Is Ben Bernanke the new Mary Poppins?

His “spoon full of sugar” of choice is slashing 225 basis points from the federal funds rate since September. nowadays, he told the U.S. Congress that more rate cuts will probably fitting.

“In part as the aftermath of the developments in financial markets, the outlook for the economy has worsened in recent months, and the downside risks to growth have increased,” he said in his prepared testimony. “To period, the largest profitable effects of the financial turmoil seem to have been on the housing market, which, as you know,

has deteriorated significantly by the past two years or so.”

He goes on to mention that demand for housing is weak considering of the “the virtual shutdown of the subprime mortgage market and a widening of spreads on jumbo mortgages” while the labor market has suffered as the gains in service sector employment slowed and interpretation and manufacturing jobs fell.

Continue reading Is Ben Bernanke’s ’spoonful of sugar’ working?

Original post by Jonathan Berr

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