Recession is likely over: Bernanke
Thursday, 17 September 2009
From Fazle Rashid
NEW YORK, Sept 16: Ben Bernanke, US Fed Chairman, who has been out of public sight in recent times and Treasury Secretary Tim Geithner has been doing the talking, broke his silence yesterday to announce that recession is "likely over". The stock market responded with vigour.
Bernanke hastened to warn that from a technical perspective the recession is over but the economy is not likely to recover fully before the end of 2010. Bernanke's measured outlook reflected concerns among investors who wonder whether the market can continue adding to recent gains if the economy is running only at half speed, the New York Times (NYT) in a report said today
Tim Geithner, treasury secretary, and Fed Chairman Ben Barnanke both said unwinding the myriad lending and guarantee programmes too early could lead to another round of problem. Unwinding of various spending programmes and lower interest rates policy will increase the cost of borrowing for the federal government, NYT said.
Many economists believe that consumer spending will be constrained for months because limited access to credit and people's desire to reduce their debts, an analyst said. It is almost certain that Group of Twenty (G20) leaders meeting at a summit meeting in Pittsburg on Sept 24 will impose limits on banks on the total amount they pay staff in bonuses. The financial institutions will have to meet "more demanding capital requirements".
The proposal for temporary curb is important for firms to conserve profits so they can rebuild capital and support lending.
Growth has also resumed in the UK economy but any recovery was likely to slow and protracted, Governor Bank of England said. Labour Prime Minister Gordon Browne who faces an election and whose political fortunes are fluctuating told union leaders that government would have to cut costs, cut inefficiencies, cut unnecessary programmes and cut lower priority budgets, a reputed paper quoted him saying. He also indicated that there could be a pay cut as well.
On the political front, there have been interesting developments. Militants fired several rounds of mortars and rockets at the well fortified Green Zone area shortly after US Vice President Joe Biden landed in Baghdad on a surprise visit to put pressure on Iraqi government to compromise. The mortars and rockets did not hit the US embassy where Biden met with the US ambassador and top military leaders.
The US secretary of state expressed concern over Venezula's arms shopping from Russia, saying it would start an arms race in the region. Russia will lend Venezuela $2.2 billion to buy 92 tanks and advanced anti-aircraft missiles. Nato in statement called for patching up hitches with Russia to confront a common enemy. Nato did not name who the common enemy is.
Pakistan President Asif Ali Zardari is planning to set up a South African style Truth and Reconciliation Commission to "help heal wounds suffered during Pakistan political history." President Zardari has named world renowned and country's most respected human rights activist Asma Jahangir to head the commission. Asma who was subjected to humiliation during the previous regime will play a similar role to that of Archbishop Desmond Tutu.
NEW YORK, Sept 16: Ben Bernanke, US Fed Chairman, who has been out of public sight in recent times and Treasury Secretary Tim Geithner has been doing the talking, broke his silence yesterday to announce that recession is "likely over". The stock market responded with vigour.
Bernanke hastened to warn that from a technical perspective the recession is over but the economy is not likely to recover fully before the end of 2010. Bernanke's measured outlook reflected concerns among investors who wonder whether the market can continue adding to recent gains if the economy is running only at half speed, the New York Times (NYT) in a report said today
Tim Geithner, treasury secretary, and Fed Chairman Ben Barnanke both said unwinding the myriad lending and guarantee programmes too early could lead to another round of problem. Unwinding of various spending programmes and lower interest rates policy will increase the cost of borrowing for the federal government, NYT said.
Many economists believe that consumer spending will be constrained for months because limited access to credit and people's desire to reduce their debts, an analyst said. It is almost certain that Group of Twenty (G20) leaders meeting at a summit meeting in Pittsburg on Sept 24 will impose limits on banks on the total amount they pay staff in bonuses. The financial institutions will have to meet "more demanding capital requirements".
The proposal for temporary curb is important for firms to conserve profits so they can rebuild capital and support lending.
Growth has also resumed in the UK economy but any recovery was likely to slow and protracted, Governor Bank of England said. Labour Prime Minister Gordon Browne who faces an election and whose political fortunes are fluctuating told union leaders that government would have to cut costs, cut inefficiencies, cut unnecessary programmes and cut lower priority budgets, a reputed paper quoted him saying. He also indicated that there could be a pay cut as well.
On the political front, there have been interesting developments. Militants fired several rounds of mortars and rockets at the well fortified Green Zone area shortly after US Vice President Joe Biden landed in Baghdad on a surprise visit to put pressure on Iraqi government to compromise. The mortars and rockets did not hit the US embassy where Biden met with the US ambassador and top military leaders.
The US secretary of state expressed concern over Venezula's arms shopping from Russia, saying it would start an arms race in the region. Russia will lend Venezuela $2.2 billion to buy 92 tanks and advanced anti-aircraft missiles. Nato in statement called for patching up hitches with Russia to confront a common enemy. Nato did not name who the common enemy is.
Pakistan President Asif Ali Zardari is planning to set up a South African style Truth and Reconciliation Commission to "help heal wounds suffered during Pakistan political history." President Zardari has named world renowned and country's most respected human rights activist Asma Jahangir to head the commission. Asma who was subjected to humiliation during the previous regime will play a similar role to that of Archbishop Desmond Tutu.