This afternoon the Spanish Ibex 35 came back, and is now more or less where it opened this morning. The other European markets have also recovered on the day. Everyone is waiting to see what Wall Street does. The Federal Reserve has just announced an interest rate cut of three-fourths of a point.

Here's Larry Kudlow of National Review. Note the second paragraph.

There’s a global stock market tsunami gathering force. It may hit U.S. shores very hard this morning.

Much of this is panic over a U.S. recession threat that has yet to clearly materialize. The world sell-off also vastly overestimates loan and credit problems among international financial institutions.

In any event, world central banks should immediately reduce rates and add liquidity first thing in the morning, no matter what the time-zone.

Fed head Ben Bernanke should have cut rates 50 basis points last week. He should do it first thing this morning. Then cut rates another 50 basis points on January 30.

Importantly, central banks must work together and cut rates together. They must coordinate to avoid major financial consequences. They must show investors, financiers, and business people that they are in charge.

In this deflationary environment, plunging commodities, stocks, and credit-risk-free government bond yields are all signaling central bankers to take charge. That means lower rates and more money creation.

Pronto.

Looks like the Fed more or less followed Kudlow's advice.