David Leonhardt – Charlie Rose 03-20-13

Salient to Investors:

David Leonhardt at The New York Times said:

Fed will continue QE until unemployment falls to 6.5%.

Democrats may want Bernanke replaced since a Republican has been Fed Chairman for over 20 years.  Obama likes Bernanke and both have underestimated the length and depth of this weak economy.

Bernanke’s explanation that it did not have the legal authority to rescue Lehman is unsatisfactory as the Fed found the legal means when it wanted to.

The Fed is fighting austerity headwinds. Unlike prior recessions, this time government jobs are falling instead of growing because states and municipalities have to cut back and house republicans have insisted on big cuts. More austerity to come in 2013.

A large proportion of GDP growth is going to corporate profits. People are going into stocks because of low interest rates but question how long this can go on because stocks are no longer cheap relative to earnings.

Cyprus is a tiny country so it will not be a turning point like Greece was and because the financial sector is substantially stronger now than a few years ago.

Watch the full video at http://www.charlierose.com/guest/view/6555

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