Payday Loans Abound | Bernanke Says Economy Could Turn Around

Americans need payday loans to bail them out

Ben Bernanke

More and more consumers are seeking personal bailouts in the form of payday loans as the economy continues to shrink. Also, more consumers than ever before believe that the financial crisis won’t get better any time soon.

However, Federal Reserve Chairman Ben Bernanke says there is hope.

Just a glimmer

Of course, that little ray of sunshine comes with a big IF. If the government’s bailout succeeds in stabilizing the banking system, Bernanke says the economic contraction could possibly cease in less than six months. However, he also believes that the economy is likely to shrink even more before then.

A long recovery

Even if the recession does cease, families and individuals will still need payday loans to bail them out of financial hardship for a while. The unemployment rate will continue to go up until the economy begins to grow again. Businesses must start pulling in enough money to pay off their debts plus fund more production before they begin hiring again.

Will credit be normal again?

Bernanke says the key to economic turnaround is getting credit and financial markets to operate normally again.

“Only if that is the case, in my view there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery,” Bernanke told the Senate Banking Committee.

A few more IFs

One factor that could have a significant effect on the United States’ economic crisis: The rest of the world. If countries that we trade with continue to have shrinking economies, it will hurt U.S. exports. Also, according to ABC News: ... click here to read the rest of the article titled "Payday Loans Abound | Bernanke Says Economy Could Turn Around"