The severe difficulties of the banking industry have affected companies being able to obtain short term loans in the form of "commercial paper" which is used by many companies to finance daily operations, even though they may have company money available. I was told this is now a major problem in the junior mining and exploration sector by two senior people including one from KXL ( I don't know whether this is actually a problem for KXL. We know they have lots of cash but perhaps it is in a form which cannot be readily used for daily operations).

Here is a report about this issue from the Globe and Mail:

" What was behind the Federal Reserve's Oct. 7 plan to buy up commercial paper?

The central bank is stepping in as a buyer of last resort in the $100-billion market for commercial paper. This is a form of short-term debt that thousands of companies use to finance their daily operations, including paying employees and buying supplies. The Fed hopes to kickstart this market and free up funds for corporations. The central bank said it was taking the action because money market mutual funds and other investors were loathe to buy commercial paper. Ian Stannard, a currency strategist at BNP Paribas in London, described the move as "probably the first piece of news we've had that starts to address the underlying problem in the financial system. This is a very proactive step and will be a huge help to getting things moving again.

What are the specifics of the plan?

Using Depression-era powers, the Fed will create a new temporary lending vehicle that eligible companies can tap for short-term cash (IOUs of less than three months). In return, the Fed will collect fees and interest, assuming the role of private investors, such as pension and money market funds, that have become too nervous to buy the paper.

How effective will the Fed's new measure be?

The historic move should unclog the market for these business IOUs, helping to insulate the real economy from the credit crunch. The hope is that, over time, private investors will feel confident enough to return to the market, allowing the Fed to withdraw. The catch is that the commercial paper market is just one piece of a massive and interconnected credit system that is no longer functioning, and the Fed can't possibly nationalize it all. Credit markets saw some slight easing Tuesday after the announcement, described by some observers as the most effective measure to date. Douglas Porter, deputy chief economist at BMO Nesbitt Burns, said the central bank is putting itself even more into the "credit creation process" and taking on more risk as a result. Will it work? "This welcome step should alleviate some of the pressure on companies which were finding even day-to-day operations difficult to manage ... Still the problems besetting the credit markets are so multi-dimensional that no move will be a single fix," Mr. Porter said, noting the Fed wants to use every measure possible before cutting its benchmark Federal funds rate."