Bernanke Channels Amazon's Bezos
11:31 A.M.: UPDATED WITH BERNANKE'S HOUSE AFIRE COMMENT:
Fed Chairman Ben Bernanke is testifying before the Senate Banking committee right now and is channeling Amazon chief executive Jeff Bezos.
Bernanke, in his semi-annual update on the economy, responded to a question from Sen. Evan Bayh (D-Ind.) that, by bailing out bad banks, the government is encouraging bad behavior, or creating the "moral hazard" you hear so much about.
Bernanke responded by comparing the current crisis to a neighbor of yours smoking in bed and setting his house afire.
"You could punish him very severely by refusing to send the fire department," Bernanke said, but he added that the neighborhood is filled with closely-packed houses, meaning your neighbor's negligence would spread and burn down the entire 'hood.
"The smart thing to do is to put out the fire and save him from the consequences of his own actions," Bernanke said.
Yesterday, Bezos appeared on CNBC promoting his new Kindle 2 electronic reading device. He was asked essentially the same question and said, "You don't tell someone not to play with matches " when the house is burning down.
Bernanke: Inflation To Remain Low
10:27 A.M.: Bernanke said core and overall inflation is likely to remain low for the next two years and sees a recovery in 2010.
He said strong government is needed to break what he called the "adverse feedback loop."
The markets have thus far not tanked as Bernanke is speaking. The Dow is near its intraday high, up more than 1 percent.
You can read the entire text of Bernanke's speech right here.
The comments to this entry are closed.