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Banks Coming Clean

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With various institutions now fessing up to the levels of their sub-prime induced losses, are we likely to see some liquidity return to the money markets as lenders become better able to assess the risks of lending to other banks?

If so, what impact will this have on the LIBOR and mortgage rates in the short term? And what about the house price crash I requested??

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With various institutions now fessing up to the levels of their sub-prime induced losses, are we likely to see some liquidity return to the money markets as lenders become better able to assess the risks of lending to other banks?

If so, what impact will this have on the LIBOR and mortgage rates in the short term? And what about the house price crash I requested??

Excellent analysis of the current state of credit markets by Gillian Tett in the FT yesterday suggest that the credit squeeze if far from over with the 3 month interbank (LIBOR) market still barely functioning and banks still refusing to lend ot each other.

http://www.ft.com/cms/s/0/6c48c1fc-7214-11...00779fd2ac.html

But the problem that haunts both the politicians and banks is that while the signs of a rebound may be tangible, they remain patchy - and, above all, decidedly fragile. That suggests that the current apparent calm could quickly give way to another bout of turmoil if any new shocks emerge.

"Fragile" is probably the best word to use," says one central banker. Or as a senior private sector banker admits: "We are on a knife-edge . . . there are still worrying signals in the markets."

One issue provoking worry is that there is still alarmingly little evidence of genuine trading under way in many of the complex securities that were at the heart of the summer credit storm. While bargain hunters, such as hedge funds, have started snapping up corporate debt, the same does not appear to be happening much in derivatives linked to mortgage securities. Meanwhile prices in that sector - insofar as there are any prices - are still falling. Last week, a derivatives index linked to US mortgage loans touched a new low.

Another - potentially more pernicious - problem is the state of the interbank market. In recent weeks, the cost of borrowing funds overnight has dropped in Europe and the US as central banks have flooded the money markets with funds. However, in the three-month money market, rates remain very high because banks are apparently hoarding their funds rather than lending them out.

A Churchill quote springs to mind...

"Now this is not the end. It is not even the beginning of the end. but it is, perhaps, the end of the beginning."

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With various institutions now fessing up to the levels of their sub-prime induced losses, are we likely to see some liquidity return to the money markets as lenders become better able to assess the risks of lending to other banks?

If so, what impact will this have on the LIBOR and mortgage rates in the short term? And what about the house price crash I requested??

Haven't they done these write downs mark to model ?

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Nah just the beginning of the beginning, I have just read on a tread on here that BAA have £19 billion of debt, if they are a real outlier we may be OK but I suspect they are not.

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Nah just the beginning of the beginning, I have just read on a tread on here that BAA have £19 billion of debt, if they are a real outlier we may be OK but I suspect they are not.

We will see a lot of these hollow Pirate Equity shells to go belly-up.

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