When He Has Nothing Else To Say, Bernacke Blames Bad Luck. Doesn't That Give You Confidence In His Knowledge?

Bernanke: 'Bad Luck' Contributed to Subpar Recovery

Thursday, 19 Dec 2013 08:00 AM

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Federal Reserve Chairman Ben Bernanke says the U.S. economy's slow recovery from the Great Recession has been subpar for several reasons, including the extensive damage from the housing bust and tight budgets at all levels of government.

But he also blamed the anemic pace of the recovery on "some bad luck," saying Europe's debt troubles slowed the global economy at a critical time.

"Given all the things we have faced, it is not shocking that the recovery has been tepid," he said during a news conference after the Fed's two-day policy meeting.


He said the United States has still done better than many other countries.

Bernanke made the comments after the Fed announced it would begin to reduce its bond purchases by $10 billion in January, signaling a stronger economy.

Bernanke says the Federal Reserve's decision Wednesday to slow its bond purchases is a sign of progress and he expects the Fed to take "similar moderate steps" throughout next year to reduce the purchases further if the economy shows continued improvement.

Still, Bernanke cautioned that the Fed's further reductions in the purchases remain dependent on data.

"When we are disappointed with the outcomes, we could skip a meeting or two; if things pick up, we could go faster," he said.

He noted that the economic recovery still remains far from complete and long-term unemployment remains a concern, he said.

Meanwhile, Bernanke says his expected successor, Janet Yellen, "fully supports" the Fed's decision to slow its bond purchases.

Bernanke said that he has made a practice of consulting with Yellen and that she was "consulted closely" before the Fed voted to reduce its bond purchases.

Yellen's nomination as the next Fed chairman is expected to be confirmed soon by the Senate. Bernanke's term as chairman ends on Jan. 31.

Responding to a question, Bernanke said that his impending departure played no role in the decision to vote on reducing the bond purchases at the December meeting.

Finally, Bernanke says he intends to stay in Washington for the "immediate future" after he steps down as chairman of the Federal Reserve next month.

But he was otherwise vague on his future plans when asked about them at his final quarterly news conference as chairman.

Responding to a question about his retirement plans, Bernanke said he has decided to stay in Washington rather than return to his hometown of Dillon, S.C., where he has an uncle.

"He is 85 and very chipper," Bernanke said but he indicated that he now has more relatives living in North Carolina than South Carolina.



© Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

No One Knows What Is Going On In The Economy And Fed QE Programs Have Made It Worse!

Greenspan: Economic 'Uncertainty' Greatest I Have Known

Sunday, 08 Dec 2013 10:03 PM

By Dan Weil

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Uncertainty now represents the biggest problem plaguing the economy, says former Federal Reserve Chairman Alan Greenspan.

While the Fed's massive easing program has stabilized much of the economy, "the issue goes beyond that, because, even though we have very major expansion of the balance sheets, it has not essentially spilled over in lending by commercial banks into the usual pattern that one sees when reserves go up," he told CNN's "GPS" program.

So why aren't banks lending more?

"The first and most important issue to recognize in the United States — and it's a problem to an extent in other countries as well — is that the level of uncertainty about the very long-term future is far greater than at any time I particularly remember," Greenspan said.



And one political argument is that "the extent of government intervention has been so horrendous that businesses cannot basically decide what to do about the future," Greenspan said.

For example, two years ago the percentage of business cash flow that was invested in any form of capital asset was at the lowest level since 1938, he says.

"It’s improved somewhat [since then], but it is still extraordinarily low. And what we're observing there is with all this money coming in, all the profit, the cash flow, it cannot find adequate investments."

Asked for his assessment of Fed Chair-nominee Janet Yellen, Greenspan had plenty of compliments.

"Janet Yellen is an excellent economist, very intelligent," he said. "She knows exactly what is going on. I've worked with her for years. I learned a lot from her."

Yellen will handle Fed policy "as well as anyone I can think of can handle it," Greenspan said.

"But there's a different type of problem that's going to be occurring. None of us has handled this before," he added in reference to how to engineer an exit rom the Fed's unprecedented stimulus program.

"She's as qualified as anyone I know to deal with it, and sufficiently knowledgeable with that extraordinary staff at the Federal Reserve to handle it," he said.

Meanwhile, a Bloomberg survey of 35 economists after Friday's strong jobs report showed that 34 percent believe the Fed will announce a beginning of the tapering of its quantitative easing policy at its policy meeting Dec. 17-18. A slightly larger percentage — 40 percent — expect a move in March.

“Clearly the economy is performing far better than the FOMC [Federal Open Market Committee] expected, and there’s no reason not to get started with tapering,” James Smith, chief economist at Parsec Financial Management, told Bloomberg. He expects a December tapering.



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