Minyanville asks whether capitalism as we know it is dead, and the Financial Times says yes, in fact, it is. Bloomberg talks about the jump in US debt risk following the AIG demi-nationalisation/bailout. Brad Setser at the CFR tracks flight from "risky US assets" and describes how nobody wants to hold risk (US 35-day T-bills got in some cases negative-interest bids yesterday) and while I can't back it I'm hearing rumours about a near-freezeup in LIBOR interbank lending.
Last night, as two nights ago, the Fed was unable to defend its 2% target rate, tho' at least the standard deviation was lower than Monday night. This despite central bank and soverign fund intervention that Brad (lots from him the last couple of days - tracking money is his forté) describes as breathtaking.
Still, for today, it made the markets happy; the Dow regained most of yesterday's decline, the NASDAQ essentially all of its; the S&P did nicely too. A variety of market-makers have decided to blame it all on short-sellers, with Britain moving to ban short-selling of financial-sector stocks. That doesn't usually work out well. There are also a fleet of investigations being set up; maybe they'll pass a regulation saying you can't sell stock unless it's gone up!