In his bleakest economic assessment to date, the Federal Reserve chairman, Ben S. Bernanke, said Wednesday that the American economy could contract in the first half of 2008, meeting the technical definition of a recession, and he encouraged Congress to help homeowners caught up in the mortgage crisis. 

While not endorsing any specific housing proposals, Mr. Bernanke made clear that the weakness in housing remained the single biggest drag on the prospects for an economic recovery and said that it was up to Congress to act. 

In fact, Senate Democrats and Republicans reached a general agreement Wednesday afternoon on legislation to help Americans in danger of losing their homes, underscoring the political urgency that lawmakers have faced since last month, when the Fed intervened to coordinate the sale of the brokerage firm Bear Stearns to JPMorgan Chase. 

In separate comments, Mr. Bernanke went further than he had in the past, suggesting that the Fed would remain aggressive and vigilant to prevent a repetition of a collapse like that of Bear Stearns, though he said he saw no such problems on the horizon. 

Bernanke Nods At Possibility Of A Recession 

meanwhile …..

A week after a piece in The New Yorker calling for the end of the penny in America stirred bloggers (here, here and here) and presidential candidates alike, the debate seemed, for a moment, to move to other currency. 

“Where Have All the Sacagawea Dollars Gone?,” The Washington City Paper asked this afternoon. The answer, according to Frontline/World, is interesting enough: Ecuador.

But the news herds would not be swayed. In the past few hours, The New Yorker article received hundreds of votes and comments on Digg, the social news site, based almost solely on a headline emphasizing one of its more convincing pieces of trivia: “A Penny Costs 1.7 Cents to Produce.” 

War On The Penny Continues Unabated 

but all is safer ….. 

Only on Wall Street can billion-dollar bank losses be a good thing. 

Stocks started off the second quarter with a soaring rally on Tuesday that sent the Dow Jones industrials up nearly 400 points, its best performance in two weeks. Investors seemed to take heart in a fresh round of mortgage-related write-offs at UBS and Deutsche Bank and a capital infusion at Lehman Brothers, the brokerage firm. 

Despite the discouraging numbers — $19 billion in write-downs at UBS and nearly $4 billion at Deutsche in the first quarter alone — investors appeared hopeful that the bad news could signal the last of Wall Street’s subprime woes. 

Stocks Surge On Hopes Financial Woes Are Easing 

but may not be for some …..

Food stamps are the symbol of poverty in the US. In the era of the credit crunch, a record 28 million Americans are now relying on them to survive – a sure sign the world's richest country faces economic crisis.

We knew things were bad on Wall Street, but on Main Street it may be worse. Startling official statistics show that as a new economic recession stalks the United States, a record number of Americans will shortly be depending on food stamps just to feed themselves and their families. 

Dismal projections by the Congressional Budget Office in Washington suggest that in the fiscal year starting in October, 28 million people in the US will be using government food stamps to buy essential groceries, the highest level since the food assistance programme was introduced in the 1960s.  

USA 2008: The Great Depression 

Gus: ah, for the privilege of being on the black side of the ledger... I wish you lots of black ink.