What Bernanke really thinks about the US housing market

Investors were expecting that Ben Bernanke would give a clear line on the US housing market in his speech to the Economics Club in Washington DC last week. Did he deliver?

Dr Bernanke had been expected to pull out all the stops in an eagerly awaited speech to the Economics Club in Washington DC. The leitmotif was intended to be personal savingsor the lack thereof and thus, by extension a clear line on the Fed's thinking regarding the collapse in the residential property market. In previous commentary Dr Bernanke has linked comment pertaining to the savings ratio to concern regarding the current account and budget deficits.

On the basis that weakening energy prices are set to close the current account deficit somewhat over the months ahead this speech really did hold out the possibility that the Fed Chairman might pin his concerns elsewhere namely; a need to rebuild the savings ratio from negative territory in the context of slowing growth in residential property investment, falling mortgage equity withdrawal, a slowing in consumption growth and possible negative wealth effect from falling house prices. Dovish or what?

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