Shortly after the opening bell yesterday, BNP Paribas announced they were pausing three of their largest funds due to uncertainty in the U.S. home lending market. BNP Paribas is not the first bank to announce problems stemming from the rising tide of loan problems here, but they are the most recent. Other European establishments have faced similar hurdles in the past few months. With news of the Dow collapse, other global markets followed suit in Europe and Asia. To counter these effects, the European Central Bank pumped $130 billion into the system to try and up liquidity. Think about that for a moment — how would you like to borrow money at 4%?? What a nice dream. Anyhow, the Fed followed suit today, putting about $25 billion into play. It was an interesting turn of events for the Fed, considering their decision not to cut interest rates just a couple of days ago. Perhaps Bernanke and the Reserve are beginning to recognize an impending crisis that others have been predicting for months. As of this writing, the Dow is off another 100 points or so, but seems to have stabilized with the news of the bank support. Stay tuned, as this may only be a temporary solution for a collapsing market.
