These are nerve jangling times for the world economy. Monday's severe yet orderly Wall Street tumble surely marks the beginning, not the end, of major market volatility. Markets hate uncertainty and will remain fraught until the US outlines a retaliatory strategy for the Washington and New York attacks that avoids an international escalation spilling across the Middle East and destabilising oil supplies. Asian-market investors yesterday took short term comfort from Monday's seven per cent fall in the Dow Jones Industrial Average. Declines matched expectations, trading systems worked and panic was absent. That was perhaps to be expected with normal market spirits subdued in a city still mourning its loss. However, the world saw a powerful demonstration of the US financial system's depth and resilience and breathed a cautious sigh of relief. Much has been made of a potential 'patriotic' rally in share prices. That may be hopeful. No cabal of insiders runs Wall Street. Shares are owned by millions of investors who will sell if they lose confidence. At best professional traders can be persuaded to reduce aggressive trading and institutions can be leaned on to be measured in disposals. Ultimately, policy responses matter more and signs are encouraging with both the US Federal Reserve and European Central Bank cutting interest rates and making liquidity available. The bigger question is whether an already weak world economy tips into a full-blown recession. The US faces an immediate impact with lost economic activity from delayed trade, travel and consumer spending over the last week. Protecting against a broader slump in consumption and business investment may involve a far larger stimulus than the US$40 billion (HK$312 billion) agreed for rebuilding Manhattan and improving domestic security defences. The situation is delicately balanced. A dramatic weakening of the US dollar against the yen and Euro would augur further instability, with the Japanese economy especially vulnerable. Deflation-stricken Hong Kong would benefit from a weaker greenback, but remains highly geared to a global economy that looks deeply exposed.