BernieHund: The Political Watchdog

Ben Bernanke, Federal Reserve Chairman, made his presentation before The Joint Economic Committee this morning, offering a rather bleak view of our economic future, at least as far as 2008 goes.  Usually as little more hopeful, today Bernanke offered that the economy is “stagnate” and will possibly “contract” over the next few months.  Well, in plain old English it sounds to me as if he was saying the economy is not good and going to get worse. 

This was Bernanke’s first appearance before Congress since the Bear Stearns bail out.  Of course, Bernanke tried to tell Congress that it was not a bail out. 

“We did not bail out Bear Stearns,” Mr. Bernanke said, during the question-and-answer session after his testimony. “Bear Stearns shareholders took a very significant loss. An 85-year-old company lost its independence and became acquired by another firm. Many Bear Stearns employees, as you know, are concerned about their jobs.”

Although Bear Stearns had decided on the Thursday before the federal reserve rescue mission to file for Chapter 11 relief and the money toting knights in shining armor appeared on the scene over the following weekend and rescued the troubled firm, Bernanke prefers to call the event anything but a bail out.  And, it was still a bail out.  Let’s not argue semantics here.  The Bear would have sunk faster than the Titanic had the Fed not appeared and begun bailing. 

In case, Mr. Bernanke ever takes another road, other than the one between Washington, D.C. and Wall Street, he will notice that lots and lots of people are worried about their jobs, not just the Bear Stearns lot.  Further, many of the people have already lost their jobs.  I believe the number is almost 85,000 since December and we don’t even know how many were fired or laid off in March.

When questioned by senators and representatives, Bernanke’s answer to how the Fed had helped the consumers he offered that lowering the interest rates had helped stabilize the economy.  And, beyond that he more or less stated that it was not up the Fed, nor did the Fed have the authority or responsibility, to handle the consumers. 

Of course, there are those counselors around the country who are helping homeowners negotiate their present interest rates, but try to get hold of one.  From all reports the lines are busy and the process is not as sweet and quick as one may expect. 

To quote Mr. Bernanke

“It now appears likely that real gross domestic product will not grow much, if at all, over the first half of 2008 and could even contract slightly.”

He went on to say

“The uncertainty attending this forecast is quite high and the risks remain to the downside.”

And, when asked about inflation

“We expect inflation to moderate in coming quarters,” he said, but added, “Uncertainty about the inflation outlook has increased. It will be necessary to continue to monitor inflation developments carefully in the months ahead.”

In his testimony, Mr. Bernanke presented a laundry list of coming economic woes. He said he expected the unemployment rate to rise, payrolls to shrink and home construction to fall.

Okay… so the bottom line?  The Fed is bailing out the Titanic on Wall Street and unless Congress takes action soon, those of us on Main Street are floating in little inflatable dingies that are leaking like sieves and no one from the Fed is bailing us out or even offering us a bucket.