and bernanke has made it clear at the moment. our view is that core inflation is going to continue to decline and that there may be emerging deflation concerns next year. at the same time, bernanke has to be very clear that the fed is not going to allow inflationary pressures to reemerge at some point in the future. so i think that, you know, it's sort of very clear what their ames are. not quite so clear how they intend to achieve it. and i think the key thing to look out for in what bernanke says today is at what point do they envision having to stop quantitative easing and starting to reverse the process? >> is there basically a time clock on that? i mean, essentially once you start seeing a bit of stabilization perhaps let's say even a bit of growth in terms of gdp, is that the time to start? >> well, it depends on what type of growth. we think that the second half of this year is going to see some reasonably solid gdp growth from the u.s. but that may need driven by the turn around in the inventory cycle and the fiscal easin

bernanke. >> can you explain that? >> well, let's say that i can't -- but i have a kind of look at life that is marked parallel and a look at economics and financial methods that are more comparable. i think it must have been quite difficult situation for mr. bernanke when the financial crisis turned and maybe you can go back in your memory, it took quite a while for paulson and the bush administration to realize that this was really bad. this is not just a minor crisis that would go away in three months' time and i think there have been very interesting articles amongst "the new york times" about what bernanke had to do to convince paulson and other people in the bush administration that this was serious and is needed urgent personal reaction to prevent from getting into something really bad. >> there was a lot of resistance to government intervention in general which now we have seen pretty much told. practically anything goes of the moment is what it seems so what was the source of that resistance? was at the chicag

bernanke is a professor. and i don't see anything wrong with trying to educate the average person who doesn't see inside the fed as to what he's doing. now, whether you want to call that explanation, is he worried about his place in history? or is he trying to carve out his job in the future? you never lose ground if the public gets more -- >> you know, rick, this guy has to go to charm school. i mean, he's never going to charm people. and you know what? -- >> are yeah, you know, that's a little unfair. because after the "60 minutes" interview his ratings went up. >> what's wrong, larry, with a little transparency at the fed? >> nothing. that's what he's doing. he's charming, he's elegant, he's debonair. john carney has this story exactly right. he is -- he is we will manying. he is bernanke. he may not overwe will many. >> what's our grand panel say? >> the stock market is roaring, the proof of the pudding is in eating. steve moore, rick santelli, and coming up senator jim demint will take on joe biden. that

bernanke. >> what i like about bernanke is he has been very courageous. he has been doing things that would have been unimaginable a few years ago but given the fact his main focus was the great depression, i knew he couldn't wait too long to some pretty drastic things given what we saw happening in financial and the banking sector. he stated very carefully what happened in the 1930's and basically you can say that the great depression it became the great depression because the monetary authorities first of all the federal reserve didn't do anything or at least certainly not enough to stop the banking crisis from degenerating the first thing he probably did worldwide realized he had to step in and do whatever was necessary to stop this banking crisis. and first of all, he was the interest rate policy to do this and second he didn't hesitate to use the balance sheet of the federal reserve which extraordinarily the balance sheet of the federal reserve in september last year was something like $85

why are the bonds applaud iing n bernanke, yipptido. >> nothing says that more than ben bernanke. >>as hoping he would use that term. >> i'd love him to use that term. >> he was playing the role of schoolteacher and scolding them on deficit spending and maybe congress is saying, enough already. i don't think it will work, i think bernanke lives under the illusion his going along with the administration makes him a trusted advisor and he will be reappointed next year. i think it's an illusion. >> they say it's an 170% chance he will get appointed. >> i almost never go against that but i am. >> did ben bernanke have a lot to do with the stock market? >> no, a lot to do with the bond market. i'd like to see secret squirrel be the chairman. we will see the same transparency. not working for me. >> ned is on this cook, having himself a heck of a summer rally. why is he wrong. >> you're not putting me against an amateur. i see a rally but a lot of links busted. a jobless recovery, ultimately, fundamentals have to drive stock prices. we need consumption. we have 70% of gdp driven by consump

that's bernanke's view. but when you see these good earnings from caterpillar, from merck and pfizer, for example, and from am, for example and even from starbucks, who would think people would be buying high priced coffee during a downturn, one thing mcintyre says, he uses the phrase 85%, i say 90% of the people are working in this country and what these better earnings or better than expected earnings, they're basically saying business is operating. we haven't stopped dead in our tracks in this economy. i want to link that to the bernanke testimony. if he's looking for liquidity exit strategy to stop rising future inflation, which is very important to investors in both stocks and bonds, you might want to consider the message of the stock market, the message of these four different areas, apple, starbucks, merck and cat, you might want to also take a look at improvement in bank, i hope he's looking at that. let me repeat. dr. copper, a classic recovery signal up 70%. this story may be coming on faster. if w

bernanke said things aren't getting better at all. >> the house of pain!> which is what washington needed to hear or to put it another way, bernanke's negativity was a necessity. worth wise you can bet the congress would have done anything in its power to stop theseec troerd near measures that the fed and the treasury have been doing to stabilize the economy and things would get a whole lot worse. hey, ben, to paraphrase, cramer fife barry goldwater firing in defense of profits is no vice. i would have told bern anke toe take a bow. as a matter of fact, to quote market historian rihanna -- ♪ ♪ ♪ >> i would have given them a round of applause. a standing ovation, but he put on quite a show and because of his downbeat speech, congress won't cut the credit to make things better come the fall. here's the bottom line. i need you to ignore the man in front of the curtain. i'm not buying into his negativity especially after the magnificent quarter today. i think bernanke's credit machine will soon be replaced by the private sector's printing presses and the recip

bernanke said the same thing. he said he didn't remember. >> but what i do -- so you ask where i came away with that view. >> yeah. >> and i participated in a number of meetings and calls, where chairman bernanke participated, there were lawyers from the fed, staff members from the fed. people from treasury. and i came away from that -- those calls with that understanding. >> well -- wait, wait, wait. you came away from that -- well, listen, just a second. if approximate you came away from that from those phone calls, somebody must have said, hey, we can't let them do this. and i would suggest that it might have been mr. bernanke. >> well, what i would say to you, i do tnot know whether someone in those conversations or calls expressly said it, or if my understanding came from just the town and the forcefulness -- >> you know, you're a very smart man. i don't think anybody is buying what you're saying right now. i mean, you guys were on a phone call, there was a number of conversations and e-mails and you're sayin

soon people will be asking, what did bernanke say again? did he say buy caterpillar? not with his words, but definitely with his action. guy in philadelphia, guy? claerl a sport -- >> caller: a sport fas nattic boo-yah. >> how many in a row there, pal? >> caller: i think we're up to nine now. >> what's up? >> caller: i'm feeling like flotsam on the ocean of financial instruments. >> why is that there, sir? >> caller: the big boys are out there and making their move. we had the correction because of the uber negativity, and at the home gamer you taught us to ride the waves and making money. now that we're on vacation, earnings are starting to drive the market back up a little bit. what should we be expecting when they come back? will there be a buying opportunity here? >> listen to me and listen good, all right? you're from the city of losers like me, we often forget we won the world series and we'll win it again. i think that things right now are poised to go higher. should they go higher? i know the negatives, but i think we'll see a series of pieces of data come sep

besides bernanke, there's barney. barn every frank's house financial services committee, we'll look at systemic risk this afternoon. hearing focused on the so-called too big to fail institutions. joining us first on cnbc, peter wallison resident fellow with the american enterprise institute as well as a member of the congressional financial crisis inquiry commission. peter, thanks very much for being with us. >> pleasure to be here. >> is there such a thing as too big to fail? >> yeah, i think there actually is something like. >> that all right. why -- then what do we do about it? >> first of all, the institutions that are too big to fail are only commercial banks and that's because commercial banks are the places where people put their payrolls, people rely on immediate funds to pay for their mortgages an their living skpenlss and so forth. so when a commercial bank fails, a large commercial bank fail it is conceivable that it will set off through the economy a cat skad of loss cascade of losses that would amount it

bernanke said three features of the fed's exit strategy should keep that from happening. first, the fed charges a premium for some of its lending, and as markets have returned to normal, banks have sought cheaper sources of cash. second, the fed can effectively pay banks more to keep reserves with the fed, reducing the incentive to make new loans. and third, the fed can buy and sell securities, a technical tool it uses to keep inflation in check. >> so we do have a number of tools to do it, and we're quite aware of this issue, and we will not allow the broad measures of money circulating in the economy to rise at a rate rapid enough that it would cause inflation eventually. >> reporter: there's just one problem: reinhart says it's important to remember the earliest this exit strategy would take effect is next year. >> we don't know who the federal reserve chairman will be next year. we don't know if the congress will be considering a federal reserve reform act of 2010. there are going to be lots of mechanisms to put pressure on the federal reserve. >> reporter: so reinhar

that was chairman n bernanke's messe for congress today, sayinghe fed intends to keep interest rates low and cdit easy for quote an extended period. bernanke said it the right policy, even though the econy is showing quote tentativeigns of stabilizaon. the chrman also reassured investors the central bankas an exit strategyeady to go once it'time to reverse its easy money picy. darren gershxplains. >> repter: always cautious, the federal reserve is ccking out the exs in case of an flation emergency. a jumpn prices would require the fed to unwd the $600 billion it has pumped to the ecomy. but chairmanen bernanke made it clear he anhis colleagues are not expecting to p an exit stragy into action for "an extended period of time. vince reinhart is a form senior staer at the fed. he says the ntral bank won't ise interest rates or tighte crit until it believes a durable economicecovery is under y. >>hey don't have that evidence yet, and they are ying to send a signal to push back agnst market participantwho are expecting too quick turn in monetaryolicy. >> reporte yes, banks are looking tte

. >> ben bernanke says that the policies have helped to prop up the economy. the conflict in the congo could be supplying parts for the phone in your pocket. welcome to bbc news. guerrillas made a good, former fighters bringing order to kurdistan. a woman desperately hunts for her valuable shoe. the world health organization is now calling swine flu the fastest moving pandemic ever. the death toll stands at more than 700 worldwide. that is a jump of 60% from a few weeks ago. britain is a months the state's best prepared for the -- is amongst the country's best prepared for the pandemic. >> here in china, the authorities have taken tough measures to stop the spread of swine flu. they are not taking any chances health officials -- they are not taking chances. how officials screen people before they get off of the flight. if you are found wit vz swine flu, you are placed in quarantine. these people have been spending weeks in confinement. shoots around you. >> in the past, china was criticized for spreading its sars virus to the rest of the world. it is worried

bernanke's fighting for his life here. -- steve liesman about a month ago was given 3 to 1 in favor of bernanke, i'll take all of that and then some at 3 to 1 because he's not going to be reappointed. he's way too independent. this is a paul volcker type chairman rather than an al greenspan type chairman. he doesn't want to create a cult of personality. he want to create a cult of doing the right thing. i think that's way too independent. especially -- it administration will be leary about a fed governor -- a fed chairman who's so independent. in the face they'll need easy money if they're going to back off on fiscal stimulus. >> super glue their right foot to the accelerator. >> absolutely right. i think he's much to -- he's fighting for the right reasons but i think the head winds that are into him are really great. >> that really helps the conspiracy theory that i want to think, that the reason they're not saying what they're going to do is because they don't want to reappoint him because they want somebody they can --

did bernanke help? >> i don't think bernanke changed the big picture as far as euro/dollar is concerned. sure, he has an exit strategy. what was more important, i thought, was he went to great lengths to make it clear he didn't intend to use that exit strategy any time soon. so i've got the fed clearly on hold. no desire to raise rates for a long period of time. that means u.s. yields aren't going to climb above. and that should keep the dollar under pressure. i also think the size of the fiscal deficit in the u.s. means that euro/dollar can continue to climb higher. here, i think we can see as high at 1.50 over the summer. >> adam, thanks very much for that. we're going to leave it on that note. >> coming up in the next hour of "worldwide exchange," the director general says we're not out of the woods yet and prevents a further significant contraction in the world of trade. stay tued with a interview with pascal in the next few minutes. >>> welcome to "worldwide exchange." the world's third largestmake

the head of the american central bank, ben bernanke, says the u.s.conomy is improving, but unemployment is set to rise further. the former guerrilla force in kurdistan fought the iraqi army during the reign of saddam hussein, but now it is changing roles. >> they used to be rebels. but today, they are one of the most organized forces in iraq. they are the kurdish peshmaiga, if which means, those who face death. >> the soldiers used to be a guerrilla fighters and now they have come down out of the mountains and where the iraqi before. >> this force has been protecting the kurdish since 1991, at the very important part of the new iraqi security forces. >> these checkpoints are being controlled by the kurdish. >> this man used to be a rebel. he spent most of his youth fighting in the mountains. today, he is in the peshmaiga force. >> i consider myself a soldier of the iraqi federal army in the kurdistan regional government, but we have a dream to become an independent nationç >> in recet months, the iraqi army deployed a battalion to the disputed city

bernanke's testimony. chairman icea asked him if there were threats which i know you don't like that term or if people felt threatened to go through with the deals, it's okay because it worked out. do you agree with that? bernanke responded no, sir, in other words it wouldn't be appropriate for ken lewis and bank of america to feel pressured. given bernanke's acknowledgement in the hearing that threatening to fire bank of america's management would have been inappropriate, are you prepared to take responsibility for issuing an inappropriate statement? >> i certainly take responsibility for what i said. i think it logically followed. i laid out a train of events and i think it logically followed that that's what a regulator should do. i would say i think chairman bernanke when he testified here last month, he acknowledged that if someone put their decision to harm the company, they deserve to be held couldable. that's what i was trying to communicate to ken lewis. >> you stated you took issue with bank of a

bernanke insisted he has an exit strategy. greg ip, u.s.conomics editor for the "economist," joins us to explain what, exactly, that is. he sounded like he was trying to be op mystic today, greg. >> i think he was. he talked about, for example, how the markets have basically come back to normal in many areas from the situation where they were practically dysfunctional last fall. the stock market is doing well. investors don't seem to be as fearful. they're buying stocks and bonds. banks had a very good quarter. they've raised a ton of capital. the signs in the economy are also getting better. consumer spending seems to be stabilizing and our trading partners overseas are also seeing turn-arounds in their economies. >> ifill: in spite of all that, some of the lawmakers today seemed to express concern about what they felt was an unprecedented infusion of fed money. basically printing money into the private economy because it might spur inflation. chairman bernanke was questioned here by republican bill posey of florida. >> well, let's be clea

you can catch chairman bernanke's testimony live at 10:00 a.m. eastern. >>> meantime, the president launching a media blitz, making a personal pitch for health care reform. he says the august deadline for legislation may, in his words, spill over. but the president repeated his call for reforms enacted soon. he alsory load on the government's action to take action. you had a wall street that took risks, acted irresponsibly and almost dragged the u.s. economy into a recession. we had to intervene and did to stabilize the financial system. >> a new gullup poll shows americans are becoming more optimistic will a recovery. president obama says he is not seeing enough change on wall strut. >> he mentioned that he has less control now over the banks that have paid back the t.a.r.p. money, goldman sachs, jpmorgan, but interesting how he thinks wall street knot contrite enough, so don't expect the pressure to go away any time soon. >> even in the u.s. day today -- >> day today? >> pointing out that yesterday's health care beat, i think it was at the chil

bernanke said two things traders think are important. he talked for joblessness to continue for a long time. fiscal irresponsibility. if we don't get the outs in order, there consequences. we put those two together, it continues to push the notion of inflation further down the road and makes the current economy and maybe the near term outlook for several plus or more quarters, mediocrity. the course is stag without flation. it's going to flat curve the long rates moving down. the one aft rick, maybe there is a glitch in supply. that's not what traders are looking at. they are looking to buy and bought everything from five years out. down a dozen basis points and short maturities are down about half of that. hence the flattening. >> thank you. the 787 billion dollar american recovery and reinvestment acts set aside 27.5 billion. to date, 16.9 billion has been obligated to the state. we have three states with us to provide an update on how they're putting tax dollars to work. first up is california. at the epicenter of the economic crisis.

bernanke sd three features of the fed's exit straty should keep thafrom happening. first,he fed charges a premium for some of its leing, and as marks have returned to normal, banks have sout cheaper sourceof cash. second, the fecan effectively y banks more to keep reserve with the fed, ducing the incente to make new loans. and third, the fed c buy and sell securities, a tecical tool it uses to keep inftion in check. >> so do have a number of tools to do it, and 're quite awe of this issue, and we will not allow the broad asures of money ciulating in the economy to rise at a rate rapid ough at it would cause inflation eventually. >> reporter:here's just one problem: reiart says it's imrtant to remember the earliest this exittrategy would ta effect is next year. >> we don't ow who the federal reserve chairman will be nex year. we don'tnow if the congress ll be considering a federal reserve reform actf 2010. there are going be lots of mechanisms to put pressure o the federal resee. >> reporter: so rehart says, even tugh the fed has an exit strategy, it may noteel free

>> well, it's a combination i thought chairman bernanke was measured and did well. but one of the concerns that i raised had to do with the fed's role as a regulator, that i thought that they had failed the american people as the steward of the monetary policy. i think they've overall done a pretty good job. but i think we have to watch what we give the fed in the overall scheme of things in the future regulatory debate. >> so you say that they failed the american people in terms of monitoring the risk that was being taken off the investment banks? >> absolutely. not just the investment banks. i'm speaking -- >> banks in general. >> they were the prime regulator of the holding company, our largest banks. and most of that was outsourced to the reserve banks, like the bank of new york, rich sond, san francisco, you name it. and you have to say that they were totally inadequate to the task at hand. >> what has tim geithner said good that? he was running the new york fed at the time, right? >> absolutely. i've asked him that in the hearings, too. where was and he what h

bernanke and his testimony. and just the general notion that some of the medicine, especially some of the potential fiscal expenditures down the road, may be in and of themselves a fundamental negative for growth and small businesses. this is not lost on the bond market. we don't have anything going on with coupon supply, a buyback was yesterday and tomorrow. but we are going to pay close attention to what is being called home base by home technicians. that's a yield of 3 1/2% in the ten-year. mark, back to you. >> thank you. mixed picture in asia overnight. japan's nikkei up. south korea's kospi rising to the seventh straight day. china's shanghai composite up 2.6%. highest finish since june '08. hong kong's hang seng down 1.3%. india's bombay down 1 1/2%. guy johnson in london, what's up? >> down, mark. i hate to say it but we are down. we're coming off the best run the european markets have had in four years. but it had to break sometime and it has now. most of the main european markets are trading lower if n

bernanke was emphasizing the soft recovery. bond prices competing and i think the caterpillar call was the most important reason. you are right. on the earnings report with the press release and everyone seized on that. in the conference call that began at 11:00 a.m. eastern time, they talked about how tough the third quarter would be and for sales and earnings and talked about the fact that they could lose money and expecting to make 17 cents. that was a bit of a head turner. that's the main reason we came off the highs. >> there were a lot of reasons why we are off the highs. one thing we haven't talked about is cit. after waiting to put out the release of the finance for example the bond holders and they came out this morning saying bankruptcy a possibility. how much is that weighing on the market? . >> we diddy isry leaf and cit may not be systemic, but to main street has almost a domino effect. ask any retailer and it's a powerful force. not well-known to the public, but again to small mom and pop businesses. this is the f

bernanke did. this hearing and the two previous hearings revealed that the government concluded that mr. lewis's running of bank of america was in legal jeopardy. they had determined that mr. lewis in new about accelerating losses at merrill lynch before the shareholder vote to ratify the merger but he did not provide that information to shareholders. the top lawyer at the bird, had he determined that his management team for possibly in violation of securities laws for withholding material information from shareholders. top fed -- top professional staff at the fed had determined that his management team had failed to do due diligence in requiring merrill lynch and not up to the task to identifying and solving the problems in which they found themselves in late 2008. the professional staff was pressing for a number of new requirements on bank of america as conditions of any federal bailout in order to ratify three if you look at the screen -- in order to ratify. if you look at the screen. an email t

ben bernanke had much to do before congress today. he needed to provide some encouragement that an economic recovery is underway or on the way, and he he did say that some growth should occur later this year, though not enough to do much about the unemployment rate. at the same time, he insisted that once a recovery takes hold, a massive sum that the fed has been pumping into the economy, cash it has created, can be taken quickly to avoid inflation f anyone can pull off such a feat, it is bernanke. he pumped up the money supply when the dimensions of the banking is up problem came and this guy is decisive and fast. remember, it is the fed's traditional independence from the rest of the government and especially from congress that enables it to be decisive and fast. now, though, there is a new round of calls for greater oversight of the fed in the form of greater access to its books by congress. it sounds reasonable enough but it is unmistakably an effort to give politicians greater say in interest rate policy. some members of congress

chairman bernanke. i wanted to focus depend on the health care issue that we are certainly grap plink with right now. and, of course, the cost estimates are all over the lot. cvo says there kn's no way this going to lower the cost to government and what we're concerned about, of course, is that the government plan then attracts more and more from the private sector plan. and i just wanted to ask you how you would assess another big government health care program in addition to medicare and medicaid that are already causing great concern for the future that will be required. what you think that does to debt and is it the right approach right thousand considering our economy and let meed a the disincentive to employers to hire people which is what we're trying to do the reverse of right now when we have the high unemployment rate. just give me your view of whether we should be looking at something different, is there a problem here that you see on the horizon looking at the big picture and the long term.

ben bernanke is montaging that debt.t groet is growing at an 8% annual rate year over year yet bank lending is almost flat year over year. all of our money creation is going to service our debt. >> we're trying to reflat? >> we are reflating. look at the price of oil and gold. we are reflating. >> mike, hold on. hold on. the fed is buying $300 billion worth of treasuries. the treasury is issuing some trillion dollars or more this year or next -- >> 1.84 trillion, plus the rollovers. >> bernanke has argued he's only, first of all, buying a portion of the treasure ris out there. second, he's argued is that he's only restoring the traditional amount of treasuries on the fed's books. where do you get the word mon y monetizing from? >> not zimbabwe. >> i don't get the comparison to monetizing debt. >> any fer reserve prints money, and buys the mortgage-backed security, they're monday net tidsing the debt, whether they do a purchase agreement or coupon pass. that's monetizing the debt. >> you can monetize mortgage debt because

bernanke and mr. paulson keep the s.e.c.but you failed to raise the issue at two consecutive meetings at the financial oversight board which congress established to bring oversight to t.a.r.p. according to the minutes ofs these meetings, it was not until the january 15th meeting that you and mr. bernanke informed the board of additional bailouts with bank of america in connection with the merrill lynch merger. so you claim forcing the merger would have had catastrophic effect, but it wasn't worth revealing it to the financial stability oversight board. then the last example i would point to is the one i started with. go back to the october 13th meeting. you dereceived the banks involved with this. this is base odd ken lewis' testimony. i've offed talked about this with him and fed chairman bernanke. you called the nine biggest banks to washington. they don't know what the meeting is about. he describes the meeting. they sat on one side. male speaker: bernanke, ms. bair sat on the other side and told them they would take t.a.

bernanke had to make decisions over the weekend. now, under the proposed reforms, we are asking that the secretary of treasury give approval if the federal reserve is going to expend -- put out treasury money -- is going to rescue an institution or to put it back on its feet, so i think that's an appropriate thing to do and i think the secretary of treasury, working together with the federal reserve, can do this quickly, but i don't think you can necessarily come back to congress or try to audit whatever he said. that just doesn't work. >> suarez: the congressman -- congressman, does your proposal and one from congressman ron paul of texas threaten the fed's historic independence from congress? >> i don't think so at all. actually, quite honestly, i'm surprised mr. baily's comment he's so dismissive of the idea that -- i think he said that, yeah, probably the fed did expert some pressure on merrill lynch with regard to the b.o.a. situation and he's not taken aback by that. if he believes that went on, he's not surprised and he's ok

and a one-hour version: "bernanke on the record" will air on most pbs stations.eck your local listings for the time. >> ifill: finally tonight a restless rock 'n roller. jeffrey brown has our profile of musician elvis costello. ♪ pump it up pump it up >> reporter: young, brash, sporting tight pants and big glasses, elvis costello emerged in the late '70s as a leading voice of "new wave" rock and roll. born 'declan macmanus' "costello" came from his mother's family, "elvis" came from, well, you know who. the young man from liverpool turned out a series of hit albums and songs. ♪ what's so funny about peace, love and understanding >> reporter: but soon enough, fans learned that costello had wide-ranging tastes in music. and that he didn't like being confined by labels, which he's continued to defy for more than 30 years. >> the sign posts are a matter of convenience so that we don't stumble into or through the wrong door. but i grew up in a house full of music, and my parents were both involved in music and it made it seem natural enough for me to listen to all of

jason, what is ben bernanke going to do tomorrow? do you expect any particular exciting announcements and what about this motion that the base of the balance sheet hasn't changed in six months, almost seven months, and most of the new cash is on deposit at the fed itself. it's not being used. >> all right. i don't want to be patronizing, but i thought that your explanation of the monetary base and the excess reserves was terrific. i know a lot of people are focusing on this, and there has been a big change, as you know, because the fed can now pay interest on reserves. so that's important, because it kind of divorces the balance sheet from the fed funds rate, which usually the balance sheet was used to essentially effect the fed funds rate and now you don't necessarily have to do that. so i think, you know, to sum it up, i basically think the fed is already in the midst of some sort of exit strategy. i think you're right about that. and i think that they're going to kind of -- i think bernanke is going to own up to that. i think that

a one-hour version, "bernanke on the record," will air on most pbs stations.heck your local listings for the time. and check out paul solman's "making sense" web site to play a game where you get to be fed chairman, and see what happens when you make decisions on monetary policy. >> ifill: there were positive signs from the housing sector. the commerce department reported new-home sales jumped 11% in june, the most in nearly 9 years. and on wall street: the dow jones industrial average gained 15 points to close at 9108. the nasdaq rose about two points to close near 1968. the u.s. warned today iran could face tougher sanctions if it rejects talks on its nuclear program. defense secretary gates carried that message to amman, jordan. earlier, he met with israeli defense minister ehud barak in jerusalem. gates defended diplomacy, but barak emphasized military action is very much a live option. >> i think we are in full agreement on the negative consequences of iran obtaining this kind of a capability. i think we're also agreed that it is important to take every o

bernanke term is up in january. was it something he said in his testimony on capitol hill this week that brought this on? >> i don't think it's that. i think what you've got here is you -- let's remember that the fed chairman is a holdover from the previous administration. the bush administration, and since the democrats came into power, he may very well have a bull's eye on his back since that time. i think the issue here is trying to separate whether or not there is a better, more qualified man or woman for that position or if this is a great deal of political posturing to take the spotlight off other people or other issues and put it on the fed chairman. >> some lawmakers are raising red flags against expanding the fed's power, but there is a big difference between expanding power and kicking him out and it's not bernanke, then who? >> there sure is a big difference between expanding the power and kicking him out. the question of who, i think if you look at the idea of expanding the fed's power, that's not unprec

you already know what bernanke is going to tell you. he says don't take those rule-writing providence away from me. and sheila bair says i want to enforce the rules. where do you come down on this? >> what we don't need is an assault on consumer rights, and unfortunately what the second confirmed in this hearing is that the agency that the administration -- is proposing, will be given the draconian powers to either ban or modify all home mortgages, ban or modify all credit cards, ban or modify remittances, home equity loans, and the list goes on of. and so you don't protect consumers by taking their choices away, and it would also contract credit in the midst of a huge credit contraction in a small business. specifically to your question, i don't think you can separate a product approval, which is really what this agency is all about, from safety and soundness. that's what happened with fannie and freddie. and i can give you 85 billion reasons today why that's a bad idea. and it was 85 billion reasons represents the taxpayer dollars tha

ben bernanke's war on the great panic. tonight he'll tell us what bernanke was up to this week. >> that's right, gwen. the poor guy went to the hill three times, once in the senate and once before the house. he had a very consistent message. things are getting a little better and i deserve some of the credit. and barney frank told him no one got elected with a bumper sticker saying, you could have been worse. he said, you really do need to change the regulatory -- financial regulatory apparatus so we don't go through this again. and i'm 100% behind tim geithner, the treasury secretary and his plan, except for the things i don't want to do. he said to congress emphatically he hates this bill ron paul is pushing that has the surprising support of 2/3 of the house that would give the government the accountability office the right to audit the feds' monetary policy, their interest rate decisions and basically said if you do that the fed will lose its independence and we'll have inflation. he was very strong on that. and he sai

discuss what motivated, another bernanke television interview.ow, melissa, no good deed goes unpunished. >> a great job. fantastic. >>> the earning central round up and how to ring up profit in the tell come sector. two top analysts with their tope stocks are straight ahead, right here on "the call." 31 are streaming a sales conference from the road. eight are wearing bathrobes. two... less. - 154 people are tracking shipments on a train. - ( train whistles ) 33 are im'ing on a ferry. and 1300 are secretly checking email... - on a vacation. - hmm? ( groans ) that's happening now. america's most dependable 3g network. bringing you the first and only wireless 4g network. sprint. the now network. deaf, hard of hearing and people with speech disabilities access www.sprintrelay.com. bringing you the first and only wireless 4g network. sprint. the now network. you have questions. who can give you the financial advice you need? where will you find the stability and resources to keep you ahead of this rapidly evolving world? these are tough questions. th

. >> paul: last night federal reserve chairman ben bernanke went where no fed chief has gone before. straight to the people. it came in a town hall meeting in kansas city hosted by the pbs program "the newshour with jim lehrer". bernanke took questions on everything from the fed's handling of the financial crisis to exactly what his agency does. and some of the questions were blunt. a small business owner asked why the fed rescued big banks while short-changing small companies? bernanke responded saying he too was disgusted by the bailouts. >> let me just emphasize that nothing made me more frustrated, more angry, than having to intervene, particularly in a couple of cases where taking wild bets forced these companies close to bankruptcy. there's nothing that made me angrier than having to do that. why did we do it? because if that company had collapsed in the middle of a crisis it could have brought everything down. >> paul: you can see more of bernanke's comments on the newshour on pbs tonight, tomorrow night, and wednesday night. also, the fed is taking a closer look at how the fi

here is bernanke. this is after bear stearns had collapsed, and the wheels of the stock market start to come off. i know because i was there. take a listen to mr. bernanke. >> overall the u.s. economy appears to expand at a moderate pace with growth and strengthing in 2008 to a rate close to the underlying trends. >> 2008 was the year we put trillions of dollars in the financial system in order to prevent total financial apocalypse. and we lost the largest insurance company of the group, and citigroup the largest commercial bank on the planet earth, and all a component of the dow jones industrial average. and now listen to his predecessor in allen greenspan and his predictions of how the economy would behave in the days and weeks and months ago. >> while local economies may experience significant price imbalances, a national severe price distorsion seems unlikely. the housing problem became clear to me in 2006 retrospect. we never had a significant decline. >> bill, my question is simple, for all of us

bernanke said that. some of the forecasters i trust the moek, macroeconomic advisers, research institute, alan blinder in friday's "the wall street journal." just mathematically, the depth of the decline in the first half of the year, we will get incremental growth on top of that. the question is, what does that translate into in terms of the jobless rate and people's pocketbooks? i think, you know, judging by recent history, ie, the post '01 expansion, and given all of the head winds we have, problems with credit, the fact that the tool -- >> it's just like ben bernanke said last night, we're going to have growth but it's not going to be enough to offset the decline of unemployment. >> absolutely. >> what about, dan, the fact that a lot of people think that even when we do get into a sustainable recovery, that people's habits have changed dramatically because of the depth of this recession and the fact that it was led by housing, and that fundamentally, things are going to be different. the economy, its

we have got fed chairman bernanke is speaking both tomorrow and on wednesday. how might that influence the market in the here and now? people are looking for an exit strategy from the fed. what is your take? >> i think everything that the fed, the government is doing is a head fake to make it look like things are improving but the bottom line is the same. unemployment is rising, the housing market is two years away from a recovery. banks aren't lending, they are tightening their standards. the baby boomers have left the spending party. they are not coming back, they are afraid of losing their jobs, they are afraid for retirement and last but not least, you have got congress and the president who seems to have taken their economic classes at the kremlin. i don't see how anybody can see that long-term. >> i like that very much, mike rubino. that is well put n terms of the economics coming out of the kremlin, how do you invest in kreml kremlinomics? >> the last bounce, the green shoots are quite possibly weeds and long-term tough but right now, large cap growth, s

ben bernanke accused of being anything but gentle ben with bank of america.here is a probe to figure out whether the fed abused its power during the takeover of merrill lynch. scott garrett from new jersey was one of those lawmakers, he joins me now. welcome to the program. >> i like that tony soprano reference. stuart: well, you are from new jersey, and so am i. but i've got a sustain petition that you don't like ben bernanke and you don't want the fed to be the ultra regulator, as is the proposal. so you're coming up with an investigation to see exactly what ben bernanke did with b of a and merrill lynch and maybe stop the fed from being the uba regulator, as is the proposal. am i going too far? >> well, i like some of your points. do i like or not like ben bernanke? i like the man. i respect the tough position that he's in. as a matter of fact, just moments ago he was here speaking to a small group of us here on a whole bunch of these issues. but you're absolutely right on the aspect of i have real concerns about throwing a whool new slew of areas of autho

he did mention ben bernanke. the fed chairman defendants his actions on the financial crisis, saying he did not want to be the person who presided over the second great depression. bernanke making those comments after answering questions in a town hall forum this past sunday. bernanke tried to alloy concerns that the fed has too much power, saying he's answerable to the american people. bernanke said the fed is doing all it can at this point to turn the economy around. he's confident the u.s. will be back to strong growth within a few years. >> shares of pearson trading at the top of the ftse. education, publishing business. it expects subscriptions to withstand further economic pressure but did not see an upturn in advertising any time soon. >> china's first ipo in a year skyrocketed in china. sichuan expressway trading was suspended for the second time. analysts say investors were drawn in by the strong prospects and the low price. china state construction engineering widely expected to kick off this tuesday. a

bernanke reassured congress that the fed had the necessary tools to implement an exit strategy and raise interest rates as needed. the federal reserve is under attack from some politicians in washington who believe it has become too powerful. they want to expand the authority of the government to audit the fed's decisions, including those on interest rates. ben bernanke warned that these moves would be seen as an attack on the independence of the federal reserve and could lead to higher interest rates and inflation in the future. >> bbc news, new york. >> in what was seen as a brave move, the japanese prime minister dissolved parliament and called early elections for next month. opinion polls suggest he is going to lose the vote on the 30th of august. he also apologized to the public for the failures of his government in the midst of the worst recession for 60 years. >> a new report by amnesty international criticized saudi arabia for detaining thousands of people without charge or trial since 2001. amnesty alleges widespread abuse in the name of counterterrorism and accuses the internat

bernanke. welcome to the committee. it's always good to be in touch with you. we share a firm commitment to empowering our citizens through financial literacy. to build stronger families, businesses and communities. and i greatly appreciated your efforts and that of your talented and dedicated staff on this issue. too many, as we know, too many working families were steered into mortgages that they could not afford, or effectively understand the potential risks associated with mortgage products. now some potential homeowners cannot obtain mortgages or meet substantial down payment requirements. especially in states such as hawaii. with high housing costs. what must be done? what must be done to ensure that working families are better prepared to purchase a home, select an appropriate mortgage, and remain in their house when challenged with financial hardships? >> well, senator, as you say, you and i agree very much on the importance of financial literacy. we have talked about this in the past.

that follows the cond day of questionsor fed chairman bernanke. ray suez has the story. >> rerter: those tough qutions came today before the senate bankingommittee. top of the agenda f senators: the fed'suthority and its response to theinancial crisis. chairman chris dodd of connecticut. >> reporter: richardhelby of alabama,he committee's ranking republic said he disagreed witan administration proposal to give the d more regulatory power >> in the end, it washe failure, i bieve, of the fed to adequately supervise our largest fincial institutions that ruired the deployment of s monetary policy resources stave off finanal disaster. in light of e fed's record of failure as a bank regulor, it should come as nsurprise that congress is taking closer look at the fed and reconsideringts regulatory mandat >> reporter: some senator supported bernanke's respons tthe economic crisis. still, ny had questions and criticism. democrat chuck schumer new york pressed t chairman on the fed new rules for the credit card industry, which ke effect a new law sied by the