Bernanke: There's No Housing Bubble to Go Bust

Washington Post Staff Writer
Thursday, October 27, 2005

Many economists argue that house prices have risen too far too fast in many markets, forming a bubble that could rapidly collapse and trigger an economic downturn, as overinflated stock prices did at the turn of the century. Some analysts have warned that even a flattening of house prices might cause a slump -- posing the first serious challenge to whoever succeeds Fed Chairman Alan Greenspan after he steps down Jan. 31. Bernanke's testimony suggests that he does not share such concerns, and that he believes the economy could weather a housing slowdown. (read more...)

Zentrader Note: I think since 2005 Bernanke was having his Big Picture seriously wrong that US economy were strong enough to weather a housing slowdown and his major policy mistake causing the DEEP recession was the fact the interest rate over tightening since 2005. Japan's interest rate has been at the low of near zero percent for more than ten years but until today so far we still don't see their economy forming a Property Bubble. My view is that whether the housing market were to crash or not US economy will eventually heading towards this severe economic downturn. This is because their fundamental economy structure has changed. Their automobile sector is losing market share to Japan Inc., IT to India and manufacturing works to China. I could be wrong but I think if Mr. Bernanke didn't over tightening the money policy the economic scenario today will be quite a different one ie US will be in soft landing mode instead of the hard landing one that even their overall banking system almost in deadlock condition. Just my view only.