The last few days of the subprime meltdown have seen aggressive Federal Reserve activity whether we wanted to or not. If I hear the word “deleveraging” one more time I'll scream. Bear Stearns shareholders heard their management misrepresent the condition of the company, just two days later to be told that the company was being taken over for $2 a share to avert bankruptcy.

Just today the Federal Reserve lowered by three quarters of a percentage point. Their statement was not all that encouraging. “Inflation has been elevated, and some indicators of inflation expectations have risen. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook has increased. It will be necessary to continue to monitor inflation developments carefully.”

What does this mean? The Fed is saying that inflation problems can wait; they'll deal with the financial system now. When they say that they expect inflation to moderate, what they are saying is that home prices and rents will come down. They are expecting a “leveling-out” of energy and commodity prices; this means that one should not expect those prices to come down. Uncertainty about the inflation outlook? No. It's certain. We have it. Prepare for it. They're going to monitor for it, but they're not going to act on it.

The worst of the subprime crisis in terms of surprises is over. Prepare for the unintended consequences of their actions, notably higher inflation, a very weak dollar, and months and quarters of plodding along as all businesses deal with the aftermath of the Fed's blunt actions.

I mentioned in Monday's column that China's Internet population will exceed the U.S. A reminder of China's lack of a truly free press is from this article in the London Times about how YouTube and Yahoo! have been blocked because of the ability to access reports of the violence in Tibet. Whether there will be an uprising among China's citizens as the taste of economic freedom continues, or if it will be a gradual change as Party leaders retire or die remains to be seen. But it's a reminder that China still has risks and that a command and control economy does not disappear easily.

Probably the most important news of the day was not the Fed or China, but General Motors' advertising plans. As originally reported in Advertising Age, “The country's third-largest advertiser is getting ready to shift fully half of its $3 billion budget into digital and one-to-one marketing within the next three years. And as GM goes, so goes the entire automotive industry -- the leading advertising category that pumped some $9.42 billion into the ad economy last year.”

While automakers broadcast budgets are huge, their print advertising and print support materials are big as well, and their plans affect the decisions of all marketers. Dealers for the automakers take their cues from the advice and counsel of headquarters, and they are being asked to follow the march to digital. As the article states: “At a time when a slowing economy is taking a toll on advertising, the prospect of billions of dollars fleeing TV, print, newspaper, radio and outdoor is unwelcome, to say the least.”

Here are other key highlights of the article:

“In the last few years GM has shifted several hundred million dollars from TV and print to digital and one-to-one, and that trend will accelerate, said the executives.”

“...a pattern is developing among automakers whereby TV and print are deployed for launches in order to raise awareness, while more of the continuous branding and sales activity shifts online -- as automakers and many of their dealers accept that the purchase process increasingly begins, and sometimes even effectively ends, on the internet.”

“the marketer will try to persuade its regional dealer ad groups 'to shift their focus to digital vs. spot TV' starting this spring after the dealer co-ops, which spend some $500 million annually, are revamped.”

“Hyundai Motor America is doubling its online ad spending this year over 2007, according to VP-Marketing Joel Ewanick, who declined to offer specific figures. 'Online is getting to the point where it may be more important than the 30-second TV spot.'”