A different kind of PROFIT CONFIDENTIAL today:

Below you will find some exact statements Fed Chairman Ben Bernanke made late last week to the Senate Banking Committee, followed by what former Fed Chairman Greenspan said, or would have said, followed by my humble interpretation as to what's really happening or going to happen with the economy. Since I was never the Fed Chairman, you can simply call me the dummy.

Bernanke: "To date, the largest economic effects of the financial turmoil appear to have been on the housing market." Just after Greenspan left office, he said that problems in the housing market would not affect the economy. Boy...was he ever wrong. As for me, I've been saying since 2005 that the contraction in the housing market would bring down the entire economy. I guess Greenspan was never a real estate man.

Bernanke: "Further cuts in homebuilding and in related activities are likely." Again, Greenspan thought the housing slump would not affect the economy. I continue to believe that, by the time the housing bust is over, we will see at least one major American homebuilder go bankrupt. At that point, potential homebuyers will panic further, sending house prices down below where they have already fallen.

Bernanke: The Fed "will act in a timely manner as needed to support growth and to provide adequate insurance against downside risk." Greenspan was the same here — he would drop interest rates in a flash to save the economy. In less than two weeks in January, Bernanke slashed interest rates by 1.25 percentage points, making it the biggest two-week interest-rate cut in 25 years. Me...I thought the Fed would be more cautious when reducing interest rates so as not to plunge the U.S. dollar into a freefall against other world currencies. How can we sell bonds to foreigners to finance our deficit when our dollar is plunging against other world currencies? What the heck, might as well live for the day.

Bernanke: "...the housing market or the labor market may deteriorate to an extent beyond that currently anticipated." This is Ben's polite way of saying that we could see a recession. As for Greenspan, he thought the odds were only one out of three that we would get a recession. Then he changed his bet to one out of two. Me, I must just be too aggressive. In the summer of 2007, I predicted that the U.S. would be in a recession in the first or second quarter of 2008. Why? Simply because I've never seen a big American boom not followed by a recession.

NEWSFLASH — According to the National Association of Realtors in Chicago, median home prices in the U.S. fell 5.8% in the last three months of 2007, compared to the same period of 2006. Home prices fell in 77 of 150 metropolitan areas, the highest ratio since the NAR started keeping track of this statistic 30 years ago. With potential homebuyers finding it more difficult to obtain financing in 2008, I predict that the trend of lower home prices in the U.S. will continue. If you are thinking of buying, better prices may lie ahead.