It’s going to take much more than a quarter point cut. As I mentioned before, I could live with a bifurcated rate, where the low rate is exclusively to allow refinancing and the 1/4 pt higher rate is to fight off inflation concerns.
I’ve read many of Bernanke’s writings, he knows a great deal about the Japanese collapse and has mentioned that he has “a printing press.” I’m not sure the printing press needs to be revved up for the greater economy, but if the trend is towards millions of foreclosures over the next 6 months, that trend must be stopped and it must be stopped now. Otherwise the fixed income crisis will continue to spiral out of control.
Let me put this a different way: “subprime” has metastasized. It is the polar opposite of “contained.” There’s no way to treat the bond market convulsions without first dealing with the source of the disease … namely, that US debtors are walking away from their obligations.