Chip maker Intel Corp (NASDAQ: INTC) had some embarrassing emails published today by the European Union that show the company may have been strong arming its customers into buying its products over competing chip makers.

The emails were part of the evidence that led to a record EU fine set against the company last May of $1.45 billion, when it was determined that the company had used strong-arm sales tactics in its competition with Advanced Micro Designs (NYSE: AMD).

On Thursday morning, European Union regulators announced the launch of an antitrust probe into U.S. software maker Oracle's (NASDAQ: ORCL) takeover of Sun Microsystems. The regulatory group believes that the deal could lead to higher prices and limited choice for database software. Approval from this group is considered the main stumbling block for the deal, which has cleared the Department of Justice in the United States.

The final decision has a deadline of 90 days, or January 19, 2009. By this date, the European Commission can decide to clear or to block the deal. More often than not, the Commission will force companies to make changes that would eliminate any concerns over antitrust regulations.

Rambus Inc. (NASDAQ: RMBS - option chain) shares are rising today after the company said European Union antitrust regulators have agreed to drop a probe and any fines if the company reduces its royalty rates for DRAM memory chip patents. The European Commission had charged RMBS with setting exorbitant royalties for DRAM patents. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on RMBS.

RMBS opened this morning at $16.84. So far today the stock has hit a low of $16.55 and a high of $17.81. As of 11:15, RMBS is trading at $17.44 up 2.35 (15.6%). The chart for RMBS looks bullish.

Intel (NASDAQ: INTC) is recently up 17 cents to $15.38 in pre-open trading. INTC was fined $1.45 billion by the European Union for using rebates to impede competition. INTC said orders and billing so far in the June quarters have been better than INTC originally expected. INTC May 15 straddle is priced at 63 cents, June 15 is priced at $1.65. INTC option implied volatility of 44 is below its 26-week average of 52, according to Track Data suggesting decreasing price movement.

Arcelor Mittal (NYSE: MT) closed at $26.23. MT has recently announced it would make layoffs and idle iron-producing operations. MT June option implied volatility of 80 is below its 26-week average of 93, according to Track Data, suggesting decreasing price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Following the instructions of President John F. Kennedy, "I appreciate candor almost as much as I appreciate good news," we're moving forward with candor, however unpleasant.

Investors take heed: the U.S. recession most likely just got longer.

The European Union, led by Germany, has rejected Eastern Europe's pleas for an aid package of about $228 billion, citing budget concerns in their own Western European countries, Bloomberg News reported Sunday.

The E.U.'s failure to provide aid and fiscal stimulus to Hungary, the Czech republic, Slovakia, Romania, Bulgaria, Latvia and Poland will hurt both the U.S. and global economies.

The manager of the world's largest bond fund, PIMCO, has laid-out in unambiguous terms the problem facing the global economy in the quarters ahead: The U.S. and global recession will worsen -- with a "second wave" of turmoil -- unless governments increase fiscal stimulus and spending plans.

"The economic setback is still in its early stages," Koyo Ozeki, head of Asia-Pacific credit research at Pimco's Tokyo office, wrote in a report published on PIMCO's web site. "Any further decline in housing prices could accelerate the downturn, intensifying the pernicious feedback loop and possibly leading to a second wave in the financial crisis in the next six to 12 months."

In 2009 Europe, font of western civilization, will experience its first recession since the launch of the euro currency, the European Commission announced Monday.

Reversing an earlier forecast, the commission, governing council of the European Union, now forecasts that the economy of the 16 nations that comprise the euro zone will contract 1.9% in 2009, a downward revision from the September 2008 estimate of a scant 0.1% growth. (There are 27 nations in the larger European Union, with 11 who are not members of the euro zone's monetary union.)

Further, the EU sees GDP increasing just 0.5% in 2010 in the euro zone. As a result of the recession, and the slow, gradual recovery, euro zone unemployment is expected to increase to 9.25% in 2009, "with a further increase in 2010," but the EU did not specify an unemployment rate estimate for 2010.

Economist Peter Dawson told BloggingStocks Monday although the euro zone did not experience anywhere near as large a housing bubble as the United States, the bursting of the bubble and consequent financial crisis have created negative ripples in the euro zone economy almost as bad as those in the states.

Amid the global recession there has been one sign of economic growth, albeit retroactive growth.

China has revised its estimate for 2007 GDP growth to 13% from the previously-released 11.9%, the Associated Press reports. With the revision China's 2007 GDP totaled $3.5 trillion, passing Germany's $3.3 trillion for third place, globally. (The United States is first, followed by Japan. And I should note that Germany is part of the European Union, and if the E.U. were ranked collectively, it would be the largest economy in the world, followed by the United States, Japan, then China.)

Economist David H. Wang, a China expert, said it's not unusual to see a large change in an emerging market nation's GDP estimate given the frenetic nature of a developing economy's expansion.

"Developing markets are characterized by overbuilding, excesses, inflation, and isolated shortages, and this has been the case in China. We know that growth had been strong up until the financial crisis. My reading now is that China's GDP is currently growing at a 7-8.5% annualized rate," Wang said. "Like the rest of the world, there's been a pronounced slowdown in China, but that doesn't blot out the impressive growth registered from 2003 to 2007."

On Tuesday Russia cut off all natural gas to Ukraine, creating shortages in Europe that could spread across the continent as a cold snap grips the region, Bloomberg News reported.

Gas shortages were reported in Ukraine, the Balkans, Bulgaria, Poland, Italy, and Hungary.

The shortages were expected to extend to Germany, Austria and broader Europe, as a cold snap with temperatures below 20 F degrees is expected to increase demand for fuel in Eastern and Central Europe, The New York Times reported Tuesday. When the natural gas is flowing, Europe imports about 20% of its natural gas from Russia.

The current Russia natural gas cut-off has already lasted longer than the last Russian cut-off, in January 2006.

It's about price . . . and politics

The dispute pertains largely to price, but also involves geopolitics. Russia's oil and natural gas giant Gazprom is seeking to raise the price of natural gas to $450 per 1,000 cubic meters from $179.50 last year, and to collect fines for alleged late payments. The Times reported. However, analysts also believe Russia is upset with Ukraine's move to apply for North Atlantic Treaty Organization membership and the nation's closer ties with the United States and Europe. Ukraine is seeking to integrate more fully with the West, but Russia views Ukraine as part of its sphere of influence.

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.

So much for the 'decoupling' thesis -- the belief that emerging market economies could maintain adequate global growth in the face of a developed-world recession.

All of the world's major economies -- the United States, the European Union, and Japan -- have most likely slid into a recession -- the Organization for Economic Cooperation and Development (OECD) announced in its most recent projection.

A tri-polar contraction

The OECD sees GDP in the three major zones contracting 1.4% in Q4 and 0.4% for all of 2009 -- a decline in output that will create a global recession for at least the first half of 2009.

Economist Richard Felson told BloggingStocks Friday it's difficult if not impossible to put a positive spin on the OECD's latest projection -- a projection he believes will prove to be accurate.

"Other than the bursting of the commodity price bubble and a pull-back in inflation, it's hard to see any positives," Felson says. "The world needs expansion in at least one and ideally two of the major economies to maintain adequate global growth, so you can see the fix we're in, from a demand standpoint. That's all the more reason for governments in both the developed and developing worlds to increase fiscal stimulus."

Nouriel Roubini, the once obscure New York University economics professor who two years ago predicted the current global financial crisis, now says the world's largest economy will need a large fiscal stimulus from the federal government to avoid a serious economic downturn.

Further, failure by Congress to pass a large fiscal stimulus, as well as undertake other measures, will lead to a 18 to 24 month recession, which will push unemployment above 9%, Roubini said on his website, the RGE Monitor.

Sees need for large fiscal stimulus

"Much more needs to be done including further monetary policy easing, a large fiscal stimulus program to boost demand at the time when private aggregate demand (consumption and investment) are sharply falling; and a plan to reduce the mortgage debt burden of millions of distressed households," Roubini said.

Further, Roubini said the U.S. government will have to double its purchase of bank stakes and require these banks to eliminate dividends to save them from bankruptcy. He also now sees bank/financial institution credit losses stemming from the collapse of the subprime mortgage market of about $3 trillion, up from his earlier estimate of $1-2 trillion.

The above statistics paint a sobering prospect/picture of economic contraction, but Roubini does see a ray of light:

The manager of world's largest bond fund is taking a positive stance regarding market confidence following U.S. and European efforts to stabilize the global financial system.

PIMCO chief investment officer Bill Gross said Friday finance minister and central bank action worldwide should soon loosen-up credit and bond markets.

"We're talking weeks here," Gross said in an interview with Bloomberg News.

Gross' Total Return Fund has yielded 4.4% annually over the past five years, besting 99% of its peers in the government / corporate bond category, as of October 16, according to data compiled by Bloomberg News. California-based PIMCO has $840 billion under management.

Gross: more rate cuts needed

Gross has also called on the U.S. Federal Reserve to lower its benchmark interest rate to 1% from the current 1.5%, arguing that asset deflation has taken hold and that the threat of headline inflation is gone, Reuters reported.

The world major economies are using a combination of fiscal and monetary policy actions to end a liquidity crisis that threatens to severely damage economies worldwide by constraining commercial operations.

Gosh. Golly. Gee Whiz.

That was the reaction Monday of traders and economists to the European Union's coordinated decision to invest a staggering $2.4 trillion in interbank loan guarantees and bank recapitalizations, ft.com reported, to end the global financial crisis.

(Of course, 'gosh, golly' etc. were not exactly the reactions of traders and economists -- this is a family-appropriate financial blog -- but you get the point.)

Europe's decision sparked a global rally in stocks. The Dow closed up 936.42 points -- the largest one-day point gain in its history -- to 9,387.61.

Europe takes the lead

At minimum, Europe is saying that its economic stake in the current global financial system is so large that it's willing to err on the side of over-committing public funds, economist Peter Dawson said.

"Europe's response is very large, unexpected, and it could prove to be the pivotal move in this crisis," Dawson said. "Europe appears to be saying, 'well the United States is doing what it can do, given its political constraints' now let's do what our political culture allows. Basically, Europe is saying 'the storm of fear starts to lose its strength here.' "

The measures were both sweeping and unprecedented in size and scope, Dawson said. Germany said it offered about $680 billion in loan guarantees and will invest $108 billion in its banking system, ft.com reported. France said it would provide up to $435 billion in loan guarantees and invest as much as $52 billion. The United Kingdom has committed about $70 billion for investment in key banks, along with a guarantee for banks deposits and interbank lending. The Netherlands, Spain, and other nations announced similar plans.

One of the world's leading investors is expressing cautious optimism - - underscoring cautious - - regarding the fate of the global financial system.

Billionaire investor George Soros said Monday a pledge by European leaders to guarantee new bank financing is "a positive step" may help stabilize global financial markets, Bloomberg News reported.

Soros: We're finally getting the leadership we need

"In the last 72 hours, I think the European governments got religion and realized that this is a serious problem,'' Soros said at a press conference in Washington, Bloomberg News reported. "People are looking for some leadership and finally they are getting it." Soros is chairman of the $20 billion Fund Management LLC.

Along with actions by the major central banks to increase the supply of dollars in the global money supply, Europe's major industrialized nations announced fiscal policies to back bank-to-bank loans and recapitalize banks, The New York Times reported Monday. Britain said it will invest $73 billion in its banks, Germany is investing up to 500 billion euros or about $680 billion, and France will create an agency to offer state guarantees for banks and to channel money to them.

Further, Soros underscored that the United States government must recapitalize solvent banks, ft.com reported Monday. The U.S. said it intends to do that, but has not yet released details of its plan. Soros would like the U.S. government's recapitalization to take the form of preferred shares, which would dilute existing shareholders, but with private capital given the right to subscribe on the same terms, if private investors are able to put up more money, ft.com reported.