Sunday, November 6, 2011

Bernanke and Geithner

Watch these uncomfortable interviews by Fed Chairman Ben Bernanke and Treasury Secretary Geithner.  Both are explaining, or more like making excuses, why the U.S. economy is so weak and, more importantly, why they are cutting GDP growth estimates going forward.  Geithner explaining why the U.S. will not lose its AAA credit rating knowing full well it did makes him look completely out of touch with reality.

The Fed has already cut its own rosy GDP projections it laid out in June, just five months ago.  Here are some excerpts from this Reuters article that should put those videos into context.

In fresh quarterly projections, the Fed lowered forecasts for growth and raised forecasts for unemployment for this year, 2012 and 2013. Policymakers do not see the jobless rate, now at 9.1 percent, falling to a level they consider consistent with full employment even by the outer edge of their forecasting horizon, the final quarter of 2014.

Officials now expect the world's largest economy to grow by a tepid 2.5 percent to 2.9 percent next year, down from the rosier 3.3 percent to 3.7 percent they were expecting in June, with inflation muted over the forecast horizon.

They see the unemployment rate going no lower than 8.5 percent to 8.7 percent by the end of 2012, up from the more sanguine 7.8 percent to 8.2 percent range envisioned in June.

Fed officials believe the economy will have reached full employment when the jobless rate drops to between 5.2 percent and 6 percent, with a growing number seeing it at the top of that range. In their forecast, the unemployment rate would still be at 6.8 percent to 7.7 percent at the end of 2014
Bernanke and Geithner complaining that the economy is not growing fast enough reminds me of the endless problems and nonsense solutions of Lloyd Christmas and Harry Dunne, who seem to make more sense in some ways than our high paid public servants in DC.  Watch all three clips and you tell me who comes off best, who actually figures out they have a problem and actually comes up with a solution.