Events Calendar
In This Section
AutoZone to replace Blockbuster in West Akron
Panel says banks underpaying government to exit bailout
May trade deficit unexpectedly drops to $26 billion
GM reportedly emerges from bankruptcy
New General Motors to fire up its engine
Smucker CEO pay up 23% in 2009
Wal-Mart settles $17.5 million discrimination suit
Modest gains follow Alcoa success
Most Read Stories
Akron police investigate teen mob attack on family
Man found hanging at playground in Stow
Family is proud of late son's gift
Man shot in back near Akron park
Varejao's $50 million deal isn't really $50 million
Woman, 75, charged with beating fawn to death
Robbery suspect's body left at Akron hospital
Akron woman found dead at Brimfield Township store
Blogs:
Pets:
Sly children fool exercise study by using dogs
The Heldenfiles:
Friday Notebook
Patrick McManamon:
Dwayne Wade says no to Cleveland
Akron Zips:
Opponent outlook: Kent State
Browns Bulletin:
Quick thought on Browns rookies
Tribe Matters:
Now is no time to quit
Cleveland Browns:
Stallworth test showed marijuana
Kent State Sports:
Men's Basketball Scheduling update
Cleveland Cavaliers:
Andy’s Signed According to ESPN
All Da King's Men:
Baby Got Barack !
Blog of Mass Destruction:
As California Goes?
Akron Law Café:
Why do public officials violate Ohio Ethics Laws?
Varsity Letters:
Report: Ontko selects Wisconsin
See Jane Style:
Oh Baby!
Car Chase:
Where do We Go from Here?
Let's Talk Real Estate:
Closings….Not the Good Kind!
Ohio Travels with Betty:
Margy inquires-when is a Taste of Hudson?
Sound Check:
LeVert II live performance Saturday night — "Dedication" album due July 13,
HRLite House:
DDI One of Best Places to Work
Akron Gamer:
Video game sales drop in May
By Jeannine Aversa
Associated Press
POSTED: 08:50 a.m. EST, Jan 13, 2009
WASHINGTON: Federal Reserve Chairman Ben Bernanke said today the stimulus package being crafted by President-elect Barack Obama and Congress could provide a ''significant boost'' to the sinking economy. But he warned that such a recovery won't last unless other steps are taken to stabilize the shaky financial system.
Although Bernanke has previously endorsed the notion for a fresh round of government stimulus to lift the country out of a recession, it marked the first time the Fed chief has referenced the roughly $800 billion recovery plan now being worked on by Obama, who takes office next week. Obama envisions a blend of tax cuts and increased government spending, including on big public works projects, to make up the stimulus plan.
Bernanke, who didn't weigh in on the details of the evolving package, made clear that such a recovery plan was needed as part of a broader, multi-pronged government response to combat the worst financial crisis to hit the U.S. and the global economy since the 1930s.
''The incoming administration and the Congress are currently discussing a substantial fiscal package that, if enacted, could provide a significant boost to economic activity,'' Bernanke said in a speech to the London School of Economics.
''In my view, however, fiscal actions are unlikely to promote a lasting recovery unless they are accompanied by strong measures to further stabilize and strengthen the financial system,'' he warned. ''History demonstrates conclusively that a modern economy cannot grow if its financial system is not operating effectively.''
To help on that front, the Fed is loaning out billions to financial companies and buying mounds of companies' debt to help bust through the debilitating credit clog. And the Treasury Department is overseeing a $700 financial bailout program that has pledged to inject $250 billion into banks in return for partial government ownership. Some money from the bailout pot also is being used to guarantee against possible losses from risky assets held by Citigroup Inc.
Bernanke said ''more capital injections and guarantees may become necessary'' to stabilize financial markets and spur more lending. If Obama's incoming Treasury secretary Timothy Geithner decides to remove toxic assets from financial institutions' balance sheets — the original but abandoned strategy under the $700 billion bailout — Bernanke suggested some options to do that.
Public purchases of the troubled assets are one way to go, he said. Another option is to provide asset guarantees under which the government would agree to absorb — presumably in exchange for warrants or some other form of compensation — part of the prospective losses on specified portfolios of rotten assets held by banks. Yet another approach would be to set up and capitalize so-called ''bad banks,'' which would buy assets from the financial institutions in exchange for cash and equity in the bad bank.
WASHINGTON: Federal Reserve Chairman Ben Bernanke said today the stimulus package being crafted by President-elect Barack Obama and Congress could provide a ''significant boost'' to the sinking economy. But he warned that such a recovery won't last unless other steps are taken to stabilize the shaky financial system.
Although Bernanke has previously endorsed the notion for a fresh round of government stimulus to lift the country out of a recession, it marked the first time the Fed chief has referenced the roughly $800 billion recovery plan now being worked on by Obama, who takes office next week. Obama envisions a blend of tax cuts and increased government spending, including on big public works projects, to make up the stimulus plan.
Bernanke, who didn't weigh in on the details of the evolving package, made clear that such a recovery plan was needed as part of a broader, multi-pronged government response to combat the worst financial crisis to hit the U.S. and the global economy since the 1930s.
''The incoming administration and the Congress are currently discussing a substantial fiscal package that, if enacted, could provide a significant boost to economic activity,'' Bernanke said in a speech to the London School of Economics.
''In my view, however, fiscal actions are unlikely to promote a lasting recovery unless they are accompanied by strong measures to further stabilize and strengthen the financial system,'' he warned. ''History demonstrates conclusively that a modern economy cannot grow if its financial system is not operating effectively.''
To help on that front, the Fed is loaning out billions to financial companies and buying mounds of companies' debt to help bust through the debilitating credit clog. And the Treasury Department is overseeing a $700 financial bailout program that has pledged to inject $250 billion into banks in return for partial government ownership. Some money from the bailout pot also is being used to guarantee against possible losses from risky assets held by Citigroup Inc.
Bernanke said ''more capital injections and guarantees may become necessary'' to stabilize financial markets and spur more lending. If Obama's incoming Treasury secretary Timothy Geithner decides to remove toxic assets from financial institutions' balance sheets — the original but abandoned strategy under the $700 billion bailout — Bernanke suggested some options to do that.
Public purchases of the troubled assets are one way to go, he said. Another option is to provide asset guarantees under which the government would agree to absorb — presumably in exchange for warrants or some other form of compensation — part of the prospective losses on specified portfolios of rotten assets held by banks. Yet another approach would be to set up and capitalize so-called ''bad banks,'' which would buy assets from the financial institutions in exchange for cash and equity in the bad bank.
Comments
Click here to post your comments
Posted 09:15 AM, 01/13/2009
Sounds like the same B.S. that we have been listening to since the eighties. Nothing is going to change for the better as a whole. They will give us a little here and then take back more from over there. LOL
Posted 10:32 AM, 01/13/2009
Thanks, economist DAG.
