Fed's Kohn

• RATES WELL CALIBRATED TO EASE INFLATION, SPUR EMPLOYMENT
• FED SHOULD WATCH FOR SIGNS STABLE PRICES ARE THREATENED
• ECONOMY TO FIRM IN 2ND HALF OF 2008, STRENGTHEN IN 2009
• KOHN SAYS ECONOMY, MARKETS SHOULD GRADUALLY IMPROVE
• FED IN UNCHARTED WATERS, FORECASTS UNCERTAIN
• INVESTORS WARY, MARKETS VULNERABLE TO NEGATIVE NEWS

•  ECONOMY ENTERING PERIOD OF `SLOW GROWTH'
•  `NOT MUCH WE CAN DO ABOUT' NEAR-TERM SLOWDOWN
•  FED'S EFFORT TO PROVIDE `OFFSET' TO TIGHTER CREDIT
•  `THE ECONOMY HAS BEEN HURT'
•  `CORRECTION' IN MARKETS IS `NECESSARY,' `PAINFUL'
•  LENDERS, BORROWERS GOT `COMPLACENT' ABOUT RISKS
•  MARKET TURMOIL EXTENDED BEYOND MORTGAGES
•  BANKS ARE MORE `CAUTIOUS' ABOUT LENDING

ANALYSIS: Kohn is telling like it is about the past, and about the future.  There are no real answers to the problems nor quick fixes.  It will be painful.