DJIA as of noon today

[whistle]

<snip>
DOW JONES INDUSTRIAL AVERAGE IN (DJI:^DJI)

Index Value: 11,918.92
Trade Time: 12:02PM ET
Change: 180.38 (1.49%)
Prev Close: 12,099.30
Open: 12,092.72
Day's Range: 11634.82 - 12092.72
52wk Range: 11,926.80 - 14,280.00

http://finance.yahoo.com/q?d=t&s=%5EDJI

<related story>

Reuters
Fed slashes rates
Tuesday January 22, 12:04 pm ET
By David Lawder


WASHINGTON (Reuters) - The Federal Reserve on Tuesday slashed a key interest rate by a hefty three-quarters of a percentage point, the biggest cut in more than 23 years, after a two-day global stocks rout sparked by fears of a U.S. recession.

The move, a rare one made between the U.S. central bank's regularly scheduled meetings, took the federal funds rate governing overnight lending between banks down to 3.5 percent, its lowest level since September 2005. The Fed also lowered the discount rate it charges on direct loans to banks to 4 percent.

"The Fed is very, very, very worried," said John Tierney, an analyst at Deutsche Bank in New York.

The Fed's bold bid failed to instill confidence in shaken financial markets as U.S. stocks, playing catch-up with sell-offs around the world, fell sharply at the open. The Dow Jones industrial average (DJI:^DJI - News) was down about 1.1 percent in late morning.

Prices for U.S. government bonds slipped, while the dollar fell sharply against the euro.

"The committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth," the Fed said, referring to its policy-setting Federal Open Market Committee.

"While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households," it said.

Some analysts viewed the Fed's surprise move, which came just a week ahead of its next regularly scheduled meeting on January 29-30, as a timely and much-needed effort to shore-up deteriorating confidence in global markets. Others said it signaled a sense of desperation.

"Plainly the Fed realized that to try to stay ahead of the market they had to act immediately. That is the positive reading of the action," said Alan Ruskin, chief international strategist at RBS Greenwich Capital in Greenwich, Connecticut. "The negative viewpoint is that it smacks of panic."

Shortly after the Fed announced it was lowering U.S. interest rates, the Bank of Canada cut its key overnight interest rate by a quarter percentage point to 4 percent and said further cuts were likely to be needed.

MORE U.S. RATE CUTS?

Even after the Fed's move, interest-rate futures markets showed a 74 percent chance of another half-percentage point reduction in U.S. rates next week. They also pointed to a federal funds rate of 2.25 percent by mid-year.
<MORE>

http://biz.yahoo.com/rb/080122/usa_fed_1.html?.v=8

[Freddie Stubbs]

1. OMFG! The sky is falling! It's another Great Depression!

[whistle]

2. No, not the sky, just the Dow Jones Industrial Average, so Helicopter Ben Bernanke

....is throwing out billions of dollars of new paper to inflate the economy as a desperate measure to keep things afloat until the November elections. Will it work? I have no idea, but inflation hurts a lot of people

[Junkdrawer]

3. The volume is low now....

Great time for the PPT to spike it high (of course that would be a little obvious).

[whistle]

4. Well I think the Plunge Protection Team has acted by pumping $64 billion in new paper money

...into the Central Banks from the Federal Reserve since early this morning. If that is done every day for say the next two weeks we should see inflation rise into the double digits just like back in the mid to late 1970s. That just could break the backs of most poor American wage earners and retirement savers

[whistle]

5. DJIA at closing today

Index Value: 11,971.19
Trade Time: 4:03PM ET
Change: 128.11 (1.06%)
Prev Close: 12,099.30
Open: 12,092.72
Day's Range: 11634.82 - 12092.72
52wk Range: 11,926.80 - 14,280.00


<related story>
WRAPUP 1-Panicky markets spur U.S. tax, interest-rate stimulus
Tue Jan 22, 2008 3:36pm EST

By Glenn Somerville

WASHINGTON, Jan 22 (Reuters) - A vicious rout of global stock markets at the start of the week sent the Federal Reserve scrambling to slash U.S. interest rates on Tuesday and the White House and Congress sped up work on tax cuts and other steps to ward off a possible U.S. recession.

Global equities pulled out of their nosedive after the Fed made its move early in day. Wall Street came back from a steep initial fall to stand moderately lower and European shares rose. U.S. treasuries prices, which go up as interest rates fall, soared in anticipation the Fed will keep cutting rates to prop up the economy.

The Fed's three-quarters of a percentage point cut in its benchmark federal funds rates came a day after stock markets from Bombay to Frankfurt and Sao Paulo fell by as much as 10 percentage points on concern the U.S. economy might drag the rest of the world into a slowdown.

The U.S. central bank's rate cut, agreed at an emergency meeting, was the largest in more than 23 years. But some investors were skeptical the action would do enough to overcome the widening impact of a housing slump and credit crunch that have tipped many economic indicators lower.

"It's not going to necessarily turn this market around," said Joseph Battipaglia, market strategist at Stifel Nicolaus. Rates were lowered, he said, because "the Fed (is) coming to the realization the economy is moving lower, quicker."

U.S. stock markets that were closed on Monday for the Martin Luther King memorial holiday slid steeply at the opening, catching up with the rest of the world's declines, then cut its loss by more than half by early afternoon.

U.S. Treasury Secretary Henry Paulson consulted White House officials as he and President Bush prepared to meet Democratic and Republican congressional leaders to urge swift action on a fiscal stimulus package worth about $150 billion to get money into the hands of America's free-spending consumers.

BREATH OF RELIEF Continued...

http://www.reuters.com/article/marketsNews/idCAN2252898920080122?rpc=44

[Junkdrawer]

6. Today was easy to predict....Tomorrow, Next Week is much harder...

Today the Fed jumped in and absolutely refused to let the market fall. But they can't keep that act up forever....

On edit: Here was my prediction I posted at 7:45 this morning:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=2739629&mesg_id=2740859

[Selatius]

7. They cut interest rates during an inflationary period. That means MORE INFLATION.

The inflation is being generated by high energy prices. Because it takes energy to move any product to the store shelf, naturally this means everything will go up in price. Usually, the Fed increases interest rates to combat inflation.

[whistle]

8. That's correct, hyperinflation is now imprinted on the monetary system

[Selatius]

9. I wouldn't call it hyperinflation until we're looking at 20 percent inflation/month or worse.

Of course, there is no universally agreed upon precise definition of hyperinflation in the current time, but a simple definition is 20 percent or more per month, as opposed to a year.

[whistle]

13. I lived through the inflation period of the 1970's up to early 1981...

...where annual rates of inflation were double digits hitting reported annualized highs close to 18%. All prices were escalating while wages remained stagnated and saving money became nearly impossible. It was pretty bad and gave us republican presidents Reagan and Bush I and ultimately the Gulf War.

I think we are poised for inflation levels of 20% a month and higher because the Fed is prepared to dump $30 to $60 billions in new paper every day until Bush II leaves office.

[Junkdrawer]

10. If the interest rate goes above, say, 6 percent, bye bye stocks...

The Dow is inflated by about 50% with baby boomer retirement money. Once boomers can get 6% or more on their money, they'll pull out of the market en masse.

[Selatius]

11. It was a lot higher than that in the 1980s and was done for a reason.

When Paul Volcker was Fed Chairman, he intentionally pushed higher interest rates to bring down inflation from 10+ percent to around 3 percent. Of course, he was wildly unpopular on Wall Street for doing so because it brought down stock prices, but he stopped the inflation that was eating into the middle class and crushing the working poor.

[Junkdrawer]

12. So.. double digit inflation with 3.5% interest rates..

Talk about pain...