1)The Fed is almost out of bullets. If something devastating like another 911 should happen, the Fed would not have the ability to provide much help. If on the other hand, if the fed had 4 more .50 basis point bullets in its holster, effective relief could be provided.
2)The economy has clearly improved, and market rates will begin to rise in anticipation of Greenspan痴 actions. Greenspan will have to raise the Fed Funds rate to get in line with market rates.

As far as the long bond is concerned, the historical pattern tells us that a move to 5.5-6% would be perfectly normal. By historical measures, this is no big deal. What you and I have to contend with is how the market will deal with these interest rate increases. Initially, I think the market will react negatively until traders can get a sense as to where rates will settle in. There will be plenty of jawboning on TV and among the doom and gloomers, and we want to be in position to take advantage of this opportunity. After the election in November, we will be taking steps to reduce our exposure to the market, and taking a more defensive posture. So the bottom line is: I think short term rates will rise to 3-4%, and long rates will rise to 5.5%-6% over the next 18-24 months".