Which parts of Bernanke’s speech do you disagree with?
There was and there is no nationwide housing bubble. There is a number of regional housing bubbles in California, Nevada, Arizona, Florida, and Hawaii, and to a lesser extent in the Northeast. Elsewhere in the country, price increases have been modest and explained by a combination of rising incomes and low interest rates. Even in places like Bay Area and SoCal, housing prices didn’t deviate from fundamentals until 2003-2004.
House prices aren’t growing any more, but the economy did not go into the recession and even as of Q3 2007 we are experiencing continued growth in real GDP.
The biggest thing that Bernanke didn’t see at the time was the subprime problem. Its possible that he did not appreciate the importance of mortgage equity withdrawals. That is probably not the case any more (there’s a thorough analysis of MEW and their impact on consumer spending on the Federal Reserve web site).
