Tag Archives: Ben Bernanke

Economy:Bernanke Meets The Press

Federal Reserve Chairman Ben Bernanke held the first public press conference in the history of the Federal Reserve yesterday, in an attempt to bring more transparency to the central bank (which faced its first ever audit last year). “I’ve personally always been a believer in providing as much information as you can,” Bernanke told the gathered press. The conference wa s held just hours after the Federal Reserve Board announced that it will end its program of quantitative easing (QE2) — aimed at boosting the sluggish economy — on schedule in June, due to its assessment that “the economic recovery is proceeding at a moderate pace and overall conditions in the labor market are improving gradually.” However, at the same time, the Fed revised its projections for economic growth downward. Previously, the Fed had estimated that growth this year would be between 3.4 and 3.9 percent, but now it is only predicting growth at 3.1 to 3.3 percent, due to contractions in exports, construction spending and military spending. The Bureau of Economic Analysis announced today that first quarter growth registered at just 1.8 percent . And while most of the questions during the conference centered on Bernanke’s views on inflation, gas prices, and the nation’s deficit, little time was spent on arguably the most pressing problem facing the country: continued high unemployment.

‘VERY DEEP HOLE’: Bernanke acknowledged during the press conference that the nation faces a “very, very deep hole” when it comes to job creation, noting that we would have to create seven million jobs just to make up for those lost during the Great Recession. The unemployment rate currently stands at 8.8 percent, while the broader U-6 measure of underemployment is at 15.7 percent. The African-American unemployment rate is 15.5 percent, and the Hispanic unemployment rate is 11.3 percent. While the private sector has been slowly adding jobs, it would still take several years at the current pace in order to get back to full employment. In fact, at the rate of job growth that occurred in March, full employment would not be achieved until 2019. As The Wall Street Journal noted, “even adding 300,000 jobs a month would take almost five years to get back to full employment.” According to the Fed’s own estimates, the economy will not reach full employment for ano ther five years or six years, and the unemployment rate will still be between 6.8 and 7.2 percent in 2013. “The fact that we’re moving in the right direction, even though that’s encouraging, doesn’t mean that the labor market is in good shape. Obviously it’s not,” Bernanke said. To his credit, Bernanke also noted the problem with long-term unemployment, saying, “Long-term unemployment in the current economy is the worst, really the worst it’s been in the post-war period.” “We know the consequences of that can be very distressing, because people who are out of work for a long time, their skills tend to atrophy,” he added.

NO FURTHER ACTION: The Fed has a dual mandate to both ensure full employment and price stability (i.e. combat inflation). During the conference, The New York Times’ Binyamin Applebaum asked Bernanke, “Is it in the Fed’s power to reduce the rate of unemployment more quickly? How would you do that and why are you not doing it?” Bernanke replied, “While it is very, very important to help the economy create jobs and help to support the recovery, I think every central banker understands that keeping inflation low is absolutely essential to a successful economy.” Essentially, Bernanke’s response was that the Fed could do more but won’t due to worries about infla tion getting out of control. However, as many economists have noted, inflation at the moment is exceedingly low (the Fed isn’t meeting its own inflation targets, and its forecasts show inflation is contained for the foreseeable future ), while unemployment remains stubbornly high. In fact, as Nobel Prize-winning economist Paul Krugman noted, “there is no tradeoff: more expansionary monetary policy is good in terms of both unemployment and achieving the Fed’s inflation target.” And Bernanke, during his days in academia, actually chided Japan for failing to engage in more expansive monetary policy to get itself out out of its 1990’s slump. “The Bank of Japan could achieve a great deal if it were willing to abandon its excessive caution and its defensive response to criticism,” Bernanke wrote in 1999. So Krugman noted that “[Bernanke’s] own theories — and for that matter the doctrine endorsed by the Fed itself — says that the central bank should be doing much more quantitative easing, not stopping with the US still facing high unemployment.” As Center for American Progress Action Fund Fellow Matthew Yglesias wrote in the journal Democracy, “The idea that a time of unusually high unemployment and unusually low inflation would be a good moment for monetary policy-makers to start caring less about growth and more about price stability, especially when we already have price stability, is bizarre.” Bernanke did say, though, that if Congress enacts spending cuts in the short-term that will slow economic growth too much, the Fed will be forced to act, and the Fed Board also announced that it will be keeping interest rates at around zero for the time being.

POLITICAL GAMESMANSHIP: Thus far, the steps to boost the economy that the Fed has taken have been too small and have thus ushered in lackluster results. But as the New York Times noted this week, “a vocal group of critics…argues that the Fed has already done far too much.” These include several Republicans in Congress, who have been fearmongering about the effect of the Fed’s attempt to spur economic growth. Sen. Mark Kirk (R-IL) wrote in a letter to Bernanke that, “you should prepare the Board for an early end to quantitative easing, along with other monetary measures to protect Americans from rising inflation.” House Republicans spent two hearings e arlier this year peppering Bernanke with questions about the specter of inflation. Senate Republicans have also refused to confirm Nobel Prize-winning economist Peter Diamond, who President Obama has nominated to the Federal Reserve Board, saying that despite his stellar economic credentials, he is not qualified for the job; Diamond is known to be an inflation “dove.” Late last year, several Republicans also introduced legislation that would strip the Fed of its responsibility for promoting full employment, with Sen. Bob Corker (R-TN) calling the Fed’s full employment mandate “inappropriate.” By focusing more on inflation than full employment, even though inflation is low while unemployment is high, Bernanke and the Fed seem to be bowing to this Republican pressure.

Energy: Crude Profits

The cost of filling up a gas tank has shot up in recent weeks as oil trades at unusually high prices for this time of year. Oil prices have come down slightly since hitting a high of $106.95 a barrel two weeks ago — the highest price for a barrel since the record 2008 oil price hike — but early trading today has already pushed prices back up. The spike in the cost of oil this early in the year poses a serious threat to the fragile economic recovery, with experts saying that prolonged high gas prices could cripple economic growth at a critical time. Some economists are even warning that high oil prices could cost the economy up to 600,000 jobs. “[S]ustained rises in the prices of oil or other commodities would represent a threat [to] both to economic growth and to overall price stability, particularly if they were to cause inflation expectations to become less well anchored,” Fed Chairman Ben Bernanke warned Congress earlier this month. A new CNN poll of experts shows that “economists are most fearful of one major headwind [to recovery]: oil prices.” So what’s causing this spike in prices? One factor is Wall Street speculation. The government has new powers created by the Dodd-Frank Wall Street reform law to deal with this problem, but as part of their war on consumer protection regulation, Republicans have so far prevented this from happening.

WHAT’S BEHIND OIL PRICES: While there are several causes that contribute to rise in oil prices, many experts point to Wall Street speculation: hedge funds, investors, and big banks trying to make money by betting on the price fluctuation of oil and other commodities. Speculation in and of itself isn’t a bad thing — in fact, it’s necessary in moderation with proper regulation to help end users like airlines hedge against price fluctuation — but excessive speculation, especially when it is based on fear about inherently unknown future events, can artificially inflate the price of oil beyond the price that natural supply and demand forces would set. Experts concluded in 2008 that that year’s spike in oil and other commodity prices couldn’t possibly be explained by supply and demand forces, and that speculation must have played a role. “[T]here is substantial evidence that the large amount of speculation in the current market has significantly increased prices,” a House Homeland Security Committee report on oil prices from 2008 concluded. The same appears to be true today. While many blame high oil prices on the crisis in Libya, the country accounts for only 2 percent of the world’s output. More importantly, Saudi Arabia has vowed to make up for any shortfall in global supply by increasing its own production. So supply issues are not likely having a significant impact on prices. And despite conservatives’ scapegoating, President Obama’s policies are clearly not to blame either. Meanwhile, a commissioner of the Commodity Futures Trading Commission (CFTC) — the government agency charged with policing commodity speculation — said earlier this month that speculation on energy futures, including oil, is at an all-time high, jumping 64 percent even since 2008. Speculation was blamed by both Republicans and Democrats three years ago for oil prices, and even with conservatives’ tea party embrace of Wall Street today, several Republican congressmen, and conservative leaders have acknowledged that speculation is a driver of oil prices.

A SOLUTION: Recognizing the problem of oil speculation, Congress gave the government new powers to protect consumers and help ensure market stability with the Dodd-Frank Wall Street reform law passed last year. The law gives the CFTC the ability to limit “excessive speculation” by limiting the bets speculators can make. The law expanded the CFTC’s authority to regulate the entire market for the first time. While futures — bets on the future prices of commodities like oil and wheat — were regulated before the law passed, traders could choose to instead purchase “look-alike” futures that were not subject to regulation. Dodd-Frank changes this by allowing the CFTC to “impose a uniform set of rules across exchanges and the over-the-counter market, replacing a patchwork of inconsistent restrictions for different venues and commodities.” Curbing regulation could help make these markets more stable and transparent, and help bring down the cost of oil.

DEFENDING WALL STREET: But the CFTC has so far failed to take up this responsibility and write the rules that would rein in oil speculators. The agency missed a January deadline to file new rules because of opposition from the commission’s Republican members and one of its Democrats, CFTC commissioner Michael Dunn. The agency’s chairman, Gary Gensler — a Democrat and former Goldman Sachs banker — has taken a lead in advocating strong new rules on speculation, but the Republican commissioners have been foot dragging to defend Wall Street’s profits, making Dunn the swing vote. Dunn has said he does not have enough information to sign off on new rules, despite the fact that the agency has received hundreds of public comments and held at least 75 meetings with experts, stakeholders, and the public on the matter. But Dunn’s term is ending this summer, giving President Obama an opportunity to appoint someone who is willing to follow the law and rein in speculation. But the CFTC faces another threat from Republicans on a different front. H.R.1, the House Republican approved spending plan for the remainder of 2011, includes a nearly one-third cut in the CFTC’s budget. Such a draconian cut would require the CFTC to lay off more than 30 percent of its staff. Moreover, House “Republicans are threatening repercussions for regulators that ignore their concerns.” “We’d have to have significant curtailment of our staff and resources,” CFTC Chairman Gensler said. “We would not be able to police…or ensure transparent markets in futures or swaps.” The Republican effort to take cops off the oil trade beat would allow speculators to continue to drive up prices, ensuring even bigger profits for oil companies.

TGIF …&some News …Mrs.Obama’s speech while in Wisconsin

Congress is still on break…sigh ..so much work to do, so many bills to get through… only if we had more(truer) Democrats on the floor of both Chambers of Congress. Vote Dems on Nov.2nd

***Today started out like another day of nasty weather just like the rest of the country and while the weather does affect, maybe set the mood for the day it is on a very rare occasion that the weather makes a person or group of people act out in ways that are not just extreme, obscene and or pack like but their actions and their words have influenced some ugly behavior from their followers. The words and comments being made by rightwing radio hosts, protesters and cableheads but mostly Republican Tea Party candidates continue to race bait, promote violence, lean to the extreme as promises of repealing, replacing and eliminating looms over the middle class if the Republican Tea Party gains control. I have to say contrary to what progressives are saying on the airwaves the  land  of the middle class is not ruled or inhabited only by white folks like keith o and ed Shultz would have us all believe. I appreciate the advocacy they do and the variety of guests but it is getting tiring to hear that “those people” in need, the poor blah blah blah they talk about are black or Latino …I am not naïve but being poor is not about colour Keith and or Ed Shultz, there a lot of poor white people in need too as well as there being non-whites who are or should be included in your so-called Middle Class monologue yo.  The words coming from the right definitely upsets me but I gotta say tuning into so-called progressive stations playing the class war game as well is making me tune out almost completely.

The great speech while in Wisconsin by Mrs. O is below

We have two weeks before we all vote and though people like Palin love trying to engage in the art of fear mongering it would be great if the public finally gets it and turns off the nasty vitriol.  Words still matter, words hurt as we have seen over the last few weeks and this seems to have been lost on a whole lot of people on the right. The blood pressure of Americans seems to have been pushed up by rhetoric that is just full of miss-information.  After watching the latest round of debates the need to fact-check not only the news but right-wingers and their candidates because the do as we say not as we do is in full effect and while we all expect truthfulness this 2010 group of Republicans have decided to lie…luckily for folks who care can log into YouTube and plug in any candidate and hear their views their real opinions because it got caught on tape.

The changes the Obama admin and Congress have been able to put in place despite the Political Party of no will affect all our lives, our children and our jobs. The new HCR laws  will transform the lives of people who previously were denied coverage due to an illness, people who have kids just about to turn 22, usually get dropped will now be able to stay on your insurance until age 26 and as for being a woman… def a pre-existing condition has been dealt with and while some of us didn’t have these new laws in place when we needed them it is with great pride that others will not be subjected to insurance and or health care discrimination; hopefully, all the changes will happen in a positive way; create healthier people and jobs in the future.

Anyone with a mom, sister, daughter or wife should celebrate because the new law of the land will increase her ability to live longer.

Other News…

Pastor Terry who threatened to burn quran & offered a car if he didn’t -collects

Danica says she won’t be pushed around after Nascar crash

GM recalls model year 2009 and 2010 Chevrolet Impalas.

Prince will go on the road ..his tour starts in December

Feds oppose Prop 19

NYC’s Lincoln Center says 2nd venue has bedbugs

Oprah is sending her audience to Restore Sanity Rally


Pres. Obama & Vice Pres. Biden Remarks at Chris Coons (D) Campaign Event Pres. Obama & Vice Pres. Biden Remarks at Chris Coons (D) Campaign Event
Hudson Institute Discussion on U.S.-Japan Relations Hudson Institute Discussion on U.S.-Japan Relations
Fed Chair Ben Bernanke Addresses Boston Fed. Reserve Conference Fed Chair Ben Bernanke Addresses Boston Fed. Reserve Conference
Fmr. Sec. of State Condoleezza Rice Remarks at National Press Club Luncheon Fmr. Sec. of State Condoleezza Rice Remarks at National Press Club Luncheon
CSIS Discussion on the Year Ahead in Space CSIS Discussion on the Year Ahead in Space
Urban Land Institute Conference on the Real Estate Market & the Economy Urban Land Institute Conference on the Real Estate Market & the Economy
C-SPAN Debate Coverage of Campaign 2010 - Thursday, October 14 C-SPAN Debate Coverage of Campaign 2010 – Thursday, October 14
White House Briefing with Press Secretary Robert Gibbs White House Briefing with Press Secretary Robert Gibbs
FCC Open Meeting on Cell Phone FCC Open Meeting on Cell Phone “Bill Shock” Regulations