Word: short-term
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...even grown as other countries step up their own efforts to guarantee bank accounts and bolster financial firms. In a coordinated swoop, governments around the world cut interest rates; two days ago, in the U.S., the Fed took the unprecedented step of saying it would start buying commercial paper, short-term corporate IOUs, in yet another attempt to thaw frozen credit markets...
Financial panics--short-term, acute market upheavals that often coincide with long-term recessions--were common as the U.S. economy developed. There was the Panic of 1857 (prompted by railroad-bond defaults), the Panic of 1873 (sparked by a stock crash in Vienna) and the Panic of 1907, which started when shaky New York City banks quit lending. We learned a lot from those scares--the U.S. Federal Reserve was created in the wake of the 1907 Panic--and some believed we were too smart to panic again...
...values mean more homeowners could default, further driving down property values. All that crimps tax revenues, and states such as Pennsylvania and New York are now trying to plug gaping holes in their budgets, while California is looking for $7 billion from Washington in part to make payroll, since short-term borrowing is unavailable. Two out of three city finance officers are reporting that they're less able to make up budget shortfalls this year. Municipalities are facing skyrocketing borrowing costs--some of it tied to complex derivatives contracts they agreed to that have blown up with the rest...
...billion loan to fund its daily operations, it was the most dramatic display yet of how state and local governments are being buffeted by the deterioration in credit markets. With few willing buyers of municipal securities, Massachusetts twice shelved plans to float $750 million worth of short-term notes used for paying its bills. And across the country, dozens of other funding deals for longer-term projects, from road repair to school expansion, have been delayed...
...offering to help banks raise up to $88 billion of new capital, either by buying preference shares in the institutions or encouraging commercial sources to invest. Together with an extension of the Bank of England's special liquidity scheme, which will now make $350 billion available to banks in short-term loans, the package is intended to stabilize the banking system and foster the sector's recovery. It can be implemented without any new legislation or parliamentary votes...