(by Dr. Goldfinger)

On Tuesday, the U.S. Federal Reserve Chairman Alan Greenspan made an attempt to soften the fears about mortgages and growing home prices. But more analysts treat the speech as forging.

Mr. Greenspan said mortgage debt is now under control and won’t see any impact from growing home prices. "If lenders, including community bankers, continue their prudent lending practices, household financial conditions should be all the more likely to weather future challenges," said Mr. Greenspan.

Pointing at mortgage debt, Alan Greenspan also noted that there is no need to overstress worries about housing bubble as family finances still were in "reasonably good shape."

"Taking into account this higher level of assets, all in all the household sector seems to be in reasonably good financial shape with only modest evidence of an increased level of household financial strain," added Mr. Greenspan.

Fed watchers have their own opinion on what Mr. Greenspan said about mortgages and home prices.

"Greenspan’s trying to soften fears of a housing bubble just as he has tried to soften fears of higher energy prices or the growing current account deficit," said Josh Stiles, a bond strategist with IDEAGlobal in New York.

"Greenspan’s modus operandi now is always to play down problems," said Stephen Roach, the director of global economics at Morgan Stanley and professionally known as one of the biggest worriers on Wall Street.

"If oil holds at $50, the impact of that is likely to be a good deal more than the linear rules of thumb that Chairman Greenspan alluded to. This is a psychological threshold for a pretty fragile global economy, and it does represent a significant threat for next year,” Mr. Roach added.