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Bernanke Sees Few Ripples For U.s. From Expensive Oil - Printy Printy

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Federal Reserve Chairman Ben Bernanke offered a fairly upbeat assessment of the U.S. economy on Tuesday, saying the recent surge in oil prices is unlikely to have a major effect on either growth or inflation, as long as higher prices do not become sustained.

Bernanke told the Senate Banking Committee he saw increasing evidence that the economic recovery has enough momentum to be become self-supporting. But job growth remains far too anaemic, he said, indicating Bernanke is not considering cutting short the Fed's $600 billion (368 billion pounds) bond-buying stimulus.

"We do see some grounds for optimism about the job market over the next few quarters," Bernanke said, citing a steep recent decline in the jobless rate among other factors.

Bernanke said downside risks to growth had diminished and, for the first time, stated the risk of deflation was now "negligible." The threat of deflation, a downward spiral in wages and prices that could derail the economy, was a key justification for the Fed's bond-buying spree.

"It's encouraging to see that the risk of deflation is moderating according to the Fed," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. "That's one of the keys that will be necessary for the Fed to wind down its quantitative easing program going forward."

Bernanke reiterated a warning that a failure by Congress to raise the U.S. government's debt ceiling could lead to a debt default that would have dire consequences for the economy.

"It would be extremely dangerous and very likely a recovery-ending event," he said."

You can tell why Bernanke is the head central banker can't you with genius statements like this.

The oil price isn't a problem so long as it doesn't become sustained, followed by we need to print more money to fund the US deficit. As Denniger keeps noting US GDP growth is clearly down to massive deficit spending, the US economy has become a junkie hooked on debt.

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The lies will continue until morale improves.....

While indicators of spending and production have been encouraging on balance, the job market has improved only slowly. Following the loss of about 8-3/4 million jobs from early 2008 through 2009, private-sector employment expanded by only a little more than 1 million during 2010, a gain barely sufficient to accommodate the inflow of recent graduates and other entrants to the labor force.


What improvement? The employment rate is at new lows as of the January job report.

Likewise, the housing sector remains exceptionally weak. The overhang of vacant and foreclosed houses is still weighing heavily on prices of new and existing homes, and sales and construction of new single-family homes remain depressed. Although mortgage rates are low and house prices have reached more affordable levels, many potential homebuyers are still finding mortgages difficult to obtain and remain concerned about possible further declines in home values.

The housing market refuses to clear and stabilize because the banks, which you supervise, have not been forced to eat the bad loans on their books. As a consequence the market-clearing prices have not been achieved, inventory is being intentionally manipulated and the market distorted.

This is your responsibility Beernapke.

FOMC participants see inflation remaining low; most project that overall inflation will be about 1-1/4 to 1-3/4 percent this year and in the range of 1 to 2 percent next year and in 2013

Absolutely - there's no inflation found here:

Or here:

That's a one-year chart. Oh yeah, it's lock-limit up again today.

There's plenty more of course. But none of this is "inflation." Well, not yet. What it will be is either inflation or margin collapse. I'm betting on the latter.

Although overall inflation is low, since summer we have seen significant increases in some highly visible prices, including those of gasoline and other commodities. Notably, in the past few weeks, concerns about unrest in the Middle East and North Africa and the possible effects on global oil supplies have led oil and gasoline prices to rise further.

A doubling in the cost of food in Egypt over the last two years didn't have anything to do with the unrest, right?

That said, sustained rises in the prices of oil or other commodities would represent a threat both to economic growth and to overall price stability, particularly if they were to cause inflation expectations to become less well anchored. We will continue to monitor these developments closely and are prepared to respond as necessary to best support the ongoing recovery in a context of price stability.

How about if they cause riots and destruction of governments via angry mobs that loot and burn everything in sight Would that be a problem for "economic growth"?

My colleagues and I continue to regularly review the asset purchase program in light of incoming information, and we will adjust it as needed to promote the achievement of our mandate from the Congress of maximum employment and stable prices. We also continue to plan for the eventual exit from unusually accommodative monetary policies and the normalization of the Federal Reserve's balance sheet. We have all the tools we need to achieve a smooth and effective exit at the appropriate time.


Cessation of QE2 will cause the government to have to actually sell debt into the market, which will cause interest rates to move up, which in turn means that the inability of the government to get its deficit spending under control will become fully-exposed.

And none of these clowns in the Senate has the balls to ask that question. Oh sure, they're dancing around it, but they're not asking the question directly.

PS: Ron Paul won't tomorrow either. Bet on that.

PPS: Bernanke's voice is quavering when being asked about the debt limit. He knows we're on the edge of the cliff.

Denniger on Bernanke's testimony. Got to love his comment about people rioting might just affect economic growth. :D

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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