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The markets seem to believe the hype so I suppose that is the main thing. The entire problem (sorry the majority of the problem) has been the lack of confidence in the interbank lending markets. There have been huge funds sitting on the sidelines, not willing to risk depositing with banks who might not be secure. The effective nationalisation of three of the major banks in the UK and the huge addition of liquidity elsewhere might get these funds moving again.

For all of the euphoria in the equity markets it is important to note that Libor rates are still considerably higher than base rates and this is even though we are anticipating rate cuts in the coming months. 3mth sterling Libor is likely to be around 6.25pc this morning and that is with base rates at 4.5pc. This is lower than the end of last week but is still extraordinarily tight by historical standards. Unfortunately for those talking about the end of the current financial crisis this does not quite indicate such a rosy scenario. Outside of the major trading nations (who can afford, for the moment, to stand behind their financial institutions) the rest of the globe might well start to experience a sharp decrease in available liquidity as corporates and wealthy individuals reallocate assets to the G8 nations.

The nature of this crisis might well be (as I have mentioned several times) that as we attempt to extract ourselves from the mire all we succeed in doing is stepping on someone else and pushing them further down. In desperation they then grab hold of us and pull us back in.

The loan books of the big banks are truly massive and we have all grown fat on the back of easy credit. Much of this debt is built into the value of our property and I am very much worried that the well meaning attempts of the government to prop up the housing market by adding liquidity will backfire spectacularly. The idea that we are in a better position than others on the housing front "because we have excess demand" presupposes that there are jobs available that pay well enough to afford housing at the current levels. The falls in general values of around 12pc from the highs can be seen as just 'the froth' being knocked off we have still to see real asset depreciation on a par with other asset classes. Equity markets dropping by almost 50pc might well trigger a similar (not 50pc but maybe 25 to 35pc) long term depreciation in property values. If this happens then the injection of £50 bln into the banks might not be enough especially if they are forced to start lending at 2007 levels once the Government assumes control.

The FTSE is looking quite solid this morning in the mid 4400's having opened up almost 200 points for the second day in a row. The huge relief rally in the States of almost 1000 points in the Dow has done its magic for us and we are back at the levels of.... Errr the middle of last week, to be precise, the close on Wednesday. I am afraid to say that for all of the fact that we have had a huge rally equity prices are still a tad squashed. Trading will remain very fragile for many weeks, prone to sharp spikes and even quicker sell offs so traders should remain small scale and fast on their feet.

Gold is quietly moving higher this morning as well so it would appear that there are quite a few people out there who are also not convinced that final chip has been played. At $853 we are 20 bucks up from the close yesterday and sitting in the middle of the recent trading range. I have never been a great believer in the value of the Yellow Metal but with the Euro zone, the UK and the US effectively printing money in mind boggling amounts I might have to reappraise my view point.

On the currency front the interest rate play might become more important now that most major crosses are all in the same boat. Sterling has rebounded from lows last week versus the dollar and this might have further to play as weak Pound shorts get squeezed out. Unfortunately the long term trend is still bearish and we have had bounces of this size several times this year.

The Tradefair Spread Betting Team