All through last week, governments and central banks around the world collectively and individually cajoled, supported, nationalized, recapitalized, and backstopped financial institutions and markets contorted by a lock-down of credit. But as this piece was written and published-to-web in advance of the Columbus Day weekend, credit remained stifled and the global equity markets unraveled even more.
The Federal Reserve started buying commercial paper. Treasury Secretary Henry Paulson strongly hinted that direct cash-for-equity injections in needy U.S. financial institutions would commence shortly, under authority provided by Congress in the Emergency Economic Stabilization Act. The U.S. may insure all bank deposits. In an unprecedented, coordinated move, the Fed, the European Central Bank, the Bank of England, the Swiss National Bank, the Bank of Canada, and the Bank of Sweden cut their rates, following a surprise rate cut by the Bank of Australia and followed by rate cuts by the Bank of China and the Bank of Korea.