In testimony today before Congress Fed Chairman Ben Bernanke says the U.S. recession should begin easing in late 2009.
This, of course, is the same recession he denied was going to happen in 2008.
Want to read how truly inept and out of touch with reality Ben Bernanke really is? Read this speech he gave to the Chicago Fed on May 17, 2007 where he denies there is any coming problem in the U.S. subprime mortgage market.
His exact words here:
"As the problems in the subprime mortgage market have become manifest, we have seen some signs of self-correction in the market. Investors are scrutinizing subprime loans more carefully and, in turn, lenders have tightened underwriting standards. Credit spreads on new subprime securitizations have risen, and the volume of mortgage-backed securities issued indicates that subprime originations have slowed. But although the supply of credit to this market has been reduced--and probably appropriately so--credit has by no means evaporated. For example, even as purchases of securitized subprime mortgages for collateralized debt obligations--an important source of demand--have declined, increased purchases by investment banks, hedge funds, and other private pools of capital are beginning to fill the void. Some subprime originators have gone out of business as their lenders have cancelled credit lines, but others have been purchased by large financial institutions and remain in operation. Importantly, we see no serious broader spillover to banks or thrift institutions from the problems in the subprime market; the troubled lenders, for the most part, have not been institutions with federally insured deposits." (emphasis added by me)
Of course within six months the entire world banking system was brought to the brink of collapse by subprime paper but Bernanke never saw it coming.
I did---and wrote about it as early as 2004 but the Chairman of the Federal Reserve System with a staff of five hundred full-time professional economists missed it. I had been writing about how deteriorating underwriting standards in the mortgage market, excessive valuations on real properties, and unrealistic investor expectations hyped by Wall Street and creative real estate gurus were destroying the U.S. real estate market for YEARS before Bernanke took to the podium in 2007 but hey, he's a nice guy so let's pass on his faults.
Bernanke is CLUELESS when it comes to anything related to the U.S. economy. He literally has not been right on a single issue. I don't see any positive growth in the U.S. economy until at least late 2011 and negative returns for investors on most classes of real estate through 2012. And I see a tidal wave of inflation on the horizon that will swamp any short-term positive growth that manages to poke above the chaos Bernanke, Paulson, Cox, Geithner & Company have given us.
Want more on the incompetence of Ben Bernanke? Check out this great Jim Rogers video where he calls Bernanke "an idiot." I agree with Jim.
Robert J. Abalos, Esq.