Loose Cannons

March 1, 2008

In denial

"Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson both acknowledged problems in the US economy Thursday, but both said they believe the nation will avoid falling into recession... Bernanke said he believes major banks and Wall Street firms are likely to take additional earnings hits tied to bad investments in subprime mortgages ... But he added he's not worried about bank failures because he thinks banks entered the current downturn with sufficient capital and have been able to raise additional funds." — CNNMoney.com, February 14.

Reality bites

"In testimony before the [US] Senate banking committee, Bernanke said the US economy is in a worse position now than it was before the recession in 2001 ... He also warned of the likelihood of 'some bank failures' in the US ... 'With initial jobless claims getting closer to the 400,000 a week mark, the odds clearly favour a recession at some point in the first half [of the year]', he said." — Forbes.com, February 28.

Perfect storm

"Companies ranging from homebuilders to automakers are cutting staff as the biggest housing slump in a quarter century pushes the economy close to a recession. The weakening labor market is eroding consumer spending, adding headwinds to growth." — Bloomberg.com, February 28, reporting that 373,000 US workers made first-time claims for unemployment benefits in the week ending February 23 — a level equal to the four-week average in the month before the last US recession officially began in March 2001.

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