Reuters reports that this morning's futures markets point to a 251 point drop in the Dow. Unfortunately, Fed Chairman Ben Bernanke's rate cuts over the last several months have had the perverse effect of making the market fall. Unlike Alan Greenspan, whose moves put a floor under the market -- the Greenspan Put -- as I posted earlier in the month, Bernanke's moves put a ceiling on the market below which it keeps falling -- the Bernanke Call.

The basic idea here is that Bernanke cuts rates in response to a crashing stock market. And while it generally recovers in response to that cut, that response is temporary and the market continues marching down. Here's a brief summary:

• September 50 basis point cut. After the Dow plummets 244 points last August, Fed cuts 50 basis points in September to 4.75%. Market rallies 979 to its October 12 high 14,093.
• October 25 basis point cut. Between October 12 and October 19, 2007, the Dow drops 571 points so Fed cuts rates 25 basis points on the 31st and the Dow falls an additional 541 points by November 23rd due to disappointment with the lower than hoped for cut.
• December 25 basis point cut. Between November 23 and December 7, 2007, the Dow rises 645 points to 13,625 -- I have no idea why, but on December 12, the Fed cuts another 25 basis points to 4.25% and the market is again disappointed -- the Dow falls 1,526 points to 12,099 by January 18, 2008.

Yesterday, Bernanke made a 75 basis point emergency cut -- the biggest since Alan Greenspan's emergency 50 basis point cut on January 3, 2001-- which caused the Dow to spike 268 points. This was supposed to keep the U.S. market from falling as much as the 500 points that futures had suggested in the wake of the global market tumble over the long weekend.

The market ended down 'only' 128 points following the cut. However, if the Dow futures are right, the downward trend of the Bernanke call appears to have been delayed a bit but not denied.

One possibly positive note, suggested to me by a colleague, is that Bernanke's cuts could ease the mortgage problem because it will lower the reset rates on adjustable mortgages assuming they are tied to the U.S. interest rate -- such as prime or the T-bill rate. If the fed cuts enough, it could rescue many of these deals that reset over the next two years.

If this saves many of the two million worth of mortgages expected to foreclose, then the Collateralized Debt Obligations (CDOs) backed by these mortgages might be worth more -- say 75 cents on the dollar -- than the current range of roughly 25 cents to 50 cents on the dollar.

And that could mean that banks which have written down those CDOs below a potentially higher value could lock in profits which would replenish their capital -- a good thing for the U.S. banking system.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.