Can the Fed and Friends Save the Economy?

Markets were in a state of near panic, deeply worried about the economic outlook. But then the Federal Reserve stepped up: its chairman issued a statement strongly suggesting that he would cut interest rates. And the market experienced a huge relief rally.

No, I’m not talking about Monday’s big market bump. I’m talking about Dec. 5, 2000, in the middle of what we now remember as the bursting of the dot-com bubble. (Actually, I wonder if some of my readers are too young even to remember that?) The Fed chairman in question was Alan Greenspan; his remarks sent the tech-heavy Nasdaq soaring 10.5 percent in a day, while broader stock indexes also rose by several points.