Wall Street Digest Hotline Update

This is The Wall Street Digest Hotline Update for Friday, March 28, 2008, at 6:00 p.m. EST.

Stock prices were weak across the board today. By the close, the Dow lost 86 points, closing at 12,216, while the Nasdaq fell 19 points, closing at 2,261. Oil closed $2.47 lower at $105.11 per barrel, and gold closed $18.20 lower at $930.60 an ounce.

February inflation was up only 0.1 percent. The Fed pushed over $65 billion of M3 money into the banking system last week, and approximately $500 billion since December 1st. Our ten percent fractional reserve banking system will expand that $500 billion to $4.5 trillion during 2008. This is extraordinary expansion of the money supply to accelerate economic growth and provide mortgage money to the housing industry. The credit crisis is passing. The Fed's aggressively loose monetary policy has never, once failed to end a financial crisis. Get ready for an economic boom and higher stock prices both here and abroad by year-end.

Let's continue to avoid the housing sector, banking and the financial sector. I would not purchase residential nor commercial real estate. Approximately 865,000 new home formations occur annually. As home prices fall to more affordable levels, the inventory of homes and condos for sale will decline. However, home foreclosures continue to rise. I do not see a bottom in the housing industry in 2008.

The stock market bottomed in January, survived a test in March, and is now base-building prior to a stronger move up.

Stay close to our Tuesday/Friday Hotline Updates. I will be adjusting our portfolio of recommendations to capture maximum profits from a stock market rally that will surprise everyone, but you.

The global economic boom is still underway. The Smart Money and the institutions have been purchasing U.S. stocks on every pullback. Historically, that has been a reliable indicator of a market bottom.

The next Hotline Update will be on Tuesday, April 1, 2008, at 6:00 p.m. EST.

Why tech stocks have a glorious future

Unless you believe poor people will suddenly start to enjoy being unconnected and uninformed, you've got to have faith in tech's future. Just look at the numbers.

By David Kirkpatrick, senior editor
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(Fortune) -- As a financial writer, I spend a lot of time looking at numbers. Right now, the numbers say that the world has a huge and unremitting hunger for technology, communication, Internet access, and information.

That means that while we may seem to be living in grim economic times, tech companies are facing a future that is anything but grim - something that is salutary to recall when we read the daily headlines about financial turmoil and economic uncertainty. If you take the global view - and what technology company doesn't? - there really isn't much uncertainty. While things could slow down for a year or two, there is nowhere to go but up - way up.

In Indonesia, one person in a hundred owns a PC, and only one in a thousand has a broadband Internet connection. While there are already 63 million cell phone subscribers, that only represents 27% of the country's population of 234 million. Cell phone subscriptions in Indonesia are growing 36% annually. And you think that's something? In India, with 166 million cell phone users, growth last year was 84.5%.

These are numbers I randomly picked out from my favorite annual spreadsheet - the just-published 2008 Global Internet Snapshot compiled by Imran Khan, senior analyst for Internet, media and entertainment at JP Morgan (JPM, Fortune 500). Khan and his adept team spend months gathering data (the CIA is one major source) and making sure it's comparable. They use it to compile a massive chart that enables us to compare countries and regions all over the world by population, GDP growth, use of PCs, broadband, and mobile and landline phones.

When attempting to divine how deeply technology could ultimately penetrate developing countries like Indonesia or India, you might think the benchmark would be the United States. And for PC penetration it is. Only Switzerland (with 85.1) exceeds the 80.3 PCs per 100 persons we have here in the United States. Even if you don't think the rest of the world will ever reach that level, it will go a lot farther than it has so far. Khan's chart shows global PC penetration to be a measly 12.9 for every 100 people.

But for cell phones it's a different story. Here the United States is a laggard, with 77.4 subscribers per 100 people. The place to see the potential for worldwide cell phone use is Europe, where every country but Turkey exceeds the penetration of the United States. Italy, where many people have multiple subscriptions, is the European champ, with 135.1 cellphone subscribers per 100 people. Hong Kong exceeds even that, with 135.3. The overall global average is 41.6 subscribers per 100 people. The world's 2.75 billion mobile phone users are growing in number at an annual rate of 27%.

The unsated hunger for connectivity, communication, and information just leaps off the charts. Let's look at, say, Peru, where cellphone use grew 57% last year, or the real mobile growth champs - Vietnam at 114%, Pakistan at 170%, and Ukraine at a whopping 185%. To be sure, we should acknowledge that some of these stats may be fuzzy, but it's impossible to deny that we are seeing a historic transformation of the world's population. The charts don't give growth rates for PCs per person and broadband usage, but we can simply look at the global figure for broadband Internet access penetration - 5.3% - and draw our own conclusions.

Says Khan: "It highlights that there is pretty significant opportunity worldwide for PC penetration growth and Internet penetration growth. That's why we put this chart out - the numbers speak for themselves."

In addition to the data about economies and technology access, Khan's team compiles data about global advertising expenditure by media, especially the percentage of advertising spent on the Net. Then he looks at the growth of each country's Internet-connected population, and global trends.

He highlights a stat showing that the global population of people connected to the Internet - now 1.3 billion - has had a compound annual growth rate of 20.3% for the past eight years. Meanwhile, Internet ad spending of $40 billion remains only 6.6% of the global total of $605 billion and is growing at an annual rate of 33%. Says Khan, who follows companies like Google (GOOG, Fortune 500), Yahoo (YHOO, Fortune 500), and Omniture (OMTR): "When I look at this it makes me very excited about the sector I cover."

Khan is quick to point out that he only covers Internet stocks, and thus cannot generalize about what the numbers mean for other types of companies. He adds: "The big question is whether global economic growth can be sustained if the U.S. slows down."

Me, I'm happy to generalize.

Among companies I believe are likely to benefit from these trends long term are globally-oriented ones including wireless equipment and phone-makers Qualcomm, Nokia, LG, and Samsung; infrastructure providers Cisco and Juniper; multi-faceted large tech companies IBM and Hewlett-Packard; telecommunications operators Deutsche Telecom, Telefonica, Vodafone, and BT; software firms Microsoft, Oracle, Symantec, VMware, and Salesforce.com; Internet companies Google, Yahoo, eBay, Amazon, and Facebook; and diversified global media companies News Corp., Time Warner (which owns Fortune and CNNMoney.com), Bertelsmann and the about-to-be-created Thomson Reuters.

More regional players will also likely benefit, especially in China, where winners are likely to include Baidu, Tencent, and China Mobile. Given the pace of growth in wireless, a global economic slowdown might most trouble the companies in that sector, but again, only in the short-term.

We are entering a world of common communication and awareness. Undeniable benefits will continue to accrue to the technology suppliers. But even beyond that, there will almost certainly be a significant positive macroeconomic impact from bringing so many new people into the global economic system.

Wall Street Digest Hotline Update

This is The Wall Street Digest Hotline Update for Tuesday, March 25, 2008, at 6:00 p.m. EST.

Stock prices were mixed today. By the close, the Dow fell 16 points, closing at 12,533, while the Nasdaq gained 14 points, closing at 2,341. Oil closed $0.36 higher at $101.22 per barrel, and gold closed down $16.30 at $935.00 an ounce.

February Existing Home Sales rose 2.9 percent. However, prices fell 8.2 percent, making homes more affordable.

The January Shiller Case Home Price Index showed a year-over-year decline of 10.7 percent, the largest drop in the history of this report.

March Consumer Confidence fell to 64.5 from 75 in February.

But here is the good news that you don’t read about.

(1) On March 19, the Bush Administration reduced the amount of capital that Fannie Mae and Freddie Mac are required to hold. This should immediately pump $200 billion into the mortgage-backed securities market. Combined with a lifting of portfolio caps on March 1st, this should allow Fannie Mae and Freddie Mac to buy or guarantee $2 trillion in mortgages this year.

(2) The Fed rate cuts have dramatically pushed short-term rates down and long-term rates up. Hence, the steepest yield curve in many years will strongly motivate the banks to lend money aggressively in the coming year. And they will have plenty of money to lend.

(3) The Fed has pushed over $400 billion of new M3 cash into the banking system since early December. Our ten percent fractional reserve banking system will expand $400 billion of M3 money to $3.6 trillion by year-end. Our total GDP for 2007 was only $14 trillion.

(4) Add the $100 billion monthly Term Auction Facility (TAF) and the $200 billion monthly Term Securities Lending Facility (TSLF), which the Fed will increase, as necessary.

(5) Add $160 billion cash in the mail to consumers on May 1st from the IRS.

(6) Add another Fed Funds rate cut at the April FOMC meeting.

(7) Yields on Treasury debt are rising, which means investors are moving out of the bond market bomb shelters and into the stock market.

The Fed's aggressively loose monetary policy has never, once failed to end a financial crisis. This is far too much stimulus! Get ready for an economic boom and dramatically higher stock prices both here and abroad by year-end.

Stay close to our Tuesday/Friday Hotline Updates. I will be adjusting our portfolio of recommendations to capture maximum profits from a stock market rally that will surprise everyone, but you.

The global economic boom is still underway. The Smart Money and the institutions have been purchasing U.S. stocks on every pullback. Historically, that has been a reliable indicator of a market bottom.

The next Hotline Update will be on Friday, March 28, 2008, at 6:00 p.m. EST.

Wall Street Digest Hotline Update

This is The Wall Street Digest Hotline Update for Thursday, March 20, 2008, at 6:00 p.m. EST.

Traders ignored weak economic news this morning. By the close, the Dow soared 261 points, closing at 12,361, while the Nasdaq gained 48 points, closing at 2,258. Oil closed $0.95 lower at $101.59 per barrel, and gold closed $34.70 lower at $910.60 an ounce.

First, a bullish comment about yesterday's 293 point drop in the Dow Industrial Average. Sellers aggressively pushed stock market indices down to support levels, but not below them. Stock traders are playing games with the Fed!

Weekly initial jobless claims rose to 378,000 from 356,000, which was higher than the expected reading of 360,000. But here is the good news that you don’t read about:

(1) On March 19, the Bush Administration reduced the amount of capital that Fannie Mae and Freddie Mac are required to hold. This should immediately pump $200 billion into the mortgage-backed securities market. Combined with a lifting of portfolio caps on March 1st, this should allow Fannie Mae and Freddie Mac to buy or guarantee $2 trillion in mortgages this year.

(2) The Fed rate cuts have dramatically pushed short-term rates down and long-term rates up. Hence, the steepest yield curve in many years will strongly motivate the banks to lend money aggressively in the coming year.

(3) The Fed has pushed over $400 billion of new M3 cash into the banking system since early December. Our ten percent fractional reserve banking system will expand $400 billion of M3 money to $3.6 trillion by year-end. Good Grief! Our total GDP for 2007 was only $14 trillion.

(4) Add the $100 billion monthly Term Auction Facility (TAF) and the $200 billion monthly Term Securities Lending Facility (TSLF), which the Fed will increase, as necessary.

(5) Add $160 billion cash in the mail to consumers on May 1st from the IRS.

(6) Add another Fed Funds rate cut at the April FOMC meeting.

I have seen far worse financial crises during my 32 years of publishing The Wall Street Digest. The Fed's aggressively loose monetary policy has never, ever failed to end a financial crisis. This is far too much stimulus! Get ready for an economic boom and dramatically higher stock prices both here and abroad by year-end.

Both 2008 and 2009 will be profitable and exciting, but I still expect deflation to arrive with the 2010, 2011 and 2012 recession and bear market. Cash will be king beginning in 2010. Stop buying all of those things you don't really need. And, do not purchase commercial or residential real estate. Pay off all debts by year-end 2009.

Stay close to our Tuesday/Friday Hotline Updates. I will be adjusting our portfolio of recommendations to capture maximum profits from a stock market rally that will surprise everyone, but you.

The global economic boom is still underway. The Smart Money and the institutions have been purchasing U.S. stocks on every pullback. Historically, that has been a reliable indicator of a market bottom.

The offices of The Wall Street Digest will be closed, along with the stock market, on Friday, March 21, in observance of Good Friday. The next Hotline Update will be on Tuesday, March 25, 2008, at 6:00 p.m. EST. Have a very safe and happy Easter holiday weekend.

Sunbelt Sees Slowing In Population Growth

By Conor Dougherty
From The Wall Street Journal Online

Population increases in many fast-growing counties, particularly in the South and West, started slowing last year, suggesting that the housing crunch may be forcing many Americans to stay put.

People "are paralyzed in their quest for jobs in growing areas in many parts of the country because the housing market has shut down across the board," said William Frey, a demographer at the Brookings Institution, a Washington think tank.

The Census Bureau's annual estimate of county-population changes covers the 12 months that ended July 1, 2007. It shows that many Americans continued moving to sunny counties in Florida, Georgia and Arizona, but that the rates were slowing.

The data show a marked deceleration in population growth in several suburban counties that are farthest from urban centers -- the kind of counties to which some city residents had flocked in prior years for bigger houses and a different lifestyle. At the same time, urban areas and close-in suburbs were seeing population decreases slow, and in some cases reverse.

"It's a year of a migration correction, just as there was a correction in the housing market," said Mr. Frey.

Americans continue to seek out the Sunbelt. The 10 counties with the largest population increases were all in California, Nevada, Arizona and North Carolina.

Maricopa County, Ariz., where Phoenix is located, had the biggest rise in population between July 2006 and July 2007, adding 102,000 people, tallying births, deaths and migration from inside and outside the U.S. That increase, though, was 30,000 fewer than the year before, mostly reflecting fewer people moving there from another county.

The slowdown of county-to-county movement pulled down expansion in other fast-growing counties. Population in California's Riverside County, which is east of Los Angeles, increased by 66,000 -- down from 80,000 between July 2005 and July 2006. In Texas's Harris County, where Houston is, the population increased by 60,000, less than half the gain between July 2005 and July 2006.

Some formerly highflying counties actually saw population fall. Broward County, Fla., part of the Miami-Fort Lauderdale metropolitan area, added an average of 28,000 residents a year between 2000 and 2005. But the county lost 13,000 residents between July 2006 and July 2007. That was the county's first population decline recorded by the Census Bureau.

Some cities and suburbs that had been losing people to outer areas saw the exodus slow. Cook County, Ill., which includes Chicago, had lost an average of 16,000 a year between 2000 and 2006. Last year it gained about 4,800. In San Diego, the population rose by 27,000 in the latest period, compared with an average gain of 5,000 a year between 2003 and 2006.

"It's like the whole system [of migration] is kind of gearing down a little bit," said Kenneth Johnson, senior demographer at the University of New Hampshire's Carsey Institute.

Movement from one part of the country to another often slows during economic weakness and sometimes spurs shifts. In the early 1980s, many people fled the industrial Midwest for Texas oil towns, then moved again when the boom ended. Earlier this decade, workers from tech firms in Northern California headed south after the late 1990s tech boom collapsed.

The housing market's woes, though, are working the other way. Demographers and headhunters suggest people may be staying put because they can't sell their homes or can't get financing for new ones.

Dru George, a partner at Austin McGregor, an executive search firm based in Dallas, said that in the past nine months he has had several executives turn down jobs in other places because of the financial hits they would take if they sold their homes. Some are "under water" -- that is, they paid more on their houses than they would get selling them -- he said.

"I'm doing a search in Austin, and I was speaking with candidates, East Coast, West Coast, in the South," he said. "A lot of these executives are $300,000 to $400,000 under water on their house. Do they sell it at a loss or stay put? That's something we see on a daily basis."

The data also show that some Gulf Coast counties, decimated by Hurricane Katrina in 2005, are attracting new residents.

Two of the nation's fastest-growing counties, on a percentage basis, were in Louisiana. Orleans Parish, La., added 29,000 residents between July 2006 and 2007, after losing 243,000 residents in the year-earlier period.

Home Vacancy Rates Post Sharp Increases

2007 Homeowner Vacancy Rates, see interactive map.


By Matt Phillips
From The Wall Street Journal Online

Cities and counties with some of the worst fallout from the nation's housing slump also are seeing a sharp upswing in vacant homes, a trend economists say might set up further declines in home prices.

The national homeowner vacancy rate, which gauges the number of vacant homes on the market, rose to 2.8% in the fourth quarter, according to Census Bureau data. That was up from 2.7% in the previous quarter and matched the record set in the first quarter of last year.

Vacancy rates in the 75 largest metropolitan areas showed vast differences last year, ranging from a low of 0.1% in the Poughkeepsie, N.Y., area to a high of 7.4% in Orlando, Fla., Census Bureau data show.

"The higher the vacancy rate, the greater is the degree of stress on pricing," said Jim Diffley, managing director of regional services at economic-research firm Global Insight in Waltham, Mass. "It's a measure of how far the market is out of whack."

The Census Bureau's report also showed that when compared with 2005, some of the fastest-rising vacancy rates last year were in struggling Rust Belt cities and recently sizzling Sun Belt markets, with cities in Florida -- the epicenter of the housing bust -- showing the biggest jumps in the gauge of vacant homes.

The vacancy rate in the Tampa-St. Petersburg-Clearwater area rose to 5.1% last year from 1.8% in 2005. The rate in the Miami-Ft. Lauderdale area jumped to 4.4% last year from 2.3% in 2005.

Mitchell Glasser, manager of housing and community development for Orange County, Fla., which includes Orlando, said the abrupt slowdown in home sales reduced demand even as builders were adding to supply.

"You had a booming real-estate market, and then it just stopped," he said, adding that a glut of condominiums is probably a part of the problem.

Vacancies also jumped in some once-booming Western cities. Between 2005 and 2007, homeowner vacancies more than tripled to 3.8% from 1.2% in the Riverside-San Bernardino area, part of California's Inland Empire, east of Los Angeles. In the Sacramento area, vacancies jumped to 4.2% from 1.2%. And in the Phoenix-Mesa-Scottsdale, Ariz., area, vacancy rates soared to 3.7% from 1%.

Economists caution that the fundamentals of local economies can make for very different levels of average homeowner vacancy. For example, a glance at historical homeowner vacancy data from California's San Bernardino-Riverside region shows that during the past 20 years, local homeowner vacancy rates have regularly hovered above national numbers before they last dipped below them around 2003. Other metropolitan zones, such as Atlanta; Fort Lauderdale and Jacksonville, Fla.; and Indianapolis, Ind.; also regularly have had vacancy rates that top national levels.

But outside of Indianapolis, vacancy rates in other Midwest cities have been creeping up lately. Census numbers show that in 2007, areas in and around the Ohio cities of Cleveland and Akron had some of the highest homeowner vacancy rates in the country. They both came in at 4.5% last year. And Indianapolis, Detroit, and Cincinnati, Ohio/Middletown, Ohio., also all showed rates at 4% or more.

Susan O'Neal, president of the Akron Area Board of Realtors, said she is surprised by the Census Bureau figures on rising vacancy rates there. She said, however, that significant foreclosures in the area would likely play a role in the jump. Also, the general slowdown of the local market would have an effect as houses sit on the market longer. "They're not selling as quickly because of the cycle that we're in," she said.

Vacancy rates alone, of course, aren't the only gauge that economists are watching when trying to weigh future price trends. They note that other important measures, such as employment and population growth, also play a role. In that light, they say higher vacancy rates in areas with struggling economies and slumping populations could present more persistent problems than in cities with growing economies.

"I'd be more worried as an owner and investor in Michigan," said Joseph Gyourko, a professor of real estate and finance at the University of Pennsylvania's Wharton School. "Why? Because they don't have strong population growth. Florida does. So Florida is going to grow out of its excess supply. And even though it looks worse now, I would suspect that, long run, it's better off."

Email your comments to rjeditor@dowjones.com.
-- March 24, 2008

How To Report Merchants For Requiring A Minimum Purchase Or Making You Show ID

Not Exactly brooklyn or gerritsen beach related but ive been walking in to more and more stores that try and charge a minimum for credit card purchases. If they want to continue to accept credit cards they better abandon the policy right quick.

Stores are violating their contract with the credit card companies if they set minimum or maximum charges, or force you to show ID in addition to your credit card (with the obvious exception being for age-limited purchases). Depending on your state and your card issuer, surcharges or “convenience fees” may be banned as well. The best way to straighten these guys out is to report them to the credit card company. People who have done so on the Credit Boards message board say that when they report a merchant, they get a letter from the credit card company and when they go back to the store, the shenanigans have stopped. Here’s all the contact infos for the credit card companies to file a merchant complaint, as well as links to merchant agreements, in case you feel like standing up for your consumer rights.

Visa
Phone Number: 1-800-VISA-911 (International: 1-410-581-9994). Or call the number on the back of your card
Mailing Address:
Visa U.S.A. Inc.
P.O. Box 194607
San Francisco, California 94119-4607
Online: Your card issuer’s website may let you send them complaints about merchant violations and start a dispute if your were charged a fee to use your card.

“Visa merchants are not permitted to establish minimum transaction amounts, even on sale items. They also are not permitted to charge you a fee when you want to use your Visa card.”

“Although Visa rules do not preclude merchants from asking for cardholder ID, merchants cannot make an ID a condition of acceptance. Therefore, merchants cannot refuse to complete a transaction because a cardholder refuses to provide ID. Visa believes merchants should not ask for ID as part of their regular card acceptance procedures.”

See this VISA faq on how minimum charges are not allowed.
Rules for Visa Merchants.

MasterCard
Make a report online.
Phone Number: 1-800-MASTERCARD (International: 1-636-722-7111) Or can also call the number on the back of your card.

“A merchant must not require, or post signs indicating that it requires, a minimum or maximum transaction ammount to accept a valid MasterCard card.”

“A merchant must not refuse to complete a MasterCard card transaction solely because a cardholder who has complied with the conditions for presentment of a card at the POI refuses to provide additional identification information.”

MasterCard Merchant Rules

American Express
Make a report online
Phone Number: 1-800-528-4800 (International: 1-336-393-1111)
Mailing Address:
American Express
P.O. Box 297812
Ft. Lauderdale, FL 33329-7812

“American Express’s regulations do not explicitly prohibit minimum charges, but its policy is to discourage any merchant practices that create a “barrier to acceptance.” Amex does prohibit “discrimination” against the Amex card, however, so if a merchant has no minimum or maximum charge or require ID for Visa and MasterCard, the merchant may not discriminate against Amex by imposing a minimum or maximum charge or requiring ID.”

Why the Fed can't put out the fire

Even many of those who believe Fed must make another big rate cut Tuesday concede it can't do much to calm troubled markets.

By Chris Isidore, CNNMoney.com senior writer
Last Updated: March 17, 2008: 4:57 PM EDT

NEW YORK (CNNMoney.com) -- With Wall Street hit by a crisis of confidence, many are hoping the nation's central bank can save the day.

The Federal Reserve's main weapon: Cutting interest rates, and most economists expect a big slash of three-quarters of a percentage point on Tuesday.

But even those economists in favor of such a move concede it will do little to calm investor fears.

"It doesn't address the fundamental problems, which is that financial markets are just scared," said David Wyss, Standard & Poor's chief economist. "The Fed is trying, but they don't have a magic wand to wave and make everyone confident again."

In the past week, investors have come to expect even more aggressive action from the Fed.

The sudden collapse of investment bank Bear Stearns sparked fears that other Wall Street banks could be at risk. Shares of Lehman Brothers (LEH, Fortune 500) plunged more than 25% in morning trading on Monday. Concerns that another institution could collapse is one reason that the Fed will probably deliver another big rate cut.

But Rich Yamarone, director of economic research at Argus Research and a critic of the Fed's rate cuts, argues the Fed is feeding current market fears with emergency moves like Sunday night's decision to make loans directly to Wall Street firms instead of just banks.

"Anytime you act on a Sunday night during '60 Minutes,' if you don't think that will engender fear, I don't know what does," said Yamarone.

He added that the Fed should not be trying to prevent failures by Wall Street firms.

"It was almost naive to think this wasn't going to happen to someone," he said. "You don't have a credit crisis of this magnitude and have every player sidestep calamity."

Issue # 1: America's money
But Lyle Gramley, a Fed governor from 1980 to 1985 and now a senior economic advisor for the Stanford Washington Research Group, said that such a failure would have far broader implications for the economy and the financial markets and the Fed has to do what it can to avoid that.

"If the Fed had sat aside and let Bear go down the tubes, the cascading effects would have been ghastly," he said.

Still, Gramley concedes the Fed has only a limited ability to deal with market fears. And he said that makes this economic crisis the most difficult challenge for the central bank since the Great Depression.

"In all past recessions, I was always quite sure that if the Fed stomped hard on the gas pedal, the economy would turn around and start to grow," he said. "But they've now stomped hard on the gas, and credit is not more available, it's less available."

Gramley and some other experts believe the solution to the current credit crisis will have to come from Congress, not the Fed, and that the federal government will have to take steps to bail out both Wall Street firms holding mortgage-backed securities as well as homeowners who have mortgages with balances greater than the value of their homes.

"I think the federal government is going to have to recognize taxpayer money will be involved and the sooner we get going on that, the better," Gramley said. "The longer it takes to do that, the more expensive the bailout will be."

The Fed took steps to assume some of that credit risk last week when it agreed to accept mortgage backed securities as collateral.

Still, Yamarone and other Fed critics argue that another round of rate cuts will do little but drive the value of the dollar lower versus the euro and the yen, which in turn will further drive up the prices of commodities such as oil and gold.

"Not one company is saying monetary policy is restrictive or that the current interest rate levels are impeding them from investing," said Yamarone. "A (full percentage point) cut would send the dollar into a potential collapse. We're in a free fall now, wait till you see what a collapse looks like."

But many others think the Fed has no choice but to keep slashing rates.

"It helps, even if it doesn't solve the problem," said Wyss. "You need to keep the cost of borrowing down. It's not the optimal solution, but it's better than nothing."

And no matter what the Fed does, market fears probably won't go away any time soon. After all, some investors will probably take more Fed cuts as a sign that the central bank sees more trouble ahead.

"The market is going to stay worried, regardless of what the Fed does. It's heads you lose, tails you lose," Wyss said.

First Published: March 17, 2008: 1:24 PM EDT