Let's get the bad news out of the way. Oh wait.... its all bad news!

Ok, ok, we'll start with import price inflation.

Up 2.7% .vs. expected 2.4%, and against previous of 1.8%. Hmmmm..... that looks kinda like a near-vertical move - especially with China, which is now running at a double-digit rate.

Oh, and foreclosures? Up 31.8% - in one month. That's good, right? Must be!

The Fed comes out with a plan to provide liquidity in an auction system and swap lines in concert with other central banks. The instantaneous move north in the futures was rocket-like.

The dollar cratered immediately and the FX markets went parabolic too, although both quickly settled down - except for the Yen, which weakened a lot. The Yen's move, however, is more likely attributable to the recession call for Japan which came out overnight (oops); while this might please carry folks I suspect that the carry is far less important than it has been in the past, simply because the extreme volatility in the FX markets has raised the risk of engaging in that game to irrational levels. The intelligent have left for greener pastures; the fools will find out soon enough that you don't get sheared when this goes wrong on you in the next few months - you get skinned.

The Fed's announcement was claimed to "directly attack the liquidity issue"?

Hmmmm...... well, that would be great if there was a liquidity issue. Unfortunately there isn't - the issue is one of trust and solvency. This move was more directly aimed at LIBOR, which has refused to respond to liquidity and "formal" rate targets. Will it collapse LIBOR? It sure did in the short term, and buried a lot of people on the floor. And by the way, those aren't retail investors down there on that floor - they're institutional boys, and more than a couple were carried out on their shields this morning.

"A newer, more open Fed"? Pull my finger. How about a Fed that, if it was a listed public company, would have each and every one of its officers in prison for market manipulation. But heh, when you're The Fed, you can do what you want, right, even if that includes having "unnamed inside sources" initiating conversations intended for publication in the media because you are "dismayed" with the market's reaction to your public actions, as happened with Steve Liesman last night!

Number two, there's a little problem here with The Fed's statement that there will be no disclosure of those who bid on (and win) these auctions!

We've got a problem with trust in that nobody knows who's stuffed full of crap in the banking system, so now we'll provide yet another way for people to hide from it?

All this is going to do is tighten up the sphincter of credit even further because it actually moves the ball the wrong way on the transparency playing field!

I call this play a sack.

You figure out what sort of sack and what's in it.

I doubt you'll need much imagination.

Never mind that later on The Fed said clearly that there would be no net change in the amount of slosh in the system - only the form would be changed. Oh, wait, let's think here.... does that mean that this is all good? Oh I'd think not.....

Don't tell the pumpers in the equity markets about the fact that the problem is that people are hiding the "B" word (that'd be "bankruptcy", or if you prefer, "balance sheet".) The more stupidity they display, the more money I (and those with IQs larger than their shoe size) make!

I love the pumpers on days like this when I can be in front of the computer; I was quite upset yesterday, as the intensity and velocity of the move on the announcement precluded me from getting half of the positions on that I wanted without undue risk. How often do you get a "mulligan" in the market casino? Well, I got one today - thanks boyz!

The unfortunate reality is that Ben And Buddies are trapped. If they attempt to force the financials to take their garbage back onto their balance sheet and lay it bare so we can all see it, the market (and economy) will crater, and several of these institutions will be proven insolvent.

If The Fed does not do this, then the lending sphincter will remain cinched closed, and eventually these non-performing assets will exert enough of a cash flow drain that they will be forced out into the open as the well-putrefied carcass' stench is no longer bearable. At that point the end game happens anyway (insolvency, bankruptcy, pick your favorite word) but this way Ben And Buddies don't get blamed for it.

The bad news is that Door #2 could take years to play out, and in the meantime our economy is choked off.

Down this rabbit hole lies the risk of a deflationary credit collapse and perhaps even a depression instead of an ordinary, if severe, clearing recession.

In the best Washington DC tradition you should fully expect "Ben and Buds" to take the expedient (for them) way out rather than risk being "blamed" for the explosion. Certainly, all evidence now on the table suggests strongly that Bernanke lacks of the statesmanlike qualities of a Paul Volkler necessary to employ the leverage that he does have to do the right thing.

The nasty is that now we get to trade on fundamentals for the next six weeks or so. Yeah, I know, there may be more "Bennie and The Feds" surprises out there, but if this is what they've got and are planning, I'll take it. Tight stops, never hold unprotected positions overnight that you're not willing to get buried on with a 2% or more upward move in a day, and make the same money as many times as possible.

Scalp-trading is insanely profitable on days like this as the moves tend to be stupidly out sized in proportion to what they should be, with all the volatility being created out of thin air by the idiots - including Ben. A 400-point range in the Dow - insane. Thanks Ben.

Here's the technical!