The world’s stock markets are roiling over the credit crunch that continues to spread worldwide. Yet again, across the business wires, news of financial institutions telling investors they can not take their money out of their funds due to problems in the U.S. mortgage markets. Only this time it’s in Europe.

CBSMarketwatch is reporting that French bank BNP Paribas suspended redemptions in three of its funds over night, a US-German joint venture, WestLB Mellon Asset Management Fund, suspended redemptions on an ABS fund on Tuesday and Frankfurt Trust put a stop to redemptions last Monday- also in its ABS fund.

Make no mistake, the US housing market is going to get quite ugly before it is over. The credit was too easy and too many people are in way over their heads with debt they cannot pay off.

America is telling the world: we borrowed money and we’ll never be able to pay it back.

Yet, the underlying economy, outside of finance and housing, continues to boom. It’s not just housing and construction which has pushed the Chinese economy to post 11% gains in GDP every quarter. They have real businesses that are kicking some serious behinds. Same in the United States.

Take a company like American Oriental Bioengineering. It is a small plant-based pharmaceutical company serving the Chinese market. It has been growing like gang-busters over the past few years. They announced earnings yesterday and they again hit it out of the ballpark. From their press release:

Gross profit in the second quarter of 2007 increased 61.2% to $23.7 million from $14.7 million in the second quarter of 2006. Gross profit margin increased 550 basis points to a record 69.9% from 64.4% in the prior year’s period. The increase in gross profit was a result of increased sales of OTC products, which carry higher margins, and improved operating efficiencies across all business segments.

Look at their profit margin!

The company’s CEO stated:

Mr. Liu stated, “We believe the remainder of 2007 is going to be an exciting time for the company and we are very pleased with our revenue guidance for the full year, which represents a strong year-over-year increase in organic growth. We are focused on growing our Company through not only our existing, highly-regarded product line of plant-based pharmaceutical and nutraceutical products, but also through acquisitions and new product launches, both of which help to increase brand awareness of our products and further improve our revenue opportunities.”

Yes, every CEO says things are going swimmingly (unless you are the CEO of a homebuilder right now.) But AOB is projecting revenues to increase 43% over last year.

Sounds like things are booming for them. And they’re not alone. Tech titan Cisco announced better than expected earnings this week. The optimism coming from the company’s management was nearly infectious. Cisco’s CFO, who just announced his retirement, said in an interview with the AP:

He’s “never been more optimistic” about Cisco’s prospects and is leaving at a time when the company’s investments in lucrative emerging markets are beginning to pay off.

“We’re at the right time with the right products,” he said. “And the economy, from my perspective, on a global basis have never been better. And that bodes well for Cisco.”

Cisco CEO John Chambers, who said during the dot-com bust about 6 years ago that things were too murky to even know what the future would hold, was telling CNBC that this was the best economy he has ever seen in his career.

Cisco is cashing in on tremendous global growth in the internet such as with video feeds. The global boom is on and cannot be contained.

As people get nervous about what the housing markets around the world will do to financial instutitions, companies like Paccar and Crane, both which make a lot of infrastructure type products (airplane parts, trucks etc) are booming. Housing isn’t impacting that.

What does it mean going forward? The global economy is in a great place. Look at Dubai. Look at Bangalore. Look at London. The credit crunch will put a crimp on the boom but it’s not going to stop it.

American businesses are still poised to prosper.