Radical measures taken yesterday have yet to impact. The 90 day LIBOR rate jumped to 4.75% this am ( http://www.bloomberg.com/markets/rates/keyrates.html). Take our word for it - this means that aside from a little O/N activity, banks are not lending to each other.
Central banks continue to lower key rates. Our problem has nothing to do with rates at this juncture, but lack of trust.
The WSJ editorialized this morning that there is "Progress Amid the Ruins." Maybe so. They’re smarter than we are. We just don’t see it.
KEY - Banks are not raising enough capital to offset losses.
Certainly yesterday’s UK Treasury mandate appears to be a positive - injections in return for partial gov’t ownership. Certainly Paulson’s flirting today with a similar rescue (US taxpayers inject capital and take a position), although it would gag Hayek and please Marx, may be a positive. There are other plans afoot.
May the force be with us.
Robert Craven
Thursday, October 9, 2008
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