Bernanke sees ‘no spillover’ from subprime…hello?

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Fed Chairman Ben Bernanke sees "no spillover" of the subprime mess in to the broader economy. A brief article from Reuters reports.

"We believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system," he said in remarks to a Chicago Fed conference.

Are we serious here? Regardless of the fact that the subprime credit mess has spread far and deep in to the Alt-A market there are several clear harbingers out there. The latest one being the HUGE jump in home inventory across the country. If this doesn’t spell price depreciation I don’t know what does.

Do people really expect that home owners with average credit, average (negative) savings, over stretched on everything are going to kill themselves to pay a mortgage on a home where they owe 110% or more? Really – sell me on that one, because if you can, you can come work in the mortgage industry.