Fed chairman Ben Bernanke’s recent keynote on the state of the economy could have been accompanied by a funeral dirge. He made no effort to conceal the gloomy facts:
“Currently, about 21% of subprime ARMs are ninety days or more delinquent, and foreclosure rates are rising sharply ...The far-reaching financial impact of the subprime shock is that it has contributed to a considerable increase in investor uncertainty about the appropriate valuations of a broader range of financial assets …The market strains have been serious, and they continue to pose risks to the broader economy.”
Bernanke's grim (but realistic) forecast: “The baseline outlook for real activity in 2008 has worsened and the downside risks to growth have become more pronounced.”
When someone of Bernanke’s status makes statements to this effect, that says it all. We're entering a major recession.