• Bernanke started with how we got here
• Financial institutions created the balance sheet issues led by subprime loans.
• Bernanke used the phrase:
  • 'Virtual shutdown of the subprime market'
• Home prices still falling as is new construction.  High energy prices contine.
  • Will be a drag on growth
• Bernanke also outlined other declining growth areas:
  • Jobs
  • Business purchases such as hardware equipment
• Domestic exports should continue to grow and be healthly
• Inflation is real and a concern of the fed
  • increased prices in food and energy are here
  • indications that this inflation may moderate
  • We will be watching inflation closely
  • "Like we said, inflation will weigh on fed"
• Auctions will continue
  • $60 billion in January 2008
• Says additional FOMC policy easing may be necessary
  • Still hinting of a rate cut at 1/30/2008 meeting
• Fiscal and Monetary Policy
  • fiscal stimulus should be implented now
  • Should act over next 12 months
  • should be temporary
  • do not make deficit worse
• Q&A Bernanke statements
  • below trend growth in 2008
  • growth returns in late 2008
  • economy has softened
  • economy has inherent strengths
  • fiscal stimulus will help
  • dividend cuts permanently stimulates stock markets
  • $100 billion stimulus package would stimulate economy
  • Sub-Prime losses at $100 billion, could go higher
  • Fed's job is not to protect investor's from their decisions
  • Fed's goal is to keep economy as stable as possible
  • Extending Bush Tax cuts is a long term positive
    

If you look at these issues holistically one can realize how complicated a situation we are in, and why we are moving very slow on new stock picks.

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