Monday, September 10, 2007

The refinancing of the commercial paper is expected to start tomorrow and end on September 20. In that short period the City is braced for huge market volatility.

Worst crisis for 20 years, say banks

LEADING bankers are warning of the worst crisis in the money markets for 20 years, which will come to a head this week when $113 billion (£57 billion) of commercial paper – market IOUs – comes up for refinancing. This huge refinancing, mainly through London, exceeds the $100 billion that became due in mid-August, and which sparked the most serious phase in the money-market crisis, which has seen banks scrambling for funds and market interest rates rising sharply. “This is a serious pressure point,” said one leading banker.

Posted by chris @ 08:10 AM (569 views)
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2 thoughts on “The refinancing of the commercial paper is expected to start tomorrow and end on September 20. In that short period the City is braced for huge market volatility.

  • So now we are to believe that banks (starting with the Fed) are now about to start dropping interest rates again. The Fed themselves rumoured to be considering a 0.5% cut.

    Surely this doesn’t just make everything magically better? Won’t this make US imports more expensive and therefore drive up US inflation?

    It all seems a bit weird. On the one hand we have gradually rising interest rates which are still too low to stop house price inflation – and now when it seems as though house prices are about to level off again – we might get another cut as a feed through from the US change. What is going on?

    That ‘crazy’ multi billion dollar debt on a market nose dive is looking less and less silly by the day.

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  • planning4acrash says:

    “There have also been suggestions that the funding pressures could force Northern Rock to issue a second profit warning. In June the bank said that £180m to £200m in income had been wiped out after it failed to pass on higher-than-expected borrowing costs to customers rapidly enough”. So, here we go, mortgage companies are to be challenged by shareholders to pass on higher borrowing costs, and guess what? Companies have a duty to their shareholders above and beyond any duty they have to their customers.

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