Fed on tap

Yesterday I was moving some money around, trying to diversify my financial institution risk. I really felt like a coot doing it but I'd rather feel like a coot than an idiot if this house of cards really is collapsing. I was told the bottom is coming this week a half a dozen times. An investment advisor at JP Morgan implored me not to buy treasuries because they yield nothing. I don't care about yield, I told him. I'm trying to protect the base. I tried to steel myself under his slightly alarmed and condescending gaze that seemed to imply I was nuts.

Expectations seem to be for a 1% reduction in rates today from the Fed -- I know because I heard it on TV. Lehman and Goldman seem to have alleviated some liquidity concerns with their quarterly reports. Maybe it'll all be fine. The dollar's reaction and subsequent direction will likely dictate the tape for the afternoon session -- if it collapses, so will the market.

Major policy changes at the Fed are not the sign of a bottom to me. It's a sign that things have continued to deteriorate at an alarming pace. The Fed typically moves in small increments so as not to jar the system. A full point reduction in rates is not indicative of a resolution -- its indicative of the magnitude of the crisis.

It would amaze me if the Fed were not tested on their resoluteness defending non-primary financial entities. I want it to be over... I just don't think it is.