Greg Hunter’s USAWatchdog.com
I, and many others, have said when it comes to the economy, nothing has been fixed. I thought Federal Reserve Chief Ben Bernanke underscored that fact when he spoke yesterday in Washington D.C. for the Joint Economic Committee. Mr. Bernanke said in prepared remarks, “There have been some positive developments: The functioning of financial markets and the banking system in the United States has improved significantly.” Of course, there was not a word about the recent credit downgrades for three big U.S. banks. I also don’t see how the banks are in so much better shape with many of their stock prices tumbling. Bernanke also admitted, “Nevertheless, it is clear that, overall, the recovery from the crisis has been much less robust than we had hoped.” (Click here to read the complete text from Bernanke’s prepared remarks.) Maybe that’s why the Fed recently froze a key interest rate at near 0% for at least the next two years.
Bernanke is still saying that lethargic growth of the economy is due to “temporary factors.” And, yet, he also told the Congressional Committee the so-called economic recovery “is close to faltering.” I don’t see how these kinds of back and forth contradictions are not the sign of a Fed Chief with a clear view of the economy, let alone with a plan to fix it. The fact is the Fed’s lax regulations, easy money policies and massive bailouts are a big part of why the economy is in the shape it is in. To be fair, it is not all Bernanke’s fault. First of all, Alan Greenspan was no “maestro.” The last Fed Chief who could call himself that was Paul Volcker. He raised interest rates to the moon to kill inflation, and Wall Street hated him for it. In the years leading up to Mr. Bernanke’s appointment, Greenspan was quick with his own bailouts and never saw a regulation he couldn’t bend or cut. It was Greenspan that pushed to get rid of Glass-Steagall, and from that point in 1999, it was all downhill.
Congress was basically taken over by Wall Street years ago, and instead of statesmen, all we have now are mostly bagmen. Nobody has the spine or political will to do what is necessary to right the ship of state. Congress cannot agree on anything resembling a financial plan to get America back on track. Congress is so divided that it has flirted with shutting down the government several times—this year. Now, the so-called “super committee” is supposed to cut $1.5 trillion from federal deficits by the end of next month. (By the way, this is not really a cut; it just slows the growth of government spending.) Yesterday, Bernanke warned Congress about this “crucial objective” by saying, “The federal budget is clearly not on a sustainable path at present. The Joint Select Committee on Deficit Reduction, formed as part of the Budget Control Act, is charged with achieving $1.5 trillion in additional deficit reduction over the next 10 years on top of the spending caps enacted this summer. Accomplishing that goal would be a substantial step; however, more will be needed to achieve fiscal sustainability.”
Fat chance that is going to happen with Democrats and Republicans hopelessly deadlocked. One side does not want to cut spending, and the other doesn’t want to raise taxes. So, if the “crucial objective” is for politicians to get the finances of the U.S. in order, then there is no plan. Warren Buffett would have a better chance of climbing to the top of Mount Everest than the super committee cutting $1.5 trillion. By the way, the President’s recent $450 billion jobs bill wasn’t even brought up by either party when they were questioning Bernanke. How’s that for respect. It looks like neither party considers it a viable plan for financial recovery.
Bernanke, once again, said that the Fed is prepared to take action if necessary. But, when asked if the Fed would consider a third round of major stimulus, Bernanke said the Fed has “no immediate plans to do anything like that.” “No immediate plans”? My bet is, sooner or later, Mr. Bernanke will be forced to start another round of money printing (quantitative easing QE3), or let the whole economy collapse. I’ll say it again; there is no plan to fix the economy.