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View Full Version : $90B in CP not rolled over in last 2 weeks




jonahtrainer
09-01-2007, 08:00 PM
Interesting article (http://www.marketoracle.co.uk/Article1906.html):


I want to comment on the UST market and stocks, but first another thing about how bad this credit crisis is. It is NOT over. The commercial paper market (short term credit for companies like 30 to 90 days) is swapped between banks and companies and institutions to cover short term funding needs. The market in the US alone is $2trillon. $50 billion has to roll over each week.

Well, in the last two weeks, a backlog of $90 trillion has accumulated and NOT rolled over. This is the next set of dominoes to fall. The EU is having similar trouble, and one German banker said there is the making of a serious German banking crisis – because short term paper is not rolling over. So what does everyone do now? The system is collapsing right before our eyes.

If a company, bank, whoever, cannot roll over their short term paper, they are insolvent. This is a very big deal. ...

if lenders have lost confidence in the liquidity of the system, and that is a real problem.



Things could get very volatile soon. Just in time for Greenspan's new book Age of Turbulence (http://www.amazon.com/Age-Turbulence-Adventures-New-World/dp/1594201315/ref=sr_1_1/105-3143022-4906863?ie=UTF8&s=books&qid=1188698261&sr=8-1) which comes out ironically on Constitution Day. :mad:

You may want to get all your money out of MMFs. I will be moving almost all my excess liquidity into gold through GoldMoney.com (http://goldmoney.com/) just to be safe.

Any thoughts?

sickmint79
09-02-2007, 02:59 AM
i took everything out of my ING account... i have a fair amount in silver now.

Hook
09-02-2007, 11:34 AM
So does this effect Gov't treasury funds as well?

Cowlesy
09-02-2007, 11:39 AM
I'm sorry I started reading this but it doesn't mention there has been a huge flight to treasury securities. There has been a divergence between CP and T-Bills, it's just the paper preference. The Discount Window will take commercial paper if a bank really needs liquidity as a last resort.