Tuesday, October 7, 2008

Commercial Paper?

Check out the Consumerist for an insightful run-down of "Commercial Paper" which to me, this morning, was certainly a rather foreign term.

"To put it simply, the commercial paper market works like a credit card for big companies. Some days they have money, and some days they do not. So if they need money Tuesday, but will have money Friday, they'll go to the commercial paper market and borrow some money. Then on Friday they will pay back the money, plus interest. It's usually all very calm and safe — but when large well-respected companies started failing and the people who had lent them money on the commercial paper market (money market mutual funds, for example) actually lost money on these "safe" investments — the pool of lenders dried up."

go read the rest of the article because this is a pretty scary undertaking in terms of goverment intervention and use of power. plus i would wager most Americans, like myself, have no freaking clue what "Commercial Paper" is.

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