08:54 AM Mar 23, 2012
WASHINGTON – There is still not enough spending and investment to sustain the economic recovery, United States Federal Reserve chairman Ben Bernanke yesterday.
Mr Bernanke said consumer demand remains weak relative to its level before the Great Recession. He noted that other contributors to economic growth – including borrowing and trade – have declined.
“Consumer spending has not recovered. It’s still quite weak relative to where it was before the crisis,” Mr Bernanke said. “We lack a source of demand to keep the economy growing.”
His comments provided further insight into the reasoning behind the Fed’s plan to hold short-term interest rates near zero through 2014. The central bank has stuck with that timetable despite three months of strong job growth and other signs of economic improvement.
While applications for unemployment benefits fell last week to a four-year low, and employers have added an average of 245,000 jobs per month between December and February, incomes are still barely keeping up with inflation and people are having to cope with a big jump in gas prices.
Many economists believe that Fed officials will not make any changes in policy at their next meeting late in April and will only ease credit conditions if the economy slows further.
Mr Bernanke said he did not think the Fed’s low interest rates in the past decade contributed to the housing bubble, but admitted the central bank made mistakes in supervision and regulation that played a role in banks making unsound mortgage loans.
“A lot of banks simply didn’t have the capacity to thoroughly understand the risks that they were taking,” he said. “I think the Fed and other bank supervisors didn’t press hard enough on this and that turned out to be a serious problem.” AP
Spending on property will increase as the conditions of low interests will not last forever
To aid the global economic recovery, investments in property will greatly increase globally as the conditions of low interests will not last forever, where property is seen as a good hedge against inflation, keeping your money in the bank just does not justify the returns, with many countries has it’s own property curbs, where most only allow you to buy a single property without paying additional taxes, now is the best time ever as traditionally, most property buyers will not sell at a loss after factoring in their costs, and most buyers have holding power, so there will be an increase in property purchases, to fuel the global recovery, where people will buy the greatest hedge against inflation, and cut down on other area of purchases on spending, will it spur a bubble? I do not think so at the present moment, as this window of opportunity will not last forever, as investments will certainly find it’s equilibrium, this will indirectly help fund the governments, this global recovery is certain and on the right path, as there are no conditions at present that will fuel a recession, even if oil prices will to increase substantially, most economies will find ways to shift from the dependence of oil, where it will find it’s own equilibrium. I can put money in your pockets if you believe, but I cannot give you money.
God’s Logic – God owns everything in this world except money, and He is capable of taking care of all your needs, but He will not glorify money, He knows you need money in this world, and He can easily influence the indirect things in this world to get money, to support His ministry, so that even non-believers will also believe.
– Contributed by Oogle.