Andrew Leonard on today’s rate cut

Here’s Salon’s Andrew Leonard on today’s 75 point emergency rate cut from the Federal Reserve:

If Bernanke has been “wrong” so many times, was he wrong Tuesday morning? As of this writing, around 2:20 p.m. EST, the lead headline on the Wall Street Journal declared “Fed’s Deep Cut Appears to Soothe Markets.” After falling almost 500 points at the start of trading, impelled by massive sell-offs on stock exchanges around the world, the Dow Jones industrial average had fought its way back to a relatively minor 118-point drop. What if Bernanke had done nothing, or even waited just eight days until the regular meeting of the Federal Reserve Board of Governors meeting to deliver his rate cut? If Monday, Jan. 21, is already being called the 21st century version of Black Monday, summoning up memories of the crash of 1987, what would Tuesday have looked like without a rate cut bailout?

Given the clear connection between Tuesday’s rate cut and global market turmoil, it is hard to avoid at least one conclusion. Bernanke has proven, once and for all, that juicing the stock market is now considered Job No. 1 for the Federal Reserve Bank. The material effects of rate cuts do not show up in economic growth statistics for months or even years after their enactment. By making an emergency “inter-meeting” cut a mere eight days before its regularly scheduled meeting, Bernanke is conducting economic policy in order to appease market psychology. The fragile psyches of Wall Street traders who played such a pivotal role in creating this mess by romping through the derivatives wonderland, are now in control of government strategy.