Financial Armageddon

When the chairman of the Federal Reserve uses the phrase "debt Armageddon"...you know there may be something prophetic going on.

Federal Reserve Chairman Ben Bernanke told Congress on Wednesday that America is facing something approaching a debt Armageddon.

"The deficit will recede somewhat over the next two years as the temporary stimulus measures wind down and as economic recovery leads to higher revenues," he said, testifying before Congress' Joint Economic Committee.

"Thereafter, however, the annual deficit is expected to remain high through 2020, in the neighborhood of 4 to 5 percent of GDP," he said.

However....the article doesn't spell all doom and gloom. Many continue to tell us that the economic recovery is upon us.

On the economy, Bernanke seemed slightly more optimistic that the fledgling recovery will keep on going after massive government stimulus fades later this year. Incoming economic barometers suggest that growth in demand by consumers and businesses "will be sufficient to promote a moderate economic recovery in coming quarters," he said.

Consumers are spending again after having cut back sharply during the recession. Going forward, consumer spending should be helped by a gradual pick up in jobs, a slow recovery in household wealth from recent lows and some improvement in the ability to get loans, Bernanke said.

That assessment of consumers -- whose spending accounts for 70 percent of national economic activity -- also appeared more upbeat. In recent weeks, Bernanke and other Fed officials have cited a litany of headwinds facing consumers, including high unemployment, rising home foreclosures and sluggish wage growth.

See it here; http://www.foxnews.com/politics/2010/04/14/bernanke-expresses-confidence-economic-recovery/?test=latestnews

Did you catch the 70 percent stat there again? That's pretty amazing that 70% of our entire economy is dependent on people buying stuff.... I wonder how long that can go on at that level?

It's no wonder during the real estate boom that folks spent all that home equity money at the retail stores....and really got that 70 percent part of the engine turning extremely fast.