In the other link I posted on the Roubini thread, he explains why not even a rate cut can prevent a recession; it’s a sure thing now. He also explains why the rest of the world cannot decouple from the US slowdown; they will all be affected; commodity prices and emerging markets will all go down as US demand wanes.

One comment I’d like to add: the US consumer is in so much debt, that not even 0% interest rates can save us. Look at Japan – not even 0% rates for over a decade prevented their recession and housing bubble collapse. The US consumer is spending 108% of disposable income, up from 40% in the 1950s when they first started tracking this data. How much more of income can people spend. Any Fed printing will really raise inflation, and that will be just as bad for consumers as higher interest rates.

The other very real problem that the Fed doesn’t directly address: how do they get foreign central banks to keep funding our deficit? If rates are cut to 1% again, watch the flight out of the dollar in earnest.

I am curious if the Fed has any rabbits in the hat. What can they possibly do to mitigate the recession. The recession is coming, I’m certain,but what will they do to try to shorten it once it hits? Anything they could do would be just an intermediate fix, I am afraid. The real answer is we must invest in our education, development, research, and start saving and not consuming stuff made by other countries at a higher rate than our own production!