Tuesday, October 14, 2008

Fantastic news – Libor down another 0.02%

Libor falls for second day

More evidence, if any was needed that everything is now fine, house prices are going to rocket skywards again and so on. Or at least, that's what the VIs are saying. Libor is still 1.75% above base and it is going to take a lot of these 0.016% and 0.02% drops to get back there.

Posted by jonb @ 03:11 PM (1630 views)
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28 thoughts on “Fantastic news – Libor down another 0.02%

  • That’s now the inter-departmental lending rate obviously.

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  • whiteknight – exactly – as I said in #8 on today’s 10.16am post, given the consolidation and nationalisation inter-bank lending has become intra-bank lending. Add that the govt would no doubt like the BBA to tweak the libor numbers southwards.

    Also, given that the depositor guarantee scheme was based on ownership rather than brand, how has the shake-up of ownership structure changed the scheme?

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  • The EU has put aside a TRILLION Euros to support banks.

    I wonder what effect this decision will have (apart from putting up EU taxes). Will the EU equivalent of LIBOR drop significantly? The impacts are perhaps best measured when the dust settles.

    If nothing nasty happens then LIBOR should drop significantly by this time next week. However, I have the feeling that we are not out of the woods, yet!

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  • Ah.I have given it a lot of thought and I think I have solved Argentinas problem. What they need to do is get their tax payers to pay off the debt thereby not defaulting on it.

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  • planning4acrash says:

    All u need do, now that the favoured 1’s have full access 2 unlimited central bank £’s, let LIBOR soar, refuse central bank money 4 unfavoured banks, let em go bankrupt, then give Goldman’s public money 2 buy them cheap, oops, they already doing that!

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  • Everything is not fine. At best we will get a years respite while the banks use up this extra capital.
    At worst, there are more horrors soon to explode, probably from derivatives.
    There is a lot more excessive capital created through leverage still
    to be destroyed.

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  • Granted, the Libor Rate is being hyped up (media).. but I suggest you keep your eye on OIL.. That is really what is going on.. OIL should be around $30 – $50 a barrel.. but someone is using this to make vast amounts of money. Bascially, the stockmarkets are fake. Gold prices are being manipulated too.. OIL.. is being used as the silent weapon.. Not Nuts.. It’s so obvious.. This is NOT economics.. This is NOT analysts forecasting.. This IS pure gambling.. the OIL price is what is being used. As for the USA, they are owned by the Financiers. House prices will come down!!! Gravity!!!!

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  • I have to confess to not understanding this. If we, as taxpayers, have just made a few hundred billion pounds available to the banks, why do they need to borrow from each other – greedy b*stards, is a couple hundred billion not enough?

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  • Timmy T…..

    The rough estimate of the UK sub-prime market is £80,000,000,000.

    That’s the size of the potential hole

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  • No need for libor now that most UK banks are nationalised.Although banks have just been re-capitalised, they cannot lend when assets keep falling in value. GB needs to be re-elected, so all this talk on lending at 2007levels is just political propaganda.

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  • Alan,
    Euribor fell by 0.07%.

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  • That doesn’t explain why banks need to borrow from each other. Why don’t those with holes just borrow from the Govt and those without just get on with life? The hole can’t be bigger than the amount the banks just got.

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  • If you consider the size of the banks, yes I think they do still need to borrow from each other.

    Approximate figures are

    RBS – £1700bn
    HSBC – £1200bn
    Barclays – £1000bn
    Santander – £750bn
    HBOS – £700bn
    Lloyds – £350bn

    They are presumably still able to find some of the money they need on the interbank markets, and the £500bn is the amount they can’t find.

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  • The extraordinary amounts of money the government has pledged over the last year so that the higher middle and upper classes can continue buying fancy holidays and cars is a long way from the real struggle low income people have deciding if they should “eat or heat”. Why not borrow a couple of billion more and help the poor. The Libor might remain relatively impotent because lending at grass roots has changed and if people can’t buy houses or cars then money will still stagnate.

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  • larry pickleman says:

    timmy, isn’t it that the banks holdings are not real physical holdings, but valued investments…so if they say have £1000 billion on their books, they only really have immediate access to a fraction of that…and that’s why they need to borrow?

    I’m probably totally wrong!!

    🙂

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  • The oil, is being used to fabricate the market.. or stock exchanges

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  • mountain goat says:

    Unlike LIBOR FT Alphaville reports that CDS is responding to bailouts, rates have fallen quite a bit.

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  • Keep your eye on OIL prices, the stockmarket. DJIA is a fabrication.

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  • planning4acrash says:

    Correct Larry. In fractional reserve banking, banks borrow from others when under their legally required reserves. Banks borrow from govt when all banks are under, i.e. Insolvent. Govt also offer£2 reduce demand 4interbank lending 2 reduce LIBOR rates.

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  • planning4acrash says:

    This manipulation of the market, along with setting artificially low interest rates helps inflate bubbles, prolong crashes, reduce market signals, increasing business failures, making govt & banks interdependent, encouraging systematic corporate welfare.

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  • planning4acrash says:

    Capitalism requires 100% reserves and sound money backed fully by a trusted medium of exchange with a reliable non monetary value. Clearly, paper doesn’t have much value, but gold does, even if the financial system goes. So, central banks are the problem.

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  • @9 – “The hole can’t be bigger than the amount the banks just got”. Why not? If you got a 95% mortgage in summer 2007 you’d be deep underwater by now. Same for the banks, who leverage in the same way.

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  • ….and you’d be unable to unload as you went deeper underwater. Ditto the banks.

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  • Gold isn’t sucked out of thin air (or 9th dimension) with interest fraudulently then charged on it, as per fiat. If gold did become the standard currency, to what extent would mining companies be the new central banks, with control of the gold price/supply?

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  • Icarus – “The hole can’t be bigger than the amount the banks just got” was a statement of disbelief rather than a statement of fact. If the hole really is that big then we must be getting close to Iceland’s predicament!

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  • Clearly the libor rate does seem to be ridiculous when they are all one big happy family with big ‘Yin’ Broon as mother hen and Baron Hardup to whip them into line (the mental picture it conjours up is only for those with a strong constitution).
    There is however a wonderful opportunity to right many wrongs.

    Consider this; for the past twenty years or so, all of the banks and related financial institutions have engaged in an unseemly orgy of tax avoidance, spending untold millions in getting the legal (?) and accountancy advice to enable them to create artificial scenarios to understate their correct tax liabilities, to the extent that any central forcasting of Government funding from taxation was rendered useless. This in turn meant that Education and NHS funding as well as all other funding that would be of benefit to the tax paying general public was slashed……….. We paid the cost of the bankers greed.

    We now own them……….time for you Broon and your trusty prudent Badger, and your hardman Baron Hardup to set about ‘unwinding’ the artificial avoidance practices and to recoup the scandalous sums stolen from the British public before there is any move made to return the banks to their dark hole under the stone where they belong.

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  • [email protected]: while banks can still operate on a fractional reserve, it doesn’t matter much whether that reserve is gold or paper, if the reserve fraction is not tightly controlled. Investment banks and Structured Investment Vehicles have effectively been running without reserve requirements, creating debts (particularly Credit Default Swaps) with no reserve whatsoever.

    Commercial banks have to borrow from each other to satisfy their individual fractional reserve requirements, as customers withdraw their deposits (counted as reserve but could be simply borrowings from other institutions) or take out new loans.

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