Today the Fed Chairman gave his testimony on the economic outlook before the Joint Economic Committee.  In his testimony he stated that “we continue to expect economic activity to bottom out, then turn up later this year.”  One of the key elements of the assessment is that the housing market is beginning to stabilize.  I am not completely sure what he means by stabilize but he is the Fed Chairman so we will give him the benefit of the doubt.

He continues by stating that “an important caveat is that our forecast assumes continuing gradual repair of the financial system.”  Then Mr. Bernanke reiterates that banks will have the “assurance that equity capital from the Treasury under the Capital Assistance Program will be available as needed.”  WHAT?!?

So first you tell us that the housing market is beginning to stabilize.  You then proceed to tell us that all your economic forecasts are dependant on the gradual repair of the financial system.  You ice the cake with the grand finale that the Treasury will continue to provide capital for the banks.  Oh yeah, the economic outlook is definitely looking bright!

Well, I guess Ole Ben gave us an economic outlook but it is solely dependent on the financial system.  NO SHIT!  I think anyone who can speak English could have told us that.  “The outlook for this economy is dependent on the repair of the financial system.”  What knowledge and research has been bestowed upon us?!?

Well, now that we know the sky is blue I guess we can assume that Ben and his misfits will continue to sink trillions into mortgage backed securities which should send mortgage rates lower.  The Fed eased greatly on the amount of purchases (ONLY $5 billion) last week so mortgage rates might not decline as much as usual over the short term.  Overall we should still continue to see rates fall.