WASHINGTON: Would cheaper money relieve the panic in financial markets about shoddy mortgages and declining home prices?

Even as the chairman of the Federal Reserve vowed Friday to act “as needed” to keep the economy from sliding into a recession, some analysts and even some policy makers caution that the central banks main tool may be ill-suited to the problem it faces.

Like horses that rear up at the sight of a rattlesnake, investors who financed commercial lending have become spooked as the housing bubble turned to a bust and foreclosure rates on subprime mortgages began to skyrocket.

Money for subprime mortgages, for people with weak credit, has already evaporated. And the paralysis has spread to more traditional home loans, business loans and corporate borrowing for billion-dollar leveraged buyouts.

But the Feds main weapon for restoring confidence - reducing its benchmark Federal funds rate on overnight loans between banks to 5 percent or less from 5.25 percent today - would have little effect on fears about credit quality.

“The reason there isnt a market for these credits is that people dont know what price they should be trading at,” said Edward Leamer, professor of management at University of California, Los Angeles, who presented a paper this weekend at the Federal Reserves symposium in Jackson Hole, Wyoming. “Thats not going to be affected by a small change in the federal funds rate.”

The meltdown in credit markets permeated discussions at Jackson Hole. In late-night chats over cognac, European central bankers and American hedge fund managers swapped stories about collapsing “conduits,” “special investment vehicles” and “SIV-lites” - entities that banks and private equity funds use to bundle and sell loans as securities.

The talk was not idle.

Over the next six weeks, more than $1 trillion worth of U.S. commercial debt is set to come due and will need to be refinanced, more than five times as much as came due since the panic began one month ago.

Fed officials say most of that $1 trillion in maturing debt has nothing to do with subprime loans or any other kind of mortgages. It includes credit card debt, car loans and business loans.

One official compared the load of maturing debt to a pig in a python: a bulge that would be take time to digest but could eventually be absorbed without huge problems.

Much of the digesting will be by big banks, which provided backup credit lines for their mortgage lenders.

But David Hale, a longtime Fed watcher, noted that at least two German banks needed to be rescued last month because of their exposure to American mortgages. Chances are very high that there will be more, Hale said.

Ben Bernanke, the Fed chairman, said Friday that the central bank was ready to act if the turmoil in credit markets threatened to undermine the overall economy.

On Wall Street, investors welcomed Bernankes remarks as a signal that the Fed will probably lower rates at its policy meeting Sept. 18. Many economists and hedge fund managers said the move would indeed shore up confidence.

More importantly, supporters of a lower Fed funds rate say it could prevent the huge looming losses from bad mortgages from expanding into even bigger losses on all kinds of loans.

“It would be a very powerful signal,” said Lewis Alexander, chief economist at Citigroup. “A critical determinant of housing prices is employment. If you think employment is going to weaken, your assumption for housing and for the ripple effects through the economy will be very different.”

(08-24) 13:56 PDT NEW YORK, (AP) —

Major commodities markets moved higher Friday, with energy and metals prices supported by newly positive data on home sales and factory orders.

Oil prices jumped above $70 a barrel. Gold prices rose solidly, underpinned by a weaker U.S. dollar, while agriculture futures finished in mixed range.

Investor sentiment in the commodities markets has been hesitant in recent weeks, as tighter credit conditions have emerged and tempered expectations about economic growth. But stronger-than-expected economic reports Friday bolstered commodity prices, as did the return of an air of calm on Wall Street. Stocks logged strong gains on Friday, capping a week that saw much less volatile trading compared with the past month.

The Commerce Department reported a big jump in orders for expensive goods and an increase in home sales in July Д evidence that the housing market slump and problems in the credit market haven’t reached manufacturers. Factories saw orders for big-ticket “durable” goods rise 5.9 percent in July, the most in 10 months. Meanwhile, sales of new homes increased 2.8 percent in July, bucking economists’ consensus forecast for a decline.

Despite the slight gain, home sales are still down more than 10 percent from a year ago.

Copper prices rose on the London Metal Exchange and gained 7.35 cents to settle at $3.35 a pound on the New York Mercantile Exchange. BNP Paribas analyst David Thurtell noted that “copper prices have been positively correlated with the economy since the beginning of this year,” and the market on Friday got a boost from the surprisingly bullish U.S. data.

Other industrial metals prices ended mixed on the London Metal Exchange, with tin, zinc and nickel down while lead and aluminum rose. Lead jumped 3.5 percent, supported by declining inventory levels. Stockpiles of lead held by the LME decreased every day this week; exchange inventories are viewed as a barometer of global supply.

Meanwhile, gold prices rose solidly Friday as the U.S. dollar lost ground against the euro and other major currencies. Precious metals prices had been mostly on the decline since late July as problems in the credit market Д linked to the rising defaults on subprime mortgages and the devaluation of those assets that has followed Д have increased.

There are two main forces battling one another that could affect the gold market, said Axel Merk, president of Merk Hard Currency Fund. One is the global theme of contracting credit Д a negative for the precious metals market. The other is that the Federal Reserve doesn’t want to let the credit market shrink up.

“The folks who buy precious metals believe the Fed will do anything in its power to get the economy growing and stop a recession,” he said.

A cut in the benchmark federal funds rate, which Wall Street is hoping for, could stir up additional liquidity even as it would undermine the U.S. dollar Д two potential buttresses for gold. The Fed is scheduled to meet Sept. 18 to set interest rates.

December gold picked up $9.10 to $677.50 an ounce at the close of the Nymex. December silver rose 30 cents to $12.098 an ounce.

Elsewhere on the Nymex, energy prices climbed, helped by Wall Street’s positive finish on Friday and the day’s upbeat economic data. JPMorgan analysts said in a report Friday “this week’s stability in the equity market quelled concerns over subprime-mortgage slowing the global economy and cutting energy demand.”

Oil and gasoline prices also jumped on reports that Chevron Corp. had declared force majeure on purchases of some crude oil for a Pascagoula, Miss., refinery that suffered a fire last week. Chevron did not return calls requesting comment. The 330,000-barrel-a-day Pascagoula refinery has been running at partial capacity since the fire.

Force majeure protects a company from contractual liability in the face of natural or unexpected disasters.

Light, sweet crude for October delivery jumped $1.26 cents to settle at $71.09 a barrel, while September gasoline futures added 5.82 cents to $1.9814 a gallon.

In Chicago, wheat futures built on the sharp gains of the past week.

The December wheat contract rose 8 percent this week and tallied all-time record highs amid robust demand for U.S. wheat from foreign buyers. On Friday, futures picked up another 3 cents to close at $7.42 a bushel on the Chicago Board of Trade, as more evidence of strong export demand emerged: The U.S. Department of Agriculture on Friday reported Cuba purchased 100,000 metric tons of hard, red winter wheat.

December corn slipped 3.25 cents to close at $3.5875 a bushel, while November soybeans rose 6.75 cents to $8.65 a bushel.

Microsoft CEO Visits Vietnam Microsoft CEO Steve Ballmer Visits Vietnam to Cement Anti-Piracy Deal The Associated Press

HANOI, Vietnam

Microsoft CEO Steve Ballmer witnessed the signing of an agreement Monday requiring all of Vietnam’s government offices to use licensed computer software in a step to curb rampant piracy.

“The agreement demonstrates very strong commitments of the government of Vietnam,” in protecting intellectual property rights, Prime Minister Nguyen Tan Dung told Ballmer before the signing ceremony.

Vietnam’s Ministry of Finance was the first government agency to sign the Microsoft Office licensing agreement during a visit by company Chairman Bill Gates last year.

“I see a prosperous future ahead for Vietnam, and the country is doing the right things by looking now at how it can foster a healthy local software ecosystem, which will help open up this market to the rest of the world,” Ballmer said in a statement.

The software piracy rate in Vietnam is about 90 percent, one of the highest in the world, according to the U.S.-based Business Software Alliance, a piracy watchdog group. A version of Microsoft Windows can be bought on the street for as little as 50 U.S. cents.

The Business Software Alliance hails the licensing agreement saying it demonstrates how the government is serious about protecting intellectual property rights and reducing piracy.

“We anticipate that the Vietnam government licensing agreement of desktops could reduce the overall piracy rate in Vietnam significantly next year,” Jeffrey Hardee, the Alliance’s Asia Pacific regional director said in a Microsoft Corp. statement.

Local information technology developers said Ballmer visit will be another boost to the country’s IT industry following Gates’ visit and Intel Corp.’s kicking off construction a $1 billion semiconductor plant in southern Vietnam last month.

“The whole world sees Vietnam as a new destination for information technology,” said Truong Gia Binh, President and CEO of FPT Corp., Vietnam’s leading IT company. “This trend will continue after the visit.”