Central banks and governments around the world will today be grappling with the ongoing financial crisis that is spreading out from Wall Street.
Investment banking giant Lehman Brothers went bankrupt yesterday, sparking a global share price rout and widespread fears for the financial system.
Central banks are thought to be considering cash rate cuts as early as today.
The Reserve Bank of Australia has left the way open for more interest rate cuts but has by no means promised the cash rate will be reduced at its next board meeting on October 7.
The political ramifications will start to be felt today, with United States presidential candidates John McCain and Barack Obama focusing on the economy after a weekend of stunning developments reshaped Wall Street.
Mr McCain said the fundamentals of the US economy were strong but the country was facing difficult times.
"We're going to reform the way Wall Street does business and put an end to the greed that has driven our market into chaos. We'll put an end to running Wall Street like a casino."
Mr Obama blamed the crisis on Republican opposition to sensible market regulation - a philosophy, he said, Mr McCain shared.
He ridiculed his rival's statement that the country's economy fundamentals were sound.
"Senator McCain, what economy are you talking about?"
Merrill Lynch was the target of a $US50 billion ($NZ75.84 billion) rescue takeover as US titans fell or teetered as the financial crisis twisted and turned yesterday.
The US Federal Reserve provided funds to banks on easy terms and the European Central Bank and Bank of England injected tens of billions of dollars to avert a domino effect, known as systemic failure.
Another distress signal from the US financial system was a report that insurance giant American International Group (AIG) was looking for a huge emergency loan.
AIG, thrown a $20 billion ($NZ30.78 billion) lifeline by New York state officials, came under fresh pressure for survival as ratings agencies downgraded the insurer's debt.
In New Zealand, Prime Minister Helen Clark said the financial crisis, which she described as the worst for 70 years, would focus the minds of voters on who they could trust to run the economy - the money trader (National Party leader John Key) or the Government, which had managed the economy through good times and bad for nine years.
The Reserve Bank of New Zealand was understood to be considering bringing forward an expected October official cash rate cut to try to keep the fallout from the "Monday market meltdown" to a minimum.
Japan, Australia and India plied money markets with cash as central banks across the Asia-Pacific region moved to prevent the upheaval on Wall Street from clogging the pipes of the global financial system.
The Bank of Japan gave the banking system its biggest cash injection in almost six months as the Japanese prime minister met his top financial policy-makers to discuss the fallout from the collapse of Lehman Brothers.
The rates at which banks lend to each other jumped in South Korea and the financial hub of Hong Kong.
Stunned investors had hoarded cash, drying up lending between US banks and triggering a $70 billion cash injection from the Federal Reserve.
Authorities across Asia said they, too, were ready to act.
"The Bank of Japan will carefully monitor the recent situation surrounding US financial institutions and its impact," governor Masaaki Shirakawa said in a statement.
The bank, which began a two-day rate review yesterday, pumped 1.5 trillion yen ($NZ21.8 billion) into the money market, the biggest injection since March 31.
"I expect the BOJ to keep a generous funding stance for a while, until market jitters subside," said Shinsuke Kanabu, joint general manager at money broker Central Tanshi.
The Bank of Japan is expected to leave its benchmark interest rates unchanged today, with its banking system largely unscathed by the global credit squeeze triggered by US mortgage defaults.
The US market appeared poised for another sell-off today after ratings agencies downgraded AIG's debt, complicating its battle for survival.
Shockwaves from the Wall Street crisis prompted the Reserve Bank of Australia to pump nearly $A1.8 billion ($NZ2.2 billion) into the banking system, nearly three times as much as the market estimated requirement, in its second injection in two days.
The Reserve Bank of India added almost 60 billion rupees ($NZ2 billion) through a refinancing operation, its biggest injection in at least a month.
Hong Kong, South Korea and Taiwan offered verbal reassurances.
"We will take appropriate steps if we see fluctuations in the foreign exchange market," South Korean vice-finance minister Kim Dong-soo said.
Seoul authorities have spent more than $US30 billion this year to support the won, which has taken a beating along with most emerging-market currencies as investors shun risky assets.
The Hong Kong Monetary Authority said it was ready to inject cash into the banking system and Taiwan said banks could draw on funds at the central bank at any time.
