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Bernanke: Recession could end in ‘09
Question of the Day
WASHINGTON (AP) — America’s recession “probably” will end this year if the government succeeds in bolstering the banking system, Federal Reserve Chairman Ben Bernanke said.
In carefully hedged remarks in an interview with CBS’ “60 Minutes,” Bernanke seemed Sunday to express a bit more optimism that this could be done.
Still, Bernanke stressed — as he did to Congress last month — that the prospects for the recession ending this year and a recovery taking root next year hinge on a difficult task: getting banks to lend more freely again and getting the financial markets to work more normally.
“We’ve seen some progress in the financial markets, absolutely,” Bernanke said. “But until we get that stabilized and working normally, we’re not going to see recovery.
“But we do have a plan. We’re working on it. And, I do think that we will get it stabilized, and we’ll see the recession coming to an end probably this year.”
Even if the recession, which began in December 2007, ends this year, the unemployment rate will keep climbing past the current quarter-century high of 8.1 percent, Bernanke said.
A growing number of economists think the jobless rate will hit 10 percent by the end of this year.
Asked about the biggest potential dangers now, Bernanke suggested a lack of “political will” to solve the financial crisis.
He said, though, that the United States has averted the risk of plunging into a depression.
“I think we’ve gotten past that,” he said.
It’s rare for a sitting Fed chief to grant an interview, whether for broadcast or print. Bernanke said he chose to do so because it’s an “extraordinary time” for the country, and it gave him a chance to speak directly to the American public.
Bernanke spoke at a time of rising public anger over financial bailouts using taxpayer money. Battling the worst financial crisis since the 1930s, the government has put hundreds of billions of those dollars at risk to prop up troubled institutions and stabilize the banking system.
Institutions that have been thrown lifelines include American International Group Inc., Citigroup Inc., Bank of America Corp., mortgage giants Fannie Mae and Freddie Mac and others.
Democrats and Republicans on Capitol Hill have questioned the effectiveness of the rescue efforts and have demanded more information about how taxpayers’ money is being used.
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