Getting Through the Weekend

The latest move in the fiscal and monetary response to the global financial crisis has been to flood the world with money.

The Fed boosted its U.S. dollar swap line with foreign central banks by $180 billion....
The Fed also debuted new swap lines with the Bank of Japan for $60 billion, the Bank of England for $40 billion and the Bank of Canada for $10 billion. All the swap lines expire on January 30, 2009.

Well, they technically expire at the end of January. If the events of the past 14 months are any precedent, these swap lines will be around much longer than that.

The effect has been what was intended. $247 billion is a lot of money even by today's standards, and overnight borrowing costs have fallen, stocks are up, and even Morgan Stanley is now in positive territory, after opening down a little.

The difference between this and previous central bank actions is that no one pretends or expects that it will have any big long-term effect. With any luck, however, it should at least get us through the weekend without panic setting in. Then, over the weekend, a few big things should be resolved:

• The future of Morgan Stanley;
• The future of Washington Mutual;
• The future of Lehman Brothers' European and Asian brokerage operations.

Without those big unknowns hanging over the market, there might be less nervousness. Or, of course, there might not.