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Liquidity crisis has deepened, forcing banks to offer much higher interest rates on short-term deposits. Get the most out of fixed deposits | Tips for investment

Short-Term Market Dries Up (Financial Planning.com)
Liquidity in the short-term market has dried up to the point where “there’s pretty much a total lack” of banks willing to provide issuers with letters of credit or standby bond purchase facilities, the executive director of the Municipal Securities Rulemaking Board said yesterday.

State leaders repayment of short-term loans won’t be problem (Long Beach Press-Telegram)
Gov. Schwarzenegger and legislative leaders say California can repay $7 billion in short-term loans, despite estimates state’s revenues will drop $3 billion below projections.

California seeking short-term loan to get by (The Sacramento Bee)
State leaders Wednesday delayed immediate action to resolve California’s latest budget woes as they approached Wall Street with some trepidation seeking a short-term loan. Gov. Arnold Schwarzenegger and legislative leaders emerge from a Capitol meeting Wednesday to announce they will act quickly to deal with the state’s short-term needs.

Massachusetts Won’t Need U.S. Loan, State Treasurer Cahill Says (Bloomberg)
Oct. 8 (Bloomberg) — Massachusetts probably won’t need a loan from the U.S. government to help bolster its finances as it seeks to sell $750 million of short-term notes to investors, State Treasurer Timothy Cahill said.

Fed sets dates for short-term loan auctions (Courier-Post)
The Federal Reserve provided more details Tuesday about when it will make billions of dollars in short-term loans available to squeezed U.S. banks.