• STOCKS JUMP, THEN FALL ⓠWednesdayâ™s rate cut caused the market to jump over 250 points, but it then settled back to close down 37 points. Some say the market âœdiscounted❠the rate decrease and wanted more.
• GOLD SURGES - Minutes after the Fed decision, gold for April delivery jumped $4.70 to $935.50 an ounce in after market trading.
• OIL GYRATES - Oil futures fluctuated Wednesday after the Federal Reserve cut a key interest rate less than many investors had hoped, and the government reported larger than expected increases in crude oil and gasoline inventories last week. Light, sweet crude for March delivery fell 7 cents to $91.57 a barrel, but alternated between gains and losses.
• DOLLAR PLUNGES - The dollar fell against the euro in anticipation of the Federal Reserve half-percentage point cut to prevent the U.S. from falling into recession. A government report showed the economy weakened more than forecast in the fourth quarter, reflecting a deepening housing slump. The Canadian dollar was worth more than the U.S. currency for a second straight day on bets Canada's interest-rate advantage will grow with a Fed cut.

WE HAVE MET THE ENEMY...AND HE IS US? - Robert J. Samuelson writes in a Newsweek commentary that "Capitalism's most dangerous enemies are capitalists," and argues that the current brand of capitalism favors a privileged few. "No one can have watched the subprime mortgage debacle without noticing the absurd contrast between the magnitude of the failure and the lavish rewards heaped on those who presided over it.❠ Mr. Samuelson places the blame squarely on Wall Street's pay practices, which encourage extreme risk taking.  The complete article can be read at www.newsweek.com.

CAPITALISM STILL THE BEST ⓠWell, it may be out of control and we may be heading toward a recession, but donâ™t believe the âœusual gloom that comes with a cyclical economic downturn.❠Further, there are some darker predictions that capitalism as we know it will soon end. Consider:  

• It is imperfect, but no system on earth is better at creating and fairly distributing wealth than the free-market system. 
• The freest countries are also the richest. Those in the top 20% of free nations have an average per person GDP of $28,217; those in the bottom 40% average $3,998.  
• In Zimbabwe, the state-run grain company now makes luxury dog food for Robert Mugabe and the other privileged Marxists who run the country...while up to four million people starve. 
• Arabs on the West Bank, who live in a nearly totally unfree economy as wards of the U.N., suffer from a 57% poverty rate. A third live on less than $1.60 a day.  
• In the Congo, another socialist paradise riven by war, 45,000 people are dying unnatural deaths each month, in large part due to food shortages, malaria, diarrhea, pneumonia, and even measles and whooping cough...all easily preventable and treatable in free, rich societies.  
• Odds are that we are going through a short-term economic slump that will be followed by another long-term boom.

CONCERN OVER FUTURES EXCHANGES - The proposed $11 billion âœmerger❠by CME Group and Nymex Holdings would create the largest exchange in the world, but is raising concern about the power of the combined company. The two companies are the only U.S. futures exchanges with substantial clearing operations.

BOND INSURER BAILOUT? - Help for this beleaguered industry may be in the works. The New York State Insurance Department and others are seeking ways to shore up troubled bond insurers. Banks, private-equity firms and billionaire investors are likely to participate. 

MUNI BOND TROUBLES - Barclays predicts that banks will need to escrow as much as $143 billion if municipal bonds are downgraded. Just the bonds insured by two insurers (MBIA and Ambac Financial Group) will require banks to raise at least $22 billion if their insured bonds drop one level from an AAA credit rating. A drop to A would require six times that amount.

JOBLESS CLAIMS DROP SIGNIFICANTLY - Jobless claims fell this week, comforting news for those concerned with the labor market and the current state of the economy. The Department of Labor reports that in term of first-time jobless claims, figures fell by 1,000 to 301,000 ┠the lowest level since early September. Additionally, over the past four weeks, jobless claims have fallen by 56,000.

GREENSPAN SAYS GLOBAL RECESSION âœINEVITABLE❠ⓠFormer Fed Chairman Alan Greenspan said in a recent speech that âœsome form of a global recession is inevitable at some point." Bet he wouldnâ™t have said that when he was Chairman, but when you think about it, he is probably right. The economy canâ™t just go up all the time. 

HATS OFF TO ANGELO - Countrywide CEO Angelo Mozilo, under fire over the size of his potential payout from the proposed sale of the troubled mortgage company, will forfeit $37.5 million in severance pay, fees and perks. While he will still retain retirement benefits and deferred compensation and we doubt that the gesture will radically alter his lifestyle, it is certainly more than we have seen other CEOs do in similar circumstances.

EVIL KERVIEL LOST $7.2 BILLION - Rogue Societe Generale trader Jerome Kerviel cost his employer $7.2 billion in unauthorized trades and his actions may have moved global stock markets deeper into crisis. The loss may also make the French banking giant a takeover target. Just how in the world can âœone lone trader❠lose $7.2 billion? 

WHAT IS A DEFAULT CREDIT SWAP? - Apparently, it is the practice of swapping loans that are in default. Why you would want to be on the receiving side of the swap is unclear to us. However, Moody's believes that the swaps will magnify the subprime-related mess because they drew unrelated financial institutions and investors into the mortgage meltdown. "Given the size of the market now and the lack of public information on who holds what...this market will be really tested for the first time if we do see a big round of defaults."