Tuesday, January 22, 2008


Bernanke the pessimist.

People wondering why Federal Reserve Chairman Ben Bernanke suddenly moved to reduce the bank borrowing rate by three quarters of a point should know that in private he has expressed growing pessimism about the economy. Whispers has learned that has told people in recent weeks that the economic situation some see falling into recession will be much worse than he has admitted to publicly.

We're told by those who've heard him that he says the first six months of this year will be "bad," an adjective that some interpret this as signaling there is better than a 50-50 chance for a recession. Even worse, the former Princeton prof believes the ensuing recovery will be "weak" because of persistent problems in the housing market that will result in subdued consumer spending.

Housing market problems will persist for the next two years minimum, at least in many areas. Just how much that spills over into the rest of the economy is somewhat of an open question.

Met a guy tonight whose job it was/is to bundle up pieces of big shitpile and sell them off to suckers financial wizards. He certainly couldn't say anything to make me feel any better about all of this.