In an interview that aired Sunday on CBS’ “60 Minutes,” Federal Reserve Chairman Ben Bernanke said the recession “probably” will end this year if the government is successful in its efforts to bolster the banking system. This includes getting banks to lend more freely (and responsibly) again and stabilizing the financial markets, he said.
Bernanke also believes the U.S. economy is no longer in danger of sinking into a depression. (To read the interview, click here.)
This is great news if Bernanke is right. But I don’t think we’re out of the economically depressed woods yet. I’m sure it won’t be easy to convince banks to lend more freely, considering how tone deaf the heads of bailed-out banks and insurance companies have been to the situation thus far. The latest example of this is American International Group (AIG) paying $165 million in bonuses to executives after losing $61.7 billion in the fourth quarter of last year — the largest corporate loss in history. Yet AIG still gives all that bonus money — money it has only because the insurance giant took more than $170 billion in bailout money from the federal government — to people who helped put our country in this economic mess. AIG says it was contractually obligated to pay out those bonuses, but I’m sure the company would have found a way out of parting with that money if it hadn’t gotten billions of dollars in bailout funds.
Even if the banks and financial markets start acting the way Bernanke hopes, unemployment figures still will rise, probably into double digits. I’m hopeful that economic recovery will begin by next year as Bernanke suggests, but if it doesn’t, things are going to get ugly for a lot more Americans.
While this is all going on, former Vice President Dick Cheney is busy saying the Bush administration is not to blame for the economic crisis. He told CNN’s John King that America got swept up in a global financial crisis. That may be partly true, but the state of America’s economy plays a large part in determining the state of the world economy. Cheney ought to go back to an undisclosed location and stop reminding us about the Bush administration.