Ben Bernanke had the country’s ear today, but in November we will. Today everyone wanted to hear what Ben had to say about potential actions from the fed if the economic slide continues. Home sales have now sunk to record lows--they are down 27% from June. New jobless claims increased this past week to 484,000, the highest level in six months and 10.1 million Americans are now receiving unemployment benefits. The second quarter growth is down from an estimated 2.4% to a 1.6% and the Dow Jones dropped below 10,000 on Thursday, August 26th for the first time since July 6th to close at 9985.
The Federal Funds Rate is one of the main tools for effecting change in the economy and it is down to near zero. The Fed has also agreed to reinvest in new Treasury Securities using the proceeds from the Mortgage Backed Securities that it currently owns. However, is this enough? Bernanke has said we are on a long road back to good economic health even though some progress has been made and the worst of the financial crisis is behind us.
With the crisis continuing, Washington should be careful regarding talk about new taxes or increasing taxes. Getting American’s back to work should be the number one priority. That will entail keeping interest rates low for an extended period, working with bank regulators to loosen up on small business lending, encouraging the banks that have built up cash reserves to lend again. I fully understand that border security and what gets built at the site of 911 are important issues, but so is the creation of jobs, jobs and jobs. This is an election year, let them hear you.
