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Bernake Predicts the Economy Recovers in 2009

March 18th, 2009 · No Comments

Part 1

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Part 2

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People ask me all the time when this market will turn around as if I had some crystal ball. I never answer the question, because I honestly have no clue. Any real estate professional who answers otherwise is totally full of it and I’d be vewy careful.

Now chariman Bernake on the hand is probably the guy to ask. Guess what, he shared a bunch of his thoughts on 60 Minutes last week.

The section of the piece covering Bernake’s background was especially compelling to me. He’s the son of first generation immigrants who ran a small business and made sacrifices to afford to be able to provide an Ivey League education for their son. I was never accepted to an Ivey League school and closest I got was a free T shirt, but I can identify with his family background that’s quite similar to mine.

I have lots more confidence in him after seeing this interview.

One of the great ironies in this piece is that the childhood home of Bernake that was purchased from his family years ago is now in foreclosure.

Bernake assures us that the recovery in terms of things stabilizing and not getting worse will happen later this year meaning that financial markets will be stable by then.

He also points out that the government is printing tons of money at the moment and will aim to contract the money supply once they feel things are stable and will raise interest rates at the same time to control inflation which is a tough beast to tame.

That means the market will recover later this year, but expect higher interest rates at the same time.

I think I have a lot more confidence in Bernake as well as the economy from watching this interview and glad he provided such a candid account which is pretty rare for a Fed chairman.

Tags: Market Forecast