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FINANCIAL PANIC UPDATE….The credit markets have seized up so completely that the world’s central banks are now in the overnight repo market in a big way:

The world’s leading central banks made a fresh attempt today to ease the growing stress in the world’s money markets, taking coordinated action to provide $180bn (£100bn) in extra liquidity.

After the unwillingness of banks to lend to each other led to acute shortages of funds in short-term dollar markets, the Federal Reserve announced that the European Central Bank, the Bank of Japan, the Swiss National Bank, the Bank of Canada and the Bank of England would all provide extra funding in short-term US dollar markets….The Bank of England is making $40bn available, with the ECB increasing its funding by $55bn and the Swiss National Bank offering $15bn. The Bank of Japan will lend $60bn and the Bank of Canada will provide $10bn.

Nobody knows how much bank assets are worth these days, so no one knows which banks are solvent. And if you don’t know which banks are solvent, you aren’t willing to do business with any of them. Hence the central banks take over. Eventually all these assets (Atrios’s “big shitpile”) will get valued, but it’s not clear when this will happen or what (if anything) central bankers can do to move the process along. It’ll be a while, though.

In other news, Lloyds has taken over the British bank HBOS, the first shotgun marriage outside the U.S. And the flight from bank debt to safe treasury debt is in such full flight that U.S. treasury bonds now have a negative return, the first time that’s ever happened.

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Fact:

In-depth journalism that investigates the powerful takes real money and is so damn important right now.But it doesn’t take a Mother Jones investigation to know that billionaires and corporations will never fund the type of reporting (like they do politicians) we do that exists to help bring about change. Instead, our mission-driven journalism is made possible by people power, and has been for 46 years now since our founding as a non-profit.

In “TITLE TK” Monica Bauerlein writes about the perilous moment we’re in, and why it’s so important that we raise $325,000 by the time November’s midterms are decided so we can be ready to throw everything we have at the big issues facing the nation no matter what happens. Please help MoJo’s people-powered journalism with a donation today.

$400,000 to go!

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