The Confidence Game, Round Two.

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So if the Fed paid 1.75% interest on reserves, the effective federal funds rate couldn't go below 1.75%. Fed researchers believe monetary policy would be much more effective with this approach, because the Fed could more directly control the most liquid asset in the economy and would no longer have to worry that policy could become impotent as the target rate approaches zero.

The Treasury announced steps to clarify to the market how it plans to coordinate the massive borrowing needs that will be required to fund the new emergency mortgage financing plan approved by Congress last week. Treasury said it will make adjustments to its auction calendar by increasing the size of bill and note auctions and continuing to issue cash management bills, some of longer-duration. In addition, the department said it was considering bringing back the three-year note in November and taking other steps.

The Fed and Treasury said that they are consulting with market participants on ways to support term unsecured funding markets.

"Together these actions should encourage term lending across a range of financial markets in a manner that eases pressures and promotes the ability of firms and households to obtain credit," the Fed said.

"The Federal Reserve stands ready to take additional measures as necessary to foster liquid money market conditions," the statement said. The Fed will increase the size of its term auction facility auctions to $150 billion beginning later Monday.

Anthony Ryan, the acting under secretary for domestic finance, went on television to stress that top-level officials are working rapidly to implement the mortgage rescue plan hatched by Treasury Secretary Henry Paulson.

"We're moving as quickly as we can," Ryan said in an interview on CNBC. But Marc Chandler, currency analyst with Brown Brothers Harriman, said he was worried that the markets were moving much more rapidly than regulators and that Washington's efforts ultimately may be too small to stem the crisis."

Well, things could be worse. It has been revealed today that one in four mammals is in danger of extinction. Although humans were not (yet) included on the list, they are apparently trying real hard to be included.

Happy Survival.