Bernanke Gives Some Good News

July 13th, 2011 at 12:14 pm David Frum | 20 Comments |

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Some good news in Ben Bernanke’s testimony today:

On the positive side, household debt burdens are declining, delinquency rates on credit card and auto loans are down significantly, and the number of homeowners missing a mortgage payment for the first time is decreasing.

Continuing on the brighter side:

Two bright spots in the recovery have been exports and business investment in equipment and software. Demand for U.S.-made capital goods from both domestic and foreign firms has supported manufacturing production throughout the recovery thus far. Both equipment and software outlays and exports increased solidly in the first quarter, and the data on new orders received by U.S. producers suggest that the trend continued in recent months. Corporate profits have been strong, and larger nonfinancial corporations with access to capital markets have been able to refinance existing debt and lock in funding at lower yields. Borrowing conditions for businesses generally have continued to ease, although, as mentioned, the availability of credit appears to remain relatively limited for some small firms.

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20 Comments so far ↓

  • DFL

    Corporate profits have been strong partially because less productive workers have had their hours cut or they have been fired. I have done the same at my small company so that we can stay more profitable.

  • armstp

    Bernanke made four important points today:

    1) he warned of the consequences of not lifting the debt ceiling. He said it would have significant domestic and global economic consequences.

    2) he also warned of cutting spending over the short-term, as it could negatively impact an already weak economic recovery.

    3) he hinted that he would use Q3 if required, but did not guarantee its use. The stock market took off on this news.

    4) he acknowledge the fiscal problems of the country, but said they were largely long-term problems and should be dealt with over some period of time. Entitlements, he said, were an issue, but did not have to be dealt with right now, but needed to be dealt with over the longer-term.

  • ottovbvs

    Bernanke’s testimony made entire sense of course. Not that this means much to Republican nitwits. Almost alone of the major economies who had serious over leveraging the US has dramatically reduced its total public and private indebtedness. It’s now below 3 x GDP whereas in Britain it’s around 5 x GDP.

  • Frumplestiltskin

    This article is like saying that cut you got is healing right before they were to cut off your head.

  • DFL

    The reliance of Wall Street on Bernanke’s Quantitative Easing policies reminds of the dependency a junkie has on his next fix. Years ago Neil Young sang about this sort of dysfunctional dependency- The Needle and the Damage Done. Collectively Wall Street is a junkie swooning over Bernanke’s junk money. So the can will be kicked down the road to eventual doom. But never mind. As Keynes once quipped, “In the long run, we are all dead.”

    • ottovbvs

      The reliance of Wall Street on Bernanke’s Quantitative Easing policies reminds of the dependency a junkie has on his next fix.

      This is your considered armchair economic opinion is it?

    • pnumi2

      The reliance of Wall Street on Bernanke’s Quantitative Easing policies”

      Really, DFL, who is actually more reliant on Bernanke’s Quantitative Easing policies: Wall Street or the Treasury, Government and People of the United States of America?

    • pnumi2

      JimBob // Jul 13, 2011 at 1:39 pm

      The economy isn’t getting any better.

      Now if John McCain had been elected, imagine the size of the pile of horse sh*t we’d be sitting on.

  • LFC

    Borrowing conditions for businesses generally have continued to ease, although, as mentioned, the availability of credit appears to remain relatively limited for some small firms.

    These small firms are the jobs creators. Any talk of cutting taxes or regulations to spur business have to revolved around SMALL business. Big business already gets a boatload of loopholes, incentives, breaks, etc. but they aren’t going lead us into the future.

  • sinz54

    All these optimistic-sounding words were just camouflage for the real message:

    It was just a few months ago that Bernanke said that no further quantitative easing was necessary or desirable, since inflation appeared to be picking up (according to him). Now in just a few short months, Bernanke has done a 180, having failed to foresee the recent slowdown in the economy.

    • ottovbvs

      Our economic seer Sinz thinks this is like operating a TV, just press certain buttons and certain outcomes are entirely predictable. In fact it’s like driving a car. You have to have gas in the tank and be able to adjust speed and direction constantly in reaction to ever changing traffic patterns.

  • Diomedes

    “Now in just a few short months, Bernanke has done a 180, having failed to foresee the recent slowdown in the economy”

    He failed to foresee it because he under-estimated the sheer stupidity of the new Congress and their need to placate to a bunch of backwater yokels that only get their knowledge from Fox News.

    Congress put the brakes on this economy when it went into slash and burn mode. Take a look at the jobless claims. The private sector is hiring yet unemployment is going UP. Why? Because the public sector is LAYING OFF. Thus they spend less. Thus, our economy slows down. And the real irony is that these newly laid off public sector workers are now collecting unemployment. Which means we are paying money anyway, except this time without the services.

    I will give the Republicans credit. They run on the platform of ‘government is bad’. Then they get elected to office and prove it.

  • SteveThompson

    Even the Federal Reserve is now admitting that the issues facing America’s housing market will take years to undo because of a massive oversupply of foreclosures and vacant homes:

    http://viableopposition.blogspot.com/2011/06/americas-housing-market-as-fed-sees-it.html



    So much for the positive impact of QE1 and QE2.

    • pnumi2

      So much for the positive impact of QE1 and QE2.

      So what you are saying is that the run of the DJIA from 6,500 in March 09 till now and the low interest rates, which otto will recite you chapter and verse if asked, count as nothing?

      Well, we are all entitled to our opinions here.

  • sinz54

    “ottovbs”: “Our economic seer Sinz thinks this is like operating a TV, just press certain buttons and certain outcomes are entirely predictable. In fact it’s like driving a car. You have to have gas in the tank and be able to adjust speed and direction constantly in reaction to ever changing traffic patterns.”

    To continue on with your “car” metaphor:

    Bernanke’s reaction time is off. Bernanke is blaming heavy traffic for his inability to make the necessary turns in time to reach his destination.

    He blamed the messes in Japan and the Middle East for the new weakness in the U.S. economy. Are you buying that?

    Earthquakes, tsunamis, nuclear plant accidents, hurricanes, have happened, and will continue to happen. Stuff happens. And it will continue to happen in the future.

    But I can remember a time when the U.S. economy wasn’t so fragile as to tank due to an earthquake or tsunami in Asia. Note that Germany’s economy didn’t tank due to the earthquake/tsunami in Japan, or the turmoil in the Middle East either.

    If that’s the state our economy is in–tanking due to ANY foreign shock–then Bernanke failed to boost it enough in the first place.

    • ottovbvs

      Bernanke’s reaction time is off. Bernanke is blaming heavy traffic for his inability to make the necessary turns in time to reach his destination.

      Now Sinz expects Bernanke to forecast tsunamis and revolutions in the middle east. As well as being a car driver he now has to be a tarot card reader. The US economy is fragile because it’s emerging from the worst recession since the war that was bequeathed by the previous admin. Bernanke and the current administration deserve enormous credit for getting the car out of the ditch Bush drove it into and back on the highway despite huge efforts by Republicans to impede these efforts. Once you start to take responsibility for this situation and move away from an attitude of “winning” politically I might start take your economic comments seriously. Until then you’re just a blinkered ideologist. And what is an ideology worth if it has to be continually defended by lies and obfuscation?

    • pnumi2

      sinz

      “Earthquakes, tsunamis, nuclear plant accidents, hurricanes, have happened, and will continue to happen. Stuff happens. And it will continue to happen in the future.”

      Did the planet ever run down on crude oil before? (I apologize to everyone I promised not to mention PO again. I guess I’m just out of control.)

  • Primrose

    “Earthquakes, tsunamis, nuclear plant accidents, hurricanes, have happened, and will continue to happen. Stuff happens. And it will continue to happen in the future.

    But I can remember a time when the U.S. economy wasn’t so fragile as to tank due to an earthquake or tsunami in Asia. Note that Germany’s economy didn’t tank due to the earthquake/tsunami in Japan, or the turmoil in the Middle East either.”

    First of all these things have always affected the economy. Second, we are far more global than we were in the past and third, yes we are fragile when you are recovering from a severe illness every little thing affects you more. You must agree we have had a severe bout of economic pnemonia, so there will be lots of little slowdowns.

    But the feds can only do so much. They are only one group responsible for helping and have limited tools. We could have renewed our infrastructure putting money directly into the industry hardest hit (construction), directly into the middle class and the young. But you Republicans thought the deficit more important, forgetting that with less tax revenues, a deficit increases.

  • D Furlano

    There is no good news. The unemployment rate went up last month. At best retail is flat.

    Any decrease in the debt will pretty much guarantee that demand remains low for a long time.

    We are quickly becoming the next Japan.