For those who wondered what my Commercial Paper Market obsession was about:
The Fed’s drastic move had a nearly immediate impact: Yields on top-rated overnight U.S. commercial paper dropped 0.74 percentage points, to 2.94%, according to Bloomberg Financial Markets. And rates on three-month Treasury bills–the ultimate safe asset to which big investors, like money-market funds, have been flocking–rose above 1.0% on Tuesday for the first time in weeks. Rising yields suggest demand for government debt is easing. Just Monday, yields were 0.43%.
The $700 billion and the rest of it are worthless if this doesn’t work.
As I’ve ranted about before, the first act of the govt/fed should have been to immediately and directly participate in the Commercial Paper market. They are now doing it and it’s working at first glance, but only after a ton of unnecessary damage was done.
Through delaying this action because of the debate on all the other bailout points, we’ve lost trillions of dollars of market value. I hope this isn’t too little too late now that we have been allowed to enter panic and free-fall. My fear is that the market conditions will exist for recovery and that will be roundly ignored because of paranoia.
What everyone should be reminded of is that in this market, bravery and timing will be greatly rewarded: the earlier you get back in, the better you will do. Just not too early ( the dilemma ) – and everyone is waiting at the pools edge, using others’ actions to guide them instead of testing the waters themselves.
My schattenfreud has worn off entirely now that my IRA is worth 50% of what it was 3 weeks ago. Good luck to us all.