[SaxxonWoods]

Very well. Your opinion noted that you know more than the FED governors. What would your course of action have been, now that you have the advantage of hindsight?

[JasonC]

Nothing wrong with the quarter point cut. But what I would do that they aren't (at least publicly known so far) is call the bigger banks on the carpet and force them to mark declining mortgage assets to market, sell them to stronger, less leveraged hands, and raise more risk capital through share issuance. I'd also tell them either LIBOR comes down to near Fed Funds or they can forget about any more issuance by the Home Loan Bank system - in other words, lend to the high bidders or else.

[JasonC]

I'd also advise the FOMC in New York to feed the market treasuries, all maturities from 3 months to 3 years but especially the 3 month bill, instead of using treasury purchases as a way of injecting funds. Inject funds using corporates or direct bank loans. Right now the treasuries are "on special", way overbid. The Fed should be trying to reduce the spread between them and bank loan rates. Incidentally, it will make money doing this...