Having digested AG's comments for a few days, I have come up with what I believe is the Fed's ultimate strategy in deflating the housing bubble. He is talking about liquidity/credit "drying up", if "investors" want more of a risk premium. Namely, the Asians will not want to buy our GSE/MBS without more of a risk premium. This along with decrease purchasing of our Treasuries, I think, could cause credit to dry up. And, it seems rather obvious, that at this point, it is excess credit that is driving the leading edge of this bubble. Once credit dries up, and the marginal/highly leveraged buyer will no longer have access to easy money, it will really grease up the property ladder. Obviously, they are going to try to engineer a contolled descent. And perhaps on a national level, in the aggregate, it will be. However, in the bubble zones, I think people will be really hurt. C'est La Vie.