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 Afghan Refugees Complain of Harassment in Pakistan

Afghan officials and human rights organizations assert that Pakistani authorities are using deadly attack at school in Peshawar as pretext to push out Afghan refugees More

At Boston Bombing Hearing, Sides Spar Over Boat

At final pre-trial hearing, lawyers for suspect Dzhokhar Tsarnaev, prosecutors disagree on whether vessel where he hid from police can be shown to jurors More

Iran Judiciary 'Picks' Lawyer for Detained WP Reporter

Masoud Shafii has been attempting to secure official recognition as Rezaian’s attorney, but is not allowed to see his client in prison 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.
US Supreme Court Hears Hijab Discrimination Casei
X
Katherine Gypson
February 25, 2015 11:30 PM
The U.S. Supreme Court has heard opening arguments in a workplace religious discrimination case that examines whether a clothing store can refuse to hire a young woman for wearing the headscarf she says is a symbol of her Muslim faith. Katherine Gypson reports from the Supreme Court.
Video

Video US Supreme Court Hears Hijab Discrimination Case

The U.S. Supreme Court has heard opening arguments in a workplace religious discrimination case that examines whether a clothing store can refuse to hire a young woman for wearing the headscarf she says is a symbol of her Muslim faith. Katherine Gypson reports from the Supreme Court.
Video

Video Falling Gas Prices Hurt Nascent Illinois Hydraulic Fracturing Industry

Falling oil prices are helping consumers purchase cheaper petroleum at the pump. But that’s made hydraulic fracturing or “fracking” less economically viable for the companies in the United States invested in the process. VOA’s Kane Farabaugh reports on one Midwestern town that was hoping to change its fortunes by cashing in on the next big U.S. oil boom.
Video

Video Fighting in Sudan's South Kordofan Fuels Mass Displacement

Heavy fighting in Sudan's South Kordofan state is causing hundreds of thousands to flee into uncertain conditions. Local aid organizations estimate as many as 400,000 civilians have been internally displaced since the conflict began more than three years ago, while another 250,000 have fled across the border to refugee camps in South Sudan. VOA's Adam Bailes reports.
Video

Video Lao Dam Project Runs Into Opposition

A Lao dam project on a section of the Mekong River is drawing opposition from local fishermen, international environmental groups and neighboring countries. VOA's Say Mony visited the region to investigate the concerns. Colin Lovett narrates.
Video

Video A Filmmaker Discovers Her Biracial Identity in "Little White Lie

Lacey Schwartz grew up in an upper middle-class Jewish family, in a town in upstate New York where almost everyone she knew was white. She assumed that she was, as well. Her recent documentary, Little White Lie, tells the story of how she uncovered the secret of her true racial background. VOA’s Carolyn Weaver has more on the film.
Video

Video Deep Under Antarctic Ice Sheet, Life!

With the end of summer in the Southern hemisphere, the Antarctic research season is over. Scientists from Northern Illinois University are back in their laboratory after a 3-month expedition on the Ross Ice Shelf, the world’s largest floating ice sheet. As VOA’s Rosanne Skirble reports, they hope to find clues to explain the dynamics of the rapidly melting ice and its impact on sea level rise.
Video

Video US-Cuba Normalization Talks Resume Friday

Negotiations aimed at normalizing diplomatic relations between the U.S. and Cuba resume Friday. On the table: lifting a half-century trade embargo and easing banking and travel restrictions. There's opposition in Congress, but some analysts say there may be sufficient political and economic incentives in both nations for a potential breakthrough this year. VOA's Mil Arcega reports.
Video

Video Pakistan's Deadline For SIM Registration Has Cellphone Users Scrambling

Pakistani cell phone users have until midnight Thursday to register their SIM cards, or their service will be cut off. While some privacy experts worry about government intrusion, many Pakistanis are just worried about keeping their phone lines open. VOA Deewa reporter Arshad Muhmand has more from Peshawar.
Video

Video Myanmar Warns Factory Workers to End Strikes

Outside Myanmar's main city Yangon, thousands of workers walked off their jobs earlier this month demanding a doubling of their wages, pay raises after a year and input from labor unions on industrial regulations. Since Friday, the standoff has grown more tense as police moved in to disrupt the sit-ins, resulting in clashes that injured people from both sides. VOA correspondent Steve Herman visited industrial zones which have become a focus of Myanmar's fledgling workers rights movement.
Video

Video Oscar Winners Do More Than Thank the Academy

The Academy Awards presentation is Hollywood’s night to reward the best movies from the previous year. It’s typically a lot of glitter, a lot of thank you’s, a lot of speeches. But many of this year’s speeches carried messages beyond the thank you's. VOA’s Carolyn Presutti takes a look.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

World Currencies

EUR
USD
0.8896
JPY
USD
119.26
GBP
USD
0.6475
CAD
USD
1.2451
INR
USD
61.816

Rates may not be current.