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"Are Central Banks Making Libor WORSE?"
Click on the chart to expand it and see who the banks are that report to the British banking Assc. that sets LIBOR.
"This also means the market’s new favorite idea of having G7 countries guarantee all inter-bank loans will do nothing. If enacted, banks would still be missing an incentive to use the inter-bank loan market because they can get all the funding (loans) they need from their neighborhood central bank and at a much lower rate."
AND, PLEASE, read the comments associated with the above link for more understanding/education.
"The US will draw up its own plan to pour public money into Wall Street banks after studying the emergency proposals outlined by Alistair Darling to save UK banks from imminent collapse." ; so much -despite all the speeches- for co-ordinated action between all the central banks !!
Note what he says at the end about the need by the U.S. for foreign financing in upcoming years, especially by China; then think about the arms deal to Taiwan.
In the meantime:
For insensitivity, Wachovia refuses to be outdone
"Be that as it may, AIG’s Norton said next week’s Ritz-Carlton retreat would proceed as planned. He said the event would introduce new insurance products to salespeople who specialize in wealthy clients."
Now don’t that make you feel better?
And a followup to Ian Welsh’s posting earlier today about Fannie,Freddie, and Paulson
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Whoops; forgot to include this stuff:
On the left side,scroll down to “falling out of bubble territory” for P/E graph of stocks (P/E means price divided by earnings)
“So the English bankers came out and said, in England, we have an ethic: it’s lend to the person, not against the asset. And they’ve come to the conclusion that the American bankers—well, we won’t say “crooks,” but let’s say they’re cronies who deal among themselves and are willing to screw the foreigner.
And this has created such a mistrust abroad that Europeans and Asians and OPEC country investors are simply pulling their money out of the US, because they don’t have a clue as to the solvency of the banks. “
The above is why the G7 statement was so mealymouthed and lacking in detail.
Alas, the U.S. banks don’t have a clue as to the solvency of each other (and perhaps not even their own) — note for example the high interbank lending rates relative to prime.
The interbank rank for 3 month libor (used for most commercial paper loans) is explained in the first link; the overnight rate is but about 756 basis points above the Fed overnight rate. ‘Prime’ has nothing to do with interbank lending but is a ‘benchmark’ regarding the rate charged the most ‘creditworthy’ customers.
BTW, Freddie,Fannie, and Lehman CDS’s have already gone thru the auction process.