The Washington Whispers story reporting Fed chief Ben Bernanke's private worries that the economy is in even worse shape than he has admitted publicly landed with a thud in the markets today. About 10:30 a.m., with the Dow Jones industrial average down just 50 points, CNBC picked up the story, showing it twice on the TV screen from the floors of the exchange and Chicago Board of Trade. Within an hour, the Dow had dropped an additional 150 points.
The Whisper reported that Bernanke has been telling officials in public that the first six months of this year will be "bad," an adjective that some interpret this as signaling there is better than a 50-50 chance for a recession. Even worse, he believes the ensuing recovery will be "weak" because of persistent problems in the housing market that will result in subdued consumer demand.
The stock blogs fanned the flames throughout the day, warning investors to be wary of a rush back into the market. Blogs like Huffington Post, Outside the Beltway, BuzzTracker, and DailyStox all picked up the story.