Global markets had deep sell-offs yesterday (Tuesday) as short-term credit markets remained tight, with the three-month lending rate for banks hitting a yearly high.

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Central banks around the world yesterday (Wednesday) announced a coordinated reduction of their respective interest rates in a bid to restore investor confidence and put an end to the worst market rout since the Depression era. However, analysts and investors alike are skeptical that even the largest coordinated effort by central banks since Sept. 11 will be enough to save the economy from a severe recession.

Yen trades to 98! Carry Trades unwinding hurt high yielders… Gold rallies back to $900! Central Bank rate cuts…. And Now… Today’s Pfennig!

In the currency market, the dollar slipped against the euro. Late Tuesday, the euro was trading at $1.3653 vs. $1.3492 on Monday. In the latest government move to ‘fix’ the credit problem, the Federal Reserve announced that it would create a Commercial Paper Funding Facility, which will buy commercial paper, in a transparently desperate attempt to revive frozen credit markets and ease borrowing costs.

The government of Iceland (yesterday) Tuesday pegged its currency to a basket of foreign currencies, nationalized its second-largest bank, and pleaded with Russia for a $5.4 billion loan – all in a desperate attempt to prop up the island nation’s ailing economy.

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In a bold move to provide stability to the frozen short-term credit markets, the U.S. Federal Reserve yesterday (Tuesday) announced new measures aimed at boosting liquidity and allowing corporations to maintain daily operations. But the U.S. markets were less enthusiastic about the Fed’s new measure. Slight gains in early morning trading quickly reversed course to plunge much lower.

For Europe, this is more than just a banking crisis. Unlike in the US, it could develop into a monetary regime crisis. A systemic banking crisis is one of those few conceivable shocks with the potential to destroy Europe’s monetary union.

Good day… And a Terrific Tuesday to you! Well… Folks… The wheels, what was left of them, are really coming off this economy. It’s a sad sight to see, but it’s happening nonetheless, and there’s no bailout, stimulus check, mortgage bill, truck loads of money supply, or whatever, that’s going to stop this recession bus.. Memo to Paulson and Bernanke… Don’t throw yourself under this recession bus…