Libor Soars, Commercial Paper Slumps as Credit Freeze Deepens

Libor Soars, Commercial Paper Slumps as Credit Freeze Deepens

bloomberg.com

The London interbank offered rate that banks charge each other for loans rose for a fourth day to 4.21 percent, boosting the Libor-OIS spread, a gauge of cash scarcity among banks, to a record, while a drop in financial issuance caused the U.S. commercial paper market to tumble 5.6 percent to a three-year low, according to the Federal Reserve.

The crisis deepened after the worst month for corporate credit on record. Leveraged loan prices plunged to all-time lows, short-term debt markets seized up and even the safest company debt suffered the worst losses in at least two decades. Credit markets have frozen as financial institutions hoard cash to meet future funding needs amid deepening concern that more banks will collapse.

(visit the link for the full news article)

This is bad news, I think this is a sign that the "bailout" isn't calming fears. It has gotten past the Senate, and I think it will get past the House as well this go round. This is pretty bad news, as the credit crisis goes deeper than or as deep as some of us have feared. Soon we might see a giant bank collapse which could hit consumer credit harder. Imagine using your credit card to buy gas, only to discover you have had your credit line frozen. Suddenly you can't make internet transactions via credit. I don't have a credit card, I have a debit card but even that could be effected. Consumers could hoard cash...banks hoard cash...and we have an deflationary spiral. This might make banks lift their overdraft fees...this could get ugly.

bloomberg.com
(visit the link for the full news article)

[edit on 2-10-2008 by yellowcard]

reply to post by yellowcard


You last comment..about banks lifting overdraft fees..would that be an attempt to get people to overdraft their accounts?

Just wasn't sure where you were getting that..

Your right about the bail out, its like using a piece of gum to stop the leak at the dam lol

I think it started as more of a joke, but I really think that taking the Trillion dollars (which this will end up costing us, at least).. and just giving it out to the tax payers as a stimulus would do a lot more to fix things then just throwing it at these few companies...it would be about 200k for each person right? And that money would be used to probably pay off a lot of personal debt, be it mortgages or other. So it would end up doing the same thing but also stimulating a lot of purchasing.

Of course that's assuming most people would use it responsibly lol

I'm obviously not in favor of throwing away any more money, but if we're going to do it lets at least give it to the people that deserve it.

In fact..and I hate to double post..but this thread is slow atm and I'm bored..sorry :

Why not give everyone 200k (would be about a trillion or so) but attach some regulation to it....use existing oversight agencies, maybe the consumer credit with the IRS and stipulate: Okay, heres your money but we have to do these things first:

1. pay off all your debt..mortgage, credit cards, whatever else..if your lucky and rich and have a really expensive place, we'll say up to 25% goes towards any mortgage...if you were just irresponsible and have 200k or credit card debt over your head, well thats your own fault lets just wipe your slate clean; besides you already had your spending spree :p

2. then take some of that and start some kind of long term savings, maybe even some kind of health care/retirement savings..and this could be left up to the individual how they want to do it..and it doesn't have to be a lot..maybe 10% - just tuck it away somewhere (and not SS, because thats pretty much useless anyways lol)

If you have a lot of health related bills I think that should be up to the person if they want to pay that off...this could help, but I don't think it would be fair to force someone to loose out just because they had some unfortunate things happen.

Remember..everyone is getting this..so thats a lot of money being dumped into the whole system..

this is all just rambling..and I apologize, but honestly I think it would be better then where we are headed right now..because as the OP points out, this 700 Billion, which is just the revolving door to potentially trillions of our tax dollars..it might as well just be flushed down the toilet.