The treasury department periodically holds auctions to sell US Treasuries to fund the government debt.  Today they held one for 30 year treasury bonds and to put it simply, buyers didn't show up.  It was the worst auction results EVER for the treasury department with 90% of the bonds going to primary dealers.  Basically the bond market is giving the middle finger to the government over their projected increase in deficits and bail out plans which would both require issuing significant amounts of new debt.

The result was that this instantly spiked rates on the ten year treasury bond, which will in turn spike mortgage rates.  Within a half hour of the auction results the yield on the was up to 3.81% or almost a 5% increase.  That's a monster of a move and there's reason it may continue over the next several weeks.  This basically is thwarting any cuts to the fed funds target rate, as the FED has no control over long term rates which are much more important to real estate and the rest of the economy.

This now shows the pickle the FED and government is in.  Attempt to significantly bail things out and the bond market will respond by ramping debt costs which will increase both government borrowing costs and long interest rates.  This is what will make an S&L style bailout unlikely.  

See also:Fed target rate down, mortgage rates up