Central Banks Offer Extra Funds to Calm Money Markets

[villager]

Source: Bloomberg

Central Banks Offer Extra Funds to Calm Money Markets

By John Fraher and Simon Kennedy

Sept. 18 (Bloomberg) -- The Federal Reserve almost quadrupled the amount of dollars central banks can auction around the world to $247 billion in a coordinated bid to ease the worst crisis facing financial markets since the 1920s.

The Fed increased the amount of dollars that the European Central Bank, the Bank of Japan and other counterparts can offer from $67 billion ``to address the continued elevated pressures in U.S. dollar short-term funding markets.'' The Bank of England, the Bank of Canada and the Swiss National Bank also participated.

Policy makers have struggled to revive confidence in markets this week as investors stockpiled money on concern more financial institutions would fail after the bankruptcy of Lehman Brothers Holdings Inc. and the U.S. government bailout of American International Group Inc. The cost to hedge against losses on U.S. government debt climbed to a record yesterday.

``There's a complete lack of faith in the markets,'' said Jim O'Neill, chief economist at Goldman Sachs Group Inc. in London. ``There's a lot of cash hoarding and people losing trust in banks, so the central banks are acting to relieve that. This might not be the last time they have to act.''

Markets welcomed the announcement, which was made in statements from each central bank at 9 a.m. Frankfurt time at the start of European trading. The cost of borrowing dollars overnight slid to 3.84 percent from 5.03 percent yesterday. It was 2.15 percent last week and reached the highest since 2001 on Sept. 15.

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

[RUMMYisFROSTED]

1. What is the inflationary effect of this move?

[villager]

2. I suspect we will find out in the next few weeks...

n/t

[AndyTiedye]

3. That's Why They Call Him "Helicopter Ben"

(this image was from Business Week, no less)

[clear eye]

4. Deflation, here we come

If anyone reading this has any significant savings in dollars, switch to another currency, pronto. For small amounts, I highly reccommend EverBank. (I have no personal connection, other than a small account.) <http://www.everbank.com/001Currency.aspx>

[AlphaCentauri]

5. Central banks pump up the dollars

Source: CNN

NEW YORK (CNNMoney.com) -- The Federal Reserve and five other central banks around the globe announced joint efforts early Thursday to try to pump an additional $180 billion into the battered global financial system.

The Fed joined with the European Central Bank, the Swiss National Bank, the Bank of Japan, Bank of England and Bank of Canada in the coordinated effort.

"These measures, together with other actions taken in the last few days by individual central banks, are designed to improve the liquidity conditions in global financial markets," said the Fed's statement. "The central banks continue to work together closely and will take appropriate steps to address the ongoing pressures."

The bankruptcy of Lehman Brothers and the Fed rescue of insurance giant American International Group (AIG, Fortune 500) this week has led to a tightening of credit in global markets.



Read more: http://money.cnn.com/2008/09/18/news/economy/central_banks/?postversion=2008091811

[lapfog_1]

6. Is that on top of the $247 B they did at 3am this morning?

Or did someone drop out? (Like, say, the Chinese)

In any event... the market is negative again.

[kirby]

7. I think they mean Pump OUT dollars... n/t

[lurky]

8. Crank up the printing presses? n/t

[Javaman]

9. and yet the market is down by 50 points. yeah, that helped A LOT. nt

[CitizenPatriot]

10. they are trying to keep credit viable

Let's hope this works.