The Federal Reserve has never maintained interest rates so low for so long over the course of modern economic history: they have been close to 0% since 2007, in reaction to the economic crisis of the time and the weak recovery since then.

Temporary measures have become the norm: the Fed today buys $85 billion of U.S. Treasuries (TLT) and mortgage securities per month in order to stimulate the economy. It has announced that it would not cease to use this unconventional monetary policy until the unemployment rate drops to 6.5% (it is currently 7.6%). Even though these emergency measures have been necessary, they are also dangerous.

Firstly, let us highlight the good management of Ben Bernanke, the Federal Reserve's chairman since 2006. Given his experience as a macroeconomist focused on the crash of 1929 and monetary policy, it would have been difficult to find someone better equipped to head

Several days after a record winning streak for the Dow Jones Industrial Average, as the U.S. is witnessing budget bickering, and at the time of the Fed's meeting on the economy, where is the country's economy really standing?

The Good

Overall, investors' optimism has increased over the past few months, at every level. Mega deals are back, as indicated by the recent buyouts of H.J. Heinz (HNZ), the famous ketchup maker from Pittsburgh for $28 billion, and of Dell (DELL), the computer maker from Texas for $24 billion (even if this deal is currently contested by investor Carl Icahn). The Dow Jones closed at an all-time on March 5, at 14,253.77. It has roughly doubled since March 2009. Following the lead of institutional investors, retail investors are now jumping back into the stock market, fostering the "great rotation," the large-scale readjustment of portfolios from bonds to equities.

The housing

With $2.3 trillion of assets under management, over 260,000 employees and over $1.1 trillion in deposits, J.P. Morgan Chase (JPM) is the largest bank in the United States. It is currently recovering from a rare tumultuous period.

Management Shake-Up

While J.P. Morgan weathered the financial crisis very well, it suffered a trading loss that shook the banking giant to its core. The institution's Chief Investment Office, which manages that bank's cash, lost $5.8 billion in the first half of 2012. While investigations are being conducted about the credit trades, the biggest consequence to J.P. Morgan was perhaps reputational, especially to Jamie Dimon, the bank's much-respected, longtime CEO. J.P. Morgan had managed to gain a reputation for strong risk management over 25 years during which it navigated with savvy growth through external acquisitions on the one hand, and volatile financial markets periods on the other hand.

Seeking to convince investors that

Global finance has not been en vogue since the bankruptcy of Lehman Brothers in 2008, and that is slow to change. But banks across the globe are nevertheless evolving, step by step, in order to adapt to the post-crisis environment.

In the United States

In the United States, banks (XLF) are still cutting costs and raising equity. Bank of America (BAC), for instance, has announced it will shed 16,000 jobs by the end of the year, mostly in its commercial banking division. Its Chief Executive Brian Moynihan has sought to transform the company into a smaller and more efficient platform, in part through an increased focus on investment banking. Among all North American firms, Bank of America is the organization which is slimming down the most -a drastic reversal of the pre-crisis consolidation strategy that led Bank of America to expand rapidly in all corners of the banking industry.

It took long enough. After years of struggle, the national real estate picture of the United States seems to be brightening. The housing market (single-family homes, townhouses and condominiums), the multifamily real estate market (apartment buildings and garden-style apartment communities) and the lending industry all appear to be turning the corner, slowly.

Getting out of the water

While 24% of mortgages are still underwater, home values are rising across the country for the first time since 2007, albeit at different paces depending on local factors. Prices in Phoenix have recently posted the largest gains (with home prices that increased by 12% in a year). At the other end of the spectrum, prices in Atlanta are still declining (home values have decreased by 6% in a year). Within cities, buyers cluster around sought-after neighborhoods; sales in exurbs and "up-and-coming" areas are lagging.

Reasons for this uptick include the decrease in

As much as Greece and Spain are capturing the markets' attention, of significant importance for the Euro zone are the recent changes in France. In addition to being at the forefront of the European crisis as one of its largest economies, France has seen its debt downgraded and elected a new president in May.

Investors have no doubt been worried about the direction the Hexagon is taking. François Hollande, the leftist new president, is seen as anti-business and anti-rich. He has campaigned on raising the French state's revenues more than cutting spending. In particular, he proposed raising taxes to 75% for taxpayers earning over 1 million euros, and reducing the minimum retirement age back to 60 years from 62 for workers who started their careers young.

The good

It is no secret that Europe needs radical changes if it is to cure itself and if the Euro zone is to

For years, Western economies have been binging on debt. So much that their banking systems are still hung over, and their recovery is shaping up to increasingly resemble a multi-year hiccup with consecutive ups and downs.

As Europe is trying to avoid its 'Lehman moment', obvious challenges, but also some opportunities, have arisen from the current state of the world's financial system.

In North America, some banks are still badly bruised, and Bank of America (BAC) is the institution with the most to sort out. It has been struggling to turn itself around from the drags created by the acquisition of mortgage lender Countrywide Financial in 2008, lawsuits related to real estate foreclosure practices and public-relation snafus created by an attempt to charge a $5 monthly debit card fee to its customers (a plan that was eventually scrapped).

Overall, third quarter results across the Street have been weak and down

God bless the internet! Zillow.com (Z), a Seattle-based real estate website offering home values and rents estimates nationally, IPO'ed on July 20th and saw its value instantly triple to $1 billion - without having ever turned a profit. This is, however, more a sign of the strength of the technology sector than the real estate one.

First, some numbers: at 66%, the rate of homeownership is at its lowest level since 1998. 22.7% of homeowners - or 11 millions of them - are 'underwater' (meaning that they have a mortgage that is more than the current value of their home). Existing home sales reached a 7 months low in June (third straight monthly drop) and 40% of second mortgages are underwater. Home prices are near recession lows. In some hard-hit markets, such as Nevada, Arizona and Florida, homes have lost half of their values since their July 2006 peak. 63%