Friday, March 29, 2024 Mar 29, 2024
58° F Dallas, TX
Advertisement
Business

Fed’s Fisher Sees Recovery By Second Half Of ’09

By |
Image

Richard W. Fisher, president and CEO of the Federal Reserve Bank of Dallas, says the current economic crisis was summed up neatly by a woman who complained to her accountants: “This [meltdown] has been like the divorce from hell. My net worth’s been cut in half, but I’m still stuck with my husband!” Addressing a sold-out luncheon today of the World Affairs Council of Dallas-Fort Worth, Fisher (shown here) had a lot to say about the meltdown, some of it surprisingly optimistic. Jump for the details.

With C-SPAN cameras rolling and national financial journalists hanging on his every word, Fisher told a big crowd at the Hotel Crescent Court that economic crises like the current one are nothing new. They’re caused by a mixture of “greed and tomfoolery,” he said, and cited something Washington Irving wrote in 1719 about another downturn brought on by a speculative bubble.

That’s cold comfort to struggling Americans, though, and Fisher said there’s more pain ahead. As companies batten down the hatches–slashing every cost they can–he expects U.S. GDP will contract another annualized 4 to 5 percent in the current quarter, with still more shrinkage at least through next June.

So, what position should stock-market investors assume now, Fisher said? “Somewhere between cash–and fetal.”

To date, he went on, the Fed has tried to avoid the mistakes made by previous central bankers–read: Herbert Hoover’s and, more recently, Japan’s–by priming the money pump, big-time. As of last week, the Federal Reserve’s “total footings” had expanded to $2.25 trillion, nearly three times where it started the year. “We’re duty-bound to apply every tool we can to clean up the mess,” Fisher insisted–and he added that it’s begun to work.

How so? LIBOR rates have come down, for one thing, he said. The Fed’s purchase of GSE (government-sponsored enterprise) mortgage-backed securities has reduced 30-year fixed-rate mortgage rates to record lows. And commercial-paper facilities have begun improving.

“So far, so good,” he said. “Confidence is mending. But we have miles to go before we sleep. And I can’t wait to get a good night’s sleep.”

How long is there to go, exactly? “If all goes well, I expect recovery in the second half of 2009,” Fisher told reporters after his speech. “We’ve gone from irrational exuberance to irrational fear. We’ll balance out.”

Related Articles

Image
Arts & Entertainment

Here’s Who Is Coming to Dallas This Weekend: March 28-31

It's going to be a gorgeous weekend. Pencil in some live music in between those egg hunts and brunches.
Image
Arts & Entertainment

Arlington Museum of Art Debuts Two Must-See Nature-Inspired Additions

The chill of the Arctic Circle and a futuristic digital archive mark the grand opening of the Arlington Museum of Art’s new location.
By Brett Grega
Image
Arts & Entertainment

An Award-Winning SXSW Short Gave a Dallas Filmmaker an Outlet for Her Grief

Sara Nimeh balances humor and poignancy in a coming-of-age drama inspired by her childhood memories.
By Todd Jorgenson
Advertisement