Aug. 10 (Bloomberg) -- Central banks in the U.S., Europe, Japan, Australia and Canada added about $135.7 billion to the banking system in an attempt to avert a crisis of confidence in global credit markets.
The Federal Reserve, in a second day of action in concert with the European Central Bank, provided $38 billion of reserves and pledged further funds ``as necessary,'' in a statement unprecedented since the aftermath of the Sept. 11, 2001, attacks. The European Central Bank loaned 61.05 billion euros ($83.6 billion) after injecting a record amount yesterday.
``This is a situation of great uncertainty,'' said Alice Rivlin, a former Fed vice chairman who's now at the Brookings Institution in Washington. Central banks ``are all injecting credit in hopes that collectively they can stabilize things.''
Central banks in Japan and Australia also added funds as money-market rates rose. The subprime crisis is spreading after international investors in the past year piled into the U.S. market for debt backed by mortgages.
Where is all this money coming from? Isn't throwing more money into the market really just expanding the problems?
I admit that I really don't pay much attention to the stock market. Having spent most of my adult life only slightly above the poverty level, I'm not part of the "investor class". I have a small 401k from a previous job that I hope to collect on someday, but that's about it. As Mr. Dylan said, "when you ain't got nothing, you got nothing to lose".