On a day that has so far brought somewhat of a lull in the federal government\u2019s efforts to avoid being remembered as the people who brought you \u201c1929: The Sequel,\u201d many eyes were on Federal Reserve chairman Ben Bernanke, who appeared on ABC\u2019s \u201cGood Morning America\u201d and later spoke to The Economic Club of New York. In concisely summarizing to the latter the federal government\u2019s actions over the past few weeks, Bernanke (pictured) struck a measured but confident tone, certainly not implying that the crisis is past the worst, but emphasizing that the government has the tools it needs to deal with the problems and is \u201cwell positioned to move forward.\u201d Although the current situation \u201chas many novel aspects\u201d and is significantly different from the one that launched the Great Depression, Bernanke said, it resembles past crises at least in causing a major loss of confidence and trust. He also pointed out that government was often slow to act in the past, with the Hoover administration failing for more than three years to intervene in the financial markets. \u201cThat is not the situation we face today,\u201d he said. Although the Fed still vastly favors market-based solutions to troubled companies, Bernanke said, the government will intervene \u201cforcefully and without hesitation\u201d when there is \u201can unacceptable risk to the financial system as a whole.\u201d He recapped various recent Treasury actions, such as the decision to provide unlimited dollar funding to key central banks overseas and a flurry of moves yesterday by the Federal Deposit Insurance Corp., including those involving interbank lending, protection of non-interest-bearing accounts and a 30-day waiver of fees for these new programs. Another of Bernanke\u2019s themes was that the government is doing its best to minimize the risk to taxpayers in its bailout plans. He noted the announcement that warrants will be used ensure that taxpayers will be able to participate in the upside of the federal government\u2019s interventions and also pointed out the limitations on executive compensation. Bernanke also emphasized that the benefit for taxpayers should be seen not just in the potential returns on the government\u2019s unprecedented equity investments in private companies, but in the bailout\u2019s effects on the overall economy. The U.S. economy, he predicted, will emerge from this crisis \u201cwith renewed vigor.\u201d One of the themes emerging from the punditocracy is that realigning misplaced human capital will be a big factor in setting the economy straight. On CNBC this morning, it was noted that 25 percent of the new jobs created over the past 10 years were in financial services or housing. And in his cover essay in the current issue of Newsweek, \u201cThere is a Silver Lining,\u201d Fareed Zakaria quoted Boykin Curry, managing director of Eagle Capital Management of New York: \u201c30 percent of S&P 500 profits last year were earned by financial firms, and U.S. consumers were spending $800 billion more than they earned every year. As a result, most of our top math Ph.D.’s were being pulled into nonproductive financial engineering instead of biotech research and fuel technology. Capital expenditure went into retail construction instead of critical infrastructure.\u201d Zakaria added, \u201cIf some of the smart people on Wall Street end up building better models of energy usage and efficiency, that would be a net gain for the economy.\u201d It will be interesting to see how, and how explicitly, the next presidential administration addresses this. Finally, as of presstime, the Federal Reserve Board was about to release its latest Beige Book. a summary of and commentary on current economic conditions.<\/p>\n","protected":false},"excerpt":{"rendered":"
On a day that has so far brought somewhat of a lull in the federal government\u2019s efforts to avoid being remembered as the people who brought you \u201c1929: The Sequel,\u201d many eyes were on Federal Reserve chairman Ben Bernanke, who appeared on ABC\u2019s \u201cGood Morning America\u201d and later spoke to The Economic Club of New…<\/p>\n","protected":false},"author":1314,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21742],"tags":[],"class_list":["post-1003874467","post","type-post","status-publish","format-standard","hentry","category-latest"],"acf":[],"yoast_head":"\n