Facts matter: Sign up for the free Mother Jones Daily newsletter. Support our nonprofit reporting. Subscribe to our print magazine.


FINANCIAL PANIC UPDATE….The credit markets have seized up so completely that the world’s central banks are now in the overnight repo market in a big way:

The world’s leading central banks made a fresh attempt today to ease the growing stress in the world’s money markets, taking coordinated action to provide $180bn (£100bn) in extra liquidity.

After the unwillingness of banks to lend to each other led to acute shortages of funds in short-term dollar markets, the Federal Reserve announced that the European Central Bank, the Bank of Japan, the Swiss National Bank, the Bank of Canada and the Bank of England would all provide extra funding in short-term US dollar markets….The Bank of England is making $40bn available, with the ECB increasing its funding by $55bn and the Swiss National Bank offering $15bn. The Bank of Japan will lend $60bn and the Bank of Canada will provide $10bn.

Nobody knows how much bank assets are worth these days, so no one knows which banks are solvent. And if you don’t know which banks are solvent, you aren’t willing to do business with any of them. Hence the central banks take over. Eventually all these assets (Atrios’s “big shitpile”) will get valued, but it’s not clear when this will happen or what (if anything) central bankers can do to move the process along. It’ll be a while, though.

In other news, Lloyds has taken over the British bank HBOS, the first shotgun marriage outside the U.S. And the flight from bank debt to safe treasury debt is in such full flight that U.S. treasury bonds now have a negative return, the first time that’s ever happened.

THE END...

of our fiscal year is Thursday, June 30, and we have a much larger fundraising gap than we can easily manage with only days left to go.

Right now is no time to come up short: If you value the hard-hitting, democracy-protecting, justice-advancing journalism you get from Mother Jones, please help us keep charging as hard as we possibly can with a much-needed and much-appreciated donation today.

payment methods

THE END...

of our fiscal year is Thursday, June 30, and we have a much larger fundraising gap than we can easily manage with only days left to go.

Right now is no time to come up short: If you value the hard-hitting, democracy-protecting, justice-advancing journalism you get from Mother Jones, please help us keep charging as hard as we possibly can with a much-needed and much-appreciated donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate