Re: alephblog.com
Interesting. Well I have the same data he is using, but, I think he's missing a bunch of context and that makes his post dangerous.
When he says "JP Morgan is leading a group to lower LIBOR" - this is backwards. During the crisis, JP Morgan was considered the best-run bank in terms of avoiding the downturn. Like the other U.S. banks, it was receiving aggressive and immediate support from the U.S. government. And, like the other U.S. banks its deposits are mainly U.S. dollar, so it makes sense that $ LIBOR would be lower for U.S. banks.
Conversely, when he notes that "Barclays is leading a group to raise LIBOR" (incidentally, this is the exact opposite of the charges against it), it's because the European banks didn't get aggressive and fast support from their governments, and their funding is primarily not in U.S. dollars.
Incidentally, you see this effect today - the fed reserve opened up swap lines with the ECB because Europe is having problems getting dollar funding. To me, it's natural that U.S. banks would have a funding advantage in U.S. dollars.
To me this post reads like "We found evidence that the ratings agencies are colluding: every single one rated Coke more highly than Kodak" |
