September 15, 2009
A Tale of Two Economies
Federal Reserve Chairman Ben Bernanke says the worst recession since the 1930s is probably over.Bernanke says the economy is probably growing now, but it won't be sufficient to prevent the unemployment rate, now at a 26-year high of 9.7 percent, from rising.
In responding to questions at the Brookings Institution, Bernanke says "the recession is very likely over at this point."
While I would certainly like to hope that Bernanke is right, his comments don't square with reports that credit is shrinking and that President is on the verge of inciting a trade war with our biggest creditor.
The Fed Chairman's comments seem disconnected from our financial reality. I don't think he's being honest with us.
My bigger question is why.
We've been in a trade war with China for at least the last ten years and they're kicking our butts. That's a big part of the reason why we owe them so much money.
Posted by: Steve at September 15, 2009 12:24 PMThese comments also don't square with the large number of cargo ships parked in various backwater ports around the world, and some not so backwater ports like Singapore. There are hundreds anchored there....
PeterT
Posted by: PeterT at September 15, 2009 12:49 PMSorry, Ben, but reality is not buying what you are selling today--try again in 12 months. (And it gives me no pleasure to say it because a lot of my family is suffering real hardship due to the present, economic, climate.)
Posted by: ECM at September 15, 2009 03:14 PMDr. Bernanke may have access to preliminary data which would support his thesis.
Your link refers to an article on the contraction in the money measure known as "M3". The Federal Reserve has this to say about this metric:
For example, the publication of the M3 monetary aggregate on the H.6 release was discontinued in March 2006. M3 did not appear to convey any additional information about economic activity that was not already embodied in M2 and had not played a role in the monetary policy process for many years.
The quantum of M2 did decline by an annualized rate of 2.3% that quarter, but the quantum of M1 increased.
Posted by: Art b at September 17, 2009 06:53 PMAs long as no one's pointing to the stock market as an indicator. The current run-up is largely due to computerized hyper-trading, not any change in real value.
Posted by: DoorHold at September 20, 2009 12:32 PM
