BizJournals Portfolio
Home >   Business Views, Opinions and Blogs >   Business Blogs >   Market Movers >  

How Can We Bring Down Libor

Market Movers

by Felix Salmon
Main
Did Derivatives Cause the Crisis?   Bank Soundness Datapoint of the Day

Recent Blog Posts

Links

Oct 09 2008 9:32am EDT

How Can We Bring Down Libor?

When banks get nationalized, they become much safer, right? So what on earth is overnight Libor doing at 5.09%, and three-month Libor at 4.75%? The TED spread is a new record high, 413bp, making all its previous scary spikes look like mere foothills in comparison.

Yves Smith thinks this might all be connected to tomorrow's Lehman CDS auction, and says that "there may be some relief if the financial community passes this test". I do hope so: every day that Libor remains broken is a day that thousands of debt instruments reset to silly levels.

In fact, I wouldn't be averse to measures specifically designed to bring down Libor, even if interbank lending volumes remained near zero. At this point, Libor is moving from being a symptom of the crisis to being one of its central causes.

. □

Comments

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.


Connect With Portfolio.com
Like Portfolio on Facebook

Come on, like us—you know you want to.

Follow Portfolio on Twitter

Follow us and if you're an innovative entrepreneur, we'll return the favor.

The Mix

Today's top stories, conversation starters, and the back nine business bites.

spotlight on

People & Ideas

Whisky To-Go-Go

Now there's a company that let's you taste your knowledge of fine blended Scotches by mixing a whisky of your own. Read More