Now banks are forcing their counterparties to pay a much higher price to roll the paper over, and it is not clear how quickly central-bank injections of liquidity will ease the squeeze.

ECONOMIST: The crisis in the debt markets

On Tuesday the U.S. central bank said it would begin purchasing the short-term corporate debt known as commercial paper from American issuers.

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The less charitable interpretation is that the central bank has softened the penalty for banks that have funded purchases of very illiquid assets with short-term paper.

ECONOMIST: The Fed lowers its discount rate

The Bank of Japan is being highly unorthodox, as it has allowed for the possibility of purchasing commercial paper, exchange-traded funds and even real estate investment trusts, something no central bank in a major economy has been doing.

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