The Hard Road Ahead

"Although there seems to be a widespread feeling (at least on bubble TV) that the Fed could wave a magic wand and cure anything, this is not the case. On January 3, 2001, when the Fed cut rates by 50 basis points in an emergency telephone meeting the S&P 500 jumped 5% that day and 7.8% by the end of the month. The index then proceeded to plunge 44% over the next 21 months and the recession continued for ten months following the cut."