Fed May See Companies, States as Next Crisis Fronts

Scott Lanman and John Brinsley
Bloomberg
Monday, Oct 6, 2008

Federal Reserve Chairman Ben S. Bernanke may find the next fronts of the financial crisis to be just as chilling as last month’s downfall of Wall Street titans: its spread to corporate America and state and local governments.

Companies from Goodyear Tire & Rubber Co. and Duke Energy Corp. to Gannett Co. and Caterpillar Inc. are being forced to tap emergency credit lines or pay more to borrow as investors flee even firms with few links to the subprime-mortgage debacle. California Governor Arnold Schwarzenegger says his and other states may need emergency federal loans as funding dries up.

A cash crunch on Main Street would endanger companies’ basic functions — paying suppliers, making payrolls and rolling over debt. The widening of the crisis suggests that Bernanke and Treasury Secretary Henry Paulson may have further fires to put out even as the Treasury sets up the $700 billion financial- industry rescue plan approved last week.

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“The rest of the economy is clearly being affected right now by the tightness of credit,” said Kurt Karl, chief U.S. economist at Swiss Reinsurance Co. in New York. “It’s just gathering momentum in the wrong direction.”

Bernanke announced new moves today aimed at easing the lending crunch. The Fed will double its auctions of cash to banks to as much as $900 billion and is considering further steps to unfreeze short-term lending markets.

The market for commercial paper, which typically matures in 270 days or less and is used to help pay for expenses such as payroll and rent, shrank to a three-year low of $1.6 trillion in the week to Oct. 1, Fed data show.

Full article here

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9 Responses to “Fed May See Companies, States as Next Crisis Fronts”

THINK YOU IDIOTS! Says:
October 6th, 2008 at 1:26 pm
NEW YORK STATE IS ALREADY SAYING IT’S IN FINANCIAL TROUBLE(BULLSHIT!). WE WILL NEXT SEE OTHER STATES(I THINK CALIFORNIA IS NEXT)DECLARE THEY BANKRUPT AND LOW AND BEHOLD THE FED WILL STEP IN.

THE UNITED STATES IS OFFICIAL OVER!!
k Says:
October 6th, 2008 at 1:53 pm
New York state has been billions of dollars in debt for years now. This is nothing new. So no, it is not bullshit.
THX1138 Says:
October 6th, 2008 at 1:59 pm
Massachusetts Treasury Secretary was on CNBC saying theya re investigating what kind of assistance they could get from the FedGov in the next few weeks.

https://www.pyrabang.com/?ref=thx1138
"C" Says:
October 6th, 2008 at 4:44 pm
“..all money is FAKE = NO Value!”

“if we don’t spend the worthless money; then it does not matter if all 52 states go broke/ or does it ?
Answer: ‘the money is worthless..so it does not matter..”C” what i mean! money is all an illusion of the printing press!
MG Says:
October 6th, 2008 at 4:56 pm
Madness.

The more local the Fed reaches, the greater the rise of self-defense
Darth Chaos Says:
October 6th, 2008 at 5:30 pm
I guess this means we’ll be forced to foot the bill when the government bails out. These days, Microsoft is basically a front for the DoD and Homeland Security.
rich Says:
October 6th, 2008 at 6:19 pm
this is going to make the 29 depression look like a day at the park !!!!!!!!!!! time to hunker down for the “long run”

http://www.youtube.com/watch?v=XxqDv9jJpws
Howard in Shantytown U.S.A. Says:
October 6th, 2008 at 6:53 pm
Just turn the printing presses on 24/7 and let them run until they blow up. Then, replace them and run those 24/7 until they blow up. Sooner or later all debt will be paid off and then we will have world peace.

Zeig heil, comrade.
mythicshadow Says:
October 6th, 2008 at 8:00 pm
http://ca.youtube.com/watch?v=XbrNSOxwXOM