Someone once joked that the best cure for insomnia is to get a lot of sleep, but somehow I don't find that funny at the moment. If you're a homeowner in pain, you might also be struggling to sleep. You might be dreaming of a parallel world where Fed chairman Ben Bernanke saves the day, but you're more likely to wake up with a nasty housing market hangover when Bernanke speaks on the housing market tomorrow morning at 10am ET. David Jones, a former Fed economist, says that this is a make-or-break moment for Bernanke. It is an early and maybe ultimate test, and Bernanke is in "a position of weakness, not strength." This is a tricky balancing act for Bernanke, says Ian Shepherdson at High Frequency Economics. "If Mr. Bernanke sounds hawkish, he runs the risk of inducing further chaos in the markets as expectations of easing are unwound. He will not want to appear too dovish, however, in case the markets start to discount even more easing."

In a brilliant piece published in the Wall Street Journal, Fed watcher Greg Ip says that Bernanke is trying to break the market's assumption that market convulsions lead to interest rate cuts. Bernanke's approach to the credit crunch is, in part, an effort to undo perceptions fostered by former chairman Greenspan's rate-cutting interventions. Will Bernanke hint at a rate cut? I don't think so, because he doesn't yet have the economic data in hand to judge how the recent turmoil in financial markets is impacting the real economy.

But there is one piece of data that blew my mind when I saw it two days ago. Investment adviser John Mauldin released a report focused on the month-by-month dollar amounts of mortgages that will be reset through 2008. The report shows that the largest reset amounts occur in the first six months of next year. Mauldin points out that the $197 billion of mortgage resets so far this year is "less than we will see in two months (February and March) of next year. The first six months of next year will see more than the total for 2007, or $521 billion."

That's why I can't sleep.

Photo:Pittsinger, Creative Commons, Flickr

Disclaimer: I have no exposure to the current market turbulence.