T Nation

Pump, Baby, Pump!

No, nothing like that…its the new mantra of the Federal Reserve.

"Oct. 2 (Bloomberg) – Interest rates on three-month dollar loans rose to a nine-month high, short-term corporate borrowing fell by the most ever and leveraged loans tumbled, exacerbating the credit freeze that’s paralyzing businesses around the world.

The London interbank offered rate that banks charge each other for loans rose for a fourth day, driving a gauge of cash scarcity among banks to a record. The biggest drop in financial short-term debt outstanding since at least 2000 caused the U.S. commercial paper market to tumble 5.6 percent to a three-year low, according to the Federal Reserve.

The crisis deepened after the worst month for corporate credit on record. Leveraged loan prices plunged to all-time lows, short-term debt markets seized up and even the safest company bonds suffered the worst losses in at least two decades as investors flocked to Treasuries. Credit markets have frozen and money-market rates keep rising even after central banks pumped an unprecedented $1 trillion into the financial system.

The credit window is closed,'' Jim Press, president of Chrysler LLC, the third-largest U.S. automaker, said today at the Paris Motor Show. The financial rescue plan must be approved becauseit’s important for us to restore credibility in our banking system.’’

http://www.bloomberg.com/apps/news?pid=20601087&sid=a0JbUyhTA71Y&refer=home

You’re Headhunter today, huh?

Does anyone think this (credit recession)will last?

[quote]dhickey wrote:
Does anyone think this (credit recession)will last?[/quote]

I don’t see how it can. If there were a true (and proper) market correction that required us to produce more and save more and spend less then it would last a while until the market truly adjusts to within-means spending. America is drunk on cheap credit though. A new way will be found to extend credit to unworthy borrowers in the name of progress. Eventually that marker will be called in and we’ll dip again.

And don’t forget, Black Friday is coming, a real patriot will spend spend spend! Dust off those credit cards and get to work fixin the economy!