Whatever the merits of differing views on the economic fundamentals which underlie the subprime mortgage fiasco, panic can also bring markets down. According to a Boston Globe bulletin, the Dow Jones was down 382.47 points. The newspaper reports that both the European Central Bank (ECB) and the Federal Reserve injected cash into the lending system.
Although the bank’s loan of more than $130 billion in overnight funds to banks at a low rate of 4 percent was intended to calm investors, Wall Street saw it as confirmation of the credit markets’ problems. It was the ECB’s biggest injection ever.
The Federal Reserve added a larger-than-normal $24 billion in temporary reserves to the U.S. banking system.