The WSJ notes that JP Morgan can’t walk away from the deal even if Bear Stearns business and assets deteriorate further.

Fed wields its scissors, again

In economic news, the papers say markets are expecting the Federal Reserve to cut interest rates today by at least a half a percentage point and as much as 1.25 points. Or as the FT paradoxically puts it, “by as much as a full percentage point or more.”

Bloomberg says the move is likely to be the biggest since 1984 when Paul Volcker dropped the rate by 1.75 percentage points (to a low, low 10 percent). A point-drop now would bring the Fed’s benchmark interest rate to 2 percent, raising yet more concerns about inflation.

(But some key measures of inflation showed major drops yesterday: Crude oil prices fell more than 4 percent to $105.68 a barrel while a Goldman Sachs index of raw-materials prices had its biggest daily drop in three years.)

And don’t forget the cash drop that’s actually falling in taxpayers’ pockets. The government checks start fluttering into electronic mailboxes the first week of May, says the NYT. Nothing like trying to solve a debt crisis by getting the entire country into more hock so it can buy Blu-rays and stuff to give the economy a sugar shock.

Manufacturing data was recessionary last month, with industrial production dropping 0.5 percent. The New York Fed says its state manufacturing survey is at its lowest point on record. Trade data were good, however. The current-account deficit narrowed last month by 2.5 percent.

The Journal says on B1 that CEOs are worried the financial-sector woes are spreading to other sectors.

Ryan Chittum , a former Wall Street Journal reporter, is deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.