The markets are in a joyful mood.  They opened strongly on comments from President George Bush and have rallied further following remarks from Fed Chairman Ben Bernanke this morning. 

I found Bernanke’s speech particularly enlightening and for those so inclined, I’d recommend reading it.  You can find it

The easy reading version and play by play is as follows. 

Daddy Bernanke has a calming hand.  He tells some good stories about the history of the U.S. housing and mortgage markets.  The stories captivate our minds, getting us to forget about our upset stomachs for awhile.  He reminds us that we’re big boys and that he isn’t going to save us from stupid decisions, but stands ready to protect the innocent bystanders —  you know, the good old fashioned women and children stuff.    

Professor Bernanke then makes some observations about his econometric tinker toy set.  He says that monetary policy may have less of an impact on residential output than in the past, with a 14% correlation versus 25%.  Consumer spending may be affected by housing more than it has in the past, since folks have been able to tap their home equity for current consumption more easily than he has in the past.  But he doesn’t know for sure.  While daddy is wise, there are things even he can’t know. 

But, he’ll surely do his best…