Tuesday, February 24, 2009

Thank You Benjamin!

Today we saw the power detailed and precise plans have. In a semi-annual meeting with the Senate, Ben Bernanke gave the public a timeline on when he expects the recession to end, how the government plans on ending it and the steps they are taking to do so. He instilled confidence back into the government by saying that the Stimulus Plan will work, the measures taken to help housing will work and that the government is taking the right course of action with regards to helping the financial sector. He reassured investors today that an all-out bank nationalization is not in the government's plan at all. He shed light on the bank stress test. He stated that he believes the banks are still valuable franchises and he believes they will be able to recover. He reiterated that since the banks are still valuable franchises, the government is not going to let them fail. 

Tomorrow Geithner is going to reveal further details about the bank stress test and will begin conducting it. As more details come out about stabilizing the financial sector, I believe we will see a rally in the markets. Now that we are finally going to start the recovery program for banks that Geithner has planned, hopefully we will learn what liabilities the banks have and how much additional capital they may or may not need as well as the overall health of the financial institutions. Once investors have this information it will take away from the speculation there is right now about the state of the financial sector, putting an end to the recent sell-offs. 

Bernanke did a good job today of re-instilling confidence in investors - something they have been lacking recently. His statement that he believes the recession will come to an end this year gives investors an idea of when they can expect a recovery. 

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