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FRIDAY MAY 30
Libor (Magically) Ticks Up Wow, whoever guessed that could happen after one little Wall Street Journal study? Funny how once everyone notices the emperor has no clothes, he somehow instantly gets himself a membership to Laura Ashley. Here, a closer look at the biggest Libor move in more than two weeks. May 2008The benchmark London interbank offered rate, or Libor, rose Thursday in a move some analysts attributed to new concerns about the rate's accuracy. Three-month dollar Libor, which is supposed to reflect the rate at which banks lend to one another, rose 0.03 percentage point to 2.68%, its largest increase in more than two weeks. The move came after the publication of a Wall Street Journal study suggesting banks may have reported flawed borrowing rates used to set Libor. In response to concerns that some banks may have understated their borrowing costs, the British Bankers' Association, which oversees Libor, has been conducting a review of the rate system. An initial report is expected Friday. One of the world's most important financial indicators, Libor forms the foundation for payments on trillions of dollars in mortgage loans, corporate debt and other financial contracts. The Journal's study analyzed Libor by comparing banks' reported borrowing rates with estimated borrowing rates derived from the market for default insurance -- another indicator of banks' financial health. The analysis suggested that many banks' reported rates -- and dollar Libor itself -- were significantly lower than what the default-insurance market suggested they should be.
1 COMMENTS
Posted by hooligan - May 30 2008 @ 9:54 AM Re: Libor (Magically) Ticks Up you mean that LIBOR that also is used to price 70 trillion dollars worth of swaps (including cds) may be being manipulated by the big players like goldman sachs jp morgan merrill lynch citi and deutsche? bite your tongue, you are being mischievous and all the lenders are getting a great deal! why dont they publish two way LIBOR and LIBID, that would fix the whole problem and maybe...shudders...publish the contributors rates?
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