Thursday, November 8, 2007

At least he's not hiding it anymore!

From the AP:

WASHINGTON (AP) -- Federal Reserve Chairman Ben Bernanke said Thursday that economic growth will slow noticeably in coming months while surging oil costs will raise inflation pressures. But he said the economy is nowhere close to the stagflation nightmare of the 1970s and he predicted an economic rebound by mid-2008.

Testifying before the Joint Economic Committee, Bernanke acknowledged a host of problems facing the economy, from a deeper-than-expected housing slump to a lingering credit crunch and now sharply rising oil prices and a falling value of the dollar, both of which increase inflation threats.
I am glad that the Chairman is finally acknowledging the faults of the economy, although it certainly isn't helping Wall Street:

After falling by as much as 200 points, the Dow Jones industrial average closed out another difficult trading session down 33.73 points at 13,266.29. That decline followed a 360.92-point plunge on Wednesday, which had been the third drop of more than 350 points in the past month.
Wall Street will come back. In fact, the reason Wall Street was doing so well before was just because those idiots were giddy over the multiple interest rate cuts, as well as the liquidity that occured in the summer. These guys think they are entitled to central planning in their favor, but when the realization that government doesnt always know best hits them, they dump their savings. I suppose the question that logically follows then is: Does Wall Street run largely on a centrally-planned economy? If so, then what a sad age we live in.

I am going to tell you right now, Wall Street will rebound. But I don't know how sustainable it will be when you consider that two big-spending holidays are coming up, and that quarterly reports are going to be far less than average. This will prompt further degradation of stock value, but hopefully at this time, the price for oil will have dropped. We cannot forget the importance of the value of oil in our calculations of the economy. Face it, oil is the blood that serves our economy.

I am not too worried though about oil becoming a burden on the markets. As long as capitalism reigns, the market will adapt. Therefore, this may be a good thing, since it will spur innovation for renewable and cheap resources that in the end will ween us from the stranglehold of OPEC.

Bernanke said he and his colleagues believe economic activity will "slow noticeably in the fourth quarter" compared with the 3.9 percent pace of the third quarter, reflecting the impact of higher energy prices, tighter credit and continuing weakness in housing will have on consumer spending. Many analysts believe growth could be as weak as 1.5 percent in the current quarter.
SLOW NOTICEABLY? My friends, 1.5% is a RECESSION!

No comments: