Financial crisis set to continue

The crisis in the financial world that has been affecting the US has a long way to go before it eases, according to the Chairman of the Federal Reserve, Ben Bernanke.

The crisis poses a major challenge to the government, Bernanke added, and with the high and rising inflation levels of present will continue to make a mark on a troubled economy.

Bernanke went on to state that while improvements have been seen in some of the markets, any subsidence in the ‘gale force’ storm that is currently affecting the financial world in general will continue to affect things in the broader sense and will also affect the continuing rise in unemployment and the general consumer activity.

Federal Reserve close observation

Recent drops in oil prices, and thus of other commodities, may be welcome, he added, but the outlook is uncertain for the foreseeable future and inflation looks set to waver.

Bernanke went on to explain the Federal Reserve would be monitoring the situation at close hand and may have to act in the future in order to keep inflation rates at an acceptable level, and claimed that the current financial situation may be among the most taxing that governments and financial institutions have faced in living memory.

With weak economic growth alongside high inflation, the federal Reserve may well be advised to keep interest rates at a standstill throughout the rest of the year, this waiting until there is some indication of financial stability and any sign of a change in the state of the economy as a whole/

Wall Street responds

Wall Street responded to Bernanke words earlier this week with a rallying call, the Dow Jones up to 11,565.7 and the Standard and Poor up by 7.45 in the wake of his speech in conference on economics earlier in the week. The Nasdaq composite index also rose by 19.41.  

With the election on the near horizon, it is clear that the economy is a prime concern for voters and the contenders for the presidential office, Barack Obama and Jon McCain, are both aware of this and will be dealing with the subject at the upcoming party conventions.

Credit problems, affecting the populace country –and world – wide, show no signs of abating, and the financial crisis is clearly set to carry over into the next governments time. The unemployment rate will be of concern to the candidates, too, with a year high of 5.7 percent being seen in the month of July.