A trifecta of economic bad news

Following yesterday’s European and Asian plunge, Wall Street dropped more than 300 points in its first hour of trading, to fall below the 12,000-point mark.

The Fed, in little more than panic mode, cut the funds rate not a half point, but three-quarters of a point.

As pointed out before by me and better people, the flip side is that this drives the dollar further into the tank, and, if the immediate problems of this recession are beyond Fed reach, risks causing some sort of stagflation.

The panic was reflected in finance stocks with housing exposure. Bank of America and Wachovia reported almost zero profit in last year’s fourth quarter.