By David Berman
There wasn’t a lot to chew on in Fed chairman Ben Bernanke’s press conference on Wednesday afternoon, which followed a similarly unchewable monetary policy statement shortly after noon – the one where the Fed left rates unchanged, stuck to its “operation twist” stimulus idea and said that there remain significant downside risks to the economy.
When asked about the significance of MF Global’s (MF) failure this week – it sought bankruptcy protection following some ill-timed leveraged bets on European government bonds – Mr. Bernanke said that the failure appears to be an idiosyncratic case. In other words, in his view, MF Global’s unfortunate fate doesn’t signify more European-inspired failures ahead.
At the same time, Mr. Bernanke again nodded to the role of government in helping to resuscitate the U.S. economy, saying that it would be helpful to get assistance from other parts of the government to promote economic growth.
And about those revised (um, downward) economic projections for this year and the next three years and what has gone wrong with Fed projections? Mr. Bernanke said that it was clear in retrospect that the central bank understated the severity of the last financial crisis and housing downturn, and the drags on recovery have been stronger than expected.
However, there were some elements of bad luck involved too – particularly the global impact of the Japanese earthquake and tsunami earlier this year and the ongoing European debt crisis.