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It's A Deal

Anything More You'd Like To Tell Us?

So the Fed decided that Tuesday was the day to calm the markets. And the timing couldn't have been worse.

Sure, stock markets around the globe were hemorrhaging in a way we haven't seen too often. And there's a good chance we're already in a recession. But by taking this action now, just a week -- one week -- before their regularly scheduled meeting, they've likely introduced more panic, not less. Granted, they're in a tough spot -- and it is Bernanke's first big test -- but it says here that the more prudent move would have been to see where the chips fall over the next few days then pull the trigger next week.

Of course, there's always the idea floating out there that the Fed "knows something we don't know." It's a natural reaction when the Fed cuts rates outside of its regularly scheduled meeting, but it often flies in the face of reality. Keep in mind that this is the same group that largely found the whole credit crisis as a surprise shockingly late into the game.

The monetary policy makers also run the risk that this move simply doesn’t work. If one of the goals is to stop the bleeding in the stock markets, it's debatable how effective this dose will be. The Fed is not supposed to be in the business of stock-market strategy, but at times like these it often seems it is. Stock futures erased some of their losses on the announcement, but quickly gave it all back, and more.

Then again, they can always go another half point next week...

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Tom Granahan

Tom Granahan is the Editor of IDD. He has more than 15 years of financial-journalism experience, having written about the stock market for Dow Jones Newswires and The Wall Street Journal for several years. He also supervised the Newswires' U.S. bureaus, and was the founding editor of Dow Jones Market Talk, which some consider to be one of the earliest forms of financial-news blogging. He graduated with a BA in journalism from Temple University in his hometown of Philadelphia.

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