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CREDIT MARKETS REMAIN TIGHT - Funds Availability for Business and Consumer Spending Hard to Come By!


Since last fall, the U.S. Government has earmarked Billions, perhaps over One Trillion Dollars to shore up our Credit Markets, and hopefully jump start business, consumer, and mortgage lending.  The efforts have been largely ineffective thus far, and the Obama Administration now is considering a previously-floated plan to buy up distressed financial assets through special investment funds.

The objective - to stabilize the prices of strong assets, and restore investor confidence, encouraging them to start making loans once again.

As reported by Liz Rappaport and Serena Ng in today's Wall Street Journal, during this past week, stocks fell to lows not seen in the past 12 years.   Investors are nervous over the price trend for stocks, and concerned about possible returns in the bond markets.

Thanks to recently-enacted programs to purchase certain commercial paper and guarantee short-term debt, short-term credit market performance has actually improved versus last year.  However, the London Interbank Offered Rate, or LIBOR, a key benchmark to which Consumer Mortgage Rates are often linked, has ticked up in recent weeks - closing at 1.3% last Friday, after being as low as 1.1% in January.  The benchmark peaked at a high 4.8% last October.

The Worldwide Recession continues to get deeper.  Here in the U.S., Bond Investors worry that The Fed's repeated rescue packages will undermine the historic security of investing in bonds, and make such investments more risky.  Investment dollars could be lost if the borrower against which the bonds are drawn defaults - which would keep many from investing here.

Bond investors are still waiting for details on Obama's Credit Market Rescue Plan.  Until they are satisfied with its strategy, many analysts feel the market will continue to tumble, keep credit frozen, and stall a U.S. Economic Recovery.


Posted: Sunday, March 08, 2009 9:21 PM by Dean's Team

Comments said:

Good Morning! Despite an over-$1 Trillion infusion of Federal Money in recent months, U.S. Credit Markets

# March 9, 2009 6:45 AM
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