Fed Don't Fail Us Now

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NEW YORK: The Fed heads are going to cut rates at their policy meeting Tuesday. They've just got to, or so say the markets, which were laying in wait Tuesday while the FOMC met behind closed doors. Alan Greenspan's justification for the cut may be that the U.S economy needs it, but its real purpose is to give a largely psychological lift to foundering economies in Asia and Latin America -- to let them know a kindly Father Greenback is watching.

Wall Street has already raised the bar. "The market has already discounted a quarter-point cut," says TIME business reporter Bernard Baumohl. "There may actually be a sell-off if that's all there is. A half-point is probably needed to produce any kind of a rally." And if the Fed -- gasp -- doesn't cut short-term rates at all? "I'd hate to think what would happen," says Baumohl. One talking head on CNN was already guessing on Monday: a 400-point drop in the Dow, followed by voters calling not for Bill Clinton's impeachment, but Greenspan. Well, maybe it won't be that bad. But it won't be pretty.