As wild as the stock market was today that's not as important. Something behind the scenes is a much better indicator of how the credit market is doing. It is called LIBOR. It stands for the London Interbank Offered Rate. The LIBOR is:
An interest rate at which banks can borrow funds, in marketable size, from other banks in the London interbank market.Friday the LIBOR rate was at 4,33% a nine month high. Monday it was at 4.29%. Not much of a movement at all. If money is going to start moving again, if credit is going to start to be given again then this number needs to come down and come down a lot and come down fast. That is probably not going to happen.
The LIBOR is the world's most widely used benchmark for short-term interest rates. It's important because it is the rate at which the world's most preferred borrowers are able to borrow money. It is also the rate upon which rates for less preferred borrowers are based.
There were reassurances from President Bush calling for patience. Probably the last person anyone wants to hear that from. Bush said in part:
"I believe that in the long run, this economy is going to be just fine," Bush said. In the short term, he said the Treasury Department must go about enacting its plan to buy up troubled assets from financial firms so that credit will start flowing again to consumers.And that's something else that has to be done as quickly as possible enacting the plan or the markets are just going to fall apart.
To take a quote from All About Eve: Fasten your seatbelts, it's going to be a bumpy night! Only I think the bump is going to last a lot longer than one night.