Rep. Barney Frank, the Massachusetts Democrat who chairs the House Financial Services Committee, accused Republicans on Monday of siding with Chinese central bankers in their attacks on the U.S. Federal Reserve.

“The Republicans are joining the Central Bank of China in criticizing [Fed Chairman] Ben Bernanke,” Mr. Frank said Monday during an interview on Bloomberg Television. “This is really distressing to me.”

Frank: ‘Republicans Join Central Bank of China’

HONG KONG — China’s central bank unexpectedly announced on Friday night that it would require commercial banks to set aside a bit more money. It was the second such move by Beijing this month and the clearest sign yet that China means to counter the Federal Reserve’s monetary easing in the United States.

But economists were quick to point out that the Chinese central bank had chosen a policy stance particularly well suited to holding down the value of the renminbi against the dollar, at a time when the Federal Reserve was trying to increase the supply of dollars by buying longer-denominated Treasuries.

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The currency wars have started

China Move Could Counter Fed’s Efforts

Another good one...

The Federal Reserve is Laundering Money

Excellent.

Quantitative easing and Ben Bernak explained

They should have rang the cash register where GM still owes $27 billion, to the taxpayers, after the IPO.

ringing of the bell announcing GM's public offering with a engine roar of a Camero SS

Bucking the Federal Reserve's efforts to push interest rates lower, investors are selling off U.S. government debt, driving rates in many cases to their highest levels in more than three months.

The trend is a potential problem for the economy and the Fed. Rates had fallen sharply for months in anticipation of a Fed buying program, and in a short time much of that effect has been lost, spelling an unwelcome rise in borrowing costs throughout the economy.

That could throw a wrench in what the Fed is trying to accomplish: to use low rates to encourage more borrowing and risk-taking by consumers, businesses and investors, thereby reviving growth.

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Fail

Bond Market Defies Fed - Interest Rates Rise Despite Launch of Treasury Buying as Investors Take Profits

Blahous and Greenstein favor different strategies to close the gap, but they agree on the reality of the problem and on the desirability of acting soon to fix it. Acting soon would yield several benefits, according to the authors:

Reductions in scheduled benefits and/or tax increases can be phased in gradually. The longer a solution is postponed, the more difficult it will be to restore solvency without imposing large, sudden reductions in benefits or increases in taxes.

More options will be available. Delaying action forecloses some options for restoring solvency and can produce less attractive distributional outcomes. For example, if Social Security tax increases were phased in soon, some or all current workers could contribute to restoring solvency. But if payroll tax increases are not implemented until 2037, the additional tax burden would fall entirely on younger workers still in the labor force after that date.

Beneficiaries and taxpayers will have more advance notice of changes and will be able to adjust their work, saving and retirement plans accordingly. For example, if scheduled Social Security benefits are to be reduced, people should receive ample warning so they can compensate by saving more or delaying their planned retirement.

Confidence in Social Security will be strengthened. If people do not believe that they can count on Social Security, the program will not be fully effective in serving as a basis for their retirement planning.
Strengthening Social Security’s finances could provide a modest early step toward closing the federal government’s long-run fiscal gap. Even if the changes were not scheduled to be fully effective for many years, their enactment would cause an immediate improvement in the long-run budget outlook.

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Interesting white paper...

The Pew Charitable Trusts - Social Security Shortfall Warrants Action Soon

Mortgage rates fell ahead of the Federal Reserve’s announcement last week that it would start buying $600 billion in government bonds to stimulate the economy over the coming months. But could mortgage rates go even lower, now that more is known about the scope of the Fed’s plan?

With the possibility of lower rates, it may be tempting for people who can refinance to hold off and wait for mortgage rates to drop some more.

But be careful: Betting on the direction of rates right now is difficult, and it might not make sense to hold out for another drop, gambling that mortgage-market prognosticators will be dead-on with their projections, Springer said.

And if you have a lot to gain from a refinance now, it could be in your best interest to make a move — even if rates do end up dropping after your loan originates. If home prices slide more, for example, a borrower who could refinance today might have a tougher time in the future if he doesn’t have enough equity to make the deal work.

What Fed’s bond buy means for mortgage rates

“Is gold worth $1,400? We think so,” UBS precious metals analyst Edel Tully wrote in a recent research report. “We like gold, and expect it to continue climbing given the current macro and sentiment backdrop.” Tully predicted that gold likely will zigzag its way above $1,500 an ounce next year, and “behave more like a currency than a commodity for the foreseeable future.”

At Goldman Sachs, meanwhile, analyst David Greely in mid-October raised his 12-month target for gold to $1,650 an ounce from $1,365, saying that the Fed’s monetary easing policy will keep interest rates low and spur gold purchases.

Why gold is a bad investment

For 10 long years, market rallies have ended badly for investors. Now, with stocks up 15.6% in four months, strategists are beginning to suggest that ordinary investors start dialing back on risk.

That doesn't mean dumping shares willy-nilly. With the Federal Reserve committed to flooding markets with liquidity, it still makes sense to be in equities. But "if you've ridden the market up, you might want to do some trimming," says Steven Shueh, managing partner at Roundview Capital.

How to Play a Market Rally