The U.S. Federal Reserve launched
a new measure to help financial markets. To restore liquidity in
money market mutual funds Fed is taping a new bill of $540
billion.
Fed. will buy certificates of deposit and commercial
paper from money market mutual funds. Many companies rely on
commercial paper for short-term funding needs to pay workers and buy
supplies. Governments around the world have promised $3.3 trillion
to guarantee bank deposits and bank-to-bank lending
"The short-term debt markets have been under
considerable strain in recent weeks as money market mutual funds and
other investors have had difficulty selling assets to satisfy
redemption requests," the Fed explained.
"By facilitating the sales of money market instruments
in the secondary market," the Fed added, the facility "should
improve the liquidity position of money market investors, thus
increasing their ability to meet any further redemption requests and
their willingness to invest in money market instruments."
However, White House spokeswoman Dana Perino said We
are open to good ideas, we will listen to people if they put
anything forward that we think would actually stimulate the economy;
so far we have not seen that."
Democrats say that previously rejected items should be
in a new stimulous bill such as road and bridge construction. Also
adding possible another tax rebates to spark up spending again among
businesses and consumers.
Economy will remain weak for several quoters and
Congress needs to do something to help and stabilize economy
quicker.
Democrats want to consider a new tax rebats. Just like
earlier this year when individuals and couples received tax rebates
of $600-$1200.
With many uncertain factors out there, investors are
coutious, but with the drop in LIBOR , the rise in 3-month T-bill
rates and the fall in Eurodollar rates, we are seeing a small
improvements in economy. LIBOR may be set to fall, which means we
are on the right track for improvement, because of the massive
support announced by Fed.
Even banks start to lend more with the help of
Congress and their first $250 billion package.
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