Vi,
Questions...
Is the surge in LIBOR main reason for not lowering rates here is US?
Also, other than indicating a credit freeze, is LIBOR indicating hyper inflation in US?
Can TED spreads be narrowed by rising the rates? Equity holders of FRE, FNM were thrown under bus to save the debt holders; equity and debt holders of WM and WB were thrown under the bus to save the depositors and FDIC. Cntrary to the popular belief, will it be prudent to give some pain to the equity holders around the world and RISE rates to unfreeze credit markets? THIS MAY EVEN BE THE BEST WAY TO INFUSE CAPITAL TO BANKS. People will dump stocks and flock to CDs.
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Libor Surges Most on Record After U.S. Congress Rejects Bailout
By Gavin Finch and David Yong
Sept. 30 (Bloomberg) -- The cost of borrowing in dollars overnight surged the most on record after the U.S. Congress rejected a $700 billion bank rescue plan, heightening concern more institutions will fail.
The London interbank offered rate, or Libor, that banks charge each other for such loans climbed 431 basis points to an all-time high of 6.88 percent today, the British Bankers' Association said. The euro interbank offered rate, or Euribor, for one-month loans climbed to record 5.05 percent, the European Banking Federation said. The Libor-OIS spread, a gauge of the scarcity of cash, advanced to a record. Rates in Asia also rose.
``The money markets have completely broken down, with no trading taking place at all,'' said Christoph Rieger, a fixed- income strategist at Dresdner Kleinwort in Frankfurt. ``There is no market any more. Central banks are the only providers of cash to the market, no-one else is lending.''
bloomberg.com |
