Economy - Wednesday

Bernanke: Credit woes tenacious

"It's been a challenging economic situation ... and also a difficult, rather tenacious set of problems in credit markets," Fed chief Ben Bernanke told the New York Times Magazine in an interview released Wed. "However, I have the advantage of having a terrific committee (the Federal Open Market Committee) ... and strong staff support, and I think we have a good hold and understanding of the situation," it quoted him as saying.

Bernanke testifies before Congress on current economic conditions on Thu. Ex-Fed chief Paul Volcker said the central bank is to blame for letting bubbles to inflate asset markets. Volcker, who ran the Fed from '79-'87, told the New York Times Magazine that "Bernanke is in a very difficult situation." Hefty U.S. capital inflows in Nov.

Foreigners bought a net $149.9 bil of U.S. securities, the most in nearly 2 years, the Treasury Dept. said. That follows $92.2 bil in Oct. and is more than enough to finance the trade deficit of $63.1 bil. Net long-term capital inflows were $90.9 bil vs. Oct.'s $114 bil. Private investments more than doubled to $104.9bil. Foreigners curbed buys of Treasuries and U.S. equities.

Home builders' confidence edged up in Jan. from Dec.'s record low. The Nat'l Assoc. of Home Builders' sentiment gauge rose 1 point 15 19, thanks to slightly higher buyer traffic and sales outlooks. European slowdown fears mount

U.K. home prices fell at their fastest rate since Nov. '92, said the Royal Institution of Chartered Surveyors. Meanwhile, France's central bank trimmed its Q4 '07 GDP growth forecast, following similar moves in Germany and Italy.

Japanese consumer sentiment worsened to nearly a 5-year low and public expectations of future price hikes rose sharply, a Bank of Japan survey showed. COMING UP THURSDAY

Housing starts for Dec., 8:30 a.m. EST (forecast: down 37,000 to 1.15 mil-unit annual rate). New jobless claims for week ended Jan. 12, 8:30 a.m. EST (forecast: up 13,000 to 335,000). Philadelphia Fed factory index for Jan., 12 noon EST (forecast: -1.5).