Bernanke's Testimony

This afternoon Bernanke testified on the congress that the fragile U.S. economy is being confronted by "numerous difficulties" including persistent strains in financial markets, rising joblessness and housing problems, despite aggressive interest rate reductions and other fortifying steps over the past year.

The problem is not how aggressively the Fed reduces interest rate, but US credit market has lost its credibilities that were caused by credit rating manipulation. So that, credit default risk has been going to rise. Banks worry to lend each others. As result, they set higher interest rate to cover lending risks and then borrowers are getting squeeze.

The chart below reflects although Fed fund rate has been reduced aggressively on March but LIBOR rate has been going to rise since then.



Please Note!

This is generally never true. Before buying or selling any asset you should do your own research and reach your own conclusion. See my Disclaimer on the bottom for more information.

You are welcome to republish this article, or any portion thereof.
Please, cite the actual/original source. I would be grateful if you could link back.