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IPFS News Link • Federal Reserve

Bernanke warns spending cuts could derail recovery

Federal Reserve Chairman Ben Bernanke warned on Thursday that overzealous cuts to government spending in the short term could derail a shaky recovery and said a debt default could wreak financial havoc.

"I only ask ... as Congress looks at the timing and composition of its changes to the budget, that it does take into account that in the very near term the recovery is still rather fragile, and that sharp and excessive cuts in the very short term would be potentially damaging to that recovery," Bernanke told the Senate Banking Committee.



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