Sunday, August 3, 2008
Short Term bank borrowing reaches record highs.
NEW YORK (Reuters) - Banks borrowed a record amount of funds from the Federal Reserve in the latest week as the year old credit crisis took a persistent toll, while the commercial paper market continued to contract, signaling tough conditions for short term borrowers. Banks' primary credit borrowings averaged $17.45 billion per day in the latest week, the second straight week this had hit a record and up from $16.38 billion the previous week, Fed data showed on Thursday. Clearly, the credit fiasco is far from over. Infact, it is still accellerating. At the moment, we are seeing increased borrowing, leading to inflation. Eventually, banks will refuse loans or be refused them. There could be a plateaux, but, after that point, we enter deflation and a currency death spiral.