Commentary

After three years of trying to solve their self-imposed debt crisis, the Jefferson County, Alabama, commissioners threw in the towel on Wednesday and declared bankruptcy. The bankruptcy, involving over $4 billion in debts owed by the county, will be costly to the banks who loaned the money, the private investors who participated in the bond offerings, the guarantors of the debt, and most especially, the taxpayers of Montgomery.

Christine Lagarde, managing director for the International Monetary Fund (IMF), warned that the world faces the risk of a “lost decade” and that “there are dark clouds gathering in the global economy.”

Economist Gary Shilling’s claim that the U.S. economy is on the edge of deflation defies the Bureau of Labor Statistics’ recent announcement that inflation is high and increasing.

Critics of the banking system in the United States declared Saturday, November 5, National Bank Transfer Day — a grassroots movement that encouraged bank customers to switch to credit unions. The notion behind the event was to teach banks a critical lesson. The effort reportedly has had some positive impact on the credit unions; however, overall it proved to have the opposite effect on banks from what the protesters intended.

BernankeFed Chairman Ben Bernanke’s news conference on November 2 included the admission that the Fed is depending on hope and patience to see if its continuing strategies of Operation Twist and zero interest rates will grow the economy out of recession. In his session with reporters, Bernanke defended Fed actions in the face of increasing criticism from both the left and the right.

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