U.S. economy to "grow" 3% under new GDP calculation

In July of 2013, the U.S. gross domestic product will officially grow three percent, due to a few additions to the statistics that economists have been using to calculate GDP for years.

From now on, government statisticians will take into account money earned from creative works including movies, television shows, books, theater and music. Money spent on research and development, which has, until now, been considered a cost of doing business will also be included.

Lewis Alexander, chief U.S. economist for Nomura, says the new additions are meant to reflect a shift in what’s important in a twenty-first century economy.

“You can think of it as the growing importance of the IT industry, but obviously the entertainment industry as well,” Alexander said.

Still, economists say that while the new additions will boost GDP, they will be too small to fundamentally change our view of how the economy is doing.

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U.S. economy to "grow" 3% under new GDP calculation

Like Shamu, SeaWorld leaps after IPO: Why theme parks are doing well

What’s black and white, weighs 10,000 pounds, and is now publicly traded? Shamu, the orca, of course.

SeaWorld Entertainment debuted on the New York Stock Exchange today, and investors applauded as exuberantly as if they had just seen Shamu do a triple back flip. SeaWorld and other publically traded theme parks have outperformed the stock market this year.

Theme parks, much like the children whose earnest screams fuel them, are resilient. The $ 13 billion a year industry saw revenue grow 2.9 percent last year, according to IBISWorld. And, attendance at big California parks rose by double digits, says John Robinson, chief executive officer of the California Attractions and Parks Association.

“Even when the economy isn’t doing well,” explains Robert Niles, editor of ThemeParkInsider.Com, “theme parks tend to be a popular substitute for people who may have considered more expensive vacation destinations.”

Niles says many of the big amusement parks have made major investments in new characters and attractions.  Universal opened the Wizarding World of Harry Potter in 2010, for example, and SeaWorld is about to debut a $ 100 million attraction in Orlando based on Antarctica and penguins. “People love penguins. They’re cute,” Niles says.

And those investments are paying off. SeaWorld, which has 11 theme parks, has swung from a loss to a surging profit in just two years.

At Disney and Universal theme parks in Florida, says character performer Sawyer Stroud, “During the spring break-Easter peak season, it was the busiest I’ve seen the parks in the seven years I’ve been here.”

The rising share prices of theme parks are also a sign that investors are expecting the economy — and discretionary consumer spending — to improve, says Nima Samadi, a senior analyst at IBISWorld. “The story with this is as the economy recovers so will amusement and theme parks continue to grow,” he says.

In other words, the economic roller coaster ride may be coming to an end soon.

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Like Shamu, SeaWorld leaps after IPO: Why theme parks are doing well

Why I love doing taxes

Today is tax day. Some of you are probably doing your best to get them done at the last minute, or have requested an extension. We suspect that, no matter when you did your taxes, it wasn’t the most fun you’ve had this year.

Here’s someone who has a different feeling about taxes — tax preparer Bruce McFarland talks about why he actually enjoying doing them. Listen above.

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Why I love doing taxes

The Bordeaux Effect

Via Mark J. Grant, author of Out of the Box,

I have seen it before. God willing, I will see it again. A world that is dislocated, on a different axis, where the economy is doing one thing and the markets are doing something else that is not connected. After almost forty years on Wall Street I have seen a great many imbalances. None quite like this one though; none as distorted.
 
As political nonsense becomes the world’s normal banter; the official language in the Press is little more than printed or spoken noise.
 
It is all caused by the Fed’s outpouring of money into the system which has caused carnage for savers, investors and has pushed the equity markets past anyplace that the economy can rationally support and caused bond compression that is frankly, dumb. The employment numbers on Friday are a good indicator of the real economy; a real unemployment rate of 11.6% that has been fictionalized by the amount of people no longer in the work force so that the data is seriously skewed towards political fantasy.
 
The world will return to its senses once again either driven by some “event” or by the Fed beginning some sort of withdrawal. In the meantime the markets are beginning to back-up some as moved by becoming accustomed to the continuing flood of money. It is rather like a fine Bordeaux. One meal, two meals, a week’s worth of meals and the experience is marvelous but if you drink it every night for dinner the magic begins to dissipate. It is no longer special; it is something expected, it is just the normal fare.
 
Rational reactions become irrational when confined to an irrational world. We live in such a world at present. The money created must go somewhere and so it does which causes the soaring markets while not improving the American economy enough to justify it. If nothing else we have all now gotten to see what the unlimited creation of little blue and green pieces of paper does to the world. The outcome, so long wondered about by any number of economists, has now been proved but I fear the magnificence of the Bordeaux is wearing off and may turn to vinegar before it is all consumed.
 
“Irrational exuberance” has returned and in a bigger way than before. It is not this market or that market but all of the markets that have been afflicted by the new money that has been created. It is too much paper and a trash bin that has grown no larger and so it spills out and blows about in the wind. Japan has now joined the fray and so there is no region left on Earth where they have not learned the trick of mixing water with pulp and calling it money.
 
It may be an “event” but it may just be the “Bordeaux Effect” that turns the ship one night as we are all sleeping.

Zero Hedge

The Bordeaux Effect

Beware the rise of the robo-grader

A robo-grader may be coming to a school near you. 

EdX, the nonprofit collaboration between Harvard and the Massachusetts Institute of Technology, is about to launch a new free Internet service that uses artificial intelligence to grade student essays without any input from teachers. 

But Dr. Joshua Kim, an administrator in learning and technology at Dartmouth College, says the new technology isn’t meant to replace teacher feedback — it’s meant to get more students writing. 

“The choice is between doing something like this and not doing any writing and only doing multiple choice,” Kim said. “So if a technology like this can introduce writing into large classes where the writing was not going on because the classes were too big, I think that’s a great technology.” 

He added, “Maybe this technology is sort of a gateway drug for getting people writing and they’ll end up in the small seminars that we all believe are what education should be about.” 

One criticism of some examination methods is that teachers “teach to the test” so students get high scores. With the EdX essay grader, will students learn to write to the robot?

Professor Kim says that’s not likely. “I think that any technology can be misused and I think we’re starting to see this with these massively open online courses where people are thinking, well this is a substitute for what goes on in higher education.” But Kim says, “It’s only a tool, its a way to engage our students, to get them to think and participate and to build. Sure, it could be misused but I’m not so worried about that.”

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Beware the rise of the robo-grader

After The Banksters Steal Money From Bank Accounts In Cyprus They Will Start Doing It EVERYWHERE

Cyprus is a beta test.  The banksters are trying to commit bank robbery in broad daylight, and they are eager to see if the rest of the world will let them get away with it.  Cyprus was probably chosen because it is very small (therefore nobody will care too much about it) and because there is a lot of foreign (i.e. Russian) money parked there.  The IMF and the EU could have easily bailed out Cyprus without any trouble whatsoever, but they purposely decided not to do that.  Instead, they decided that this would be a great time to test the idea of a “wealth tax”.  The government of Cyprus was given two options by the IMF and the EU – either they could confiscate money from private bank accounts or they could leave the eurozone.  Apparently this was presented as a “take it or leave it” proposition, and many are using the world “blackmail” to describe what has happened.  Sadly, this decision is going to set a very ominous precedent for the future and it is going to have ripple effects far beyond Cyprus.  After the banksters steal money from bank accounts in Cyprus they will start doing it everywhere.  If this “bank robbery” goes well, it will only be a matter of time before depositors in nations such as Greece, Italy, Spain and Portugal are asked to take “haircuts” as well.  And what will happen one day when the U.S. financial system collapses?  Will U.S. bank accounts also be hit with a “one time” wealth tax?  That is very frightening to think about.

Cyprus is a very small nation, so it is not the amount of money involved that is such a big deal.  Rather, the reason why this is all so troubling is that this “wealth tax” is shattering confidence in the European banking system.  Never before have the banksters come directly after bank accounts.

If everything goes according to plan, every bank account in Cyprus will be hit with a “one time fee” this week.  Accounts with less than 100,000 euros will be hit with a 6.75% tax, and accounts with more than 100,000 euros will be hit with a 9.9% tax.

How would you feel if something like this happened where you live?

How would you feel if the banksters suddenly demanded that you hand over 10 percent of all the money that you had in the bank?

And why would anyone want to still put money into the bank in nations such as Greece, Italy, Spain or Portugal after all of this?

One writer for Forbes has called this “probably the single most inexplicably irresponsible decision in banking supervision in the advanced world since the 1930s.“  And I would agree with that statement.  I certainly did not expect to see anything like this in Europe.  This is going to cause people to pull money out of banks all over the continent.  If I was living in Europe (and especially if I was living in one of the more financially-troubled countries) that is exactly what I would be doing.

The bank runs that we witnessed in Cyprus over the weekend may just be a preview of what is coming.  When this “wealth tax” was announced, it triggered a run on the ATMs and many of them ran out of cash very rapidly.  A bank holiday was declared for Monday, and all electronic transfers of money were banned.

Needless to say, the people of Cyprus were not too pleased about all of this.  In fact, one very angry man actually parked his bulldozer outside of one bank branch and threatened to physically bulldoze his way inside.

But this robbery by the banksters has not been completed yet.  First, the Cypriot Parliament must approve the new law authorizing this wealth confiscation on Monday.  If it is approved, then the actually wealth confiscation will take place on Tuesday morning.

According to Reuters, the new president of Cyprus is warning that if the bank account tax is not approved the two largest banks in Cyprus will collapse and there will be complete and total financial chaos in his country…

President Nicos Anastasiades, elected three weeks ago with a pledge to negotiate a swift bailout, said refusal to agree to terms would have led to the collapse of the two largest banks.

“On Tuesday … We would either choose the catastrophic scenario of disorderly bankruptcy or the scenario of a painful but controlled management of the crisis,” Anastasiades said in written statement.

In several statements since his election, he had previously categorically ruled out a deposit haircut.

The fact that the new president had previously ruled out any kind of a wealth tax has a lot of people very, very upset.  They feel like they were flat out lied to…

“I’m furious,” said Chris Drake, a former Middle East correspondent for the BBC who lives in Cyprus. “There were plenty of opportunities to take our money out; we didn’t because we were promised it was a red line which would not be crossed.”

But apparently the wealth confiscation could actually have been far worse.  According to one report, the IMF and the EU were originally demanding a 40% wealth tax on bank account holders in Cyprus…

As the President of Cyprus proclaims  to his people that “we’ should all take responsibility as his historic decision will “lead to the permanent rescue of the economy,” it appears that the settled-upon 9.9% haircut is a ‘good deal’ compared to the stunning 40% of total deposits that Germany’s FinMin Schaeuble and the IMF demanded.

Could you imagine?

How would you feel if you woke up someday and 40% of all your money had been taken out of your bank accounts?

At this point, there is still some doubt about whether this plan will actually be adopted or not.

Right now the new president of Cyprus does not have the votes that he needs, but you can be sure that there is some high level arm twisting going on.

Originally the vote was supposed to happen on Sunday, but it was delayed until Monday to allow for some extra “persuading” to be done.

And of course the people of Cyprus are overwhelmingly against this wealth tax.  In fact, one poll found that 71 percent of the entire population of Cyprus wants this plan to be voted down.

The funny thing is that Cyprus is not even in that bad of shape.

The unemployment rate is around 12 percent, but in other European nations such as Greece and Spain the unemployment rate is more than double that.

Cyprus has a debt to GDP ratio of about 87 percent, but the United States has a debt to GDP ratio of well over 100 percent.

So if they will go directly after bank accounts in Cyprus, what will stop them from going after bank accounts in larger nations when the time comes?

In the final analysis, this is a game changer.  No longer will any bank account in the western world be considered to be 100 percent safe.

Trust is a funny thing.  It takes a long time to build, but it can be destroyed in a single moment.

Trust in European banks has now been severely damaged, and that damage is not going to be undone any time soon.

A recent blog post by the CEO of Saxo Bank, Lars Christensen, did a great job of explaining how incredibly damaging this move by the IMF and the EU truly is…

This is a breach of fundamental property rights, dictated to a small country by foreign powers and it must make every bank depositor in Europe shiver. Although the representatives at the bailout press conference tried to present this as a one-off, they were not willing to rule out similar measures elsewhere – not that it would have mattered much as the trust is gone anyway. It is now difficult to expect any kind of limitation to what measures the Troika and EU might take when the crisis really starts to bite.

if you can do this once, you can do it again. if you can confiscate 10 percent of a bank customer’s money, you can confiscate 25, 50 or even 100 percent. I now believe we will see worse as the panic increases, with politicians desperately trying to keep the EUR alive.

Depositors in other prospective bailout countries must be running scared – is it safe to keep money in an Italian, Spanish or Greek bank any more? I dont know, must be the answer. Is it prudent to take the risk? You decide. I fear this will lead to massive capital outflows from weak Eurozone countries, just about the last thing they need right now.

This is the biggest moment that we have witnessed since the beginning of the European financial crisis.

Financial authorities in Europe could try to calm nerves by at least pretending that this will never happen again in any other country, but so far  they are refusing to do that…

Jeroen Dijsselbloem, president of the group of euro-area ministers, on Saturday declined to rule out taxes on depositors in countries beyond Cyprus, although he said such a measure was not currently being considered.

Such a measure is “not currently being considered” for other members of the eurozone?

Yeah, that sure is going to make people feel a lot more confident in what is coming next.

I have insisted over and over that the next wave of the economic collapse would originate in Europe, and we may have just witnessed the decision that will cause the dominoes to start to fall.

The banksters have sent a very clear message.  When the chips are down, they are going to come after YOUR money.

So what do you think about the bank robbery that is taking place in Cyprus?  Please feel free to post a comment with your thoughts below…

Be Sociable, Share!

• 

The Economic Collapse

After The Banksters Steal Money From Bank Accounts In Cyprus They Will Start Doing It EVERYWHERE

After The Banksters Steal Money From Bank Accounts In Cyprus They Will Start Doing It EVERYWHERE

Cyprus is a beta test.  The banksters are trying to commit bank robbery in broad daylight, and they are eager to see if the rest of the world will let them get away with it.  Cyprus was probably chosen because it is very small (therefore nobody will care too much about it) and because there is a lot of foreign (i.e. Russian) money parked there.  The IMF and the EU could have easily bailed out Cyprus without any trouble whatsoever, but they purposely decided not to do that.  Instead, they decided that this would be a great time to test the idea of a “wealth tax”.  The government of Cyprus was given two options by the IMF and the EU – either they could confiscate money from private bank accounts or they could leave the eurozone.  Apparently this was presented as a “take it or leave it” proposition, and many are using the world “blackmail” to describe what has happened.  Sadly, this decision is going to set a very ominous precedent for the future and it is going to have ripple effects far beyond Cyprus.  After the banksters steal money from bank accounts in Cyprus they will start doing it everywhere.  If this “bank robbery” goes well, it will only be a matter of time before depositors in nations such as Greece, Italy, Spain and Portugal are asked to take “haircuts” as well.  And what will happen one day when the U.S. financial system collapses?  Will U.S. bank accounts also be hit with a “one time” wealth tax?  That is very frightening to think about.

Cyprus is a very small nation, so it is not the amount of money involved that is such a big deal.  Rather, the reason why this is all so troubling is that this “wealth tax” is shattering confidence in the European banking system.  Never before have the banksters come directly after bank accounts.

If everything goes according to plan, every bank account in Cyprus will be hit with a “one time fee” this week.  Accounts with less than 100,000 euros will be hit with a 6.75% tax, and accounts with more than 100,000 euros will be hit with a 9.9% tax.

How would you feel if something like this happened where you live?

How would you feel if the banksters suddenly demanded that you hand over 10 percent of all the money that you had in the bank?

And why would anyone want to still put money into the bank in nations such as Greece, Italy, Spain or Portugal after all of this?

One writer for Forbes has called this “probably the single most inexplicably irresponsible decision in banking supervision in the advanced world since the 1930s.“  And I would agree with that statement.  I certainly did not expect to see anything like this in Europe.  This is going to cause people to pull money out of banks all over the continent.  If I was living in Europe (and especially if I was living in one of the more financially-troubled countries) that is exactly what I would be doing.

The bank runs that we witnessed in Cyprus over the weekend may just be a preview of what is coming.  When this “wealth tax” was announced, it triggered a run on the ATMs and many of them ran out of cash very rapidly.  A bank holiday was declared for Monday, and all electronic transfers of money were banned.

Needless to say, the people of Cyprus were not too pleased about all of this.  In fact, one very angry man actually parked his bulldozer outside of one bank branch and threatened to physically bulldoze his way inside.

But this robbery by the banksters has not been completed yet.  First, the Cypriot Parliament must approve the new law authorizing this wealth confiscation on Monday.  If it is approved, then the actually wealth confiscation will take place on Tuesday morning.

According to Reuters, the new president of Cyprus is warning that if the bank account tax is not approved the two largest banks in Cyprus will collapse and there will be complete and total financial chaos in his country…

President Nicos Anastasiades, elected three weeks ago with a pledge to negotiate a swift bailout, said refusal to agree to terms would have led to the collapse of the two largest banks.

“On Tuesday … We would either choose the catastrophic scenario of disorderly bankruptcy or the scenario of a painful but controlled management of the crisis,” Anastasiades said in written statement.

In several statements since his election, he had previously categorically ruled out a deposit haircut.

The fact that the new president had previously ruled out any kind of a wealth tax has a lot of people very, very upset.  They feel like they were flat out lied to…

“I’m furious,” said Chris Drake, a former Middle East correspondent for the BBC who lives in Cyprus. “There were plenty of opportunities to take our money out; we didn’t because we were promised it was a red line which would not be crossed.”

But apparently the wealth confiscation could actually have been far worse.  According to one report, the IMF and the EU were originally demanding a 40% wealth tax on bank account holders in Cyprus…

As the President of Cyprus proclaims  to his people that “we’ should all take responsibility as his historic decision will “lead to the permanent rescue of the economy,” it appears that the settled-upon 9.9% haircut is a ‘good deal’ compared to the stunning 40% of total deposits that Germany’s FinMin Schaeuble and the IMF demanded.

Could you imagine?

How would you feel if you woke up someday and 40% of all your money had been taken out of your bank accounts?

At this point, there is still some doubt about whether this plan will actually be adopted or not.

Right now the new president of Cyprus does not have the votes that he needs, but you can be sure that there is some high level arm twisting going on.

Originally the vote was supposed to happen on Sunday, but it was delayed until Monday to allow for some extra “persuading” to be done.

And of course the people of Cyprus are overwhelmingly against this wealth tax.  In fact, one poll found that 71 percent of the entire population of Cyprus wants this plan to be voted down.

The funny thing is that Cyprus is not even in that bad of shape.

The unemployment rate is around 12 percent, but in other European nations such as Greece and Spain the unemployment rate is more than double that.

Cyprus has a debt to GDP ratio of about 87 percent, but the United States has a debt to GDP ratio of well over 100 percent.

So if they will go directly after bank accounts in Cyprus, what will stop them from going after bank accounts in larger nations when the time comes?

In the final analysis, this is a game changer.  No longer will any bank account in the western world be considered to be 100 percent safe.

Trust is a funny thing.  It takes a long time to build, but it can be destroyed in a single moment.

Trust in European banks has now been severely damaged, and that damage is not going to be undone any time soon.

A recent blog post by the CEO of Saxo Bank, Lars Christensen, did a great job of explaining how incredibly damaging this move by the IMF and the EU truly is…

This is a breach of fundamental property rights, dictated to a small country by foreign powers and it must make every bank depositor in Europe shiver. Although the representatives at the bailout press conference tried to present this as a one-off, they were not willing to rule out similar measures elsewhere – not that it would have mattered much as the trust is gone anyway. It is now difficult to expect any kind of limitation to what measures the Troika and EU might take when the crisis really starts to bite.

if you can do this once, you can do it again. if you can confiscate 10 percent of a bank customer’s money, you can confiscate 25, 50 or even 100 percent. I now believe we will see worse as the panic increases, with politicians desperately trying to keep the EUR alive.

Depositors in other prospective bailout countries must be running scared – is it safe to keep money in an Italian, Spanish or Greek bank any more? I dont know, must be the answer. Is it prudent to take the risk? You decide. I fear this will lead to massive capital outflows from weak Eurozone countries, just about the last thing they need right now.

This is the biggest moment that we have witnessed since the beginning of the European financial crisis.

Financial authorities in Europe could try to calm nerves by at least pretending that this will never happen again in any other country, but so far  they are refusing to do that…

Jeroen Dijsselbloem, president of the group of euro-area ministers, on Saturday declined to rule out taxes on depositors in countries beyond Cyprus, although he said such a measure was not currently being considered.

Such a measure is “not currently being considered” for other members of the eurozone?

Yeah, that sure is going to make people feel a lot more confident in what is coming next.

I have insisted over and over that the next wave of the economic collapse would originate in Europe, and we may have just witnessed the decision that will cause the dominoes to start to fall.

The banksters have sent a very clear message.  When the chips are down, they are going to come after YOUR money.

So what do you think about the bank robbery that is taking place in Cyprus?  Please feel free to post a comment with your thoughts below…

Be Sociable, Share!

• 

The Economic Collapse

After The Banksters Steal Money From Bank Accounts In Cyprus They Will Start Doing It EVERYWHERE

Want a job? Get an internship first

Marketplace teamed up with The Chronicle of Higher Education to find out what exactly employers are looking for in today’s college grads. On the one hand, no surprise — they want bright, shiny degrees. Even in industries like manufacturing and retail, a four-year degree is increasingly seen as a must. But what really gets employers’ bacon sizzling is work experience. And particularly, internships. Plus, the survey showed that the credential that really stands out in resumes of recent college graduates is an internship, followed closely by work experience of some kind.

---

Follow more of our coverage on the survey’s findings:

Internships become the new job requirement
What do employers really want from college grads?

---

Some degree programs do require an internship or some form of experiential learning — such as in journalism or health sciences — but often it’s up to students to get one. And grads who don’t intern while at college can find it difficult to land an internship after graduating or even afford one for no pay or little money. In addition, studies show more and more job listings require a degree for work.

But even though more employers are demanding a degree, they’re also saying colleges aren’t doing a good enough job. What do they really want?

For instance, 31% of employers in the survey said colleges were doing a ‘fair’ to ‘poor’ job preparing what they called ‘successful employees,’ a sizeable minority. They said job candidates were most lacking in things like writing and communication skills, adaptability, making decisions, and problem solving. They said it’s the colleges’ job to teach these things. But some might argue that employers need to be doing more training on their own, especially in entry-level jobs. Nearly a third of employers in the survey told us that grads are unprepared or even very unprepared for the job search.

See how qualified you are….. try our simulator above.

Latest Stories on Marketplace.org

Want a job? Get an internship first

The economy + Valentine"s Day = True Love?

Love was in the air this week — and we’re not just talking about Valentine’s Day. Businesses and investors also had their hearts aflutter.

American Airlines and US Airways announced wedding plans. The boards of both carriers approved a merger. And Warren Buffett’s Berkshire Hathaway said it is starting up a relationship with Heinz. Buffet’s company will help buy Heinz for$ 23 billion in cash.

“There’s almost a perfect combination of factors leading to a kind of dealmaking right now,” says FT Alphaville’s Cardiff Garcia. “Interest rates are low, expected to remain low. It’s cheap to borrow money. The companies doing the buying have a lot of cash on their balance sheets.”

Congress, meanwhile, is still having marital difficulties. With the massive spending cuts known as “the sequester” just two weeks away, Republicans and Democrats are no closer to seeing eye to eye.

“I’ve lived in this town long enough to know that the government moves very slow,” says Nela Richardson of Bloomberg Government. “Until it doesn’t. And then it moves very quickly.”

In Richardson’s estimation the effects of sequestion — a reduction in GDP, 750,000 jobs cut — “That’s enough to get people’s attention and actually make them get back to work and do this deal.”

In his State of the Union address on Tuesday, President Obama offered his own ideas on how to improve another long-term relationship — the economy. He talked about deficit reduction and balancing the budget, while offering a long list of government programs he hopes to grow over the next four years.

There has to be some give and take for the relationship to work though, warns Richardson. Americans can’t want everything wihtout wanting to pay for anything.

“Having your cake and eating it too is a perfectly fine state of being,” she says,”until you run out of cake.”

And we asked them to give us some suggestions for some weekend reading:

Garcia recommended:

• An in-depth look at the effects of the oil boom in North Dakota — both good and bad.
• The FT’s Lucy Kellaway on the gambling addictions of London traders.
• A visit to Burning Man … with dad.

And Richardson chose:

• For those still on the fence about owning versus buying, some help from Bloomberg Businessweek. 
• The next big thing Washington, D.C. will be buzzing about. 
• A fascinating, and deeply philosophical, treatment of race and ethnicity. (You may need to have coffee first for this one.)

Latest Stories on Marketplace.org

The economy + Valentine"s Day = True Love?

Fed officials warn about doing too much, or too little

By Paul Day and Ann Saphir

MADRID/STANFORD, California | Tue Feb 12, 2013 11:24pm EST

MADRID/STANFORD, California (Reuters) – The tug-of-war over U.S. monetary policy was on full display on Tuesday as one top Federal Reserve official warned against being too timid, two others focused on the risks of being too bold, and a fourth said the Fed’s policy was too vague.

Atlanta Fed President Dennis Lockhart, speaking in Madrid, predicted the U.S. economy would remain weak and cautioned that unemployment, at 7.9 percent last month, could become entrenched if left unaddressed.

“A sense of urgency is appropriate,” said Lockhart, a centrist who does not vote on Fed policy this year. “If policymakers are too patient, what started as cyclical problems can evolve into structural problems.

The U.S. central bank is buying $ 85 billion in Treasuries and mortgage-backed securities each month to boost the economy and has pledged to continue with asset purchases until the labor market outlook improves substantially.

In December, it went further into uncharted territory with a promise to keep interest rates near zero until unemployment falls to 6.5 percent, as long as inflation does not threaten to rise above 2.5 percent, and to keep policy highly accommodative even after the recovery strengthens.

Lockhart’s view that such action is needed represents that of the majority of the Fed’s 19 policymakers, including Chairman Ben Bernanke.

But a handful of their more hawkish colleagues are less comfortable with the Fed’s aggressive policies.

Kansas City Fed President Esther George, a voter who dissented at a Fed policy meeting last month, said the Fed could disrupt markets if it actively sells large amounts of mortgage-backed securities when the time comes to tighten monetary policy.

Addressing an audience at University of Nebraska-Omaha, George also warned that investors could question the central bank’s commitment to its 2-percent inflation goal if inflation expectations begin to rise.

When the time finally comes, “actively selling a large amount of agency mortgage-backed securities … could be potentially disruptive to markets and market functioning,” she said, adding: “These actions are untested.

Jeffrey Lacker, the Richmond Fed’s hawkish president, reiterated his criticism of adding to monetary stimulus, saying the central bank’s large balance sheet will make it tougher to withdraw liquidity when the time comes.

“The more stimulus we provide, the greater the sensitivity to small errors in the timing and pace of withdrawal,” he told reporters after a speech in Lancaster, Pennsylvania.

PLOSSER SAYS FED GUIDANCE TOO VAGUE

A third vocal critic of the Fed’s easy policy, Philadelphia Fed President Charles Plosser, called for the central bank to be even more specific about its policy intentions.

The Fed’s policy-setting panel, the Federal Open Market Committee, “is silent on how policy will actually be conducted” once thresholds are reached, he said in a speech at the Stanford Institute for Economic Policy Research in California. “This vagueness runs counter to the theory that supports the use of this explicit form of forward guidance in the first place.” <ID:N9E8KD01K>

Plosser advocated adopting a simple policy rule that would allow markets to better predict how the Fed will react to a given set of economic conditions.

Bernanke has defended the Fed’s aggressive easy-money policies, arguing the economy needs to grow quicker to lower unemployment and withstand tighter fiscal policies and threats from abroad. He and others say the economy, especially interest rate-sensitive sectors like sales of homes and automobiles, has responded to monetary policy.

“While we’ve made progress, there’s still quite a ways to go before we’ll be satisfied,” Bernanke said in January.

Yet the slow overall recovery has cast some doubt on the U.S. central bank’s far-reaching strategy. Some Fed officials and congressional Republicans warn that the multitrillion-dollar quantitative easing efforts risk future inflation and could crimp the Fed’s ability to tighten policy when the time it right.

The U.S. economy likely expanded only slightly in the fourth quarter, despite an early government estimate that gross domestic product unexpectedly fell at a 0.1 percent rate. As it stands, overall growth was just 2.2 percent in 2012, below the 3-percent pace to which the United States is accustomed.

Hawks worry that the Fed’s thresholds express some tolerance for inflation to exceed its 2-percent goal.

That in turn “carries with it the risk that longer-term inflation expectations may flip above levels consistent with” the goal, George said, and “cause the market to question the Federal Reserve’s commitment to its inflation goal.”

Long-term inflation expectations usually predict actual inflation, George noted.

So far this year, U.S. inflation expectations have edged higher.

Lockhart said he expects the Fed will need to continue its asset buying into the second half of this year in order to keep pressure on long-term interest rates, and encourage investment and hiring.

Plosser said he expects unemployment to fall fast enough so that the Fed can begin to wean markets of its asset purchase program before the end of the year, and it could begin to contemplate a rate rise in the first half of next year.

“If my forecast is right and we are close to 7 percent unemployment rate near the end of this year, then I think we should at least to have begun backing off from our asset purchases,” Plosser said.

(Additional reporting by Steven C. Johnson, Jonathan Spicer, Pedro da Costa; Editing by Andrea Ricci and Mohammad Zargham)

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Reuters: Economic News

Fed officials warn about doing too much, or too little