Ever since Ben Bernanke took over from Alan Greenspan, he has been flying by the seat of his pants. His tyraid of interest rate hikes has finally (if not killed the economy) seriously wounded it. OJT (On the Job Training) may be good in some fields, but this position requires a bit more skill.
With the dollar falling to a 15 year low, and inflation being reversed into deflation he is begining to realize he didn’t know how much of the economy was driven by the housing market.
Now he is seeing lower consumer confidence and a possible downward slide of the economy.
Federal Reserve chairman, Ben Bernanke, said the housing slump “would be a drag on economic growth into next year”. Mr Bernanke said official figures did not pick up the “sharp increase” in cancellations on house deals and might understate the inventory glut.
“Any significant effect on consumer spending arising from further weakness in housing would have important implications for the economy”
In my opinion, his policy of raising interest rates has put the economy in jeopardy by making it harder for people to buy homes, as they no longer can easily qualify to make the purchase.
My guess is he will need to start back down the interest rate mountain and practice more restraint in action and focus more on getting the details before increasing the rates in the future.
