Tags : economic crisis
Bernanke: World Beginning To Emerge From Financial Crisis
Washington, D.C. (AHN) – Federal Reserve Chairman Ben Bernanke was in Wyoming on Friday to address an annual economic symposium. Acknowledging that there are still more problems to face, Bernanke nonetheless asserted that the global economy has begun to turn around.
“The world has been through the most severe financial crisis since the Great Depression,” Bernanke told the summit. “The crisis in turn sparked a deep global recession, from which we are only now beginning to emerge.”
“When we met last year, financial markets and the economy were continuing to suffer the effects of the ongoing crisis,” Bernanke explained. “We know now that the National Bureau of Economic Research has determined December 2007 as the beginning of the recession. The U.S. unemployment rate had risen to 5-3/4 percent by July, about 1 percentage point above its level at the beginning of the crisis, and household spending was weakening.”
In the past year, the American economy saw several major setbacks. Americans watched first hand as Lehman Brothers failed and AIG was bailed out with an $85 billion loan from Washington. Commercial bank Wachovia was sold and the two largest free-standing investment banks, Morgan Stanley and Goldman Sachs, were stabilized with help from the Federal Reserve. In October, Congress approved a $700 billion TARP plan to remove “toxic assets” from the U.S. housing market.
Nonetheless, with help from the Obama administration and foreign assistance to stabilize banks based overseas, Bernanke believes the world economy has begun to climb out of its hole.
“Unlike in the 1930s, when policy was largely passive and political divisions made international economic and financial cooperation difficult, during the past year monetary, fiscal, and financial policies around the world have been aggressive and complementary. Without these speedy and forceful actions, last October’s panic would likely have continued to intensify, more major financial firms would have failed, and the entire global financial system would have been at serious risk,” Bernanke said.
“We must work together to build on the gains already made to secure a sustained economic recovery, as well as to build a new financial regulatory framework that will reflect the lessons of this crisis and prevent a recurrence of the events of the past two years,” Bernanke added.
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