If you think the markets are screwed up, wrapped in fears of recession and wondering whether they should buy or sell, you are not alone. Why? How can they expect to know what to do when Big Ben can't even tell what is going on?
In three separate articles I read this morning, each breaking down what Bernanke (and Paulson) said, each focused on a different part of what Bernanke mentioned, and all lead to different conclusions on the economy.
CNN Money highlights Bernanke and Paulson's comments stating that the economy will not see a recession because of the Fed's actions. Here is the opening remark...
Treasury secretary and Fed chairman say rate cuts and rebates should keep economy out of downturn.
Bernanke even opened the speech with this statement...
"At present, my baseline outlook involves a period of sluggish growth, followed by a somewhat stronger pace of growth starting later this year as the effects of monetary and fiscal stimulus begin to be felt,"
That sounds like he is no longer concerned with the economy and, in fact, expects it to grow reasonably later this year.
Then there is this article, put out by MarketWatch, which talks about how Bernanke and his buddies stand ready, willing and able to cut rates further. Why would there be a need to cut rates again if the cuts already in place will keep the economy from recession and return growth toward the end of the year?
Federal Reserve Chairman Ben Bernanke said Thursday the central bank was ready to cut interest rates further if fresh signs of a weaker-than-expected U.S. economy emerge.
So, should we fear recession, or as I have mentioned numerous times, inflation? Bernanke and his buddies have been putting recession fears ahead of inflation, even saying inflation is a "non-issue", all the while the CPI and PCE numbers were ticking higher.
And then we head over to the Miami Herald which headlines reads "Bernanke warns economy worsening"...
Federal Reserve Chairman Ben Bernanke told Congress Thursday that the country's economic outlook has deteriorated and signaled that the central bank is ready to keep on lowering a key interest rate - as needed - to shore things up...
"The outlook for the economy has worsened in recent months, and the downside risks to growth have increased," Bernanke said. "To date, the largest economic effects of the financial turmoil appear to have been on the housing market, which, as you know, has deteriorated significantly over the past two years or so."
So, which is it? Which should we be fearing more? Recession or inflation? I guess he is just doing a little CYA maneuvering right now because he probably is just guessing at this point.
Still wondering why there is so much volatility in the markets today? Still wondering why housing is so screwed up and failing to correct itself in many markets? Big Ben and the government gang have the answers, right? Don't count on it.
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