Haim, that chart is flabargasting to say the least, why would commercial paper increase by $60 Billions since January? Do we have a situation where the large companies are actually running at a negative cash flow and they need to borrow so much? Or, is the economy's growth rate so high that this increase is just requirement for additional working capital?
Come to think of it, maybe these numbers are not that much out of the ordinary. Let see, the GDP is around 7 trillions, growth rate is 5%, thus an additional $350 B on a yearly basis and $175 for the last six months. Typically, one needs 30% of increases in sales as increases in working capiat, or close to $60 B. The only minor problem, is where are the profits? Could it be that the large companies foresaw an increase in borrowing costs and went to market before these costs become prohibitive?
Of course, we should also take into account that access to the commercial paper market is available only to the largst companies, so this blow up has probably some $30 B which are not explained.
y the way, I was wondering where did all the "excess liquidity" go, well, $10 B per month or so will go a long way to soak almost half of this "excess".
Zeev |
