While Fed Chairman
Ben Bernanke Warns of a Credit Market 'Relapse', Congress is increasingly
willing to stand up to the Fed Chairman.
Please consider Bernanke Warns of Danger of Credit Market
Chairman Ben S. Bernanke warned that another shock to the financial system
would undercut the central bank’s forecast that the U.S. recession will give way this year to a slow recovery.
“A relapse in financial conditions would be a significant drag on
economic activity and could cause the incipient recovery to stall,”
Bernanke said today in testimony to the congressional Joint Economic
Committee. He highlighted that the economic contraction may be slowing and
that the housing market has “shown some signs of bottoming” after
a three-year slump.
The Fed’s effort at greater transparency in its emergency lending
programs is a response to an April 2 nonbinding budget amendment sponsored by
Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat,
and the panel’s ranking Republican, Alabama Senator Richard Shelby,
Bernanke said. That proposal passed 96-2.
The Fed chief did not mention a tougher measure, also nonbinding, sponsored
by Vermont Senator Bernard Sanders, an independent, that called on the Fed to
identify borrowers. The measure passed 59-39 on the same day.
Sanders, in a statement after the hearing, threatened to pass the measure
again “in a stronger form” if Bernanke failed to accept it. Bernanke
told Sanders in February that identifying borrowers would be
“counterproductive” and result in “severe adverse
consequences for the economy.”
“Mr. Bernanke should not pick and choose which amendments he wants to
respond to,” Sanders said. “My bipartisan amendment passed the Senate
by 20 votes, and we expect him to respect it.”
Pick and Choose
Whether Bernanke is supposed to "pick and choose" is irrelevant. Bernanke
and the Fed are going to attempt attempt to "pick and choose" . Meanwhile,
as time goes on, the actions of the Fed are in complete alignment with the Fed Uncertainty Principle.
Mish's Global Economic
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inflation/deflation/stagflation debate as well as discussions on gold,
silver, currencies, interest rates, and policy decisions that affect the