Financial Crisis | featured news

The Federal Reserve, facing rising global financial strains and recession fears, is poised to increase downward pressure on longer-term interest rates next week in a bid to accelerate a sputtering U.S. recovery.

The federal deficit will hit $1.3 trillion for fiscal 2011, the third consecutive year of record shortfalls and an emerging campaign theme for GOP attacks on President Obama and congressional Democrats. The deficits of the last three years are at levels unseen since World War II and stem from the "long shadow" cast on the economy by the financial crisis and recession, the Congressional Budget Office said Wednesday.

The price of gold streaked past $1,700 an ounce for the first time Monday. Investors, beset by worries about the U.S. debt downgrade, Europe's financial crisis and slowing global growth, sought safety in the metal as stocks tumbled around the world.

Investors fled Wall Street in the worst stock-market selloff since the middle of the financial crisis in early 2009 in what has turned into a full-fledged correction. The Dow and the S&P tumbled more than 4 percent on Thursday and the Nasdaq lost 5 percent on fear the United States is staring at another recession and that Europe's sovereign debt crisis is swallowing two of its largest economies.

Prime Minister Silvio Berlusconi tried on Tuesday to calm fears that Italy could be swept into a full-scale financial crisis and the opposition pledged to smooth the passage through parliament of tough debt-cutting measures.

But you know what? The bailout, by the numbers, clearly did work. Not only did it forestall a worldwide financial meltdown, but a Fortune analysis shows that U.S. taxpayers are also coming out ahead on it — by at least $40 billion, and possibly by as much as $100 billion eventually. This is our count for the entire bailout, not just the 3 percent represented by the massively unpopular Troubled Assets Relief Program. Yes, that’s right — TARP is only 3 percent of the bailout, even though it gets 97 percent of the attention.

International Monetary Fund Managing Director Christine Lagarde said on Wednesday the global economy was rebounding from the financial crisis but recovery remains unbalanced.

Global regulators said that banks deemed too-big-to-fail would have to set aside an additional cushion of capital reserves in an effort to avoid a repeat of the 2008 financial crisis.

Austerity measures being adopted by many industrialized world governments in the wake of the 2008-09 financial crisis are undermining economic recovery, a United Nations report said on Wednesday.

Despite $18.8 billion spent by the U.S. to help stabilize and build up Afghanistan, that nation is at risk of falling into financial crisis when foreign troops leave in 2014, a new report from Senate Democrats says.