Most of the US financial shares traded lower on Wednesday ahead of the Federal Reserve’s expected outlook on the economy and its plans for monetary policy later in the day. Federal Reserve officials are trying their best to stay out of the limelight this week out of fear that any steps they might take could be construed as tightening policy. According to the analyst point of view on Wednesday, the Financial Select Sector SPDR ETF (XLF) dipped 0.4% to $15.27. Most financial stocks on the Standard & Poor’s 500 traded lower, but American International Group’s (AIG) shares were up 1.3% to $46.38.

On the other hand in the US, two of the nation’s largest banks have eased controversial overdraft rules for customers as the financial-services industry faces criticism over charging lucrative fees to boost sagging profits in the recession. In Europe, the European Commission on Wednesday cleared asset management company BlackRock Inc. (BLK) to buy Barclays Global Investors from U.K. bank Barclays PLC (BCS). BlackRock shares climbed 4.5% to $217.60.

On the political front, the US Treasury Secretary Timothy Geithner on Wednesday defended the department’s proposal to create a Consumer Financial Protection Agency before a House of Representatives committee, saying it is needed to supervise banks as well as write rules for mortgages and credit cards.

So, these all things are clearly showing that the US is improving slightly so time is demanding some more efforts n order to support the US financial situation.

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Now there is another major thing which has to be kept in mind and regardless of any other policy choice, interest-rate policy alone determines inflation, discarding criticism the doubling in the Fed’s balance sheet to around $2 trillion will eventually lead prices higher. In a study at the Columbia University economist examines that the track record of the Fed a year after the failure of Lehman Brothers forced it to take unprecedented action to prevent a financial market meltdown.

So, the growth in the Fed’s balance sheet will offset the collapse in demand for US credit after Lehman’s demise. This growth in the Fed’s balance sheet will stop the economy tipping into the type of deflation suffered in Japan, where falling prices led to a decade of stagnation and all these symptoms are showing that now the US will come up form their decades worst crunch in finance and economy and it will lift again on the worlds number 1 strongest part in financial and economical sector!

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There is a danger that in spite of all the talk among the G20 finance ministers at their weekend summit about the need to do something about bankers’ bonuses and banks’ capital ratios, the drive to reform could fade as the economic crisis recedes. This financial crisis is ruining the life of U.S people so, government have to take some quick steps for this and everyone is looking worried that when this situation will be gone off! We have to change the current system and make it work for us. Our policymakers seem too tired to do much about it. But failure to do so will leave the clock ticking down towards the next crisis.

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When the election was ready, Hatoyama drew attention with an interview in The New York Times that was critical of the US economic policy. He said Japan was “continually buffeted by the winds of market fundamentalism in a US-led movement that is more usually called globalization” and traced the origins of the global economic crisis to “American-style free market economics.” These all symptoms’ are showing that in future there must be a big change between the Japan and the US Financial sector.

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Now the question which will rise from the people “is their savings will remain safe?”The grim tally prompted FDIC chairwoman Sheila Bair to reassure Americans that their savings remain safe. “No matter how challenging the environment, the FDIC has ample resources to continue protecting depositors as we have for the last 75 years.” Ms. Bair said firmly. “No insured depositor has ever lost a penny of insured deposits, and no one ever will.” She acknowledged that the slow painful process of cleaning up bad banks, which has sapped the FDIC’s resources, could drag on for more than a year after the economy recovers.

Banking crisis is impacting badly and draining the FDIC’s resources as banks fail at a faster rate than it can readily handle. The insurance fund, which protects deposits of up to $250,000 (US) at roughly 8,200 US banks and savings institutions, has dwindled to just $10.4-billion. That’s down from more than $45-billion a year ago, as the FDIC has been forced to set aside funds to handle looming failures. So far, 81 banks have closed their doors this year, including 45 since the end of March. So, these are some very big challenges for the government to resolve and drive their country successfully!

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We know that, everyone loves a central banker when he’s doing best of flooding the economy with money. But Mr. Bernanke will sooner or later have to say no to the political class. This is something he has never done, and already there are signs in China and the edges of the dollar bloc of new asset bubbles. Mr. Bernanke has also tended to be a domestic central banker, ignoring the Fed’s larger role as steward of the world’s reserve currency.”His money-withdrawal task will only be harder because of the Fed’s extraordinary forays into fiscal policy and credit allocation since the crisis began. The Bernanke Fed has also become nearly an arm of the Treasury by endorsing a spendthrift stimulus and by directly buying federal debt for the first time in a half-century.”

All of these steps helped the country narrowly sidestep a much deeper financial panic than the one we had. Let’s recall that in July, analysts began issuing reports saying that the “recession is over.”I am hoping the best to see my country again on the top and economically strong so, Bernanke might be a right man to resolve the countries “financial bubble” which is very much important!

United States has very good relations with different countries and US is always proven as a front line friend and welcome and appreciates the good steps for the world peace, a big example is that the US is encouraging the deal between the two countries North Korea and South Korea on business. The US has good relations with North Korea and they are also trying to built very good business relations with them so, after the decision of building new Business relations between North Korea and South Korea is good step for the peace of the world. North Korea is the country who declared them self as a successful new atomic power recently .The South Korean government distanced itself Monday from an agreement struck between a South Korean company and North Korea to restart tourism projects and business, saying it is a private deal and calling for official state-to-state negotiations. So, the deal made on this Monday the United States welcomed North Korea’s rare conciliatory gestures to South Korea but said that the communist regime needed to do more by moving ahead with denuclearization. The States Department’s spoke man told to reporters about this advancement that “Clearly these are welcome steps, in and of themselves,” he also said that, “This deal can open the door for renewed dialogue” between North and South. They said that these steps are marginal so we need more and especially we have to make our world peaceful and safe, it’s only possible if we talk on nuclear issues so, now we want to see them take definitive steps, irreversible steps, towards denuclearization.”

We are hoping that these steps could be very useful to save the world from the disastrous atomic threat and disaster.

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