Bernanke: Economic Growth Is A Shared Responsibility

By Andrea Salazar

Federal Reserve Chairman Ben Bernanke pointed out Tuesday that fiscal policy is not the only tool needed to fix the nation’s economic problems.

“Fostering healthy economic growth and job creation is a shared responsibility of all economic policymakers, in close cooperation with the private sector,” Bernanke said. “Fiscal policy is of critical importance…but a wide range of other policies - pertaining to labor, markets, housing, trade, taxation and regulation, for example - also have important roles to play.”

Bernanke told members of the Joint Economic Committee that “the recovery is close to faltering.”

Although the chairman would not comment on how, specifically, Congress should act, he did offer some advice.

“As you think about reducing our deficits and putting us on a sustainable path, it’s also important to think about how good is our tax system? How efficient, how effective is it? How equitable is it? How effective is our government spending? Is it producing the results we want. Is it supporting growth and recovery?”

Bernanke said that the financial crises in Europe, the housing market, the job market and consumer behavior are all factors that are hindering domestic growth.

“Consumer behavior has both reflected and contributed to the slow pace of recovery,” Bernanke said. “Households have been very cautious in their spending decisions, as declines in house prices and in the values of financial assets have reduced household wealth, and many families continue to struggle with high debt burdens or reduced access to credit.  

Bernanke’s complete testimony is available on the Federal Reserve website.

Congressmen Ask Geithner To Resign

By Julianne LaJeunesse - University of New Mexico/Talk Radio News Service

Hopefully, no one told U.S. Treasury Secretary Timothy Geithner that pitching the Obama administration’s financial reform plan to Congress was going to be painless. During a heated Joint Economic Committee hearing on Thursday, U.S. Republican Reps. Michael Burgess (Texas) and Kevin Brady (Texas) called on Geithner to step down, telling him that his work is not adequately serving Americans.

“Conservatives agree that as point person, you failed,” Brady argued. “Liberals are growing in that consensus as well. Poll after poll shows the public has lost confidence in this President’s ability to handle this economy... for the sake of our jobs, will you step down from your post?”

Geithner responded to Brady by saying he’s privileged to serve in his position, but did not give the Congressman an answer. Responding to Brady’s concerns over unemployment and the types of jobs lost, Geithner remarked, “Almost nothing in what you said represents a fair and accurate perception of where this economy is today.”

The purpose of Geithner's visit to the Hill, his second in as many days, was to encourage lawmakers to include four elements that he argued, “are critical to a strong package of [regulatory reform] legislation.”

Among them: Forcing non-banks who act as banks to be subjected to the same safeguards as recognized monetary institutions; accountability that includes a proposed council that will ensure that banks, regardless of size, work on a level playing field; a more capable financial system that will better absorb shocks and failures and adoption of a “no institution should be considered too big to fail” motto, which Geithner explained would be enforced by the government under “resolution authority.”

“This emergency authority, what we call resolution authority, has to be designed to facilitate the orderly demise of a failing firm...not ensure its survival,” he said. "Any risk of loss, must be recouped from the largest institutions, in proportion to their size. The financial industry, not the taxpayers, need to be on the hook.”

Unemployment Reaches 10.2 Percent

By Leah Valencia, University of New Mexico- Talk Radio News Service

Unemployment increased to 10.2 percent in October, the highest rate since 1983, leaving Americans with 190,000 less jobs, Bureau of Labor and Statistics Commission Keith Hall told Congress in a Joint Economic Committee hearing Friday.

“The declines are much smaller and less widespread than they were last Fall and Winter,” Hall said. “Nevertheless, some industries are still experiencing notable employment decline.”

Hall told the committee that in October the heavy construction, manufacturing and retail industries have had a particularly significant decline in employment losing a combined total of 163,000 jobs.

However, he added that some industries have seen an increase in employment. Health care and help services are among the few that have added jobs, with a much smaller figure of 63,000 combined jobs.

Hall said since the recession began the number of unemployed has more than doubled to 15.7 million.

“The number of long-term unemployed remained high in October,” Hall said. “5.6 million workers have been jobless for 27 weeks or more.”

He said the increasing number of people who have become discouraged in looking for work and therefore remained unemployed have added to the problem. In October there was a reported 808,000 discouraged workers, a figure up from 484,000 last year.

“These are individuals are not currently looking for work because they believe no jobs are available for them,” Hall said.

Committee members on both side of the aisle agreed that in terms of job creation, the economy is not where it needs to be. Chairwoman Carolyn Maloney (D-N.Y.) said she believes the nation is on track to recovery, while Republicans argued that the Obama administration has not done enough to facilitate employment growth.

Commercial Real Estate Market In Serious Trouble, Say Experts

By Mariko Lamb, Talk Radio News Service

In a Joint Economic Committee hearing Thursday, Congress sounded the alarm on the ongoing financial problems in the commercial real estate market--problems that may lead to consequences similar to the housing market failure at the start of the economic recession.

Expert panelists Richard Parkus, head of Commercial Mortgage Backed Security, and Jeffrey DeBoer, president and CEO of The Real Estate Roundtable, told the committee that palpable improvements in the commercial real estate market will not likely be seen until the beginning of 2012.

“Typically, commercial real estate fundamentals begin to pick up 12-18 months after unemployment begins to pick up,” said Parkus, projecting that unemployment will pick up by mid-2010 at the earliest.

“The bottom line is this,” said DeBoer, “the current financial system in America simply can not meet the financing demands of the commercial real estate marketplace.”

Parkus noted, “In order to work through this extremely stressful process, it will be critically important that commercial real estate financing markets begin to function again with some degree of normalcy.”

One of the panel's suggested fixes to this looming crisis included an extension of Term Asset-Backed Securities Loan Facility (TALF), a Federal Reserve credit facility that will support the issuance asset-backed securities (ABS) to assist in accommodating consumer and small business’ credit needs. Additional suggestions included not increasing taxes on real estate ownership and support of the Public-Private Investment Program (PPIP).

The Future Of Energy and Oil Dependency Is Decided Today

By Michael Combier - Talk Radio News Service

New alternatives of energy needs to be found by the United States to be less dependent on oil and the dictate of political regimes in Venezuela, Russia or in the Middle East. Additionally, US economy will be hit less severely by rising oil prices if other energy options are provided to the population.

The Joint Economic Committee chaired by Rep. Carolyn B. Maloney (D-NY) held a hearing this morning entitled “Oil and the Economy: The Impact of Rising Global Demand on the U.S. Recovery”. The hearing dealt with the impact of last year’s impact of oil prices on U.S. economy.

“Last year’s oil shock showed us that right now it takes a very large increase in gasoline prices to reduce our consumption of oil. Part of the reason is because many consumers have no alternatives to their gasoline powered cars”, Maloney said,adding that “in the long run, energy policies that increase alternatives to using a gas-fueled car - whether they are different modes of transportation or alternative fuels for cars - will help minimize the impact to the economy of a rise in the price of oil.”

To explore policy options and alternative energies, Dr. Daniel Yergin and Dr. James D. Hamilton were invited to testify. Yergin pointed out that “oil prices are among others a barometer of the world economy” while also adding that because the U.S. uses 46 million barrels of oil a day, the country can still face difficulties in four or five years when the economy will be totally recover and oil prices will rise to a level experienced in 2008.

The diversification of the country’s energy with wind mills, solar energy, nuclear and new efficient automobiles will protect the country in the future on high oil prices. By changing the country’s habit on oil and by focusing on domestic productions, “it will create jobs in the U.S. and activity here rather than revenues going to the treasury of other countries,” said Dr. Yergin.