The broader S&P 500 bled more, ending the day down just over 3%. The tech-centric Nasdaq was worse off still, losing 3.35%.

And today, the bloodletting spilled over into Asian measures. Hong Kong’s Hang Seng (-2.9%), Japan’s Nikkei 225 (-2.8%), Australia’s S&P/ASX 200 ( -3.1%) and South Korea’s Kospi Composite ( -2.8%) were among the worst hit.

“Asian investors are connecting the dots – with the World Bank’s help – that the U.S. economy is nowhere near turning around,” Tony Sagami, editor of Asia Stock Alert, told the Wall Street Journal’s Asian Edition. “Any Asian companies that depend on Americans for a big chunk of their sales need to prepare for lots of red ink.”

But it’s not just Asian markets.

Russia “officially” entered a bear market after yesterday’s 0.6% selloff pushed the Micex index down 20% from its last peak. Indeed, the MSCI Emerging Markets Index ended the session down 10% from its 2009 high. What do you call that? Half a bear market?

“After the World Bank report yesterday we see more concern about the return of negative growth dynamics,” Commerzbank AG’s Michael Ganske, told Bloomberg. “Investors realize that all the discussions of a sharp, V-shaped recovery are not going to materialize.”

NOW they realize, eh? We wonder how long it will be before they’ll forget that the word depression doesn’t end with a “V”. It ends with a lower case “n” or, as Bill Bonner is fond of saying, “a corrective force equal and opposite to the deception and delusion that preceded it.”

And there’s still plenty more deception and delusion to come, folks. For starters, the FOMC meets tomorrow, no doubt armed with a sack full of optical illusions and prestidigitations for the investing public. History shows, however, that we humans prefer a blissful illusion to a decaying reality…even if the shoots are turning brown before our noses.

or a closer look at what’s going on around town, we decided to ask the Rude readership for some boots-on-ground analysis. As usual, you obliged with emails from Sweden to Singapore and Atlanta to Alabama. In today’s column, we present the second and final installment of our green shoots vs. premature celebration mailbag. Please enjoy…

From Anytown, U.S.A., a reader reports…

Regardless of what the official figures are on inflation, prices are going up. Here are a few examples.

· Grape juice, Walmart store brand, up 17%

· Corn chips, up 27% [price unchanged, but the bag went from 28 oz. to 22 oz.]

· Gasoline, up 84% since January.

· Commodity Futures data provider, up 50% [he apologized, but said the exchange fees are up sharply.]

· Homeowners insurance, down 5%. I guess the cost to replace a house isn’t what it used to be.

I could go on, but you get the point. Meanwhile, I am retired, with a pension that is supposed to include an annual COLA [cost of living adjustment], but because the government declared that there was no inflation last year, I will not receive a COLA come July 1.

My IRA/401(K) accounts are heavily overweighted toward oil, natural gas, gold, etc., in an effort to keep my purchasing power at least even with inflation, and I just hope that it works. Now if we can just sell our house [which we own free and clear] my wife and I are looking to move to Latin America.

A lot of our friends think we are crazy, that the government will never let things “get too bad” here. I think that they are crazy to have that much faith in the government, and I would rather live where people actively distrust their government, but I guess that it is differences of opinion that make a market.

From Texas, a reader reports…

In the Hill Country of Central Texas, life continues at what passes for normal in these parts. The Texas economy overall has been able to withstand the credit crisis quite well. Foreclosures are almost non-existent out here in the sticks since the mortgage loans were never any of the alphabet soup variety and the lending banks keep their own paper. Real estate seems to be selling but at the normally slow pace that is historic for our area. Real estate prices never got overheated here so the market has remained slow and stable. Even the local Chrysler dealership is still in business (must have made a large-enough contribution to the Democrats’ campaign). I own an industrial building and my tenant tells me his business has slowed somewhat but he is still doing a good volume. One note of economic concern is tourism. Friends own a Bed & Breakfast on the lake and they tell me their guest-count has dropped dramatically.

Out on the West Coast, we just bought a second home in San Clemente, CA. It’s a gorgeous ocean-view home that was foreclosed and then we bought it on a short-sale from the bank. I calculated we got a 60% discount overall. From what I see in Southern California, they’re in a world of hurt.

From Oakland, California, a reader reports…

Well, I’ve got some doom and gloom. My IRA is still down over 40% from its high. At the beginning of the year I could not find work for 4 months and finally swallowed my pride and went on unemployment. My house is under water. Bank of America says that I do qualify for a loan adjustment but they won’t do it “right now” because I’m not over 2 months late on my payments.

On the flip side I have started getting work lately and I’m still making money with the short report. Puts and gold seem to be where it is at right now.

From Florida, a reader reports…

I know it is politically au courant to blame all spending on Obama, but that ignores the truths that the Congress is doing a helluva good job in that field as well AND that Eisenhower started building the Interstate highways with money we didn’t have and that every congress and every administration since then has spent more than it has taken in. Our two ruling parties are equally fiscally irresponsible.

As for Kudrin’s “white lies” about US currency, I remember while being trained for intelligence work a lengthy discussion of information, misinformation, disinformation, propaganda and outright lies. And while there are differences in them, it seems these days everything we hear from governments and most media stinks of one or another kind of spin. I read Agora financial info every day to try to get unadulterated information without the spin. Keep up the good work. And keep entertaining us with the fashion reports on the emperor’s new clothes.

From north of the border, a reader reports…

I live in Peterborough, a city of about 75,000 which is 90 miles NE of Toronto.

Things here are slow, but not extremely so, even though we depend on the auto industry and tourism. We have a high retired population and people are very price conscious. Housing sales died during the winter but have come back a little since. Prices are off 10 to 15% on average and houses over 350k usually sit a long time and are then marked down. Some businesses are running ads suggesting people “just think positive”. Since everyone is still looking for the bottom, I’d say we still have a ways to go. I expect this winter to be really ugly.

And finally, an unpaid international correspondent reports from Singapore…

1) Unemployment; graduates are finding it difficult to find jobs, other than the “odd jobs” that don’t fit the qualification; most of which have vacancies because the cheaper foreign workers that were brought in during the boom phase were repatriated back to their countries…Its déjà vu for people who graduated in the 70s; they are repeating the mantra from then – “Graduation = Unemployment”.

2) Retail sales are down pretty big, but those shopping malls continue to pop up all over the place and many of them are continuing their work-in-progress. The government is supportive of these projects… again, uncertainty over the economic climate is putting a gloom over these things.

3) Property prices fell approximately 30%, but have since rebounded about 15% with the stock market rally. The same companies that are building those shopping malls continue with these condominium projects.

5) Consumer credit still seems pretty okay; those stupid banks continue to pull out all the stops to get people signed up for their credit cards.

6) Healthcare costs continue to rise regardless of economic conditions and there is quite a bit of public outrage at the moment; no worries, just let the government handle everything… we’re a nanny state. (That disgusts me btw and I’m pretty close to swearing never to work for the government… having said that, I might choose the porridge over my ideals).

Source: For Better or Worse, Part II

Chirowth this year – and that’s after China’s government has taken steps to slow the country’s economy down. Other Asian countries such as India, Vietnam and the Philippines are following in near lockstep.

“Investors who abandon China now will live to regret their decision,” Money Morning Investment Director Keith Fitz-Gerald said. “China will continue to grow for decades to come. And that’s after nearly 30 years of double-digit growth that country has already logged into the history books.”

China Profit Plays

With many indices beat down significantly by the Asian bubble burst and global credit crisis, now may be a time for investors to get in while prices are significantly reduced from their 52-week highs.

However, economic underpinnings are still uncertain – both in Asian and U.S. markets. And only the strongest companies are best suited to grow during good times and bad.

A still-weak greenback will make brand-name imports [both products and services] even more popular in China. And rapidly growing consumer income will give China’s increasingly image conscious consumers the cash to buy them with.

We’ve been predicting that these two trends would converge for some time. That’s one reason why, all the way back in September, we said that brand-name companies such as MGM Mirage (MGM) were actually high-profit plays on China. And we still feel that way.

So the bottom line is that if controlling risk is key to your overall investment strategy, as you sift through China-oriented investment opportunities, look for companies that generate revenue and profit “because” of China including those that are based in more-highly regulated markets such as the United States and Europe.

Look, too, for companies with a solid dividend yield because the cold hard cash you receive can go a long way towards reducing your downside.

Consider the so-called “Global Titans,” including PepsiCo Inc. (PEP), Diageo PLC (DEO), Yum! Brands Inc. (YUM), McDonald’s Corp. (MCD), The Coca-Cola Co. (KO), The Boeing Co. (BA), and a few others.

Every investor must have a China strategy these days.

And while choosing to sit on the sidelines is certainly a viable decision, longer term it’s probably just not a profitable one.