Thursday, September 25, 2008

The Financial Crisis Goes Global; Dollar in Peril

Libor Soars on Concern Bank Bailout Will Be Diluted

Sept. 25 (Bloomberg) -- Money-market rates around the world soared on mounting concern the U.S. Treasury's $700 billion bailout plan will be diluted as it makes its way through Congress, causing financial institutions to hoard cash.

The three-month London interbank offered rate, or Libor, that banks charge each other for dollar loans jumped today by the most since 1999 and the euro rate rose to the highest level since November 2000. Rates in Hong Kong and Singapore climbed as Bank of East Asia Ltd. faced a run on deposits. The difference between the three-month dollar rate and the overnight indexed swap rate, the Libor-OIS spread, widened to the most on record.

``Liquidity in the money markets in maturities over a week is desperately scarce,'' said Tim Bond, head of global asset allocation at Barclays Capital in London. ``A near-term solution to the crisis is urgent. Unchecked, the current crisis would turn into a self-reinforcing vortex of defaults, bank capital contraction and deep recession within a matter of weeks.''...

If this is the case the $700 billion payoff to the U.S. Financial oligarchy will do little to alleviate the crisis.  It is important to remember that the Mortgage Backed Securities are a TINY fraction of the Credit Derivatives, which total MORE THAN THE ENTIRE YEARLY GROSS DOMESTIC PRODUCT OF THE WORLD.  The 700 bill only covers the mortgage related liabilities.

Is a global takedown in the offing?  More than plausible.  Stay tuned.

1 comment:

jEan Milu trUesdale said...

It is my humble opinion that a globe take down as you call it is necessary. This is not accident people. I lived abroad and the monies brokers have been planning this for years and the fat cats will get even fatter.
When I moved to Europe in 1999, it was the EU's intenntion to drive the dollar down to gain an advantage over a greedy US government and fatcats. IE Bush, Chenny, Morgan, Rockefellers, and the Arabs.