Poor Greenspan. All he wanted was to be able to retire a winner and maintain a legacy any hero would envy. Instead, the famed Fed chairman finds himself mired in a sluggish economy that refuses to budge when he says "Go ye forth and prosper! Borrow! Buy stocks! Build! Spend! Spend! Spend! A world of wonder and wealth await ye!"

OK, I am taking some creative license here, but we must really take a pause and appreciate what happened today with the Fed. While some characterize today overall as a non-event because the fairytale of the 2nd half recovery was so obviously over with this summer's sell-off, I myself am taken aback somewhat. I am pausing not just because the sluggish recovery I was expecting in the 2nd-half looks to be even more sluggish than I expected, but the Fed today actually came around to admit that it is more likely we will dip again into recession than not in the near-term. Even a bear like me stuck to the "tepid recovery theme," but apparently even that bit of optimism is in peril at this point.

Let's read the typically terse statement the Fed treated us to:

"The softening in the growth of aggregate demand that emerged this spring has been prolonged in large measure by weakness in financial markets and heightened uncertainty related to problems in corporate reporting and governance. The current accommodative stance of monetary policy, coupled with still-robust underlying growth in productivity, should be sufficient to foster an improving business climate over time. Nonetheless, the Committee recognizes that, for the foreseeable future, against the background of its long run goals of price stability and sustainable economic growth and of the information currently available, the risks are weighted mainly toward conditions that may generate economic weakness."

Reading between the lines, we have to see that the Fed is as close as it may ever get to admitting that it ain't as powerful as it assumed itself to be when all this rate cutting began. If you didn't believe me before, you have to believe me now that you cannot listen to anyone or any analysis whose fundamental basis lies on a second-half recovery, much less robust one. I hope that FINALLY the talking heads drop that dead anchor. We also KNOW that we are still experiencing the pain of a post-bubble economy - the inevitable correction is obviously not over and almost no one knows for sure how the U.S. will navigate the coming storms.... In fact, the Fed's powerlessness is specifically because, as one anti-Fed commentator puts it, "a bubble cannot be cured, only prevented." We are now in a phase where the post-bubble popping must run its course. What must concern us all is that because our 90s bubble was unprecedented, it goes to reason that its consequences will also be unprecedented (we have already seen post-WWII and post-Depression records fall one-by-one). Thus, even worse, it is quite likely our leaders who pretend to be in the know have no idea how we are going to fix this pickle, especially without increased pain down the road.

Here is what Bushie had to say today: "Even though times are kind of tough right now, we're America. I am terribly optimistic about the future of this country, because I understand the strength of the country. The strength of our country is its people," Bush said. Never mind the simplemindedness of it all. Note that "times" are not really that tough now compared to other slowdowns we have experienced in the 20th century. Given the Fed's admission and the government's standard "all is well, or at least pretty good" reassurances, we have further confirmation that things must be about to get worse. I know, the science of this analysis is dazzling in its display! You sure couldn't get this kind of logic from some knucklehead Wall Streetie. :)

So, you wonder, what can we as a country do? What should I do? For once, I am at a loss for words. I can only say that you must be careful and NOT take on big financial commitments that you are not confident you can handle in all but the worst of times. You should focus on saving versus spending. And you must be extremely careful with all investments and emphasize cash and liquidity. I am also continuing to keep tabs on the news and try to keep learning from history.

Here is a final example of the quandary we are in. Even the Fed couldn't do any right today. This is a clip from Aaron Task of realmoney.com:

"The consensus opinion Tuesday morning, confirmed by market reaction, was that the Fed was in a no-win situation given the range of unpalatable options at the committee's disposal, including:

• Leave rates unchanged but change the risk assessment statement -- as was the case -- and people would suggest that the Fed should have taken action now, rather than waiting -- as was the case.
• Cut rates and many people would worry that the central bank knew "something" was going on in the banking sector or that they were pressured by the White House to act. A rate cut also would have been a confidence-busting admission by Chairman Alan Greenspan that his mainly upbeat congressional testimony last month was wildly off-base.
• Do nothing on either rates or the bias and risk being viewed as out of touch."

PLEASE BE CAREFUL OUT THERE!