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Bernake sounds the alarm

· For the President of the Fed, the problems of the American economy are very serious ·

But U.S. treasuries remain a safe haven

The problems of the American economy, “are very serious,” and the Fed is doing everything possible to sustain the job market and growth, the President of the U.S. central bank, Ben Bernake said yesterday. The unemployment rate remains, “painfully high” and there is concern for the crisis in Europe; in the eurozone there is, “ a lot of stress,” and decisive plans against the risk of contagion need to be put into action quickly. The United States, he said, will not be able to escape the consequences of an eventual worsening of the situation. Speaking to military members in Fort Bliss, Texas, Bernake attempted to reassure them, “U.S. treasuries remain a safe haven despite the downgrade; the American economy remains the largest in the world; the United States continues to be a great place to do business, with a strong system of laws, an entrepreneurial tradition and flexible capital and labor markets.” The country, Bernake said, “remains a technological leader… these strengths will reassert themselves if our country takes the steps that are necessary to prepare for the future - for example by putting the budget on a sustainable path and improving our primary and secondary educational system.” The Fed, “will certainly do its part to help restore high rates of growth and employment in a context of price stability.”

According to an analysis of the Wall Street Journal , the possibility that the United States might slide into a recession has decreased, but recovery could be derailed by European events. The paper conducted a survey of 52 analysts, according to which the chance of recession for the United States in the next 12 months is one in four, a decrease compared to two months ago. Moreover, economists say that the U.S. economy will grow less than 3% until 2012; not enough to reduce the unemployment rate, which will drop to 7% in 2014. All eyes are on the work of the bipartisan super commission which is studying a strategy for cutting the deficit.

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