Oh boy, our domestic financial flu is spreading, and overseas financial markets are in a swoon as a result.

That's the big news today even as the U.S. financial markets are closed for Martin Luther King Day. With U.S. banks and stock exchanges closed down in honor of the slain civil rights legend, Americans can only watch in increasing despair as global markets respond poorly to our economic struggles and the government's early attempt's to avoid a full-fledged recession.

This from today's Associated Press:

"Stocks fell sharply worldwide Monday following declines on Wall Street last week amid investor pessimism over the U.S. government's stimulus plan to prevent a recession.
U.S. markets were closed for Martin Luther King Jr. Day, but the downbeat mood from last week's market declines there circled through Europe, Asia and the Americas."

The news coming in from foreign bourses reads like a "who's who" of declining financial performance. Britain's benchmark FTSE-100 fell 5.5 percent to 5,578.20, France's CAC-40 Index dropped 6.8 percent to 4,744.15, and Germany's blue-chip DAX 30 lost 7.2 percent to 6,790.19.

The news from Asia wasn't much better. India's benchmark stock index fell 7.4 percent, while Hong Kong's blue-chip Hang Seng index slid 5.5 percent to 23,818.86, its deepest slide since the Sept. 11, 2001, terror attacks.

Even our neighbors to the north and south are suffering from exposure to the U.S. economy. Canada's S&P/TSX composite index on the Toronto Stock Exchange fell by 4 percent in early afternoon trading. In Brazil, stocks were off 6.9 percent on the main index of Sao Paulo's Bovespa exchange.

Why the global stock malaise? Analysts say the U.S. response to its economic woes -- a potential $145 billion stimulus package announced by President Bush and hints of either a .50 or more reduction in interest rates by the Federal Reserve -- proved anemic in the eyes of foreign investors, leading to a global-wide selloff in world financial markets.

"We've taken our lead from the Asian markets who have not been impressed by the U.S. There's debate if there's going to be a recession in the U.S. I don't think there's much chance of that though," Richard Hunter an analyst at Hargreaves Lansdown Stockbrokers Ltd. in London, told the AP.

"It's another horrible day," echoed Francis Lun, a general manager at Fulbright Securities in Hong Kong. "Today it's because of disappointment that the U.S. stimulus (package) is too little, too late and investors feel it won't help the economy recover."

The consensus from overseas is that the stimulus package has arrived too late and in the form of too little substance to offer any real protection against a recession. And the Federal Reserve's proposed interest rate cut could hurt as much as help, given the rising cost of consumer goods and services in an increasingly inflationary economic environment.

While Asia's leading economies, notably Japan, India and China, are decreasingly dependent on the U.S. economy in recent years, the notion of anxious Americans closing their pocketbooks is enough to send investors worldwide running to the exits.

Tomorrow should be an interesting day when the U.S. financial markets reopen, "interesting" in the way that King Kong was interesting as he rampaged through Manhattan. Pessimists are already lining up to predict that the Dow Jones Industrial Average will fall through not only the 12,000 barrier this week, but the 11,000 level, too.

If that really does happen, look for the Fed Reserve to slash interest rates by a full 100 basis points, and not the 50 basis points most economists are talking about. Inflation be damned, loosening credit significantly may be the last, best hope to keep the U.S. economy -- and the rest of the world -- out of recession.