Helicopter Ben Is Monitoring the Situation
(or waiting on the private sector)


Krugman's thoughts on Bernanke's testimony.

Bernanke says moderate growth will continue and the economy will improve very slowly. He says we're not Japan because our economy has higher productivity and our banking sector is in much better health than theirs was. He said consumer spending was increasing.

The IMF is forecasting unemployment of 9.5 percent until 2012, whereas the Fed is predicting that the economy will continue to heal (see above). However Bernanke admitted a lot uncertainty exists and will "get to the chopper" if need be.

About Europe, Bernanke said:

One factor underlying the Committee's somewhat weaker outlook is that financial conditions--though much improved since the depth of the financial crisis--have become less supportive of economic growth in recent months. Notably, concerns about the ability of Greece and a number of other euro-area countries to manage their sizable budget deficits and high levels of public debt spurred a broad-based withdrawal from risk-taking in global financial markets in the spring, resulting in lower stock prices and wider risk spreads in the United States.

But Europe has seem to stabilized and he highly doubts that Greece will default. Maybe the Euro isn't dead after all. About the Federal deficit, he didn't seem terribly concerned. The government shouldn't withdraw stimulus until the private sector starts taking over supplying demand.

Bernanke also applauded the "landmark financial regulation legislation" Obama signed this morning.

Obama was also able to get the unemployment benefits extension through the Senate today.