Bernanke expresses confidence
In a speech this morning to the Economic Club of Washington, D.C., Federal Reserve Chairman Ben Bernanke discussed with the crowd the “the most serious financial crisis and the worst recession since the Great Depression,” he ended his speech with a message of hope, noting that “we have come a long way from the darkest period of the crisis, but we have some distance yet to go. In the midst of some of the toughest days, in October 2008, I said in a speech that I was confident that the American economy, with its great intrinsic vitality, would emerge from that period with renewed vigor. I remain equally confident today.”
What was most interesting to me was Bernanke’s assertion that “financial firms must do a better job of managing the risks of their business, regulators–the Federal Reserve included–must complete a thoroughgoing overhaul of their approach to supervision, and the Congress should move forward in making needed changes to our system of financial regulation to avoid a similar crisis in the future. In particular, we must solve the problem of ‘too big to fail.’”
Wall Street’s response
In response, news outlets this afternoon buzzed about a Wall Street rally but it was short lived and the DOW closed at almost exactly what it opened with, and the DJUSRE (Down Jones U.S. Real Estate Index) dropped 2% (which is the equivalent of remaining stable). It was just another day on Wall Street despite Bernanke’s vote of confidence.
Texas State Network political reporter, Robert Wood told us, “what Bernanke is saying tracks with what our Texas officials have been saying too. The Comptroller’s office expects growth to pick up in the middle of next year and with the last couple of job reports showing some slow job growth in Texas with only a small increase in the number of unemployed it appears that’s the direction we are heading.”
Some will jeer at the lack of a rally on Wall Street while others will exhale as there was not a drop or a jump in the market, rather a stabilized response. Times are bad and Bernanke is blunt about that, but times will “moderately” improve over the coming year.
Bernanke’s speech is harsh as he points the finger back at the government while it is hopeful as he maintains a cautiously optimistic outlook. His speech can be found in full on the Federal Reserve website.