Subprime ‘crisis’: FAQs (revised & updated) | vox – Research-based policy analysis and commentary from Europe’s leading economists

Subprime ‘crisis’: FAQs (revised & updated) | vox – Research-based policy analysis and commentary from Europe’s leading economists
Let’s start with the facts: On Thursday 9 August 2007 the Federal Reserve’s Open Market Trading Desk (the “Desk”) injected $24 billion into the U.S. banking system. This was done in two equal size operations, one at 8:25am and a second 70 minutes later at 9:35am.1 On Friday 10 August 2007, the Desk was in the market three times (8:25am, 10:55am, and 1:50pm) putting in a total of $38 billion dollars. By early this week, things seemed to have returned to normal with injections of $2 billion on Monday and no action at all on Tuesday.

The Fed’s operations came on the heels of two even larger injections by the European Central Bank (ECB) in Frankfurt. On Thursday morning the ECB in Frankfurt Germany had put nearly €95 billion ($130 billion) into European financial institutions, followed by a somewhat smaller operation of €61 billion ($83.6 billion) on Friday. Things continued to seem unsettled in Europe after the weekend, as the ECB added €47.7 billion ($65.3 billion) on Monday (13 August), and then in two separate operations put €25 billion ($34.2 billion) into the European banking system on Tuesday.

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