Credit Seizure
Equity markets are rallying today, in anticipation of a bailout getting done later in the week. Here is a post from the Wall Street Journal's MarketBeat blog stating that the credit markets are still not responding. I guess credit markets trade on action, not anticipation or expectations. Here is a sobering section from the post:

In short, credit is frozen, in part because institutions are hoarding liquidity for the end of the quarter. Monday’s Epic Fail on Capitol Hill would seem to be hurting too — except credit was worsening even before the $700 billion bailout bill died, notes Brian Reynolds, chief market strategist at WJB Capital.

Need more geeky proof just how little trust is around? The three-month Libor/OIS spread — which compares the rate at which banks are prepared to lend to each other to the expected benchmark interest rate set by the Fed — widened to a record 246.75 basis points from around 218 basis points Monday. And it isn’t just Wall Street. The commercial paper market, where companies raise short-term financing, also felt the pressure of tightening conditions. One trader at a primary dealer said volumes are holding up around Monday’s levels, but overnight rates on asset-backed commercial paper jumped to 6% to 7.5% from 2% for better-rated companies on Monday. It isn’t helping that today is the last day of the third quarter, bringing banks’ efforts to get their books in order to a head.

I wish there was a readily accessible way to view spreads because they will show the way out of the immediate credit crisis.