Thursday, Dec 13, 2007
Mmmmm... Paulson scratches head...How about we try to pump in $100 trillion? It just might work, I'll get my cheque book...
Bloomberg: Euribor Stays at 7-Year High, Defying Central Banks
Interest rates on loans in euros stayed at a seven-year high, a day after global central banks teamed up in an attempt to thaw a freeze in money markets.
``It's not going to help us find an exit to this crisis,'' said Cyril Beuzit, head of interest-rate strategy at BNP Paribas SA in London. ``These measures aren't going to address the root cause of the crisis. Banks are still reluctant to lend money to each other because there are serious concerns about potential further bad news.''
Posted by tyrellcorporation @ 12:24 PM (425 views) Add Comment
5 Comments
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1. cornishman said...
If the banks can't trust each other enough to lend money to each other - how do they expect us to trust them to look after our savings? I think uncle tom had a point a few days ago when he said there may be massive problems with the banks in the next few weeks...
2. crash bandicoot said...
"The existing institutions aren't good enough. I'm going to make it my business to reform those institutions.''
While you are at it Gordon why not take a look at the NHS, the DWP, the Treasury and probably the house of commons too.
3. C'mon Correction said...
I agree, UT was right, this just shouts PANIC ! The problem is far more serious than what the simple-minded media report it to be.
This action can't solve the problem though, only delay the inevitable and then ultimately compound the problem. A bank won't to lend huge sums of money to another if there is any chance that the bank will "do a Northern Rock", NR has been very lucky to have had £25b+ given to it to prop it up - even with that, would you want to lend them money as cheaply as last year ?!
We simply won't ever have money as cheap as the last ten years again; credit was too cheap, risk wasn't priced correctly and the end result is where we are now/going. Nothing can change that; certainly not giving out more of what caused the problem in the first place.
4. planning4acrash said...
The truth is that central bank rates should be as high as LIBOR right now. Banks are annoyed that the market is over-ruling their policies. It is good medicine for their politically driven arrogance and optimism.
5. Will said...
@planning4acrash: "The truth is that central bank rates should be as high as LIBOR right now."
This comment, or similar, has been repeatedly stated in postings here. Do people not understand how commercial banks determine LIBOR?
It is dependent on the Bank rate, the difference between the rates giving an idea of the risk involved in the transaction. It is not the "market interest rate", or an indicator of what commercial banks think interest rates should be. The difference is the premium that they require to risk loaning out liquidity to other institutions.
To suggest that the risk premium be zero is to suggest that the world go back to before August. The central bank cannot completely control that, the market does.