“This is not the time to take aggressive tightening action, either fiscally or monetary-wise,” said Volcker in an interview in Berlin yesterday, pointing to “high” unemployment. “So I think we have to, as best as we can, maintain the expectation that it will be taken care of in a timely way.”

The Federal Reserve and the Treasury are trying to withdraw the emergency measures introduced during the financial crisis without causing a relapse in the economy. Fed Chairman Ben S. Bernanke said Feb. 24 the U.S. is in a “nascent” recovery that still requires keeping interest rates near zero “for an extended period” to spur demand once stimulus wanes.

At the same time, the Treasury’s resources are under strain from the loss of 8.4 million jobs since December 2007, stimulus spending, wars in Afghanistan and Iraq and health care programs. The Obama administration predicts the budget deficit will swell to a record $1.6 trillion in the fiscal year ending Sept. 30.

Volcker, whose recommendations inspired the restrictions on bank trading that President Barack Obama sent to Congress last week, said U.S. lawmakers must now prove they can pass the “comprehensive” legislation needed to prevent another financial crisis.

Test

“That is the test,” said Volcker. “Congress has not been very good at passing any comprehensive legislation in various areas.” Banking rules “shouldn’t be a matter of partisan dispute. But everything seems to be infected by partisan disputes in the U.S. now.”

The so-called Volcker Rule bans banks from hazardous trading and imposes limits on how large they can grow. Obama’s plan faces resistance in Congress. Lawmakers including Senate Banking Committee Chairman Christopher Dodd have called the plan a political ploy and said it could complicate efforts to overhaul rules governing financial companies.

“There is a lot of lobbying out there on the other side,” Volcker said. Volcker, who hasn’t seen the “precise language” of Obama’s legislation, said he doesn’t believe the proposal has been “watered down.”

Asked whether responsibility for consumer protection should be given to the Fed, Volcker said it’s “not really central to the banking supervision question.”

“It is a very important question politically and some people think it’s the most important single element, but I think it’s not an element that’s crucial in terms of my concerns,” he said.

Ingenuity

The former Fed chairman said regulators will have to clearly define proprietary trading when supervising banks.

“The legislation is quite clear that hedge funds and private-equity funds are prohibited for banks and so is proprietary trading, but then you have to interpret,” he said. “Banks are ingenious in saying: ‘Well, this isn’t exactly a hedge fund.’ So the supervisor’s going to have to say: ‘No, sorry, whatever you call it, we call it a hedge fund.’”

Volcker was in the German capital to give a speech to the American Academy in Berlin, a trans-Atlantic research institute, and pointed to the “abuse” of derivatives to massage Greece’s budget deficit as a reason to tighten regulation of the securities.

“Surely the recent revelations about the use (and abuse) of complex derivatives in obscuring the extent of Greek financial obligations reinforces the need for greater transparency and less complexity,” Volcker said in his speech yesterday.

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A government tax panel convenes in coming weeks to review changes and hear recommendations of a private-sector board, after Kan last month urged discussing the sales levy. He had previously focused on spending cuts, and Prime Minister Yukio Hatoyama pledged not to alter the 5 percent tax for four years.

The shift underscores how Japan is seeking to avoid any association with the crisis in Greece, which has a smaller debt burden. Lifting taxes on consumers is politically risky — the Obama administration isn’t considering such a levy in the U.S. even as two former central bank chiefs endorsed the concept — and the last time Japan did so, it helped cause a recession.

“Japan’s fiscal situation is reaching a very dangerous point,” said Seiji Shiraishi, chief economist at HSBC Securities Japan Ltd. in Tokyo. “They have to start talking about the sales tax even though the topic has been taboo and provokes traumatic memories among politicians.”

Consumption taxes offer the simplest way of raising revenue in economies where more than half of gross domestic product comes from spending. India’s government boosted excise taxes in its budget proposal last week and New Zealand is considering an increase in its tax.

Kan’s ‘Handstand’

When assuming the post on Jan. 7, Kan indicated he wouldn’t raise taxes until cutting spending to the point where wasteful outlays couldn’t be found even when “doing a handstand.” He changed gears a month later as Standard and Poor’s threatened to cut Japan’s AA sovereign rating and Greece’s public finances deteriorated.

Kan’s deputy, Naoki Minezaki, said discussion about sovereign debt at a Group of Seven meeting of finance ministers in Canada last month made his boss realize the importance of mapping a plan to contain the nation’s public debt.

The Finance Ministry’s debt projections and S&P’s outlook cut also propelled Kan to spur debate on taxes, according to two finance ministry officials who spoke on condition of anonymity.

“I have a feeling that he senses we don’t have much time,” Minezaki told reporters on Feb. 15. Public debt is projected to swell to a record 973.2 trillion yen by next March, and the Finance Ministry anticipates it will get more cash from bond sales than tax revenue for the first time in 63 years in the fiscal year ending this month.

Record U.S. Gap

In the U.S., which will see a projected record budget deficit of $1.6 trillion this year, the Obama administration isn’t considering a consumption tax free credit report and score.

“It’s the only thing that raises revenue in significant quantities without significantly impacting on the economy,” former Federal Reserve Chairman Alan Greenspan said in an August interview on ABC television. Paul Volcker, Greenspan’s predecessor, also endorsed some tax on consumption and House Speaker Nancy Pelosi and Senate Budget Committee Chairman Kent Conrad both have supported considering a VAT.

Even so, Peter Orszag, head of the White House Office of Management and Budget, said in a November interview with Bloomberg Television there’s no “serious policy discussion” of a VAT. The White House position hasn’t changed, an administration official said on condition of anonymity this week.

Share of Revenue

In Japan, the consumption tax accounts for a quarter of total revenue. A one percentage point boost would secure about 2.5 trillion yen, according to government estimates.

Hatoyama’s administration also needs to come up with 12.6 trillion yen next fiscal year to fund election pledges including childcare handouts and farmer subsidies.

Japan’s debt to GDP ratio is estimated to rise to twice the size of the economy this year, compared with Greece’s 123 percent, according to the Organization for Economic Cooperation and Development.

A deteriorating fiscal situation hasn’t spurred an increase in Japan’s benchmark bond yields yet, with 10-year securities yielding 1.3 percent — the lowest among G-7 nations because of the economy’s deflation. Bank of Japan Governor Masaaki Shirakawa said yesterday that investor trust in fiscal and monetary policy has also helped keep yields low so far.

“Japan is worse than Greece if you only look at figures,” said Takeshi Minami, an analyst at Norinchukin Research Institute Ltd. in Tokyo. “No one knows when yields will start to rise because of concerns about the debt.”

Hashimoto’s Folly

Japan’s sales tax was introduced in 1989 and raised to 5 percent in 1997. The increase pushed the nation into a 20-month recession and caused then Prime Minister Ryutaro Hashimoto’s Liberal Democratic Party to lose a majority in the lower house of parliament for the first time.

The nation’s sales tax is the lowest among the 30 Organization for Economic Cooperation and Development members, except the U.S. — which has no levy at the national level, although some of its states do.

“The government will continue to lose money every year unless they change the tax system and cut expenditures,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo.

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The Glendale graduate business school said the students as well as a professor and staff member survived the quake without injury.

The students, in the capital city of Santiago for a one-week class, were scheduled to leave Monday. The hotel they were staying at suffered power outages, but was operating on a backup generator.

"Everyone is in good spirits and doing very well,” said Roy Nelson, the Thunderbird professor in Chile with the students.

The quake has killed some 147 people and triggered tsunami warnings in Hawaii and other Pacific Ocean locations quick cash.

“This morning was a very scary one indeed. The shaking was incredible, woke me very hard out of a deep sleep around 3:34 a.m.,” said Ray Flores, assistant director of global recruitment at Thunderbird in an account provided by the business school. “It lasted for a few minutes, with smaller aftershocks. I was the last one out of our group. We had a heavy after shock around 7 a.m. with smaller ones throughout the day.” Flores and Nelson said the students should be back in the U.S. Monday or early next week.

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LaHood objected to a suggestion that the National Highway Traffic Safety Administration, a part of his department, has been a "lap dog" to the auto industry.

"On my watch we have been a lapdog for nobody," LaHood said. "We’ve been a lapdog for the people who drive cars and want to safely. That’s who we have been a lap dog for."

Investigators for the House Oversight Committee believe that NHTSA had enough evidence to demand strong action from Toyota Motor Co. over mounting complaints of unintended acceleration long before the automaker finally issued recalls for pedals that could become stuck in floor mats in the fall of 2009.

The Committee will also address concerns that Toyota had too much influence on NHTSA’s investigations and worked to narrow the scope of those investigations.

Committee Chairman Edolphus Towns, (D-N.Y.) opened the hearings by saying "NHTSA failed the taxpayers, Toyota failed its customers."

The 2009 recall was prompted by a high-profile crash in San Diego that killed four people.

"There was ample evidence before the fall of 2009 when the Saylor accident occurred," said a source familiar with the panel’s investigation.

Toyota vehicles already had a high number of complaints of unintended acceleration by that point, a fact that had been brought to the agency’s attention at least as early as 2007 by the State Farm Insurance company.

"State Farm reports 920 reports of sudden acceleration," the source said, "most before the Saylor crash."

During the hearing, LaHood agreed with a suggestion that Toyota had been slow to respond to safety concerns raised by NHTSA and others fast cash without a hassle.

"That’s the reason we went to Japan," he said "That’s the reason I talked to (Toyota CEO) Mr. Toyoda directly."

The automaker has changed, however, LaHood said.

"Things have changed. His visit here has been a game changer," LaHood said of Mr. Toyoda, who was scheduled to testify before the committee later Wednesday.

LaHood agreed that rules regarding former regulatory agency employees going to work for companies those agencies regulate should be tightened. Toyota has come under scrutiny for hiring two former NHTSA employees who subsequently dealt with the agency on safety investigations and recalls.

NHTSA has subpoenaed documents from Toyota in an attempt to investigate whether the automaker delayed reporting potential safety defects to the agency.

"We felt it was necessary to do a comprehensive review of this to make sure we get it right," he said.

One of Toyota’s problems has been a corporate structure that placed all important decision-making in Japan.

"That’s the business model," LaHood said, "I think it’s failed in this instance."

LaHood denied that NHTSA lacks technical expertise to do such an investigation.

The agency has a total of 230 engineers on staff, he said, including electrical and software engineers. The agency has also gotten funding to hire an additional 66 engineers, he said.

Toyota has said it is adding brake override, a system that helps prevent unintended acceleration by automatically reducing engine power as soon as the brake pedal is pressed. LaHood told the Committee he would consider making that technology mandatory for all automobiles in the U.S. 

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The swaps that allowed Greece to receive payments upfront date from before 2008, when European Union regulators changed rules to limit the use of the contracts, said the person, who spoke on condition of anonymity. Goldman Sachs Group Inc., which provided Greece with about $1 billion in funding in a 2002 swap, may have arranged the biggest of the contracts, the person said.

The EU accounting watchdog ordered Greece last week to provide information on its swaps as it probes whether the country used derivatives to hide the extent of its budget deficit, and if other countries used them. Swaps are typically designed to help countries to manage their debt rather than generate cash, according to Cesare Conti, a business professor at Italy’s Bocconi University.

“Upfront payments don’t necessarily lead to hidden debt,” Conti said in a telephone interview from Milan. “If swaps are used to manage obligations, rather than increase them, they’re beneficial.”

Concern about Greece’s ability to finance its deficit and debt have roiled financial markets since the government revealed the country had a budget shortfall of 12.7 percent last year, more than four times limit allowed for those countries using the euro, and the highest ratio in the 27-nation European Union.

Primary Dealers

The spread, the premium investors demand to hold Greek 10- year notes instead of German bunds, Europe’s benchmark government securities, reached 396 basis points last month, the most since the year before the euro’s debut in 1999. That compared with an average of 57 basis points in the past decade. A basis point is 0.01 percentage point.

The 15 banks that have swap agreements with Greece are among the country’s so-called primary dealers, said the person. Greece had 21 dealers last year, including Citigroup Inc., Barclays Plc and Morgan Stanley, according to the country’s central bank.

Spokesmen for Goldman Sachs in New York and Morgan Stanley in London declined to comment. Officials at Barclays and Citigroup in London didn’t have an immediate comment.

“Governments seek a large number of swap counterparties to reduce the exposure to any one bank,” Conti said.

An official for the Greek government didn’t have an immediate comment. The swaps used by Greece were “at the time legal,” Greek Finance Minister George Papaconstantinou said on Feb. 15. The government doesn’t use the swaps now, he said.

Government Inquiry

A Greek government inquiry uncovered this month a series of swaps agreements that have allowed the government to defer interest payments to a later date, causing “long-term damage” to the country. Greece’s central government debt totaled 298.5 billion euros ($406.8 billion) at the end of 2009, according to the Finance Ministry.

German Chancellor Angela Merkel said on Feb. 18 it would be a “scandal” if banks helped Greece massage its budget. French Finance Minister Christine Lagarde, speaking on France Inter radio the same day, said that even if the swaps were legal, they probably contributed to instability.

Greek government bonds tumbled last week amid concern the country may not deliver measures to trim its budget deficit, and as the EU promised assistance without specifying what form it would take. The yield on the benchmark 10-year Greek government bonds rose 32 basis points to 6.46 percent last week.

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What prices are doing: Crude oil for March delivery rose 33 cents, or 0.4%, to settle at $77.33 a barrel Wednesday.

Oil surged 3.8% Tuesday to settle at $77.01 a barrel. Prices tracked rising stocks and were lifted by a weaker dollar, which lost ground against the euro, pound and the yen as worries over Europe’s debt crisis subsided.

What’s driving prices: The dollar recovered losses against the euro and the pound Wednesday, but risk appetite was still robust, driving oil prices higher.

Stocks were higher in late trading, as optimism spurred demand for equities after a better-than-expected housing report and some upbeat company news.

Gasoline prices: The national average for a gallon of regular unleaded gasoline decreased to $2.608, down .2 cents from the previous day’s price of $2.610, according to motorist group AAA.

Talkback: Are you a college student or under 21 and concerned or pleased about the tougher standards that will make it more difficult for some young adults to get a credit card? E-mail your story to jennifer.liberto@turner.com and you could be part of an upcoming article. For the CNNMoney.com Comment Policy, click here.  

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The Dow Jones industrial average (INDU) rose 106 points, or 1%. The S&P 500 index (SPX) gained 10 points, or 1.4% and the Nasdaq composite (COMP) added 29 points, or 1.4%.

Stocks slid in the morning, but managed to turn up after the European leaders promised to help Greece, although details were scarce.

The announcement gave investors the impetus to push the Dow back above the 10,000 mark, which it has been straddling for the last week.

The easing of concerns that Greece and other debt-ridden nations might default enabled investors to take on more risk, including stocks and commodities. The dollar remained stronger versus the euro and weaker versus the yen.

Gains were broad based, with 28 of 30 Dow stocks advancing, led by Boeing (BA, Fortune 500), Caterpillar (CAT, Fortune 500), Chevron (CVX, Fortune 500), Hewlett-Packard (HPQ, Fortune 500), IBM (IBM, Fortune 500) and 3M (MMM, Fortune 500).

Wary after the retreat: Investors have been cautious after a big selloff in January.

Between the rally high on Jan. 19 and the recent low hit last week, the S&P 500 fell 9.2%, getting close to the 10% decline that is the technical definition of a correction.

Stocks fell Wednesday on concerns about the Greek debt situation, the strong dollar and the Federal Reserve’s plan to withdraw some of the trillions of dollars it has used to bolster the nation’s financial system.

The Dow, S&P 500 and Nasdaq have all declined the past four weeks, as investors have overlooked improved quarterly profits and some positive signs in the economic reports.

Markets remain vulnerable to a pullback following last year’s big rally, in which the S&P 500 gained 23%. Between bottoming at a 12-year low in March of 2009 and the end of the year, the S&P 500 gained 65%.

Debt crisis: European leaders have reached a deal to help debt-ridden Greece avoid defaulting on its debt, although details were not expected to be finalized until Monday.

The intervention marks the first time the 16-nation bloc that shares the euro currency has had to bail out a member since the currency zone was created 11 years ago. The deal is expected to involve some form of loans.

Worries that a Greek default would spread to other debt-ridden European nations and destabilize the euro have dragged on global markets for weeks Business Card Holders. Portugal, Italy, Ireland and Spain are also heavily debt-laden.

The concern had caused a flight from risk, with investors dumping the euro, U.S. stocks and commodities, and putting money into the dollar and government debt.

Economy: The number of Americans filing new claims for unemployment fell to 440,000 last week from 483,000 in the previous week. Economists surveyed by Briefing.com thought claims would fall to 465,000.

Continuing claims, a measure of those who have been receiving benefits for a week or more, fell to 4,538,000 from 4,617,000 in the previous week. Economists expected 4.6 million claims.

Economists say as many as 150,000 jobs could be lost in February following back-to-back blizzards in the Northeast region, with the storms keeping people home from work and stalling hiring.

A separate report showed foreclosure filings fell almost 10% in January versus the previous month. However the report from Realty Trac also showed that filings rose 15% from a year earlier.

Company news: Boston Scientific (BSX, Fortune 500) reported a smaller quarterly loss versus a year earlier on higher quarterly sales. The medical device maker also announced a restructuring, including a cut of between 8% and 10% of its workforce. Shares fell 10% in unusually active New York Stock Exchange trading.

Power company FirstEnergy (FE, Fortune 500) said it is buying Allegheny Energy (AYE) in an all-stock deal worth $4.7 billion. Shares of Allegheny rallied 11.8% in active New York Stock Exchange trading.

World markets: European markets ended mixed, with London’s FTSE 100 up 0.6% and France’s CAC 40 down 0.5%. Asian markets ended higher.

The dollar and commodities: The dollar rallied versus the euro and fell against the Japanese yen.

U.S. light crude oil for March delivery rose 76 cents to settle at $75.28 a barrel on the New York Mercantile Exchange.

COMEX gold for April delivery rose $18.40 to settle at $1,094.70.

Bonds: Treasury prices fell, raising the yield on the 10-year note to 3.72% from 3.68% late Wednesday. Treasury prices and yields move in opposite directions.

Market breadth was positive. On the New York Stock Exchange, winners beat losers on volume of 1.08 billion shares. On the Nasdaq, advancers beat decliners nearly three to one on volume of 2.15 billion shares.  

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The sale has previously been scheduled for Oct. 1 and Nov. 12 of last year and, most recently, for Feb. 11, foreclosure records said. It’s now slated for April 22.

In Colorado, a foreclosure sale can be postponed for up to a year, according to state law.

The real estate is owned by CJS Athletic Club LLC and CJS Residential LLC, which are entities controlled by Steve Roitman and Jim Cobb of Denver-based BWAB Inc. as well as local hotelier Charlie Biederman. The athletic club continues to operate.

The Ritz-Carlton Denver is located at 1881 Curtis St. in downtown Denver. The property includes 202 hotel rooms as well as 25 condos, 24 of which are unsold, according to Denver property records payday advance.

Mortgage lender Goldman Sachs Mortgage Co. of New York, with DECO Property LLC, foreclosed on the Ritz’s condos and athletic club space in June 2009 because it was still owed $28.8 million of the total $95 million loan amount. Goldman Sachs is expected to buy the property at bankruptcy auction, but already took control of the Ritz condos last fall, hiring Broadwing International LLC of Orlando, Fla., to market them for sale.

The 193-unit Apartments at Denver Place, which are located on the upper floors of the same Curtis Street building where the Ritz is located, went into foreclosure in December because the owners were in arrears on a $38.5 million loan. The apartments are not affiliated with the hotel, but are owned by a BWAB entity.

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“Certainly in South Africa, we’ve been taking a look at it, because we were not affected as seriously as other people,” Guma said in an interview with Bloomberg News in Sydney yesterday, without being more specific.

South Africa’s economy grew an annualized 0.9 percent in the three months through September amid a manufacturing rebound, after shrinking in the previous three quarters. The central bank kept its benchmark interest rate unchanged at 7 percent last month in a decision that wasn’t supported by some members of the Monetary Policy Committee who called for a rate cut.

Group of Seven finance ministers pledged last week to press ahead with economic stimulus measures even as investors intensify their focus on mounting budget deficits.

“We need to continue to deliver the stimulus to which we are mutually committed and begin looking at exit strategies to move to a more sustainable fiscal track,” Canadian Finance Minister Jim Flaherty said Feb. 6 after chairing a meeting of counterparts and central bankers from the G-7 in Iqaluit, Canada.

South Africa’s economy “has emerged from the recession and I presume that will continue going forward in the absence of any external shock, which isn’t anticipated,” Guma said.

Rand Policy

Africa’s biggest economy will probably expand 2 percent this year and 3 percent in 2011, Governor Gill Marcus said Jan. 26. That is higher than the National Treasury’s forecast of 1.5 percent growth this year.

Guma also said that while the rise in South Africa’s currency is a “matter of concern” for parts of the nation’s economy, “the policy of the bank is not to intervene in order to establish any particular rate for the rand.”

The rand traded at 7.7169 against the U.S. dollar on Feb. 5, according to Bloomberg data. The currency has gained 28.5 percent in the past year, eroding earnings for exporters.

Guma is among global policy makers visiting Sydney this week to attend a symposium organized by the Reserve Bank of Australia to celebrate its 50th anniversary. The Basel, Switzerland-based Bank for International Settlements is also hosting a meeting of central bank officials in Sydney this week.

Guma said participants at the BIS meeting will review current developments in the global economy.

Difficult Period

“The international economy is emerging from a very difficult period, and one must hope that there will be no shocks, certainly not of the magnitude that we’ve had to deal with recently,” he said.

He also said fallout from concerns about deficits in some European countries “could be quite serious.”

“That could be a fairly serious problem, not only for the EU region, but in terms of the possible domino effects.”

Global stocks plunged last week while bond default risks soared after Greece’s biggest union approved the second mass strike this month and tax collectors began a 48-hour walkout, showing that Prime Minister George Papandreou’s parliamentary majority may not be enough to implement his plan to cut the European Union’s largest deficit.

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“This isn’t just something we uphold to keep our backyard tidy,” Yamaguchi told parliament in Tokyo today. “Should people mistakenly start to think we are financing government debt, that could create turbulence in financial markets.”

The central bank currently keeps its total government bond purchases below the amount of banknotes in circulation. Yamaguchi was responding to a question from ruling Democratic Party of Japan lawmaker Motohisa Ikeda, who asked whether abandoning that rule would enhance the bank’s policy tools to defeat falling prices.

Finance Minister Naoto Kan has been calling on the central bank to do more to fight deflation, pressure Governor Masaaki Shirakawa has responded to by saying there’s no “magic” solution for stamping out falling prices. The central bank currently purchases 1.8 trillion yen ($20 billion) of government bonds each month, an amount that Shirakawa said cannot be increased much more.

We have the rule “because it’s important we make our intentions clear to ensure market stability,” Yamaguchi said.

The government has called on the central bank to take action because the scope of further fiscal stimulus has been limited by a swelling debt load. Standard and Poor’s last month lowered its outlook for the nation’s AA sovereign debt rating, citing Prime Minister Yukio Hatoyama’s failure to come up with policies to contain the largest debt burden in the industrialized world.

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