Chopper drop incoming - Mercedes-Benz Forum

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post #1 of 3 (permalink) Old 10-06-2008, 10:24 PM Thread Starter
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Chopper drop incoming

As I predicted... three for three now, just as good as Noubini.
I will give credit where credit's due. This is a good move on the part of B B & Co.

Fed eyes plan to fund short-term business loans - Yahoo! News
Fed eyes plan to fund short-term business loans

By JEANNINE AVERSA, AP Economics Writer 37 minutes ago

WASHINGTON - The government is weighing a bold plan to buy massive amounts of unsecured short-term debts in a dramatic effort to break through a credit clog that is imperiling the economy.

The Federal Reserve is working with the Treasury Department on the plan to buy "commercial paper," a short-term financing mechanism that many companies rely on to finance their day-to-day operations, such as purchasing supplies or making payrolls, according to a person with knowledge of the plan. The person spoke on condition of anonymity because the plan is still being put together.

The market for this crucial financing, which relies on investors rather than banks, has virtually dried up.
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post #2 of 3 (permalink) Old 10-07-2008, 10:07 AM Thread Starter
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The market is fighting the fed.

-------------------------------------------------------------- Economy
The central bank's special purpose vehicle will be big enough to backstop the entire market, one official said on condition of anonymity.

Issuers will be able to sell commercial paper to the Fed up to the average amount they had outstanding in August, an official said.

Policy makers began considering buying commercial paper several weeks ago as the market began to seize up, with borrowers increasingly only able to raise funds on a short timeframe, even just overnight, officials said.

The Fed's unit will buy three-month commercial paper, which should help issuers extend the maturity of their borrowing, an official said.

``While we have continued to fund without disruption, the Fed announcement today is an important development that will help restore confidence in the market and facilitate more lending,'' General Electric Co. spokesman Russell Wilkerson said. ``This is a positive move and we applaud the Fed's decisive action.'' The company is the biggest U.S. commercial paper issuer through its GE Capital finance unit.

Yields To Fall

Fed officials anticipate that yields will come down significantly as a result of their initiative.

Yields on top-rated overnight U.S. commercial paper dropped 0.74 percentage point today to 2.94 percent, according to data compiled by Bloomberg. Borrowing for seven days increased 1.25 percentage points to 4 percent.

The Treasury's deposit with the Fed's special purpose vehicle will be substantial, officials said. The funds won't come from the $700 billion rescue plan authorized by Congress last week.

Stocks initially climbed and Treasuries sank after the Fed's announcement, while shares later turned lower. The Standard & Poor's 500 Stock Index was down 0.13 percent at 1,055.50 at 11:49 a.m. in New York. Yields on benchmark 10-year notes climbed to 3.51 percent from 3.45 percent late yesterday.


The Fed's move is ``very unusual, very aggressive and a very bold step,'' said Chris Varvares, president of St. Louis- based Macroeconomic Advisers LLC, a forecasting firm. Assuring that corporations can fund their short-term cash needs ``is absolutely essential.''
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post #3 of 3 (permalink) Old 10-07-2008, 05:55 PM
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A few years ago the credit lobby succeeded in their long attempts to get Congress to pass legislation making it much, much harder for the average joe to file bankruptcy (before you start arguing that point, give me a break, I used to practice bankruptcy law and know whereof I speak).

However, at the same time, the credit industry did nothing to improve it's record of irresponsibly granting credit.

Not that this is a big surprise, but they're one of the larger contributors to our "representatives" and have created their own mess...but stunningly, Congress will no doubt act to return some of the money they've paid into the system. Sort of like a giant tax rebate.

I'd be in support of this nonsense if it came with regulation to tighten up this ridiculous industry.

Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy; its inherent virtue is the equal sharing of misery. (Winston Churchill)
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