Federal Reserve Chairman Ben Bernanke addressed the Federal Reserve Bank of Atlanta Financial Markets Conference in Sea Island, Georgia this morning via satellite. He discussed in detail the recent provision of liquidity by the Fed.

He discussed the shift in Fed monetary policy from its primary reliance on open market operations to lending tools used to address the credit crisis more directly. He mentioned the increased use of the Term Auction Facility (TAF) by commercial banks" from $20 billion at the inception of the program to $75 billion in auctions this month" and indicated that the Fed is willing to increase the use of these auctions as necessary.

He also discussed the extension of Fed credit to primary dealers through the Term Securities Lending Facility (TSLF) and the Primary Dealer Credit Facility (PDCF). He mentioned that extending credit to primary dealers was an extraordinary move driven by the potential for a scenario "in which a cascade of failures and liquidations sharply depresses asset prices, with adverse financial and economic implications." He indicated that although improvements in the credit markets have occurred, there are still substantial problems that remain.

Recently, I had the opportunity to speak with Robert Reich about some of the problems facing our economy and humanity. Those are two very big topics that could easily fill days of talk-time and we managed to scratch through it in 20 minutes or so.

Professor Reich is a wise gent who brings us closer to understanding what is needed in an ailing economy that has seen its share of economic disasters. What is needed is a good old belt tightening, it seems, and significant change in the mindset of Americans. It seems that since China and India are consuming everything in sight, it is up to us to make sue that there is going to be enough food and drink for our future generations.

We went on to discuss how the Oil Sector and Agriculture with stocks such as Potash Corp./Saskatchewan (USA) (NYSE: POT), The Mosaic Company (NYSE: MOS) and Archer Daniels Midland Company (NYSE: ADM) are the natural leaders as they will need to bring much more product to a hungry world.

Federal Reserve Board chairman Ben Bernanke inherited a real mess from Alan Greenspan and the Bush Administration who were all asleep during their watch when noteworthy financial minds Warren Buffett of Berkshire Hathaway (NYSE: BRK.A) and John Bogel, the founder of the Vanguard Group, and numerous other people of substantial financial knowledge and integrity were sounding the alarms.

'My pal Warren' went as far as to call derivatives toxic waste and the true weapons of mass destruction. In the design and construction industry we commonly hear the phrase, "There is never enough time to do it right but there is always plenty of time do do it over!" Perhaps it is a common refrain in other professions too.

Well today, the Fed Chief urged preventive action. This is a crying shame. I do not doubt his wisdom on this matter, unfortunately the horses have long left the barn and now he wants to close the doors simply to prevent the barn from collapsing. We will need the barn if we can ever round up those horses again. Mr. Bernanke was none too fast to react to the serious nature of our economic problems but he is plenty serious now.

Last year I wrote a very positive Chasing Value article suggesting that USG Corp (NYSE: USG) looked like a value proposition when it was trading around $52 a share. We bought it and to say we were way too early would be very very kind because it dropped with the market in the summer and has only recovered slightly.

Even worse, Alan Greenspan and Ben Bernanke are finally talking about a recession and USG is still laying off more workers, attempting to balance labor and product demand in a weak housing market and soft economy.

Berkshire Hathaway (NYSE: BRK.A) is still the largest shareholder, owning over 17% of the outstanding shares. Most of what I liked last year holds true but the depth of the economic downturn shows little signs of improvement. Housing and most related construction service industries are just trying to survive. They have all cut back production.

There is little consensus when the economy might start to show significant signs of improvement, but there are few people who think it will be soon, and I have spoken with many in the business community who think it will be 18 months at least. However, timing the market is always difficult so I believe that the best you can do is try and buy solid companies on the cheap. The difficulties that USG is weathering now will turn into strengths in the future as it streamlines the enterprise, reduces debt, and plans for the future.

American high school students know little about the basics of finance and economics, and the problem is getting worse, according to a report from the AP today.

The majority of high school seniors answered basic questions about finance incorrectly in a nationwide poll conducted by the Federal Reserve. Fed chairman Ben Bernanke called for better financial education, and linked the woeful state of basic economic knowledge to the housing crisis.

Bernanke said, "In light of the problems that have arisen in the subprime mortgage market, we are reminded of how critically important it is for individuals to become financially literate at an early age so that they are better prepared to make decisions and navigate an increasingly complex financial marketplace."

It's hard to disagree with him on this point, but a cynic might wonder if a poorly educated population is really the source of the housing crisis. Sure, Americans don't know much about the power of compound interest or how to calculate net present value, but that's not why the economy is in trouble. The housing bubble was produced by people who knew what they were doing -- mortgage brokers who winked at "liar's loans" and sophisticated bankers who created new financial instruments to get rid of the bad debt. All of these people were highly educated in economics and finance. The problem isn't ignorance but a lack of integrity and regulation.

Reuters reports that jobless claims jumped to their highest level since 2005. Specifically, U.S. workers applying for unemployment benefit rose by 38,000 last week, posting the highest reading since September 2005. I guess Fed Chairman Ben Bernanke had the statistics on his side when he testified that "It now appears likely that real gross domestic product [GDP] will not grow much, if at all, over the first half of 2008 and could even contract slightly."

The key is how the statistics performed relative to expectations. The 407,000 jobless claims reported in the week ended March 29 was way above economists' estimates of 370,000. If consumers lose their jobs, they'll have even more trouble borrowing to pay their rising costs of living. Although government statistics hide it -- anyone who drives or buys food knows that prices are rising.

Bloomberg News reports that job losses are coming from homebuilders and housing-related businesses, including lenders and financial service companies with exposure to mortgage-backed securities, are also stepping up firings. It also quotes an analyst who said, "400,000 is usually a trigger point when we consider recessionary times." I credit Bernanke for knowing a bit more about what's going on -- unlike the President who was shocked to learn about $4 a gallon gas. .

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

Federal Reserve Chairman Ben Bernanke testified before Congress today on the economy, the credit crisis and the Fed's involvement in the sale of Bear Stearns to J.P. Morgan Chase. While much of the testimony summarized the Fed's recent actions and positions, there were several high points in the testimony.

First, the Fed Chairman discussed the possibility that the U.S. economy may contract in the first half of 2008. The market temporarily reacted negatively to this announcement and then rebounded. This was probably due to the realization that this also means that the Fed will continue to maintain a loose monetary and credit policy for the near future.

The Fed also showed how close to a global financial meltdown we came. The testimony detailed the reasoning behind the Fed's action to prevent the bankruptcy of Bear Stearns and facilitate its sale. It made clear that because of the interconnectivity of the world financial community, a bankruptcy could have resulted in a meltdown on a global basis, not merely one in U.S. markets.

Federal Reserve Chairman Ben Bernanke isn't promising anyone a rose garden at least until next year.

In testimony before Congress today, Bernanke paints a pretty grim picture and even goes so far as to say that, "Overall, the near-term economic outlook has weakened relative to the projections released by the Federal Open Market Committee (FOMC) at the end of January. It now appears likely that real gross domestic product (GDP) will not grow much, if at all, over the first half of 2008 and could even contract slightly."

Bernanke expects economic activity to improve in the second half of the year because of the stimulus package, and growth to improve in 2009 as housing begins an anemic rebound. He quickly added that the uncertainty "attending this forecast is quite high and the risks remain to the downside."

Not surprisingly, Bernanke also defended the bailout of Bear Stearns Cos. (NYSE: BSC), arguing that allowing the Wall Street firm to fail would have had effects that would have been "severe and extremely difficult to contain." He also mentioned that he remained optimistic about the economy's long-term prospects even as it goes through a difficult period.

Today the market is closed for Good Friday. Maybe the market can use the day off.

The market is bipolar. Rising from stratospheric highs to crushing lows at the flick of a switch. Mind you, sometimes it takes a big event to turn the market on and off and sometimes it doesn't take much of anything. That's what makes the market so maddening to follow.

Bloomberg News argues that the market's reaction indicates that Federal Reserve Chairman Ben Bernanke's strategy of aggressive interest rate cuts is working since commodity prices had a huge sell-of this week.

"The Standard & Poor's 500 Index posted its first weekly gain in a month, and the dollar leapt from its lowest level since 1973 after the Fed stepped in March 16 to rescue Bear Stearns Cos. (NYSE: BSC), the fifth-largest U.S. securities firm, and expanded its role as lender of last resort to embrace the biggest dealers in Treasury notes," the news service reported. "The Reuters/Jefferies CRB Index of 19 commodities tumbled 8.3 percent this week, the most since at least 1956, after touching a record on Feb. 29."

But any rejoicing may be premature. Consumer confidence remains shaky amid continued worries about the real estate market. Applications for unemployment benefits soared to their highest level in nearly two months, according to the Associated Press. In short, there is plenty to worry about.

The trick for investors is not to panic and do anything rash. Markets aren't volatile forever and do eventually sort themselves out. Getting to that point may cause quite a lot of pain in the meantime.

The Federal Reserve's overnight rate that was reduced to 2.25% just yesterday, and sent the Dow flying 420 points into posititve territory, gave a good chunk back today. The DJIA falling 293 points to 12,099.66 means that Bernanke's magic bullets were a very short-term fix to what ails us.

Not even some positive earnings reports and falling oil prices could sustain the markets run-up. The following stories were posted by my colleagues:

• Morgan Stanley joins Goldman Sachs in helping quell bank panic
• General Mills (GIS) quarterly profit surges 61% on strong sales
• Oil extends its pullback following today's inventory report

This has to be very discouraging to the folks in Washington DC, and on Wall Street. There is no telling what tomorrow will bring but you can only cut so far before there is nothing left to cut, and you also have a dollar that won't buy much.

But one day is meaningless in the grand scheme of things, and reduced interest rates and increased stability in the financial sector has historically given way to a stronger stock market six months out. After all, that's when the presidential elections will take place and those are the high stakes games to keep your eyes on. For that reason, I expect still another rate reduction before too long so that there is time for it to take effect.

Sheldon Liber is the CEO of a small private investment company and the design and research principal for an architecture and planning firm. He writes Chasing Value and Serious Money columns.

Four well known CEOs weighed in on CNBC's Squawk Box, giving their particular insight on economic conditions one day after the Federal Reserve made yet another basis rate cut. Each of the four Chief Executives acknowledged the tough going in the economy, yet each also sought to inject a thread of optimistic patience into their commentary.

Mike Jackson, CEO, Auto Nation Inc. (NYSE: AN), came to the defense of Reserve Board Chair Ben Bernanke. While admitting that the chairman may have crawled blindly into what is now mostly economic turmoil, Jackson stated: "...I think he absolutely has it right now. He's got to be on full flight recession mode, and we'll worry about the dollar, and commodities and inflation later." Personally, I think Benanke should be making moves to protect the consumers and their dollars first, and let inflation take care of itself until the consumer sector is back up to speed.

Wilbur Ross, CEO, W L Ross & Co. Played the most obtuse card stating: "My own opinion is that it's just more of the same volatility." More of the same volatility? Yeah the economy is volatile ... DUH!

I've had just about enough of this Federal Reserve dilution of dollars scheme. What's going on here? Our national economic team has gone mad I suppose. Reserve chairman Bernanke seems bent on flooding the world with greenbacks which are becoming increasingly useless. Am I the only one who sees this?

The latest Federal Reserve backed dollar setback, the Big Bank Bailout, is underpinned with moves like the Bear Stearns purchase (NYSE: BSC) by J.P. Morgan Chase (NYSE: JPM) backed by YOUR ever shrinking dollars. I'm sick of it, just sick.

Yet now Wall Street is all giddy again, waiting for the next rate cut to be announced by the money fools. Oh please, give me some confetti and a kazoo! I have to celebrate the further deflation of my savings account before I puke.

The DJIA is up almost 300 points on speculation that Federal Reserve Board chairman Ben Bernanke will announce another reduction in the overnight discount rate charged to banks. But it is not investors creating all this uproar; this is a trader's paradise, and in some cases a fool's paradise.

The stock market has been jumping up and down on snippets of news while traders search for some trend or short term conviction. Long term investors are probably playing wait and see. If the Fed does not meet expectations, then all the hot air will be let out of today's euphoric rise. On the other hand, if expectations are met or exceeded, then maybe we go up from here -- but I would not count on it.

The currency of our realm, the US Dollar, has been losing value for many years, but lately the results of this sad state of affairs have become increasingly more evident. Concerns are mounting on a global basis not just in the United States. The euro, once pegged at a buck, is now trading at $1.55, while gold has passed $1,000 and oil has continued its charge, breaking through the $110 per barrel mark.

While a good deal of this problem is home grown, the pain is being felt all around the world. We have read many stories about how the American economy is a smaller part of the global economy and becoming somewhat detached. This is nonsense. What has happened is that the global economy has become infinitely more integrated and like any integrated structure (the architect speaking), what occurs in one place is felt everywhere.

The Federal Reserve Board, led by Chairman Ben Bernanke, has been watching the economy in an extremely measured fashion, bordering on casual. To those who see beyond Bernanke's calm demeanor, one should imagine a stock trader of old, holding the ticker tape up to his eyes and monitoring every change, every blip in the market as the ticker tape machine clicks away, spewing out the latest market activity.

Reuters reports that Carlyle Capital -- an affiliate of Carlyle Group that counts former President George H. W. Bush among its advisers -- can't pay back the $16.6 billion it owes banks. So its lenders are taking possession of its assets to try to recoup some of the money they lent. Interestingly, it said that the only assets held in its portfolio as of Wednesday were U.S. government agency AAA-rated residential mortgage-backed securities (MBSs). If these securities are indeed worth their AAA rating, I wonder how much of a "haircut" those lenders will take.

This latest collapse is evidence of two viciously destructive cycles in the global credit markets which government policy decisions are making even worse. The first cycle is driving down the stock market, setting inflation on fire, and hammering the dollar -- which is down 68% since 1/19/01 -- as the economy slows. The second cycle is reinforcing a chest-clutching decline in the value of the $6.1 trillion MBS market:

• The Bernanke call. As I've posted, this means that Federal Reserve Chairman Ben Bernanke's moves mark a ceiling below which the market keeps falling. The basic idea is that when the stock market falls, the Fed responds by flooding the market with money -- interest rates have fallen from 5.25% to 3% and are likely to hit 1% and then there's the "Term Auction Facilities" like this week's $200 billion month long swap of government securities for MBSs. The lower rates and added money spur inflation -- oil (+357% since 1/19/01), food prices rise (e.g., milk prices +12% in 2007) and gold futures hit $1,000 -- but do nothing to solve the basic problem -- which is to recapitalize banks. The market falls on the announcement of a new credit market problem, such as Carlyle's default, and the cycle begins anew.