Stocks Up Because Of Comments By Bush And Bernanke

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Comments from President George W. Bush and Fed Chairman Ben Bernanke put a thin smile on the faces of beleaguered investors, who are looking for any sign that the current economic woes which are largely the result of the subprime mortgage crisis, will soon be a thing of the past.

The gains came after a speech from Bernanke on housing and monetary policy in Jackson Hole, Wyo., and remarks from President Bush encouraging the use of Federal Housing Administration insurance.

In his speech, Bush noted that the subprime crisis is relatively modest compared with the entire U.S. economy, but he urged mortgage holders to refinance if they become delinquent on adjustable-rate loans.

The president, however, emphasized that it is not the government’s position to provide a wholesale bailout to all borrowers. He also promised to penalize predatory lenders.

Both Bush and Bernanke made it clear that they don’t plan on bailing anyone out over their financial decisions, but that they are at least sympathetic to the idea of lending a hand to people who need it most in the form of interest rate cuts and a chance to re-finance.

“Consequently, we will pay particularly close attention to the timeliest indicators, as well as information gleaned from our business and banking contacts around the country,” he said. “Inevitably, the uncertainty surrounding the outlook will be greater than normal, presenting a challenge to policymakers to manage the risks to their growth and price stability objectives.”

From Bernanke’s comments, it’s fair to say that no one is sure exactly what moves to expect next from the Fed. Most investors hope for an easing of interest rates, but Bernanke’s decision will be based on the most current data he possesses. All in all, the interest rate decision still remains a mystery.

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