Bernanke paints bleak picture

The economy is weakening and may be headed for recession, Federal Reserve Chairman Ben Bernanke said in testimony today before the Joint Economic Committee of Congress. “It now appears likely that real gross domestic product will not grow much, if at all, over the first half of 2008 and could even contract slightly,” Mr. Bernanke said in his opening statement. He said that evidence of a weakening economy includes a lack of credit, worsening liquidity, less commercial paper issuance, a weak housing market and increasing jobless claims. Mr. Bernanke also defended the central bank’s role in arranging the fire sale acquisition of The Bear Stearns Cos. Inc. by JPMorgan Chase & Co., both of New York. The Fed chairman said the intervention was necessary in order to avoid a serious market meltdown that could have resulted from the failure of a major Wall Street firm, according to published reports. Mr. Bernanke also was reported as saying that he never again wants to assist a Wall Street firm in order to avert bankruptcy, but does not rule out a similar rescue if it is needed.