Wording: Talking about the economy
WASHINGTON (AP) - February 15, 2008 Well, it seemed that way at times during a Senate Banking
Committee hearing Thursday. Federal Reserve Chairman Ben Bernanke
and Treasury Secretary Henry Paulson talked about the challenges
the country faces from a housing slump and credit crunch and what
additional steps might be taken to bring about relief.
Bernanke spoke of "sluggish growth," a jobs market that is not
"rip roaring," and a "virtual shutdown" in the market for
subprime mortgages - those made to people with tarnished credit or
low incomes.
For his part, Paulson spoke with emotion about the troubles of
record numbers of people plunged into foreclosure and others
struggling to stay in their homes.
"I'll tell you, when you're there and you look at the abuses
and you look at the predatory lending abuses and you look at some
of the - it's heartrending," the secretary said. "But what we're
doing is trying to deal with it."
Lax credit standards during the housing boom was the spark that
led to the current economic woes. "We had a dry forest out
there," Paulson said.
Paulson was equally vivid when talking about the Treasury
Department's efforts to develop a regulatory blueprint for players
in financial markets.
"If someone came down - a man came down from Mars - and you
were trying to explain the regulatory structure and how this works,
the way the markets - you know, the regulatory structure has not
evolved with the markets. And it's a patchwork quilt, in many
ways," he said.
The Fed chief didn't sugarcoat the economy's problems and used
crystal-clear language, something his famously Delphic predecessor
Alan Greenspan often was loathe to do publicly. "The outlook for
the economy has worsened in recent months," Bernanke, a former
economics professor, told lawmakers.
People are tightening their belts and employers have slowed
hiring. "We are going through a retrenchment, and that's a painful
retrenchment," Bernanke said.
The big worry is that people and businesses will cut back
sharply, throwing the economy into a recession. The odds of a
recession have grown significantly over the last year. Some
economists believe the economy, which nearly stalled in the final
three months of last year, is shrinking now.
Many people - 61 percent - believe the U.S. is in a recession,
according to a recent Associated Press-Ipsos poll.
Bernanke and Paulson are hopeful the country can skirt a
recession. They still believe the economy is growing - but at a
slower pace.
Even with the occasional unvarnished moments, both Bernanke and
Paulson resisted one senator's efforts to pin them down on a
description of the housing market.
"There's been a lot of descriptions about where we are in the
housing sector, whether it's a crisis or whether this is a
correction," said Sen. Bob Corker, R-Tenn. "I'm wondering if each
of you might choose a word to describe where we are today."
Replied Paulson, "I don't use loaded words, and so I've been
using correction because it is a correction."
Sen. Chris Dodd, D-Conn., the committee's chairman, stepped in.
"It would be inappropriate for the secretary and the chairman to
start putting a label" on the housing situation, he said.
"That could have its own self-fulfilling prophecy here," Dodd
said. "So we've got to be careful about language. Language has
significance and implications."