Libor Hits Record As Credit Pressures Mount
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Libor, the rate banks charge each other for loans, climbed 431 basis points to a new all-time high of 6.88% today after the U.S. Congress failed to pass the $700 billion financial bailout plan.
The surges shows the pressures in the credit markets. Central Banks are the only providers of cash to the market.
The TED spread, which is the difference between Libor and U.S three-month Treasuries, rose to 338 basis points after crossing 350 basis points yesterday for the first time. This spread was near 100 a month ago.
The seizing of the credit market has led to five bank rescues in the U.S. and Europe over the past two days, including Dexia SA, Wachovia (NYSE: WB), Bradford & Bingley, Fortis and Hpyo Real Estate Holding. In addition Iceland agreed to rescue Glitner Bank and on Friday WaMu (NYSE: WM) failed.
The surges shows the pressures in the credit markets. Central Banks are the only providers of cash to the market.
The TED spread, which is the difference between Libor and U.S three-month Treasuries, rose to 338 basis points after crossing 350 basis points yesterday for the first time. This spread was near 100 a month ago.
The seizing of the credit market has led to five bank rescues in the U.S. and Europe over the past two days, including Dexia SA, Wachovia (NYSE: WB), Bradford & Bingley, Fortis and Hpyo Real Estate Holding. In addition Iceland agreed to rescue Glitner Bank and on Friday WaMu (NYSE: WM) failed.
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