View more current Financial News
Wall Street moved higher during early morning trades while Ben Bernanke urged congress to consider a new plan and the White House said that President Bush was “open” to the idea.
"We are in a serious slowdown for the economy, whether it is called a recession or not is of no consequence," Bernanke said.
Bernanke’s speech before House Budget Committee lifted markets as investors liked what he had to say. Lending rates showed signed of easing credit but Bernanke still warned that economy will be weak for several quarters.
According to Bernanke the new package should be a significant as housing, credit and financial crises has brought U.S to its knees. This also leaves door for more rates cuts and with markets taking slow recovery, investors know it will take time until we see a major change.
The three-month Treasury bill Monday yielded 0.91 percent, up from 0.82 percent late Friday. Investors were also optimistic about LIBOR as The London interbank offered rate, for three-month dollar loans fell 0.36 percent to 4.06 percent.
Many analysts still predict that market will shrink later this year and early next year as we are still in slowdown. The nation's unemployment rate—now at 6.1 percent—could hit 7.5 percent or higher by next year.
The credit markets will slowly respond to bailout packages and bring confidence in trading, including U.S and European plan to buy stakes in banks. Even though government is spending billions to buy stocks in banks, this should not hit taxpayer’s bill at all. Treasury Secretary Henry Paulson said the government will own shares in the banks that should be paid back with a reasonable return. "This is an investment, not expenditure, and there is no reason to expect this program will cost taxpayers anything," Paulson said.
The application process consists of two forms which banks need to fill out and return to their primary regulator who will review it and sends it to Treasury Department. Paulson wanted the larges banks currently participating in the package to receive $125 billion bailout first to remove any negative credit clog.
The new package according to Bernanke should include provisions that would help break through the stubborn credit clog. "If the Congress proceeds with a fiscal package, it should consider including measures to help improve access to credit by consumers, home buyers, businesses and other borrowers," Bernanke said. "Such actions might be particularly effective at promoting economic growth and job creation," he added.
Consumers, on the other hand, cut spending as rising unemployment, shrinking paychecks and hard to qualify for a credit added to cut backs. Retailers are expected to report declines for next quarter.
"The time needed for economic recovery, however, will depend greatly on the pace at which financial and credit markets return to more-normal functioning," Bernanke said.
"Because the time that will be needed for financial normalization and the effects of ongoing credit problems on the broader economy are difficult to judge, the uncertainty currently surrounding the economic outlook is unusually large."
RateTake.com is an internet Mortgage Loan marketplace is a destination site of personal finance, investing, taxes and mortgage rates. RateTake.com provides mortgage guides and financial rates and information. RateTake.com also operates
Debt Help
American Insurance
American Mortgage
Home Improvement
San Diego Mortgage
Home Gym
Business Web Hosting