Yes, you may hear that the corporate bond market is breathing again and the exotic "TED spread" -- the difference between T-Bill and LIBOR rates -- is shrinking, but no one is lending money to anyone and confidence is non-existent.

Recently the entire country of Spain (meaning Spanish national debt) was put on credit watch due to deteriorating economic conditions.

Remember, the Wall Street Crash of 1929 and the Great Depression (I am not forecasting either one, by the way) started at a medium-sized bank in Austria, not on Wall Street or in London.

Credit markets are not only frozen because we don't know what is on the banks' balance sheets; they are also frozen because banks are repairing their own balance sheets by hoarding capital.

Be sure to read all 7 reasons the stock market isn't going up any time soon.

Michael Shulman is a contributor to OptionsZone.com.

Sept. 29: Dow 10,365 (down 777 points); trading range, 872 points

The markets collapsed after the U.S. House of Representatives failed to pass the $700 billion Emergency Economic Stabilization Act.

Considering the tight credit markets, most were expecting the measure to sail through Capitol Hill, but the bill's failure exacerbated fears that the economy would continue to suffer while the politicians tried to reach a solution.

Naturally, both political parties pointed the finger at the other to place blame for the measure's failure.

Continued tightness in the credit markets were reflected in the TED spread, the difference between what the banks charge each other for three-month loans (three-month LIBOR) and what the U.S. government pays for them (three-month T-bills). The spread was at its highest level since 1984, and indicated that banks were unwilling to lend to each other.

The selling on the Street was broad based, as the Dow, Nasdaq and S&P 500 fell 7%, 9.1% and 8.8%, respectively, settling at the session's lows.

The Nasdaq and S&P 500's declines were the largest since Black Monday in 1987, while the Dow posted its worst day since the 9/11 attacks.

Greg Tucker is the executive editor of OptionsZone.com.

Based on the decline in two key measures of business risk, it appears that the actions of global financial leaders is beginning to thaw out the frozen credit markets. This improvement means that the dollar will drop as investors take their money out of U.S. Treasury bills to buy stocks. It also means that the price of oil will rise -- since a weaker dollar means it takes more of them to buy a barrel of oil.

What are these measures of business risk? The TED spread -- which is the difference between the three month London Interbank Offered Rate (LIBOR) and the three year Treasury rate -- has declined from its high of 4.65% to 4.09%. This is a big improvement but a far cry from the 1.04% at which it stood a month before. And the the LIBOR-OIS spread -- a measure of inter-bank lending risk -- fell to 3.41% from its record high 3.67% Friday -- still much higher than the 0.30% at which it stood a year ago. Things are getting better but there's a long way to go.

Meanwhile the dollar is losing altitude as oil prices rise. The dollar is losing ground to the Euro now that panicked global investors are getting out of Treasuries. For instance, the euro climbed to 1.3712 dollars from 1.3576 dollars in New York on Monday. Oil hit a 14 month low of $77.70 last Friday but has traded as high as $83 today.