As to the statement that: "though longer-term inflationary expectations remain well contained, pressures on inflation have picked up in recent months and pricing power is more evident", Greenspan made the same one to Congress three weeks ago.

There is absolutely nothing new here.

What it means is that Greenspan was afraid to take any action via open market operations needed to stop a real estate bubble, but is going to step directly on the banks like Citigroup (NYSE: C) that may be a little too loose with credit. If that's the case, I think he made a good decision.

What he's hoping for of course is that the U.S. economy picks up with jobs growth and higher wages, and that speculators will soon cool their ardour chasing prices and get back to spending money on durable goods purchases, preferably those manufactured in America.

And I think that Alan is thinking or hoping there will be a soft landing to the continued pullback in stock and bond prices. But, the capital markets will make that call. But, there will be a landing.

How did the forex market handle the news? Well, USD up, at least for the moment, but the Dow went south.

2:53pm Dow chart:

BCara@BillCara.com

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