Four Minefields For Bernanke

WASHINGTON -- It's hard now to remember the dire straits the U.S. economy was in when Federal Reserve Chairman Ben Bernanke last delivered his semi-annual report on monetary policy to Congress on Feb. 24.

The stock market had been tumbling relentlessly for two months. Home prices were collapsing at unprecedented rates. The entire economy appeared to be in a death spiral. As Obama's top economic policy adviser, Larry Summers, noted last week, traders were betting there was a 1 in 6 chance that the Dow would fall below 5,000. Now they say it's 1 in 100.It was not until several weeks after appearing before Congress that Bernanke first hinted at the "green shoots" of economic recovery. Since cratering to 6,500 points, the Dow Jones industrial average has risen 36% to 8,850. Economists are increasingly confident of recovery (although not necessarily a robust one), with some saying the turnaround has already begun.

Bernanke will likely receive some plaudits for this turnaround. However, his appearances before the House of Representatives Financial Services Committee on Tuesday and the Senate Banking Committee on Wednesday will not be easy: The chairman faces at least four difficult lines of questioning.

When will this really be over?

The terror of February has mostly subsided, with few people talking about a repeat of the Depression. But with unemployment on the rise and home prices still falling, it's far from clear that the economy has turned the corner. Politicians will be anxious to understand where the economy is headed--particularly in the House of Representatives, where everyone is facing re-election in 16 short months--and when the unemployment rate will start to come down. link....