July was a good month for new home sales, which saw an increase of 9.6 percent during the month.

Before we look at the good news, let's cover the bad news first. Even with the jump in sales in July, new home sales are still well below their peak four years ago. In fact, new home sales are 69 percent below their peaks when the housing market was at its best.

In case you haven't been paying attention, home sales and mortgage situations are a little touchy in the U.S. right now. Mortgage holders continue to default on their loans, subprime borrowers are no longer able to get loans (at least not with the same favorable terms), financial companies are writing down billions of dollars in losses from backing shoddy mortgages, Merrill Lynch (NYSE: MER) and Citigroup (NYSE: C) have fired their CEOs and home prices are down in many parts of the country.

In other words, the nightmare surrounding the housing and mortgage market is taking a toll in many areas. But if the U.S. can cut its home inventories (using several methods, I suppose), then that alone may be the key to stabilizing financial systems here in the U.S. and in the rest of the world. At least according to former Federal Reserve Chairman, Alan Greenspan. Still, it's quite a mighty prediction, right?

Greenspan connected the subprime lending situation to international financial systems and said that the way to self-correct this system would to be somehow get rid of 200,000 to 300,000 housing units in active sales inventory in the U.S. at this time. He also warned against trying to keep down "asset bubbles" as he spoke to a business leader's forum from Washington. Greenspan also referred to the global economy, saying it is "doing well."

So, is Greenspan right? Can all the excess homes now in the market as a result of the mortgage overextension and lending crisis be sold? Can this clear the air of economic concerns as the housing and mortgage crises are rolling over into other industries and even nations? He's been right before ... many times.