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Welcome to a special San Francisco edition of Bad Money.

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Today got real ugly.

But at least we finally have something that can make the Federal Reserve

itchy to cut interest rates sooner rather than later.

Bank loans gone bad.

Nothing motivates the Fed to move faster than credit losses

because there are a definitive sign that the economy is going south.

There are early warnings that it's time to ease, and the banking system has now provided us with enough questionable credits in one week that the Fed can move swiftly to slash rates without all that much worry about inflation.

Of course, when you have something as grave as credit

losses at banks, the market doesn't react. Well, it's a sign that until the Fed uses, perhaps

aggressively, banks will make it harder to borrow money and layoffs could be on the horizon,

which is ultimately why the Dow tumbled 301 points today. S&B dropped 0.63%. Nasdaq sank point 47% even though it was

up in early morning. Still though, the Fed's in a constant tug of war between cutting rates to spur economic

growth and leaving rates alone to prevent a resurgence of inflation. With the regional banks

getting crushed by bad loans, it's much, much easier for the Fed to go with the former analysis.

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