The Fed's balance sheet continues to show the results of the financial panic. Reserve balances with Federal Reserve Banks have risen from $104.5 billion to $167 billion in the week ending October 1, 2008. The source of this increase is primarily borrowing, which increased by $180 billion over the previous week.
These numbers are amazing and I am wondering how much higher it will go.There is fear and panic at the large institutions, and they no longer trust each other, so are no longer willing to lend to one another. The commercial-paper market (short-term debt issued by private companies, much as T-bills are issued by the government) is in trouble. One example of the problem spilling over to affect people not on Wall Street is the suspension of the Common Fund, a place many colleges had been using to park cash. It will be liquidated and shut up over the next few months. The colleges should not lose anything, but they now cannot get quick access to funds that they need to pay bills.
No comments:
Post a Comment