From late 2007 through Jan. 2011, the commercial paper market -- a principal source of funding
for the economy -- collapsed by over 60%, taking nearly $1.4 tril. of liquidity out of the system.
The revival in this critical medium started last year with prime non-financial paper issuance but
has been broadening out to include financial services holding co. paper, and just recently, asset
backed paper. This is further evidence the financial system is repairing and that liquidity creation
is expanding beyond the the Fed's QE programs.
The depth of the collapse in this important market underscores once more why the Fed took such
drastic steps to restore liquidity to the system in recent years.
Comm. Paper Out. Chart
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