Central bankers are very careful people: conservative, stable and above all, realistic. So when they make a move looks like a gamble, you know you should be very worried. And that’s what the world’s major central banks have just done with a $US100 billion move to try and stave off the tightening credit crunch.

The news from the Fed, Bank of England, Swiss National Bank, European Central Bank and Bank of Canada came half an hour before US trading was due to start at 1.30am this morning (Australian time).

It was well leaked beforehand so the market was primed for a solid rebound from the previous day’s slump after the Fed’s 0.25% rate cut was deemed too little by greedy investors and banks.

But the co-ordinated action was partially derailed by the sector it was trying to help. Three major US banks — Bank of America, First Wachovia and PNC — announced that they would be making bigger than expected write-downs and reporting losses on subprime mortgages and related debt in the fourth quarter.

That told traders that whatever the central banks did, the subprime problems were far from over and sentiment switched. Wall Street ended up 41 points, but it had been 250 points higher.

Bloomberg described the move from the central banks as the “biggest act of international economic cooperation since the September 11 terrorist attacks,” but they should have been a bit more upfront and described it as something of a punt, or at best a venture into unchartered waters.

The Fed and the ECB have already revealed attempts in the past month to add more money to their banking systems on a more systematic basis, and also revealed attempts to inject liquidity across the end of the year to try and alleviate what is emerging as the biggest fear of all: a complete credit lock up at year’s end.

The Fed said in a statement it will make up to $US24 billion available to the ECB and Swiss National Bank to increase the supply of dollars in Europe. The Fed also plans four auctions, including two this month that will add as much as $US40 billion, to increase cash in the US. It made two injections totalling SUS88 billion last month, to no avail as short term interest rate spreads continued to widen.

The Fed said in its statement that the measures were “designed to address elevated pressures in short-term funding markets.”

The Fed also said it’s considering setting up a permanent arrangement to provide funds to banks through so-called term auction facility operations.

The first US auction, of 28-day funds, will be $US20 billion next Monday, December 17, the second follows three days later.

“By allowing the Federal Reserve to inject term funds through a broader range of counterparties and against a broader range of collateral than open market operations, this facility could help promote the efficient dissemination of liquidity,” the Fed statement said.

These auctions will be open to all “generally sound” deposit-taking institutions to participate in the ‘”term auction facility”.

Unlike the co-ordination at the time of September 11, the potential problems soon passed. The freeze in August and September never went away, like an iceberg, it remained partly submerged in credit markets before re-emerging in November as banks and other groups produced a cascade of losses and write-downs that total more than $US100 billion.

This is become increasingly serious and the central banks are now trying everything they have in their arsenals, and more, to try and prevent a complete freeze on credit.

Forget China and the decoupling argument and BHP Billion can forget Rio Tinto for quite a while, the next few months are going to be fraught with considerable danger.