as investors were optimist that the U.S. government won't nationalize banks and as the Fed's Chairman assured investors over the outlook given that the measures taken so far helped stabilize financial markets and institutions.

Bernanke expects next year to mark a recovery year for the U.S. economy as the Feds and the government are combining efforts to help revive economic growth in the world's largest economy, however the Fed's projections are based on the assumption that the measures taken will help provide stability in the financial markets and if that doesn't happen the U.S. economy will continue to contract significantly.

Bernanke's outlook was the same provided last week from the Federal Open Market Committee Minutes, which signaled that the outlook over the short term will remain very weak and that the economy should begin to grow gradually within the second half of this year. The worst financial crisis since the Great Depression continues to weigh down on economic growth in the world's largest economies which continue to fall deeper in recession.

Tightened credit conditions, rising unemployment, falling equity markets, and the ongoing slump in the housing market are the main drags to economic growth in the world's largest economy, as those combined forced consumers retrench spending and accordingly economic growth suffered.

The housing market is undergoing its worst slump since the Great Depression and indeed was the main reason behind this whole mess, the National Association of Realtors will release today their existing home sales index which counts for more than half of the housing market. Existing home sales are expected to rise by 1.1% in January to 4.79 million units from the prior estimate of 4.74 million reported back in December.

The slight rebound should reflect the fact that home prices continued to tumble especially since the total output of the housing sector is at record lows, however we shouldn't get our hopes up at least not just yet, as the slump in the housing market continues and the sector continues to drag down economic growth.

Moving on to Europe which economies are also feeling the pinch from the worst financial crisis since early 1930s, as major economies in Europe continue to tumble and fall deeper into the depth of recession inline with other major economies around the globe.

The euro zone accordingly is suffering the aftermath of the financial crisis as its major economies are indeed now in recession, where the area's largest four economies Germany, France, Italy, and Spain are dragging the whole area's growth to the ground.

The German economy, which makes nearly 30% of total GDP in the Euro Zone contracted during the fourth quarter of 2008 according to the final GDP estimate which was released earlier today, where the economy contracted by 2.1 percent inline with the prior and expected estimates, while the economy contracted by an annualized 1.7 percent also inline with the prior and expected estimates.

The German economy remains under huge pressures amid the ongoing financial crisis, as consumer confidence is sinking to the ground and their spending accordingly is declining, meanwhile any reliance on foreign demand diminished as global economies are feeling the heat from the crisis as well and their demand is falling as a result.

The European Central Bank might be forced to slash their benchmark interest rates down to zero should the area's largest economies continue to contract, especially since the ECB has been under rising pressure from financial markets to cut their interest rates, so they won't fall behind other central banks, which so far have been taking a strong stance against the financial crisis, while the ECB were left out to be signaled as being reluctant and very rigid when it comes to dealing with the crisis!

As for Europe's second largest economy, the U.K. economy is also under huge pressures just like all major economies around the planet, the U.K. economy is expected to have contracted by 1.6 percent according to the Preliminary GDP estimate for the last three months of 2008, which would follow the prior contraction reported in the Advanced GDP estimate for the fourth quarter by 1.5%, while the U.K. economy is expected to contract by an annualized rate of 1.9% after contracting by 1.8% according to the prior estimate.

The Bank of England on the other hand has been taking a very aggressive Dovish stance which saw interest rates fall down to 1 percent, as a deepening recession and rising deflation risks forced the BOE to take such stance, and expectations signal that the BOE could continue to slash interest rates over the upcoming months, as the financial crisis continue to reveal further devastation and misery to global economies...