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Rating agency Moody’s downgraded 16 Spanish banks on Thursday, the latest sign of distress in Europe.

Among those downgraded were giants Banco Santander and BBVA, the country’s two largest banks. Moody’s cited concerns about the banks’ exposure to Spain’s faltering economy and the "reduced" ability of the Spanish government to support them in a crisis.

"The Spanish economy has fallen back into recession in first-quarter 2012, and Moody’s does not expect conditions to improve during 2012," the agency said.

"Moreover, the real-estate crisis that began in 2008 is ongoing, and unemployment has risen to very high levels, with rising risks to white-collar employment (in addition to extremely-high youth unemployment) affecting the outlook for banks’ household lending."

The downgrades come amid mounting concern about a potential Greek exit from the euro, and the implications this could have for other fiscally troubled nations like Spain and Italy. Greece, currently operating with a caretaker government, could leave the euro should anti-austerity parties triumph in elections next month.

Earlier Thursday, Moody’s downgraded Spanish regional governments in Catalunya, Murcia, Andalucia and Extremadura because they are using massive amounts of debt to fund their operations and are unlikely to meet the financial target set by Spain’s central government.

Overall, Spain has pledged to cut its national deficit to 5.3% of GDP, but last week, the European Commission forecasted that the country would fail to meet that goal, instead hitting 6.4% of GDP. Spain announced roughly $35 billion in budget cuts earlier this year.

Credit downgrades are a worrisome sign to investors and can often cause a country’s borrowing costs to rise. The yield on Spain’s 10-year bond has spiked in the last two weeks, and now sits around 6.3%, its highest level since November.  

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The Federal Reserve is worried about indecision in Congress.

At its last meeting in April, the central bank’s top officials discussed how coming tax increases and spending cuts could weigh on the recovery, and debated whether the Fed should provide additional stimulus to spur consumer spending.

"Participants expected that the government sector would be a drag on economic growth over coming quarters. They generally saw the U.S. fiscal situation also as a risk to the economic outlook; if agreement is not reached on a plan for the federal budget, a sharp fiscal tightening could occur at the start of 2013," the minutes from the meeting said.

The central bank is not alone in its fear of a coming "fiscal cliff" in 2013. The Bush tax cuts, payroll tax cut and extended unemployment benefits are all set to end, at the same time that the government slashes more spending.

While the Fed also acknowledged improvement in the economy early in the year, several members expressed concern that it could be due to waning temporary factors such as warmer winter weather.

As the Fed prepares to wind down its latest round of stimulus, known as Operation Twist, some have called for the central bank to do more to fuel growth.

Fiscal cliff: What you need to know

While those calls have yet to be answered, the minutes showed that the Fed is not ready to close the door on that option.

"Several members indicated that additional monetary policy accommodation could be necessary if the economic recovery lost momentum or the downside risks to the forecast became great enough," the minutes said.

Operation Twist was designed to bring down long-term interest rates and encourage spending by shifting $400 billion from short-term to long-term bonds faxless cash advances. Launched last September, the program is set to end in June.

Since 2008, the Fed has taken numerous steps to bolster the economy, including keeping its key interest rate near zero in an effort to give businesses and consumers cheaper access to credit.

In addition, the Fed has also enacted two rounds of asset purchases known as quantitative easing, also designed to bring down interest rates. But nearly four years later, the economy is still struggling to return to robust growth, leading many to call for more action from the Fed.

The minutes also showed that Fed members discussed the job market in great detail.

"Labor market conditions improved in recent months," the minutes said. "So far this year, payroll employment had expanded at a faster pace than last year and the unemployment rate had declined further, although it remained elevated."

At the last meeting, the Fed improved its forecast for the unemployment rate this year, but continued to believe the economy would be weak enough to warrant historically low interest rates until "at least through late 2014."

The unemployment rate was at 8.1% as of April, and the Fed expects it to fall to between 7.8% and 8% by the end of the year.

Separately, the Fed released a new schedule of two-day meetings for its policy-making committee. Previously, the meetings were set to last either one or two days. 

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Congress will weigh in on the news that JPMorgan Chase lost $2 billion on complex trades intended to hedge against economic risk, and that the losses could mount.

The Senate Banking Committee on Monday announced future oversight hearings, including one that will look into the trading losses at JPMorgan Chase from a regulatory angle. Lawmakers plan to question regulators, not JPMorgan Chase (, Fortune 500) officials.

Sen. Bob Corker, a Tennessee Republican, was the first to call for a hearing on Friday.

"Clearly the losses posted by JPMorgan are significant, and as policy makers we should understand in detail what has transpired," Corker said in a letter to Banking Committee chairman Tim Johnson, a South Dakota Democrat.

House Financial Services Committee and House Oversight Committee staff members said they had no plans yet to hold hearings yet.

The JPMorgan controversy comes a little less than two years after a big push for Wall Street reform led to the passage of the Dodd-Frank Act.

On Friday, two senators who helped craft the Volcker Rule — a new, not-in-effectpart of Dodd-Frank that bars banks from making trades for their own profit-chasing purposes — denounced JPMorgan’s trades.

JPMorgan CEO Jamie Dimon said last week that the faulty trades would have been allowed under the Volcker Rule, named for former Fed chief Paul Volcker, since the rule appears as though it will allow for economic hedging free instant credit score.

However, Democratic senators Jeff Merkley of Oregon and Carl Levin of Michigan, said they intended the law to ban the kind of trades that JPMorgan Chase traders made. They plan to push regulators to write and enforce a strict ban on so-called proprietary trading and hedging against economic forces.

"The law very clearly already excludes this activity," Levin said in a call with the media on Friday. "It specifically says that every single position that you take as a hedge has got to be tied to a specific risk arising from another specific position. Now, that’s about as clear as you can write. So the regulators are now hopefully going to implement the law as written."

The news has even drawn angry accusations from the political field. Elizabeth Warren, a Democratic candidate for U.S. Senate in Massachusetts, has called Dimon to step down from his position as a board member of the New York Federal Reserve.

"This is about accountability," Warren told CNN’s "Starting Point" on Monday. "Jamie Dimon not only is CEO of JPMorgan Chase, he holds this position of public trust, advising the New York Fed on how to regulate risk for these large financial institutions like his own financial institution,"  

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Hundreds of Japanese are marching and waving “No nukes” banners to celebrate the last of this nation’s 50 nuclear reactors switching off.

The crowd at a Tokyo park Saturday said they were not concerned about government warnings of power shortages.

One of three reactors at Tomari nuclear plant in the northern island of Hokkaido is going offline for routine maintenance checks.

After last year’s March 11 quake and tsunami set off meltdowns at Fukushima Dai-ichi plant, no reactor stopped for checkups has gone back up personal business card. Japan requires new tests on withstanding quakes and tsunamis, and it needs local residents’ approval to restart reactors.

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Defying expectations, Congress has reached the homestretch on a major overhaul of federal transportation programs that is critical if the nation is to avoid steep cutbacks in highway and transit aid.

The bill is driven partly by election-year politics. Both Congress and President Barack Obama have made transportation infrastructure investment the centerpiece of their jobs agendas. But the political imperative for passing a bill has been complicated by House Republicans’ insistence on including a mandate for federal approval of the Keystone XL oil pipeline. The White House has threatened to veto the measure if it retains the Keystone provision.

And there are other points of disagreement between the GOP-controlled House and Democratic-controlled Senate, including how to pay for transportation programs and how much leverage the federal government should have over how states spend their aid money. Transportation Secretary Ray LaHood has said it’s unlikely Congress will pass a final bill until after the November elections.

Despite LaHood’s pessimism, lawmakers and transportation lobbyists said they believe prospects are improving for passage of a final bill by June 30, when the government’s authority to spend highway trust fund money expires. The fund, which pays for roads and transit, is forecast to go broke sometime next year.

A House-Senate conference committee is scheduled to begin formal negotiations May 8.

It has taken Congress years to get this far. Work on a transportation overhaul began before the last long-term transportation bill expired in 2009. The Senate finally passed a $109 billion bill with broad bipartisan support in March. The bill would give states more flexibility in how they spend federal money, step up the pace of road construction by shortening environmental reviews and impose a wide array of new safety regulations.

House Republicans, after failing to corral enough votes to pass their own plan, recently passed a placeholder bill that allows them to begin negotiations with the Senate. That bill included the Keystone provision, as well as provisions limiting the public’s ability to challenge transportation projects on environmental grounds and taking away the Environmental Protection Agency’s power to regulate toxic coal ash.

“I feel like people are worn out on this issue and would like to get something done,” said Jeff Shoaf, a lobbyist with the Associated General Contractors of America, a trade association for the construction industry. “I think the prospects are good.”

Winning approval of the Keystone provision, which would give federal regulators no choice but to approve a pipeline to transport oil from Canada’s tar sands, appears to be House Speaker John Boehner’s top priority, lawmakers and transportation lobbyists said instant payday loan.

Republicans portray Obama’s delay in the pipeline as a contributor to high gasoline prices. “Boehner wants to push Keystone as hard as he can because he sees it as a political winner,” said Joshua Schank, president and CEO of the Eno Center for Transportation, a nonprofit foundation dedicated to improving transportation.

Senate Democratic conferees on the bill appear to have enough votes to block inclusion of the Keystone provision in the final product. Sen. Jay Rockefeller, D-W.Va., one of four Senate committee chairmen responsible for a portion of the bill, has announced he’ll oppose Keystone and other House environmental provisions.

An open question is whether House Republicans will balk on an overall transportation bill if they can’t get Keystone. Similarly, despite their public statements, it’s unclear whether Senate Democrats would be willing to sacrifice the bill in order to block a Keystone provision, and whether Obama would follow through on his veto threat, especially if the Keystone language were softened in negotiations.

The president painted a bleak picture of America’s infrastructure in a speech Monday to union workers in the construction industry, saying U.S. highways are clogged, railroads are no longer the fastest in the world and airports are congested. A transportation construction bill would boost employment and the economy, but “the House Republicans are refusing to pass a bipartisan bill that could guarantee work for millions of construction workers,” Obama said, referring to the Senate bill.

“Instead of making the investments we need to get ahead, they’re willing to let us all fall further behind,” he said.

The transportation bill “is incredibly important to the president,” said Ed Wytkind, president of the transportation trades department of the AFL-CIO.

Both sides ultimately must decide whether they want an issue to be used as a campaign weapon or an accomplishment they can tout to voters.

Dave Bauer, a lobbyist for the American Road and Transportation Builders Association, cautioned against reading too much into what congressional conferees say at this point.

“Before they even get to a conference table, some seem to be trying to make this all about Keystone, and it’s not,” he said.

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China may first relax controls on borrowing costs and widen the

Asian stock markets rebounded Wednesday after a slew of solid earnings boosted the outlook for U.S. companies and a successful Spanish bond auction eased worries over Europe’s debt crisis.

Japan’s Nikkei 225 index jumped 1.7 percent to 9,622.39. South Korea’s Kospi added 0.9 percent to 2,003.03 and Australia’s S&P/ASX 200 rose 1.2 percent to 4,339.40.

Hong Kong’s Hang Seng gained 0.9 percent to 20,750.55. Benchmarks in Singapore, Taiwan and Indonesia also rose.

On Tuesday, European stocks had their best day in four months after Spain attracted strong investor interest at an auction of two-year debt.

The government sold more than (EURO)3.2 billion ($4.2 billion) in short-term debt, more than had been expected, and the yield on Spain’s 10-year government bond fell, a sign of improving confidence in the country’s finances.

“This saw investors less pessimistic about Europe and lifted risk assets all round,” said Stan Shamu, analyst with IG Markets in Melbourne.

In the U.S., first-quarter results gave markets a lift. Coca-Cola’s profit was better than Wall Street analysts had forecast. Goldman Sachs and Johnson & Johnson also posted strong results.

The Dow Jones industrial average rose 1 bad credit payday advance.5 percent to 13,115.54, its best day in a month. The S&P 500 closed up 1.6 percent to 1,390.78. The Nasdaq composite index soared 1.8 percent to 3,042.82, its biggest point rise in three weeks.

Positive news also came from the International Monetary Fund, which raised its outlook for the global economy because of faster U.S. growth and a coordinated effort in Europe to address its debt crisis.

The global lending organization said Tuesday the U.S. economy should expand 2.1 percent this year. Europe will likely shrink 0.3 percent and the world economy should grow 3.5 percent. All three estimates are slightly better than the IMF’s January forecasts.

Benchmark oil for May delivery was up 3 cents to $104.23 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.27 to settle at $104.20 in New York on Tuesday.

In currency trading, the euro fell to $1.3111 from $1.3139 late Tuesday in New York. The dollar rose to 81.37 yen from 80.80 yen.

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Giving Iran another chance at diplomacy, deeply skeptical Obama administration officials return to nuclear negotiations this weekend looking for quick progress _ or at least enough hope to hold off urgent calls from Israel for military action.

The U.S. and other world powers are stopping short of saying the gathering in Istanbul is a make-or-break situation. But as they sit down with Iranian officials for the first time in more than a year to press yet again for an agreement on Tehran’s disputed nuclear program, American officials say the window for a diplomatic breakthrough is closing. And in the event the talks fail completely, all U.S. options remain on the table.

Speaking Thursday after hosting foreign ministers from the Group of Eight leading industrialized nations, Secretary of State Hillary Rodham Clinton urged Iran to prove to the world its claim that its uranium enrichment activity is for peaceful purposes. The U.S. and many other countries fear Tehran is trying to produce an atomic bomb and have challenged Iran’s Ayatollah Ali Khamenei to substantiate his edict that weapons of mass destruction violate Islamic law.

“We’re looking for concrete results,” Clinton told reporters. “They assert that their program is purely peaceful. They point to a fatwa that the supreme leader has issued against the pursuit of nuclear weapons. We want them to demonstrate clearly in the actions they propose that they have truly abandoned any nuclear weapons ambition.”

The ball is clearly in Iran’s court. Mounting U.S. and European measures are crippling the Iranian economy, with the rial depreciating dramatically under the weight of restrictions on petroleum exports and efforts to cut off Iranian banks from the world financial system. U.S. and European sanctions will get more severe this summer.

Ahead of the talks, chief Iranian nuclear negotiator Saeed Jalili vowed to present new initiatives, without specifying what they might be. Iranian officials have suggested scaling back on uranium enrichment while continuing to make nuclear fuel. It’s unlikely such an offer would satisfy the demands of the U.S. and its fellow negotiators _ Britain, China, France, Germany and Russia _ but may illustrate enough of a compromise to justify follow-up talks over the next several weeks.

Iran has been skilled at using negotiations to stall for time. It has reneged repeatedly on understandings reached behind closed doors over eight years of talks, initially with European mediators and later expanded to include the United States and the other permanent members of the U.N. Security Council. All the while, Tehran has intensified its uranium enrichment program.

Israel wants tougher action. The Jewish state sees a nuclear-armed Iran as the greatest threat to its existence and has made a point of reminding the world that it sees the threat more urgently than others and that it is prepared to strike Iranian nuclear facilities with or without international support. Israeli military officials believe they’d have to strike by summer to be effective business card templates.

The United States can afford to be a little more patient. But it is dealing with its own clock counting down the time left for diplomacy. The fact that President Barack Obama, too, has committed to preventing Iran from obtaining a nuclear weapon _ and not simply containing Iran should it acquire one _ means the U.S. might similarly be compelled to act. Adding to the tension is an election season in which Obama’s Republican rivals accuse him of being soft on Iran and weak on defending Israel.

Obama has underlined the need to give time for diplomacy alongside sanctions and fired back at his critics for “beating the drums of war.” But the president also will need some signs of a possible breakthrough to show Israeli Prime Minister Benjamin Netanyahu if he is to fundamentally change the Israeli calculus. And unless the Iranians break from the mold set at previous gatherings, he will be hard pressed to do so.

Speaking earlier this month in Istanbul, Clinton said Iran could demonstrate its seriousness in a number of ways. She suggested that Iran end its production of highly enriched uranium, which at 20 percent can more easily be transformed into bomb-making material. She also urged Tehran to ship out its existing stockpile of this uranium to another country and open up its facilities to “constant inspections and verifications.”

The most feasible model for a deal may involve an arrangement Iran agreed to in Geneva in 2009, and then quickly walked away from. It involved the Islamic republic shipping out its highly enriched uranium in exchange for nuclear fuel rods. Although Western officials see the contours of such an agreement as still viable, they say it must be updated to represent more than two years of continued Iranian enrichment. Another compromise could see Iran suspend its higher enrichment if the West holds off on some sanctions.

Failure of the process raises the possibility of a military attack that could lead to severe repercussions in the region and around the world. Even if it is the U.S. that chooses to intervene, Iran’s retaliation could come through attacks on Saudi oil infrastructure, attempts to block the strategic strait of Hormuz, or proxy terrorist activity against U.S. allies such as Israel or in instable states such as Lebanon. Conflict also could drive up oil prices beyond their $100-plus per barrel level today and raise gasoline costs worldwide.

For that reason, the U.S. and its European partners are prepared to show some _ but not much _ patience if they can create a framework for progress. It’s an approach that aims to avoid the all-or-nothing stakes of previous meetings that have consistently left world powers with nothing. But they’ll have to get to something quickly.

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