LIBOR is higher right now that it was the day Hank Paulson

[Subdivisions]

threatened martial law if an emergency bailout fund of $787 Billion was not immediately approved. At the time essentially credit had dried up and banks stopped making loans. Today the 3-month LIBOR indicator is .37%. If memory serves, it was ~.25% when Paulson demanded the emergency funds.

[leveymg]

1. Nobody wants to be the one to pop this bubble. There's nothing left to pump it back up again.

[Subdivisions]

2. If ~.25% was enough to seize credit, I wonder what effect .37% is having. It was

down into the .10% range just weeks ago.

I'm going by memory on all this so if anyone who's familiar could chime, please do so.

[leveymg]

3. So, what does the Libor spread mean, other than the traders are shitting bricks?

Euro collapse? Global currency wars? 1789, 1840, 1968 - Bloody revolution in the streets around the world?

No cushy bonuses for traders and fund managers who didn't see this coming this year? That would be The End of the World as we know it.

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4. Last time it spiked up, credit seized up and Paulson was demanding

$700 Billion. There was also a run on banks. The last time it was at least 1 base point lower than it is right now. CNBC is reporting, rather under-reporting, that there is a run currently in progress. I haven't seen much in the way of details and am trying to get a sense of what it all means at different financial forums I frequent, the main one of which has now gone to a paid member scheme, making it harder to get live commentary from people in the trenches.

[leveymg]

5. Links, please. And, pass the ammo.

I love this place. Nice to see some of us haven't lost our healthy sense of disbelief in authority, all authority . . .

[Subdivisions]

6. Ah shit, leveymg, it sucks to get caught short on background when you're the one

asking for links. LOL. You're one of my favorite writers on DU and I'm very familiar with your work here. So, it's kinda embarrassing that I don't have those links/sources ready. As I said earlier, I'm going mostly from memory on this particular observation. I remember how important the 3-month LIBOR indicator was the last time the markets crashed and crisis began back during the Bear Stearns, and subsequently, the Merrill Lynch things were happening. Basically, if I recall correctly, the LIBOR is the rate at which banks loan money to each other and it had gotten so high (less than today, but I admit I'm fuzzy on the exact value, knowing that it never reached above .3%) that lending siezed up and a run was occuring on the banking system. CNBC reported ealier that is happening today also.

I hope you'll forgive my lack of sourcing material. This is a rote observation that I will take the time later to check more into. In the meantime, again, anyone who is familiar with this subject is welcome to comment, even if it is to correct my observations if I am mistaken in my observations.

[leveymg]

7. Here's what I found. 3 mo libor on 5/5 - .35. A year ago - .99

This data is a day old, and spiked earlier today to .42:

LIBOR, other interest rate indexes
By Bankrate.com

The LIBOR is among the most common of benchmark interest rate indexes used to make adjustments to adjustable rate mortgages. This page also lists some other less-common indexes.

Click on the links below to find a fuller explanation of the term.
Updated 5/5/2010
LIBOR, other interest rate indexes
This week Month ago Year ago
Bond Buyer's 20 bond index 4.37 4.44 4.70
FNMA 30 yr Mtg Com del 60 days 4.82 5.04 4.56
1 Month LIBOR Rate 0.29 0.25 0.40
3 Month LIBOR Rate 0.35 0.30 0.99
6 Month LIBOR Rate 0.55 0.45 1.54
Call Money 2.00 2.00 2.00
1 Year LIBOR Rate 1.02 0.92 1.86

[girl gone mad]

9. There was talk of a run over the weekend.

It did have the vibe of 07/07. I remember going into my bank in dt Chicago that month and moving everything into treasuries because it looked so spooky.

I will PM you something personal that happened over the last several days that put me on notice a crisis might be brewing, if you are interested.

[girl gone mad]

8. I predicted the death of the Euro..

just not this soon.

Buckle up and get some safe havens. Mine is still the Yen.