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Credit Crisis Update: An Inside Look at the Commercial Paper Debacle
By Shah Gilani
Money Morning
The commercial paper market is the thoroughfare where Wall Street merges into Main Street. Corporations, finance companies and banks rely on Main Street investors for the cash they deposit into money-market funds and other short-term investment vehicles. Ultimately, that cash buys the commercial paper that’s issued to help fund everything from corporate payrolls to a manufacturing company’s production inventory.
The deepening credit crisis – with its inevitable contagion spreading like a nuclear winter across the globe – is forcing the U.S. Federal Reserve and central banks worldwide to go to extraordinary measures in their attempts to thaw out…
9Oct2008 | Money Morning | Comments Off | ContinuedCentral Banks Attempt to Boost Liquidity as Money Market Melts Down
Central banks yesterday (Thursday) launched a coordinated effort to flood global money markets with U.S. dollars in hopes of easing strained financial systems in danger of freezing up entirely. However, many analysts see this as only a short-term solution that will lower overnight lending rates but fail to assist financial institutions with longer-term cash needs.
In a statement released at 3 a.m. yesterday morning in Washington, just as the markets opened in Europe, the U.S. Federal Reserve announced that it had authorized a $180 billion expansion of its swap credit lines, allowing banks to borrow more dollars at a lower rate.…
19Sep2008 | Money Morning | Comments Off | Continued
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