Mr Alan Greenspan, one of the most savvy players on the Washington scene, is a firm believer in monetary policy over fiscal policy.

His success at running the US economy has brought many economists to the position that the central banks should indeed manage business cycles, leaving longer term tax and spending policies to Congress.

Though the Fed eschews politics, its chairman is not without political awareness. He knows well, for example, that former President George Bush blames his loss of the 1992 election on Mr Greenspan, feeling that the Fed did not do enough to stave off recession in 1990 and 1991.

So it could not have been entirely accidental that Mr Greenspan convened an hour-long telephone conference call with his executive committee at 11 a.m. on Wednesday to issue a dramatic half-point interest rate cut. At the same moment, President-elect George W. Bush was meeting business leaders at an economic forum in Austin, Texas, rallying support for his $1.3 trillion (€1.4 trillion) package of tax cuts.

Many analysts believe Mr Greenspan stole Mr Bush's thunder and may have weakened the case for a tax cut.

Understandably, observers are curious as to whether Mr Bush and Mr Greenspan are on a collision course. Time will tell.

The immediate question, however, is whether the Fed's dramatic action - they have only issued emergency rate cuts such as these twice before, in 1989 and in 1998 during the Asian financial crisis - will be enough to prevent a recession, much less a hard landing for the economy.

The numbers at this moment do not look good, and reaction to the rate cut could be characterised more according to the personality traits of the analysts and economists than any strict economic forecast.

Morgan Stanley Dean Witter strategist Mr Barton Biggs, speaking to the Wall Street Journal, likened the cut to a dose of narcotics, but warned that "once the stimulus wears off, we're going to be back in trouble". , The pessimists took the position that the Fed may know something we don't.

"Obviously he's fearful of something," said John Schneider, manager of the Pimco Value Fund, a mutual fund that has weathered the downturn rather well.

"He would have loved to have a soft landing. This action tells you he's not achieving that and he has to act faster. Personally, I think we're going to have a recession."

Alan Blinder, a Princeton University economics professor who served as Mr Greenspan's vice-chairman for two years, added: "This says to me that Alan Greenspan is considerably - not just a little, but considerably - more worried about the health of the economy than the consensus forecasts. And if things are deteriorating as rapidly as Greenspan must think, this will not be enough to stop the deterioration."

The stock market thought otherwise. It leapt 400 points in the 13 minutes following the Fed announcement. It was a needed jolt, but perhaps an unsustainable one given the negative economic numbers piling up.

Two months ago the Fed was more concerned about inflation than recession. In the past year it was the stock market's "irrational exuberance" that prompted rate hikes. Now, conditions could not be more different, and it is not simply the fact that the stock market in 2000 - both the tech-heavy Nasdaq and the more staid Dow Jones - suffered one of the worst years in a generation. The past month has shown a decline in the US economy more dramatic than anyone had predicted. Sales of personal computers fell 24 per cent in December; car sales fell between 8 and 10 per cent. Construction spending has plummeted.

Retails sales are down. FirstCall, a company that tracks corporate earnings, says that as many as 700 US companies will announce fourth quarter earning that will miss estimates, the highest since 1995 and possibly the highest ever. So far, 573 companies including Microsoft have issued earnings warnings, against 273 warnings issued at the same time last year.

History, however, is on the side of the optimists. Since 1914, the Dow Jones Industrial average has jumped 20 per cent in the 12 months following an interest rate cut. Prudential Securities says that the greatest equity gains have traditionally come during rate-easing periods.

In a time of such pessimism, those are about the only numbers that investors and consumers can to cling to for comfort.