Fed Chief Warns Of Prolonged Economic Pain

Bernanke's Gloomy Forecast May Open Door Wider To Interest Rate Cut

(CBS/ AP)  Federal Reserve Chairman Ben Bernanke warned Tuesday that the financial crisis has not only darkened the country's current economic performance but also could prolong the pain.

The Fed chief's more gloomy assessment appeared to open the door wider to an interest rate cut on or before Oct. 28-29, the central bank's next meeting, to brace the wobbly economy.

Bernanke said the Fed will "need to consider" whether its current stance of holding rates steady "remains appropriate" given the fallout from the worst financial crisis in decades.

If the Fed does lower its key rate from 2 percent it would mark an about-face. The Fed in June had halted an aggressive rate-cutting campaign to revive the economy out of fear those low rates would aggravate inflation. Since then, financial and economic conditions have deteriorated, while inflation pressures have calmed, giving the Fed more leeway to again cut rates.

"The outlook for economic growth has worsened," Bernanke said in prepared remarks to the annual meeting here of the National Association for Business Economics.

All told, economic activity is likely to be "subdued" during the remainder of this year and into next year, Bernanke said. "The heightened financial turmoil that we have experienced of late may well lengthen the period of weak economic performance and further increase the risks to growth," he warned.

Many believe the country is on the brink of, or already in, its first recession since 2001.

White House Press Secretary Dana Perino said Tuesday "I don't think that we know" if we are in a recession but that the nation is in a "very difficult situation," reports CBS News White House correspondent Mark Knoller.

Later, Perino repeated that the classical definition of "recession" is two successive quarters of negative economic growth - and that she said is not the case now. But she said that "clearly, we're in a very distressing situation," and the 3rd quarter numbers for the economy will be "nothing to write home about," Knoller reports.

Consumers - major shapers of economic activity - have buckled under the weight of rising joblessness, shrinking paychecks, hard-to-get credit, declining net wealth and tanking home and stock values. All the strains are "now showing through more clearly to consumer spending," Bernanke said.

Meanwhile, worsening sales prospects and a heightened sense of uncertainty have begun to weigh more heavily on businesses, making them more cautious to hire and to invest in their companies, he said.

Employers cut jobs in September at the fastest pace in more than five years, the government reported last week. Payrolls were slashed by 159,000 last month alone. It was the ninth straight month of job losses. A staggering 760,000 jobs have disappeared so far this year.

The financial and credit crises, which took a turn for the worst in September and continue to stubbornly persist, are likely to "increase the restraint on economic activity in the period ahead," Bernanke said.

Even households with good credit histories are now facing difficulties obtaining mortgages or home equity lines of credit, he noted. Banks are also reducing credit card limits and denial rates on auto loan applications are rising, he said.

Banks, too, are feeling the strain of a lockup in lending, particularly in the market for commercial paper.

To that end, the Fed on Tuesday announced a radical plan to buy massive amounts of this short-term debt in an effort to break through a credit clog that is imperiling the economy.

"The expansion of Federal Reserve lending is helping financial firms cope with reduced access to their usual sources of funding," Bernanke explained.

Invoking Depression-era emergency powers, the Fed will begin buying commercial paper - short-term funding that many companies rely on to pay their workers and buy supplies.

Bernanke believed the Fed's bold actions - along with the $700 billion financial bailout signed into law by President Bush on Friday - will help restore confidence in financial markets and help them function more normally.

He also defended the timing of the actions by the Fed and the Bush administration. "We have learned from historical experience with severe financial crises that if government intervention comes only at a point at which many or most financial institutions are insolvent or nearly so, the costs of restoring the system are greatly increased. This is not the situation we face today," he said.

Meanwhile, government data show consumer borrowing fell in August for the first time in more than a decade as households, battered by rising job layoffs and the worsening economy, cut back sharply on their use of credit. The Fed said Tuesday that consumer borrowing fell at an annual rate of 3.7 percent in August. It marked the first time that total borrowing had fallen since a 4.3 percent rate of decline in January 1998.

[noloyalisti]

I still can''t believe we threw 850 billion dollars to assist a bunch of rich fascists. This was like throwing a thimble of water in the ocean and expecting it to help. All they did was take more of our money we could have used to fix the fascist government system.

This country is doomed when we allow these criminals to continue to steal our money. We know whose side the government is on, the fascist corporate side.

[renonv5]

Well here is yet another crackerjack telling us that things are quite a mess. Thank goodness they tell us these things, otherwise how would we know?? And look at that, he''s considering lowering the interest rate!!! What an absolute genius!

[petro49l]

OPEC bribed Bernanke to bankrupt America. He supports high oil prices and the current financial crisis. Saudi Banks have reaped the profits of political corruption.

[antoniof123]

Fed Chief Warns Of Prolonged Economic Pain
Bernanke''s Gloomy Forecast May Open Door Wider To Interest Rate Cut

My God this man is brillant give him a cookie.

[jntlw-2009]

This is the Bush cabal implementing their version of the economic "shock doctrine" to take over the world not just economically but judicially and control as much of the energy as possible. It is an Ayn Ryn novel on steroids. It is no surprise to those of us who could see what has been happening for the past 7 years under Bush/Cheney. Lawlessness to an extreme, redefining the presidencey and VP in unheard of imperialist ways, fiscal unaccountibity and irrational wreckless spending thus totally irrespnsible, premptive wars to dominate oil, deception at every move, now a pre-orchestrated financial meltdown on a global scale to usher in the mark of the beast with us paying for it no less and his cronies in charge of it every step of the way. How dumb can we get?

[oscarez]

Maybe with a little luck China and the oil rich middle east will lose a couple trillion dollars in the crash.

[scorpio59er]

''Fed Chief Warns Of Prolonged Economic Pain''

That is, for all you LITTLE people out there.

The banksters will do just fine, thanks to the $700bn they just shook us down for.

[careerdrunk]

Wall Street threatened Bush with dumping the nation''s economy all the way into the krapper if he did not acquire the $700 billion bail-out for them. Even he could appreciate the gravity of that. To have the economy turn to dust during your last month in office would make a total apostate of him throughout all of future history, -- he was shaking in his stetson on this one, folks!

Now and for the rest of his life he''ll be wondering how the people (Wall St and other assorted rich b*stards) he idolized and revered as the cream of human evolution could have done this to him. They weren''t supposed to do this on his watch. The fact is that the boy never before realized whom (or really what) he was playing ball with. These reptiles (that Fuld piece-of-work looks like something out of a B-grade horror movie) care nothing about anyone who served as their guide through the jungles of government in order to avoid legal consequences of their past lawlessness in rank profiteering. And now Chumpie is finally (unless he''s still lying to himself about it) faced with this fact that big-money reptilian republicans will do anything (and anyone) for a buck. Couldn''t happen to a more deserving clown.

During his second campaign for re-election he even announced to a crowd of this scum that "you are my [his] base"! Looks like the "base" got up and moved completely to another location without telling him just before he crash-landed!

[vsg4]

"Barack Obama laid out key principles for dealing with this situation. Obama''''s main point: Main Street must be put ahead of Wall Street, and no blank check for the Bush Administration. http://www.barackobama.com/issues/fiscal


Congress needs to hear from the public.

Posted by alphaa010 at 02:58 PM : Oct 07, 2008"

Well said alpaa010. I wrote to my senators and congress men already. Conservative right wing people here said it is Welfare and pork barrel for 18 billions and 5 billions for SCHIP. I really wonder what is this called. Just throwing all this on the next president, just so unfair. Bill Clinton gave the Prez. stable economy, middle east, 140 billions budget surplus, 5.7 trillions internal debt. This Prez. made that a 11.4 trillion internal debt, 400 billions budget deficit, started unjust unfair war in Iraq, did not fund veterans. Man no end in sight to any problem. Greatest president of USA.

[oscarez]

Bush and McCain both have said why should we rich folks have to pay taxes when the US government can borrow all the money it needs. We will tax the middle class because they are poor and will never own anything anyway. The middle class should be grateful for what little bit we let trickle down. After all we could keep it all!!!!

[melpol1]

The recent release of government funds can only increase the ability to lend but those with a lack of confidence in the future will refuse to borrow. A media campaign might trick potential consumers into believing that things will soon get better resulting in a jump start for the economy. But The public has been frightened by reports of banks going under and a depression looming on the horizon. Ordinary people are now in a panic and are holding onto their money like a shipwrecked sailor holds onto a life raft. It is difficult to cure a person that has been tramutized by the fear of becoming homeless and then forced to stand in a soup line. The economy will remain depressed until consumers regain confidence through time or the help of a good psychiatrist

[eggy1620]

It is a known historical fact that rich people do not become obscenely rich by paying back their loans. Kiss that 700B goodbye.

[credibility2]

Those totally accustomed to quick fixes and immediacy will suffer ever more pain, since they are ill-equipped, especially emotionally and psychologically to live within their means (even if it dwindles), make do with what little they have and stop being materialistic and having to have everything and anything. Just the basics for once. Why, many may even need to stop using their credit cards and actually consider paying down the debt they never should have gotten involved in to begin with. They may even have to forgo buying obscene amounts of holidays gifts for their already over indulged kids. They may even have to cut back on their cell phone usage and texting. They may even have to quit smoking and going to MacDonalds. Oh heavens, how will these kids ever get by?

[babooph]

Bin Ladin destroyed the bldgs-Bush the rest.Endless war, funded by Chinese debt,along with massive givaway to the rich-what an idiot.

[enriquecaliente]

This is what trickle down economy is all about.
The guys at the top make all the money and let very little trickle down. Look at the numbers, if you don''t believe it. CEO''s and their senior management get all the bucks and the people doing the heavy lifting get a 2 - 3% increase.

http://graphics8.nytimes.com/images/2006/04/08/business/pay.graphic.jpg

[lastdance127]

Wells Fargo Bank - REFUSED to get into : Sub-Prime Loans.
Wells Fargo Bank. - REFUSED - to give Loans for homes that were : Overpriced
Wells Fargo Bank REFUSED to give loans for : New construction Homes
That were Overpriced

The Actions and the Behavior of Wells Fargo Bank.
Gives clear evidence that : The Entire Banking Industry and
The FBI had a clear knowledge that Massive Bank Fraud and
Massive Bank Embezzlement Was Taking Place.

Out of an Act of Political Nepotism to :
The Bush NAZI Fascist Crime Regime

For eight (8) Long years. The Political Criminal FBI Refused to
ACKNOWLEDGE or to ACCEPT any Complaints ! !

(FBI Director Robert Mueller)
(Republican NAZI Fascist Bush Appointee)

People were Complaining - But ......
Don''t just blame the : Banking Industry for this Mess
Blame also the Organization : The Political Criminal FBI.
Who''s Job it is- and - Is Paid a Wage Package to :
Protect Banking Consumers

But ... Purposely and Intentionally
REFUSED ! ! __ To do just that ! !

The Political-Criminal FBI, SEC, Federal Reserve are Now
Claiming They were : Too Dumb and Stupid to Recognize that
Massive Bank Fraud and Massive Bank Embezzlement
Was Taking Place ! !

[riddelup]

I thought the bailout was to prevent this. What did 700 billion get us. I never saw that coming they get free money and now they want more. Give them what they want and more. Why? We are dumb and gutless.

[claydowner]

These problems with the subprime mortgage meltdown and subsequent $700 billion run deep. Both parties share the blame but it must be remembered that ever since the Reagan administration the Republicans have been screaming "deregulate" all of these decades. These experiments at deregulating markets resulted in the Savings and Loan debacle and now the subprime mortgage meltdown. There have also been big corporate financial scandals like Enron, Tyco, and numerous others involving insider trading. DEREGULATION OF MARKETS IS A FAILED IDEA. FEDERAL REGULATION IS THE PRICE WE HAVE TO PAY IN ORDER TO KEEP OUR FINANCIAL MARKETS FUNCTIONING. The Republican notion of deregulation needs to be written off as a pack of failed ideas. DEREGULATION DOES NOT WORK IN A GLOBAL MARKET WITH HUGE MULTINATIONAL CORPORATIONS.

The American public also deserves lots of blame for $13 trillion in private consumer debt. We have been living beyond our means for at least the last three decades. $300K to $500K houses, SUV''s, and huge amounts of credit card debt can only be blamed by the American public looking at themselves in the mirror. There is going to be lots of pain for quite a long time to come before things bottom out.

[tibu987]

Yeah, right!

It is only a prolonged economic pain for the middle-class and the lower class.

The rich remain rich and their wealth will sustain them.

[ubrew12]

claydowner said: "DEREGULATION OF MARKETS IS A FAILED IDEA. FEDERAL REGULATION IS THE PRICE WE HAVE TO PAY IN ORDER TO KEEP OUR FINANCIAL MARKETS FUNCTIONING."

The issue is also enforcement of regulations. Elliot Spitzer (to take one example) was ''famous'' for prosecuting Wall Street bankers for their shenanigans. He fell from power when the IRS got a tip that he was possibly making politically-motivated bribes (it turns out, they were payments to a prostitute: accomplished the same thing- getting Spitzer off the banks backs by destroying his reputation).

Who made the tip that the Bush justice department prosecuted by invading Spitzers privacy (to the point of tapping his phone calls)?

Why, his bank, of course...

[joey7776]

So tell me, where did the 700 billion go, say goodbye
to Wall Street, China will be taken over soon. God
forbid the people elect a Hussein for Pres. we will
really be in a mess!!!!!!!!!!!!!!

[lastdance127]

The Chronic - Habitual - Delusional of Grandeur Disorder
Endorsed by each John McCain Supporter

The Bush NAZI Fascist Regine
Fabricated Reports - Intentionally Delivered to
the American people to Falsely and Fraudulently
Advocate a War !

Ordered Criminal Wiretaps - Criminal Surveillance Techniques
FDA = Lead Painted Toys - Defective Merchandise
Tainted and Poisoned Food - Destined for The American Family

Granting Immunity to Blackwater
(Murder of Women and Children-Smuggling Arms and Weapons

Halliburton - (No Bid Defense Contracts)
Kellogg, Brown & Root -
(Kidnapping - S*e*x*ual Assault and R*a*pe) Again

Selling of and Instructions how to use
Nuclear Weapon Technology

Allowing Millions of People into Home Foreclosure
because of Intentional Fraud
Financial BAIL OUT for Criminal Bankers and Criminal Lenders
The FBI - A Criminal Organization

Outsourcing good paying American Jobs for
SLAVE LABOR and CHILD FORCED SLAVE LABOR
An INSTITUTION of SLAVERY

Ordering and Approving of : Rape, Child Sodomy,
Torture and Murder of people within US Detention Centers
(Guantanamo Bay)

POLITICIZED The Federal Civil Service with Appointments

The Republican NAZI Fascist Party Created :
ECONOMIC STRIFE .. That is Being used as a Weapon to :
ELIMINATE a DEMOCRACY and REPLACE IT - With
The TOTALITARIAN DICTATORSHIP of : A NAZI FASCIST RULE
Against the American People

The DELUSIONAL of GRANDEUR DISORDER of each :
John McCain Supporter ! !

[random_radar]

The inflation hasn''t even started. You haven''t seen anything yet!

[txgrouch2006]

The inflation hasn''''t even started. You haven''''t seen anything yet!
Posted by random_radar at 07:11 PM : Oct 07, 2008

Yes. With tighter lending, a shrinking money supply may cause DEFLATION.

Your paycheck goes down. But your mortgage payment doesn''t.

The foreclosure rate hasn''t even STARTED to go up yet. You haven''t seen anything yet.

[txgrouch2006]

I''m thinking of some prolonged pain I''d like Bernanke to feel. And Paulson, and Bush, and Gramm - ooooh yah, GRAMM.......!

Lord have mercy on me for what I''m thinking right now.

[txgrouch2006]

Does anybody know where to buy a pitchfork?

[nextgenman]

Sheesh. BushNankePublican telling us shiiit we already know.

[txgrouch2006]

I''m STILL looking for a pitchfork. Maybe I can order one online somewhere.

All the local places are sold out. Seems there''s been a run on pitchforks the past few days. Nobody knows why.

[benice6]

THE END IS NEAR.

LEARN TO GROW YOUR OWN FOOD,
LEARN TO CAN YOUR OWN FOOD,
BUY UP ALL THE PRE-1964 SILVER COINS YOU CAN FIND. ..

---------BECAUSE---------

WHILE YOU WERE WORRIED ABOUT YOUR;
401K''''S AND KISSING BUTT TO GET A PROMOTION,
I WAS LEARNING TO DO THE ABOVE MENTIONED THINGS.

GET READY TO END YOUR KIDS ENGLISH HORSE RIDDING LESSONS, AND IF YOU DON''''T KNOW HOW TO GROW YOUR OWN VEGGY GARDEN,...PREPARE TO PAY PEOPLE LIKE ME $40 FOR A CAN OF MY CANNED STEW,...OR,...YOU''''LL HAVE TO FIGHT OVER THE LAST CAN OF TUNA DOWN AT YOUR LOCAL GROCERY STORE LIKE DURING THE NEW ORLEANS HURRICANE EVENT.

NO, I DON''''T LIVE IN THE WOODS,
YES I DO HAVE A COLLEGE DEGREE.
BUT MY FAMILY SAW THIS COMING YEARS AGO WHEN TV COMMERCIALS BOASTED THAT "YOU CAN BUY FURNITURE TODAY AND NOT PAY A DIME FOR TWO YEARS."

HA,...AMERICANS NEED TO LEARN TO DELAY SELF-GRATIFICATION.

NOW WE''''LL ALL PAY.

[easeup-2009]

Posted by benice6 at 08:20 PM : Oct 07, 2008
Posted by lastdance127 at 06:48 PM : Oct 07, 2008
osted by alphaa010 at 07:02 PM : Oct 07, 2008

Nobody, and I mean NOBODY takes your repetitive, hysterical, retarded cut/paste posts seriously.

You just clog the boards up.

[easeup-2009]

Posted by benice6 at 08:20 PM : Oct 07, 2008

I forgot you.....

[bm6005]

I agree with testerling.... we might as well have flushed 700B down the toilet!

Posted by Demongirl60

We did!!!

[txgrouch2006]

Posted by benice6 at 08:20 PM : Oct 07, 2008
Posted by lastdance127 at 06:48 PM : Oct 07, 2008
osted by alphaa010 at 07:02 PM : Oct 07, 2008

Nobody, and I mean NOBODY takes your repetitive, hysterical, retarded cut/paste posts seriously.
Posted by easeup at 08:41 PM : Oct 07, 2008

I do. And I agree.

YOU''RE the one clogging up the boards.

[bm6005]

Awhile back I heard that rich people during the Great Depression were worried for their lives. Perhaps its time to get the financial rich people (scum) worried!!!

[txgrouch2006]

Perhaps its time to get the financial rich people (scum) worried!!!
Posted by bm6005 at 10:36 PM : Oct 07, 2008

I''ve got the rope.

Which mansion do you want to go "Christmas caroling" at first?

[txgrouch2006]

censored

[vietvet06]

What does Katie Could Lick, in depth, have to say about the current world dilemma. She is as clueless as George W. Bush......They could swap jobs and the nether would not miss a beat....

[whitemale08]

Central Banks are nothing but "paper mills".

Now we witness the demise of the British East India Company Paper Empire.

Time to let this house of cards fall once and for all so that nations can rid itself of ''globization'' and practice ''national soveriegnty'' and start trading goods for goods not ''goods for paper money''.

PAPER MONEY IS GOOOOONEEEEEE FOR GOOOOOOODDDDDDD!!!

[brianbwb-2009]

"Which mansion do you want to go "Christmas caroling" at first?" Posted by txgrouch2006

There is this address in Crawford, Texas...

[stn_sage]

I have yet to hear this boob---Bernanke---formally admit that even knows that we ARE in a recession!

And, we''re suppose to believe anything he has to say?!
Not likely, mate!!

I vote ''no confidence'' in HIM or this GOVERNMENT!

LMAO!