As many have pointed out, the scariest financial developments are not in the stock markets but in the credit markets. Lending institutions have almost stopped lending, and this is reflected in very high short-term interest rates. If you want a short-term leading indicator, don't watch the Dow. Watch short-term interest rates and associated metrics. Accrued Interest, published by an anonymous (at least to me) Baltimore-area bond Yoda, gives an excellent primer on what to look for and links to regular quotes, starting with the London Interbank Offered Rate.

Right now LIBOR and the other indicators flagged by Accrued Interest are the world's economic vital signs.

LIBOR has gotten plenty of press, but many have been focused on the TED spread, which is the yield differential between 90-day T-Bills and 90-Day LIBOR. TED is interesting in terms of historic comparison, but its the absolute level of LIBOR that is a better credit indicator right now. With T-Bill rates extremely low (0.19% as of 10/10), and intra-day T-Bill moves highly volatile, it would be entirely possible to see T-Bill rates rise by some degree without any significant improvement in conditions. Thus the TED spread would technically be tighter, but to no import.

Instead, watch 1-month and 3-month LIBOR rates. Both should be around 1.5-2%, based on where the Fed Funds target is. Watch Euro-denominated rates as well. A governmental guarantee of inter-bank loans would certainly drive LIBOR lower, as LIBOR is supposed to measure inter-bank lending rates. Otherwise I'd expect LIBOR to remain elevated until at least year-end.

Get various LIBOR rates, including international levels at the British Bankers' Association website.

UPDATE: For another list of credit vital signs and links, see Calculated Risk here.