Why the Fed's Latest Rescue Effort is Doomed

World markets got a nice tailwind yesterday (Wednesday) on news that the U.S. Federal Reserve is stepping into the fray along with other central banks to boost liquidity and support the global economy. Of course it's nice to see stocks get a hefty boost, but to be honest I'd rather see them rising on real news. Not that this isn't a good development in terms of stock values - but come on, guys. When things are so bad that the Fed has to step into global markets and bail out the other bankers in the world who can't wipe their own noses, we have serious problems. Think about it. The Fed is going to collaborate with the European Central Bank (ECB), the Bank of England (BOE), the Bank of Japan, the Swiss National Bank and the Bank of Canada (BOC) to lower interest rates on dollar liquidity swaps to make it cheaper for banks around the world to trade in dollars as a means of providing liquidity in their markets. Put another way, now our government is directly involved in saving somebody else's bacon at a time when, arguably, we don't have our own house in order. The Fed is cutting the amount that it charges for international access to dollars effectively in half from 100 basis points to 50 basis points over a basic rate. The central bank says the move is designed to "ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credits to households and businesses and so help foster economic activity." Who writes this stuff? Businesses are flush with more cash than they've had in years. The banks are, too. But the problem is still putting that cash in motion -- just as it has been since this crisis began.