US Stocks Recover After Plunging on Bernanke Speech
August 26, 2011
Federal Reserve chairman Ben Bernanke walks past reporters without speaking as he arrives at a morning session of the Economic Policy Symposium at Jackson Hole in Moran, Wyoming, August 26, 2011
Former central bank official Vincent Reinhart, now an analyst at the American Enterprise Institute was not surprised by the reaction on Wall Street.
"Wall Street almost always gets ahead of itself," said Reinhart. "If you want to know the most selfish person on earth, it's an investor - because every conversation has to end with 'What does it mean for me?' And what the speech today meant for them is - not a lot."
Expectations were high because it was at the same gathering last year that Bernanke announced a second round of quantitative easing - essentially the purchase of $600 billion worth of U.S. debt to lower interest rates and boost business and consumer spending.
European markets had equally high expectations, especially with new figures showing the U.S. economy grew at a slower pace than initial estimates in the first half of this year.
German market analyst Robert Halver said the U.S. needs a large-scale program similar to one initiated in 1948 that helped to rebuild Europe's war-ravaged economies.
"America needs a demand solution for its problems, not even more liquidity. We have a big chance of risk of recession in America and that's why America needs a new Marshall Plan, a new deal," said Halver.
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