Greenspan - I was wrong but I was right Fed and Debt

In his prepared testimony to U.S. lawmakers, the former Fed chairman Alan Greenspan, called the credit crisis a "once-in-a century credit tsunami" that will result in a significant rise in unemployment. He further elaborated that the results have turned out to be much broader and more damaging than anything he had imagined, it was unexpected, a surprise. He was quick to point that economists are fortunate if their predictions are 60% accurate.
First, he poses the question, "what went wrong with global economic policies that had worked so effectively for decades?" Then he answers, "The breakdown has been apparent in the securitization of home mortgages."

Perhaps, this means that for the last 10 years the nation has been living in the 40% twilight zone, as I don’t recall any economists vocalizing eminent danger from the shaky mortgage products that Fannie and Freddie were dumping on the bond markets. We heard plenty about the "irrational exuberance" over rising home prices but a strange silence about the way they were being financed. How can a condition in the making of this magnitude slip under the radar of the nation’s brightest economic minds?

Now Greenspan points back, "In 2005, I raised concerns that the protracted period of underpricing of risk, if history was any guide, should have dire consequences…" If he means the underpricing of credit, he forgets that it was he who kept interest rates low, adding fuel to the financing frenzy…thus the housing boom.

The futures market is pricing in a rate cut of 50-75BP at their next FOMC meeting. That will lower the Fed discount rate to at the most 1.0%, leaving little room to move.
Now we have a problem, the credit crisis was allowed to fester and grow in a low interest rate environment and when the Fed wants to stimulate more lending and borrowing, they only have a 1.50% margin to work with. How can you lower rates below 0.0?

Mr. Greenspan is not the only public figure who is expressing surprise at extent of the credit collapse, and in the next breath has taken credit for forewarning its coming.