Trickledown,
The Fed said the cut should have a ripple effect on many kinds of loans -- including mortgages -- that are of great interest to consumers. It is likely that reducing the interest rate has a more immediate impact on spurring the economy than anything that can be done regarding adjusting taxes.

Increased consumer spending was the motive.

The Fed also said it would reduce the discount rate another quarter-point if the regional Federal Reserve banks request it.

Bull run,
The markets reacted favorably indeed. The technology-heavy Nasdaq composite index surged 324.82 points, or 14.2 percent, to 2,616.68, while the Dow Jones industrial average jumped 299.60 points, or 2.8 percent, to 10,945.75. Standard & Poor's 500-stock index gained 64.29 points, or 5 percent, to 1,347.56.

Trading volume on the New York Stock Exchange set a record at more than 1.86 billion shares changed hands, an increase of about 70 percent from 1.1 billion shares the day before.

Impressed yet?

2 days later,
The Nasdaq composite finished the day down 159.18 points, or 6.2 percent, at 2,407.65. The Dow Jones industrial average fell 250.40 points, or 2.3 percent, to 10,662.01. The Standard & Poor's 500-stock index dropped 34.99 points, or 2.6 percent, to 1,298.35. As a result of the sell-off, the leading market indicators finished the first week of the year with losses.

Our friend George W,
The cut in interest rates indicated that the Fed accepts at least some of the views of President-elect George W. Bush, who has worried aloud about the increasing slowdown. Mr. Bush said that he was pleased with the Federal Reserve's half-point cut in short-term interest rates.

Historically, the Federal Reserve nearly always acts on the basis of economic conditions, and there is nothing to suggest that its decision to cut interest rates was motivated by anything but a desire to steer away from a looming recession. Like Ronald Reagan, Mr. Greenspan is an ideological conservative with a strong belief that reducing taxes helps improve the economy's ability to grow over the long run.

In Washington, members of both parties are looking closely at the emerging relationship between Mr. Bush and Mr. Greenspan, especially given the rocky relationship between the Fed chairman and Mr. Bush's father, who has blamed the Fed in part for his presidential loss to Mr. Clinton in 1992.

Psychic Reality,
Wall Street faces the realism that the economy and corporate profit growth are still slowing. Weakening job markets and continued earnings disappointments continue to pour in; there is sill economic unrest abroad: the Middle East, Asia, and Europe. And although the Fed slashed short-term interest rates, it is unlikely to fix all the woes of the stock market, or the economy.

Before this rate cut -- and others that are expected to follow - will provide enough boost to counterbalance the weight of a slumping economy, expect the daily efforts of investors to lead to more disappointments.

A 15-card tarot card reading confirms.

Mr. Bush and Mr. Greenspan expect much from their most recent power plays on Capital Hill.

And as usual, so do Wall Streeters.

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