Until recently, Commercial Paper was an obscure part of the bond market most investors didn’t care about. But these securities are now squarely in the spotlight—as the credit crisis has spread to even the shortest term corporate debt market.
Corporate Paper is not a new investment vehicle and its history is actually rather interesting. According to Wikipedia, it has been around since the 19th Century. The online encyclopedia says Marcus Goldman, the founder of Goldman Sachs, got his start trading commercial paper in 1869. However, the securities really became popular in the 1980s, as an investment vehicle for money market funds seeking higher yields than Treasuries but safety of principal.
Experts say the recent implosion of the commercial paper market can be traced to one day-- September 15th, with the bankruptcy of Lehman Brothers. Lehman had issued billions of dollars in commercial paper that was suddenly worthless. That pushed up rates sharply for other firms. To give you an idea of how much: one trader I spoke to today says he’s trying to buy Morgan Stanley 3 month commercial paper yielding 34% -- well above the 3% interest rate a few weeks ago.
But its not just financials having trouble luring buyers. Tony Crescenzi of Miller Tabak says “regular, run-of-the mill” companies are having trouble getting access to capital at a rate that’s not prohibitively expensive.
If you are a business owner, please share your experience getting short term loans. Has funding availability changed? Or are we in the media over-hyping the situation?






Comments
2 guys & a debt cycle
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"Wake up, KiloSwami, slow down!"
"Why there was such a big traffic-jam in the middle of nowhere with no crash or fire-truck, 2TC?"
"Quién Sabe, KiloSwami? Perhaps there was a rubber-neck-event which was later cleared away. Several hours may be required to dissipate the self-sustaining slow-down that simulates a proverbial business cycle."
"Granddad took out mortgage when he came home from WW II. Dad was a boomer-baby who later took mortgage that contributed to the savings and loan crisis of early 90's"
"Was that wreckage ever auctioned off?"
"When Greenish was gloating over his falling interest rates his faux pas of the new-century parenthetically pointed out how lucky adjustable rate mortgage customers had been."
"That faux pas became the Curtango Hole of the Adam Smith Economic Operating System"
"But why a man so linguistically precise couldn't have been Regan's Secretary of State?"
"Thus Haig would have been cause of market melt down, but Greenish would have said --"
"I am now in charge!"
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As we pass through Gulch City we should stop at the local Encrud Funeral Parlor to say bye-bye to my Bloomsbury friend Fannie Maynard, 2TC. Here it is, Exit 13.
Wasn't that the exit number we took to visit our friend Laramie at CIA, KiloSwami? They have changed that number on the beltway recently to throw foreign agents off the trail, 2TC.
How nostalgic, KS, I sure liked the old number.
The Encrud F Parlor is housed inside a deserted bank building. The drive-in bank lanes were easy to convert to drive-up-viewing for Internet users with text only browsers. As I remember it the drive-in-branch was just across the street from large rock garden.
*I never promised you rock garden* was my favorite beer-tear song, KS.
Here we are. What an attractive and inviting new sign they have :
Lose your gold tooth where you lost your shirt
Sign seems to get results. People are just dying to get in, KS.
I'll just pull up to viewing window.
Hey, you! Are you the one who robbed the bank?
Oui, Je sens responsable, Monsieur Donut.
Huh?
Achtung, Herr 2TC, kommen Herr Kommissar jetzt, beeilen sie bitte -- machen schnell.
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"Although there is a time for all things under the sun, KiloSwami, what is the purpose of MMD, market melt-down?"
"The MMD is the time for joggers to spell out for bikers all of the numbers they could not crunch because they were busy at watching for traffic and to see if other bikers were wearing colors inside wrong turf."
"So then, the MMD is analogous to the 2X4 that gets the attention of proverbial donkey, without which the bikers would not truly have there ears on. PMMD, present MMD, is the sine qua non of communication which delays outset of SMMD, subsequent MMD."
"But such delay will only cause SMMD, to last longer thus cut deeper."
"If and only if anonymous bloggers cannot slow the unfolding of the PMMD enough to make it last longer thus cut deeper."
"But aren't such bloggers usurping the function of the fed chairman's duties."
"Volunteers always derive a greater thrill from the chase than mere professional, 2TC."
"I knew that!"
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"TwoTonCommon, what is that distant big sky pernambuco glow up ahead?"
"¿Quién Sabe, KiloSwami?"
"Could it be Annual Desert Festival of Man Burning Garbage?"
"Hope for free entrance at half-time and a drink of my favorite Generic English Ale which I read about in The Whorled Guinness Ebook of Alec Records."
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"Just look at the size of that garbage fire 2TonCommon."
"and there in the sand is my favorite brand of generic ale -- unopened."
"Is it true that you reveal all secrets of the universe of pooled cash equivalents of worthless derivatives of swaps backed by pick-your-payment mortgages when you are stoned on legalized alcoholic drugs, 2tonCommon?"
"Affirmative KiloSwami."
"Guzzle up, Goon!"
"What is the meaning of the symbol of the churning commission?"
"¿Quién Sabe, KiloSwami?"
"The symbol of childish time"
"The cross section through Minkowski time space"
"Symbol of the elephant"
"Heresy"
"the donkey"
"hypocrisy"
"bifurcating time channels"
"mass-energy preservation within MWI, many worlds interpretation"
"dual party system"
"incumbent vs. new-by"
"The Sleeping Giant"
"I can now feel the endorphins of the gratefully dying brain cells thanking me for the ale. I'll need to postpone the next response until the time of the next episode, please to forgive. And now, KiloSwami, please watch the swinging imaginary watch-fob that swings in pendular sprint and cycloid ballet as you drop into a deep sleep. Your post-hypnotic suggestion is to remember nothing that has transpired during the past 9 minutes; but recall it never."
"No? Never?"
"Hardly everrrrrrrrrr."
"Still plenty high octane from the 30's in tank. Mount up, 2tonCommon. Don't let your helmet lean back too far. Don't morph it into wheeley bar."
"Burma Shave"
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"Putting down across the desert is what America is all about, TwoTonCommon. But what is that cloud of dust arising in the East? And why the wind sounds like The Boogie Woogie Bugle Boy with a military beat?"
"Smile when you say thet, partner. Thet thar is The US Cavalry returning from their religious retreat, mounting up and riding out to save the country of George Washington from trickle-down panic."
"Thar they ride, TwoTonCommon. But why cavalry head-gear looks like taqiyah?"
¿"Quién Sabe, Kilo-Swami? Perhaps only to signify the great power of sleeping giant and his great religion."
"The religion of freedom -- freedom for every person to choose her/his own personal religion thus respect diversity that lends strength to nation of big sky."
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2 guys and a 2 wheeler
TwoTonCommon, you are now approaching lift off speed, but your flaps are still up. Slow down at once then lower flaps.
Although you can see flaps, I cannot. You have to communicate. I will stop wrist exercises with throttle and lower flaps. Whoops! Excessive exercises caused throttle to jam in open position. Lucky for us the speed of light becomes heavy as it approaches the speed of keeping up with the Joneses.
The sound of police siren behind us becomes ever faint. GPS is now telling that we are nowhere near Salinas,
but somewhere near Vanna.
A perfected state of non-existence, KiloSwami -- take a deep non-breath.
And I forgot to remind you to pit-stop for top-off. We will soon be walking.
Not to worry, KiloSwami, Lithium battery is now fully charged and has enough electrons for starter motor to get us to deserted air-force base with long forgotten 19 cent per gallon petroleum chock full tetra-ethyl-lead and tri-ethyl-aluminum.
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Our tank is now full. We will need to reimburse America with charitable contribution which does not require concomitant tax deduction. Mirage-like ghost-base has peculiar circular runway to save expense of longer straight runway having proper point of no return but only two wind direction options.
It was abandoned to stimulate economy with wasteful government spending, KiloSwami.
Eerie ghost-base appears less O-zone and more Twilight-zone. But why wind sounds like Tijuana Brass?
"¿Quién Sabe, KiloSwami? Perhaps more important is difference between sound of two flaps a down-flapping VS. two flaps a napping."
"And a partridge in a pear tree"
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Debitores Vigilate
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"Just how many CC we have on this BMV, TwoTonCommon?"
"¿You talking Commodity Commissions, KiloSwami?"
"I'm not talking asset-liability mismatch with insufficient swaps, Crankcase Churner"
"¿Quién Sabe, KiloSwami? Perhaps more important is difference between sound of eleven campaigns a flapping VS. seven voters a napping."
"And a partridge in a pear tree"
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2 Guys and a Hog
"Do the new palladium platinum sparking plugs exempt us from the catalytic converter gas-mask-helmet requirement, TwoTonCommon?"
"¿Quién Sabe, KiloSwami?"
"Strangely I do not trust the unbelievable accuracy of these Johnson-Hunt-Club silver bullets. Should I continue knocking off bits and pieces of our environment, or should I go back the my trusty blanks.
"¿Quién Sabe, KiloSwami? Perhaps more important is difference between sound of seven central banks a napping and sound of seven jawbones a flapping."
"And a partridge in a pear tree"
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2 Guys and a business cycle
"Since Rigger ran off with your mustang, this motorcycle idea of yours has solved lots of problems, TwoTonCommon."
"Not the least of which is pollution problem, Kilo-Swami. Methane from my pony and your hoss was depleting O-zone."
"I like to lean back into sissy-bar and shoot wild geese with silver bullets. But why all my bullets are silver?"
"I bought at Military Surplus Factory Outlet during Hunt Brother Johnson era when silver was taken out of dimes and quarters to prevent cancer. When I put in my order, the Outlet had computer set for Hexadecimal by mistake. That is when we stocked up at their expense."
"But why silver is more accurate than blanks?"
"¿Quién Sabe, KiloSwami?"
"Unbelievable accuracy with these bullets. But since we are riding your poorly maintained bike named Zen, should we talk philosophy?"
"What is difference between sound of one hand clap vs. one jawbone a flapping sound"
"To get some ideas on that and other things, lets go over and meet tonight's guest. He is telling that jawbone is when famous central banker announces a change in target rate charge between banks for loans made in the middle of the night when nobody is there to keep score."
"Perhaps more important is difference between sound of one jawbone a flapping and sound of three jawbones a flapping."
"And a partridge in a pear tree"
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Dear Jim, Mark and David and Gwen, I always thought you were a cut above until last night. Have you forgotten the big picture? That we are judging a candidate who could be in line to be the next President of The U.S. This is not about who is the most popular person with the best personality running for a high school office. And Gwenn, your questions were excellent but you let Palin got away with murder allowing her to customize her answers to her comfort level making you seem too intimidated to keep her feet to the fire. And to Jim and producers, get off your high horse and forgive Doris Kearns Goodwin already and get her back on. Her comments are invaluable! I may have to change to CNN. They had a better mix. I think David was so happy that Palin didn't fall flat on her face so he could again support the pathetic Republicans. I changed parties this past winter to be able to vote for Hillary. But I am also proud to support Obama. McCain is pathetic and getting worse by the day. He has zero credibility and Palin doesn't know which end is up. If taken this eam in college she would have gotten a failing grade. Not answering the questions gives you a zero. Did any of you happen to read in Wednesday's NY Times page A10 how France views the U.S.? I think they have us down pat. You are praising a redneck for looking confident attractive and aggressive? What a disappointment! Biden gets an A+ from me. Palin a D+. I hope the News Hour will pick itself up and come to the rescue of our once great nation. And not get caught in the morass of near-sighted reporting. We could go the way of the Roman Empire.
I'm a small contractor in AZ,and as long as I pay my American Express bill every month I have another thirty days of short term credit.