Bernanke off his gourd, as far as I'm concerned

"Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure.''

Cool, so if I'm underwater I get my equity restored. Then when home prices rebound, I can pocket the additional appreciation in addition to Ben's giveaway. Damn, maybe real estate does ALWAYS pay off.

"Lenders tell us that they are reluctant to write down principal. They say that if they were to write down the principal and house prices were to fall further, they could feel pressured to write down principal again.''

Well, DUH! Does this strike him as unreasonable? What does he think will happen if prices drop further (which they probably will)?

Based on futures prices, traders expect the Federal Open Market Committee to lower the benchmark rate by 0.75 percentage point by or at the panel's next meeting on March 18. I hope the traders are off their rocker, because another 75 basis point cut will put us well on the Japan path of zero interest rates. And we all know how well that worked out for them. Come to think of it, their mess started with bloated real estate prices - if I recall correctly at one point the real estate in Japan had a paper value larger than all the real estate in the US.

ETA: I found it; it was even more ridiculous that I remembered:
Japan suffered one of the biggest property market collapses in modern history. At the market's peak in 1991, all the land in Japan, a country the size of California, was worth about $18 trillion, or almost four times the value of all property in the United States at the time.