Fed sees start of US recovery in 2010
US Federal Reserve Chairman Ben Bernanke said the US economy should start recovering from recession next year if there is the political will to complete the costly rescue of the shattered banking system.business Updated: Mar 16, 2009 22:49 IST
US Federal Reserve Chairman Ben Bernanke said the US economy should start recovering from recession next year if there is the political will to complete the costly rescue of the shattered banking system.
Battered US banks showed signs of life last week, with Citigroup, Bank of America and JPMorgan Chase saying they have returned to black early this year and assuring they should ride out the recession without more taxpayer help.
Such signals, combined with pledges by the G20 group of the world's largest economies to boost rescue funds for developing economies in trouble and do all they can to combat the worst downturn since the 1930s, lifted financial markets.
Asian-Pacific stocks outside of Japan rose 1.2 percent, while Tokyo shares climbed 2.4 percent, buoyed by rising bank shares.
"It seems as if overall worry about the U.S. financial sector is fading," said Noritsugu Hirakawa, a strategist at Okasan Securities in Japan.
Bernanke, in a rare interview with CBS programme 60 minutes, largely upheld the Fed's view that there was a reasonable prospect the recession that took hold in December 2007 would end this year and that 2010 would be a year of recovery.
"We'll see the recession coming to an end probably this year," Bernanke said. "We'll see recovery beginning next year."
The Fed chairman said his greatest worry is that lawmakers and the public will withdraw support for efforts aimed at stabilising the shattered banking system.
"The biggest risk is that, you know, we don't have the political will," he said. "We don't have the commitment to solve this problem, and that we let it just continue."
"In which case ... we can't count on recovery."
Bernanke acknowledged the depth of public resentment against institutions such as the AIG, which has revealed that it was paying $165 billion as bonuses and other payments after receiving an aid package of $170 billion. He however argued the financial rescue was necessary to protect the U.S. economy and jobs.
"I care about Wall Street for one reason and one reason only -- because what happens on Wall Street matters to Main Street."