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quinta-feira, abril 03, 2008

The economic outlook - Ben S. Bernanke 020408

Antes mesmo do início da fala de Bernanke, o discurso de abertura de
integrantes do conselho econômico do Congresso mostrou que a preocupação
dos congressistas ia além da visão de Bernanke sobre as perspectivas para a
economia americana. Membros do Congresso americano trouxeram uma pauta
composta por questões associadas à credibilidade do Banco Central
americano, o dilema da regulamentação, preocupações com a deterioração do
quadro fiscal com a crise de crédito e indagações sobre o quadro sistêmico
da economia. O discurso de Ben não trouxe todas as respostas, obviamente,
mas, na minha opinião, o presidente do Fed fez um pronunciamento
equilibrado e realista.

Sobre o crescimento da economia no primeiro semestre e perspectivas
econômicas de médio-prazo, Bernanke pareceu moderadamente pessimista:

"Overall, the near-term economic outlook has weakened relative to the
projections released by the Federal Open Market Committee (FOMC) at the end
of January. It now appears likely that real gross domestic product (GDP)
will not grow much, if at all, over the first half of 2008 and could even
contract slightly."

"Residential construction is likely to contract somewhat further in coming
quarters as builders try to reduce their high inventories of unsold new
homes."

"The unemployment rate edged down in February and remains at a relatively
low level; however, in light of the sluggishness of economic activity and
other indicators of a softer labor market, I expect it to move somewhat
higher in coming months."

"We expect economic activity to strengthen in the second half of the year,
in part as the result of stimulative monetary and fiscal policies; and
growth is expected to proceed at or a little above its sustainable pace in
2009, bolstered by a stabilization of housing activity, albeit at low
levels, and gradually improving financial conditions. However, in light of
the recent turbulence in financial markets, the uncertainty attending this
forecast is quite high and the risks remain to the downside."

Sobre a trajetória da inflação, seu view parece mais otimista:

"Inflation has also been a source of concern. The price index for personal
consumption expenditures rose 3.4 percent over the twelve months ending in
February, up from 2.3 percent over the preceding twelve-month period. To a
large extent, this pickup in inflation has been the result of sharp
increases in the prices of crude oil, agricultural products, and other
globally traded commodities. Additionally, the decline in the foreign
exchange value of the dollar has boosted some non-commodity import prices
and thus contributed to inflation. However, the so-called core rate of
inflation--that is, inflation excluding food and energy prices--has edged
down recently after firming somewhat late last year."

We expect inflation to moderate in coming quarters. That expectation is
based, in part, on futures markets> '> indications of a leveling out of
prices for oil and other commodities, and it is consistent with our
projection that global growth--and thus the demand for commodities--will
slow somewhat during this period. And, as I noted, we project an easing of
pressures on resource utilization. However, some indicators of inflation
expectations have risen, and, overall, uncertainty about the inflation
outlook has increased. It will be necessary to continue to monitor
inflation developments carefully in the months ahead.

Sobre a situação dos mercados frente às ações do Fed:

Although our recent actions appear to have helped stabilize the situation
somewhat, financial markets remain under considerable stress. Pressures in
short-term bank funding markets, which had abated somewhat beginning late
last year, have increased once again. Many lenders have been reluctant to
provide credit to counterparties, especially leveraged investors, and have
increased the amount of collateral they require to back short-term security
financing agreements. To meet those demands, investors have reduced their
l> everage and liquidated holdings of securities, putting further downward
pressure on security prices."

"Credit availability has also been restricted because some large financial
institutions, including some commercial and investment banks and the
government-sponsored enterprises (GSEs), have reported substantial losses
and writedowns, reducing their available capital."

Sobre o bail out do Bear Stears e sua venda para o JP:

"The Primary Dealer Credit Facility was put in place in the wake of the
near-failure of Bear Stearns, a large investment bank. On March 13, Bear
Stearns advised the Federal Reserve and other government agencies that its
liquidity position had significantly deteriorated and that it would have to
file for Chapter 11 bankruptcy the next day unless alternative sources of
funds became available. This news raised difficult questions of public
policy. Normally, the market sorts out which companies survive and which
fail, and that is as it should be. However, the issues raised here extended
well beyond the fate of one company. Our financial system is extremely
complex and interconnected, and Bear Stearns participated extensively in a
range of critical markets.

With financial conditions fragile, the sudden failure of Bear Stearns
likely would have led to a chaotic unwinding of positions in those markets
and could have severely shaken confidence. The company> '> s failure could
also have cast doubt on the financial positions of some of Bear Stearns> '>
thousands of counterparties and perhaps of companies with similar
businesses. Given the current exceptional pressures on the global economy
and financial system, the damage caused by a default by Bear Stearns could
have been severe and extremely difficult to contain. Moreover, the adverse
effects would not have been confined to the financial system but would have
been felt broadly in the real economy through its effects on asset values
and credit availability. To prevent a disorderly failure of Bear Stearns
and the unpredictable but likely severe consequences of such a failure for
market functioning and the broader economy, the Federal Reserve, in close
consultation with the Treasury Department, agreed to provide funding to
Bear Stearns through JPMorgan Chase. Over the following weekend, JPMorgan
Chase agreed to purchase Bear Stearns and assumed Bear> '> s financial
obligations."

Apesar do tom neutro/pessimista, o discurso teve um final feliz:

"The U.S. economy is going through a very difficult period. But among the
great strengths of our economy is its ability to adapt and to respond to
diverse challenges. Much necessary economic and financial adjustment has
already taken place, and monetary and fiscal policies are in train that
should support a return to growth in the second half of this year and next
year. I remain confident in our economy> '> s long-term prospects."

------------------------------------------------------------------------------------------

Segue texto completo abaixo.

> Chairman Ben S. Bernanke - The economic outlook
> Before the Joint Economic Committee, U.S. Congress
> April 2, 2008
>
> Chairman Schumer, Vice Chairman Maloney, Representative Saxton, and other
members of the Committee, I am pleased to appear before the Joint Economic
Committee. In response to deterioration in the near-term outlook for the
economy and intensified strains in financial markets, in recent months the
Federal Reserve has eased monetary policy substantially further and taken
strong actions to increase market liquidity. In my remarks today, I will
first offer my views on conditions in financial markets and the outlook for
the U.S. economy, then discuss recent actions taken by the Federal Reserve.

>
> Although our recent actions appear to have helped stabilize the situation
somewhat, financial markets remain under considerable stress. Pressures in
short-term bank funding markets, which had abated somewhat beginning late
last year, have increased once ag> ain. Many lenders have been reluctant to
provide credit to counterparties, especially leveraged investors, and have
increased the amount of collateral they require to back short-term security
financing agreements. To meet those demands, investors have reduced their
leverage and liquidated holdings of securities, putting further downward
pressure on security prices.
>
> Credit availability has also been restricted because some large financial
institutions, including some commercial and investment banks and the
government-sponsored enterprises (GSEs), have reported substantial losses
and writedowns, reducing their available capital. Several of these firms
have been able to raise fresh capital to offset at least some of those
losses, and others are in the process of doing so. However, financial
institutions> '> balance sheets have also expanded, as banks and other
institutions have taken on their balance sheets various assets that can no
longer be financed on a standalone basis. Thus, the capacity and
willingness of some large institutions to extend new credit remains
limited.
>
> The effects of the financial strains on credit cost and availability have
become increasingly evident, with some portions of the system that had
previously escaped the worst of the turmoil--such as the markets for
municipal bonds and student loans--having been affected. Another market
that had previously been largely exempt from disruptions was that for
mortgage-backed securities (MBS) issued by government agencies. However,
beginning in mid-February, worsening liquidity conditions and reports of
losses at the GSEs, Fannie Mae and Freddie Mac, caused the spread of agency
MBS yields over the yields on comparable Treasury securities to rise
sharply. Together with the increased fees imposed by the GSEs, the rise in
this spread resulted in higher interest rates on conforming mortgages. More
recently, agency MBS spreads and conforming mortgage rates have retraced
part of this increase, and conforming mortgages continue to be readily
available to households. However, for the most part, the nonconforming
segment of the mortgage market continues to function poorly.
>
> In corporate debt markets, yields and spreads on both investment-grade
and speculative-grade corporate bonds rose through mid-March before falling
more recently. Issuance of investment-grade bonds by both financial and
nonfinancial corporations has been quite robust so far this year, but
issuance of new high-yield debt has stalled. Strains continue to be evident
in the commercial paper market as well, where risk spreads remain elevated
and the quantity of commercial paper outstanding, particularly asset-backed
paper, has decreased. Commercial and industrial loans at banks grew in
January and February, but at a considerably slower pace than in previous
months.
>
> These developments in financial markets--which themselves reflect, in
part, greater concerns about housing and the economic outlook more
generally--have weighed on real economic activity. Notably, in the housing
market, sales of both new and existing homes have generally continued weak,
partly as a result of the reduced availability of mortgage credit, and home
prices have continued to fall.1 Starts of new single-family homes declined
an additional 7 percent in February, bringing the cumulative decline since
the early 2006 peak in single-family starts to more than 60 percent.
Residential construction is likely to contract somewhat further in coming
quarters as builders try to reduce their high inventories of unsold new
homes.
>
> Private payroll employment fell 101,000 in February, after two months of
smaller job losses, with job cuts in construction and closely related
industries accounting for a significant share of the decline. But the
demand for labor has also moderated recently in other industries, such as
business services and retail trade, and manufacturing employment has
continued on its downward trend. Meanwhile, claims for unemployment
insurance have risen somewhat on balance, and surveys indicate that>
employers have scaled back hiring plans and that jobseekers are
experiencing greater difficulties finding work. The unemployment rate edged
down in February and remains at a relatively low level; however, in light
of the sluggishness of economic activity and other indicators of a softer
labor market, I expect it to move somewhat higher in coming months.
>
> After rising at an annual rate of about 3 percent over the first three
quarters of last year, real disposable income has since increased at only
about a 1 percent annual rate, reflecting weaker employment conditions and
higher prices for energy and food. Concerns about employment and income
prospects, together with declining home values and tighter credit
conditions, have caused consumer spending to decelerate considerably from
the solid pace seen during the first three quarters of last year. I expect
the tax rebates associated with the fiscal stimulus package recently passed
by the Congress to provide some support to consumer spending in coming
quarters.
>
> In the business sector, the pullback in hiring that I noted earlier has
been accompanied by some reduction in capital spending plans, as weaker
sales prospects, tighter credit, and heightened uncertainty have made
business leaders more cautious. On a more positive note, the nonfinancial
business sector remains financially sound, with liquid balance sheets and
low leverage ratios, and most firms have been able to avoid unwanted
buildups in inventories. In addition, many businesses are enjoying strong
demand from abroad. Although the prospects for foreign economic growth have
diminished somewhat in recent months, net exports should continue to
provide considerable support to U.S. economic activity in coming quarters.
>
> Overall, the near-term economic outlook has weakened relative to the
projections released by the Federal Open Market Committee (FOMC) at the end
of January. It now appears likely that real gross domestic product (GDP)
will not grow much, if at all, over the first half of 2008 and could even
contract slightly. We expect economic activity to strengthen in the second
half of the year, in part as the result of stimulative monetary and fiscal
policies; and growth is expected to proceed at or a little above its
sustainable pace in 2009, bolstered by a stabilization of housing activity,
albeit at low levels, and gradually improving financial conditions.
However, in light of the recent turbulence in financial markets, the
uncertainty attending this forecast is quite high and the risks remain to
the downside.
>
> Inflation has also been a source of concern. The price index for personal
consumption expenditures rose 3.4 percent over the twelve months ending in
February, up from 2.3 percent over the preceding twelve-month period. To a
large extent, this pickup in inflation has been the result of sharp
increases in the prices of crude oil, agricultural products, and other
globally traded commodities. Additionally, the decline in the foreign
exchange value of the dollar has boosted some non-commodity import prices
and thus contributed to inflation. However, the so-called core rate of
inflation--that is, inflation excluding food and energy prices--has edged
down recently after firming somewhat late last year.
>
> We expect inflation to moderate in coming quarters. That expectation is
based, in part, on futures markets> '> indications of a leveling out of
prices for oil and other commodities, and it is consistent with our
projection that global growth--and thus the demand for commodities--will
slow somewhat during this period. And, as I noted, we project an easing of
pressures on resource utilization. However, some indicators of inflation
expectations have risen, and, overall, uncertainty about the inflation
outlook has increased. It will be necessary to continue to monitor
inflation developments carefully in the months ahead. >
>
> * * *
>
> I turn now to the Federal Reserve> '> s policy responses to these
financial and economic developments.
>
> Well-functioning financial markets are essential for the efficacy of
monetary policy and, indeed, for economic growth and stability. To improve
market liquidity and market functioning, and consistent with its role as
the nation> '> s central bank, the Federal Reserve has supplemented its
longstanding discount window by establishing three new facilities for
lending to depository institutions and primary dealers.
>
> The lending facilities now in place offer depository institutions and
primary dealers two complementary alternatives for meeting funding needs.
One pair of facilities--the discount window for depository institutions and
the Primary Dealer Credit Facility for primary dealers--offers daily access
to variable amounts of funding at the initiative of the borrowing
institution. A second pair of facilities--the Term Auction Facility for
depository institutions and the Term Securities Lending Facility for
primary dealers--makes available predetermined aggregate amounts of
longer-term funding on pre-announced dates, with the interest rate and the
distribution of the awards across institutions being determined by
competitive auction. Although these facilities operate through depository
institutions and primary dealers, they are designed to support the broad
financial markets and the economy by facilitating the provision of
liquidity by those institutions to their customers and counterparties.
>
> The Primary Dealer Credit Facility was put in place in the wake of the
near-failure of Bear Stearns, a large investment bank. On March 13, Bear
Stearns advised the Federal Reserve and other government agencies that its
liquidity position had significantly deteriorated and that it would have to
file for Chapter 11 bankruptcy the next day unless alternative sources of
funds became available. This news raised difficult questions of public
policy. Normally, the market sorts out which companies survive and which
fail, and that is as it should be. However, the issues raised here extended
well beyond the fate of one company. Our financial system is extremely
complex and interconnected, and Bear Stearns participated extensively in a
range of critical markets. With financial conditions fragile, the sudden
failure of Bear Stearns likely would have led to a chaotic unwinding of
positions in those markets and could have severely shaken confidence. The
company> '> s failure could also have cast doubt on the financial positions
of some of Bear Stearns> '> thousands of counterparties and perhaps of
companies with similar businesses. Given the current exceptional pressures
on the global economy and financial system, the damage caused by a default
by Bear Stearns could have been severe and extremely difficult to contain.
Moreover, the adverse effects would not have been confined to the financial
system but would have been felt broadly in the real economy through its
effects on asset values and credit availability. To prevent a disorderly
failure of Bear Stearns and the unpredictable but likely severe
consequences of such a failure for market functioning and the broader
economy, the Federal Reserve, in close consultation with the Treasury
Department, agreed to provide funding to Bear Stearns through JPMorgan
Chase. Over the following weekend, JPMorgan Chase agreed to purchase Bear
Stearns and assumed Bear> '> s financial obligations.
>
> The Federal Reserve has taken additional measures to improve market
liquidity. We have initiated a series of twenty-eight-day single-tranche
term repurchase transactions with primary dealers, expected to cumulate to
$100 billion outstanding, in which dealers may offer any of the types of
collateral that are eligible for conventional open market operations. We
have also expanded and extended reciprocal currency arrangements (> "> swap
lines> "> ) with the European Central Bank and the Swiss National Bank.
Using these swap lines, the participating central banks are providing
dollar liquidity to financial institutions in their jurisdictions, which
should improve the functioning of the global market for dollar funding.
These facilities and programs will be kept in place as long as conditions
warrant their ongoing use. We are working closely with the Securities
Exchange Commission to monitor the financial conditions and funding
positions of primary dealers who might seek Federal Reserve credit.
>
> To date, the recent liquidity measures implemented by the Federal Reserve
seem to have been helpful in addressing some of the strains in financial
markets. Funding pressures on primary dealers appear to have eased
somewhat, and liquidity seems to have improved in several markets,
including--as noted earlier--the market for agency mortgage-backed
securities. To the extent that these measures improve market functioning,
they will have favorable effects on the ability and willingness to make
credit available to the broader economy. More-liquid markets also increase
the efficacy of monetary policy, which in turn improves our ability to meet
the goals set for us by the Congress--namely, to promote maximum employment
and price stability.
>
> As you know, in response to the further weakening of economic conditions,
the Federal Reserve has continued to ease the stance of monetary policy.
The FOMC reduced its target for the federal funds rate by a total of 125
basis points in January and by an additional 75 basis points at its March
meeting, leaving the current target at 2-1/4 percent--3 percentage points
below its level last summer. As the Committee noted in its most recent
post-meeting statement, we anticipate that these actions, together with the
steps we have taken to foster market liquidity, will help to promote growth
over time and to mitigate the risks to economic activity.
>
> Clearly, the U.S. economy is going through a very difficult period. But
among the great strengths of our economy is its ability to adapt and to
respond to diverse challenges. Much necessary economic and financial
adjustment has already taken place, and monetary and fiscal policies are in
train that should support a return to growth in the second half of this
year and next year. I remain confident in our economy> '> s long-term
prospects.

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