US Economy: Bernanke Optimistic for 2009 Recovery
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New York, 16 Mar. Ben Bernanke thinks the recession will end this year. Or so he said on 60 Minutes, “We’ll see the recession coming to the end probably this year, obviously recovery beginning next year. This decline will begin to moderate and we’ll begin to see a leveling off.”
New York, 16 Mar. Ben Bernanke thinks the recession will end this year. Or so he said on 60 Minutes, “We’ll see the recession coming to the end probably this year, obviously recovery beginning next year. This decline will begin to moderate and we’ll begin to see a leveling off.”
It’s rare to get an interview from a Fed chairman – too much is at stake. Anything they say can easily make markets rise or fall overnight. But Bernanke, the fourth most powerful man in the world as ranked by Newsweek, explained the interview his stance on bailouts, the markets, and recovery.
Commenting on AIG, he said that if the Fed would have let AIG die the repercussions would have been more than disastrous.
“Let me just first say that of all the events and all of the things we’ve done in the last 18 months, the single one that makes me the angriest, that gives me the most angst, is the intervention with AIG,” Bernanke said. “Here was a company that made all kinds of unconscionable bets. Then, when those bets went wrong, we had a situation where the failure of that company would have brought down the financial system.”
“I understand why the American people are angry,” he continued. “It’s absolutely unfair that taxpayer dollars are going to prop up a company that made these terrible bets, that was operating out of the sight of regulators, but which we have no choice but the stabilize, or else risk enormous impact, not just in the financial system, but on the whole U.S. economy.”
He added that none of the banks the Fed oversees will fail, and that they are all solvent, but that doesn’t mean they will all survive.
“They are not going to fail,” Bernanke explained. “But what we can do, should it be necessary, is try to wind it down in a safe way.”
Although Bernanke is optimistic, he explained that if we’re not careful things could still get worse. “I think the biggest risk is that, you know, we don’t have the political will,” he elaborated. “We don’t have the commitment to solve this problem, and that we let it just continue. In which case, you know, we can’t count on recovery.”
When asked if he had anything to say to the American people he said, “…first of all, that the Federal Reserve is here, and is going to do everything possible to support this recovery. The second thing I would say is that we have to understand, though, that recovery is not going to 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 going to take some patience.”
“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,” he continued. “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.”
Ron Portobello, EconomyWatch.com
