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  • The judge concluded Officer Edward Nero played little role in the arrest and wasn't responsible for the failure by police to buckle Gray in  
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  • Bill Cosby faces a preliminary hearing Tuesday to determine if his criminal sex-assault case in suburban Philadelphia goes to trial.Prosecutors had declined to charge the comedian-actor over the 2005 complaint, but arrested him in December after his explosive deposition in the woman's lawsuit became public. In the testimony given in that deposition, Cosby is grilled about giving drugs and alcohol to women before sex; making secret payments to ex-lovers; and hosting Andrea Constand at his home. They knew each other through Temple University, where he was a trustee and she managed the women's basketball team. Bill Cosby's wife refused to answer dozens of questions during a combative deposition in a defamation lawsuit filed by seven women who say the comedian branded them liars after they accused him of sexually assaulting them, according to a transcript released Friday. Camille Cosby was subjected to intense questioning by the women's lawyer, who repeatedly pressed her to say whether she believes her husband "acted with a lack of integrity" during their 52-year marriage. The lawyer also asked if her husband used his position and power "to manipulate young women." Camille Cosby didn't answer those questions and many others after her lawyer cited marital privilege, the legal protection given to communications between spouses. She repeatedly said she had "no opinion" when pressed on whether she viewed her husband's behavior as dishonest and a violation of their marriage vows. About 50 women have publicly accused Bill Cosby of forcing unwanted sexual contact on them decades ago. Cosby has denied the allegations. He faces a criminal case in Pennsylvania, where prosecutors have charged him with sexually violating a former Temple University employee, Andrea Constand. He has pleaded not guilty. Camille Cosby answered questions in the deposition Feb. 22 and again April 19 after her lawyers argued unsuccessfully to stop it. A judge ruled she would have to give a deposition but said she could refuse to answer questions about private communications between her and her husband. Camille Cosby's lawyer, Monique Pressley, repeatedly cited that privilege and advised her not to answer many questions asked by the women's lawyer, Joseph Cammarata. The exchanges between Cammarata and Cosby became testy at times, and she admonished him: "Don't lecture me. Just keep going with the questions." Using a transcript of a deposition Bill Cosby gave in a civil lawsuit filed by Constand in 2005 and a transcript of an interview she gave to Oprah Winfrey in 2000, Cammarata asked Camille Cosby about extramarital affairs her husband had. "Were you aware of your husband setting up trusts for the benefit of women that he had a sexual relationship with?" Cammarata asked. She didn't answer after her lawyer cited marital privilege. Cammarata asked her about Shawn Thompson, a woman who said Bill Cosby fathered her daughter, Autumn Jackson, in the 1970s. Jackson was convicted in 1997 of attempting to extort money from Bill Cosby to prevent her from telling a tabloid she's his daughter. He acknowledged he had an affair with her mother and had given her money. "Was it a big deal when this came up in the 1970s that your husband had — big deal to you that your husband had an extramarital affair and potentially had a daughter from that extramarital affair?" Cammarata asked. "It was a big deal then, yes," Camille Cosby replied. She said she had "no opinion" on whether her husband's admission he obtained quaaludes to give to women with whom he wanted to have sex violated their marriage vows. Her lawyer objected and instructed her not to answer when Cammarata asked her if she ever suspected she had been given any type of drug to alter her state of consciousness when she had sex with her husband. A spokesman for the Cosbys declined to comment on her deposition. The Cosbys have a home in Shelburne Falls, an hour's drive from Springfield, where the lawsuit, seeking unspecified damages, was filed. An attorney handling a separate lawsuit against Bill Cosby revealed Friday that Playboy magazine founder Hugh Hefner provided sworn testimony Wednesday. In the sexual battery lawsuit filed in Los Angeles, Judy Huth says Cosby forced her to perform a sex act on him at the Playboy Mansion around 1974, when she was 15. Bill Cosby's former lawyers have accused Huth of attempting to extort him before filing the case and have tried unsuccessfully to have it dismissed. Huth's attorney, Gloria Allred, said Hefner's testimony will remain under seal for now. Hefner also was named as a defendant in a case filed Monday by former model Chloe Goins, who accuses Bill Cosby of drugging and sexually abusing her at the Playboy Mansion in 2008.   The Associated Press generally doesn't identify people who say they're victims of sexual abuse, but the women accusing Cosby have come forward to tell their stories.___AP Entertainment Writer Anthony McCartney contributed to this report from Los Angeles.
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  • Some hope killing will bring peace in Afghanistan     
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Federal Reserve Chairman Janet Yellen, center, arrives at the office of CONNECT, a coalition of local organizations that provides employment services in Chelsea, Mass., escorted by Executive Director of The Neighborhood Developers Ann Houston, left, and Marissa Guananja, right, and followed by President and CEO of the Federal Reserve Bank of Boston Eric Rosengren. second from right, Thursday, Oct. 16, 2014. (AP Photo/Michael Dwyer)

NEW YORK (AP) — Soaring inflation. A collapsing dollar. Bubbles in financial markets that would soon pop. One presidential candidate even suggested that the Federal Reserve chairman should be roughed up.

Over the past five years, as the Fed has pumped ever-more money into the financial system, critics have warned that it would lead to all kinds of disasters. Yet the central bank kept extending its bond-buying program, known by the wonky name of quantitative easing, or QE. It was an unprecedented effort aimed at lowering borrowing costs, encouraging spending and reviving a dormant economy before it could slip back into recession.

Now, $4 trillion later, QE is drawing to a close, so the question is: Did it work?

Economists have plenty of quibbles, but many agree that the Fed accomplished the bulk of its goals.

"Look at us now," says Anthony Chan, chief economist for Chase Private Client in New York. All of the jobs lost during the financial crisis have been recovered. The stock market has more than doubled, and inflation has remained tame.

"I have to say it was a pretty impressive success," Chan says. "But other people define success differently."

At the tail end of 2008, the Fed cut its benchmark short-term lending rate to a record low to spur growth, then made an historic move. It began the first round of QE, buying $100 billion in bonds backed by mortgages every month. The Bush administration had already hatched a number of rescue programs aimed at patching up the banking system, and so the Fed's initial step met little resistance.

Liz Ann Sonders, the chief investment strategist at Charles Schwab, compared the Fed's action to a famous scene in the movie "Pulp Fiction" when Vincent, played by John Travolta, revives a woman near death.

"It was like Travolta slamming the needle into her heart," Sonders says. "It was clearly the right thing to do."

The Fed's second round of quantitative easing, dubbed QE2, received a hostile reception.

In late August 2010, the economy had slowed to a crawl, and the big worry was deflation — a dangerous spiral of falling prices and wages. During a speech that month in Jackson Hole, Wyoming, Fed Chairman Ben Bernanke outlined a turnaround plan.

The Fed began buying $600 billion in U.S. government bonds that November to loud protests.

QE3 followed the next year, and the heated rhetoric increased.

John Boehner, the speaker of the House, argued that the Fed risked creating "hard-to-control" inflation, a weak U.S. dollar and market bubbles. After entering the presidential campaign in 2011, Texas Gov. Rick Perry said that it would be "almost treasonous" if Bernanke "prints more money" ahead of the election. Perry told an Iowa crowd "we would treat him pretty ugly down in Texas."

Here's what has actually happened since Bernanke made the case for the Fed's expanded effort in August 2010:

— The unemployment rate has fallen to 5.9 percent, the lowest level since July 2008. Back in August 2010, it was 9.6 percent.

— The stock market has soared. The Standard & Poor's 500 index has returned 101 percent, powered by a stronger economy, higher spending and record corporate profits.

— The dollar has held up against most major currencies. One widely used measure, the dollar index, is 3 percent higher.

— Inflation has remained tame, despite all the warnings. Over the past year, overall prices have climbed a modest 1.7 percent, still below the 2 percent annual increase that the Fed targets.

To be sure, the Fed's efforts merely contributed to all the good things listed above. But none of the predicted disasters came true. So how did the loudest critics get it so wrong?

A common warning was that the policies would erode the dollar's value and cause investors to look for a replacement, like gold or the Swiss franc.

Chan says a flaw in this thinking was that it failed to consider that other countries would struggle, too. When investors worried that Greece's debt troubles could tear apart Europe, for instance, they rushed to buy dollars and U.S. Treasury bonds, still considered the world's haven.

Long-term interest rates in the U.S. may be low, but sluggish growth across the industrialized world means government bond rates in Japan and Germany are even lower. As a result, foreign banks and investors keep buying U.S. bonds, stoking demand for dollars.

"How fast is your country growing, and what are its interest rates relative to the rest of the world? Those are the key things that determine a currency's strength," Chan says. "Guess what? We're now growing faster than Europe. Our success means our dollar should get stronger."

Y-Money-fullPHOTO: An employee counts British pounds and Euro notes at a currency exchange office in downtown Rome, Tuesday, Oct. 28, 2014. Economists have plenty of quibbles, but many agree that the Federal Reserve accomplished the bulk of its goals with its bond-buying program, known as quantitative easing, or QE. The dollar has actually held up against most major currencies, as the euro and Japanese yen have slumped. (AP Photo/Gregorio Borgia)

Critics also predicted that the Fed would create runaway inflation, a result of pumping so much money into circulation. It was a popular idea, based on the common-sense notion that a flood of dollars would make the greenback cheap.

In reality, much of the money never saw daylight. When the Fed bought bonds from big banks, it gave them an electronic credit on their accounts at the Fed. Starting in the financial crisis, the central bank paid interest on those reserves, so big banks could just sit on the money. Excess bank reserves soared from $800 billion at the start of 2009 to $2.7 trillion today.

"The criticisms of QE were clearly overblown," says Dean Baker, co-director of the Center for Economic and Policy Research, a liberal think tank based in Washington. "The flip side is that the benefits were exaggerated, too."

The Fed has been scaling back its bond buying this year. It said at its September meeting that it plans to shut down the program after buying a final $15 billion in securities this month — as long the economy keeps improving. Even if the central bank goes ahead and announces the end of the purchases on Wednesday, it will be left with a $4.5 trillion balance sheet that will keep putting pressure on long-term rates.

At the moment, the Fed has said it plans to maintain its holdings at that level. When it does begin to reduce its portfolio, it will do so in a "gradual and predictable manner" by ceasing to re-invest maturing bonds. However, it has left many questions about how it will unwind its balance sheet unanswered.

It is also keeping markets guessing about another big question: When exactly will it start hiking its benchmark lending rate? That move is expected at some point next year.

Many on Wall Street have faith that the central bank will raise interest rates slowly enough to not derail the recovery.

"I'm less worried because I see all the progress," Chan says. "Could the economy lose momentum? Sure. It's like when you get off crutches. You're a little uneasy at first."

But some economists still worry that the economy won't be ready when the Fed decides to start raising rates. "The logic of a rate hike is that employment is taking off and the Fed needs to cool the economy down," says Baker. "We're so far from that."

Even some optimists expect more market turbulence as the Fed moves closer to its first interest rate hike since 2006.

Schwab's Sonders notes that economists and market strategists can usually find similar situations in the past and use them to guide projections. But history offers little guidance for the months ahead. The Fed has never wrapped up a $4 trillion stimulus program and has no experience raising rates from zero.

"Usually you can ask, 'When's the last time the Fed did this?'" Sonders says. "But, no, there is no last time."

 

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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