Prometheus 6

Fears of a shortage of money available to banks meeting demands for funds by investors as they sold assets prompted the Fed to add $24 billion in reserves to the banking system Thursday.

Responding to fears of a similar credit squeeze in Asia, the Bank of Japan said today that it added 1 trillion yen, or $8.4 billion, to money markets in Tokyo. And the Reserve Bank of Australia said it had lent banks 4.95 billion Australian dollars, or $4.2 billion, its biggest such injection of liquidity since 2003.

Three steep market declines in the past month have begun to raise concerns that deteriorating credit in the United States, rising inflation and higher interest rates are finally starting to end a long period of easy money in global markets.

Stocks Are Volatile After Global Sell-Off
By JEREMY W. PETERS and WAYNE ARNOLD

In a volatile day of trading that followed sharp declines in Asia and Europe, stocks fell sharply on Wall Street early today but closed essentially flat.

The market’s wild swings point to continued concerns about the tightening of credit across the world. But they also indicate optimism among many investors that on balance the global economy will be able to handle higher borrowing costs without significant damage.