Tuesday, October 7, 2008

He's the Expert!

When the Congress was deliberating the bailout proposal submitted by the Treasury Department and Federal Reserve Chairman Ben Bernanke was testifying in support of that proposal, we kept reading about Bernanke's perspective being important because he was an expert on the Great Depression. Well, now that the Treasury proposal has been signed, sealed, and delivered, the "resident expert" seems to be singing a different tune, at least according to this account on Al Jazeera English:

There was little cause for optimism as Ben Bernanke, the chairman of the US central bank, said that the crisis would continue despite the government's $700 billion bailout plan to halt the turmoil.

Bernanke, the head of the Federal Reserve, said that the US economy was likely to remain "subdued" for the rest of this year and into 2009.

"The outlook for economic growth has worsened," he said on Tuesday in Washington DC.

"The heightened financial turmoil that we have experienced of late may well lengthen the period of weak economic performance and further increase the risks to growth."

He also said the Federal Reserve would have to consider if its current stance of holding rates steady "remains appropriate" given the fallout from the worst financial crisis to hit the US and global markets in decades.

Earlier, the Fed had announced plans to buy massive amounts of corporate debt to improve lending in the markets, where many companies turn for short-term loans called "commercial paper".

Fears that loans will not be repaid has made it both difficult and expensive for businesses and consumers to borrow money.

Where, then, is all that talk of confidence that was such an obsession with President George W. Bush when he was ramming the bailout down the Congressional throats? In the Al Jazeera account it does not seem as prominent:

George Bush said on Tuesday the economy would be "just fine" in the long run, but that he was in close contact with European leaders to ensure the market turmoil would not destabilise foreign markets further.

"We have been through tough times before and we're going to come through
this again," he said.

Bush also said that finance ministers from the G7 nations would be meeting in Washington DC this weekend to discuss the crisis.

We seem to be back to "long run" talk, which did not play very well with those on Main Street who had bills to pay when this crisis was just beginning to show how ugly it was and is not going to play any better now that the shallowness of both Executive and Legislative thinking is haunting us all. Is there anyone in the Congress with the courage to propose legislation to repeal the bailout, now that we know how ill-conceived and ineffective it is? Wouldn't it be nice if Senator Christopher Dodd took this as a rude awakening and went back to rallying his colleagues in both Houses to return to the principle of doing it right, rather than doing it quickly? As I have been trying persistently to demonstrate, there is more than enough to deliberate; and, if the Congress took their work more seriously (and stopped counting calendar days until Election Day), we might yet have a more convincing plan for getting out of this mess!

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