Three Moves to Make Before the Next FOMC Meeting

The decisions made at the next Federal Open Market Committee (FOMC) meeting on Sept. 20-21 could affect market performance for years to come. That's why investors should prepare ahead of time. Of course, there's no way to predict exactly what U.S. Federal Reserve Chairman Ben S. Bernanke will do, but 20 years of experience in global markets suggest he's considering five alternatives drawn from a rapidly diminishing menu of options: Eliminate interest paid on reserves. Sell short-term securities while buying longer-term debt. Target actual inflation. Buy more assets outright in a program that would be somewhat like the $600 billion worth of Treasuries it bought as part of QE2. And, finally, it could just do nothing.

Don't bet on China saving the eurozone

When in doubt, call the Chinese. The superpower-in-waiting has become the global lender of last resort. If no one else will recapitalise your bankrupt bank, or buy bonds from your hopelessly indebted country, you can always put in a call to China. A report in the FT that Italy had done precisely that, inspired a late rally in the euro last night, not to mention a last-minute recovery in the Dow Jones. But even if the rumour is true, we wouldn't be piling into Europe just yet. Here's why.

Nations need to steer different courses through these choppy waters

Last week saw some very different approaches to addressing the current economic weakness, from fiscal expansionism in the US to continued austerity here and in the eurozone. Who is right?

Germany and Greece flirt with mutual assured destruction

Bild Zeitung populism has prevailed. Germany is pushing Greece towards a hard default, risking the uncontrollable chain reaction so long feared by markets.

Germany pushes Greece to the brink in dangerous brinkmanship

Germany and Holland have threatened to block rescue payments to Greece unless the country complies to the letter with bail-out terms, raising the spectre of default and a chain-reaction through southern Europe.

Stockmarkets bounce as Germany backs sovereign debt rescue policies

Financial markets breathed a collective sigh of relief after Germany's top court gave its backing to sovereign debt rescue policies but tempered optimism by putting obstacles in the way of any future bail-outs.

German austerity drive risks Euro-slump

German finance minister Wolfgang Schäuble has vowed to halt rescue payments to Greece unless the country complies totally with the EU-IMF demands, brushing aside warnings that a Greek collapse would set off a disastrous chain reaction and a global banking crisis.

Switzerland abandons floating exchange rate in dramatic 'currency war' twist

The era of global "currency wars" has taken a dramatic turn after Switzerland abandoned its floating exchange rate, setting a floor against the euro to counter safe-haven flight from eurozone debtors.

IMF: global economy faces a 'threatening downward spiral'

The International Monetary Fund has called on the US and Europe to abandon fiscal austerity and switch to stimulus measures, warning that the global economy faces a "threatening downward spiral".

German endgame for EMU draws ever nearer

For fifty years Germany has invariably stumped up the money required to keep Europe’s Project on track, responding to unreasonable demands with grace and generosity.

EU law "gutted" by bail-outs, growls Bundesbank

Germany's Bundesbank has issued a thundering denunciation of Europe's rescue policies and actions by the European Central Bank, alleging that EU treaty law has been "completely gutted".

Central bank flight to Federal Reserve safety tops Lehman crisis

A key warning signal of global financial stress has shot above the extreme levels seen at the height of the Lehman crisis in 2008.

Global trade buckles in second quarter

Global trade buckled suddenly in the second quarter as Europe flirted with recession and Asia came off the boil, while Canada's bellwether economy contracted outright, adding to the darkening picture across the world.

Double-dip fears across the West as confidence crumbles

The Western world is at mounting risk of a double-dip recession after key measures of confidence collapsed in both the United States and Europe, with Germany suffering the steepest one-month fall since records began in the 1970s.