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Monday, October 20, 2008

Bernanke: "Risk of a protracted slowdown", Supports Fiscal Stimulus

by Calculated Risk on 10/20/2008 10:14:00 AM

From the WSJ: Bernanke Signals Support For Second Stimulus

U.S. Federal Reserve Chairman Ben Bernanke on Monday threw his support behind a second round of fiscal stimulus by the government to limit the risk of a "protracted" slowdown in the economy.

"With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate," Mr. Bernanke said in prepared remarks to the House Budget Committee.

Mr. Bernanke offered many caveats, however. Any stimulus should be "well-targeted," he said, and focused on ways to "help improve access to credit by consumers, homebuyers, businesses, and other borrowers."

Meanwhile, "any program should be designed, to the extent possible, to limit longer-term effects on the federal government's structural budget deficit," Mr. Bernanke said.
Although there are some signs of a thaw in the credit markets, most indicators suggest the economy is already in free fall.