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Only a month or so ago, it seemed more than likely that the Bank of England would raise interest rates this week. Now everyone's talking about when the first cut will come.
As for Europe, commentators now have no idea of what the usually utterly predictable European Central Bank will do this week. Will it raise rates as it virtually promised last month - or keep them on hold?
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Meanwhile, across the Atlantic, markets now reckon that the base rate will be a full 75 basis points (0.75%) lower by Christmas. A cut in September is seen as a near-certainty.
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So are the world's central banks planning to pour more meths in the punch bowl to keep this cheap money party going? And more importantly - would it work?
Plenty of market players are screaming for the world's central banks to cut interest rates. One of the more prominent was Barclays Capital's Bob Diamond, who called for the Bank of England to intervene at the weekend, after a dreadful month for the bank (for more, see Friday's Money Morning: What's going on at Barclays? (/file/34253/whats-going-on-at-barclays.html))
But as Liam Halligan points out in The Sunday Telegraph, central banks risk sowing the seeds of the next crisis if they simply slash interest rates now. The careless lending that gave rise to the US subprime collapse is at least partly down to interest rates being too low for too long. "The solution to a cheap money problem is most definitely not more cheap money."
As Halligan also adds, "while serious, the current crisis is nothing like the terrorist attacks of 9/11, or the big corrections of 1987 and 1998. The question must be posed, if the Fed cuts now, what does it do when things get really nasty?"
Of course, across the Atlantic, George Bush is already getting ready to bail everyone out, with proposals to help some householders who look set to lose their homes.
But every intervention just encourages people to throw caution to the winds in future.
It seem tough, but as more than a few people have been rightly pointing out, this is how markets work. People who make mistakes lose money, and so learn to be more careful investors in future - or lose so much that they are unable to make mistakes again.
That seems a pretty harsh way to put it, so you can see why it's not a popular mode of thought. It almost seems unfair, particularly when you see poor unfortunates losing their homes.
So let's look at it another way. Dave lied on his mortgage application so that he could buy a house which he then expected to be able to 'flip'. This would enable him to retire early on the millions of pounds he was sure to earn from the one-way bet that was property. Bob on the other hand decided he couldn't afford a house at current prices on his salary, so carried on renting.
Now that Dave's facing the bailiffs, the government wants to take some of Bob's income away to save Dave from being kicked out of his house.
What's the lesson there? That it's stupid to be careful with your money, because the government will end up taking it away to save people who are careless with their money.
But, you may ask, if that's the way things are, then why get worked up about it? Well, the key problem is that these bail-outs don't come from nowhere. The US government is already deeply in debt. If it decides to just save all the subprime homeowners, then the foreign lenders who have been funding the US's huge debt might start to wonder about just how AAA-rated the American economy really is. They might start demanding a better yield on their dollar investments, or they might just dump them altogether. A weaker dollar means higher inflation which means more pressure for higher interest rates.
Halligan's view is that Bernanke should "tell Bush to back off Bernanke has the chance to usher in a new era of relative stability. If only he would take it."
We hope to be pleasantly surprised, but somehow we're not sure he will.
Turning to the wider markets
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In London, the FTSE 100 closed higher on Friday as stocks were given a boost by the strong start on Wall Street. The blue-chip index was up 91 points to 6,303, and the broader indices were also firmer. The resources sector really stood out with strong gains for Vedanta and Rio Tinto. For a full market report, see: London market close.
On the Continent, the Paris CAC-40 closed 28 points higher, at 5,662. And in Frankfurt, the DAX-30 was up 118 points to 7,638, with tech stocks making some of the day's best gains.
On Wall Street, the market was reassured by comments from President Bush on help for subprime homeowners, plus indications from Federal Reserve chairman Ben Bernanke that he was not averse to cutting interest rates. The Dow Jones added 119 points to close at 13,357, with gains led by Home Depot and Hewlett-Packard. The tech-rich Nasdaq was up 31 points to 2,596. And the broader S&P 500 ended Friday at 1,473, a 16-point gain.
Asian markets were lower today. The Japanese Nikkei slipped 44 points to 16,524 on weak economic data. And in Hong Kong, profit-taking saw the Hang Seng fall by as much as 218 points - although the index had since clawed back losses to close at 23,885, a 98-point deficit.
Having risen on 4% last week, crude oil had further edged up to $74.25 this morning. In London, Brent spot was up to $72.23.
Spot gold had fallen back from a three-week high of $674.30 reached on Friday, and was last quoted at $672.30 today. Silver, meanwhile, was at $12.09.
Turning to the forex markets, the pound had risen to 2.0195 against the dollar this morning but was stable against the euro at 1.4794. And the dollar was at 0.7324 against the euro and 115.98 against the Japanese yen.
And in London this morning, US-based General Electric agreed to buy oilfield services stock Sondex for £288.7m. Sondex - which jumped 24% on Friday when it revealed that it was in takeover talks - was up by a further 7% today.
And our recommended articles for today...
Is this crisis worse than LTCM?
- The 1998 liquidity crisis caused by the collapse of Long Term Capital Management prompted fears of a meltdown which never appeared. But this time round, the FTSE's looking far more fragile, says Jeremy Batstone. To find out which sectors are looking most vulnerable, read: Is this crisis worse than LTCM?
Why wind power won't work
- 'Wind farms not in windy places', said a headline on the BBC website last Thursday. What's more, says Garry White, even those that are actually situated in the right place generate more problems than they do power. For more on why wind turbines aren't the answer to our energy needs, read: Why wind power won't work
