Unemployment could undercut U.S. recovery: Bernanke

[thundley4]

WASHINGTON (Reuters) – Federal Reserve Chairman Ben Bernanke Tuesday said the outlook for the long-suffering U.S. economy was improving, but supportive policies would be needed for some time to prevent rising unemployment from undercutting recovery.
Delivering the Fed's semiannual report on the economy to Congress, Bernanke also sought to dispel concerns the U.S. central bank's aggressive monetary easing could end up fueling inflation, saying he was confident the Fed could pull back its extraordinary stimulus when the time was right.
"Better conditions in financial markets have been accompanied by some improvement in economic prospects," Bernanke told the House of Representatives Financial Services Committee. "Despite these positive signs, the rate of job loss remains high."
While housing and household spending appear to be stabilizing, unemployment is likely to remain uncomfortably high into 2011 and could sap fragile consumer confidence, he warned.

Sheer Genius

And this is the quality of leadership we have running this economy? No wonder it's going nowhere fast.  Unemployment won't start going down until businesses start hiring. DUH !!  Companies aren't going to hire anyone until they know just how badly 0Bama and his thugs are going to screww them over on Cap and Tax, The Socialist Health Care program, and last of all, taxes in general.
  0Bama and his minions in congress are doing nothing to ease fears of the employers, and are actively working to increase those fears.

[Rebel]

Wow.


I'm ashamed this idiot is from Augusta.

[NHSparky]

That's just ONE of Obumble's policies which will cockblock any recovery.  Talk about your understatements of the day.

[Chump]

Bernanke deserves jail time for BofA alone.

His QE has turned out to be BS.  Were he a student of history, he might have saved himself (and us) a lot of hardship.  As it is, his train is officially off the tracks, headed towards a cliff, and he thinks if he can just get it moving a little faster he can save us all.

God help us.

[Sam Adams]

Doesn't Ben Bernanke have the reputation of being like the world's greatest scholar on the Great Depression? Or do I have him confused with someone else? But yeah, it's a dumb statement. Maybe he was tired. Or talking to journalists and politicians all day might have the effect of reducing one's IQ.

[USA4ME]

And this is the quality of leadership we have running this economy? No wonder it's going nowhere fast.

The purpose of the Fed Chair to speak at all is to try and stablize the market, to ease fears.  So if he's painting this bleak of a picture, then it's likely to be worse.

The housing market has essentially shaken itself out, there's nowhere to go but up from here.  Now, it's a matter of when, and who knows the answer to that?  The big problem is all the credit card debt, something I've mentioned several times here.  Citi is going to be broken up, I don't see how they'll remain intack at all.  BofA might remain, they're on the edge.  BofA got strapped with Merrill, already had Countrywide and have worked through that, but several years ago they bought MBNA in order to get their credit cards, and that's what may or may not drag them under.  Nobody really knows just how deep the credit card defaults are going to go, and anyone who says they do know are lying to you.

So yeah, who's going to hire with all this uncertainity out there?  Dear Leader has taken a difficult but managable situation and created a huge mess with his Keynesian nonsense.

.

[Chump]

The housing market has essentially shaken itself out, there's nowhere to go but up from here. 

I strongly disagree.  We are nowhere near the bottom of the housing market and until banks are forced to reveal the true value of their loans (essentially pennies or zero on the dollar in a lot of cases) we will continue to have an inflated market.  Add to that the coming collapse in CRE (which follows housing by at least 8-12 months) and we're looking at a lot of inventory that's continuing to grow coupled with still-inflated prices.

Ben's QE has essentially been a mask.  We've been shuffling bad debt around from various balance sheets while pretending it still has any sort of value.  Until it's defaulted, it will remain as a weight around the neck of the economy.  Defaulting it would be horrendous, but the consequences of not doing so are frightening beyond imagination.

Of course, this is all my opinion and I'm certainly no expert, always open to more information.

[USA4ME]

I strongly disagree.

I'm in the industry and I sometimes use industry terms not stopping to think others aren't familiar with the full meaning.  Allow me to clarify.

The banks know what they have in the housing market and what to expect.  So in that respect, they know where the light is at the end of the tunnel even though they can't yet see the light or can barely see it.

When it comes to the creditcards, they don't know what they're going to have in defaults, so they're very much in the dark.  They see the tip of the iceburg, and they know there's a lot more there, but they don't know how much more.

So when I say housing has "shaken itself out," I mean they know with what they're dealing, and if you know what your dealing with you can handle it.  The same can't be said with the creditcards, it's still a big, big mystery.

.

[Chump]

I hear ya USA4ME.  I still think we'll see housing go lower, however.  There are just too many loans out there that are worthless but still on the books as having value.  Hell, some loans (I forget the type, but it's one of the sketchy alphabet kind) are going to kill the holding bank twice if they get defaulted.  What is essentially negative amortization on bad loans has been handled as actual income!  So, when these non-performing loans go, not only is that "asset" no longer on the books, claimed income is wiped out along with it.  Maybe that's why we hear anecdotes about folks who haven't made a payment in months yet haven't heard a thing about foreclosure.

But yeah, credit card debt is a whole 'nother ball game, and in all likelihood one of the final nails in the coffin.

At this point, I'm more worried about the Treasury auction scheduled for next week.  235 billion...

Two hundred, thirty-five billion dollars...being auctioned...in a week.  I'm looking around for confirmation information, and I'll probably post about it when I find it.

[JohnnyReb]

Unemployment could undercut U.S. recovery: Bernanke

No Shiite Sherlock.....and it took 16 + how many years of government education for you to figure that one out?

[Chump]

USA4ME, this is germane to your comment about credit cards I think.

http://market-ticker.denninger.net/archives/1260-Four-Bad-Results.html

[USA4ME]

USA4ME, this is germane to your comment about credit cards I think.

http://market-ticker.denninger.net/archives/1260-Four-Bad-Results.html

Thanks.  That certainly addresses a portion of it.

Citi has been gobbling up the credit card business for several years now, so they are in major, major trouble.  Once again, absent a miracle I can't see how they aren't gong to get broken up.  BofA is just about in the same boat, but they may survive.  We'll see what unveils in the following 12 months.

.

[Chump]

Heh, either that or they'll be "too big to fail."

I swear, if I hear another financial "wizard" utter that phrase I'm going to puke.

[Lacarnut]

Wow.


I'm ashamed this idiot is from Augusta.

His term is up at the end of year and I bet Obama will throw him under the bus. Uncle Ben, Paulsen and Geithner have all been in cahoots with their pals in the banking industry. Bailed them out and gave us a good screwing. However, Ben does show a tiny bit of independence from Obama and his Admin. Summers is chomping at the bit to take his place. He will even be worse than Uncle Ben. Summers will do what he is told by Obama and his Chicago thugs.