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Credit Crunch Hits Bond Market

Tight corporate borrowing could slow economy

By Peter Fearon,  Newser Staff

Posted Aug 20, 2007 3:36 AM CDT
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(Newser) – Ripples from the credit crisis have reached the corporate bond market—threatening to slow down the economy by seriously limiting the ability of major corporations to borrow money for new projects,  the Washington Post reports. Credit problems have already begun to bite into the future plans of Hertz,  Deere & Co. and Home Depot .

Credit hasn't been as tight since the early 1990's. "It affects everything," said one analyst of the bond market. "It's access to capital. It's the lifeblood of a lot of big Standard & Poors companies. They've been encouraged to borrow money to make money for so long, and now the spigot's suddenly been shut off."

Federal Reserve Chairman Ben Bernanke appears before Congress in file photo from Wednesday, Feb. 15, 2006, in Washington. The Federal Reserve approved a half-percentage point cut in its discount rate on loans to banks Friday, a dramatic move designed to stabilize financial markets roiled by a widening credit crisis. Private...
Federal Reserve Chairman Ben Bernanke appears before Congress in file photo from Wednesday, Feb. 15, 2006, in Washington. The Federal Reserve approved a half-percentage point cut in its discount rate...   (Associated Press)
Traders and Specialists work the trading floor of the New York Stock Exchange, early Friday, Aug. 17, 2007. Stocks soared Friday, propelling the Dow Jones industrials up more than 180 points, after the Federal Reserve, acknowledging that the stock market's plunge posed a threat to the economy, slashed its discount...
Traders and Specialists work the trading floor of the New York Stock Exchange, early Friday, Aug. 17, 2007. Stocks soared Friday, propelling the Dow Jones industrials up more than 180 points, after the...   (Associated Press)
Traders crowd the floor of the New York Stock Exchange near the close of trading, Thursday afternoon, Aug. 9, 2007. Wall Street plunged again Thursday after a French bank said it was freezing three funds that invested in U.S. subprime mortgages because it was unable to properly value their...
Traders crowd the floor of the New York Stock Exchange near the close of trading, Thursday afternoon, Aug. 9, 2007. Wall Street plunged again Thursday after a French bank said it was freezing three funds...   (Associated Press)
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Credit Crisis

Why the Fed stepped in
Wall Street Journal

After a month of turmoil, what may be ahead
Wall Street Journal

All eyes on Fed and Bernanke
New York Times

 
Federal Reserve • General Electric • money • Johnson and Johnson • US economy • Home Depot • Countrywide • bond market • Deere and Co • Walmart

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