U.S. stock markets teetered between positive and negative territory on Tuesday as the federal government unveiled yet another effort to loosen tight credit and promote lending. The day brought more unwelcome news about America's troubled housing and automobile sectors.

It is a paradox of the current economic slump: loose lending standards and reckless debt incursion set the stage for the financial meltdown that has pummeled the U.S. economy. Yet conventional wisdom holds that the recession will linger as long as credit remains tight, and consumers and businesses are unable or unwilling to take out loans for purchases and activities that will stimulate the economy.

To combat the credit crunch, the federal government has propped up struggling financial institutions while the Federal Reserve, the nation's central bank, aggressively cut interest rates. Now the government plans to provide hundreds of billions of dollars to promote a wide range of loans through a program known as the Term Asset-Backed Securities Loan Facility.

The initiative's name may sound abstract, but President Obama says it aims to produce tangible results. 

"One of the challenges is to jump-start lending, so that businesses and families can finance the purchases of everything from inventory and payroll to a home, a car, or a college education," he said.

The funds will finance debt purchases by investors who have been hard hit by the financial crisis. Overseen by the Federal Reserve and the Treasury Department, the program is expected to begin later this month and is intended to spur as much as one trillion dollars in business and consumer lending.

Federal Reserve Chairman Ben Bernanke spoke on Capitol Hill.

"We need to fix the banks and we need to fix the financial system. If we can do that, we will get a good recovery," he said.

America's housing sector has been particularly hard-hit by the recession. The National Association of Realtors says its index of pending home sales fell nearly eight percent last month to its lowest level since tracking began in 2001. Analysts say it is an indication that the housing market continues to struggle.

Housing prices have fallen dramatically in many parts of the country during the past two years, but may have further to fall, according to New York University business professor Lawrence White. 

"It takes a while for [home] sellers to come around to recognize the new reality [of severely depressed housing values]. And I do not think they are there yet," he said.

Meanwhile, America's number-two automaker, Ford, reported another dramatic sales drop of 48 percent in February compared to the same month a year ago. The weak U.S. car market has added to long term viability questions surrounding the entire domestic automobile industry, which is surviving thanks to billions of dollars in government loans.

Markets across Asia and Europe were lower Tuesday on the heels of Monday's steep sell-off on Wall Street that saw the Dow Jones Industrial Average hit a 12-year low.

"A lot of sellers said, 'You know what? I cannot take this anymore. I just want out [of the market]. I want out,'" said New York Stock Exchange floor trader, Alan Valdes.

But Washington-based investment advisor Michael Farr says this is precisely the wrong time to sell stocks and leave the market. "One thing you look for in a market bottom is universal pessimism. When seldom is heard an encouraging word, the market is typically close to a bottom," he said.

The Dow Jones Industrial Average has lost more than half its value since late 2007.