Asian Bears

How's that for quick feedback? On Sunday night -- Monday morning in Asia -- the Fed cut the discount rate and approved J.P. Morgan Chase's acquisition of Bear Stearns. Yesterday Asian markets delivered their verdict: Hong Kong plunged 5.2%; Tokyo, 3.7%; and Mumbai, 6.5%.

Given the region's dependence on the U.S. consumer, it's hard to view this as anything other than fear that the Fed can no longer keep the American economy on course. The dollar's dramatic decline and the concomitant rise in commodities prices are the most obvious symptoms.

But the negative reaction to the Bear Stearns bailout is also telling. Rather than forestalling fears that a "too-big-to-fail" institution might collapse, the Fed's move seems to be stoking alarm that it knows something the market doesn't about the depth of the problem. Bear's plight has also called market attention to another flaw in the Fed's rate-slashing approach -- it works only if people are willing to lend and borrow.

Despite dramatic declines in recent weeks, many Asian markets have fallen only to around their levels of last summer. (Japan's three-year low is the exception.) But another bad market day is another reminder to policy makers that what U.S. consumers giveth, a faltering U.S. economy can taketh away. Taking their fates into their own hands by adopting strong pro-growth policies is the best insurance against a fickle Fed.