THE TELEGRAPH: Federal Reserve chairman Ben Bernanke said that the impact of the current housing-led slowdown in America has the potential to be far deeper than the collapse of the dotcom boom at the start of the decade.
In his second day of semi-annual assessment of the economy on Capitol Hill, Mr Bernanke explained that the decline in home prices is causing a broader set of problems than the end of the technology bubble.
Comparing the 2001 slowdown to the economy's current woes, he said: "In fact the effects of the stock market declines were primarily on investments. In this case, consumers are taking the brunt of the effects."
Mr Bernanke also believes the Fed is in a more difficult position to respond now that it was in 2001.
However, he does not anticipate a period of stagflation - where stagnant economic growth and inflation coincide - saying that economy's current problems are "nowhere near" the set of issues that led to the stagflatory environment of the 1970's. Bernanke says US slowdown will eclipse dotcom bust >>> By James Quinn, Wall Street Correspondent
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