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The financial crisis appears to be mostly behind us, and the economy seems to have stabilized and is expanding again.

Ben Bernanke

A collapse in U.S. stock prices certainly would cause a lot of white knuckles on Wall Street. But what effect would it have on the broader U.S. economy? If Wall Street crashes, does Main Street follow? Not necessarily.
BEN BERNANKE

Country Stock Street Wall White
I don’t see much evidence of an equity bubble.
BEN BERNANKE

Bubbles Equity Evidence
We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s going to drive the economy too far from its full employment path, though.
BEN BERNANKE

Employment House Thinking
It’s true that the Federal Reserve faces a lot of political pressure and is unpopular in many circles.
BEN BERNANKE

Circles Political Pressure
The crisis in Europe has affected the US economy by acting as a drag on our exports, weighing on business and consumer confidence and pressuring US financial markets and institutions.
BEN BERNANKE

Acting Country Financial Lace
The GSEs are adequately capitalized. They are in no danger of failing.
BEN BERNANKE

Capitalized Danger Failing
House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals.
BEN BERNANKE

Fundamental Past Strong Years
The economic repercussions of a stock market crash depend less on the severity of the crash itself than on the response of economic policymakers, particularly central bankers.
BEN BERNANKE

Bankers Crash Economics
Nobody likes to fail but failure is an essential part of life and of learning. If your uniform isn’t dirty, you haven’t been in the game.
BEN BERNANKE

Dirty Essential Games
I come from Main Street, from a small town that’s really depressed.
BEN BERNANKE

Main Street Small Towns
The best approach here, if at all possible, is to use supervisory and regulatory methods to restrain undue risk-taking and to make sure the system is resilient in case an asset-price bubble bursts in the future.
BEN BERNANKE

Investing Risk Use
Among the largest banks, the capital ratios remain good and I don’t expect any serious problems . . . . among the large, internationally active banks that make up a very substantial part of our banking system.
BEN BERNANKE

Banking Ratio Serious
Although low inflation is generally good, inflation that is too low can pose risks to the economy – especially when the economy is struggling.
BEN BERNANKE

Economy Risk Struggle
The central bank needs to be able to make policy without short term political concerns.
BEN BERNANKE

Able Needs Political
I and others were mistaken early on in saying that the subprime crisis would be contained. The causal relationship between the housing problem and the broad financial system was very complex and difficult to predict.
BEN BERNANKE

Casual Financial Problem Relationship
Indeed, in general, healthy investment returns cannot be sustained in a weak economy, and of course it is difficult to save for retirement or other goals without the income from a job.
BEN BERNANKE

Goal Job Retirement

The financial crisis appears to be mostly behind us, and the economy seems to have stabilized and is expanding again.

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The financial crisis appears to be mostly behind us, and the economy seems to have stabilized and is expanding again.

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