Oct. 15, 2008
Fed Chief Dampens Recovery Expectations
Market Stabilization Only First Step; "The Way Forward" Won't Be Easy, Bernanke Warns
-
Photo
"We now have the tools we need to respond with the necessary force to these challenges," Federal Reserve Chairman Ben Bernanke said Oct. 15, 2008 in New York. (AP Photo/Mark Lennihan)
-
Play CBS Video
Video
World Markets Make Gains
Global financial markets improved as banks now have money to lend., reports Mark Phillips. Bianca Solorzano reports on what this means for Wall Street.
-
Video
Obama Tackles The Economy
Barack Obama's new plan to help bolster the economy comes after heated criticism that he's been standing on the sidelines as the financial crisis continues. Dean Reynolds reports.
-
Video
The Man With A Plan
Gordon Brown's blueprint for salvaging the British economy has been met with great interest from other European leaders. But will his plan prove to be a lasting cure? Mark Phillips reports.
-
Timeline
Financial Meltdown
Track major events that lead to one of the most tumultuous times in Wall Street's history.
-
Timeline
Credit Crunch
Feeling the squeeze? Here's a look at actions and statements from key players in Washington.
"Stabilization of the financial markets is a critical first step, but even if they stabilize as we hope they will, broader economic recovery will not happen right away," Bernanke said in prepared remarks to the Economic Club of New York.
Meanwhile, the country has sunk deeper into an economic rut, the Federal Reserve reported Wednesday.
The Fed's latest snapshot of business conditions around the nation showed the economy continued to lose traction in the early fall, reflecting mounting damage as financial and credit problems worsened.
Economic activity weakened across all of the Fed's 12 regional districts, according to the report. Consumer spending - the lifeblood of the economy - slumped in most Fed regions. Manufacturing also slowed in most areas.
Bernanke said the government's new powers under the $700 billion financial bailout package signed into law two weeks ago should help reduce risks to the economy.
Prior to his speech, a report on U.S. retailers dropped in September showed sales at a two-year low. Uncertainty about the economy - and their own financial fortunes - probably will force consumers and businesses alike to hunker down further, spelling more problems for the already troubled economy.
And on Wall Street, stocks remained down, plummeting during afternoon trading.
Tapping that new authority, the Treasury Department announced Tuesday that it will inject up to $250 billion in U.S. banks in return for partial ownership. It is hoped that banks will use the cash infusion to rebuild their reserves and lend money more freely to businesses and consumers.
The government also plans to buy rotten mortgages and other bad debts held by banks, another new power granted by the bailout package.
Speaking to criticism that the plan only benefits the big Wall Street banks embroiled in the financial crisis, U.S. Treasury Secretary Henry Paulson told CBS' The Early Show Wednesday, "This is only about the American people. This is only about Main Street."
The rationale behind capital injections and buying bad debts is to unclog credit. That should help financial markets function more normally again and - in time - help the wobbly economy get back on stronger footing.
"We now have the tools we need to respond with the necessary force to these challenges," Bernanke told the group. Still, he warned, "I am not suggesting the way forward will be easy."
In his prepared remarks, Bernanke did not give a fresh clue about the Fed's next move on interest rates.
In a coordinated assault on the global financial crisis last week, the Fed and other major central banks ordered hefty rate reductions. The Fed dropped its key rate to 1.50 percent, from 2 percent, in an emergency move.
Many economists said the Fed might cut rates again at its regularly scheduled meeting later this month, or may be later this year.
Bernanke said it is likely economic activity will "fall short of potential for a time."
A growing number of analysts predict the economy will actually shrink in the final three months of this year and the first three months of next year, meeting the classic definition of a recession.
"Ultimately, the trajectory of economic activity beyond the next few quarters will depend greatly on the extent to which financial and credit markets return to more normal functioning," Bernanke said.
Even with a flurry of radical steps recently taken by the Fed, the U.S. government and others around the world, "credit markets will take some time to unfreeze," Bernanke said.
The economy had been losing traction even before the financial crisis intensified last month. Fallout from the housing market's collapse continues to be the primary source of weakness for the economy and for financial markets.
All the problems have led to employers cutting jobs and other investments. Nervous consumers have hunkered down. Slowdowns overseas is sapping export growth, which had been a key source keeping the economy afloat.
"These restraining influences on economic activity, however, will be offset somewhat by the favorable effects of lower prices for oil and other commodities on household purchasing power," Bernanke said.
With the economy slowing, inflation should moderate, he added.
© MMVIII, CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.
- 1
- 2
- next
See all 70 Comments----
Luck.
Not sound fiscal policy, proper long term strategy or planning rather, just luck. No confidence.
B$ from the media that has lost all credibility.
We are letting both Presidential candidates off lightly as neither are qualified to run this country let alone sort out the mess caused by the crooks they associate with on a daily basis.
America ! We Have Blown It Yet Again. We needed Dr Ron Paul to bury the crooks not Obama or McCain to jump in bed with them. WE are not a socialist society and WILL NOT respond to socialist methods as dictated to us by those picking up the tab. Mainly China.
The Democrats understand how to run a win-win economy. They know that giving all the wealth to the top 3 % is a lousy way to run the world. We need to redistribute that wealth from the rich to the working class - so that every one can have a share of the pie.
The REPUBLICANS have crippled, disgraced, and looted America. It will take time to undo the malaise brought on by the GOP MAFIA.
Remember McCains economic expert''s advice to YOU.... Phil Gramm(R) says: "SHUT UP, whiners!!! ...and eat your cake!!"
I am a democrat and lately I have seen so much proof of the democrats actually being the cause of a lot of events. I also saw a video of Clinton and senate democrats talking about Hussein and that he has weapons of mass destruction. This was when Clinton was president.
Scarier and scarier.
Posted by horse3farm at 12:45 PM : Oct 15, 2008
No it isn"t.
The non-partisan fact-check website Snopes.com looked into these smears: "None of them has (or apparently ever had) ongoing roles with the campaign as chief economic advisors."
Not an adviser: Frank Raines
Barack estimates that he and Raines have talked for "maybe five minutes" in their lives, and Frank Raines himself even released a statement saying that he is "not an advisor to Barack Obama, nor have I provided his campaign with advice on housing or economic matters."
Not an adviser: Tim Howard
This supposed connection appears to have been made up completely out of thin air. Snopes.com writes, "We haven''t yet found any tangible connection between Tim Howard and the Obama campaign, however, much less any information supporting the claim that Howard is a ''chief economic adviser'' to Obama."
Not an adviser: Jim Johnson
Jim Johnson has never held a paid position with Obama for America. He volunteered to help Barack select a vice presidential nominee but stepped down after just one week.
Listen to the famous "Hurry Up" song. You''ll get it.
--------------------------------------------------------------------------------
Posted by ainttaken
======================
You are just a Bush basher who cant accept that this is all the fault of Clinton, Obama, and all the other liberals.
And herein lies the crux of half the problem because that money was ''donated'' against the express and undeniable wishes of the American people. The whole thing was carried knowing it was NOT what the People wanted.
Excuses range from ''It had to be done'' to ''It was the only thing to do''. but they don''t wash well when we are supposedly living in a free market society where people and corporations are responsible for their own behavior.
In Novemeber, we are asked to choose between Barrack Obama and John McCain. They pretend to be distantly postioned but in truth? They both... yes BOTH voted for that $700 billion ripoff.
As a nation, we are now beginning to get a wake up call that our parties and politicians are NOT as they have pretended. There are NO real differences between Mr. McCain and Mr. Obama when both can join in giving away a large portion of the national treasury to the Wall Street bankers.
You vote how you choose to. This post was not meant to try and change your mind. In fact, only YOU can dod that.
Only you can prevent another ripoff.
1. millionaires
2. suckers
I wonder which catagory gop_will_win falls under?
--------------------------------------------------------------------------------
Posted by ainttaken
=====================
1, I was born into a rich family. Jesus asked me before I was born what kind of family I wanted to be born into and I said rich.
Posted by gop_will_win at 02:04 PM : Oct 15, 2008
Jesus asjed me iF i wantt to be welll-endowd or a good typer
WHERE DID THEY FIND THEIR MONEY, NOT WORKING A
REAL JOB. AGAIN IT''S REPUBLICANS & DEMORATS.
So is Paulson, Bush, Clinton (both of them), Bill Gates, and Joseph Hazelwood.
60% of Congress are Baby Boomers.
If you think our government is doing a bad job and acting like a bunch of spoiled brats, MAYBE THAT''S WHY.
Now then, figure that about half the people you see on any given day are politically opposed to you. That''s right, one in every two people don''t agree on your politics.
The choice is yours... are half od all voting age Americans evil or... do they simply disagree?
Here''s another one. Out of all those who represent us in Congress, the majority, including both Obama and McCain voted FOR the $700 billion bail out of Wall Street.
If you lost your job and were going to have your electricity disconnected, would anyone YOU voted FOR vote for a bailout in YOUR behalf?
How many here feel safe counting on either the GOP or Democrats to vote a relief package so you could feed your family in a crisis?
Stop the partisan games. We are already a house divided.
We are on our own now.
Posted by Hacker11001 at 02:37 PM : Oct 15, 2008
To put things in perspective:
In 1920, the Dow was around 100
In 1929, it was around 400
It spent THREE YEARS dropping to around 40 in 1932.
In 1933, it was back to 100.
It did not get above 200 until 1946.
It did not get back to 400 until the mid-1950''s.
IN OUR TIME:
It was around 3,000 in 1990
It was around 12,000 in 2000
It hovered around 12,000 until this year.
You guess what will happen from here.
Posted by sincityq at 02:39 PM : Oct 15, 2008
They''re the ones who CAUSED our crisis.
VOTE THEM OUT!
VOTE THEM *ALL* OUT! EVERY SINGLE ONE OF THEM!!!
As long as we are bickering between us, we don''t pay attention to what BOTH parties are doing in Washington. Both parties wanted the $700 billion for Wall Street. Both part candidates, MCain and Obama, voted FOR it.
So why do we fight?
Your fellow American is NOT your enemy. We may disagree on some things but no one in the house next door is evil!
Unscrew your heads from the koolaide wars... we are being deceived by BOTH parties.
Vote for whomever you wish but remember that it is highly unlikely that either party or candidate would vote a relif package for you if your lights were about to be disconnected or if your pantry was bare.
Americans need to join in a fight to regain their nation and the only way to do that is to put down the silly party banners and stand under the one flag that unites us all.
--------------------------------------------------------------------------------
Posted by Hacker11001
Please take 15 minutes to get a little education:
http://www.dailymotion.com/video/x32cxf_yuri-bezmenov
He''''s here to seek vengance on his misplaced hatrid of the US.
--------------------------------------------------------------------------------
Posted by Speakinup21
Very few want to hear truth any more, they''re too busy playing politics, thinking that will somehow solve the problem. And most don''t even know what the problem is!
I will suggest, again, however, to any who want to get a glimpse at the real problem, copy and paste the following link(in its entirety) into your browser and get a clue:
http://www.dailymotion.com/video/x32cxf_yuri-bezmenov
I work for AA Basket Company. making baskets. I get paid on Friday and go to bank and cash my check. My local store sales corn grown by John. I buy the corn that''s in a basket (made by AA Basket) and pay the store $5.00 cash. The store has paid John $4.00 for the corn John pays the seed store $3.00 for the seed, the basket and other supplies to grow more corn. The store makes $1.00, John make $1.00, AA Basket make 25 cents and I get the corn I need and still have money in my pocket. This is good.
I work for AA Basket Company. making paper wrappers for McDonalds. I get paid on Friday and go to bank and deposit my check. My local MEGA store sales corn grown by China. I buy the corn that''s in a basket made in China (that should have been made at AA Basket) and pay the store $5.00 using my credit card. I take my corn home and write a check to the credit card company to pay some on my $5,000.00 balance. MEGA store makes $1.00 and gets the cash transfer from my credit card company then makes a payment on the $5,000,000.00 loan used to by the basket and corn from China. I don''t have any money in my pocket, China makes the $4.00 on the basket and corn and MEGA store will go broke if I can no longer buy the corn. Money no longer exist, only credit. This is bad.
The corn in the Chinese basket would have only cost you $2, giving you an extra $3.
Duh!
You both messed this up.
--------------------------------------------------------------------------------
Posted by niceface09 at 03:27 PM : Oct 15, 2008
+ report abuse
go to h### racist
yeah hi, do you believe a judge should go to prison for attempting to rule that attempted murder by forcible suffocation not only isn''''''''t a crime at all in florida, it isn''''''''t a tort at all in florida, in fact it''''''''s a medical procedure, for which priviledge i''''''''m forced to give the state my whole life savings?
doesn''''''''t that sound bad?
this is a real lawsuit, orange co. case # 2003 ca 5314. i am totally unrepresented, haven''''''''t been able to find a lawyer in 7 years. the judge is cynthia mackinnon, and if i could fire her i would have fired her four years ago. after all this time i still have no clue whether she is republican or democrat.
Election Finance Reform %u2013 Level the field so decent eligible candidates from all sectors can lay out a synopsis of their ideas and get equal time to present them at the start of elections. This will assure that the financially gifted or connected will not continue to monopolize the process.
Term Limits %u2013 Officers in Congress may no longer ensconce themselves in webs of power that have lasted for decades in some cases. It will form it%u2019s own check and balance system against the abuses that occur in our system now. Disrupt the good old boy system and insure a new influx of talent and ideas each election instead of doses of the S.O.S.
Codes and Guidelines for our Financial Sector - Create an oversight committee regulating and policing stock and futures trading and banking practices. This committee should also investigate policies which reward management failures with year end bonuses and/or separation packages worth millions of dollars.
Make lobbyists make their pitches and donations a matter of public record. Let%u2019s put a stop to the closed-door kickback and rewards system in place now. Violations of an ethical code of conduct should then be prosecuted vigorously and speedily.
Penalties - We should hold our leaders to a higher standard of behavior. The people we expect to lead our children into the future. We need to hold them accountable for their actions. If they are guilty of malfeasance in office, the penalties and fines should be so severe that the next person to entertain such ideas will at least hesitate before they try to manipulate matters of finance or state in an unethical or illegal manner.
Calmly walk to the window, gaze pensively at the view, open the window, gently step out onto the ledge, close your eyes, and lean forward and glide to the street below.
The illusion of flying can be very pleasant.
The entire Congress is to blame. Not just the Republicans.
Our entire government is riddled with the rot of GREED. Be it for power or money, or both, the place is a den of corruption and double dealing. We need to clear out the deadwood and slap a muzzle and hobbles on Wall Street.
Posted by random_radar
Just please pick a building your lungs can handle - it really sound bad when your scream is punctuated by a breath!
Vote for election and finance reform. Vote for term limits to end the powerbrokering.
Stop being one of the herd or you will end up fleeced and on your way to the slaughter house with the rest of the sheep.
- 1
- 2
- next
See all 70 Comments