Continuing his spate of speeches on important subjects, US Fed Reserve Chair Ben Bernanke has delivered one of the most influential statements about US housing – and the US economy - in recent times.

Depending on your view of the world, Bernanke's statement at Princeton University last Friday was either a welcome confirmation of the liberal views of predecessor Greenspan or a condemnation of the US and the rest of the world to an inflationary spiral that will lead to a massive global recession.

The question: what "to do" about rising US housing prices. Recall that this issue is part of the armoury of the US Twin Deficit skeptics who reckon...