Fed Chairman Ben Bernanke's Take On The Economy

(CBS)  Friday's unemployment number was a troubling surprise -up from 9.6 percent to 9.8 percent. The economists who decide such things say the recession ended in 2009.

But this is the worst recovery the nation has ever seen. Ben Bernanke is concerned. As chairman of the Federal Reserve, Bernanke has enormous power over the world economy. And he has used that power in ways that the world has never seen.

During the panic of 2008, he committed trillions of dollars to rescue the financial system. And the Fed dropped interest rates nearly to zero.

Now, in a new move that has become controversial, Bernanke intends to commit another $600 billion to hold down interest rates.

Chairmen of the Fed rarely do interviews. But this week, Bernanke feels he has to speak out because he believes his critics may not understand how much trouble the economy is in. We wanted to know whether we're headed for another recession, whether Congress should extend the Bush tax cuts.

But first we wanted to talk about unemployment which has been at 9.5 percent or more for 16 months.

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Interview with Ben Bernanke
On "60 Minutes" this week, Scott Pelley interviewed Fed Chairman Ben Bernanke, discussing a wide range of economic issues. "60 Minutes Overtime" presents unaired excerpts from that interview.

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Chairman Ben Bernanke: The unemployment rate is just not going down. Unemployment is just about the same as it was in mid-2009, when the economy started growing. So, that's a major concern. And it looks that at current rates, that it may take some years before the unemployment rate is back down to more normal levels.

Scott Pelley: We lost about eight million jobs from the peak. And I wonder how many years you think it will be before we get all those jobs back?

Bernanke: Well, you're absolutely right. Between the peak and the end of last year, we lost eight and a half million jobs. We've only gotten about a million of them back so far. And that doesn't even account the new people coming into the labor force. At the rate we're going, it could be four, five years before we are back to a more normal unemployment rate. Somewhere in the vicinity of say five or six percent.

Four or five years. And Bernanke told "60 Minutes" something else that makes that even more painful.

Bernanke: The other aspect of the unemployment rate that really concerns me is that more than 40 percent of the unemployed have been unemployed for six months or more. And that's unusually high. And people who are unemployed for such a long time, their skills erode. Their attachment to the labor force diminishes and it may be a very, very long time before they find themselves back in a normal working position.

Bernanke was appointed in 2006 by President Bush and reappointed by President Obama. He grew up in Dillon, S.C., the son of a drugstore owner. He studied economics at Harvard and MIT and chaired the economics department at Princeton.

Pelley met Bernanke Tuesday (Nov. 30) in the Thompson Library on the campus of The Ohio State University. He was in Columbus on one of his frequent trips to hear how people are coping with the economy.

Earlier in the day he heard from the CEOs of Ford and IBM but also from small business owners who told him they were having trouble getting financing from banks.

Pelley: The major banks are racking up profits in the billions. Wall Street bonuses are climbing back up to where they were. And yet, lending to small businesses actually declined in the third quarter. Why is that?

Bernanke: A lot of small businesses are not seeking credit, because, you know, because their business is not doing well, because the economy is slow. Others are not qualifying for credit, maybe because the value of their property has gone down. But some also can't meet the terms and conditions that banks are setting.

Pelley: Is this a case of banks that were eager to take risks that ruin the economy being now unwilling to take risks to support the recovery?

Bernanke: We want them to take risks, but not excessive risks. We want to go for a happy medium. And I think banks are back in the business of lending. But they have not yet come back to the level of confidence that, or overconfidence, that they had prior to the crisis we want to have an appropriate balance.

Bernanke's first interview ever as Fed chairman came in 2009 shortly after the panic.

It was then that he gave "60 Minutes" and Scott Pelley a rare opportunity to see the Federal Reserve headquarters in Washington, D.C.

Last month, Bernanke announced the Fed's intent to buy $600 billion in U.S. Treasury securities, which is supposed to have the effect of lowering rates on long term loans for things like cars and homes.

Bernanke wanted to emphasize that these are the Fed's own reserves. It's not tax money. It does not add to the federal deficit.

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[Kerrinyc]

MUST SEE

http://www.youtube.com/watch?v=419aPXb7Uhg&feature=player_embedded#at=635

[Bernokio]

Dear CBS, thank you yet AGAIN for another creampuff, milksop, pathetic Bernanke propaganda-infomercial. Since you have obviously sold your journalistic credentials and have no grasp of what is actually going on in this country (Google 'Japan and lost decades')I have a suggestion for your next piercing and informative interview: You can interview the founder of Mona Vie and ask him if HIS product is good for consumers. Since you are apparently in the business of promoting snake-oil salesmen, this should be right up your alley. Then you can interview Bin Laden and ask him if he thinks jihad is justified. Golly- I wonder what he'll say?!?

[garys411]

Been reading ALL,just ONE simple question,if Bernake is to give the $ over to LOWER the amount owed,THEN it is our $ and IS costing us $ to carry what is owed...@ a bank level isn't this Check Kitting???

[click411]

Chairman Ben Bernanke blames the lack of higher education for the situation this country is in. I blame it on too much higher education. There are millions of people that are unemployed and even more that are underemployed than have degrees in higher education. While the people that conceptualized securitize loans and derivative swaps were highly educated

[orwell59]

Click, I agree totally. It took a system clogged with inbred Ivy Leaguers to conjure up the mess we find ourselves in now. (Not to deny a big assist to an apathetic and doltish populace who care more about dance contests than their futures). Bernanke, Geithner, Paulson and peers attended the same schools, absorbed Keynesian dogma from the same professors and were injected directly into the government circulatory system before their theories had been filtered through, and refined by, significant real world experiences. I'm not an expert on Keynesian or Austrian economics but my common sense tells me that John Maynard's system is unsustainable outside of a laboratory or the virtual world of a computer model. The bottom line for me is that I don't trust these guys. Greenspan, Bernanke, Krugman and company have shown a remarkable ability to miss the warning signs of impending economic calamities. They're either kind of dumb (the strain of hubristic ignorance and myopia that only affects those with PhDs) or they are benefitting from the resulting chaos. Either way, I wouldn't want them to manage a Burger King franchise for me, much less the U.S economy. Give me somebody from Iowa State with some business experience and a little common sense.

[BustedFlat]

I agree well said Orwell59. Pelley is quite disappointing in his failure to ask any tough questions of Bernanke whom looked like he was going to be sick. Bernanke blames the poverty gap on lack of education. If only people will go to school their lives will be better. Education is a good thing i do agree as well as the ability to apply critical thought and that is why I write today 60 minutes. Pelley allows Bernanke to place the blame on the people --if only they will pick themselves up by their boot straps and go to school. Nothing asked about saddling young lives with enormous debt. Pelley asks Nothing about the rising costs of going to school these days, or the fact that the only thing we manufacturer in this country anymore is debt. Pelley ignores all the money being spent on war. Unemployment is over 10%, and the federal reserve is run by a private bank which has enslaved us all unto a life of servitude. And Pelley neglects to ask anything about these goons of the IRS.
Pelley this interview with Bernanke was weak pap--propaganda--Just like the Facebook story-- which makes 60 minutes look like it has past its prime-- past its prime as being a viable source of investigative journalism.
When Bernanke states the USA as being number one in the world this statement alone discredits everything he says, because that is a lie.
There are 60 countries ahead of the USA in math, science,production, health-care, vacation time,employment,innovation,and infant mortality, so Bernanke is obviously not living in my world-- Pelley why did you not call Bernanke on any of these blatant discrepancies? Because like Orwell59 and others have mentioned that American investigative journalism has been hijacked by a Corporate fraudulent system that places profits above all life on this planet. Bernanke and Pelley this interview shows you both as puppets, neither pull any strings both are by products of a system based on slavery, smoke and mirrors.

[stn_sage]

Bernanke was put in as chairman because he WAS a Wall Street insider and would turn 'a blind-eye' to every cheat, double-cross, lie, and scheme from Wall Street! When he's gone in front of Congress, he has refused or declined---depending on your point-of-view---to directly answer questions about WHERE bailout money has gone, WHO got it, and HOW much! So, should the average citizen be concerned? I'd say, ABSOLUTELY! Because our elected officials ARE NOT holding him accountable!!!

[dontknowitall]

The six hundred billion dollars is going to be coming from our 401k's and 403b's when the fed starts their raid in the next few weeks.

[orwell59]

inketolstoy, thank you very much. I am (no BS) humbled. It's sad when you can't even count on 60 Minutes to give an honest effort anymore. Where would we be without Jon Stewart and Julian Assange?

[USSoftwareEngineer]

How to stop the outsourcing of american jobs and heal the economy:
Simply stated Outsourcing is causing major (like millions of jobs) relocation of jobs from the US to india and china. Let us put aside the china outsourcing issue and solve the simpler to solve india issue first...

To solve this india outsourcing issue let's ask the simple question, how are middle class jobs outsourced to india? a software engineer job cannot just simply pick up and move to india. There must be some way of training and knowledge transfer from the american engineers to the indians, before those american engineers lose their jobs, and before those jobs are moved to india.
How are indian temp agencies and staffing companies like wipro, infosys, tata,... able to outsource the work to india ?

Simply stated they use the H-1b and L1 visas to do so.
So, in short, cancel the H-1b and L1 visas and by default you have prevented millions of american middle class jobs from being outsourced. The added benefit is that without those visas, even the millions of jobs that have been already outsourced to india would quickly start coming back to the US, since american companies would see the writing on the walls and would quickly adapt by keeping and starting to create jobs here in the US, instead of exporting jobs from the US.
It is the H-1b and L1 visa stupid, cancel those visas and you started to solve what deep down caused, and is still prolonging the big recession of 2008-2011

[Kerrinyc]

Not my words but wanted to share:
Bernanke sees 'deflation' and therefore must ease credit and money - guaranteeing wages are low and savings rates are also low - bankrupting the bottom 99% who have to work cheap and vote against their own self-interest - while the cheap money floods into stock, bonds and commodities - making the top 1% wealthier - who now have the double edge wealth creator of having to pay their workers less and less while watching their assets increase in value more and more. So it's fake deflation to stoke real inflation for the top 1% while the bottom 99% experience stagflation. Going forward, the next, great down leg in housing is upon us. Case-Schiller now expects house prices to drop another 20%. This means more of the same fraud-cycle. Deflation met with trillions in money/credit (QE) that makes the bottom 99% poorer (lower wages, savings rates on pensions) and the top 1% richer (rising asset prices; stocks, bonds, commodities). To add insult to injury, the financial press will continuously point to the rising stock market as evidence of a 'recovery' even though the bottom 99% are still getting slammed with job loss, lower wages and lower income on pensions and savings. Only the top 1% are making money - and it's not a 'recovery' since they never stopped making money - not even in 2008 when the banks almost keeled over - but bonuses were left intact. This year, record Wall St. bonuses, rising unemployment, falling wages, falling income on pensions/saving and falling competitiveness for the U.S. economy that is shrinking back to where it was back in colonial days with JP Morgan now the new Monarch subjugating the peasants to various unpleasantries.