Fed Chief Bernanke Grants Rare Interview - CBS News
This should be a very interesting interview. This could be the chance to really bring confidence into the market, and make the public feel like the Fed has a plan, and has started executing a strong strategy to curtail this recession.
On the other hand, if the interview heads south, and there doesn't seem to be a coherent strategy that is laid out, this could be a very slippery slope. I am a fan of Bernanke. I think he has a great grasp of the technical fundamentals of the US financial system. He is able to gauge risk and understands the number of complexities that our financial system has baked in. However, he doesn't always come off as a polished speaker. If the average public doesn't fully understand what is going on, or worse, the media portrays a very negative connatation of what is stated, I think we could be in for a rough next week.
1 comment:
I thought Bernanke did a good job representing the Fed. It was interesting to see where he came from and to see how much he has achieved in his life time.
Interesting points (still thinking about these statements):
1. He thinks that based on their plan, he sees a probability that the recovery will start in '09.
2. Unemployement will lag return slower than the turn around.
3. Thinks the risk of a depression has been averted.
4. He's extremely angered by the bail out of AIG. Feels that it was the right decision to avoid a financial collapse, but he is very upset that their "unconscionable bets" require a bail out to avoid a collapse.
5. We came very close to a disaster in October. Legislation allowed for averting that disaster.
6. Fed had to print money to allow for the bail out of big banks.
7. He believes that all the big banks are solvent, but they are running stress trust to confirm.
8. Biggest risk is that there is not enough political will to keep fighting this problem.
9. "The era of this high living, this is over now. And that they need to be responsible and use the money constructively,"
10. Capital from international investors created a situation were aggressive risks were taken, and the Fed didn't have enough regulations to avert risky behavior.
11. Changes that he is thinking about are to create stronger regulations and processes that allow for large institutions to be wound down w/out creating a financial domino effect.
12. Creating a systemic regulator that oversees the full system.
13. Sees "green shoots" sporouting in some areas.
14. "Scott, I'd say three things. I'd say, first of all, that the Federal Reserve is here, and is gonna do everything possible to support this recovery. The second thing I would say is that we have to understand, though, that recovery is not gonna happen until the financial markets and the banks are stabilized. And we do have a plan, we have a program for that. But it's gonna take some patience," Bernanke said.
"But the third and final thing I'd just like to say to the American People is that I have every confidence that this economy will recover, and recover in a strong and sustained way. The American people are among the most productive in the world. We have the best technologies. We have great universities. We have entrepreneurs. I just have every confidence that as we get through this crisis, that our economy will begin to grow again, and it will remain the most powerful and dynamic economy in the world."
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