SubscribeAll Posts Tagged With: "LIBOR"
Fears of Mortgage Rate Re-Sets May Fuel LIBOR Manipulation and Mask Deeper Banking System Problems
It’s panic time for U.S. legislators, regulators, banks and lenders. More than $24 billion worth of adjustable-rate mortgages (ARMs) are expected to “re-set” to higher interest rates in November – boosting the likelihood of further home foreclosures.
And it gets worse. That increase in borrowing costs will spread to other parts of the global debt market, representing an across-the board threat to corporate, institutional and sovereign borrowers. If interest rates remain high and interbank lending remains tight, the credit crisis is not likely to recede.
This raises two key questions. Are desperate times prompting desperate measures? Is LIBOR being manipulated by banks…
23Oct2008 | Money Morning | Comments Off | ContinuedThe Best and Worst a Dollar Will Buy
I am going to use this edition of Charts of the Week to accomplish a series of tasks that has gone undone for too long. Forthwith:
- To answer a brainless dolt called James West, whose name appears with some regularity on the otherwise respectable Kitco website. This “writer” [oh, if only he could string a few words together without obfuscating] produced this gem just a week ago:
“Right now, the dollar is looking strong because of the massive repatriation of U.S. dollars now underway as a result of global U.S. denominated asset de-leveraging. So it looks [the “writer’s” emphasis] like the dollar is strengthening. This…
22Oct2008 | Oxbury Research | Comments Off | ContinuedHow 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 | ContinuedThe Three Signs That the Credit Crisis Has Yet to Hit Bottom
Have we seen the worst from the financial sector?”
The question – a very good one – came from an audience member following my global investing presentation at the Agora Wealth Symposium in Vancouver, British Columbia. During my entire time there, the interest in the ongoing credit crisis was intense.
I took a deep breath and launched into my three-point response.
First, I’m encouraged by what I see lately but still believe there is a fair distance to travel before all the skeletons are cleaned out of the financial sector’s closet.
There is a growing body of data that suggests banks have recognized only…
7Aug2008 | Money Morning | Comments Off | ContinuedHow Will We Know the Credit Crisis and Banking Fiasco Are Truly Over?
How will we know the credit crisis and banking fiasco are truly over?
We won’t.
But there’s a damn good indicator that will show us the way – the London Interbank Offer Rate, usually referred to as LIBOR.
And right now LIBOR tells us that this financial mess still has room to run.
As indicators go, recent developments have demonstrated that the LIBOR system is arguably corrupt. Until now, LIBOR always has been constructed by industry insiders – with little in the way of oversight or regulation. It drives billions of dollars of trades and transactions a day. And it’s publicly available at 11:30…
12Jun2008 | Money Morning | Comments Off | ContinuedA Currency Conundrum: Beware of the U.S. Dollar’s “Head Fake†Rally
Don’t mistake the U.S. dollar’s recent rally for strength. If anything, it’s a head fake of legendary proportions.
In fact, the dollar’s recent run-up is actually a warning that risks are escalating.
To better understand what I mean here, let’s look at the greenback’s recent performance against the euro. After bottoming at an all-time low of $1.6019 versus the euro on April 22, the dollar has soared nearly 4% and was trading at $1.5428 per euro early yesterday (Wednesday).
Now many of the Wall Street types expect that rally to continue. Just yesterday, UBS AG (UBS) predicted the greenback would rise to $1.47…
8May2008 | Money Morning | Comments Off | Continued
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