Die Worte von Ben B zum Bailout von Bear Stearns und wie nahe wir der Kernschmelze gekommen sind muß man (mT)

Text of Bernanke's Remarks on Hill

By The Associated Press – 6 hours ago

Federal Reserve Chairman Ben Bernanke's prepared remarks Wednesday to the Joint Economic Committee:

Chairman Schumer, Vice Chairman Maloney, Representative Saxton, and other members of the committee, I am pleased to appear before the Joint Economic Committee. In response to deterioration in the near-term outlook for the economy and intensified strains in financial markets, in recent months the Federal Reserve has eased monetary policy substantially further and taken strong actions to increase market liquidity. In my remarks today, I will first offer my views on conditions in financial markets and the outlook for the U.S. economy, then discuss recent actions taken by the Federal Reserve.

Although our recent actions appear to have helped stabilize the situation somewhat, financial markets remain under considerable stress. Pressures in short-term bank funding markets, which had abated somewhat beginning late last year, have increased once again. Many lenders have been reluctant to provide credit to counterparties, especially leveraged investors, and have increased the amount of collateral they require to back short-term security financing agreements. To meet those demands, investors have reduced their leverage and liquidated holdings of securities, putting further downward pressure on security prices.

Credit availability has also been restricted because some large financial institutions, including some commercial and investment banks and the government-sponsored enterprises (GSEs), have reported substantial losses and writedowns, reducing their available capital. Several of these firms have been able to raise fresh capital to offset at least some of those losses, and others are in the process of doing so. However, financial institutions balance sheets have also expanded, as banks and other institutions have taken on their balance sheets various assets that can no longer be financed on a standalone basis. Thus, the capacity and willingness of some large institutions to extend new credit remains limited.

The effects of the financial strains on credit cost and availability have become increasingly evident, with some portions of the system that had previously escaped the worst of the turmoil — such as the markets for municipal bonds and student loans — having been affected. Another market that had previously been largely exempt from disruptions was that for mortgage-backed securities (MBS) issued by government agencies. However, beginning in mid-February, worsening liquidity conditions and reports of losses at the GSEs, Fannie Mae and Freddie Mac, caused the spread of agency MBS yields over the yields on comparable Treasury securities to rise sharply. Together with the increased fees imposed by the GSEs, the rise in this spread resulted in higher interest rates on conforming mortgages. More recently, agency MBS spreads and conforming mortgage rates have retraced part of this increase, and conforming mortgages continue to be readily available to households. However, for the most part, the nonconforming segment of the mortgage market continues to function poorly.

In corporate debt markets, yields and spreads on both investment-grade and speculative-grade corporate bonds rose through mid-March before falling more recently. Issuance of investment-grade bonds by both financial and nonfinancial corporations has been quite robust so far this year, but issuance of new high-yield debt has stalled. Strains continue to be evident in the commercial paper market as well, where risk spreads remain elevated and the quantity of commercial paper outstanding, particularly asset-backed paper, has decreased. Commercial and industrial loans at banks grew in January and February, but at a considerably slower pace than in previous months.

These developments in financial markets — which themselves reflect, in part, greater concerns about housing and the economic outlook more generally — have weighed on real economic activity. Notably, in the housing market, sales of both new and existing homes have generally continued weak, partly as a result of the reduced availability of mortgage credit, and home prices have continued to fall. Starts of new single-family homes declined an additional 7 percent in February, bringing the cumulative decline since the early 2006 peak in single-family starts to more than 60 percent. Residential construction is likely to contract somewhat further in coming quarters as builders try to reduce their high inventories of unsold new homes.

Private payroll employment fell 101,000 in February, after two months of smaller job losses, with job cuts in construction and closely related industries accounting for a significant share of the decline. But the demand for labor has also moderated recently in other industries, such as business services and retail trade, and manufacturing employment has continued on its downward trend. Meanwhile, claims for unemployment insurance have risen somewhat on balance, and surveys indicate that employers have scaled back hiring plans and that jobseekers are experiencing greater difficulties finding work. The unemployment rate edged down in February and remains at a relatively low level; however, in light of the sluggishness of economic activity and other indicators of a softer labor market, I expect it to move somewhat higher in coming months.

After rising at an annual rate of about 3 percent over the first three quarters of last year, real disposable income has since increased at only about a 1 percent annual rate, reflecting weaker employment conditions and higher prices for energy and food. Concerns about employment and income prospects, together with declining home values and tighter credit conditions, have caused consumer spending to decelerate considerably from the solid pace seen during the first three quarters of last year. I expect the tax rebates associated with the fiscal stimulus package recently passed by the Congress to provide some support to consumer spending in coming quarters.

In the business sector, the pullback in hiring that I noted earlier has been accompanied by some reduction in capital spending plans, as weaker sales prospects, tighter credit, and heightened uncertainty have made business leaders more cautious. On a more positive note, the nonfinancial business sector remains financially sound, with liquid balance sheets and low leverage ratios, and most firms have been able to avoid unwanted buildups in inventories. In addition, many businesses are enjoying strong demand from abroad. Although the prospects for foreign economic growth have diminished somewhat in recent months, net exports should continue to provide considerable support to U.S. economic activity in coming quarters.

Overall, the near-term economic outlook has weakened relative to the projections released by the Federal Open Market Committee (FOMC) at the end of January. It now appears likely that real gross domestic product (GDP) will not grow much, if at all, over the first half of 2008 and could even contract slightly. We expect economic activity to strengthen in the second half of the year, in part as the result of stimulative monetary and fiscal policies; and growth is expected to proceed at or a little above its sustainable pace in 2009, bolstered by a stabilization of housing activity, albeit at low levels, and gradually improving financial conditions. However, in light of the recent turbulence in financial markets, the uncertainty attending this forecast is quite high and the risks remain to the downside.

Inflation has also been a source of concern. The price index for personal consumption expenditures rose 3.4 percent over the twelve months ending in February, up from 2.3 percent over the preceding twelve-month period. To a large extent, this pickup in inflation has been the result of sharp increases in the prices of crude oil, agricultural products, and other globally traded commodities. Additionally, the decline in the foreign exchange value of the dollar has boosted some non-commodity import prices and thus contributed to inflation. However, the so-called core rate of inflation — that is, inflation excluding food and energy prices — has edged down recently after firming somewhat late last year.

We expect inflation to moderate in coming quarters. That expectation is based, in part, on futures markets' indications of a leveling out of prices for oil and other commodities, and it is consistent with our projection that global growth — and thus the demand for commodities — will slow somewhat during this period. And, as I noted, we project an easing of pressures on resource utilization. However, some indicators of inflation expectations have risen, and, overall, uncertainty about the inflation outlook has increased. It will be necessary to continue to monitor inflation developments carefully in the months ahead.

I turn now to the Federal Reserve's policy responses to these financial and economic developments.

Well-functioning financial markets are essential for the efficacy of monetary policy and, indeed, for economic growth and stability. To improve market liquidity and market functioning, and consistent with its role as the nation's central bank, the Federal Reserve has supplemented its longstanding discount window by establishing three new facilities for lending to depository institutions and primary dealers.

The lending facilities now in place offer depository institutions and primary dealers two complementary alternatives for meeting funding needs. One pair of facilities _the discount window for depository institutions and the Primary Dealer Credit Facility for primary dealers — offers daily access to variable amounts of funding at the initiative of the borrowing institution. A second pair of facilities — the Term Auction Facility for depository institutions and the Term Securities Lending Facility for primary dealers — makes available predetermined aggregate amounts of longer-term funding on pre-announced dates, with the interest rate and the distribution of the awards across institutions being determined by competitive auction. Although these facilities operate through depository institutions and primary dealers, they are designed to support the broad financial markets and the economy by facilitating the provision of liquidity by those institutions to their customers and counterparties.

The Primary Dealer Credit Facility was put in place in the wake of the near-failure of Bear Stearns, a large investment bank. On March 13, Bear Stearns advised the Federal Reserve and other government agencies that its liquidity position had significantly deteriorated and that it would have to file for Chapter 11 bankruptcy the next day unless alternative sources of funds became available. This news raised difficult questions of public policy. Normally, the market sorts out which companies survive and which fail, and that is as it should be. However, the issues raised here extended well beyond the fate of one company. Our financial system is extremely complex and interconnected, and Bear Stearns participated extensively in a range of critical markets. With financial conditions fragile, the sudden failure of Bear Stearns likely would have led to a chaotic unwinding of positions in those markets and could have severely shaken confidence. The companys failure could also have cast doubt on the financial positions of some of Bear Stearns thousands of counterparties and perhaps of companies with similar businesses. Given the current exceptional pressures on the global economy and financial system, the damage caused by a default by Bear Stearns could have been severe and extremely difficult to contain. Moreover, the adverse effects would not have been confined to the financial system but would have been felt broadly in the real economy through its effects on asset values and credit availability. To prevent a disorderly failure of Bear Stearns and the unpredictable but likely severe consequences of such a failure for market functioning and the broader economy, the Federal Reserve, in close consultation with the Treasury Department, agreed to provide funding to Bear Stearns through JPMorgan Chase. Over the following weekend, JPMorgan Chase agreed to purchase Bear Stearns and assumed Bears financial obligations.

The Federal Reserve has taken additional measures to improve market liquidity. We have initiated a series of twenty-eight-day single-tranche term repurchase transactions with primary dealers, expected to cumulate to $100 billion outstanding, in which dealers may offer any of the types of collateral that are eligible for conventional open market operations. We have also expanded and extended reciprocal currency arrangements ("swap lines") with the European Central Bank and the Swiss National Bank. Using these swap lines, the participating central banks are providing dollar liquidity to financial institutions in their jurisdictions, which should improve the functioning of the global market for dollar funding. These facilities and programs will be kept in place as long as conditions warrant their ongoing use. We are working closely with the Securities Exchange Commission to monitor the financial conditions and funding positions of primary dealers who might seek Federal Reserve credit.

To date, the recent liquidity measures implemented by the Federal Reserve seem to have been helpful in addressing some of the strains in financial markets. Funding pressures on primary dealers appear to have eased somewhat, and liquidity seems to have improved in several markets, including — as noted earlier — the market for agency mortgage-backed securities. To the extent that these measures improve market functioning, they will have favorable effects on the ability and willingness to make credit available to the broader economy. More-liquid markets also increase the efficacy of monetary policy, which in turn improves our ability to meet the goals set for us by the Congress — namely, to promote maximum employment and price stability.

As you know, in response to the further weakening of economic conditions, the Federal Reserve has continued to ease the stance of monetary policy. The FOMC reduced its target for the federal funds rate by a total of 125 basis points in January and by an additional 75 basis points at its March meeting, leaving the current target at 2- 1/4 percent — 3 percentage points below its level last summer. As the Committee noted in its most recent post-meeting statement, we anticipate that these actions, together with the steps we have taken to foster market liquidity, will help to promote growth over time and to mitigate the risks to economic activity.

Clearly, the U.S. economy is going through a very difficult period. But among the great strengths of our economy is its ability to adapt and to respond to diverse challenges. Much necessary economic and financial adjustment has already taken place, and monetary and fiscal policies are in train that should support a return to growth in the second half of this year and next year. I remain confident in our economy's long-term prospects.

Thank you. I would be pleased to take your questions.

http://ap.google.com/article/ALeqM5i6_PUYTtL0JkeBYqTIM8y-YpGuXAD8VPPILO1

Wenns nicht so traurig wäre, könnte man sich totlachen.

http://youtube.com/user/donharrold?ob=1

... wenn Bernanke und Co. jetzt mit der Nummer durchkommen sollten, dann hilft kein Lamentieren und kein Theoretisieren. Dann haben die recht, und wir nicht ...

Ich neige daher zunehmend dazu, statt einem abrupten "Game Over" eine Periode des langsamen Dahinsiechens zu sehen, mit einem graduell nach Süden gehenden Dollar, einer zunehmend erstarrenden Gewinndynamik und stagnierenden bis leicht negativ verlaufenden asset-Preisen.

Notabene: ich glaube nicht mehr an neue Hochs und dergleichen. In der Hinsicht haben wir definitiv fertig. Aber ich sehe einfach nicht mehr den großen Kataklismus. Auch wenn ich weiss, dass Elli die große III nach unten vor der Tür sieht. Die mag uns im DJ auf 9000 und im DAX auf 5000 drücken, aber vermutlich fällt den Bernankes und Paulsons auch dafür eine Lösung ein. Wird eben alles verstaatlicht, who cares, zumindest temporär ...

Auch eine Beinahe-Katastrophe ist eben keine solche.

Und dann sind noch welche hier, die unsere Vorbereitungen und dottore's
Game Over in Frage stellen.

Voellig egal um was es jeweils thematisch geht, Du wirst immer wieder mal auch auf solche Leute treffen, die dem Prinzip der 3 Affen huldigen, sowie auf hochgradig Blinde und Taube zuweilen geradezu elitaerer Systemkonformitaet, deren Introvertiertheit selbst im Falle einer bereits entzuendeten tickenden Bombe sie mit einem harmlosen Tropfengeplaetscher eines undichten Wasserhahns erklaeren laesst, ja, die sogar die Chuzpe haben, nach der Zuendung und Explosion einer gigantischen Bombe mit einer Zerstoerungswirkung von 99% mit ihrem stark gebuendelten und eng fokusierten Blick aus ihrem geschlossenen Dachfensterchen mit seiner stark erblindeten Glasscheibe zu blicken, um sofort lauthals nach rueckwaerts in den Raum zu verkuenden:

Wieso? Warum denn alles kaputt? Es ist doch ALLES in bester Ordnung, UNS fehlt doch nix, UNS ALLEN geht es doch gut!

DT

--
Gruss!
TD

Die StaSi tobt und Tassie kichert,
denn er ist Schaeuble abgesichert!

Hallo,

Danke an DT und natürlich auch an Ben für das Einstellen bzw. Aussprechen.
Dieser Artikel kommt gerade noch rechtzeitig, denn so langsam fragt sich mein "Umfeld" ob ich nicht doch ein wenig crasy bin. Wo denn nun der vielbeschworene Untergang bleibt? Werde den also zu meiner Ehrenrettung verteilen, dann können sich die ewig-Schönwetter-Gläubigen selbst ein Bild machen.

@ Englischprofis und Experten: gibts viell. die Möglichkeit, die wichtigsten Passagen (zu BSC) möglichst genau zu übersetzen und mit einem möglichst sachlichen/objektivem Kommentar zu versehen? (nicht jeder "meiner Informierten" kann englisch).
Für den Fall, dass die "Systemspeichellecker" das Thema aufgreifen, kann man das hier verlinken?

@ DT, wie Du weiter unten ja zum Thema "Spitzenpolitiker merkten nichts" geschrieben hast. Ich denke deine Arbeit, die Basics von Dottore und auch wgn´s Blog sind extrem wichtig. Das Gelbe hier ist der "Starter", die Signalrakete oder der Katalysator der Erkenntnisgewinnung.
Die Mainstream-Abschreiberlinge kommen am Gelben und an wgn nicht mehr vorbei! Was dort steht, stand vor Tagen schon hier.
Deshalb ist es unser Job hier zunehmend und nachdrücklich den Finger ständig auf die Wunden zu legen und eben keine Ruhe zu geben. Wegschauen und "geschehen lassen" hat ja traurige Tradition in unserer Geschichte. Keiner hat dann etwas gesehen und gewußt oder war sogar dabei. Komisch nur, dass ES dann doch immer wieder passiert. Ich bemühe hier mal einen alten Antifa-Spruch: Wehret den Anfängen!
Also: immer schön weiter aufdecken, enthüllen und anklagen!

@wgn: OK, wir alle wissen Du bist im Urlaub. Schreibst aber wie wild in deinem Blog (so lieben wir das!!!). Ähmmmm., ich hoffe es juckt Dich das Ben Statement mal richtig auseinander zu pflücken. Wir lechtzen danach....
btw., ich hoffe Du machst viele Fotos von den Licht- und Schattenseiten von gods-own-country und stellst mal ein paar ins Netz. Kommt gut heim!

Gruß
McShorty

--
Danke an Elli, Chef, HM und igelei für das wunderbare Forum hier!
Seid wachsam auf diesem Narrenschiff!

Damit hat sich B. die Rückendeckung des Kongresses geholt, das Grünpapier solange am Leben zu halten, bis der Euro an seinen vielen Achillessehnen implodiert (Greece, Italy, Spain usw.)
Er weiß, wie platt diese wirklich sind, diese Salamiescheiben bekommen wir ja erst noch im April serviert.
Dann werden drei der vier Dollarsorten überflüssig und das ist Tatsache , es sind alle Informationen veröffentlicht, das Puzzle gewinnt an Kontur.

Go Ron Paul

http://www.youtube.com/watch?v=VJP5dmIQs7c

--
“We are on strike against the dogma that the pursuit of one’s happiness is evil. We are on strike against the doctrine that life is guilt." John Galt

---------------------
DASH - Digital CASH

Auf die Frage, wann der Crash, der Grosse kommt, gibt es keine Antwort.
Es ist halt nur sicher, dass er kommt, weil - und das wird wohl niemand in Frage stellen - das System immer unstabiler wird.
Dass man keinen Zeitpunkt vorausbestimmen kann, haben 1987 die Physiker Per Bak, Chao Tang und Kurt Weisenfeld in einem Sandhaufenspiel nachweisen können.
Um den Zusammenbruch von unstabilen Systemen zu simulieren, ließen sie, in Computersimulationen, einzelne Sandkörner von oben runterfallen und zu Sandhaufen werden. Dann beobachteten sie wann, und mit welcher Stärke, es zu Sandlawinen kommen würde, die das unstabile System halt wieder stabilisieren würden. Das Ergebnis war, dass man weder die Häufigkeit, noch die Stärke, noch den genauen Zeitpunkt der Lawinen voraussagen konnte.
Allerdings fanden sie dann doch ein System hinter den Ereignissen. Sie begannen, beim Aufbau der Sandpyramide, die Sandkörner die in größeren stabilen Lagen waren, anders zu färben als die restlichen Sandkörner. Es entstanden so, innerhalb der Haufen, mehr oder weniger vertikale Linien verschiedener Größen von unstabilen Sandkörnern. Wenn jetzt, bei großer Instabilität, ein Sandkorn auf eine dieser Linien fiel, kam es meist zu Lawinen, deren Stärke abhängig war von der Importenz der Linie auf die sie gefallen war.
Für die Märkte ergibt sich daraus eine ganze Reihe von Erkenntnissen. Da es auch instabile Systeme sind, werden sie von Zeit zu Zeit von Lawinen, sprich Crashs begleitet, die eine gewisse Stabilität wieder herstellen sollen. Die Heftigkeit dieser Crashs hängen dann:
a) von dem Grade der Instabilität ab, den das System erreicht hat,
b) davon, ob das Sandkorn, sprich die zusätzliche Instabilität auf eine kurze oder lange Instabilitätskette fällt.
Es ist unmöglich beides vorauszusagen. Insbesondere eben Zeitpunkt und Intensität. Man weiß halt nur, dass innerhalb einer gegebenen Zeit das System wieder zur Stabilität findet und deshalb eine Crashperiode durchmachen muss, die proportional zu der Instabilität ist.
Und jeder soll selbst entscheiden, wie hoch er die Instabilität des Systems einschätzt.
Und da Vorsicht halt die Mutter der Porzellankiste ist, sollte man sich nicht lustig machen über diejenigen, die vor dem Crash warnen, sondern ihren Ratschlägen folgen, auch wenn das Sandkorn noch dieses Mal haarscharf an einer langen Instabilitätskette vorbei gelandet sein sollte.
Georges

(Und dann sind noch welche hier, die unsere Vorbereitungen und dottore's Game Over in Frage stellen.)
Ja hier am Board gibt's ganz schlimmen Gerüchten zufolge hartnäckige Game Over-Leugner (wird Zeit für einen eigenen Strafparapraphen), d.h. Leute, die maßen sich tatsächlich an, die Doktrin des morgen drohenden Weltuntergangs in Frage zu stellen. Und das in Zeite wie diesen, man ist fassungslos! Jeder streng gläubige Sektenanhänger soll sich gefälligst ins Eck stellen und sich schämen, wie kann man nur! Wenn auch die 538. Weltuntergangsprophezeiung in die Hose ging, die 539. wird endlich der ersehnte Volltreffer

(Das hier war die offizielle Verlautbarung!)
Umso schlimmer!

Der DAX hat jetzt seit "Game Over" +10% in 2 Wochen gemacht, das lobe ich mir. Wenn so die Weltuntergangsperformance ausschaut, dann möchte ich mal die Performance des Aufschwungs sehen.

Manfred