Fed Chief Ben Bernanke on the economy:
Presenting a bleak picture of a deteriorating national economy, Ben S. Bernanke, chairman of the Federal Reserve, strongly suggested on Thursday that the Fed would cut interest rates soon, perhaps by a large amount.
“The outlook for real activity in 2008 has worsened,” Mr. Bernanke said after describing all the forces dragging down the economy. “We stand ready to take substantive additional actions as needed to support growth and to provide adequate insurance against downside risks.”
With fears rising that the economy is sliding into recession, Mr. Bernanke’s blunt assessment is expected to encourage politicians to call on Congress to take steps that would stimulate growth beyond what the Fed can achieve through lower interest rates.
Mr. Bernanke’s gloomy assessment of the economy represented a turning point for the Fed. Until now, most of the Fed’s top policy makers, starting with Mr. Bernanke, had spoken publicly of their “uncertainty” about what lay ahead. They have cut their benchmark interest rate, the federal funds rate, by a full percentage point since mid-September in response to the credit crisis and the housing downturn.
But they accompanied each cut with a statement that stopped well short of declaring that the economy was clearly in trouble.
On The West Wing, the Bartlet administration refused to use the word “recession.” Instead, they referred to “a bagel.”
Hey, Ben, you want yours toasted with lox and a schmeer?