Federal Reserve Chairman Ben Bernanke spoke yesterday on the state of the economy, noting that "if actions taken by the Administration, the Congress, and the Federal Reserve are successful in restoring some measure of financial stability--and only if that is the case, in my view--there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery."

This is welcome news for those inclined to believe the optimism.

The chairman did acknowledge that the end of the housing boom, or what some consider the bursting of the bubble, was the "immediate trigger" of the crisis our nation now finds itself in.

Bernanke continued, "Conditions in housing and mortgage markets have proved a serious drag on the broader economy both directly, through their impact on residential construction and related industries and on household wealth, and indirectly, through the effects of rising mortgage delinquencies on the health of financial institutions."

Studies and data indicate that prices continue to fall at this time, and foreclosures continue to infect the market.

The Federal Reserve has taken drastic action in the last year in order to stave off a worsening crisis in the housing market. "To support housing markets and economic activity more broadly, and to improve mortgage market functioning, the Federal Reserve has begun to purchase large amounts of agency debt and agency mortgage-backed securities. Since the announcement of this program last November, the conforming fixed mortgage rate has fallen nearly 1 percentage point," Bernanke noted.

Published: February 25, 2009

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