"They're panicking out there right now..."

Fed takes new steps to ease crisis
By JEANNINE AVERSA, AP Economics Writer
16 March 2008
WASHINGTON - The Federal Reserve, in an extraordinarily rare weekend move, took bold action Sunday evening to provide cash to financially squeezed Wall Street investment houses, a fresh effort to prevent a spreading credit crisis from sinking the U.S. economy.

The central bank approved a cut in its lending rate to financial institutions to 3.25 percent from 3.50 percent, effective immediately, and created another lending facility for big investment banks to secure short-term loans. The new lending facility will be available to big Wall Street firms on Monday.

"These steps will provide financial institutions with greater assurance of access to funds," Federal Reserve Chairman Ben Bernanke told reporters in a brief conference call Sunday evening.

Big financial news on Sunday is a rare event. Today brought news of JPMorgan's acquisition of Bear Stearns at bargain basement $, plus the Fed's move noted above. In a rational world, this would not inspire confidence in the economy!

Note: the Fed's regularly scheduled Open Market Meeting is this Tuesday.

"...the action comes just two days before the central bank's scheduled meeting on Tuesday, where another big cut to a key interest rate that affects millions of people and businesses is expected to be ordered."

I keep using this quotation from the 1983 film, Trading Places:

They're panicking out there right now, I can feel it.
[Billy Ray Valentine, Trading Places]

My hope is that the stock market will initially respond to this news positively, before tanking when folks start realizing that Fed panic is not a good thing!

As I've stated previously, I have a vested interest in the market not tanking... at least, not before I get out of it! My hope for a short-term reprieve is strongly related to my desire to get out of it soon!