Bernanke Warns of Worse Times in the Economy
Ben S. Bernanke PhD ’79, chairman of the Federal Reserve, told Congress on Thursday that the economy is going to get worse before it gets better, a message that got a chilly reception from both Wall Street and politicians.
On a day when stock prices swung wildly, the dollar hit another new low against the euro and further signs emerged from retailers that consumers are growing more cautious about spending, Bernanke warned that the economy is about to “slow noticeably” as the housing market continues to spiral downward and financial institutions tighten up on lending.
But in a disappointment to investors, Bernanke offered no signal that the central bank might soften the blow by lowering interest rates for a third time this year at its next policy meeting on Dec. 11.
Share prices, which had plunged on Wednesday, went on a roller coaster after Bernanke testified. The Dow Jones industrial average first fell 205 points by midafternoon, but then clawed back most of the way and ended the day at 13,266.29, down just 34 points.
Testifying before the Joint Economic Committee, the Fed chairman said that the two rate cuts in September and October should be enough to keep the economy from slipping into a recession. Without being specific, he reinforced statements by other Fed policymakers that the economy would have to show signs of stalling out entirely before they would reduce rates again.
An Abrupt Slide For Technology Shares
Markets slumped for most of the day on Thursday as technology stocks succumbed to the turmoil they had largely resisted in recent weeks. Stocks recovered in the final hour, but investors remained anxious as a shaky week on Wall Street neared its close.
The Dow Jones industrials finished down 0.3 percent, or 33.73 points, at 13,266.29, after spending much of the day deeper in the red. The benchmark index, which lost 360 points on Wednesday, dropped more than 200 points on Thursday before climbing back in the final hour of trading. The broader market was virtually unchanged for the day, with the Standard & Poor’s 500-stock index dropping 0.85 point, or 0.06 percent, to 1,474.77.
“There was enough blood on the streets to finally entice buyers back into this market,” said Ryan D. Larson, senior equity trader at Voyageur Asset Management.
But sinking technology stocks were out of luck. They battered the Nasdaq composite index, which fell 52.76 points, or 1.9 percent, to 2,696.00. The index was down as much a 3 percent.
It was a sudden downturn for technology companies, which have enjoyed a steady run-up in prices since the summer. Analysts said Thursday’s sell-off was driven by a bout of profit-taking in an uncertain climate.
Protest Greets Police Plan To Map Muslim Angelenos
A plan by the counterterrorism bureau of the Los Angeles Police Department to create a map detailing the Muslim communities in that city, an effort described as a step toward thwarting radicalization, has angered civil rights groups, which say it is no better than racial profiling.
At least three major Muslim groups and the American Civil Liberties Union sent a letter Thursday to top city officials raising concerns about the plan.
“When the starting point for a police investigation is ‘let’s look at all Muslims,’ we are going down a dangerous road,” Peter Bibring, a lawyer with the ACLU of Southern California, said in an interview. “Police can and should be engaged with the communities they are policing, but that engagement can’t be a mask for intelligence gathering.”
The objections started after Michael P. Downing, a deputy Los Angeles police chief who heads the counterterrorism bureau, testified before a U.S. Senate committee on Oct. 30 that the Police Department was combining forces with an unidentified academic institution and looking for a Muslim partner to carry out the mapping project. He emphasized that he wanted the process to be transparent.
In his testimony, to the Homeland Security and Governmental Affairs Committee, Downing said the project would determine the geographic distribution of Muslims in the sprawling Los Angeles area and take “a look at their history, demographics, language, culture, ethnic breakdown, socioeconomic status and social interactions.”
Bill Clinton Says His Wife Took the Rap on Health Care
Former President Clinton said Thursday that he should receive more blame than his wife for the failed attempt to revamp the nation’s health care system more than a decade ago.
“You know how much she cares about this,” Clinton told an audience in Glenwood, Iowa, according to an account on MSNBC. “She has taken the rap for some of the problems we had with health care the last time that were far more my fault than hers.”
In her Democratic presidential bid, Sen. Hillary Rodham Clinton of New York has placed health care at the heart of her domestic policy agenda. Her rivals have sought to portray her experience on health care as an example of why a fresh approach is needed to truly change and improve the system.
As he campaigned here on Thursday, Sen. Barack Obama of Illinois said Hillary Clinton could not claim credit for trying to overhaul health care if she did not accept any of the blame.
“All I know is that part of the record she’s running on is having worked on health care,” he said, “so it’s kind of hard to gauge if one of her claims is to have experience in this issue to then suggest that somehow she doesn’t have anything to do with the fact that it didn’t work.”