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A Stanford University scientist who has co-founded three biotech firms offered five tips for successful business strategies to participants at the Moffitt Cancer Center’s Business of Biotech conference.

It’s important for scientists whose work is being commercialized by newly formed biotech companies to know their role, and be willing to step aside, said Gary Nolan, who sits on the board of directors of Nodality Inc., the firm he most recently co-founded. He’s also professor of microbiology and immunology at Stanford University School of Medicine and director of the Stanford NHLBI Proteomics Center.

He also said the founders of startup biotech firms should hire managers they can trust. The founders should remember that they no longer own the technology that’s the basis of a new firm because they sold it. Nolan advised that “there’s lots you can get for free,” such as legal services, by offering stock in a newly formed firm. And he cautioned against promising anyone anything, advising, “make them work for it.”

Nolan was the keynote speaker at the biotech conference Feb. 1, the fourth such event hosted by the H. Lee Moffitt Cancer Center & Research Institute.

A principal aim of the conference is to foster a life science cluster in Tampa Bay, said Jarrett Rieger, director of Moffitt’s Office of Technology Management and Licensing.

“It’s one thing to have discovery that could be monumental. It’s quite another thing to deliver it,” said Dr. William Dalton, president and chief executive of Moffitt.

Moffitt is playing a critical role in that delivery, he said.

Also attending the conference was H. Lee Moffitt, former speaker of the Florida House of Representatives, who was instrumental in funding the now 24-year-old organization that now bears his name.

“I constantly pinch myself that we’ve come as far as we have,” Moffitt said.

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The cost of living rose less than forecast in December, indicating the economic recovery is showing few signs of stoking inflation.

The consumer-price index rose 0.1 percent following a 0.4 percent gain in November, Labor Department figures showed today in Washington. Excluding food and energy costs, the so-called core index also increased 0.1 percent from a month earlier.

Companies may have little success raising prices with unemployment projected to average 10 percent this year, the highest annual rate in seven decades. Federal Reserve policy makers have said they expect “subdued” inflation in coming months, allowing them to keep interest rates close to zero to help fuel growth.

“Consumer pricing pressures remain very subdued,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit, who accurately forecast the rise in the core rate. “It gives the Fed further leeway to continue keeping rates where they are well through 2010.”

Stock-index futures trimmed losses and Treasury yields fell after the report. Futures on the Standard & Poor’s 500 Index expiring in March declined 0.3 percent to 1,141.9 at 8:34 a.m. in New York after losing 0.7 percent earlier. The yield on the 10- year Treasury note dropped to 3.7 percent from 3.74 percent late yesterday.

Last Year

Americans paid 2.7 percent more for goods and services in 2009. The annual gain followed a 0.1 percent rise in 2008 that was the smallest since 1954 as energy costs plunged the most since those records began four years later.

Prices excluding food and energy rose 1.8 percent in 2009, matching the previous year as the smallest gain since 2003. Service costs, which make up 60 percent of the CPI, rose 0.9 percent last year, the smallest gain since 1945.

Economists forecast the consumer-price index would rise 0.2 percent in December from a month earlier, according to the median of 77 projections in a Bloomberg News survey. Estimates ranged from a 0.1 percent drop to a gain of 0.3 percent.

The core index was forecast to rise 0.1 percent, according to the Bloomberg survey.

Fed policy makers’ long-term forecast for their preferred measure of inflation, the Commerce Department’s index tied to consumer spending and excluding food and fuel, calls for gains in a range of 1.5 percent to 2 percent. That gauge, which is typically lower than the CPI, was up 1.4 percent in the 12 months to November.

Energy Prices

Energy costs increased 0.2 percent in December, less than the previous month as gasoline and fuel oil costs slowed.

The year-over-year gains in the consumer price index are getting bigger as crude oil prices increase from an almost five- year low in December 2008. Energy costs last year jumped 18.2 percent, the most since 1979.

Crude oil futures traded on the New York Mercantile Exchange averaged $74 need a personal loan with bad credit.60 in December, compared with $78.15 the previous month. Prices have rebounded this month, averaging $81.59 a barrel.

Gasoline prices in December averaged $2.61, compared with $2.65 a gallon the previous month, according to AAA. Prices for regular-grade gasoline at the pump have climbed to an average of $2.71 so far this month.

Food Costs

Food costs, which account for about 15 percent of the CPI, increased 0.2 percent in December, reflecting higher prices for fruits and vegetables, dairy products and cereals. The cost of food for all of last year dropped 0.5 percent, the biggest decline since 1961.

Delhaize Group SA, owner of Food Lion supermarkets in the U.S., said in a statement yesterday that revenue fell for the first time in five quarters on declining food prices. The Brussels-based company said U.S. retail food deflation accelerated to 2.1 percent in the fourth quarter and prices in its stores fell 0.92 percentage point more than the cost of goods sold.

Rents, which make up almost 40 percent of the core CPI, were unchanged. Owners-equivalent rent, one of the categories used to track rental prices, held steady last month after a 0.1 percent decline. Owner-equivalent rent hasn’t risen since August.

The CPI is the broadest of the three monthly price gauges from the Labor Department because it includes goods and services. A report yesterday showed the cost of imported goods was unchanged last month. The Labor Department is scheduled to report December wholesale prices on Jan. 20.

Prices of Services

Almost 60 percent of the CPI covers prices consumers pay for services ranging from medical visits to airline fares and movie tickets.

United Airlines, the third-largest U.S. carrier, discounted fares to as low as $55 each way in an effort to boost travel during the winter months. The carrier’s Chicago-based parent UAL Corp. made the announcement this month in a statement and followed one-way discounts offered by JetBlue Airways Corp.

Retailers offering discounts during the holiday shopping season to spur demand weighed on earnings for some companies.

GameStop Corp., the world’s largest video-game retailer, reported fourth-quarter earnings that fell short of estimates because of disappointing sales. The Grapevine, Texas-based company offered a $50 discount on Nintendo Co.’s top-selling Wii console from Wal-Mart Stores Inc.

“The macroeconomic environment put a damper on people buying as many video-games as we expected,” Chief Executive Officer Daniel DeMatteo said in a Jan. 8 interview. He said sales were impacted by “economic weakness.”

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Wall Street is in for a quiet three and a half days of trading this week with many market participants on vacation and traders mostly focused on defending this year’s gains.

"There are a lot of lights out in investment management offices," said Lawrence Creatura, a portfolio manager with Federated Clover Investment Advisors. "It’s likely to be a quiet week."

The stock exchange will close early Thursday and will remain dark Friday for the Christmas Holiday. Many traders will take the entire week off.

And with the major indexes on track to post double-digit percentage gains for the year, those money managers who are on the clock next week will probably not be making any aggressive plays.

"Investors will have a very limited focus," said Doug Roberts, chief investment strategist for Channel Capital Research. "For the most part, people are trying to protect gains."

Still, traders will have to contend with a number of economic reports this week, including the final revision to third-quarter gross domestic product, data on personal income and spending, as well as weekly jobless claims numbers.

What’s more, the lack of participation means trading volumes could be low, which tends to amplify small moves and cause market volatility.

Meanwhile, investors continue to focus on the economic outlook for next year.

The Federal Reserve said last week that economic conditions continue to pick up, even as the central bank held interest rates at historic lows. It also noted that conditions in the financial markets have improved, and that it will allow most of its asset purchase programs, launched during the height of the financial crisis, to wind down on schedule.

"The consensus is for stepwise improvement in the economy in 2010," Creatura said. "Any deviation from that script will have pronounced effect on the market."

The market may also look to the dollar for direction. The greenback regained ground against the euro last week as concerns about the economic health of some major European economies weighed on the shared currency.

Greece’s credit rating was downgraded by Standard & Poors last week, and investors will be on the lookout for red flags from other euro zone economies.

"If we see further talk that S&P and Moody’s are going to look closer at Spain, another major economy, stocks here could take a hit," said Charlie Smith, an analyst at Fort Pitt Capital Group.

On the docket

Monday: Nothing scheduled

Tuesday: The Commerce Department will release its final revision of third-quarter Gross Domestic Product before the opening bell.

Economists surveyed by Briefing.com expect GDP, the broadest measure of economic activity, to have risen at an annual rate of 2.7% in the three months ending in September.

While that would be below the 3.5% growth rate the government projected in October, it still marks a substantial improvement over the previous four quarters, in which economic activity shrank.

Shortly after the market opens, the National Association of Realtors will release a report on existing home sales in November.

Wednesday: Government figures on personal income and spending in November come out in the morning.

Economists forecast a 0.5% increase in personal incomes, while spending is expected to be unchanged from the month before.

Reports on consumer confidence and new home sales are due out shortly after the opening bell.

The weekly crude oil inventories report is also due in the morning.

Thursday: A report on durable goods orders comes out before the start of trading.

Economists believe new orders for long-lasting manufactured goods rose 0.4% in November after a decline of 0.6% the month before. Excluding transportation, durable goods orders are expected to rise 1.0%.

The government’s weekly jobless claims report is also due in the morning, but no estimates were available yet.

The stock exchange will close at 1 p.m. ET and will remain dark Friday.  

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Boeing Co. defense chief Dennis Muilenburg said demand for helicopters, logistics support and cyber-security services will more than make up for recent losses of Army, missile defense and satellite programs.

"No question there’s downward pressure on our revenue profile," Muilenburg, 45, said in an interview Thursday in Bloomberg’s New York headquarters. "But what we are seeing is that upside opportunities are more than offsetting some of the visible program reductions."

Boeing, the second-largest defense contractor, was hurt in the Pentagon’s 2010 budget as programs such as a missile-defense laser and an $87 billion portion of the Army’s Future Combat Systems were canceled or curtailed.

Muilenburg said Boeing is speeding efforts to enter new markets such as energy grids and expects a boost from add-on orders for Chinook helicopters and F-18 Super Hornet fighters, along with increased demand as the U.S. places more troops in Afghanistan.

"I’m not sure I buy into growth, but I don’t have a precipitous drop forecast for Boeing’s defense business either," Howard Rubel, an analyst at Jefferies & Co. in New York, said in a phone interview. "They also need to work pretty hard to keep their current book sold and to get a couple of breaks in the international market."

In military airplanes, U.S. production of Boeing’s C-17 transport aircraft may be extended through at least 2012 if Congress approves a $2.5 billion plan to buy as many as 10 extra planes in the final 2010 budget and as international interest picks up, Muilenburg said. Foreign militaries also are seeking Chinook and Apache rotorcraft.

Defense accounted for about 52 percent of Chicago-based Boeing’s $60.9 billion in revenue and 76 percent of operating income in 2008. Boeing Integrated Defense Systems is based in Hazelwood.

The plan that President Barack Obama unveiled this week to increase U payday loans with no fax.S. forces in Afghanistan by 30,000 will mean higher usage of Boeing’s transport aircraft such as the C-17 and Chinooks, as well as increased deployment of the F-18 fighter, Muilenburg said.

That will lead to more revenue from support services and spare parts, he said.

Muilenburg said his first three months on the job have made it clear to him that the repositioning efforts the company began under Jim Albaugh, who was named head of Boeing’s commercial unit on Aug. 31, need to be accelerated as an offensive move.

Boeing is working on a "regional-scale, real-world demonstration" of the power-grid protection technology it hopes to transfer from defense projects to the commercial energy market. The company won an $8.6 million grant for the pilot project last month from the U.S. Department of Energy.

The company also sees opportunities to provide large-scale integration skills to improve security across multiple weapon systems and government agencies, as the U.S. government formulates an acquisition strategy for cyber-security programs, Muilenburg said.

Potential delays to Lockheed Martin Corp.’s F-35 Joint Strike Fighter may leave the Navy as many as 250 jets short of its war-fighting requirements, and Boeing will be ready to fill the gap with its F-18 Super Hornet, which is assembled in Hazelwood. Muilenburg said. Bethesda, Md.-based Lockheed Martin is Boeing’s only larger military-contracting rival.

Lockheed must "get it on cost, get it on schedule or I have to do something to mitigate" the potential gap that may arise from any delays of the F-35 plane, Vice Admiral Barry McCullough, deputy chief of naval operations for resources, said Thursday.

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Italian business confidence rose to the highest in more than a year in November on expectations that exports will help the recovery gather pace after the worst recession in six decades.

The Isae Institute’s manufacturing sentiment index climbed to 78.8 from a revised 77.4 in October, the Rome-based research center Isae said today. The reading compared with a median forecast of 78 in a Bloomberg News survey of 16 economists.

“The data confirms a positive trend for the output, a further sign that the worst is over,” said Silvio Peruzzo, an economist at Royal Bank of Scotland in London. “However, manufacturers need to rely on exports while domestic demand remains weak due to the growing unemployment.”

Italy emerged from the recession in the third quarter as the global recovery helped exports increase 6.6 percent in September from the previous month. The country posted a trade surplus in October compared with a deficit from a year earlier, national statistics institute Istat said today. After previously forecasting 0.7 percent growth for 2010, Finance Minister Giulio Tremonti said on Nov. 24 the economy may expand by “more than 1 percent” next year.

“Greater confidence is due to an improved outlook for orders, especially from abroad, and rising expectations on short-term production,” Isae said in today’s report. “Inventories remain below levels considered normal.”

Stimulus Spending

Government stimulus measures across Europe helped auto sales recover from a global decline caused by the recession. In Italy, they benefited the country’s biggest manufacturer, Fiat SpA. Sales of the Turin-based automaker rose 15 percent for the month of October.

Incentives to trade in old cars for newer models are due to be phased out and unemployment is still rising, which may weigh on consumer spending. Italy’s jobless rate climbed in the second quarter to a seasonally adjusted 7.4 percent, and will rise to 8.5 percent next year and 8.7 percent in 2011, the Organization for Economic Cooperation and Development said on Nov. 19.

Consumer confidence unexpectedly rose in November as optimism on economic growth outweighed concerns on the outlook for the labor market, Isae said yesterday. Manufacturers were more pessimistic about the job market than consumers, today’s report showed. A sub-index measuring expectations on employment fell to minus 17 in November from minus 16.

Isae conducted its latest survey of 4,000 companies between Nov. 2 and Nov. 18. The research center revised its October reading from an initial 77.1.

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This is a quiz. What do the record-high Wall Street bonuses have in common with the record-low yields for savers?

Answer: They show yet another way that prudent people, especially those living on fixed incomes, are being screwed by the government’s bailout of the imprudent.

Here’s the deal. The government is spending trillions to keep interest rates down in order to support the economy and prop up housing prices, and those low rates have inflicted collateral damage on savers’ incomes.

"It’s a direct wealth transfer from savers and retirees to overly indebted borrowers," says Greg McBride, senior financial analyst at Bankrate.com.

Since October 2007, when government intervention in the financial system began picking up speed, yields on the ultrasafe one-year and five-year investments that many retirees favor have tanked.

Two years ago the average yield on a five-year federally insured bank CD was 3.9%, according to Bankrate.com. Now it’s 2.2%, a drop of more than 40%.

Yields on one-year CDs have almost vanished: 0.92%, compared with 3.6%. On five-year Treasury securities, yield is down to 2.3% from 4.4%. On one-year maturities, you get a minuscule 0.3%, down from more than 4% in 2007.

The rates on AAA-rated one- and five-year tax-exempt bonds, another safe saver haven, are down sharply, too, for bailout-related reasons that we’ll get to in a bit.

As for money market mutual funds, fuggeddaboutit — the average is about 0.06% (no, that’s not a misprint) according to Crane Data, down from 4.6% two years ago.

It’s become customary practice — a wise one — that when the U.S. economy falters, the Fed cuts very short-term rates, the only ones that it controls, to stimulate business. But this time the Fed hasn’t confined its rate-suppression activities to the short-term markets.

It’s been a huge buyer of Treasury securities with maturities of up to 10 years, as well as mortgage-backed securities and Lord only knows what else. This buying pressure forces up the securities’ prices, and thus reduces their yields no fax needed payday loans.

The Fed, which declined to talk to me, is the major buyer of mortgage paper, in what’s clearly an attempt to hold down mortgage rates and prop up house prices. The Fed has also been a huge buyer of Treasury bills — securities with a maturity of less than a year — that Uncle Sam has issued to help fund the federal deficit and pay for various bailout programs.

But wait, there’s more. As part of the economic stimulus package, the federal government is promoting Build America Bonds, under which the Treasury pays 35% of the interest costs of project-related bonds issued by state and local governments. These BABs, as they’re known, are taxable securities rather than being tax-exempt as normal state and local bonds are.

The BAB program has sharply reduced the supply of new tax-exempt muni bonds. Almost $40 billion of Build America Bonds have been issued since the program began in April, according to Bloomberg.

Chip Norton, a muni maven at Wasmer Schroeder & Co., says that by reducing the supply of new munis, Build Americas have been a major factor in driving down yields on one- and five-year triple-A munis to 0.5% and 2.3%, respectively, from 3.4% and 3.6% two years ago.

One day, the federal government won’t be able to keep all these interest rates artificially low, as it’s now doing. The Chinese government, our major financier, is growing restless. The dollar’s falling sharply relative to other currencies is an ominous sign. If this problem accelerates, it will put pressure on the Fed to let interest rates rise to protect the dollar from a collapse.

But until rates go up, Wall Street will be chowing down on essentially free money, while fixed-income people living off their investments will have to eat into their capital, take more risk, or reduce their standard of living. A nice reward from their government for a lifetime of saving. Thanks for nothing, guys. 

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Nokia’s success in the fiercely competitive laptop market will depend on telecom operators able to offer the cell phone giant an opening not available to most PC brands.

Nokia will exploit its long ties with operators such as Vodafone and Deutsche Telekom to get into homes at lower cost, with carriers subsidizing the price of the netbook in return for revenue from long contracts.

Operators in mature markets are already eagerly offering netbooks, which allow them to sell an additional Internet connection in a market where everybody owns phones, and where buying customers from rivals is expensive.

Carriers shifting money reserved for phone subsidies into netbook sales could have pushed Nokia into making its own PCs.

“Nokia really had little choice but to enter the cellular netbook market,” said Neil Mawston, an analyst at Strategy Analytics. “Netbooks are a high-growth category that mobile operators in Western Europe are piling into.”

Nokia last week showcased its first netbook — pitting it against PC giants such as Hewlett-Packard, Dell and Lenovo — and positioned it at the luxury end of the market with a price of 575 euros ($820), before local taxes.

The move comes as PC firms encroach into its territory, with Dell in a tie-up with China Mobile to launch smartphones in the world’s largest mobile phone market, and Acer launching its own line earlier this year.

Netbook PCs, pioneered by Taiwan’s Asustek, are low-cost computers optimized for Internet surfing. Their sales are forecast to more than double this year to 26 million, helped by penny-pinching consumers looking to rein in spending.

Despite the fast growth the netbook industry is still small when compared to cell phones — Nokia alone sold more than 30 million smartphones in January-June.

Nokia’s business model for its netbook would be similar to that already in place for its phones on many markets, where operator subsidies allow consumers to buy phones at a much reduced price and often for free.

“Nokia’s edge here over the Taiwanese rivals lies in the strong relationships with major European mobile carriers. This kind of luxury device probably does need strong operator support to thrive in the current chilly consumer climate,” said Tero Kuittinen, analyst with MKM Partners.

But operator subsidies, which fluctuate wildly by region, remain unreliable as telecom firms are likely to pressure Nokia to lower prices if their own business is affected.

Many telecom operators in mature markets have already indicated that revenue and margins could come under pressure this year as consumers spend less, making it less likely for them to provide heavy subsidies on any products.

LOW RISKS FROM LOW-MARGINS?

Nokia has not given any forecast for how many PCs it hopes to sell, but most analysts agree that the firm is likely to remain a small player in an already crowded market. 

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Loan servicers will "significantly" increase the pace of mortgage modifications under the Obama foreclosure prevention program, the Treasury Department said Tuesday.

The Obama administration wants to see 500,000 trial modifications in place by Nov. 1. Currently, 200,000 are underway.

Officials called executives from 25 servicers participating in the program to Washington Tuesday to discuss improving the 5-month-old plan’s implementation.

Both the Obama administration and the industry are feeling mounting pressure from borrowers who say their servicers are not responding to their calls and applications, losing their paperwork or not making decisions.

"[T]oo many homeowners are at risk of foreclosure right now," Treasury Secretary Tim Geithner said in a statement Tuesday. "Today’s meeting was an opportunity to identify ways to accelerate the program and bring relief faster."

Announced in February, the loan modification plan allows eligible borrowers who are in or at risk of default to lower their monthly payments to no more than 31% of their pre-tax income through a loan modification. The adjustments are made permanent after the homeowner makes three on-time payments. Homeowners, servicers and mortgage investors receive incentive payments in hopes of increasing participation.

So far, the government has committed $20 billion to the effort and has said it would provide $75 billion overall.

Most servicers started implementing the program in April and May, but soon faced harsh criticism as applications flooded in. CNNMoney.com has heard overwhelming negative reviews from the nearly 500 people who wrote in about their experiences.

"Obama’s plan is a joke," wrote Jean in Michigan. "The banks are a joke. fax, fax, fax, call, call, call and no response for months. Even washington rep can’t get an answer or help, what a sham!!!!"

Also, the number of people falling behind on their payments continues to mount, especially as unemployment rises. Some 1.5 million people fell into foreclosure in the first half of 2009, up 15% from a year ago.

Even President Obama acknowledges that the program is failing to stem the foreclosure tidal wave.

"Our mortgage program has actually helped to modify mortgages for a lot of our people, but it hasn’t been keeping pace with all the foreclosures that are taking place," Obama said last month.

The administration has said the plan could help up to 4 million people avoid foreclosure. Though officials said they are on track to reach their goal, the Government Accountability Office cast doubts in a report last week on whether this number could be achieved.

To help servicers speed up the modification process, the administration said it will work with the institutions to set more exacting performance measures, such as average borrower wait time, document handling and response time for completed applications cash loans in 1 hour. Officials will release their first progress report on each servicer — detailing the number of trail modification offers were extended and are underway — by Aug. 4.

Servicers, including Citigroup (C, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Bank of America (BAC, Fortune 500), Ocwen (OCN) and Wells Fargo (WFC, Fortune 500), were spending all of Tuesday meeting with Treasury and Housing department officials in the morning and early afternoon, and then with housing counselors in the latter part of the day.

In the morning session, servicers said they would like to see a standardization of documents and definitions, which will speed their application review and reporting process. Also, they asked the administration to create a Web site where borrowers could apply for a modification and submit their documentation electronically, rather than fax them in. And financial institutions said they are looking into why only 50% of the troubled borrowers they contact respond.

"Things can be done all through the process to make it work a little better," said Paul Leonard, vice president for government affairs at the Housing Policy Council, which represents financial institutions.

Servicers believe the administration’s goal is attainable, he said.

To reach it, however, servicers will have to hire and train more staff. Like its peers, Citigroup said it is ramping up its efforts.

"We have increased loss mitigation staff, added call center capabilities, expanded training and taken other important steps to fully implement the program in its current stage of development," said Sanjiv Das, chief executive of CitiMortgage. "Today’s meeting was an important step toward the administration’s and our shared objective of improving the effectiveness and efficiency of the Make Home Affordable mortgage modification program."

How has President Obama’s $787 billion stimulus program affected you or your community? Are you seeing a benefit from the Making Work Pay tax cuts or the additional $25 in unemployment benefits? Are you seeing construction jobs or other stimulus-funded work in your neighborhood? Do you still have a job because of stimulus funds? We want to hear your experiences. E-mail your story to realstories@cnnmoney.com or send in an iReport and you could be part of an upcoming article. For the CNNMoney.com Comment Policy, click here. 

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Business legend Jack Welch has already hailed Ben Bernanke as "a national hero" for the Federal Reserve chief’s aggressive moves to pump up the economy, but Bernanke’s work is not nearly finished. One of the factors that will influence the decision whether to reappoint him when his term ends in January is the nature of the next task facing him or his successor: to wean the economy off the $1 trillion of new money created by the Fed when disaster loomed last fall.

Like much of what the Fed has had to accomplish recently, it’s a scenario without precedent since the Great Depression. And that time, the delicate operation was botched.

"Your timing has to be perfect," says David Jones, former Fed economist and president and CEO of DMJ Advisors LLC in Denver. "If you do it too soon, you keep us in a deep recession. And if you do it too late, you get inflation."

To make the best decision about whom to appoint, President Obama will have to consider not only who has the best command of monetary policy, but also who has the most mettle. Any decision to raise short-term interest rates can make the Fed chair very unpopular. "Your next act is not to refill the punch bowl," says Rob Parenteau, an economic consultant who owns the firm MacroStrategy Edge. "You’re going to be taking it away, and you’re going to be making a lot of enemies as you do that."

The argument for Bernanke goes like this: he’s already on the job, and he also happens to be one of the greatest living scholars of the Great Depression, which is basically a road map for how a central bank should not run monetary policy. One of the lessons of that crisis is that shutting off the monetary spigot too soon can stop a recovery in its tracks. In 1936-37, the central bank started withdrawing excess reserves. This, combined with FDR’s decision to raise taxes and cut spending, sent the economy into another tailspin.

Bernanke has indicated that he understands the art of timing. During testimony before Congress’s Joint Economic Committee in May, he explained, "I just want to assure the American people that we are very focused, like a laser beam … on this issue of the exit and of making sure that we have price stability in the medium term."

He added, "It’s very important for us to provide a lot of support for this economy right now because it needs support, but at the same time we understand the necessity of winding this down in an orderly way at the appropriate moment so that we will not have inflation problems on the other side instant payday loans completely online."

Bernanke and others at the Federal Reserve are saying inflation will not be a problem in the near future. But investors are already signaling their concern. Ten-year Treasury bond yields hit an eight-month peak in June.

"[The Fed’s] models may tell them inflation’s not a headache for two or three years but it doesn’t matter if investors think it could be a nearer term problem," says Parenteau. "If commodity prices begin to reflect that, you’ve got a problem on your hands"

The question is whether Wall Street trusts Bernanke to do whatever it takes to avoid the inflation problem. Larry Summers, Obama’s top economic adviser and former Treasury secretary, is often floated as another possible Fed chair. People who like that idea view his reputation for a strong will as an asset in a situation like this.

"People may view Summers as more able and willing to execute whatever tightening needs to be done on the Fed funds rate," says Parenteau, "whereas they’re used to thinking of Bernanke as ‘Helicopter Ben,’ where he comes along with the helicopter and opens the suitcase and lets the money fly."

On the other hand, Summers’ close ties to the White House could create the impression that political pressure would be brought to bear on him to err on the side of economic growth, rather than inflation-fighting.

Regardless who gets appointed, one thing is certain: this unelected corner of government has never had more power. The Obama administration’s proposal to give the Fed more authority to regulate big financial institutions comes at the same time its monetary decisions will decide the economy’s fate. And yet all the authority in the world may not be enough to stop the after-effects of injecting such a megadose of money into the system. Some think inflation is inevitable.

"It doesn’t matter who you appoint. It doesn’t change the fact you’re sitting there with a trillion dollars in excess reserves," says Thomas Saving, an economics professor at Texas A&M University and director of the Private Enterprise Research Center. "An appointment doesn’t change any of that. That’s reality." 

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DETROIT – General Motors Corp. took a key step toward its downsizing today, striking a tentative deal to sell its Hummer brand, while also revealing that it has potential buyers for its Saturn and Saab brands.

GM (NYSE: GM) has a tentative agreement to sell its rugged Hummer brand to Sichuan Tengzhong Heavy Industrial Machinery Co. of China, said a person briefed on the deal.

The Detroit automaker announced this morning that it had a memorandum of understanding to sell the brand of rugged SUVs, but the buyer's identity was not released. A formal announcement of the buyer was to be made today afternoon.

Sichuan Tengzhong deals in road construction, plastics, resins and other industrial products, but Hummer would be its first step into the automotive business, said the person briefed on the deal. The person spoke on condition of anonymity because the details have not been made public.

GM said the sale will likely save more than 3,000 U.S. jobs in manufacturing, engineering and at various Hummer dealerships.

As part of the proposed transaction, GM said, Hummer will continue to contract vehicle manufacturing and business services from GM during a transitional period. For example, GM's Shreveport, La., assembly plant would continue to contract to assemble the H3 and H3T through at least 2010.

The automaker also said today that it has 16 buyers interested in purchasing its Saturn brand, while three parties are interested in the Swedish Saab brand.

Chief financial officer Ray Young told reporters and industry analysts on a conference call that GM is continuing to pursue manufacturing agreements with a new Saturn buyer.

GM would like to sell the money-losing Saturn brand's dealership network, contracting with the new buyer to make some of its cars while the buyer gets other vehicles from different manufacturers.

At the same time, bridge loan discussions with the Swedish government are progressing, Young said.

GM, which filed for Chapter 11 bankruptcy protection in New York on Monday, is racing to remake itself as a smaller, leaner automaker. It is hoping to follow the lead of fellow U.S. automaker Chrysler LLC by transforming its most profitable assets into a new company in just 30 days and emerging from bankruptcy protection soon after.

But GM is much larger and complex than its Auburn Hills-based rival and isn't up against Chrysler's tight June 15 deadline to close its deal with Fiat.

Sharon Lindstrom, managing director at business consulting firm Protiviti, said the companies pose different challenges. But as with Chrysler, she notes that the Treasury Department made sure many of GM's moving parts were in order ahead of time so a quick bankruptcy reorganization might be possible.

"They had a lot of their ducks in a row because the terms of the government financing forced them to get all the parties to the table in a very, very short period of time," Lindstrom said.

In addition to its plan to sell the Hummer, Saab and Saturn brands, GM will also phase out its Pontiac brand, concentrating on its Chevrolet, Cadillac, Buick and GMC nameplates.

Separately, the German government said today it paid out the first euro300 million (US$425 million) in bridge loans to GM's Adam Opel GmbH division. The loans are part of a deal to shrink GM's stake in Opel and shield it from GM's bankruptcy protection filing in the U.S.

Over the weekend, the German government agreed to lend Opel $2.1 billion. The loans are part of a deal in which Canadian auto supplier Magna International Inc. (TSX: MG.A) and Russian-owned Sberbank will acquire 55 per cent of the company.

A sale of the Hummer brand had been expected. Chief executive Fritz Henderson had said in April that the automaker was expecting final bids from three potential buyers within the month payday loan for bad credit.

Critics had seized on the rugged but fuel-inefficient Hummer as a symbol of excess as GM's financial troubles grew and gas prices rose. Sales at Hummer, which is known for models like the H3 with military-vehicle roots, have been in a steep slide since gasoline prices rose to record heights last summer. For the first four months of this year, Hummer sales are down 67 per cent.

GM nailed down deals with its union and a majority of its bondholders and arranged to sell off most of its Opel operations in Europe in order to appear in court Monday with a near-complete plan to quickly emerge with a chance to become profitable.

The government has said it expects GM to come out of bankruptcy protection within 60 to 90 days. By comparison, the judge overseeing Chrysler's case approved the sale of its assets to a group led by Italy's Fiat Group SpA in just over a month. Some industry observers think Chrysler could emerge as early as this week.

During Monday's hearing, GM attorney Harvey Miller stressed the magnitude of the case and the importance of moving GM through court oversight as fast as possible. He noted that the automaker only has about $2 billion in cash left.

"If there's going to be a recovery of value, it's absolutely crucial that a sale take place as soon as possible," Miller said in his opening statement.

The automaker wants to sell the bulk of its assets to a new company in which the U.S. government will take a 60 per cent ownership stake. The Canadian government would take 12.5 per cent of the "New GM," with the United Auto Workers union getting 17.5 per cent and unsecured bondholders receiving 10 per cent. Existing shareholders are expected to be wiped out.

Attorneys for GM stakeholders packed the stuffy courtroom well ahead of the automaker's first-day Chapter 11 hearing. U.S. Judge Robert Gerber moved swiftly through the agenda's more than 25 mostly procedural motions.

Gerber set GM's sale hearing for June 30, putting it on a path similar to that of Chrysler. Objections are due on June 19, with any competing bids required to be submitted by June 22.

Gerber also gave GM immediate access to $15 billion in government financing to get it through the next few weeks, and interim approval for use of a total $33.3 billion in financing, with final approval slated to be ruled on June 25. The funds are contingent on GM's sale being approved by July 10. Gerber also approved motions allowing the company to pay certain prebankruptcy wages, along with supplier and shipping costs.

The sheer size of GM makes it a more complicated case than Chrysler.

GM made twice as many vehicles as Chrysler's 1.5 million last year and employs 235,000 people compared with Chrysler's 54,000. GM also has plants and operations in many more countries, meaning it will likely have to strike separate deals to navigate the bankruptcy laws of those places.

Henderson said GM has learned a few things by watching Chrysler's case.

"Certainly the court showed that it can address 363 (sale) transactions in an expeditious fashion," Henderson said at a news conference Monday. "Particularly in our case with what will be a very large 363 transaction."

GM's filing for Chapter 11 bankruptcy protection is the largest ever for an industrial company. GM, which said it has $172.81 billion in debt and $82.29 billion in assets, had received about $20 billion in low-interest loans before entering bankruptcy protection.

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