meanwhile President Obama has now given GM 60 days to prove their financial viability or else the automaker will go bankrupt, Chrysler was also given a 30 days deadline to finish a partnership with Fiat SpA since he believes the third largest U.S. automaker can’t make it on its own!

The repercussions of the news continued to dominate financial markets, as seemingly the worst financial crisis since the Great Depression has been taking its toll on U.S. automakers inline with other industries around the economy, however the auto industry is undergoing its worst conditions since the 1980s, as credit conditions tightened further and unemployment rose.

The U.S. economy contracted during the last three months of 2008 by 6.3 percent and the economy is still expected to contract further over the course of the first three months of this year. The economy continues to undergo its worst recession since the Great Depression ignited by the credit crunch.

Meanwhile other major economies around the world are also feeling the heat from the credit crunch, as the unemployment rate surged in Japan to a 3-year high at 4.4 percent in February up from the prior estimate of 4.1 percent.

On the other hand European economies are also feeling the pinch from the credit crunch as the euro zone economy fell deep into recession amid declining economic activity in the area’s largest economies, led by Europe’s largest economy and the world’s fourth largest economy, Germany…

The German economy continued to contract over the last few quarters and expectations signal that the economy will continue contracting over the upcoming period as well, as falling domestic and global demand continue to weigh down heavily on the economy, especially the exports sector as falling global demand is dampening Germany’s exports.

The unemployment rate in Germany continues to rise, the ILO unemployment rate rose in February to 7.4 percent inline with median estimates and up from the prior estimate of 7.3 percent, the report comes ahead of the official unemployment rate, which is expected to show that the unemployment rate surged in March to 8.0 percent from the prior rise of 7.9 percent reported back in February. The unemployment change is expected to have increased by 52,000 from the prior estimate of 40,000.

The labor market in Germany and the euro zone started to show recently the effects of the credit crunch on the 16-nation economy, as slowing global demand in addition to falling domestic consumption are indeed leading to increased levels of spare capacity in addition to the fact that companies are indeed trying to cut down on costs and the obvious and most easiest way is laying off workers.

The unemployment rate should continue to rise over the upcoming few months as the recession is still expected to deepen further, the European Central Bank will announce later this week its interest rate decision, in which markets expect the ECB to cut its benchmark interest rates in addition the ECB might announce they will start implementing unorthodox measures, following the footsteps of other central banks around the world.

Meanwhile the euro zone will release its March flash estimate for the consumer price index, CPI is expected to have risen by 0.7 percent down from the prior rise of 1.2 percent, this indeed would fuel expectations of another hefty rate cut, as the deepening recession is forcing prices to ease greatly and accordingly that could mean that downside risks to inflation are indeed increasing, which would leave the ECB with no other option but to cut interest rates.

Moving to Canada, as the Canadian economy is suffering deeply from the worst financial crisis since the Great Depression, and considering the ties that connects that Canadian economy to its neighbor and ally the United States, the Canadian economy has been affected deeply and indeed followed the U.S. economy into recession.

Gross Domestic Product is expected to have contracted during the first month of this year by 0.7 percent following the prior reported contraction of 1.0 percent, the Canadian economy is also expected to remain weak, especially since the United States is Canada’s largest trading partner, which means that chances for a solid recovery in Canada before the U.S. economy recovers are rather slim…

As for the U.S. economy, sectors are still falling apart as the recession continues to hit the economy real hard, yet the Federal Reserve and the government are trying really hard to keep the economy standing on its feet, though so far they failed as the credit crunch proved far worse than anyone had ever expected.

The housing market continues to weigh down on economic growth in the world’s largest economy, the S&P/CaseShiller home price index will be released today for the month of January, the index is expected to show that prices continued to drop, as the Composite 20 index, which is a gauge for home prices in 20 metropolitan areas in the U.S. is expected to show that compared with a year earlier, home prices dropped by 18.60 percent following the prior fall of 18.55 percent.

Also the U.S. will release their Chicago PMI for the month of March, the index is still expected to show activity remains rather weak and subdued, as the index is expected to slightly rise to 34.4 from the prior estimate of 34.2.

While consumer confidence is expected to rise in March to 28.0 from 25.0 reported back in February, the rise in confidence doesn’t reflect economic recovery but rather better sentiment affected by rising stock markets.

Consumers are still hammered by tightened credit conditions, rising unemployment and falling home values, and accordingly they continue to retrench their spending and that continues to lead the economy deeper and deeper in recession…