TEXT OF COMMENTARY

Kai Ryssdal: Credit markets are still trying to figure out exactly what to make of today's rate cut by the Federal Reserve. But in all fairness, credit analysts and everybody else out there have a whole basketful of things they need to digest. So maybe it's not surprising there's no clear verdict yet. Commentator Robert Reich has an inkling of how it all might work out.

Robert Reich: Global markets have so far given thumbs down to the giant $700 billion bailout plan.

The easy answer to why the bailout hasn't worked is it hasn't been implemented yet. But its purpose was largely psychological -- to boost confidence that the government is doing something big to clear out bad debts that have been clogging the system. That psychological boost should have happened as soon as the bailout was enacted.

Yet no one seems to believe that $700 billion will make much difference. And today's interest-rate cut, coordinated with the European Central Bank and Bank of England, may not, either. This isn't a liquidity crisis. It's a crisis of trust. Lenders don't trust that borrowers will be able to repay, because they don't think borrowers will be able to collect on what's owed to them. Every major player is moving to safer ground -- holding money, hoarding it, putting it under a giant global mattress.

Bad mortgage loans from the era of anything-goes credit standards started it. But now that America is tipping into deeper recession and unemployment is mounting, more bad loans are cropping up because more people can't pay their bills. And as consumers pull in their belts, more businesses can't pay their bills. Which means more layoffs and more bad loans and a global sell-off.

The Fed and other central banks can pour endless money into the system, but the problem is no longer just on the supply side. It's now also on the demand side. Which means the federal government, as spender of last resort, has to jump start the economy, as do other governments. Now's the time to start rebuilding our crumbling infrastructure -- roads, bridges, levees, public transit. And help cash-starved state and local governments invest in their schools.

Easy to say. But with no one in charge, a lame-duck president with the lowest approval rating in history, and a Treasury Secretary incapable of explaining exactly what he's doing, not to mention an election just weeks away, we have everything to fear from fear itself.

Ryssdal: Robert Reich is a professor of public policy at the University of California, Berkeley. His most recent book is called "Supercapitalism."