WASHINGTON - November 20, 2011 - Financial contagion from Europe is pushing global economies towards the brink, and the risks of slipping into worldwide Depression are rising significantly.

China's exports have plunged to half their year-ago levels. Factory orders in Germany, Europe's economic powerhouse, are slumping as China weakens. Australia and Indonesia have cut interest rates to ward off damage from Europe, while Japan, Britain and Brazil have slashed their growth forecasts.

From Beijing to Washington and Sao Paolo, top financial officials are worried their economies will be sucked into the maelstrom by Europe's inability to unify around a debt strategy.

High yields on Italy's and Spain's sovereign debt, hovering around 7%, are putting severe funding strains on banks, infecting the global financial system, which in turn undermines confidences and upends growth.

"It's a scary situation," said Mike Feroli, chief U.S. economist for JPMorgan Chase. "Each passing week without a resolution we are doing more damage, and it's hard to see how this will stop."

On top of Europe's woes, add an intractable U.S. Congress fighting over how to cut the U.S. budget deficit, and the risks are mounting of political mishaps that upset a gradual healing of the global economy.

"It is stunningly easy to slip into (Depr)ession," said Tom Porcelli, U.S. chief economist at RBC Capital Markets.

U.S. lawmakers face a Wednesday deadline to deliver a plan to slash $1.2-1.5 trillion from the U.S. budget deficit over the next 10 years. Porcelli is concerned that failure to reach an agreement, which looked increasingly likely, would cause lawmakers to backtrack and attempt to push through a new law to repeal the automatic triggers to impose budget cuts. Such a move would stoke financial volatility and worsen an already vulnerable outlook.