Federal Reserve Chairman Ben Bernanke is speaking to the Senate right now about the state of the U.S. economy. This is about the saddest hour of testimony we’ve heard from the Chairman.
There is little hope in his tone, or words. He has stated that there are several ideas bouncing around the Fed that they might implement in an effort to boost the economy. He has said that those ideas have yet to be approved, that the actions may or may not have an impact, and actually might cause negative results.
While Bernanke denied being “out of bullets,” he didn’t inspire confidence.
This economy is, in many ways, a shambles. Evidence of deflationary pressures on the economy is broad. Goldman Sachs’ top economist Jan Hatzius has labelled the U.S. ready for a “second half slowdown.”
And while the questions of the Senate’s members are more political than purposeful, what is coming out is that the Fed struggling. It isn’t that Chairman Bernanke is weak or lost it’s that he knows the reality of what we are going through.
This Japanese style balance sheet recession, with portions of the economy deflating every day, is only part of it. Add to that the unemployment reality and sovereign debt uncertainty, and he’s facing an extraordinarily difficult situation.
We don’t envy him, and as one senator said, we wish him good luck.
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