Geithner Weak Dollar Seen as U.S. Recovery Route Versus BRICS - Bloomberg

For U.S. Treasury Secretary Timothy F. Geithner, a weaker dollar may now be in the national interest. The dollar has dropped more than 7 percent since Aug. 27, when Chairman Ben S. Bernanke signaled the Federal Reserve is prepared to ease monetary policy. Where once such a decline may have been met with resistance from the U.S., Geithner may now be tolerating it as a way of bolstering the recovery.
Companies from Costco Wholesale Corp. to Deere & Co. have credited the weaker dollar for giving their earnings a boost, and the currency’s slide has helped propel the Dow Jones Industrial Average above 11,000 for the first time since May. Higher stock prices in turn are bolstering consumer and business confidence. The danger is that the decline gets out of hand, fueling increases in the cost of living over the long term and prompting investors to avoid U.S debt.
“In an era where deflation pressures appear to be the greatest risk, growth is below trend and the U.S. wants to boost exports, why would they not want” a weaker dollar, Jim O’Neill, chairman of Goldman Sachs Asset Management in London, said in an interview. “The answer is when it becomes a problem for financial markets. Until then it’s a straightforward strategy.”

Will Apple’s Culture Hurt the iPhone? NYT

SAN FRANCISCO — If you want a smartphone powered by Google’s Android software, you could get Motorola’s Droid 2 or its cousin, the Droid X. Then there is the Droid Incredible from HTC, the Fascinate from Samsung and the Ally from LG. That’s just on Verizon Wireless. An additional 20 or so phones running Android are available in the United States, and there are about 90 worldwide.
But if your preference is an Apple-powered phone, you can buy — an iPhone.
That very short list explains in part why, for all its success in the phone business, Apple suddenly has a real fight on its hands. Americans now are buying more Android phones than iPhones. If that trend continues, analysts say that in little more than a year, Android will have erased the iPhone’s once enormous lead in the high end of the smartphone market. But this is not the first time Apple has found itself in this kind of fight, where its flagship product is under siege from a loose alliance of rivals selling dozens of competing gadgets.

Wall Street slides as mortgage worries hit banks

NEW YORK (Reuters) - U.S. stocks posted their biggest loss in two months on Tuesday on fears banks might be on the hook for billions of dollars in souring mortgage bonds. The afternoon selloff hit investors already reeling from an unexpected credit tightening by China and disappointing financial results from Apple (NasdaqGS:AAPL - News) and IBM (NYSE:IBM - News).
The biggest scare came on news that Bank of America (NYSE:BAC - News) and possibly others may be forced to take back billions of dollars in mortgages that should not have been bundled into bonds.
"It's reminding investors of what was the main impetus for the horrific selloff we had a few years ago," said Eric Kuby, chief investment officer at North Star Investment Management in Chicago. "If you were recently struck by lightning, you are a little skittish when there is a thunderstorm."

Fed minutes: Easing may be needed "before long"

WASHINGTON (Reuters) - Federal Reserve officials believed in September the struggling recovery might soon need more help, and they discussed several ways to provide support, including the possible adoption of a price-level target.

Policy-makers had a "sense that (more) accommodation may be appropriate before long," the central bank said on Tuesday.

In minutes of the its last policy-setting session held September 21, the Fed said officials discussed several approaches to aiding the economy but focused on buying additional longer-term Treasury securities and ways to nudge the public into expecting higher levels of inflation in the future. On Wall Street, stocks trimmed their losses, with both the Dow Jones industrial average (DJI:^DJI - News) and the Standard & Poor's 500 Index (^SPX - News) briefly turning higher after the FOMC's minutes came out.

To help shift inflation expectations, policy-makers debated providing more detailed information about what rates of inflation they would prefer, or the possibility of making clear they would tolerate a higher level of inflation on a temporary basis, a policy approach known as price-level targeting.

Krugman: The Reason Government Spending Hasn't Saved The Economy Is That There Hasn't Been Any Government Spending

Paul Krugman goes back on the attack, arguing that the reason the economy is sputtering despite the stimulus is that the stimulus didn't actually include a big surge in government spending. Ask yourself: What major new federal programs have started up since Mr. Obama took office? Health care reform, for the most part, hasn’t kicked in yet, so that can’t be it. So are there giant infrastructure projects under way? No. Are there huge new benefits for low-income workers or the poor? No. Where’s all that spending we keep hearing about? It never happened...
One compelling fact to back this up:
Since January 2009, the total number of government workers in the country has shrunk by 350,000, because state and local governments have been forced to cut back.
Government spending on goods and services, meanwhile, has only risen 3% per year for the past two years, less than it rose in the two preceding years.
So the reason the Keynesian approach hasn't worked, Krugman says, is because it hasn't been tried.

Services gain powers stocks higher; Dow up 200

World markets also rose after the central bank of Japan surprised investors by slashing interest rates to near zero. - NEW YORK (AP) -- Stocks surged to their highest level in five months Tuesday after activity in U.S. services companies powered ahead in September, a hopeful sign for the largest area of the economy and the main source of employment in the country.

A surprise move by the Bank of Japan to slash interest rates also lifted stocks worldwide. The dollar fell as investors shed defensive assets, and a gauge of U.S. stock market volatility fell.

The Institute for Supply Management reported that the U.S. services industry grew slightly faster in September as demand from customers improved. It was the ninth straight month of expansion in services, which have been growing at a slower pace in the U.S. relative to the much smaller manufacturing sector.