Does Bernanke know the housing market is crashing? Oh yeah. During today's testimony, he said: "The downturn in the housing market so far appears to be orderly."
Translation: The housing boom is over. All the numbers point to declining prices from here, but there is no crash yet. At the Fed we call this "orderly." This means there are still a few people out there who think they can buy real estate and flip it in six months. Once we run out of these people, we have no idea how bad things will get.
Does Bernake care about falling housing prices?
Reuters reports on his testimony this way:
One of the things that Bernanke and his Fed colleagues are keeping close tabs on is the extent to which a housing slowdown will put a damper on overall economic activity.
"We recognize the risk ... and we are watching it very carefully," he said.
Translation: The Fed at this point doesn't care about the real estate crash. If things get so bad that there is a major crisis somewhere in the economy, the Fed may stop just watching. But for now the Fed is just watching. Housing market be damned, pass the popcorn.
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