I had to do a double take at this story that crossed the Associated Press wire earlier today:

Speaking on the sidelines of a forum in Singapore, U.S. Housing and Urban Development Assistant Secretary Darlene Williams said the U.S. Federal Reserve’s bigger-than-expected half-point cut of its key rate last week signaled that authorities were taking action to support the economy … “The hope is that the Fed rate cut would send the signal that government is concerned and willing to continue to analyze the situation so that the market can relax,” Williams said. “We believe we still have a market that is correcting, but we don’t expect any drastic changes” on the rate of defaults. “Our economic fundamentals are strong. Loan defaults are half of what they were in the 1980s and interest rates are low compared to the double-digit rates of 20 years ago,” she said.

I realize she’s probably stumping for the economy here, but I’m not exactly sure what she’s trying to get at — if anything, her comments might underscore just how far we really have to go before this cycle winds itself out. I’m interested in what Williams’ definition of a “drastic” increase in defaults would be.