According to Yahoo News, Federal Reserve Chairman Ben Bernanke said economic problems, including the severe housing slump, will cause business growth to slow in the months ahead.
Bernanke said he and his colleagues believe economic activity will “slow noticeably in the fourth quarter” compared to the 3.9 percent pace of the third quarter.
“Growth was seen as remaining sluggish during the first part of next year, then strengthening as the effects of tighter credit and the housing correction begin to wane,” Bernanke told the JEC.
Many economists believe the economy’s maximum point of danger of falling into a recession will occur in the early part of next year. A variety of problems from the steepest housing downturn in more than two decades to a severe credit crunch, surging oil prices and a falling dollar have roiled Wall Street in recent days, triggering big plunges in stock prices.
I guess the first step is to acknowledge that there is a problem.
Bernanke said the Fed plans to issue a proposal by the end of the year that would create new standards and rules for all lenders that issue subprime loans, mortgages offered to borrowers with weak credit histories.
What will these new standards and rules do the housing market? Is a set of rules really necessary? The free market will determine the rules for lending, as we’re seeing now.
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