....has to take to the airways earlier than planned to allay fears of an economic calamity. The rate cut is his greatest tool for recovery. Rate cutting should be saved for when unemployment, foreclosures, bank failures and economic collapse intensify even more. What happens when things get really really bad and the rate cuts are all used up. Guess, maybe, he thinks we are on the verge of depression now.
Recovery from what? The problem is inflated asset prices due to lax lending. Rate cuts will not fix that; people will not borrow money - the ones that can still qualify - to buy an asset (house) that is falling in value. Asset prices must and will fall. Rate cuts have been tried and have not worked - they will not help HBs. We've seen this before.
"Stocks jumped after Bernanke said the Fed was ready to lower interest rates again to ward off a recession, but they bobbled up and down before turning narrowly mixed after Hoenig said later that the stock market is "not the center of our attention."