A subprime submarine?

Kai Ryssdal Mar 28, 2007
HTML EMBED:
COPY

A subprime submarine?

Kai Ryssdal Mar 28, 2007
HTML EMBED:
COPY

KAI RYSSDAL: Have you ever noticed nothing economic seems real until the chairman of the Federal Reserve’s had a chance to weigh in on it?

Ben Bernanke was on Capitol Hill today. He talked about this and that. But what everybody wanted to know was what he thinks of real estate. And whether the subprime market will torpedo the rest of the economy.

In a nutshell, maybe, maybe not.

BEN BERNANKE: We continue to expect the economy to grow at a moderate pace…so we expect continued growth…There are risks to the outlook in both directions as I indicated so we’ll have to watch to see, you know, how big, if those risks materialize and if so how serious they are.

But Hugh Johnson of Johnson Illington Advisors pointed something out to us. He said Fed Chairmen really don’t use words like “uncertainty” and “risk” willy-nilly.

HUGH JOHNSON: In other words, he’s saying, we’re still inflation fighters, but in response to some of the weakness in the economy, maybe at some point we’ll reduce short-term interest rates.

The words were barely out of Mr. Bernanke’s mouth this morning when the markets started dropping. Suffice it to say, it’ll be the sad music when we get there. And hey, only 30 trading days left till the next Fed meeting.

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.