Ben Bernanke on Financial Crisis - October 4, 2010

Link to Federal Reserve's website:

FRB: Speech--Bernanke, Fiscal Sustainability and Fiscal Rules--October 4, 2010

Yesterday, Federal Reserve Chairman Ben Bernanke delivered a speech before the the Annual Meeting of the Rhode Island Public Expenditure Council in Providence, Rhode Island. In the speech, he warned about the current state of the government finances. His conclusion, the situation is dire and "unsustainable".

The Central Banker of the United States says in his own words:

This is as close as you are ever going to see a central banker admit that his country's financial situation is so dire that it could breakup at any time.

Here's more from Bernanke's speech:

Now, get this, he warns that it is not only the Federal government that has financial problems, but also states and local governments:

Does Bernanke see the tsunami hitting or what?

Then, he put things in historical perspective:

Then, he explains the deterioration and the problems it will create for the entire economy:

Then, he tells us how powerful the negative trends are and how the aging population and Obamacare are going to make things worse:

Then he goes back to warn that the financial mess also exists at the state and local level:

The same underlying trends affecting federal finances will also put substantial pressures on state and local budgets, as organizations like yours have helped to highlight. In Rhode Island, as in other states, the retirement of state employees, together with continuing increases in health-care costs, will cause public pension and retiree health-care obligations to become increasingly difficult to meet. Estimates of unfunded pension liabilities for the states as whole span a wide range, but some researchers put the figure as high as $2 trillion at the end of 2009.5 Estimates of states' liabilities for retiree health benefits are even more uncertain because of the difficulty of projecting medical costs decades into the future. However, one recent estimate suggests that state governments have a collective liability of almost $600 billion for retiree health benefits. These health benefits have usually been handled on a pay-as-you-go basis and therefore could impose a substantial fiscal burden in coming years as large numbers of state workers retire.[/QUOTE]

Bernanke then breaks the news that the problem is global:

Bernanke then re-emphasises, the damage this will do to the overall economy:

The real important part of Bernanke's speech is the first half where he warns of the financial crisis just ahead.