aftershocks, japan enters recession for a third time in a decade. as industrial output freefalls and consumers hold on to their cash. and the crumbling foundations of a failed property market. we'll look at the wreckage left behind by ireland's housing crisis. facing multiple charges of sexual assault in the united states, the managing director of the international monetary fund has resigned. dominique strauss-kahn tendered his resignation just a few hours ago in a letter to the imf. in it he writes i want to protect this institution which i served with honor and devotion and especially, especially, i want to devote all my strength, all my time and energy to provingmy innocence. in his statement strauss-kahn strenuously denies the allegations against him that alleged he sexually assaulted a maid last saturday at a new york hotel. he's still in a new york jail, his lawyers are going to court later on thursday to ask for bail. he's offering to post $1 million to stay in manhattan under house arrest, to wear an electronic device and surrendered his u.n. travel documents. prosecutors say they will oppose his bail request. the imf says that in the near future, it will explain how it goes about choosing a new managing director. in the meantime, the first deputy director, john lipsky will fill that role. let's go to john defterios. a sense of relief, perhaps, that the resignation has been tendered and now the process of finding a successor can begin? >> reporter: that's a fair comment, andrew. i almost look at it as book ends on both sides of the atlantic that stood up yesterday with the calls for the resignation. timothy geithner, the u.s. treasury secretary and now here at the business summit of the finance ministers, the president of the european commission, jose manuel berrosso. that was the critical turning point on both sides of the atlantic for the managing director to step aside. the institution has built a higher profile under him which ironically was the reason he needed to step away because of the higher profile of the imf. >> there has been a mott of speculation, a lot of names have been brought up in relation to a successor. is there an obvious front-runner at this stage? >> i think we should look to the fable of the hare and the tortoise, andrew, i'm not trying to be cute here. it's a case where if the front-runner is out there too early, it undermines their chances longer time for political reasons. christine lagarde is an obvious choice. she has extremely good relations in france and asia. angela merkel has put forward three candidates from the banking sector, leading economists, one of them being axel. and the secretary general of the oecd. he was in brussels yesterday filling the slot of dominique strauss-kahn by the way who could not make the keynote address at an economic forum here. >> do you think europeans are making a convincing case for a european to continue at the helm of the imf? >> well, i think after the banking crisis, andrew, we went from a g8 formula or context, very quickly into the g20 which welcomed the money from the chinese into the imf, welcomed money from saudi arabia into the imf and added indonesia, turkey, mexico, to the mix. if there's a break with tradition, it would have to happen now because we've moved to a global economy with the emerging markets representing over half the growth and global output. let's not forget these emerging market economies are growing at 6.5%. this would send a phenomenal signal if they put a person at the top of the imf, perhaps a number two from the emerging markets is a likely scenario, i would say. >> all right, john, thanks very much for that interesting -- there was a lot of talk about the new world order in the wake of the global financial crisis back in 2008. we'll see how this plays out. john, thanks for that. john defterios, joining us live from brussels. nina. strauss-kahn's alleged victim lives in the bronx. she's alarmed at the prospect that strauss-kahn might be released on bail. that lawyer, jeffrey shapiro tells cnn that the woman is under great emotional strain. >> i think she's doing remarkably considering what she's been through, starting with this attack. she's had not a moment of peace since then. she's not been able to go home. she's been separated from her daughter for a considerable period of time. she doesn't know what her future will be. she hasn't been able to get professional help of any sort. she's been subject to the interrogation and cooperation, i will say, of the new york city police department and the district attorney's office, had trouble sleeping. had to wear the same clothes for three days because she didn't have a change of clothes. but if someone would withstand all of that and keep her head held high and operate, she's been able to do it. extraordinary. just how is france reacting to the news? we're joined from cnn's paris bureau. how is france reacting to this news? >> well, i think the french are expecting, of course, mr. strauss-kahn will face tomorrow the truest day about this affair which has been making the french amazed at what happens. we see the impact today. everybody thinks now even inside the socialist party, as you know, concerning the next presidential elections in france, 11 months away from now, mr. strauss-kahn was the big, huge fabric of that. even inside the socialist party today you see a lot of people taking a distance from dominique strauss-kahn and getting used to the idea right now that the man won't be running, that the man will face difficult challenges ahead and may be staying in new york for quite a while if he has to face a trial. so we see the impact this morning in the polls. mr. strauss-kahn is out and now there is a top contender inside the socialist party, mr. holland, who becomes the favorite of the socialists, facing mr. sarkozy in this presidential campaign, which started with a lot of tension ahead as can be expected here. the french public opinion waits until tomorrow to see what's kept in store for mr. strauss-kahn and his future, not political future but his normal future. >> you mention a number of the polls. some polls are indicating that many french people think mr. strauss-kahn is innocent and that he could be a victim of a plot. tell us a bit about that. >> yes. it's true. still a lot of people thought mr. strauss-kahn, they don't understand, they said how is such a man like him, an intelligent man with so many assets, heading the imf, one of the most powerful positions in the world, being the favorite in the next presidential elections, how could he fall into maybe a potential trap? and they don't understand. but at the same time, they have to get used to this idea that now the political future of mr. strauss-kahn is out. and it's true that he had a lot of supporters in this country to succeed mr. sarkozy and the french still don't understand why it happened this way. they think -- at the time when we are getting closer to the elections and that he was the favorite. a lot of people think some people had interest in having him fall into a trap for political reasons. but where would he come from? everybody wonders about that and still asks but we have no answers. it seems also that there is a new debate in the press this morning, saying a lot of people in the political media, anybody in the press knew about mr. strauss-kahn' attitude towards women and especially sometimes behaving like somebody harassing women in private. i heard this morning, journalists saying and even women saying, working with strauss-kahn sometimes that even journalists went to interview him, woman, said when we wanted to meet mr. strauss-kahn we were trying to make sure we didn't come on somebody, we came with somebody. that's amazing, showing such a distress with strauss-kahn. the question is why did these people talk before and wait until today when mr. strauss-kahn appear? we have to be careful, appear guilty and talk now this way? it's amazing. >> thanks very much for your views. cnn analyst from francois television talking to us about all of those rumors that are in the press. we must stress, andrew, at this point, we don't have any confirmation about any of these other stories. andrew? >> absolutely. okay, nina. there is one other big story in asia that people are focusing on this thursday. it's clear the balance of economic power in the region is shifting ever further away from japan. japan's economy shrank by 0.9% quart ir-on-quarter in the first three months of this year. that's the second quarterly contraction in a row. the gdp is down by 3.7% and the march 13th disaster is only partially to blame. we have the full details just ahead. meanwhile, the nikkei has taking a bit of a hit from that economic data this trading day, given the contraction is almost twice what analysts had been forecasting. let's take a look at the broad numbers across this region. starting in japan, the nikkei down by about 0.5%, the hong kong index adding 0.66% to the 0.5% yesterday. reversing the gains of yesterday, back down by about a half. and the australian market, up by 1. %. in currency, new zealand dollar has climbed to its highest value in several days after a cautiously optimistic budget statement from the government there. three months after the earthquake in christchurch and a huge cleanup bill, the deficit is projected to peak next year. the budget surplus may raise to 1 billion u.s. dollars, about a year earlier than expected. nina? let's move across the globe, andrew, markets in europe largely in positive trading at the moment for the second day in a row. one of the markets down, the zurich smi, down by about 0.1%. the ftse, that market up by 0.6%. the commodities traded glencore, that comes at a time when the commodities markets are at their most volatile in years. many analysts expect that kind of volatility could work in glencore's favor. they priced their shares in the middle of the quoted range, hoping to see an early rise. it's actually falling, down by 1.82%. just a few moments ago, the stock was down almost 2% coming in at 538 pence per share. it's now down by 1.8%. not as bad. actually the opposite from what they're expecting, andrew. >> yes, interesting sign of the times. it shows about the worries in the commodity markets at the moment. you're looking there at the closing bell on the street, the dow bouncing back from three days of losses on wednesday, tech stocks getting a nice boost thanks to the solid numbers coming out from dell after the market on tuesday. the computermaker's stock was up more than 5% after they said earnings tripled in the final quarter. rising oil prices, chevron up 2.5%, exxonmobil up by 1.6% and by the end, as you can see, pretty healthy gains, green arrows across the board. the nasdaq techs up by more than 1%. it's another dark day for japan in its seemingly endless economic winter, a strong yen, a nuclear catastrophe, a an economic crisis. we have the details ahead. plus the business networking site that clearly means business. we'll tell you how much linked in has raised as it floats its shares in new york. to cookies just out of the oven. to the morning bowl of cereal. and to lactaid® milk. easy to digest and with all the calcium and vitamin d of regular milk. [ female announcer ] lactaid®. the original lactose-free milk. should i bundle all my policies with nationwide insurance ? watch this. on one hand, you have your home insurance with one company. and on another hand, you have your auto with another. and on another hand, you have your life with another. huh... but when you bundle them all together with nationwide insurance... ... they all work together perfectly-- and you could save 25%. wow... it's all in the wrists. ♪ nationwide is on your side welcome back. you're watching "world business today" live on cnn. the third biggest economy in the world shrank by 0.9% in the first three months of the year compared with the previous three months. it's the second quarter in a row that japanese output is actually contracted. that means it officially puts the country back into a recessionary phase. this rate japan's economy will shrink by 3.7% over the full year. the reason, well, of course, the impact of the earthquake and tsunami on march 11th. the ongoing subsequent nuclear crisis. japanese consumers and businesses stopped spending and smashed factories have also meant that the supply chain there has broken down. in the meantime, the costs of the recovery will continue to drain the country's finances. the government is setting aside close to $50 billion for reconstruction projects and another $50 billion has been set aside for the victims of the nuclear crisis. andrew? nina, it just goes to show that japan faces a long and tough climb to get its economy back into line. even before this triple crisis hit in march, the economy of japan was weak and it was also getting weaker. as you mentioned, nina, the economy annualized rate of contraction of the economy now stands at 3.7%. that's almost twice what analysts had expected. behind that figure are some even gloomier statistics would you believe? i want to focus on this one. industrial output, down 15.3% in march. that's the worst monthly drop in japan's history. and businesses also took an unprecedented battering in the disaster zone. 10,000 of 24,000 enterprises were affected. that's 42%, nearly one out of every two businesses in the zone was asecond. 600 of those may never actually recover. the worst news for japan, financially speaking, the worst is probably yet to come. kyung lah joins us now. we've had a three-week impact of the tsunami in the first three months. that means the second three months will bear the brunt of it. >> that's what some economists think, that the upcoming quarter will be far worse. there are other economists that say maybe some of the reconstruction will have helped the gdp. the general sense across the board from many economists we've spoken to, today was a surprising figure so they simply don't know what to expect in this upcoming quarter. there is this feeling of now what happens, the policymakers have got to figure out how, amid all of the underlying problems in japan's economy, how to not just work on the reconstruction, how to deal with a new energy policy, how to deal with an ongoing nuclear crisis and then try to fix this economy. a lot of things on the plate for this government to do, andrew. >> what is the sort of feeling about that at the moment, kyung, because the japanese policymakers certainly haven't covered themselves with glory in recent years about trying to kick start the economy, now faced with even bigger threats and bigger crises, is there a feeling this time they could react in a different way. >> it depends, really, if you are an optimist or someone who you might call more of a realist when you look at japan's policies and the government. there is still political discord, there is still a lot of political infighting. there certainly is, even though there's a public mandate to try to get the economy on track, to try to get the reconstruction going, to try to get these people, remember we're talking about 120,000 people who are still living in evacuation centers, trying to get them into temporary housing, there's still tremendous political discord. there is a sense among some analysts that perhaps the policymakers will join in the public sentiment of trying to get japan on track. the question is, do you have faith in the policymakers and in the lawmakers of this country? some do, some don't. >> okay, kyung. thanks very much for that. i guess it's a bit hard to have too much faith if you look at the track record. kyung lah, joining us live from tokyo. for the queen of england is on a historic visit to ireland. making a bid to heal old wounds, nina. >> security for the visit is actually costing ireland $2 million. all this is a big bill coming at a time when this country needs to pay its bills and help to do so. what happened to the keltic tiger? we'll investigate, just ahead. welcome back, you're watching "world business today." britain's queen elizabeth continued her historic visit to ireland with a state dinner at dublin castle on wednesday. earlier she toured a stadium where more than a dozen sports spectators were killed in 1920. she also laid a wreath and today she'll travel to the irish national stud. she'll later attend a concert hosted at the british embassy. the queen is the first british monarch to visit ishld in almost a century after nearly 100 years of transformation and turmoil, the two countries it seems enjoy a solid relationship as modern trading partners and good neighbors. as part of the national rescue package for ireland, the uk loaned the irish government $11.3 billion, the british government calls it a loan to a friend in need. ireland is also britain's biggest trading partner by 7% of all of the uk's exports. and 1 % of irish exports are actually sold to britain. that just illustrates the reciprocal relationship here. facing a three-year decline following a property market crash and banking crisis, ireland, of course, as we all know is mired in debt and it's also the recipient of a european bailout. >> the question is what caused ireland's sharp decline? fingers are pointing at the boom that went spectacularly bust, particularly in the housing sector. cnn's donna magnate has that part of our story from the irish town of mullengarr. >> reporter: building materials abandoned beside derelict homes. no one's visited these show homes in years, not since the property bubble burst three years ago. home owners found themselves with houses worth half as much and the dream of the keltic tiger suddenly turned into a nightmare. there are 620 of these ghost estates across ireland, the scars of the property boom, visual reminders of everything that went wrong, easy credit, lax planning regulations and just nowhere near the demaned to meet the number of houses actually being built. on the next door estate, things are going better, for now. but tour this site and you find out just how the property market's working. three years after a period of unprecedented prosperity in ireland came to a crashing halt. the banks are still lending if you have a large enough deposit. so buyers like this woman who managed to get mortgages can snap up bargains. >> the original prices with 300,000. we got it for close to half price. >> reporter: it means developer johnny owens is scraping through for now but only just and with money he knows he can never pay back. >> when you come into the estate and you see this great big sign, he's the name on the top of the board. the developer here is really the bank. guys like me, it's managing bank's money and turning it into those houses. >> reporter: turning it into houses but at such a slow rate. demand's fall an way, the builders and plasterers and electr electricians who depend on the developers, are laid off one by one, the young leaving for overseas, the old with nowhere to go. >> they know within the last 60 years with johnny owens, every one of them have gone australia or the united states or canada. there's nothing around. what do we do? we're just left on the scrap heap, really. >> reporter: didn't you think about demand as a developer? is there demand for these houses that i'm building, when everybody is building, right, left and center? >> i had no reason to think otherwise. i had no reason to think there was demand. the previous site we build, we couldn't build the houses quick enough. >> reporter: johnny owens wasn't the only one. like the country he calls his home, all he can do now is try to stay afloat while he tries to pay his debts. cnn, ireland. welcome back. you're watching "world business today." i'm andrew stevens in hong kong. >> i'm nina dos santos in l