Thank You Ben

Fed Chairman Ben Bernanke said last Thursday subprime mortgage woes do not present a serious problem to the U.S. economy. Not only do they not pose a serious problemn its effects on the overall housing market would likely be limited: "Curbs [on subprime lending] are expected to be a source of some restraint on home purchases and residential investment in coming quarters." Can we stop panicking over this now?

In March in a post I wrote "Where do we go from here? A slow decent to normalcy. That is all. Not a crash, not a recession, not a depression, just normal housing conditions with realistic lending guidelines."

It would seem Mr. Bernanke is now echoing that sentiment. Conditions now are not dire, they are getting back to normal. A little perspective is needed. Things have been insane for quite a few years in housing and the current slow down, while it may hit some of the more careless folks out there, is very good for everyone as a whole. The more froth and speculation in any economic activity, the harder the eventual fall then becomes. Bernanke should be given credit from resisting the shrill shrieks from the Barney Franks of the world on Capitol Hill to drop rates and increase regulation in the lending market. These actions would have lead to increased volatility in all markets and the uncertainty and guessing games that would have been created could have developed into something far more serious. In doing so he has all but assured a "perfect storm" of good things for the economy. The runaway housing prices will moderate, inflation is doing the same, economic growth has not suffered, job creation remains strong, unemployment is almost non existent, the S&P and DOW are at all time highs and historically speaking, interest rates are a non factor. All this in the face of Alan Greenspan running around the Asian continent telling everyone the sky is falling

While his predecessor, Greenspan, gets far too much credit for the "soft landings" he engineered from the problems he created, Bernanke should be credited for not needing a "landing" at all, just a nice smooth ride