Bernanke In His Own Words

The L.A.Times has some quotes from the incoming Fed Chairman:

HOUSE PRICES:

"Certainly some powerful fundamental forces have contributed to the run-up in housing prices, including growth in jobs and incomes, demographic trends, low mortgage rates and limited supplies of buildable land in some areas. However, it is also true that exceptionally rapid price appreciation and what appears to be speculative buying have been observed in some local markets, suggesting that prices may exceed fundamental values in some areas. Whatever the sources, house price increases will surely moderate at some point, if they have not begun to do so already." -- Bernanke's written responses to questions from Sen. Jim Bunning R-Ky., which were released Nov. 22.

NONTRADITIONAL MORTGAGES:

"I think it is important to make sure that mortgages of the nontraditional type, whether they're interest only, option ARMs or other similar types of mortgages, at first that they are consistent with safety and soundness on the part of the lenders and secondly, that consumers who are using these mortgages fully understand the implications of holding these mortgages should, for example, housing prices decline or interest rates rise.

"I think it's very important to look at these instruments. And I believe that doing so would have on the margin some beneficial effects in reducing speculative activity in some local markets." -- Nov. 15, at a hearing on his nomination before the Senate Banking, Housing and Urban Affairs Committee.

BUDGET DEFICITS:

"I think we do need to begin to try to reduce the deficit, try to reduce spending, try to bring the budget closer to balance so that we'll be prepared to deal with those long-term entitlement" obligations of Social Security and Medicare as baby boomers retire. -- at the Nov. 15 Senate hearing.

You'll want to read the whole thing.The markets are going to have to figure out what Barnanke feels are the most important economic numbers.