In a surprise move aimed at stimulating moribund financial markets and the larger economy, the Federal Reserve surprised markets with an unprecedented 50 point rate cut, taking their target rate down to -47%.

The statement accompanying the surprise cut was also unusual, employing bolder language than is typically the case. For example, the phrase “the committee judges inflationary and growth risks to be roughly balanced” was changed to read, “Screw it! We’re going nuts over here! You got a financial problem? Need some fast cash? We’ll pay you—that’s right, you heard us—to borrow money from our bank.”

Government officials commenting on the Fed’s unprecedented move were surprised but supportive. Treasury Sec’y Paulson said, “While we do not typically comment on Fed policy, I will say that I myself just borrowed a million bucks and made a very tidy profit on the trade.”

Wall St, however, was critical, continuing to press the Fed to go further.

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The story of what’s happening on Wall St. is really pretty straightforward. It’s a classic bank run, this time on the investment bank formerly know as Bear Sterns, which we’ll just call by the apt acronym BS.

Over the past few months, folks who’d lent money to BS started to get worried that BS had made some bad bets with that money, and might not be able to pay them back. So they started calling in their IOUs.

When it started to look like those folks might be right—BS might not be able to meet the “margin calls”—the Feds got nervous that the firm could fail, and helped to orchestrate a bail out. Meanwhile, the firm went from being worth billions to being almost worthless in a matter of weeks.

There are many good articles out on this if you want to read up it. Go here, here, and in case you had a little residual love for BS in your heart, go here to get it expunged.

As for my contribution, I offer this primer.

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