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How LIBOR Threatened to Destroy the Global Banking System
The largest financial crisis since the Great Depression has revolved around an interest rate that many U.S. investors are only now hearing about for the very first time: The London Interbank Offered Rate (LIBOR).
But if you understand that rate, and study the forces that have been influencing it, chances are very good that you can figure out how we can escape the current banking-sector mess without wrecking the entire world economy.
Although not a common term here in the U.S. market (where it nevertheless is a presence, as we’ll see), it is common knowledge in Europe, and especially in Great Britain,…
21Oct2008 | Money Morning | Comments Off | ContinuedCredit Crisis Update: Rising LIBOR Hints at Bigger Problems to Come
More than a year ago, even before the subprime-mortgage crisis had revved itself up into the full-fledged credit crisis that’s now threatening global growth, we pointed to the London Interbank Offered Rate (LIBOR) and other interbank rates that suggested that the worst was yet to come.
The Money Morning team has continued to watch this important risk indicator, and has regularly reported our findings to you. Each time, we’ve preached caution, even though the pundits were telling the masses that the bailout plan was a panacea for what’s actually a financial mess whose fallout continues to spread.
So what is LIBOR telling us now?
Story…
7Oct2008 | Money Morning | Comments Off | Continued
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