Coming Week: Bear(s) Set Agenda

After propping up Bear Stearns (BSC Quote) with emergency cash last week, the Federal Reserve will now attempt to rescue the U.S. financial system with more interest rate cuts aimed at shaking the credit markets out of a fear-induced paralysis.

The Fed, set to meet and unveil fresh cuts to its short-term rate target on Tuesday, needs investors to start trading mortgage-backed securities again or the U.S. economy could be facing a calamity of unprecedented proportions.

The central bank has already gone to extraordinary lengths to inject fresh liquidity into the markets, but so far, it has been unable to achieve its aim. ...