Bernanke Testimony
 

Bernanke testified before Congress today.

He said two things of import

1. That unemployment is going to stay North of 9% through 2010

2. That the USD does not face any challenges in the short run, however in the future if the US does not get its financial house in order there will be challenges.

Paul Volcker ex Fed Chief in an interview this week said that for unemployment to go down the US economy would have to grow at more than 3%. That it looks like the US economy is in for slow growth going forward.

That either US govt spending has to go down or taxes willhave to go up. He doesn't see the spending decreasing. At this point in time he see neither spending nor taxes going up.

He too see that if the US continues on this course the USD will face challenges.

Haha..."challenges."

The U.S. economy will not grow by 3% with 15% (real) unemployment or 9% (fake) unemployment. Not by a long shot.

I was gonna start a thread on Bernanke, but might as well ask it here. For a guy who's supposedly a scholar on the Great Depression and can't be fired by a politician, why the hell is he not screaming from the mountain tops that we are on a kamikaze course? People will listen to him and even if he can't convince the POTUS and Congress, he does influence investors and public opinion, which sometimes affects policy. Surely, Bernanke knows we are killing ourselves with overspending. Why isn't he being more vocal about it?

One word PANIC....

The market is going to correct as all markets do. However we have puled back from the abyss and people have caught their breaths. We have had a rebound in stock prices since march.

The emerging world is now coming out of the shadows and is starting to grow at pretty rapid rates. Which should bode well for companies with international exposure. The problem with US bonds is that people are going to be chasing those lower rates of return with with ever more amounts of capital. The risk to reward ratio is going to mount in Bonds. Bonds are traditionally a safe haven.

With the Chinese pulling back from our bond markets the only buyer of recourse is the FED iteself. To do this they are printing money. This is recognized by most people as a ticking time bomb.

Ironically corporations can be profitable even with Americans in record numbers being unemployed. As those companies with international exposure remain profitable.and with a modest 3% growth rate companies may just decide they do not need to rehire. The concern in the stock market is that with a resurgent USD US exports will fall off.

The long term effect on the USD is not one of optimism. The policies of our current administration if implemented will only excerbate the problems.

He didn't lie he is just a bright guy who is incredibley naive and thus stupid.