Federal Reserve Chairman Ben Bernanke has told Congress that this recession will end by the time the year 2009 ends, soothing Wall Street and exchange traded funds (ETFs) for the moment.
Bernanke Speaks. Although the economy will no doubt contract for the next six months, Ben Bernanke claims he will use every tool available to him to fix this recession and turn it around for the second half of 2009. Tim Paradis for Associated Press reports that the market was up a day after another sharp drop in stocks that left the major indexes near 12-year lows.
Low Confidence. The good news came after a wrenching consumer confidence report for February because of job losses and lost retirement assets. The New York-based Conference Board said its Consumer Confidence Index, which was down slightly in January, plummeted more than 12 points in February to 25, from the revised 37.4 last month. Anne D’Innocenzio for Associated Press reports that this was off the 35.5 expected by analysts.
Major contraction within the price of homes as well as weak fourth quarter results from retailers such as Target Corp. (TGT) and Macy’s Inc. (M) reflected Americans’ lack of confidence so far.
Housing. The housing market has shown no signs of life as of yet, after a widely watched index showed Tuesday that home prices tumbled by the sharpest annual rate on record in the fourth quarter. Ashley M. Heher for Associated Press reports that The Standard & Poor’s/Case-Shiller U.S. National Home Price Index plunged 18.2% from the same period a year ago. It was the largest drop in its 21-year history.
The nationalization fears many are facing with U.S. banks are of major concern, but the government is taking lengths to stem the fears and realities of this happening, reports Jeannine Aversa for Associated Press.
- Stress Test: More dire economic conditions are going to be tried until any more government aid will be given for a buffer to major banks. If more capital than the government can give is deemed necessary to keep the banks afloat, then the nationalization factor will be drawn upon.
- Ambiguity: Washington is not going to simply take over the banks; there are many gray areas where the word “nationalization” comes in and it is too soon to be using the word.
- Bank of America (BAC) is reassuring their employees there are no plans or needs to go with a stake in the U.S. government right now.
- Associated Press reports that American International Group Inc. (AIG) who was rescued twice last year is asking is asking for more aid and bracing for a fourth-quarter loss of roughly $60 billion. This is the largest quarterly loss ever in corporate history.
Tonight, Obama is addressing Congress and in his speech he will lay out what he is doing and what he plans to do to halt the economic and financial crises. He will meet with Japan to discuss The Lost Decade to try and help pull the United States out of what could be something parallel.
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