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FEDERAL Reserve Chairman Ben Bernanke said Wednesday that long-term unemployment is a "national crisis" and suggested that Congress should take further action to combat it. He also said lawmakers should provide more help to the battered housing industry.
Mr Bernanke noted that about 45 per cent of the unemployed have been out of work for at least six months.
"This is unheard of," he said in a question-and-answer session after a speech in Cleveland.
"This has never happened in the post-war period in the United States. They are losing the skills they had, they are losing their connections, their attachment to the labor force."
He added: "The unemployment situation we have, the job situation, is really a national crisis."
Mr Bernanke's comments were his latest in a public effort to get Congress to act further to rejuvenate the economy. He suggested that the Fed can achieve only so much through policies that seek to lower long-term interest rates.
"The Federal Reserve has made enormous efforts to try to help this economy recover and stabilize" though its control of interest rates, or monetary policy, he said. Those policies have driven rates to record lows.
"Monetary policy can do a lot, but monetary policy is not a panacea," Mr Bernanke said.
“A more sinister scenario could also unfold, namely a global synchronous recession where deflation becomes more visible,” said Morgan Stanley’s Adam Parker, the head of U.S. equity strategy, in a note to clients this week. “In recent days, a number of clients have told us they are having great difficulty in getting defensive, even when they want to.”
“Their worst case is not the worst case of the prior two recessions in 2001 and 2008,” said Stephen Weiss of Short Hills Capital. “This time it could very well be worse since the global economies have more interdependence.”
“The news flow for the balance of 2011 will continue to be dominated by geopolitical uncertainty on three continents led by the European sovereign debt crisis, ongoing budget negotiations in Washington, DC, risk of a U.S. recession, and slowing pace of economic activity in China,” said Goldman Sachs’ David Kostin, in a note last week.
Kostin’s highlighted the issue many investors are facing when problems occur on every continent: there’s no place to hide. With so many macro problems to deal with, investors have thrown fundamentals out the window.
The job of stopping this “global synchronous recession” falls (some would say ‘unfortunately’) on the hands of policy makers around the world.
Germany’s parliament must agree with the French government and Greece’s parliament. China must orchestrate a ‘soft landing’ in their economy. And at home, Congress must cut the deficit while still fostering growth.
“The longer the sovereign crisis goes on without resolution or empty ‘we are having constructive talks’ type statements, the more the market believes that there are very large entities within the European financial sector that cannot take any type of Greek default or haircut,” said Alec Levine, a derivatives strategist with Newedge Group. “Time is not on the side of the policy makers.”
Originally posted by Afterthought
This is just now dawning on him?
One thing that would help this national crisis is to put Bernanke in the unemployment line.
Originally posted by Afterthought
This is just now dawning on him?
One thing that would help this national crisis is to put Bernanke in the unemployment line.
Originally posted by CigSmokinMan
i think he is trying to cover his ###. wipe his hands and walk away before things get ugly. not that they arent now, but i mean rEEEEaally ugly.