Comments on: Fall in Libor May Overstate Improvement in Interbank Lending Market http://www.nakedcapitalism.com/2009/05/fall-in-libor-may-overstate-improvement.html Sun, 22 Nov 2009 01:21:03 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Todd Wood http://www.nakedcapitalism.com/2009/05/fall-in-libor-may-overstate-improvement.html#comment-47930 Todd Wood Tue, 26 May 2009 22:27:08 +0000 http://www.nakedcapitalism.com/2009/05/fall-in-libor-may-overstate-improvement-in-interbank-lending-market/#comment-47930 “It’s a sign of improving bank liquidity as customer deposit growth replaces borrowing in the short-term money markets.”<br /><br />And trillions in central-bank guarantees, I suppose. “It’s a sign of improving bank liquidity as customer deposit growth replaces borrowing in the short-term money markets.”

And trillions in central-bank guarantees, I suppose.

]]> By: ben http://www.nakedcapitalism.com/2009/05/fall-in-libor-may-overstate-improvement.html#comment-47916 ben Tue, 26 May 2009 10:56:24 +0000 http://www.nakedcapitalism.com/2009/05/fall-in-libor-may-overstate-improvement-in-interbank-lending-market/#comment-47916 i think widening of the spreads between the best and the worst is a good thing. it means the banks are working out where the risks are. better that than before when no-one knew where the dead were buried everyone had to pay for it. i guess some of the decrease in the libor can probably be attributed to knowing where the risks are rather than the system overall being less risky. i think widening of the spreads between the best and the worst is a good thing. it means the banks are working out where the risks are. better that than before when no-one knew where the dead were buried everyone had to pay for it. i guess some of the decrease in the libor can probably be attributed to knowing where the risks are rather than the system overall being less risky.

]]> By: Glen http://www.nakedcapitalism.com/2009/05/fall-in-libor-may-overstate-improvement.html#comment-47914 Glen Tue, 26 May 2009 10:50:47 +0000 http://www.nakedcapitalism.com/2009/05/fall-in-libor-may-overstate-improvement-in-interbank-lending-market/#comment-47914 Look, it's GREEN SHOOTS ok! A GREEN F**KEN SHOOT! (jj). The MSN in Ozz had a small bit about the fall in the LIBOR as 'a sign' - I'm not sure that our definitions of 'a sign' are the same but none the less it was a 'green shoot' sign. Sigh. Look, it’s GREEN SHOOTS ok! A GREEN F**KEN SHOOT! (jj). The MSN in Ozz had a small bit about the fall in the LIBOR as ‘a sign’ – I’m not sure that our definitions of ‘a sign’ are the same but none the less it was a ‘green shoot’ sign. Sigh.

]]> By: Brick http://www.nakedcapitalism.com/2009/05/fall-in-libor-may-overstate-improvement.html#comment-47913 Brick Tue, 26 May 2009 09:21:58 +0000 http://www.nakedcapitalism.com/2009/05/fall-in-libor-may-overstate-improvement-in-interbank-lending-market/#comment-47913 It would be interesting to see the volumes that make up the Libor as I suspect the range in Libor might suggest low volume. As I understand it Libor tends to be based on those short term loans that banks need overnight to balance there books. If a bank could hand over some securitised assets to the central bank instead then this might a cheaper option. The reduction in Libor may reflect Central bank action to essentially replace inter bank lending with their own schemes. There is also the possibility that perfectly healthy banks have just run out of bad assets that they can dump on the central bank. Any bank not able to access central bank lending then runs the risks of other banks increasing the price of overnight loans to them. In other words there is so much intervention going on that the value of the Libor rate is severely diminished. It would be interesting to see the volumes that make up the Libor as I suspect the range in Libor might suggest low volume. As I understand it Libor tends to be based on those short term loans that banks need overnight to balance there books. If a bank could hand over some securitised assets to the central bank instead then this might a cheaper option. The reduction in Libor may reflect Central bank action to essentially replace inter bank lending with their own schemes. There is also the possibility that perfectly healthy banks have just run out of bad assets that they can dump on the central bank. Any bank not able to access central bank lending then runs the risks of other banks increasing the price of overnight loans to them. In other words there is so much intervention going on that the value of the Libor rate is severely diminished.

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