporate revenue and earnings, most economists agree.

But at least one metric has moved in the correct direction: the U.S. trade deficit, which declined 29% in November 2008 to $40.4 billion on a record decline in imports, the U.S. Commerce Department announced Tuesday.

Economists surveyed by Bloomberg News had expected the November 2008 trade deficit to total $51.5 billion.

Imports declined a record 12% to $183.2 billion -- the lowest level in more than two years -- pushed lower by a large drop in imported oil prices.

Exports dropped 5.8% to $142.8 billion, on declining demand for industrial supplies and capital goods. The October 2008 trade deficit was revised lower to $56.7 billion from the previously released $57.2 billion.

What's the world's biggest economic concern, even after a decade of globalization? When the U.S. economy will begin to recover and pull out of its recession.

What's, arguably, the world's second biggest economic concern? When China's economy will begin to grow at a stronger rate.

The U.S. and E.U. recessions have decreased demand for China's exports, which in turn has slowed China's GDP growth from more than 11% in 2007 to about 8% in 2008, with even slower growth in the final half of 2008, so says economist David H. Wang, a China expert.

The power of Chinese demand

True, slower Chinese growth has taken pressure off commodity prices globally -- it's a major reason oil, copper, coal, and related commodity prices collapsed in 2008 -- but that reduced demand also has "resulted in a negative-feedback loop," Wang said, slowing the economies of raw material- and commodity-exporting countries, particularly emerging market economies like Brazil.

So globalization -- the spread of free markets integrated internationally by trade -- is guaranteed, correct? Just like the market's ability to self-correct, self-reform, and self-regulate?

Not quite, says New York Times columnist and Nobel Prize-winning economist Paul Krugman.

Krugman argues that the current globalization era is actually 'Globalization 2.0.' 'Globalization 1.0' began in 1919, also a period of large-scale international trade and investment, when it was thought that commerce and the benefits of trade would render previous ethnic and cultural rivalries between nations irrelevant.

History did not begin in 1981

What followed, Krugman notes -- and this will be illuminating for those investors who believe history began in 1981 -- was war, revolution, political instability, depression, and more war ... for 30 years.

To be sure, the world today is a different 'political economy place' than it was in 1919, Krugman adds, with the economic / minor-political integration of Europe being a big difference: the euro-zone and E.U. means European states are less likely today to go to war with one another.