Here's a question: We know government officials, including Bernanke, get GDP in advance. Is the pessimism in the FOMC statement reflective of a worse-than-expected GDP tomorrow? And, does it even matter, since everyone seems to have a big downside expectation for GDP (which, to boot, is backward looking)?

Here's the key paragraph in the FOMC decision. I've bolded the important parts....

Recent policy actions, including today's rate reduction, coordinated interest rate cuts by central banks, extraordinary liquidity measures, and official steps to strengthen financial systems, should help over time to improve credit conditions and promote a return to moderate economic growth. Nevertheless, downside risks to growth remain. The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.

"Over time." That seems to suggest this is going to take a while to sort out. Note the litany of all the actions it is pointing out it already took.

"Downside risks to growth remain." Even after all these cuts?

"Will act as needed." We are at 1% but they can go lower. The fact that they would even consider that is likely what is spooking the market.

Have I mentioned I'm always wrong on rate decisions?

50, not 25

Bad outlook, too, with that nasty 'downside risks' sentence still there. Fed seems open to cut again, even though we're now at 1%.

I am notoriously wrong on interest rate decisions, mostly because I tend to go against the grain of conventional thinking. Let today be no different.

Fed Fund futures say 50. I say 25. Here's why:

The FOMC's target is current at 1.50%. The effective rate is 0.67%. So, even if the Fed stayed where it is, the effective rate is still less than half the target.

True, the Fed knows that many loans are pegged to the target rate, not the effective rate, and they have control over the target, not the effective rate. But they should also realize that taking rates down to 1% takes a third of their remaining 25-basis-point arrows out of their quiver. Think Japan.

So the Fed has wiggle room to cut 25 or not cut at all.

Of course, there is the pressure from the markets and politicians and their own newfound inclination to cut first and ask questions later, all of which will weigh on the governors' decision.

Which is why I'm likely wrong again. Even though I shouldn't be.

The Wall Street Journal reported today that GMAC may convert to a bank holding company so it can line up to collect some of the $700 billion in federal bailout money. Fair enough, given that, a) it is a lender like a bank,  b) is in enough trouble financially where it could use the cash, and c) is certainly eligible, given that Wall Street firms like Goldman Sachs and Morgan Stanley have made the same conversion.

But this story isn't so much about GMAC as it is about private-equity firm Cerberus. Cerberus co-owns GMAC GM and also owns GM rival Chrysler. GM and Chrysler have been talking about a merger, and the terms that have leaked out have GM buying out Cerberus from Chrysler and Cerberus getting a bigger piece of GMAC.

If GMAC gets the funding, it gets stronger, so Cerberus makes out well. If that paves the way for a GM-Chrysler hookup, Cerberus makes out well. So, while Cerberus doesn't have its handout, it gets to put the cash in its pocket.

Some may say, "So what?" Indeed, everyone seems to have his hand out nowadays.

Well, Cerberus shouldn't, because it should have been smarter. After all, private equity is supposed to be the smartest of the smart money, and it's traditionally a helluva lot more patient with its investments. But it screwed up: Chrysler is in rough shape, and GMAC is, too. Two very bad investments.

Here's a solution: Let the government become a partner in Cerberus. Socialist? Maybe. Fair? Certainly. Private equity is a notoriously exclusive club. Most folks never get passed the porter in the hall. But, if the bailout will benefit Cerberus, then why not let the source of the bailout funds -- that's us, taxpayers -- get a nice table in the clubhouse. After all, in good times the returns from PE are pretty damn good.

Obviously, that won't happen. Cerberus would never dream of letting Treasury become a partner, as dozens of banks are doing by offering the government preferred shares in return for bailout cash.

But, if they're not willing to give something up, they shouldn't be showing up at the government's money trough.