On January 27, Bloomberg news carried a story that, in a rational world, would have been plastered over the front pages of our major newspapers to the jubilation of financial pundits everywhere. The story was about General Electric’s cautious reentry into the commercial paper market, the unsecured IOUs that banks and large corporation issue in order to fund their daily operations. It only works if those entities can find sources willing to give them some dough in exchange for the promise to pay. “Seventeen months after seizing up at the onset of the credit crisis,” the story tells us, “the $1.69 trillion commercial paper market may be the first to cut its reliance on federal bailout programs.
About $245 billion of 90-day commercial paper that companies sold to the Federal Reserve starting in October will mature this week and next, central bank data show. As much as $50 billion to $70 billion of the debt may be rolled over and bought by investors, according to Barclays Capital in New York.
The market’s ability to absorb the maturing debt may build confidence that U.S. companies are able to fund themselves without government support, said Deborah Cunningham, chief investment officer for taxable money markets at Federated Investors Inc. Investors, betting the commercial paper market has stabilized, pushed interest rates to record lows this month and bought the most 90-day debt since September, Fed data show.
This is one of many good bits of economic news that have emerged in the last month or so. Why is it not being ballyhooed about the media? My guess: because self-indulgent wallowing in hysterical gloom is more fun.