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Sorry, that is merely cosmetic as well. There is no volume going through the discount window, and wouldn't be even with a half point cut in that rate - which would have still left it above fed funds.

And while it is true treasury rates are way below fed funds at this point, corporate debt is still above the new rate. Corporates are a full point over treasuries these days. So banks can get positive carry.

As for the volume of credit being provided, it is indirectly very high. The Federal Home Loan Banks have injected nearly $200 billion in fresh credit since August. The money supply, broad, is actually growing at a 16% annual rate (MZM) since the credit "crunch" began, which has completely offset the decline in commercial paper outstanding, and then some.

Even mortgage debt has increased - it stands over 6% higher today than a year ago, despite the blowups.

The market irrationally hoped that the Fed would cut aggressively until Fed Funds caught the T-bill - which if it happened would effectively mean the banks could pick the rate themselves by bidding up treasuries. The Fed is doing the right thing here - focusing on the real economy and not on the panicky bankers on Wall Street.

The real economy is still going fine. Jobs are rising by 100,000 a month, enough to hold the unemployment rate steady at a low 4.7%. Wages are up. Even household wealth is up, despite real estate prices, on new debt and stocks since the summer, plus foreign investment translating well in currency terms, etc.

The Fed has cut rates a full percentage point since the summer. That is rapid reduction any way it is sliced - and they will probably do another quarter point in January. The truth of the matter is, a lot of unsound finance was done and many large finance companies are in trouble. The realistic ones are curing themselves by raising new capital to cover old losses, aggressively marking to market or unloading unwanted assets that did not work out. That is what they should be doing.

There is no need for the Fed or the government to panic and to firehose more funny money at the problem. That doesn't solve things, it papers them over. In case everybody forgot, that is how we got into this mess in the first place. We don't need another round of it. A bankrupt set of financial minds on Wall Street want to bring back the punch bowl - but we will all be better off if they get pink slips for Christmas instead.

They are the crowd that screwed this up...