CREDIT

As this is written, the Federal Reserve Bank of the United States has
committed itself to relieve the short-term & other credit of small
businesses. Those ordinarily borrow from the banks of the Federal
Reserve System.
Absent business,and means to pay, and the severe contraction of credit,
those businesses may choke.

Defaults particularly in their employment and business consumption
structures would have material impacton this economy.
Banks have bedded material losses due to the Wall Street drop, and the
real estate devaluation (these are collateral values for the banks) as
well as continuing mortgage maitenance.

The Fed committed its capacity to the entirety of its member banks small
business credit. That creates an immediate relief as a secondary lender
- freeing the banks to continue or restore small business credit.

Credit is what drives any modern economy. Brokerages -- which in the
USA require a fifty percent down payment to purchase a security (50%
margins) finance the rest. They have been battered - those margins
are still being met and the brokerages and their customers owe the
differences. Again, the stock marketis their collateral - its value is
their value

World repurcussions willshow up with the delayed or stalled orders for
automobiles and raw materials and commodities. A flu of the world
varierty and the USA has a dose of it -- and not solo.

The market panic depleted the market's value, and those values deplete
a banks operating strength or capacity. Reserves are commanded and must
be borrowed or a bank must close its doors having devoured all its
capital. It can borrow -- that is credit. Again in the USA all
Federal Reserve System banks insure the first $150000 of each depositor.
Europes banks and nations are discussing that course now. Europe can
lend the lost value to the banks to sustain them, or sustain them, as
the New Deal did with insured deposits.

Credit costs and can get crowded -- particualrly if only one or two
major governments are expanding it. Americans will sustain the first
benefit of the old gold (US Treasury Bonds). The world wants them,and
other than a sharply falling dollar --it is where people can safely hold
& park their spare dollars abroad.
Lets see Europe respond with EURO BONDS to the magnitude needed or at
least unleash, from EMU strictures, the credit capicity of their
national members.
Stock values can be shored up by restored confidence as asset holds --
money runs to safer quarters in a panic.
An elimination of short selling for blue chip stocks and equalling the
American 50% margin for that category of stock will strenghten national
bourses. Governments can lend to replace lsses in the stock
marketstokeepbanks operating (or insure),and bring frightened money back
into hedge funds and other SA investment funds.

That offshore stuff -- not oil-- money will come back with bonds rather
than lay idle; and from bond sales come the money for market
restoration.

Like Murrow might have said--- its credit - - until rapid market
depreciation forces a bottom price in the distress markets.