BY James Marshall Crotty, Forbes Contributor
The two most important leaders on planet earth each delivered major public speeches in the last 24 hours. Last night U.S. President Barack Obama, in what might be the last State of the Union address of his political career, suggested that the economy is improving, unemployment is heading down, the world is safer, and America’s standing in the world vastly improved all because of his administration’s policies. In a press conference this afternoon, Federal Reserve Chairman Ben Bernanke (by far, the most powerful non-elected person on the planet) delivered a more cautious assessment, suggesting that improved economic conditions, including decreased unemployment and steadily low inflation, will be affected by what happens in Europe and in the broader non-U.S. global economy (hint: China). Today’s upward rise in the U.S. stock market suggests that investors believe both men might be right. That is, there will be economic headwinds, but the U.S. will manage those headwinds well.
Just to make sure, Bernanke signaled that the Fed would keep interest rates low at least through 2014. This is unhappy news to America’s savers and the rabidly anti-Fed Ron Paul (who believes Fed money printing is the root cause of our economic malaise), but music to the ears of investors, new homebuyers, and for what Obama terms those “responsible homeowers” seeking home refinancing (who will now pay a 30-year mortgage rate of just 3.88%). Who knows, maybe housing principal forgiveness is on the way too (ah, heck, throw in a toaster while’s you’re at it).
But, with such initiatives, are Obama and Bernanke just cooking up another housing and market bubble to go along with the current student loan bubble?
What are your thoughts on Obama’s State of the Union and the Fed Chairman’s news conference today? Are things slowly getting better? Will we be able to manage the turmoil in Europe and a slower growth China? Will their remedies make the U.S. economy stronger long-term?
Or are these two men missing some elephant in the living room?
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