US Federal Reserve Chairman, Ben Bernanke, put forth what investors wanted to hear, that the economy is indeed on the verge of recovery, and they responded with a rally that sent the major indexes to new highs for the year.
Speaking at an annual Fed conference in Wyoming, Bernanke did warn that lending is not back to normal, and that the difficulty consumers and businesses are having obtaining loans will be a challenge. But his tone was the most optimistic it has been since the start of the financial crisis.
The Dow Jones industrials shot up 156 points Friday, closing above 9,500 for the first time since November 4, and all the big indexes finished with gains of more than 1.5 percent, while the Nasdaq composite index rose 31.68, or 1.6 percent. While Bernanke expressed hope about the end of recession, a government official told AP on the condition of anonymity that the US budget deficit will amount to a horrible 9,000 billion dollars by the next 10 years, which is 2,000 billion dollars higher than the previously predicted figure.
The news is considered a defeat for the regime of Barack Obama concerning his economic plan, especially at a time when Congress is acting tentatively and the American people follow the stories of budget expenditures with a kind of pessimism. The government critics believe that the plans to revive the economy, better known as stimulus plans, including 787 billion dollar bailout will only enter the US into a new era of hardships.
Though, the economic plans, aimed at creating jobs and building trusts among the investors, succeeded, at least on the surface, to curb the current whirlpool of problems, they transferred them for the future generations. However, the US President Barack Obama vowed to lessen the budget deficit to 512 billion dollars.
But its implementation is under a thick shade of pessimism considering insatiable greed of the US bureaucracy to extravagantly spend the people's hard-earned tax money and also its traditional resistance to any self-disciplinary plans to move forward. By the way, there may be talks of hope that 'recession is over', but challenges are ahead surely.
Source: Original article written by : ebrahimi (IRIB) under the title US Economic Recovery and Challenges Ahead
August 22, 2009