http://news.bbc.co.uk/1/hi/business/7201658.stm

Okay, so we didn't save the world, but the world market went nuts yesterday over fears that the US economy was going to have a recession. The markets haven't fallen so far since September 11th, 2001! So the markets were really scared yesterday.

The worst part was that our markets were closed. It was an National Holiday -- Martin Luther King Jr. Day -- and our banks and financial markets had the day off. So first the Nikkei (Tokyo) and Hang Seng (China) indexed started panicking. Then India caught on. And then Europe caught the panic. And since yesterday, the world's markets have been holding their breath.

But the lovely Federal Reserve pulled out all the stops in an emergency meeting this morning and cut the interest rate 3/4 of a percent. This is HUGE. They usually only cut it by 1/4% at a time. Three-quarters is a lot.

AND they did it before the US Stock Market and other financial exchanges opened in New York.

So the traders in those markets knew what the Fed was doing before the Stock Market opened this morning. When I worked in the markets, we were in at 7am so I bet those offices are very very quiet as the clock ticks towards 9:25 (the opening bell). Let's watch...

http://www.nyse.com/

You see, a low Fed Funds rate (the rate at which American banks lend money to each other) means a low prime rate. That means people (and banks and other corporate concerns) will be more likely to borrow money. And more money in the economy means more money to be able to spend. And when you're a company with money burning a whole in your pocket, you spend it. And spending stimulates the economy and reverses the recession.

Yay!