The US government is weighing a bold plan to buy massive amounts of unsecured short-term debts in a dramatic effort to break through a credit clog that is imperiling the economy.
The Federal Reserve is working with the Treasury Department on the plan to buy “commercial paper,” a short-term financing mechanism that many companies rely on to finance their day-to-day operations, such as purchasing supplies or making payrolls, according to a person with knowledge of the plan. The person spoke on condition of anonymity because the plan is still being put together.
The market for this crucial financing, which relies on investors rather than banks, has virtually dried up. That has made it increasingly difficult and expensive for companies to raise money to fund their operations. Commercial paper is a way of borrowing money for short periods, typically ranging from overnight to less than a week.
The unstable situation has left many companies vulnerable. The notion under the plan is for the government to come up with a backstop that would provide companies with a new place to get cash.
Depending on the ultimate shape of the plan, the Fed could become a source of credit for nonfinancial businesses in addition to commercial banks and investment firms.
The Fed made an opaque reference on Monday that it was exploring “ways to provide additional support” to “unsecured funding markets.”
The creation of a separate legal entity was being examined as one way for the Fed to get into the commercial paper market, the person familiar with the plan said.
The Fed pledged on Monday to take “additional measures as necessary” to battle the worst credit crisis in decades. Wall Street took a nosedive, with the Dow Jones industrials plunging more than 800 points at one point during the day before finishing down 370 points. Fears spread around the globe about the ability of policymakers in the US and abroad to turn the situation around.
A growing number of economists and investors believe the Fed will be forced to do an about-face and lower its key interest rate, now at 2 percent, on or before its meeting on Oct. 28 and Oct. 29.
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Taiwanese Olympic badminton men’s doubles gold medalist Wang Chi-lin (王齊麟) and his new partner, Chiu Hsiang-chieh (邱相榤), clinched the men’s doubles title at the Yonex Taipei Open yesterday, becoming the second Taiwanese team to win a title in the tournament. Ranked 19th in the world, the Taiwanese duo defeated Kang Min-hyuk and Ki Dong-ju of South Korea 21-18, 21-15 in a pulsating 43-minute final to clinch their first doubles title after teaming up last year. Wang, the men’s doubles gold medalist at the 2020 and 2024 Olympics, partnered with Chiu in August last year after the retirement of his teammate Lee Yang
The Philippines yesterday criticized a “high-risk” maneuver by a Chinese vessel near the disputed Scarborough Shoal (Huangyan Island, 黃岩島) in a rare incident involving warships from the two navies. The Scarborough Shoal — a triangular chain of reefs and rocks in the contested South China Sea — has been a flash point between the countries since China seized it from the Philippines in 2012. Taiwan also claims the shoal. Monday’s encounter took place approximately 11.8 nautical miles (22km) southeast” of the Scarborough Shoal, the Philippine military said, during ongoing US-Philippine military exercises that Beijing has criticized as destabilizing. “The Chinese frigate BN 554 was
The number of births in Taiwan fell to an all-time monthly low last month, while the population declined for the 16th consecutive month, Ministry of the Interior data released on Friday showed. The number of newborns totaled 8,684, which is 704 births fewer than in March and the lowest monthly figure on record, the ministry said. That is equivalent to roughly one baby born every five minutes and an annual crude birthrate of 4.52 per 1,000 people, the ministry added. Meanwhile, 17,205 deaths were recorded, resulting in a natural population decrease of 8,521, the data showed. More people are also leaving Taiwan, with net
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