– The worlds financial markets are waking up to a harsh reality this morning: the financial crisis has moved far beyond US subprime-mortgage meltdown to a fundamental breakdown of trust in the money markets that is dragging the sick and the healthy down alike. Yesterday’s drop below the 10,000 mark for the Dow is ample evidence that the Bush administration’s pork-laden plan to rescue the US banks has fallen short of its stated goal of shoring up confidence in the markets.

– As quoted in Agora Financial’s 5 Min. Forecast, “The idea of the bailout,” one trader told CNBC soon after the close on Friday “sounded better than the actual bailout.” 

– A report in The New York Times says the Fed is considering “a radical new plan to jump-start the engine of the financial system.” This would effectively see the central bank effectively lending directly to businesses by buying up short-term debt.

– There’s also talk that major central banks are preparing to deliver “a rare round of coordinated interest-rate cuts” if conditions don’t improve.

– The freezing of credit is certainly hitting radical levels. The London interbank offered rate, or LIBOR, a key measure of the availability of credit, rose 157 basis points to 3.94 percent today. Bloomberg reports that “The corresponding rate for euros climbed 22 basis points to 4.27 percent, the highest in four days. The Tokyo interbank rate stayed at the highest level this year and the Libor-OIS spread, a gauge of cash scarcity among banks, widened to a record.”

– Gold is up for a second day in London as investors look for a safe haven from the chaos in global equities.

– Oil rose by $3 a barrel on hopes that other central banks would follow Australia’s decision to cut interest rates and stimulate global demand.

–US stock future are also up after yesterday’s heavy selling. Mr. Market is hopeful, it seems, that the Fed will further slash interest rates to juice up the economy.