Sound the alarms! Consumer prices are in a freefall, stoking fears the economy is on the precipice of deflation. The Labor Department on Wednesday reported the prices of consumer goods fell by 1 percent in October, the biggest one-month drop in 61 years. As the New York Times points out, no, falling prices are not a good thing for an already shrinking global economy. "While most consumers might welcome the idea that things are getting cheaper, deflation is an economists’ nightmare," the NYT writes. For starters, declining prices would greatly minimize the impact of the Federal Reserve's previous rate cuts. Unresponsive monetary policy is what sunk Japan in the 1990s, the so-called "lost decade," pundits are quick to point out.  What is the Fed to do? Cut again. According to the Financial Times, "the US central bank may cut interest rates again by as much as 50 basis points from the ­current level of 1 percent in December." Analysts at JPMorganChase predict the Fed will go even lower—down to zero by early next year. It's not just the United States that is seeing a rapid decline in prices. Prices are also falling across Europe and in Japan, the NYT reports.

Deflation fears sank U.S. markets on Wednesday to their lowest levels since the current financial crisis began. According to the Wall Street Journal, investors ditched equities and bonds. "The stock market's fall to a 5½-year low was led by the credit markets, where prices of corporate and real-estate bonds fell to their lowest levels in more than 20 years," the newspaper writes.

Things look equally bleak overseas this morning. Asian stock markets fell on average by 6 percent Thursday to plumb five-year lows, Reuters reports, adding that oil fell below $53 a barrel. European markets opened down as well on Thursday, the BBC reports.  Part of the fears in Asia came from a surprise report out of Tokyo this morning. "Japan unexpectedly posted a 63.9 billion yen [$671 million] trade deficit in October, reinforcing concerns that falling exports will push the country deeper into recession," the FT writes. Economists had been banking on a trade surplus. The outlook is looking only marginally better for struggling Iceland. Overnight it announced its Nordic neighbors Finland, Sweden, Denmark, and Norway will pitch in and lend Iceland $2.5 billion.

Viewing the struggles of the world's largest economies, a new theory is emerging from global business leaders: It will be the emerging economies that get us out of this mess. These emergent powers, including China, India, and Brazil, make up 30 percent of the world's GDP. Josep Piqué, chairman of European airline Vueling, told the NYT that "the emerging countries are the solution to the overall global slump."

"Like seeing a guy show up at the soup kitchen in high-hat and tuxedo." That's how one lawmaker described the chief executives of the Big Three automakers' "tone deaf" decision to fly by corporate jets to D.C. in search of a bailout, the Washington Post writes. By the time a deeply skeptical House financial services committee had finished grilling GM's Richard Wagoner, Ford's Alan Mulally, and Chrysler's Robert Nardelli, it was clear the Big Three could go home empty-handed, writes the Los Angeles Times. Coupled with the Senate's decision to cancel a vote on providing auto loans, it is clear that "[m]any members of Congress worry that Detroit has not changed its big-spending, gas-guzzling habits, and that company executives will be back in a few months asking for billions of dollars more to stay afloat," writes the LAT. If Detroit falls, the South could rise writes the WSJ, noting, "Foreign makers have been lured to South Carolina, Alabama and other Southern states over the past decade by generous tax benefits and laws that make it easier to build a largely nonunion work force." That labor "flexibility" has allowed the likes of BMW and Toyota to quickly downsize when necessary in a way the Big Three could only dream of doing.

While retailers on both sides of the Atlantic grapple with the prospect of dire Christmas sales (even the vaunted online retail sector is cut-throat this year), at least one set of consumer companies already is looking to the New Year. The Seattle Post-Intelligencer reports that a "group of companies including Starbucks, Nike and Sun Microsystems has banded together to urge Congress to regulate greenhouse gas emissions and promote investment in renewable energy." The coalition, Business for Innovative Climate and Energy Policy, advocates "stimulating renewable energy, promoting energy efficiency and green jobs, requiring 100 percent auction of carbon allowances, and limiting new coal-fired power plants to those that capture and store carbon emissions," MarketWatch reports.

And finally, rewind to a previous financial crisis: the technology and dot-com collapse of 2000. That's when fund manager Alberto W. Vilar allegedly starting swindling a total of $20 million from his clients—including $5 million from Lily Cates, the mother of actress Phoebe Cates—to keep his operation at Amerindo Investment Advisors afloat. Vilar and his partner Gary A. Tanaka were convicted on a series of fraud charges yesterday in federal court in Manhattan, the NYT writes. For Vilar, the verdict marks a staggering fall. "The investor and music lover accustomed to opulent living, front-row opera seats and the gratitude of arts impresarios, now faces a more humble prospect: prison," the newspaper writes.