Bernanke's Message to Americans: Run, Run for Your Lives!

Federal Reserve Chairman Ben Bernanke delivered some classic Fed-speak to homeowners, shareholders and Congress on Thursday..

As a former economics writer, I thought I'd translate what Chairman Bernanke said to struggling Americans, and what I heard.

What Bernanke Said: "The virtual shutdown of the subprime mortgage market and a widening of spreads on jumbo mortgage loans have further reduced the demand for housing, while foreclosures are adding to the already-elevated inventory of unsold homes."

What I Heard: "I'm crapping my pants, you should be, too."

What Bernanke Said: "As investors lost confidence in their ability to value complex financial products, they became increasingly unwilling to hold such instruments. As a result, flows of credit through these vehicles have contracted significantly."

What I Heard: "Banks have no clue how bad this is, and you know what, Sherlock? I don't have a fuh-REAKING clue either. Think you're getting a new HELOC for a shiny new kitchen? Forget it, sucker."

What Bernanke Said: "....a number of factors, including continuing increases in energy prices, lower equity prices, and softening home values, seem likely to weigh on consumer spending as we move into 2008."

What I Heard: "Remember the late '70s? No, of course not. You know nothing about a real recession. Tell you what. Ask Gramps to get out those big-ass sweaters from the Carter years, forget about the mall, and snuggle on up in your newly chilly McMansion, which is losing value by the minute."

What Bernanke Said: "..any tendency of inflation expectations to become unmoored or for the Fed's inflation-fighting credibility to be eroded could greatly complicate the task of sustaining price stability and reduce the central bank's policy flexibility to counter shortfalls in growth in the future."

What I Heard: "Go ask Gramps what STAGFLATION means. In two words, it sucks."

What Bernanke Said: "To be useful, a fiscal stimulus package should be implemented quickly...

What I Heard: "I need help from Congress, like, right now. Like, right the F--- NOW. Can I go back to being a professor now? Please? None of this is my damn fault! Say to together, people: take your bitchin' and moanin' and belly achin' and big bad toxic mortgage to GREENSPAN. I'll get you his number."
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What Bernanke Said: "Market participants still express considerable uncertainty about the appropriate valuation of complex financial assets and about the extent of additional losses that may be disclosed in the future. On the whole, despite improvements in some areas, the financial situation remains fragile "

What I Heard: "Did you look at what your 401K did today? For the year? I dare ya. I double dog dare ya. Start lovin' you some of those canned goods, everyone. Peace out."

Comments

[mbaty]

Charts and graphs and Fico scores and 401ks and blah blah...it's all so much theory until you get right down to the job of living, much less thriving. Let's build a country where we all win and where we all always have enough--living wages, free healthcare etc. The health of the country is determined by the health of it's citizens in all areas. Houses have always been astronomically expensive; could this just be a logical correction? And much of what the banks are saying is "debt" they have to take on is actually fees that they continued to charge people who were struggling financially and had to default on, not actual debt.

[Seamus45]

Linda, Nice translation of Fedspeak. So, Do we crash on Tuesday?

[Independent voter]

Best economics story I've heard since Halloween

[edresearcher]

You're interpretations are pretty much on the mark. During the housing boom I remember listening to pundit after pundit on TV talking about how housing markets can't really crash like the stock market can, and I remember thinking, these people are full of it. Unregulated greed will always go overboard and leave the public to clean up the mess.

[willo]

Now why can't Bernanke learn to talk in such a straight forward manner?

[GreedyOldPsychopaths]

Linda,

Your article's title reminded me of what Bush said about running:

"You can run...but you cannot hide".

What I heard:

Duh, what this economic race-to-the-bottom really needs is a good ole fashioned inferno producing accelerant and I'm your arsonist, er appointed man.

[cwcrosby]

Here is where you may find part of the source of the problem http://www.theoildrum.com/; unfortunately, I cannot find the solution there, or anywhere right now.

[FogBelter]

That about covers it ... should be fun.

[MajorKong]

Very funny but unfortunately very scary.

[mmckinl]

Keenan hit it right on the head ...

Trouble is most Americans don't have the resources to move at all. They're stuck in debt sludge up to their eyeballs.

[dtboston]

Thanks for the stomach-turning translation Linda. And to think I let my smiling financial advisor convince me that my answers to his get-to-know-ya questions deemed me a "moderately aggressive" investor. I'm about ready to grab a hammer to pry up the floor boards and start a stash...inflation be damned!

[robinhood1]

And to think. All this started with three hijacked airplanes. The Arabs must be rubbing their hands with glee. If more people had listened to Jimmy Carter, maybe we wouldn't be in the financial mess that we're in now. But if you are a fat cat living in a Beverly Hills mansion why would you support energy independence? As one resident of that city once suggested, subways and buses are for poor people and immigrants.

[lindakeenan]

i completely agree on the fear thing. one of the people i most respect on money matters mentioned the fear (he manages my meager fortune). i do not think, however, that enough blame has been ascribed to individuals however. almost everyone i know is so debt ridden it is sickening. it has nothing to do with 'medical emergencies' or any of the sob stories you always hear. of course there are people genuinely hurting. but i know people "hurting" too: from plain old overspending.

[flatus]

What spoke most clearly to me was the fear in Bernanke's eyes.

[Henry]

Ponzi schemes are wonderful until somebody gets nervous. Therefore uncle Ben needs to be a confidence builder and a soothe sayer.
An economy that runs on negative real interest rates and posts a negative savings rate has to be headed into a problem, eh? Where was Alan Greenspan during his tenure as chief? Still making up for his 90's failure to Pappy?