Well, if you needed an official stamp of disapproval on the U.S. economy, it came Monday: the National Bureau of Economic Research, a private group charged by the government with determining America's economic cycles, said the country has been in a recession since December 2007.

The NBER uses a mix of economic statistics to decide when downturns begin and end, which means its rulings come after the fact. Judging by recent events in the financial markets, the recession call is a good one, but the widely accepted definition of two consecutive quarters of economic contraction will not come before the end of the year, unless earlier numbers are sharply revised.

Third-quarter gross domestic fell 0.3%, following a 2.8% increase in the second quarter.

New data on Monday did not point to happier days being here again. The Institute for Supply Management said its index of national factory activity fell to 36.2 in November from 38.9 in October. The drop brings the index to its weakest point since 1982, when the United States was also in a recession. Adding insult to injury, the reading was still below Wall Street's already dour 37.0 forecast.

The numbers, along with a sell-off from last week's buying-spree, led stocks to tumble on Monday, while the yield on the benchmark 10-year U.S. Treasury note fell to 2.83% from 2.96%.

The ISM also reported new orders also fell to the lowest since 1980, down to 27.9 in November from 32.2 in October. A reading below 50 indicates contraction in the sector.

In another sign that inflationary pressures are ebbing fast, the prices paid subcomponent fell to its lowest level since 1949, dropping to 25.5 in November from 37.0 in October. The prices paid index peaked this year at 91.5 in June.

Asian stocks plunged deeper into the red Tuesday, as confirmation of a U.S. recession and further falls in commodity prices dealt blows to exporters and oil producers. Financials also slid on some re-emerging signs of heightened borrowing costs. The surging yen continued to erode Japanese companies' overseas earnings.

Japan's Nikkei 225 sank 5.0% to 7,978.75 points in midafternoon trading, following the lead of the Dow Jones industrial average, which shed 679.95 points, or 7.7%, to 8,149.09 Monday. The National Bureau of Economic Research declared that a U.S. recession started in December 2007. Japanese financials suffered steep losses, as Mizuho Financial Group (nyse: MFG - news - people ) tumbled 7.6%, Sumitomo Mitsui (other-otc: SMFJY - news - people ) lost 6.6% and Mitsubishi UFJ (nyse: MTU - news - people ) slid 6.7%. Nomura Holdings (nyse: NMR - news - people ), which said it aims to reel in 500.0 billion yen ($5.4 billion) in pretax profit and 70.0 billion yen ($749.3 million) in investment banking profit in 2010, fell 7.2%.

Hitachi (nyse: HIT - news - people ) lost 3.5%, after the company and Intel Corporation (nasdaq: INTC - news - people ) jointly announced plans to release solid-state drives, high-end memory storage drives that have no moving parts, by early 2010.

Hurting exporters, the yen strengthened further against the dollar, briefly reaching below 93 yen on the dollar, a five-week low in early trade. Steelmaker JFE Holdings (other-otc: JFEEF - news - people ) plunged 8.6%. Honda Motor (nyse: HMC - news - people ) fell 6.8%.

Hong Kong's Hang Seng index shed 4.8%, to 13,427.95, on steep slides in financials and refiners. The three-month Hibor, or interbank lending rate, climbed to 2.14% from 2.04%. HSBC (nyse: HBC - news - people )tumbled 5.8%, amid reports that the bank plans to raise mortgage rates. Bank of East Asia (other-otc: BKEAY - news - people ) skidded 6.0%. CITIC Pacific (other-otc: CTPCY - news - people ) requested a suspension of trading without giving a reason, after soaring over 15% Monday. In November, the firm had to be bailed out by its state-owned parent company after huge losses from unauthorized forex trading (See "CITIC Pacific's $1.5 Billion Bailout: The Tarnish Remains").

PetroChina (nyse: PTR - news - people ) lost 7.0%, China Petroleum & Chemical Corp., or Sinopec (nyse: SNP - news - people ), shed 6.2% and China National Petroleum Corp., or CNPC, slid 6.0%. In a turnaround from last week, Air China (other-otc: AIRYY - news - people ) dropped 6.0%, as parent companies of its peers China Eastern Airlines (nyse: CEA - news - people ) and China Southern Airlines (nyse: ZNH - news - people ) have received or look likely to receive government aid due to steep fuel hedging losses.

China Unicom (nyse: CHU - news - people ), which last week completed its merger with China Netcom (nyse: CN - news - people ) as part of Beijing's telecom restructuring, sank 5.6%.

Two years of disastrous quality-control breakdowns, from foul fish and lead-tainted toys to poisoned drugs and dairy products, are taking their toll on China's allure as a manufacturing platform. A new study by supply-chain consulting firm AMR Research found that quality concerns are among the chief reasons U.S. manufacturers are scaling back plans to source more goods from China.

Instead, U.S. companies are looking harder at Mexico and other locales closer to home when exploring where to put new capacity. The findings are based on a survey of 130 U.S. manufacturers, ranging from producers of drugs (BusinessWeek, 9/4/08) and computers to auto parts. The survey, completed in mid-October, found a sharp swing in attitudes toward China since May, when AMR conducted a similar study.

The reasons for the shift suggest serious problems for China's export machine that go far beyond the concerns over rising costs for wages, shipping, and materials that got a lot of attention earlier this year.

AMR asked U.S. manufacturers to rate different regions around the world (China and the U.S. were each counted as region unto themselves) on 15 different risks tied to sourcing products for sale in America. Just a few months ago the biggest concerns over China were rising factory wages and the hike in trans-Pacific shipping costs owing to soaring fuel prices. Since then, the 60% plunge in oil prices and a sharp falloff in U.S. imports from China have caused spot freight prices on ocean shipping to crash.

China Is Tops in Manufacturing Risk

Now, the biggest concerns over China are quality and theft of intellectual property (BusinessWeek.com, 4/27/06). Half of respondents to the survey cited China as the biggest source of "risk" for product quality failure. Fifty-seven percent rated China as the biggest risk of intellectual-property infringement. Both categories represented sharp increases from May. No other region was named as the biggest source of risk in those two areas by more than 7% of respondents.

Workers examine panel at a factory in China, a leader in solar panel manufacturing Wang Xiaochuan/Xinhua/Sipa

Barack Obama's plan to pull the country out of recession has a strong green hue. Conventional wisdom says Washington won't have the stomach or the dollars to tackle long-term issues like climate change or dependence on foreign oil when the economy is in the tank and oil prices have plunged. Wrong conclusion, Obama says. These problems, "left unaddressed, will continue to weaken the economy and threaten national security," he said on Nov. 18 in a video message to a climate summit meeting in California.

His fix? Obama plans to set ambitious targets for reducing emissions that cause global warming—and to invest $15 billion or more per year in energy efficiency, renewables like wind and solar, biofuels, nuclear power, and "clean" coal. Beyond the environmental benefits, says the President-elect, the investment "will also help us transform our industries and steer our economy out of this economic crisis by generating 5 million new green jobs that pay well and can't be outsourced."

Whether or not a "green" stimulus will create millions of American jobs is hotly debated by economists. On the one hand, the seeds of the transformation have already been planted thanks to market forces, such as overall higher energy prices, and government policies like tax credits for renewable energy. But there are also major questions. Many executives and experts say the most effective policy to push America toward a clean, efficient energy future is putting a price on emissions of greenhouse gases like carbon dioxide, thus raising the price of energy. That's a tough sell now to Americans struggling to pay their bills. There's also a danger that the government could steer investments to the wrong technologies. Remember synfuels, President Jimmy Carter's experiment to reduce dependence on foreign oil? Most important, a green stimulus plan from Uncle Sam may end up sending billions of dollars to foreign companies instead of to Main Street, since the U.S. lags in such crucial industries as solar panels and wind turbines. Will green technologies become today's VCRs and flat-panel TVs, invented in the U.S. and commercialized elsewhere?

But the fear of enriching overseas companies simply makes a green stimulus more necessary and urgent, proponents argue. Without a plan like Obama's, which would expand U.S. markets for new technologies, American companies may fall even further behind. Michael R. Splinter, CEO of Applied Materials (AMAT) in Santa Clara, Calif., is a believer in the need for government support. Splinter has seen his business of supplying equipment for factories to make solar panels soar beyond his wildest projections. But 97% of the company's equipment goes to foreign manufacturers, who then sell panels in the U.S. It seems like the U.S. has "given up on manufacturing," Splinter laments. "Right now we are on a path to being a second-tier player in clean energy technology."

A plan like Obama's could turbocharge American industries, Splinter and other executives say. Why have European companies become world leaders in wind and solar power? Because a number of governments guarantee that anyone who supplies renewable power to the electric grid will get a premium price for that power. That cost is then passed along to customers.

POLITICAL LAND MINES

Similar incentives could work magic in the U.S., says Lester Brown, president of the Earth Policy Institute. America already has a vibrant green-energy sector, so the transformation could be rapid. There are upward of 3 million Americans employed in green jobs, ranging from renewable-power startups to businesses with products that reduce waste and pollution or boost energy efficiency.

And even when goods come from foreign companies, some of the jobs will be in the U.S. One growing trend is for European and Asian manufacturers to build factories in America so they can be closer to what promises to be the world's largest market.

The pace at which Americans are getting cancer has started to decline, marking what could be a long-awaited turning point in the battle against the disease, according to an annual report that tracks progress in the war on cancer.

Household spending and investment in big-ticket items plummeted in October in the United States, as major world economies announced new plans to try to boost demand to fight a deepening economic downturn.

Overview of U.S. Federal Laws

Although some hackers might have the benefit of bouncing around the globe from system to system, your work will likely occur within the confines of the host nation. The United States and some other countries have instigated strict laws to deal with hackers and hacking. During the past five years, the U.S. federal government has taken an active role in dealing with computer, Internet, privacy, corporate threats, vulnerabilities, and exploits. These are laws you should be aware of and not become entangled in. Hacking is covered under law Title 18: Crimes and Criminal Procedure: Part 1: Crimes: Chapter 47: Fraud and False Statements: Section 1029 and 1030. Each are described here:

• Section 1029— Fraud and related activity with access devices. This law gives the U.S. federal government the power to prosecute hackers that knowingly and with intent to defraud, produce, use, or traffic in one or more counterfeit access devices. Access devices can be an application or hardware that is created specifically to generate any type of access credentials, including passwords, credit card numbers, long distance telephone service access codes, PINs, and so on for the purpose of unauthorized access.

  The Evolution of Hacking Laws In 1985, hacking was still in its infancy in England. Because of the lack of hacking laws, some British hackers felt there was no way they could be prosecuted. Triludan the Warrior was one of these individuals. Besides breaking into the British Telecom system, he also broke an admin password for Prestel. Prestel was a dialup service that provided online services, shopping, email, sports, and weather. One user of Prestel was His Royal Highness, Prince Phillip. Triludan broke into the Prince's mailbox along with various other activities, such as leaving the Prestel system admin messages and taunts. Triludan the Warrior was caught on April 10, 1985, and was charged with five counts of forgery, as no hacking laws existed. After several years and a 3.5 million dollar legal battle, Triludan was eventually acquitted. Others were not so lucky because in 1990, Parliament passed The Computer Misuse Act, which made hacking attempts punishable by up to five years in jail. Today, the UK, along with most of the Western world, has extensive laws against hacking.

  
  

• Section 1030— Fraud and related activity in connection with computers. The law covers just about any computer or device connected to a network or Internet. It mandates penalties for anyone who accesses a computer in an unauthorized manner or exceeds one's access rights. This a powerful law because companies can use it to prosecute employees when they use the rights the companies have given them to carry out fraudulent activities.

The federal punishment described in Sections 1029 and 1030 for hacking into computers ranges from a fine or imprisonment for no more than one year. It might also include a fine and imprisonment for no more than twenty years. This wide range of punishment depends on the seriousness of the criminal activity and what damage the hacker has done. Other federal laws that address hacking include

• Electronic Communication Privacy Act— Mandates provisions for access, use, disclosure, interception, and privacy protections of electronic communications. The law encompasses USC Sections 2510 and 2701. According to the U.S. Code, electronic communications "means any transfer of signs, signals, writing, images, sounds, data, or intelligence of any nature transmitted in whole or in part by a wire, radio, electromagnetic, photo electronic, or photo optical system that affects interstate or foreign commerce." This law makes it illegal for individuals to capture communication in transit or in storage. Although these laws were originally developed to secure voice communications, it now covers email and electronic communication.

• Computer Fraud and Abuse Act of 1984— The Computer Fraud and Abuse Act (CFAA) of 1984 protects certain types of information that the government maintains as sensitive. The Act defines the term "classified computer," and imposes punishment for unauthorized or misused access into one of these protected computers or systems. The Act also mandates fines and jail time for those who commit specific computer-related actions, such as trafficking in passwords or extortion by threatening a computer. In 1992, Congress amended the CFAA to include malicious code, which was not included in the original Act.

• The Cyber Security Enhancement Act of 2002— This Act mandates that hackers who carry out certain computer crimes might now get life sentences in jail if the crime could result in another's bodily harm or possible death. This means that if hackers disrupt a 911 system, they could spend the rest of their days in jail.

• The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001— Originally passed because of the World Trade Center attack on September 11, 2001. Strengthens computer crime laws and has been the subject of some controversy. This Act gives the U.S. government extreme latitude in pursuing criminals. The Act permits the U.S. government to monitor hackers without a warrant and perform sneak and peek searches.

• The Federal Information Security Management Act (FISMA)— Signed into law in 2002 as part of the E-Government Act of 2002, replacing the Government Information Security Reform Act (GISRA). FISMA was enacted to address the information security requirements for non-national security government agencies. FISMA provides a statutory framework for securing government owned and operated IT infrastructures and assets.

• Federal Sentencing Guidelines of 1991— Provide guidelines to judges so that sentences would be handed down in a more uniform manner.

• Economic Espionage Act of 1996— Defines strict penalties for those accused of espionage.

• U.S. Child Pornography Prevention Act of 1996— Enacted to combat and reduce the use of computer technology to produce and distribute pornography.

• U.S. Health Insurance Portability and Accountability Act (HIPPA)— Established privacy and security regulations for the health care industry.

Uncle Sam Pumps Up Citi

U.S. guarantees bank against losses on $300 billion of its riskiest assets and injects another $20 billion in capital.