BEN BERNANKE

The economy stumbled badly in the first half of 2011 and came dangerously close to contracting in the January-March period, raising the risk of a recession if a standoff over the nation's debt does not end quickly.

If the impasse over the U.S. debt limit isn't broken soon, President Barack Obama will be forced to decide how he will manage the crisis.

There was little good news on the debt deal front early Wednesday: Democrats and Republicans are working on separately debt reduction plans, neither of which is likely to pass both chambers. A debt deal at this late stage is looking increasingly less likely.

There may be a point at which global investors get indigestion from U.S. money printing.

Assuming President Barack Obama and Congressional Republicans can not resolve the debt deal dispute in eight days, the unfathomable will happen -- a default by the U.S. Government. But that begs the question: what will the U.S. Federal Reserve do, if the U.S. Government defaults?

The debt talks enter a critical stage Tuesday, and there's little time left to waste on rhetoric. The two parties have less than eight days to devise a plan to cut the deficit and raise the debt ceiling. U.S. and global stock and bond markets have remained calm and patient, but that may change soon, if the markets don't see progress in D.C.

President Barack Obama, in an address to the nation Monday night, reiterated the need for a "balanced approach" to deficit reduction -- one that includes both substantial budget cuts and revenue increases, and he warned that if the debt ceiling is not raised, it would trigger a "deep economic crisis."

Time and time again, Washington has shown itself incapable of coming up with a solution to the U.S. debt ceiling impasse. Meanwhile, August 2 looms closer and closer.

Another impasse at the U.S. debt ceiling talks caused gold to touch new highs on Monday. Spot gold rose to a record $1,622.49 per ounce, an increase of 1.1 percent, as investors became nervous about the possibility of a U.S. rating downgrade. There are analysts who believe that irrespective of whether there will be a debt deal in the U.S. or not, gold will continue to rise higher, basically because of the residual weakness of the dollar.

Kansas City Federal Reserve President Thomas Hoenig said the Fed should raise interest rates that are near zero to avoid economic imbalances and asset price bubbles.

A sharply divided Congress pursued rival budget plans on Monday that appeared unlikely to win broad support, pushing the United States closer to a ratings downgrade and debt default that would send shockwaves through global markets.

As time marches towards August 2, the day the US would presumably default if the debt ceiling isn't raised, calls are growing louder and louder for a resolution.

House Speaker John Boehner, R-Ohio, took pains to underscore that not only have the debt deal talks resumed, he says all parties are working toward an agreement. Time certainly is of the essence: the U.S. has less than 10 days to raise the debt ceiling and avoid a default.

President Barack Obama, D-Ill. and Speaker John Boehner, R-Ohio moved closer toward a landmark debt deal late Thursday -- one that would avoid a U.S. default and implement major tax code changes, if approved. However, aides to both were lowering expectations, given the importance of the talks, so as to not jeopardize delicate negotiations within each caucus.

If the economy does not show signs of sustainable improvement this quarter, the Federal Reserve should dig into its toolbox to find new ways to help it along, a top Fed official said on Thursday.

As major institutions around the world continue to deal with the impact of the financial crisis, regulators will soon be laying down ground rules to buttress against a potential collapse of financial firms large enough to shake global markets, Federal Reserve Chairman Ben Bernanke said Thursday.

A top Federal Reserve official said on the Thursday the U.S. economy should grow at a modest pace for the next several years, but issued a harsh criticism of the U.S. central bank's just-concluded bond buying program.

A U.S. Government default must be avoided by Washington lawmakers at all costs, former U.S. Treasury Secretary Lawrence Summers underscored, as it would trigger a financial panic worse than that precipitated by the collapse of Lehman Brothers in late 2008.

The Federal Reserve faces a high bar for further monetary stimulus in the absence of deflation risks, but could maintain rock-bottom borrowing costs for a long time, a top central bank official said on Monday.

Spot gold prices touched a new record high of $1598.41 on Monday, extending the longest rally in about 40 years. The latest wind in the tail came from worsening worries of a European sovereign crisis and the painful stalemate in the US debt ceiling talks that has raised the specter of an unprecedented Treasury default.

Treasury bonds could soon lose the privilege of being the only debt securities in the world whose value actually rises on the threat of a ratings downgrade.