News / Economy

US Stocks Recover After Plunging on Bernanke Speech

Federal Reserve chairman Ben Bernanke walks past reporters without speaking as he arrives at a morning session of the Economic Policy Symposium at Jackson Hole in Moran, Wyoming, August 26, 2011
Federal Reserve chairman Ben Bernanke walks past reporters without speaking as he arrives at a morning session of the Economic Policy Symposium at Jackson Hole in Moran, Wyoming, August 26, 2011

Multimedia

Despite very high expectations, the head of the U.S. central bank on Friday did not announce any major steps to bolster the U.S. economy.  Speculation had been running high that Federal Reserve Chairman Ben Bernanke would use his scheduled speech at a gathering of top economist in the western state of Wyoming to announce a third round of quantitative easing. Instead, Bernanke leaned on Congress to do more to restore the nation's economic health.

Former central bank official Vincent Reinhart, now an analyst at the American Enterprise Institute was not surprised by the reaction on Wall Street.

"Wall Street almost always gets ahead of itself," said Reinhart. "If you want to know the most selfish person on earth, it's an investor - because every conversation has to end with 'What does it mean for me?' And what the speech today meant for them is - not a lot."

Expectations were high because it was at the same gathering last year that Bernanke announced a second round of quantitative easing - essentially the purchase of $600 billion worth of U.S. debt to lower interest rates and boost business and consumer spending.

European markets had equally high expectations, especially with new figures showing the U.S. economy grew at a slower pace than initial estimates in the first half of this year.

German market analyst Robert Halver said the U.S. needs a large-scale program similar to one initiated in 1948 that helped to rebuild Europe's war-ravaged economies.

"America needs a demand solution for its problems, not even more liquidity. We have a big chance of risk of recession in America and that's why America needs a new Marshall Plan, a new deal," said Halver.

Vincent Reinhart at AEI said it may not happen immediately, but he believes significant Fed action is just around the corner.

"I think ultimately the Federal Reserve will go to QE3 [Quantitative Easing 3]. They'll go to QE3 because there is a persistent drag on the economy and the unemployment rate will stay high," said Reinhart.

Of course, much will depend on the Fed's assessment of the U.S. economy at its next meeting in September. But Bernanke insists he still has a range of tools at his disposal. He also urged Congress and the White House to do more to jump start the economy.

Given the political climate in Washington, New York financial expert Jon Henes is not holding his breath.

"I'm not optimistic that will happen, not going into an election year," said Henes.

Despite increased pessimism and growing fears of a double-dip recession, key indexes on Wall Street closed higher Friday - on Fed sentiments that the long-term prospects for the U.S. economy remain strong.


You May Like

Video Obama to Send 3,000 Troops to Liberia in Ebola Fight

At Centers for Disease Control and Prevention, President says US will take leadership role for a global response to deadly Ebola virus that is ravaging West Africa More

Video China Muslims Work to Change Perceptions After Knife Attacks

Muslims in Kunming say that they condemn the violence, it is not a reflection of the true beliefs of their faith More

Humanitarian Aid, Equipment Blocked in Cameroon

Move is seen as a developing supply crisis in West Africa More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Enviropreneur Seeks to Save the Environment, Empower the Communityi
X
September 16, 2014 2:06 PM
Lorna Rutto, a former banker, is now an ‘enviropreneur’ - turning plastic waste into furniture and fences discusses the challenges she faces in Africa with raw materials and the environment.
Video

Video Enviropreneur Seeks to Save the Environment, Empower the Community

Lorna Rutto, a former banker, is now an ‘enviropreneur’ - turning plastic waste into furniture and fences discusses the challenges she faces in Africa with raw materials and the environment.
Video

Video West Trades Accusations Over Ransoms

As world leaders try to forge a common response to the threat posed by Islamic State militants in Iraq and Syria, there is simmering tension over differing policies on paying ransoms. In the past month, the jihadist group has beheaded two Americans and one Briton. Both countries refuse to pay ransom money. As Henry Ridgwell reports for VOA from London, there is uncertainty in the approach of some other European nations.
Video

Video Scotland Independence Bid Stokes Global Interest

The people of Scotland are preparing to vote on whether to become independent and break away from the rest of Britain, in a referendum being watched carefully in many other countries. Some see it as a risky experiment; while others hope a successful vote for independence might energize their own separatist demands. Foreign immigrants to Scotland have a front row seat for the vote. VOA’s Henry Ridgwell spoke to some of them in Edinburgh.
Video

Video Washington DC Mural Artists Help Beautify City

Like many cities, Washington has a graffiti problem. Buildings and homes, especially in low-income neighborhoods, are often targets of illegal artwork. But as we hear from VOA’s Julie Taboh, officials in the nation's capital have come up with an innovative program that uses the talents of local artists to beautify the city.
Video

Video US Muslim Leaders Condemn Islamic State

Leaders of America's Muslim community are condemning the violent extremism of the Islamic State group in Iraq and Syria. The U.S. Muslim leaders say militants are exploiting their faith in a failed effort to justify violent extremism. VOA correspondent Meredith Buel reports.
Video

Video Americans' Reaction Mixed on Obama Strategy for Islamic State Militants

President Barack Obama’s televised speech on how the United States plans to “degrade and destroy” the group known as the Islamic State reached a prime-time audience of millions. And it came as Americans appear more willing to embrace a bolder, tougher approach to foreign policy. VOA producer Katherine Gypson and reporter Jeff Seldin have this report from Washington.
Video

Video Authorities Allege LA Fashion Industry-Cartel Ties

U.S. officials say they have broken up crime rings that funneled tens of millions of dollars from Mexican drug cartels through fashion businesses in Los Angeles. Mike O'Sullivan reports that authorities announced nine arrests, as 1,000 law enforcement agents fanned out through the city on Wednesday.
Video

Video Bedouin Woman Runs Successful Business in Palestinian City

A Bedouin woman is breaking social taboos by running a successful vacation resort in the Palestinian town of Jericho. Bedouins are a sub-group of Arabs known for their semi-nomadic lifestyle. Zlatica Hoke says the resort in the West Bank's Jordan Valley is a model of success for women in the region.


Carnage and mayhem are part of daily life in northern Nigeria, the result of a terror campaign by the Islamist group Boko Haram. Fears are growing that Nigeria’s government may not know how to counter it, and may be making things worse. More

AppleAndroid

World Currencies

EUR
USD
0.7722
JPY
USD
107.08
GBP
USD
0.6171
CAD
USD
1.1041
INR
USD
61.075

Rates may not be current.