Federal Reserve Chairman Ben Bernanke struggled to sit down comfortably before Congress following yesterday's devastating drop in the US stock market. Shifting side to side and occasionally standing while he talked, Bernanke attempted to explain to US lawmakers the market forces responsible for the abrupt change in the US economy's performance.
The emergency joint session in Washington was called after the US stock market suffered one of the worst single-day declines since the 1987 events remembered as Black Monday. Wall Street executives were especially affected by yesterday's negative turn of events. However, a series of new safety measures were successful in helping market analysts cope with reality. Merrill Lynch President and COO Ahmass Fakahany described an automated system that locked windows above the second story and released hundreds of puppies into offices just after the stock market began its fall.
Understanding that the Fed's policy decisions are often too complex for the average economist to understand, Bernanke began his briefing with a drawing of what he termed "the market's underside." Labeling two intersecting, concave-up parabolas as the Dow Jones and the S&P500, Bernanke provided a glimpse into what has been an ugly affair for US citizens and a very personal experience for Wall Street executives.
"We need to look at this in real terms," said Bernanke as he modified the drawing. "It appears that the Dow Jones bore the brunt of the assault, taking two fingers, while the S&P suffered only half that force," Bernanke told a room of horrified policy makers.
Economist N. Gregory Mankiw followed Bernanke, chiding the Fed Chairman for "sitting back and letting this happen." Mankiw chose a non-graphical approach, but allowed Congress to use its imagination as he warned, "Given the market's current position, even moderate inflation could cause permanent damage."
"We will have to make sacrifices," warned Fakahany at a press conference for major investment firms later in the day.
When pushed about whether or not he was hinting at potential layoffs, Fakahany replied, "Merrill is committed to helping its employees. The bottom line is that we'll keep those puppies on the payroll."