This caused a disturbance in the Force…
Government programmed Economic Recovery
U.S. economy is on the mend. But amid a consumer rebound driven largely by tax breaks and government programs, it remained to be seen if a recovery will continue in the absence of federal help.
Analysts wonder how long spending growth can continue in the absence of 
programs like cash for clunkers or extended unemployment benefits or First Time Buyer’s Tax credit.
Government aid is also propping up the housing market, Auto market and unemployment.
Despite improvement in the economy, employers remain skittish about hiring. Initial claims for unemployment insurance increased 17,000 to 551,000 in the week ending Sept. 26, on a seasonally adjusted basis.
Banks Bite Bullet on Loans
Lenders Start to Write Off Some Principal in Modifying Terms for Troubled Mortgages
That’s good news for some homeowners, but may portend more write-offs over the next few years for banks and other lenders now wading through hundreds of thousands of applications for loan modifications. The trade-off for banks is that by taking the hit now they can boost their chances of being repaid.
The Credit Crunch Continues 
Taxpayer dollars have supported institutions that are ‘too big to fail.’ Small business has been left out in the cold.
Since the onset of the credit crisis over two years ago, available credit to small businesses and consumers has contracted by trillions of dollars, and that phenomenon is reflected in dismal consumer spending trends. Equally worrisome are the trends in small-business credit, which has contracted at one of the fastest paces of any lending category. Small business loans are hard to find, and credit-card lines (a critical funding source to small businesses) have been cut by 25% since last year.
Why do small businesses matter so much?
Parts of Asia Start to Watch Inflation
While the West still worries about the ravages of deflation, emerging markets in Asia are beginning to contemplate what to do about the opposite problem: inflation.
But the latest data confirm that Asian central bankers have to start thinking about applying the brakes to prevent economies from overheating. Interest rates in most countries are at record low levels and need to rise sharply to get back to levels associated with average growth rates.
“Clearly the period of falling inflation is over for emerging markets,” says UBS economist Jonathan Anderson. “We are at the inflection point.”
Japanese Regulator Eases Position on Loans
Government Will Help Banks Hurt by Plan to Delay Repayments
Shizuka Kamei
Japan’s new bank regulator is softening its stance on a proposed moratorium on
loan repayments by small business and individuals, in the latest sign that the country’s new leadership is adjusting its rhetoric to the reality of government
Geithner and Bernanke Rally Around the Dollar
China and Russia have been the major drivers behind calls for an alternative reserve currency, blaming the U.S. for the global crisis and worrying that its growing debt load could pose a further threat to stability.
The Fed will do its part to ensure that inflation remains under control, he said. “We are confident that we can manage our policies to support the economy without inducing inflation in the medium term,” he said. “We are committed to low inflation and we fully believe we have the tools and the political will necessary to achieve that.”
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