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Malaysia’s central bank, which cut interest rates yesterday for the first time since 2003, may reduce borrowing costs further next quarter as risks to economic growth heighten, economists said.

The overnight policy rate, which was lowered to 3.25 percent from 3.5 percent, will probably fall to 2.75 percent by March, according to Aseambankers Malaysia Bhd., JPMorgan Chase & Co. and HSBC Holdings Plc. CIMB Investment Bank Bhd. expects a similar reduction by the end of 2009.

Central bank Governor Zeti Akhtar Aziz, who had held rates steady as Asian neighbors announced cuts last month, said today the full effects of the financial crisis that has triggered recessions from the U.S. to Japan may only be felt next year. Sustaining growth is the government’s main challenge, Second Finance Minister Nor Mohamed Yakcop said today in Kuala Lumpur.

“Bank Negara Malaysia’s focus has shifted decisively in favor of the growth outlook,” Matthew Hildebrandt, an economist at JPMorgan, wrote in a report dated yesterday. There’s a “risk of further cuts later in the year if the growth outlook deteriorates more than expected” in 2009.

A slump in the price of crude oil and palm oil, the nation’s largest agricultural exports, will put a strain on Southeast Asia’s third-largest economy, Nor said in a prepared speech today.

Currency Gains

Malaysia’s three-year bonds rose, pushing yields to the lowest level since May 2007, on speculation the central bank will keep cutting rates. The ringgit advanced 0.3 percent to 3.6215 against the U.S. dollar.

Malaysia’s central bank said in its monetary-policy statement late yesterday that “the global economic and the international financial conditions are expected to continue to remain volatile and uncertain business card maker.” The bank will “undertake the appropriate policy response to avoid a severe economic downturn,” it said.

Malaysian companies including Malayan Banking Bhd., the nation’s largest bank, Sime Darby Bhd., the world’s biggest palm-oil producer, and planter IOI Corp. have already said profit in their current financial years will fall.

The central bank will probably cut rates by a quarter of a percentage point at each of its January and February policy meetings, Tai Hui, an economist at Standard Chartered Plc, said in a report dated yesterday. Borrowing costs will probably stay on hold for the rest of next year, he said.

Asian Slowdown

Central banks from India to Australia have already lowered rates in recent weeks to spur growth as the U.S., Japan and the euro region slipped into recession. The International Monetary Fund said yesterday Asian economies may ease “substantially’‘ as the global slowdown erodes demand for their exports.

Malaysia’s government expects economic growth to slow to 3.5 percent next year from at least 5 percent in 2008.

That’s even after a 7 billion-ringgit ($1.9 billion) stimulus package that includes providing funds for homes, public transport and industry. The government also said it would let workers pay less into their pensions. Nor said today the measures would translate into 1.6 percentage points of gross- domestic-product growth.

To free up funds for lending, the central bank also cut the so-called Statutory Reserve Requirement, the amount of money commercial banks must set aside, to 3.5 percent from 4 percent. It was the first reduction in a decade.

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Dear Lucy and Emile,

You are both too young to read this letter now. But in a decade or so, I suspect you’ll be hearing about the events of autumn 2008 in your history class. You might wonder what it felt like to live through a global crisis. And when you learn about the years just before the crash - the houses that magically doubled in value, the no-questions-asked mortgages - you’ll surely ask what all of us crazy old folks could have been thinking.

I’d like to take a stab at answering those questions today, while the events are still raw and before we know how this story ends. Your mom and I are learning some big lessons right now, ones we might not recall so well after the good times return.

First let’s talk about the hardest question: Why didn’t people see this coming? Well, we sort of did. Talk of a real estate bubble was common by 2003. But bubbles do funny things to your head - you’ll see that when your generation’s bubble comes along. You may read in your textbooks about the euphoria and optimism of boom times, but what I remember most was the worry.

In 2005, a year when home values in our neighborhood jumped 25%, your mother and I would talk anxiously about not having a giant mortgage. We didn’t want to stretch for a loan before we had saved for a big down payment. That conservatism hurt: Our chances of joining what was called the ownership society seemed to become more remote with each uptick in real estate prices. We were worried that our new family would never be financially secure. Or even truly at home.

So this is how you’ll know when a strong market has turned into a bubble. If you stick to prudent rules you learned before the market took off, you are bound to feel at least a little bit stupid for a while. Learn to regard that sinking feeling in your gut as a sign that you are doing something right.

Another thing we’re discovering is how quickly the rules can change. For years the good jobs were in construction, real estate and, of course, financial services cash in 1 hour. All those industries are shrinking right now. And for Dad, who has spent most of his adult life either working in or writing about finance, this is…uncomfortable.

I wish I had a few more tricks up my sleeve. Unfortunately, it’s hard to fully hedge your career bets - there are a lot of struggling actor-waiters, but I know only one money manager-neurologist (my magazine’s own William Bernstein).

At least educate yourself to be flexible. Try to hone a couple of concrete but transferable skills, such as writing plus some basic science (and not just the "rocks for jocks" courses). Keep learning after 21, and take some career risks - but stretch for experience, not just money. Do this especially early on, when the cost of failure is low.

Finally, remember that it’s not all about you. The next couple of years are going to be bumpy, and one of the odd consolations is that it’s happening to everybody. A financial or career setback is slightly less ego-bursting when you can blame it on a bum economy.

By the same token, though, that means you ought to be humble about your success when the wind is at your back. The practical lesson is to live a bit below your means in the flush years to give yourself some backup.

But more important, back up others. My deepest regret today isn’t how much I saved or what I did at work but how little I’ve pitched in - with money, with time - in our community. It’s obvious to me now, when I’m anxious about what’s ahead for my own family, how important it is for people to pull together. Wasn’t that just as true a year ago, when plenty of folks were already hurting? I’ve learned this year that I owe much more. And I’m writing this down so the two of you can hold me to that.

Love, Dad  

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The U.S. has entered a recession that will persist into next year, and economies around the world will follow suit, according to a survey of business economists.

After growing 1.4 percent this year, the U.S. will contract 0.2 percent in 2009, according to the median estimate in a poll taken by the National Association for Business Economics. A majority of respondents said the U.K., euro area, Japan, Canada and Mexico are either now, or will soon be, in a recession.

“Business economists became decidedly more negative on the economic outlook for the next several quarters as a result of the intensification of credit-market stresses,'' Chris Varvares, president of Macroeconomic Advisers LLC in St. Louis and of NABE, said in a statement.

Pessimism about the outlook for stocks, construction, home prices and employment means household wealth and spending will keep weakening, the report said. Of all the measures undertaken so far to stem the slump, the U.S. Treasury's bank-capital injections and Federal Reserve support for the commercial paper market will prove the most effective, the economists said.

The jobless rate, now at a 14-year high of 6.5 percent, will climb to 7.5 percent by the end of 2009, according to the median forecast. Last month, the group anticipated it would peak at 6.4 percent by the middle of next year.

Auto sales, which the group last month projected would stabilize in 2009, are now forecast to keep sliding. Purchases will decline 6.7 percent in 2009 after dropping 17 percent this year, according to the survey credit score.

Housing Slump

Similarly, the economists said housing starts won't bottom until next year. Builders will break ground on 870,000 homes in 2009, the fewest in 50 years of record-keeping. Property values are likely to fall another 3.5 percent in 2009 after dropping 6 percent this year, the group said.

The outlook for home sales was less dire, with almost all respondents projecting purchases would reach a low by next June.

On a quarterly basis, the business economists projected the U.S. would shrink at a 2.6 percent annual pace from October to December and at a 1.3 percent rate in the first three months of next year. The world's largest economy would resume growing in the second quarter of 2009, expanding at a 0.5 percent pace.

Fed policy makers are likely to hold the benchmark interest rate at 1 percent through the third quarter of next year, even as the outlook for growth dims and inflation is projected to cool, the survey showed.

Economists surveyed by Bloomberg News from Nov. 3 to Nov. 11 were more pessimistic about the U.S. economy than the NABE group. The economy will probably contract 0.3 percent next year, prompting central bankers to lower the key rate to a record-low 0.5 percent by March, the Bloomberg survey showed.

The NABE poll was conducted from Oct. 28 to Nov. 7.

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Chancellor Angela Merkel said the German government may be open to expanding its economic stimulus program, heeding calls from advisers and some in her coalition to spend more as a bulwark against impending recession.

The government's council of economic advisers, in an annual report handed over to the chancellor in Berlin today, calls for additional measures on top of the 50 billion-euro ($63 billion) package agreed on by Cabinet last week. The panel advocates a wider package amounting to as much as 1 percent of gross domestic product, or about 25 billion euros, “as a start.''

“There's no big difference between what we plan and what the advisers recommend to strengthen the economy,'' Merkel told reporters as she received the document. “We will review the proposals to see whether there's extra scope.''

Merkel's coalition may have little choice other than putting on ice plans to balance the federal budget by 2011, according to the panel, which in previous years was a champion of fiscal discipline. It said the economy, Europe's biggest, is unlikely to grow next year — just as the coalition parties prepare to fight national elections in September 2009.

The panel's recommendation to let the deficit expand met support from machine makers and Economy Minister Michael Glos, who renewed his call for tax cuts. Glos said in a statement that the advisers' report supports his call to lower income tax.

Sooner the Better

“The earlier such a reform comes, the better it is for economic growth and jobs,'' said Glos, a member of the Christian Social Union, Bavarian sister party to Merkel's Christian Democrats. Merkel and Finance Minister Peer Steinbrueck, a Social Democrat, have repeatedly rejected tax cuts.

The five-strong “wise man'' group said in its 550-page report that the economy will probably shrink in the first quarter of 2009. “Targeted'' steps forged by the Cabinet including help for the car industry and small companies are inadequate as a result, it said.

“The shock waves pushed out by the financial crisis have hit Germany full on, if later'' than other countries, said the economists short term cash loan. “We need more than short-term measures,'' as have been agreed already, “but should expand the deficit and start a broad government investment program.''

Merkel said Nov. 4 that a core coalition pledge to balance the budget by 2011 will “obviously'' be affected by the government's stimulus package. While still a “goal,'' the plan will probably be put off until the next legislative period, which ends in 2013, she said.

New Cars

The government's stimulus package, agreed on Nov. 5, is a two-year program ranging from tax breaks for buyers of new cars to greater financial help for improving buildings' energy efficiency. The measures will cost 23 billion euros in the four years through 2012, of which 10.9 billion euros will come out of the federal budget, the Finance Ministry said. The program is intended to unlock investment of about 50 billion euros, equivalent to about 2 percent of GDP.

The German public sector, striving to cut debt, has rolled back investment in education, including universities, as well as in road and rail. The three levels of government — federal, the 16 states and municipalities — should expand net credit requirements in 2009 that were close to zero last year, the advisers said.

Germany's VDMA machine makers federation backed the panel's proposals, including a recommendation to reinstall tax relief for loans raised by companies at foreign units that was crimped by the government this year.

Exports of machines and cars that fueled the fastest economic growth this decade in 2006 and 2007 will barely grow next year, the panel said. In 2009, foreign sales of goods and services may expand by just 0.4 percent following 4.2 percent this year, it said.

As inflation ebbs in 2009, the European Central Bank may see further scope to lower its benchmark interest rate, the group said.

The five advisers, all university professors, are chairman Bert Ruerup, Beatrice Weder di Mauro, Wolfgang Wiegard, Peter Bofinger and Wolfgang Franz.

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U.K. Prime Minister Gordon Brown will call on governments around the world to coordinate tax and spending policies to shore up a slowing world economy.

“We must use the power of multilateralism to establish a global consensus on a new, decisive and systemic approach to strengthening the global economy,'' Brown will say today, according to a text released by his office. After committing more than $3 trillion to bail out the banking system, governments must now turn to “international co-ordination of fiscal and monetary policy,'' he will say.

Brown's comments, to be made in a speech to London's banking community, set out the U.K.'s position going into a meeting of world leaders in Washington Nov. 15. A coordinated program to trim taxes and boost spending would give Brown political cover to allow Britain's budget deficit to swell when the Treasury announces its plans in coming weeks.

There are already signs that other countries are ready to heed Brown's call. China, the world's fourth-largest economy, announced a 4 trillion yuan ($586 billion) stimulus plan yesterday, saying the funds will be used by the end of 2010 as part of a “proactive fiscal policy.''

A similar message came yesterday from Sao Paulo, where finance ministers from the Group of 20 nations met over the weekend to lay the groundwork for the heads-of-state summit in Washington. Ministers agreed to act “urgently'' to bolster growth as the world's leading industrialized economies battle recession, according to the G-20 statement.

Warding Off Recession

The push comes as Brown and Chancellor of the Exchequer Alistair Darling prepare to update the government's tax and spending plans this month or next. Brown has said he's ready to increase borrowing to ward off recession after the U.K. economy contracted in the third quarter pay advance in 24 hour.

Spending is already increasing as the inflow of tax receipts slows. Britain had its biggest budget deficit since 1946 in the six months through September and economists say the shortfall may reach 7 percent of gross domestic product over the next two years, more than double the 3 percent limit set down by the European Union.

Since March, Brown's government delivered tax cuts and spending increases worth 4.8 billion pounds ($7.6 billion) to give relief to low-income earners, delay an increase in fuel duties and to help homeowners with mortgages and stamp-duty taxes on property purchases.

`Emergency Tax Cuts'

“A package of emergency tax cuts'' would be the most effective way of “increasing demand in the economy,'' Frank Field, a lawmaker with the ruling Labour Party, wrote in the Sunday Telegraph newspaper yesterday. “Steering these cuts towards the poorest'' would ensure that most of the cash would be spent immediately, he said.

Field is a former welfare minister who earlier this year forced Brown to water-down plans to scrap the U.K.'s lowest band of income tax. In his newspaper article, he said that further tax cuts would also offer Brown a boost in popularity, perhaps enough to call and win an election in the first half of 2009.

An ICM Ltd. poll for the Sunday Telegraph showed Labour still trails the Conservatives, with 30 percent support compared with 43 percent for the Conservatives. At the same time, 40 percent of the 1,005 voters interviewed said that Brown is best placed to handle an economic crisis, compared with 38 percent for Conservative leader David Cameron. ICM conducted the poll Nov. 5 and 6. No margin of error was given.

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China's economy may expand at the slowest pace in nearly two decades next year as demand for exports slumps in the U.S. and Europe and government spending fails to bridge the gap.

Gross domestic product may advance 7.5 percent or less, the weakest since 1990, according to estimates by Credit Suisse AG, UBS AG and Deutsche Bank AG. Royal Bank of Scotland Plc predicts the economy will grow 8 percent next year, while 5 percent “can't be ruled out.''

China hasn't yet ramped up spending on railways, roads, and low-cost housing by enough to stop a slowing economy from cooling more, economists said. At stake is the contribution to global growth — 27 percent last year — that Premier Wen Jiabao says is the nation's way of helping the world through the financial crisis.

“The government's fiscal stimulus plan may not come in time to avert a deeper economic slowdown,'' said Ha Jiming, chief economist at China International Capital Corp in Beijing. Growth may be 7.3 percent next year, he said.

Indicators from auto sales to power consumption and export orders are pointing down and a slump in the property market is also threatening growth.

“I'm getting pretty worried,'' said Paul Cavey, an economist at Macquarie Securities Ltd. in Hong Kong. “It really looks like things are slowing down quite sharply and there's nothing in the works that can turn it around in the next six months or so.''

Influence Beyond Shores

China has averaged 9.9 percent growth for the past 30 years and its expansion underpins demand for the exports of its Asian neighbors and commodities from iron ore to soybeans.

China contributed the most to global growth in 2007, the International Monetary Fund said in a report in April this year. It used purchasing power parity calculations, which account for differences in the exchange rates of national currencies.

Exports may cool to 18.1 percent in October from a year earlier, compared with 21.5 percent in September, according to a survey of 17 economists by Bloomberg News. The report is due next week.

“Exports could suddenly decelerate sharply as the global credit crunch restrains normal business and trade financing,'' said Wang Tao, an economist at UBS cash advance no faxing. “Anemic export growth could seriously affect manufacturing investment.''

Unsold Cars

Manufacturing contracted by the most since at least 2004 last month and export orders dropped to their lowest, according to CLSA Asia Pacific Markets. Unsold new vehicles were at a four- year high in September.

“The golden years have shuddered to a dramatic halt,'' said Stephen Green, head of China research at Standard Chartered Bank Plc in Shanghai. Green is reviewing his 7.9 percent forecast for next year because a “big fiscal policy package'' hasn't arrived.

The government ordered Finance Minister Xie Xuren to return home early this week from an economic conference in Peru to deal with economic problems, an organizer of the event said.

The government is poised to this year announce a switch to a “proactive'' fiscal policy in 2009 to sustain growth, China Business News reported, citing unidentified government officials. The change may come after an economic planning meeting to be held this month or next.

Though the government has pledged to boost infrastructure spending and Chinese media reported this week that road building may get a boost of 2.9 trillion yuan ($425 billion) over three to five years, nothing concrete has been announced.

China has taken some steps to spur its expansion. It cut interest rates three times since September, eliminated quotas that restrict bank lending and cut export taxes. It's also stalled the yuan's gains against the dollar to keep exports competitive.

That's not enough, said Ma Jun, chief China economist at Deutsche Bank in Hong Kong.

“Without fiscal stimulus, China's GDP growth will likely decelerate to 6 percent next year,'' said Ma. “The downside risks to economic growth are significantly greater now than just a few months ago.''

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RideNow Powersports has agreed to a three-year contract through the 2011 season to sponsor the swimming pool area the Arizona Diamondbacks’ home, Chase Field.

RideNow Powersports specializes in selling new and used motorcycles, ATVs and watercraft. The company has 28 dealerships in Arizona, Florida, Nevada, New Mexico, North Carolina and Texas bad credit payday loans. Nine are based in Arizona.

Financial terms were not released.

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Federal regulators are giving Sprint Nextel Corp. the green light to spin off and merge its new WiMax wireless broadband network with that of Clearwire Corp.

In a 5-0 vote Tuesday, the Federal Communications Commission approved a plan to combine Sprint’s (S, Fortune 500) Xohm network with Clearwire’s (CLWR) WiMax-like network. Google Inc. (GOOG, Fortune 500), Intel Corp. (INTC, Fortune 500) and a group of cable companies are investing billions into the $14.6 billion venture, which will carry Clearwire’s name.

The Justice Department has already indicated that it will allow the deal to proceed, but will continue to monitor it.

Federal regulators also signed off on Verizon Wireless’ planned $28 billion purchase of Alltel Corp. The deal will create the nation’s largest wireless carrier pay day loan lenders.

With partial dissents by the two Democrats on the five-member panel, the FCC decided to allow Verizon Wireless to move ahead with the deal for Alltel. Verizon is paying $5.9 billion and assuming $22.2 billion of Alltel’s debt.

The FCC is attaching several conditions to the deal, including a requirement that Verizon Wireless honor Alltel’s existing roaming agreements for four years.

The Justice Department approved the deal last week after Verizon agreed to sell assets in 22 states.

Verizon Wireless is a joint venture between Verizon (VZ, Fortune 500) and Vodafone Group PLC (VOD). 

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European producer-price growth slowed more than economists forecast in September as oil prices plunged from their all-time high earlier this year.

Producer prices in the 15 euro nations rose 7.9 percent from a year earlier after increasing 8.5 percent in August, the European Union statistics office in Luxembourg said today. Economists forecast that producer-price inflation would slow to 8 percent, based on the median of 23 estimates in a Bloomberg News survey.

Easing inflation pressure is giving the European Central Bank space to cut interest rates as policy makers across the globe seek to limit the economic damage from the credit crisis. The Frankfurt-based ECB this week will probably cut its key rate by half a percentage point for the second time in a month and follow that with another reduction in December, a survey of economists shows.

“The upshot of all this is that with factory-gate prices continuing to ease and only pointing to modest further rises in core consumer-price inflation, the ECB will not hesitate to cut interest rates sharply over the next year or so,'' said Ben May, an economist at Capital Economics in London. The rate “may eventually reach 1.5 percent by the end of next year,'' compared with 3.75 percent currently.

Crude oil reached a record $147.27 a barrel in July, which pushed producer-price inflation to 9.2 percent in August, the highest since the data series began in 1990. Oil has since dropped almost 60 percent to around $65.

Energy Prices

Energy-price inflation eased to 20 loan till payday.3 percent in September from 22.6 percent in August. From the previous month, energy prices dropped 0.9 percent, while overall prices slipped 0.2 percent. The core rate of inflation, which excludes energy, slipped to 4.8 percent from 4.9 percent.

European government bonds rose today. The yield on the two- year note, which is most sensitive to the outlook for rates, dropped 5 basis points to 2.48 percent by 12:34 p.m. in London. The yield on the 10-year German bund, Europe's benchmark government security, slipped 2 basis points to 3.81 percent.

The euro rose 0.9 percent to $1.2754 against the dollar. It earlier fell to $1.2527, the lowest since Oct. 28.

The European Commission said in a report yesterday that euro-area economic growth will slump to 0.1 percent in 2009, the worst performance since 1993. It also estimated that gross domestic product will shrink for three consecutive quarters this year and cut its forecast for full-year 2008 growth to 1.2 percent.

Data published last week showed that consumer-price inflation in the euro area eased to 3.2 percent in October from 3.6 percent in September. The ECB, which aims to keep inflation just below 2 percent, holds its next governing council meeting on Nov. 6. A half-point cut at the meeting would reduce its benchmark rate to 3.25 percent.

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