Scary credit news

Here's a snippet from a Bloomberg story:

The London interbank offered rate that banks charge each other for loans rose for a fourth day, driving a gauge of cash scarcity among banks to a record. The biggest drop in financial short-term debt outstanding since at least 2000 caused the U.S. commercial paper market to tumble 5.6 percent to a three-year low, according to the Federal Reserve.

The crisis deepened after the worst month for corporate credit on record. Leveraged loan prices plunged to all-time lows, short-term debt markets seized up and even the safest company bonds suffered the worst losses in at least two decades as investors flocked to Treasuries. Credit markets have frozen and money-market rates keep rising even after central banks pumped an unprecedented $1 trillion into the financial system.

What's confusing about the credit situation is that it's hitting companies in different ways. Jim Press, the president of Chrysler, says flatly that "the credit window is closed." But companies with few or no ties to subprime home debt, such as Caterpillar, are said to be having less trouble selling commercial paper, which seems to be at the center of the problem. All of this is complicated by the fact that business reporters have rarely before delved into the arcane world of credit markets - mainly because up to now, credit markets have pretty much worked the way they were supposed to. Now that they're not, the task is to determine how serious a blockage there is, where it’s coming from, and how much time is left before the situation gets out hand. When covering politics, it’s easy to establish context. For this stuff, it’s very hard.