COMMENTS: Interest Rate Cut Mitigates Stocks’ Slide

Wall Street trading resumed after a holiday to honor Martin Luther King. The financial markets' reaction to Monday's fire sale of stocks all over the world was the Story of the Day, leading all three newscasts. Apart from global finance, the nightly news was almost entirely bereft of foreign coverage. CBS and ABC both decided to run no international news while airing two show business stories instead: the prospect of celebrityfree Academy Awards ceremonies and the untimely death of 28-year-old actor Heath Ledger. The lone coverage from overseas was filed by NBC, on the Israeli siege of the Gaza Strip.

As usual when economic news breaks, NBC had its sibling financial news cable channel CNBC provide the coverage. Erin Burnett chose the global financial angle on the day's Wall Street trading, recapping the "wild ride" of selling from Tokyo to Frankfurt to Paris to London. NBC's Mike Taibbi followed up with a tick-tock of the day at the trading desk of the Wall Street investment bank Cowen & Co.

CBS' Anthony Mason and ABC's Betsy Stark (embargoed link) opted for the intervention of the Federal Reserve Board in Washington. The central bank cut short-term interest rates to 3.5% . Stark called the cut "extraordinary;" Mason called it an "emergency;" Burnett used "shocking." Stark reported that the Fed "has not cut interest rates this much in a single swipe in more than 25 years." This was the first cut not to be announced at a scheduled meeting since the aftermath of the terrorist attacks of September 11th, 2001. The upshot of the monetary relief was that the Dow Jones Industrial Average closed at 11971, down only 128 points, an unnewsworthy end to headline-grabbing trading

CBS' Mason also warned about a pair of "little known companies" that happen to be "a key part of the financial infrastructure." Between them, Ambac and MBIA insure $2.5tr in financial paper. If those two insurers find themselves in trouble, floor trader Doreen Mogavero warned Mason that "the wild ride is not over."


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