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FakeBen says: "Protect your savings from the Fed! Buy the Chinese currency via the ETF Market Vectors - Chinese Renminbi (NYSE: CNY)."

April 14 (Bloomberg) -- China's central bank chief said there's still room to raise interest rates after six increases last year, as he tries to tame the highest inflation since 1996...

Premier Wen Jiabao has pledged to use ``forceful'' steps to mop up excess cash. The problem for the central bank is that raising rates when the U.S. Federal Reserve has been cutting them may attract unwanted capital from overseas...

PALO ALTO, California (Reuters) - For the second time this week, a senior Federal Reserve official conceded the United States economy could slip into recession, but suggested the central bank should wait to see if more rate cuts are needed...

Like Bernanke, Yellen declined to point the way toward additional interest rate cuts to pull the economy out of its malaise.

Instead, she forecast a minor pickup in growth in the second half on the back of rate cuts already in the pipeline, and "timely" fiscal stimulus checks -- even though the drag from falling house prices will linger into 2009.

LONDON (Reuters) - Investors' love affair with safe-haven government bonds may be about to get rocky.

Demand for such debt, so strong during the credit crisis, appears to be ebbing. Warning signs range from South Korea's national pension fund saying it will shy away from U.S. Treasuries to major fixed income players beginning to favor riskier credit again.

Continue reading at Reuters.

European Central Bank council members Axel Weber and Juergen Stark signaled they are ready to raise interest rates if needed to contain inflation even as a global credit squeeze threatens the economy.

The ECB ``will act'' to contain ``alarming'' price pressures if its inflation goal is threatened, Weber said in a speech in Luxembourg today.

Continue reading at Bloomberg.

The UK faces a slightly less than a one-in-three chance of slipping into a technical recession - which is defined as two successive quarters of negative growth - and the Bank of England may have to cut rates aggressively to avoid following the US downward spiral, according to the chief European economist at Lehman Brothers.

Continue reading at the Financial Times.

FakeBen says: "This Euro trash talk is going to ruin my party. Don't they know I'm only popular if I continue to lower rates?"

Dec. 6 (Bloomberg) -- European Central Bank President Jean- Claude Trichet threatened to raise interest rates if an oil-driven jump in inflation spurs pay increases.

There is ``strong short-term upward pressure on inflation,'' Trichet said at a press conference in Frankfurt after the ECB left its benchmark interest rate at 4 percent. The ECB ``will not tolerate second-round effects'' on wages and some policy makers wanted to raise rates as early as today, Trichet said.

Continue reading at Bloomberg.

FakeBen says: "Mish thinks we are entering a deflationary downturn that even the Fed can't prevent. Great Mish, come bow before the powers of the inflationary Fed."

Right now there is a big disconnect between the equity markets and the credit markets. This is not a stable situation. Perhaps we have a hint of what December will bring given a rare November stock market decline and a negative start to December.

But regardless of how December concludes, the current conditions are not going to be resolved by a 50 basis point cut or even a 100 basis point cut by the Fed. We are facing solvency problems, not liquidity problems.

Continue reading at Global Economic Analysis.

The woven tangled web of subprimes has claimed more than its share of victims in recent months. Homeowners by the hundreds of thousands, to be sure, but also those that created, packaged, insured, distributed, and ultimately bought what should have been labeled "junk mortgages," but which by a masterstroke of marketing genius were given a more respectable imprimatur. "Skim milk masquerades as cream," warned Gilbert & Sullivan a century ago and sure enough, modern day subprimes packaged into financial conduits with noms de plume such as "SIVs" and "CDOs" pretended to be AAA rated cubes of butter. Financial institutions fell for the charade hook, line, and sinker and now we all suffer the consequences. Defaults are rising, the dollar’s sinking, and good Lord—even Google’s stock price is going down. Something must really be wrong here.

It is. What we are witnessing is essentially the breakdown of our modern day banking system, a complex of levered lending so hard to understand that Fed Chairman Ben Bernanke required a face-to-face refresher course from hedge fund managers in mid-August.

Continue reading at Pimco.

FRANKFURT, Germany - The European Central Bank held its benchmark rate unchanged at 4 percent on Thursday, despite surging inflation and a stronger euro, as it considers how ripples from the U.S. subprime mortgage morass will affect the economy.

Earlier Thursday, Britain cut its key rate by a quarter of a point to 5.5 percent, worried about a slowing economy.

Analysts expect the ECB, which oversees monetary policy the 13 countries that use the euro, to wait until the second quarter of next year before it moves again, in no rush to follow rate cuts in the United States and Canada.

Continue reading at Yahoo.

FakeBen says: "Buy Yuan, not Dollars!"

BEIJING - China will shift its monetary policy "from prudent to tight" in 2008, state media said Wednesday, to prevent its already hot economy from overheating and to try to contain accelerating inflation that threatens social stability.
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Xinhua News Agency said the decision was made at a closed-door economic conference, which the country's Communist Party leaders hold every December to draft policy for the coming year.

It said the conference decided to "strictly control the volume and granting pace of loans so as to better regulate domestic demand and balance international payments."

Continue reading at Yahoo.