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As pressure built in the credit markets and stock markets spiral lower around the world Monday, the U.S. Federal Reserve is considering radically new program to start the engine of the financial system.
Under a proposal being discussed with the Ministry of Finance, the Federal Reserve may buy a large number of unsecured short-term debt, enterprises rely on to finance their day-to-day activities, according to officials familiar with the discussions. If this happens, the central bank will close more than ever the direct loan business.
Although the move will put more taxpayer money at risk, it stressed the growing sense of urgency that policy makers in an atmosphere of loans has dried up in practice.
The plan being developed as a result of cascading loss, global stock markets, as banking crises across Europe and investors worried about the terrible consequences of the world economy. Dow Jones Industrial Average fell 800 points after the resumption, finishing down 369.88, down from 10,000 points for the first time since 2004.

Even Wall Street bankers met in desks, European stock markets fell. Russian stock market fell 19.1 percent, a record since the fall of the Soviet Union. The main stock indexes in London, Frankfurt and a loss of more than seven percent; in Paris stock market fell nine per cent. The stock market in Latin America and other emerging economies has taken the worst collective slump for a decade.

Volatility reached its highest level in 20 years, oil prices fell below 90 U.S. dollars for the first time since February.

No end in sight transmission, the Asian markets opened this morning Japan’s Nikkei stock fell 3 percent and the Hang Seng Index in Hong Kong, shares fell five per cent.

“There is increasing recognition that not only refused to set the credit crunch, it continues to spread, said:” Edward Yardeni of investment strategy. “This is a truly global experience.”

Investors are worried about what Evaporation of the credit will make an already weakened global economy.

In the United States, it seems that consumers will go a long way to reduce expenses; Last month, employers cut more jobs than any month five years. 6 U.S. dollars, the drop in oil prices, which closed at 87.81 U.S. dollars a barrel, stems from some of the fear that demand will slow down in the face of the deteriorating economy.

U.S. Federal Reserve aims at extending the flow of economic dependence on credit cards. According to the plan, the central bank will buy the unsecured commercial paper, short-term death is issued by the bank, businesses and towns.

This debt markets have been closed, but in the last week, many big companies can not borrow more than one day, banks have become more afraid of giving cash. The volume of total debt is about 1,600,000,000,000 U.S. dollars as of October 1, dropped from 11 percent three weeks ago.

These credit concerns continued over the weekend, although 700,000,000,000 U.S. dollars aid package that Congress approved last week.

The cost of borrowing from banks and enterprises are still high Monday, part of the increase in a series of high-profile bank money in Europe, the Governments of several major emergency rescue loans from the collapse.

U.S. government seems to be stepping up with other radical efforts to support the financial system, even wading into the corner of the market, it has very little interference.

The purchase of commercial paper can be difficult to open the Fed’s conflict of interest because it is playing with the goal to protect its investment portfolio with the traditional goal is to promote price stability and low unemployment.

“The United States Federal Reserve Board will be the real buyer of last resort in an attempt to start the commercial paper market, to take credit risk,” Reinhardt said Vincent, a former Fed official who worked under Alan Greenspan, the former Federal Reserve Chairman, Ben Bernanke, and now the chairman of the board.

The Federal Reserve has already extended its limited resources to provide hundreds of billions of dollars of short-term loans to banks, Wall Street firms and money market funds.

Monday, the Federal Reserve announced that it will once again be a key to redouble its emergency loan scheme to increase the size of the auction term funds 600,000,000,000 U.S. dollars, from 300,000,000,000 U.S. dollars. Most importantly, the central bank plans to provide additional 300,000,000,000 U.S. dollars of the bank to meet their end of the year, the demand for cash.

To cover its burgeoning responsibilities, the Fed has no choice but to continue printing more money. In order to prevent the flood of new money to reduce the central bank’s overnight interest rate to zero, while the Federal Reserve announced Monday it will start to pay interest on excess reserves, bank deposits remain at the Fed.

Payment of interest so that the central bank’s foreign exchange reserves set a floor for interest rates and to retain at least some control over monetary policy.

In Monday announced that the Federal Reserve said it would pay 1.25 percent interest, three-quarters of a point lower than the goal of two per cent of the overnight federal funds rate.

However, there are likely to push the broader commercial paper market may be more extensive than the Ministry of Finance plans to buy as many as 700,000,000,000 U.S. dollars of mortgage-backed securities.

In statements Monday morning, the Federal Reserve Board and the Ministry of Finance said that they “consultation with market participants on how to provide more support for long-term unsecured capital market.”

Referred to the “unsecured capital market,” policy makers hinted that they want to directly intervene in the credit market. Officials said Monday night that they have to complete a plan as soon as possible, perhaps as early as Tuesday.

However, the efforts of the law is full of complexity. Although the Fed has swept the power to create money and loans, experts say, it is usually forbidden to buy assets may be losing money.

One way around the legal restrictions will provide funds to a separate legal entity will not purchase and investment of the Federal Reserve. This will be similar to the girl’s capital Lane LLC, a special purpose entity, created last year, officials held in the spring of 29,000,000,000 U.S. dollars is difficult to sell Bear Stearns stock.

But so far, the efforts of numerous government regulators to support confidence appears to be little relief yield investors, some of whom have taken that action, no plan for air.

“People are slowly but surely come to realize that to play a ‘hit-mole’ with each of these issues, an ad hoc basis, do not complete the mission, said:” Max Bublitz, chief strategy for supply chain management consultants, a Investment company in San Francisco.

Wall Street, today is a terrible day for investors - the type of day 3 69-point deficit in the index is considered a relief.

A broad sell-off began to open and strengthen the entire morning. 14:00, the Dow Jones industrial average fell more than 800 hair, below the 777 point drop a week ago.

However, around 2:30, investors began looking for cheap, short of sending Road at the top of the 10,000 marks before the completion of a one-day 9955.50. The broader stock market closed down 3.9 percentage points to measure the Standard & Poor’s 500 Index. Shares of financial companies, equipment manufacturers and industrial companies all fell sharply. The Dow has lost 1187 points, about 10.7 percent, and Standard & Poor’s nearly 13 percent of the week.

To ensure that the sharp decline Monday, despite U.S. President George W. Bush would “take some time to restore the confidence of the financial system.”

“We do not want to rush this, and there are plans will not be effective.”

Following are the results of Monday’s Treasury auction of 72-day cash management bill and 3-month and six-month bills.