Some housing bubble reports from Wall Street and Washington. "Sales of existing homes fell in 38 states during the summer, led by steep declines in Nevada, Arizona, Florida and California, as the once-booming housing market showed further signs of a steep slowdown. The declines were the largest in once-booming areas of the country. Sales fell by 38 percent in Nevada, 36 percent in Arizona; 34.2 percent in Florida and 28.6 percent in California."

"The price survey showed that the median price for an existing home sold in the third quarter dipped to $224,900, down 1.2 percent from a year earlier."

"But David Lereah, the Realtors' chief economist, said he believed the decline in prices in formerly red-hot areas of the country was setting the stage for a rebound next year. 'With the market in full transition, buyers now have choices and sellers are more willing to negotiate,' he said. 'Under these circumstances, it's no surprise that overall home prices are slightly below a year ago.'"

From National Mortgage News. "Here's a telling sign about subprime delinquencies: at the end of September, Accredited Home Loans had a 30-plus day delinquency ratio of 5.44%. A year earlier the ratio was just 1.95%. Accredited is based in San Diego, one of the hottest housing markets of the past few years."

"Look in your local newspaper, in the real estate section, and behold all the deals builders are cutting on new construction. In The Washington Post, Centex Homes is willing to provide 100% financing on all its properties. In one ad I viewed, the builder wasn't even listing the price of homes. Instead, it was highlighting only the monthly payments."

"What does all this mean for mortgage bankers? For the next six months the industry can survive off of refinancings. After that, and if the flat or negative yield curve persists, look out below."

From CNN Money. "Lowe's Cos., the No. 2 home improvement retailer behind Home Depot, on Monday warned it would miss forecasts for the current period. The company blamed the weak sales comparison on the combined effects of a slowing housing market, significant deflation in certain commodity categories, and a difficult comparison to last year."

"'We believe many external headwinds will exist through the balance of the year and the first half of fiscal 2007,' said a statement from Lowe's CEO Robert Niblock."

Caroline Baum at Bloomberg. "Alan Greenspan didn't go quietly from the global stage when he retired as chairman of the Federal Reserve in January. His latest 'forecast,' that the worst of the housing slump is over, was rudely challenged Friday when the Commerce Department said October housing starts plunged 14.6 percent from the prior month to a six-year low."

"Starts were down 27.4 percent in October from a year earlier; single-family starts have fallen by more than a third since the start of the year. Housing permits declined for the ninth consecutive month, a record."

"Having presided over the late 1990s stock-market bubble...if the residential real-estate boom ends badly, as all bubbles do, he could go down in history as a 'DBCB,' or double-bubble central banker."

"'Among the consequences of the policy of maintaining interest rates at an inappropriate low level were credit and mortgage-market distortions, discouragement of personal savings, incipient inflation, and depreciation of the dollar foreign exchange rate,' said economist Anna Schwartz."

"Schwartz, who co-authored 'A Monetary History of the United States, 1867-1960,' with the late Nobel Laureate Milton Friedman, was referring to the Fed's decision to leave the funds rate at 1 percent from July 2003 to June 2004, 'a policy unjustified in view of the economy's growth rate,' and to raise it ever so slowly during the next two years."

"'Did the Greenspan Fed err by providing too much liquidity in 2001-2004?,' Harvard University's Jeffrey Frankel said. 'My answer is 'probably yes.'"

"Legacies come in all shapes and sizes. Public servants would like to be remembered for their own good deeds, as well as their contribution to the institution they serve. On the latter count, Greenspan comes up way short, according to Lawrence Wright, professor of economic history at the University of Missouri, St. Louis."

"'At his confirmation hearing, Ben Bernanke told the Senate Banking Committee: 'With respect to monetary policy, I will make continuity with the policies and policy strategies of the Greenspan Fed a top priority,'' Wright said. 'No doubt Bernanke meant to reassure us. Unfortunately, we never knew what Greenspan's policy strategy was.'"