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WASHINGTON (AP) -- The Federal Reserve struck a more cautious tone about the strength of the U.S. economic recovery, indicating Europe's debt crisis poses a risk to it. Wrapping up a two-day meeting Wednesday, the Fed in a 9-1 decision retained its pledge to hold rates at record-low levels for an "extended period." Doing so will energize the rebound. The Fed expressed confidence that the recovery will stay intact despite headwinds from abroad and at home. But Chairman Ben Bernanke and his colleagues offered a slightly more reserved outlook than the last time they convened. The Fed said the economic...

Misreading Economic Indicators Leads To Bad Policy Interest-Rates / US Debt Jun 09, 2010 - 02:54 PM Tim Iacono All this talk about how borrowing costs are so low that Washington couldn’t possibly be facing any sort of a debt crisis – that the 3.2 percent yield on the ten-year note is somehow a vote of confidence in policies coming out of the nation’s capitol – makes me think that, just as the insane fixation on a low consumer price index was a major contributor to the financial crisis, signals coming from U.S. debt markets are being similarly misinterpreted today...

Charles Djou, the newly elected Republican Congressman from Hawaii, was questioning Federal Reserve Chairman Ben Bernanke as he was testifying in front of congress. He asked him a fairly simple question, but the problem was, Bernanke didn’t have an answer. Djou asked Bernanke if he saw any fiscal exit strategy from the United States Congress. Bernanke’s response? “Right now, um, there is not anything on the table at this point.” (h/t Cubachi)

Fed Governor Calls For MASSIVE Rate Hikes Joe Weisenthal Jun. 3, 2010, 4:29 PM It's well known that Kansas City Fed Chief Thomas Hoenig is the one major voice of dissent on the Federal Reserve. He's called for a change to the dovish language, a rate hike in short order, while warning that cheap money would inevitably create another bubble. But he doesn't want to just stop at a 1% hike he said at a business lunch in Bartlesville Oklahoma today. Reuters: Thomas Hoenig, president of the Kansas City Federal Reserve Bank, has called for a modest increase in borrowing...

BARTLESVILLE, Oklahoma (Reuters) - A top Federal Reserve official on Thursday made a bold call for the U.S. central bank to raise its key interest rate to 1 percent by the end of summer, saying the economy is strong enough to support such a hike. Thomas Hoenig, president of the Kansas City Federal Reserve Bank, has called for a modest increase in borrowing costs before, but he went further on Thursday by before, but he went further on Thursday by suggesting it should happen over the next several months and by calling for an increase in borrowing costs to 3...

The Bank of Canada today announced that it was raising its overnight lending rate by 25 basis points to 50 basis points. The doubling of the price of money is the first hike in North American by a central bank since the Great Recession ended. The bank explained: The economy grew by a robust 6.1 per cent in the first quarter, led by housing and consumer spending. Employment growth has resumed. Going forward, household spending is expected to decelerate to a pace more consistent with income growth. The anticipated pickup in business investment will be important for a more balanced...

This Week Watch Australia Disappoint The Global Recovery Bulls Vincent Fernando, CFAMay, 2010, 2:35 PM Australia lead the world's rising interest cycle post-crisis, on the back of a recovering world economy which it was well levered too thanks too its commodities relationship with China and low unemployment. Other nations soon followed with their own rising interest rates, as their economies rebounded, even though the U.S. has yet to take part. Markets had even been pricing-in further rate hikes from Australia this year not too long ago. Unfortunately, that's no longer the case as previously highlighted by Joe Weisenthal. In fact,...

Sovereign Debt Defaults Equal Social Unrest Plus Much Higher Gold Prices Interest-Rates / Global Debt Crisis May 29, 2010 - 03:56 PM By: Arnold Bock The magnitude of current private and government debt, coupled with massive unfunded contingent liabilities for promises of future services to their citizens, will prove to be impossible for many nations to fund. Massive inflation in the money supply will become the preferred vehicle to deflect the default monster and will result in vastly devalued currencies and price inflation as a prelude to default. Such action will be a desperate attempt to buy time to stave...

Marc Faber: Central Banks Will Not Tighten Rates Ever Again Joe Weisenthal May 25, 2010, 4:42 PMMarc Faber gave a presentation at the Mises Institute Conference in Manhattan today, and Andrew Mellon at BigGovernment.com (via The Daily Crux) was on hand to take notes. Among his points: * Central banks will never tighten monetary policy again, merely print, print, print * Bubbles used to be concentrated in 1 sector or region in the 19th century, but off of the gold standard this concentration has ended * “The lifetime achievement of Greenspan and Bernanke is really that they created a bubble...

It's a classic abusive relationship. The person with power and money kicks around the weaker person in the relationship, then brings home flowers as a peace offering. And things go well for a while until the one in control decides to knock the vulnerable party around once again. And the cycle of abuse continues until the stronger person finally mends his ways, or the weaker person leaves -- no longer believing the rewards from the partnership are worth the pain. I'm describing how Wall Street treats small investors. "Even in abusive [situations], the relationship is not always bad. There are...

NEW YORK (Reuters) - The economy is showing signs of improvement but the recovery still has a long way to go and ultra-low interest rates are still needed, a top Federal Reserve official said on Wednesday. Boston Federal Reserve Bank President Eric Rosengren said in a speech to the Money Marketeers of New York University that even with more positive recent economic data, the economy remains vulnerable to negative shocks. He said he agrees with forecasters who expect disinflation -- a reduction in the rate of inflation -- in the near term. "With inflation expectations stable, core PCE inflation rates...

After Chinese Rate Hike, Faber Warns Of Severe Market Crash In 9-12 Months The Pragmatic Capitalist May. 3, 2010, 4:48 AM(This guest post previously appeared at the author's blog)I’ve maintained for quite some time that the biggest risks to the U.S. equity markets were not domestic. Not even close. The biggest risks to the U.S. equity markets come from abroad. Clearly, the problems in Greece are taking all the headlines today, but the biggest news of the day (in my opinion) is the continuing tightening measures that were announced in China where the reserve ratio was raised for the third...

Sovereign Debt Crisis Dominos Are Lining Up to Collapse Interest-Rates / Global Debt Crisis May 02, 2010 - 07:32 AM By: Bryan Rich Boy, what a week! I’ve been warning about a troubled euro and a building sovereign debt crisis for some time. And the bond and currency market activities this past week are a clear example that the momentum is picking up. There’s a bumpy road ahead … and not just for Greece. For those of you who aren’t closely monitoring this drama in Europe, you should be. As I’ve explained in recent Money and Markets columns, the events...

EXTEND & PRETEND: Uncle Sam, You Sly Devil! Interest-Rates / Credit Crisis 2010 Apr 30, 2010 - 10:20 AM By: Gordon T Long The modus operandi (MO) of deviant behavior aids investigators in doing criminal profiling. Forensic accounting takes a similar approach and leads us to some unnerving conclusions about Uncle Sam. As Tax Payers we place our sacred trust in our elected officials and government. Is that trust being handled similarly to how Goldman Sachs apparently has been handling its fiduciary responsibilities? Has our government been playing accounting games like European tax payers discovered in Greece and like many...

WASHINGTON (MarketWatch) -- The U.S. economy may be strengthening, but the Federal Reserve is in no rush to change its ultra-accommodative policy. Following a two-day meeting on Wednesday, the Federal Open Market Committee once again laid out its cautiously optimistic view of the economy. The economy "continued to strengthen," but the slow and fragile recovery will require exceptionally low interest rates for some time to come, the central bankers said. The statement recited the usual list of pros and cons in the economy. On the good side of the ledger: stronger growth, subdued inflation, improving labor markets, rising consumer spending...

WASHINGTON (Reuters) - With official interest rates near zero and the Federal Reserve unable to cut them any further, every policy meeting by definition brings the central bank one step closer to an eventual monetary tightening. As signs of firmer U.S. growth become more widespread, investors are getting antsy about anticipating the Fed's next move, a guessing game sure to gather momentum as the Federal Open Market Committee holds a two-day meeting this week. Much of the discussion in the markets now centers upon how soon the Fed will abandon a commitment to keep rates really low for an "extended...

EXTEND and PRETEND, Is The U.S. Facing A Cash Crunch? Interest-Rates / Credit Crisis 2010 Apr 24, 2010 - 12:49 AM By: Gordon T Long The US Government is caught in a cash vise and is being squeezed between too slow a rebound in tax revenues and the limitations on how quickly it can realistically take its funding requirements to the US Treasury auction. The US Treasury was saved in March by what the government reports as “proprietary receipts”. Those receipts require an explanation that is not well publicized since it begs the question of what happens next month without...

LONDON — Next target: Portugal. Speculators have begun to zero in on another small member of Europe’s troubled monetary zone, highlighting the same economic flaw that brought Greece to the verge of insolvency: a chronically low savings rate that forces a reliance on the now-diminishing appetite of foreign investors to finance persistent deficits. Just as investors are turning their attention to the next vulnerable country, Greece moved a step closer on Thursday to activating a $61 billion rescue package, as Prime Minister George A. Papandreou asked the European Union and the International Monetary Fund to meet in Athens next week.

WASHINGTON (Reuters) - Top Federal Reserve officials on Thursday showed little urgency about softening the central bank's promise to hold rates low for a long time, suggesting that vow will be left unchanged after the Fed's meeting at the end of the month. The Fed has held benchmark borrowing costs near zero to support the economy as it recovers from the worst downturn in decades. It has promised to hold rates exceptionally low for an extended period to provide an extra measure of encouragement for borrowing. However, as the economy shows signs of recovery, notably the addition of 162,000 jobs...

(Reuters) - Federal Reserve officials again reiterated their commitment to low interest rates for "an extended period" on Thursday, given the fragile nature of the economic recovery, and suggested a reduction in the size of the central bank's balance sheet could take as long as two decades. Echoing remarks on Wednesday by Fed chairman Bernanke, Fed vice chairman Donald Kohn on Thursday said a gradual U.S. economic recovery marked by high unemployment and tame inflation will require interest rates to remain very low for an "extended period". The Fed's promise to keep rates low is contingent though on economic conditions...