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Bernanke: Financial crisis taking toll on economy
By JEANNINE AVERSA – August 22, 2008
JACKSON, Wyo. (AP) — Federal Reserve Chairman Ben Bernanke said Friday the financial crisis that has pounded the country — coupled with higher inflation — is taking a toll on the economy and poses a major challenge to Fed policymakers as they try to restore stability.
"Although we have seen some improved functioning in some markets, the financial storm that reached gale force" around this time last year "has not yet subsided, and its effects on the broader economy are becoming apparent in the form of softening economic activity and rising unemployment," Bernanke said in a speech to a high-profile economics conference here.
Although Bernanke welcomed the recent drops in prices for oil and other commodities, and believes inflation will moderate this year and next, the Fed chief said the inflation outlook remains highly uncertain.
The Fed, he said, would monitor the situation closely and will "act as necessary" to make sure that inflation doesn't get out of hand.
The current financial and economic environment is one of the most challenging to Fed policymakers "in memory," he acknowledged.
Given those dueling economic cross-currents_ weak economic growth and higher inflation — many economists believe the Fed will leave rates where they are at its next meeting on Sept 16 and probably through the rest of this year.
The bulk of Bernanke's speech dealt with the need to bolster oversight of the nation's financial system to make it better able in the future to withstand future shocks.
To that end, Bernanke recommended that regulators work on ways to assess the health of the entire financial system, rather than the condition of individual banks, Wall Street investment firms or other financial companies — as is currently the focus.
"Such an approach would appear well justified as our financial system has become less bank centered," he said. "Some caution is in order, however, as this more comprehensive approach would be technically demanding and possibly very costly both for the regulators and the firms they supervise," he added.
He also said that "stress tests" for a range of financial firms might also be helpful.
Bernanke's remarks come amid renewed worries on Wall Street about the financial health of Fannie Mae and Freddie Mac. The mortgage giants' stock has gotten hammered this week as investors became increasingly convinced a government bailout is inevitable.
Although the Fed chief didn't mention the companies, he said that one of the critical questions facing the country is how to strengthen the financial system and at the same time protect against "moral hazard," where financial companies take extra risks because they believe the Fed or the government will ultimately bail them out.
"Some particularly thorny issues are raised by the existence of financial institutions that may be perceived as `too big to fail' and the moral hazard issues that may arise when governments intervene in a financial crisis," he said.
Mitigating that problem is another challenge facing policymakers, he said.
New Website Called U.S.A.G.E. Addresses Entitlement Funding Crisis Raised by Movie I.O.U.S.A.
Critics of Social Security and Medicare Funding Overlook Transformative Impact of Baby Boomer Generation
DENVER, Aug 22, 2008 (BUSINESS WIRE) -- Brent Green, a marketing creative director, Boomer generation blogger and author of Marketing to Leading-edge Baby Boomers, today is launching U.S.A.G.E. (http://boomers.typepad.com/usage), an ironically named website and public advocacy organization developed to address and challenge entitlement funding disaster predictions by critics intent on downsizing and/or privatizing Social Security and Medicare.
Green and guest writers are confronting predictions of impending national fiscal disaster due principally to entitlements. This issue has reached center stage for public policy debate with a recently released documentary entitled I.O.U.S.A. (http://www.agorafinancial.com/iousa.html), produced and sponsored under the auspices of the Peter G. Peterson Foundation, the eponymous philanthropy funded with $1 billion from the Blackstone Group founder and launched in February 2008.
As Green declares, "I.O.U.S.A. presents one view of the future for entitlements; there are others. On the contrary, I believe Boomers have the capacity to redefine the connotations of aging and the purpose of life's closing years. Rather than bankrupting the nation, they can enrich it by developing updated platforms for late-life accomplishments, civic engagement and social insurance -- and still benefit from entitlement programs they've been supporting for over 45 years with payroll deductions.
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Start making cents
With times getting tighter, pennies get pinched
By David Delcore, Times Argus Staff -- August 22, 2008
Intrigued by an online advertisement that suggested he could save money and conserve energy at the same time, Stephen Finner decided to give it a whirl.
Finner, 70, recalls investing in energy efficient compact fluorescent light bulbs several months ago, while at the same time religiously turning off all unused lights and appliances. The Barre man, who once chronically left his computer on at all times says he kicked that habit of convenience in favor of shutting it down each and every night.
The experiment paid off, according to Finner, who says he has lowered his monthly electric bills by a whopping 18 percent.
"It's not big money, but it helps," he says. "You have to save where you can."
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