Reuters - Video

EDITION: U.S. | U.K. | IN

Business

Fed can't fix fiscal cliff damage

Tuesday, 20 Nov, 2012 - 02:18

Nov. 20 - Federal Reserve Chairman Ben Bernanke warned that the Fed would not be able to do much if the fiscal cliff becomes a reality. Bobbi Rebell reports.

▲ Hide Transcript

View Transcript

If the fiscal cliff's $600 billion in expiring tax cuts and trillions of dollars in government spending reductions becomes a reality- the Fed won't be able to do much to help according to Fed Chairman Ben Bernanke who spoke at the Economic Club of New York. SOUNDBITE: FEDERAL RESERVE CHAIRMAN BEN BERNANKE (ENGLISH) SAYING: "In the worst case scenario where the economy goes off the broad fiscal cliff the largest fiscal cliff which according to CBO and our own analysis would throw the economy into recession, I don't think the Fed has the tools to offset that." Stocks, which had been gaining ground on optimism about a potential deal- fell on the comments. S&P Capital IQ's Alec Young: SOUNDBITE: ALEC YOUNG, GLOBAL EQUITY STRATEGIST, S&P CAPITAL IQ (ENGLISH) SAYING: "I think at this point what markets want to see is Bernanke jawboning Washington; creating some urgency for them to really get something done on the fiscal cliff." Bernanke also said just the worries about the fiscal cliff have put the brakes on a lot of the economy's potential: SOUNDBITE: FEDERAL RESERVE CHAIRMAN BEN BERNANKE (ENGLISH) SAYING: "I really have a sense that there is a lot of unused capability. Not just in terms of unemployed workers but in terms of potential products, new investments, new technologies, things that are just being on the shelf, are not being utilized to the full extent because people are waiting to see how things will evolve." That waiting is costly. IHS Global Insight's Chief U.S. Economist Nigel Gault: SOUNDBITE: NIGEL GAULT, CHIEF U.S. ECONOMIST, IHS GLOBAL INSIGHT (ENGLISH) SAYING: "Businesses will have been concerned with formulating their plans for 2013 - very difficult to do so if you are not sure where government spending is going, if you are not sure where the tax regime is going." And while Bernanke offered no new guidance on bond buying plans, Gault is confident the support will continue. SOUNDBITE: NIGEL GAULT, CHIEF U.S. ECONOMIST, IHS GLOBAL INSIGHT (ENGLISH) SAYING: "The Fed's got this Operation Twist which is going to expire. If it doesn't replace it with something, then effectively its policy would become a little tighter. So we are convinced that it will want, at least for the immediate future, to continue that policy through another form by actually having a program of outright purchases of long-term treasuries to replace the Twist." Bernanke did re-iterate the Fed's guidance that it expects to keep interest rates near zero until mid-2015.

Fed can't fix fiscal cliff damage

Tuesday, 20 Nov, 2012 - 02:18

Editors' Picks »

The Exchange »

The Exchange: Hot commodity The Exchange: Hot commodity

Wed, 16 Jul, 2014 - (9:25)

The Exchange: Constitutional crusade The Exchange: Constitutional crusade

Wed, 25 Jun, 2014 - (11:35)

The Exchange: The value of money The Exchange: The value of money

Mon, 02 Jun, 2014 - (9:53)

The Exchange: China’s Second Continent The Exchange: China’s Second Continent

Tue, 27 May, 2014 - (9:35)

The Exchange: A master of business arts The Exchange: A master of business arts

Thu, 08 May, 2014 - (8:24)

The Exchange: America's bankrupt cities The Exchange: America's bankrupt cities

Mon, 05 May, 2014 - (8:52)

The Exchange: Let the rocking commence The Exchange: Let the rocking commence

Tue, 08 Apr, 2014 - (8:13)

The Exchange: The Moneyball fallacies The Exchange: The Moneyball fallacies

Mon, 24 Mar, 2014 - (9:54)

Is doing good a good business? Is doing good a good business?

Mon, 17 Mar, 2014 - (7:38)

Oddly Enough »

Is it a plane? No, it's a hoverbike Is it a plane? No, it's a hoverbike

Fri, 22 Aug, 2014 - (2:40)

Fox kicks off "Simpsons" mega marathon Fox kicks off "Simpsons" mega marathon

Thu, 21 Aug, 2014 - (0:56)

Six-story tall duck floats into L.A. port Six-story tall duck floats into L.A. port

Thu, 21 Aug, 2014 - (1:02)

Young artist paints surreal illusions on bodies Young artist paints surreal illusions on...

Thu, 21 Aug, 2014 - (1:30)

Snow leopard cubs make Bronx Zoo debut Snow leopard cubs make Bronx Zoo debut

Wed, 20 Aug, 2014 - (0:41)

Eco-friendly bench keeps your tech fully charged Eco-friendly bench keeps your tech fully...

Tue, 19 Aug, 2014 - (1:55)

A cheetah cub and a puppy make friends A cheetah cub and a puppy make friends

Tue, 19 Aug, 2014 - (0:48)

Bug eaters unite in Tokyo Bug eaters unite in Tokyo

Tue, 19 Aug, 2014 - (1:23)

Tango dancers put best feet forward Tango dancers put best feet forward

Tue, 19 Aug, 2014 - (1:08)

Giraffe calf checks out new surroundings Giraffe calf checks out new surroundings

Mon, 18 Aug, 2014 - (0:42)

Bolivian priest blesses beloved pups Bolivian priest blesses beloved pups

Sun, 17 Aug, 2014 - (1:25)

Reuters Investigates »

Re-homing victim: "I could have been dead" Re-homing victim: "I could have been dead"

Wed, 19 Feb, 2014 - (8:24)

Cops and loggers in the Amazon rainforest Cops and loggers in the Amazon rainforest

Fri, 10 Jan, 2014 - (4:01)

"Passed around like a dog" "Passed around like a dog"

Thu, 29 Aug, 2013 - (6:32)

Adopted, then abandoned online Adopted, then abandoned online

Thu, 29 Aug, 2013 - (13:21)

How the DEA keeps its secrets secret How the DEA keeps its secrets secret

Mon, 05 Aug, 2013 - (1:36)

How education lost its role as the great equalizer - Reuters Investigates How education lost its role as the great...

Mon, 17 Dec, 2012 - (7:52)

Jihad Jane: From abused child to American jihadist - Reuters Investigates Jihad Jane: From abused child to American...

Sun, 09 Dec, 2012 - (10:01)

Jihad Jane: The order to kill - Reuters Investigates Jihad Jane: The order to kill - Reuters...

Mon, 10 Dec, 2012 - (10:39)

Moving Pictures »

"Old timers" sail the Chesapeake Bay "Old timers" sail the Chesapeake Bay

Mon, 11 Aug, 2014 - (2:27)

Burned memories Burned memories

Fri, 08 Aug, 2014 - (3:02)

Images of July Images of July

Fri, 01 Aug, 2014 - (1:20)

World Cup: passion on the pitch World Cup: passion on the pitch

Fri, 11 Jul, 2014 - (1:00)

A refugee in America gives back A refugee in America gives back

Thu, 03 Jul, 2014 - (3:25)

A long search for refuge A long search for refuge

Fri, 20 Jun, 2014 - (3:04)

World Cup: Around the globe in 50 goals World Cup: Around the globe in 50 goals

Fri, 06 Jun, 2014 - (1:08)

VIVID – Sydney’s spectacle of light VIVID – Sydney’s spectacle of light

Fri, 30 May, 2014 - (1:37)

The week that changed Boston The week that changed Boston

Mon, 14 Apr, 2014 - (3:28)