In the past 8 weeks or so the following events have occurred:
- Bank solvency has been largely addressed
- A template for shoring up weakened banks is in place with Citibank
- Financial liquidity (bank to bank lending) has been restored
- The LIBOR/T-Bill relationship is getting close to historical norms
- Depositors have stayed put as a result increased deposit insurance
- Money market funds have been stabilized through similar measures
- The commercial paper market is flowing via the Fed
- A $200 billion facility to enable consumer debt securitization is in place
- The Fed is purchasing $500 billion of high grade mortgage paper to free up that market
- The Fed has begun to purchase impaired assets — a hint of what may be coming
- Interest rates are effectively zero
Read it here.