FXNEWS-A return to 1980s plain vanilla lending

- 'As if on cue, the Fed announces it has created a commercial paper funding facility to provide liquidity to term funding markets and provide a backstop to U.S. issuers of CP through a 'special purpose vehicle',' says Andy Busch, global FX strategist, at BMO Capital 'This has sent stocks and yen carry soaring. It's a good start ... let's see if it holds.' He adds that the credit crisis 'has moved well beyond lack of liquidity to an extreme lack of confidence in the structure of financial markets.' In the long term, he believes this structure will revert back to the 1980s where plain vanilla balance sheet lending would be the 'core paradigm'. This, he says, explains the fight over Wachovia and its deposits.

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