Things will get better, unless they don’t
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KAI RYSSDAL: You wanna know why economists drive regular people nuts? Because they say things like this:
BEN BERNANKE: At present my baseline outlook involves a period of sluggish growth, followed by a somewhat stronger pace of growth starting later this year as the effects of monetary and fiscal stimulus begin to be felt.
Followed seconds later by this:
BERNANKE: It is important to recognize that downside risks to growth remain, including the possibilities the housing market or the labor market may deteriorate to an extent beyond that currently anticipated or that credit conditions may tighten substantially further.
In other words, we’re fine — unless the things that’ve been happening for the past six months keep on happening.
That was Fed Chairman Ben Bernanke on Capitol Hill today testifying before the Senate Banking Committee. He had company at the witness table. Christpher Cox, the chairman of the Securities and Exchange Commission was there, as was Treasury Secretary Henry Paulson.
Senators from both sides of the aisle asked Mr. Paulson why the government’s not doing more about the subprime crisis. And after a bit of that he let us know what he really thinks.
HENRY PAULSON: I didn’t create this problem. I’m working to try to do something about it. If this effort doesn’t work, then we’ll make adjustments in it. But, again, there are going to be …. I don’t mean to sound heartless, because I’ll tell you, when you’re there and you look at the abuses and you look at the predatory lending abuses, and you look at some of the … it’s heart rending. But what we’re doing is trying to deal with it. And about all I can say to you is if you’ve got other ideas for me, for Pennsylvania, send ’em on in.
We ought to note nobody took him up on that offer.
One more item now to keep you up at night if you’re the type to worry about these sorts of things. Two New Yorkers were on Capitol Hill today as well — the insurance comissioner and Governor Elliot Spitzer. Bond insurance was the name of their game.
Spitzer said we could be just days away from a bailout of the $2.4 trillion bond insurance market. Wall Street didn’t think much of what any of those guys had to say. The major indices all dropped 1.5 percent or so — just the latest in a long string of volatile days in the markets.
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