US Fed to meet as global crises loom large

The US Federal Reserve building
© AFP/File Karen Bleier

AFP

WASHINGTON (AFP) - The Federal Reserve's top policymakers meet Tuesday with an upbeat US economic outlook clouded by a devastating earthquake and tsunami in Japan and unrest in the Middle East.

The Fed's rate-setting panel is expected to keep stimulus policies in place -- including ultra-low interest rates -- even as unemployment eases, consumer spending picks up and businesses grow more optimistic.

"We anticipate a more upbeat assessment of the economy and a less pessimistic tone towards the labor market," said Fabio Fois of Barclays Capital.

The Fed is expected to continue to unfurl a $600 billion stimulus spending designed to jolt the US economy back to full health, but one which critics warn is a risky gambit that is stoking inflation.

The Fed is expected to wave off concerns about rising prices, which have only been fueled by fighting in Libya that has pushed up the cost of oil.

With Americans struggling to pay gasoline prices that have risen around 43 cents a gallon (3.8 liters) in the last month to an average of $3.54, the Fed has insisted that core inflation remains in check.

The Fed's measure of inflation ignores volatile food and energy prices, which are often the costs most keenly felt by consumers.

On Friday the head of the powerful New York Federal Reserve, William Dudley, said inflation levels remained well below the two percent rate which the bank says spells a healthy economy.

"Inflation expectations are well-anchored today and we intend to keep it that way," Dudley said.

But as the economy improves, pressure is building on the Fed to ease its stance.

The central bank "will have to change its inflation language," John Ryding and Conrad DeQuadros of RDQ Economics said in a client note.

"Core inflation has stabilized and picked up slightly, oil and commodity prices have increased significantly, and inflation expectations have risen."

"The Fed, we believe, is on the wrong side of the inflation story."

But events in Japan may have eased pressure on the Fed to reverse course.

The economic impact of a massive earthquake and tsunami in Japan -- the world's third-largest economy -- is still unknown, although few believe a serious spillover is likely.

"Our early assessment is that Japan's GDP will take a hit for a quarter or two, but then bounce back as reconstruction gets into gear," said Patrick Newport of IHS Global Insight.

But coupled with rekindled sovereign debt crisis in Europe that saw Spain and Greece's sovereign ratings downgraded in the past week, and rising oil prices, the potential exists for an external brake on US growth.

Against this backdrop the Fed is expected to stand pat.

"The economic outlook has improved considerably in the past six months," according to Dudley that was the aim of the Fed's strategy "this is welcome and not a reason to reverse course."

But some experts believe the Fed might soon do just that.

"This is likely to be the last gathering before the Fed has to begin prepping the markets for the end of QE2," said Stephen Stanley of Pierpont Securities using the jargon name for the Fed's easy monetary policy -- quantitative easing.

© AFP -- Published at Activist Post with license

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WikiLeaks next target - the banks

Just a day after their big scoop WikiLeaks announced plans to release tens of thousands of internal documents from a major US bank. 

The revelations will be made public early next year, according to Forbes Magazine.

WikiLeaks' founder Julian Assange declined to identify the bank, but he said that he expected that the disclosures, which follow his group's release of U.S. military and diplomatic documents, would lead to investigations, Reuters reports.

Bank revelation will be a "megaleak"

Talking to Forbes, Assange said: "We have one related to a bank coming up, that's a megaleak. It's not as big a scale as the Iraq material, but it's either tens or hundreds of thousands of documents depending on how you define it."

He declined to identify the bank, describing it only as a major U.S. bank that is still in existence.

Asked what he wanted to be the result of the disclosure, he replied: "I'm not sure. It will give a true and representative insight into how banks behave at the executive level in a way that will stimulate investigations and reforms, I presume."

He compared this release to emails that were unveiled as a result of the collapse of disgraced energy company Enron Corp.

"This will be like that. Yes, there will be some flagrant violations, unethical practices that will be revealed, but it will also be all the supporting decision-making structures and the internal executive ethos ... and that's tremendously valuable," Assange said.

"You could call it the ecosystem of corruption. But it's also all the regular decision making that turns a blind eye to and supports unethical practices: the oversight that's not done, the priorities of executives, how they think they're fulfilling their own self-interest," he said.

Assange also told Forbes that WikiLeaks has material on many businesses and governments, including Russia, and that it has some documents on pharmaceutical companies, which he did not identify.

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Is An ATM Cash Shortage Coming?

Zero Hedge

While we have no way to confirm or refute the validity of this statement presented by a supposed ATM business insider on Steve Quayle.com, it does bring up an interesting point regarding how banks may be conserving "petty cash." Of course, if this perspective is true, it validates concerns about bank capitalization, and explains the reason why the FDIC recently expanded insurance on checking accounts from $250,000 to infinity in an attempt to get Americans to put their money in their friendly neighborhood bank. Of course, that this contradicts everything that the Fed Chairman is trying to do by getting Americans to spend (or buy Netflix at a 1,000 P/E) instead of putting the money in the bank, is precisely the reason why Sheila Bair's relationship with Geithner and Bernanke is, shall we say, tenuous.

From Steve Quayle:

George, I work with a business partner in the [region redacted] . We have combined between us 180 ATM machines that we service, Cash Load. In order to do this we NEED to order the money, 20's only from several banks on a weekly basis. This is a considerable amount weekly, 380k plus. Here is the interesting piece that is developing: In the past several weeks 4 of the MAJOR banks have informed us that they can no longer provide us with the cash for our business. Now the problem is that it is OUR money we are taking out! 

So speaking with bank "personnel" on the side my question was this, what is going on? how come we cannot take OUR money out? Answer: "they" are not authorized to hold, carry or have on hand anymore more than a certain amount of cash on hand! The amount we are getting, even though it is out of our account, they cannot order or have on hand that amount of cash at any time now. I am not talking small banks...large banks [large money center bank in America name redacted] etc...! 

We can see our ability to keep these machines with available cash is becoming more and more difficult. This has taken place just in the past few weeks. By the way, these banks were willing to lose our full business due to this issue. Trying to work with smaller banks now...we will see how long!"

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ATMs Crash Across the Country After "Bank Holiday" Warnings

Twitter aflame with reports of Wells Fargo, Chase and Bank of America customers being unable to withdraw cash

Paul Joseph Watson
Prison Planet

Following rumors of a “bank holiday” that could limit or prevent altogether cash withdrawals later this week, Twitter and other Internet forums were raging yesterday about numerous ATMs across the country that crashed in the early hours of Sunday morning, preventing customers from performing basic transactions.

It’s unknown whether the crashes were partly a result of a surge of people trying to withdraw their money in preparation for any feared bank shutdown, or if mere technical glitches were to blame. The fact that the problem affected numerous different banks in different parts of the U.S. would seem to indicate the former.

The Orange County Register reported that the problems were “part of a national outage” which prevented people from performing simple transactions such as cashing checks and withdrawing money.

“Computer issues” were blamed for similar issues in Phoenix Arizona, while in Birmingham Alabama, Wells Fargo customers’ online banking accounts and ATMs displayed incorrect balances.

Read Full Article

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The Essence of the Banking Industry - To Make Us All Debt Slaves

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