Dollars and Jens
Tuesday, August 14, 2007
news links
Oh, boy, where to begin?
Well, we ought to note how the credit crunch has hit the commercial paper market, particularly recently in Canada, though it kind of started in Germany:
Germany's state-owned KfW Group and banking associations this month agreed to cover as much as 3.5 billion euros ($4.8 billion) of potential losses at IKB Deutsche Industriebank AG, after the bank's Rhineland Funding faced difficulty in rolling over commercial paper.(It comes back to American subprime mortgages there. The German national bank is subsidizing American homeownership!) Some borrowers prudently wrote in options to extend their loans, and they're finding it optimal to exercise those now. And if you avoided lending in the money markets, thinking you could chase yield with "short-term bond funds", well, you know what chasing yields has resulted in recently.
