Economic Architect Bernanke: Economy Close to Faltering; Concerns About Europe; Very Serious Risk of Substantial Impact to U.S. Financial System

Mac Slavo
October 4th, 2011

Ben Bernanke updates America on the status of our economy, interdependence on Europe, and what may ensue if Greece and the rest of the Europe’s sovereign debt and banking issues aren’t resolved in an orderly fashion. (Hint: They won’t be, so get ready for the worst case scenario) :

First it would depend on the conditions of the default. If it were done in a way that was, where there were very substantial firewalls, backstops, protections done in a very orderly and controlled way, then that would be one thing.

If it was disorderly, unplanned and disruptive that’d be a very different matter.

As I said to Congressman Brady, the direct exposures of our banks to Greece are minimal.

If there were a disorderly default, which led to, for example, runs or defaults of other sovereigns or stresses on European banks, it would create a huge amount of financial volatility globally that would have a very substantial impact not only on our financial system, but on our economy. So, it’s a very, very serious risk if that were to happen.

Ben Bernanke, the architect of our economic recovery, just told us that the worst case scenario will have a “substantial impact