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NEWS AT A GLANCE

The great recession firewall of China

Japan, Canada, and several major European economies are teetering on the edge of recession, and the best hope for avoiding a global recession lies with booming countries like China. A global recession, which doesn't require a contraction in global GDP, would be much longer and more serious than just a slowdown, so economists are paying close attention. A slowdown is bad enough -- the financial crisis has already trimmed $10 trillion from world equity market capitalization. Stephen Roach of Morgan Stanley sees a 1-in-3 chance of a global recession, which he defines as less than 2.5 percent GDP growth. The risk would be higher, he says, but for the "relative strong growth, albeit reduced growth, out of developing economies like China." (Reuters)

Merrill's British $29 billion tax trick

Merrill Lynch booked $29 billion in losses, mostly from U.S. subprime mortgages and collateralized debt obligations, at its London-based subsidiary, likely freeing it from paying U.K. taxes for decades to come. Based on a corporate tax rate of 28 percent, Merrill stands to save as much as $8 billion. It was able to do this because it shuttled almost all of its global CDO activities through its Merrill Lynch International unit. (Financial Times, free registration) But London isn't alone. New York taxpayers are shouldering much of the burden for banks' massive losses, with several firms seeking refunds from prepaid taxes. "It will be a number of years before Wall Street starts paying taxes again," said Mayor Michael Bloomberg. (Bloomberg)

Kohl's looks up, Nordstrom down

Midprice retailer Kohl's raised its full-year profit forecast after reporting a better-than-expected 12 percent drop in quarterly profit, to $236 million. At the same time, high-end department store Nordstrom cut its fiscal-year forecast after posting a 21 percent drop in profit, to $143 million. Kohl's -- like Gap Inc. -- benefited from tight inventories, while Nordstrom, like Macy's, was hurt by discounts and a department stores slump. But the forecasts were also indicative of a consumer shift to lower-priced retailers. (MarketWatch) The Labor Department said yesterday that consumer prices rose 5.6 percent in July, versus July 2007, while the inflation-adjusted average wage dropped 3.1 percent. (Los Angeles Times)

Homebuilding, Amish-style

There are now about 600 Amish contractors or subcontractors working in at least 12 states, which is a sizable jump from a decade ago. The Amish builders, who specialize in a timber-frame construction method that avoids using nails, frequently build houses faster, of higher craftsmanship, and at lower cost than other contractors. But there are downsides -- the Amish generally aren't allowed to own phones, cars, computers, or insurance. Those are inconveniences, not least because they can make finding Amish builders a challenge. "I have a lead on a Mennonite now," says Jim Zik, who couldn't secure an Amish contractor. "They are allowed to drive and have phones, so it should be easier." (The Wall Street Journal)

BEST COLUMNS OF THE DAY

The Fed's good news isn't good for you

"The good news is that the Fed's probably right when it says that we're not headed for a replay of the stagflation of the 1970s," says Fortune's Colin Barr in CNNMoney.com. The bad news is that the Fed's probably also right that "Americans are going to be feeling poorer" for the foreseeable future. It hopes it's right about that, anyways. To prevent a return of the "dreaded wage-price spiral," the Fed is betting that the labor market is weak enough that "pinched workers" aren't in any shape to demand a raise. Stagnant wages should be good for keeping down inflation, but its a good bet it won't feel good for us "wage slaves."

Greenspan's long goodbye

You'd think that at 82, with a fat bank account, "Alan Greenspan might be spending lazy summer days fly-fishing in Scotland," says Steven Pearlstein in The Washington Post, but he "just can't get the hang of this retirement thing." Instead he's writing op-eds and giving interviews to "buff up his legacy in the face of rather compelling evidence that . . . well, that he screwed up big time." The "heart of the Greenspan Fallacy" is a belief that booms and busts are inevitable, that we should learn to live with them, not try to regulate them away. This is all fine and good for mathematics, but "economics is a social science," and he doesn't seem to grasp that people will sacrifice a little growth for some "security, predictability, and fairness."

GOOD DAY FOR: Drawing the Trump card, after Ed McMahon was bailed out by The Donald, who agreed to buy McMahon's nearly foreclosed-upon Beverly Hills home and let him and his wife continue to live there. "I don't know the man, but I grew up watching him on TV," Trump said. (Los Angeles Times)

BAD DAY FOR: '80s nostalgia, after U.S. drivers spent more on gas than cars in May and June, for the first time since 1982. Gas made up 4.4 percent of U.S. spending in June, versus 3.9 percent for autos and auto parts, the U.S. Bureau of Economic Analysis said. Cars have been getting cheaper, while gas prices are "hugely higher," said Comerica Bank chief economist Dana Johnson. "The two trends have crossed." (Bloomberg)

NOTED: The Federal Aviation Administration proposed fining American Airlines $7.1 million for knowingly flying planes that needed repair work. The civil fine, one of the largest ever sought by the FAA, also covered allegations that American's drug and alcohol testing programs were deficient. American can contest the fine. (Reuters)

This column was written by Peter Weber and edited by Harold Maass of TheWeekDaily.com.