Yesterday I was stunned to learn that Fed Chair Ben Bernanke had cut the Fed Funds rate 50 basis points to 4.75%. However, I had predicted that if he did cut the rate that much, the Dow would soar between 200 and 300 points. My high end estimate was 30 points too low.

What worried me the most about the cut was that the stated reason was pretty vague -- something about the risks to growth outweighing those to inflation -- and not supported by any numbers. Then I read this morning's New York Times [registration required] which suggested that at last month's Fed retreat in Jackson Hole, WY, economists presented economic forecasts based on the assumption that housing prices decline between 20% and 40% in the next several years.

I doubt the Fed's rate cut can do much to stop this problem -- although borrowing more money might delay the worst effects until the next president is in office. If this is the reason for the unexpectedly large interest rate cut, Fed officials should say so. While we have no power to decide interest rates, in a democracy I believe we at least have the right to know why those decisions are made.

Peter Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter.