Obi-Wan Kenobi
/ 178.36.47.* / 2010-05-26 09:57
Szybko rosnący LIBOR oprzypomina sytuację sprzed upadku Lehmana i to, co się potem działo...
The reset today was some 5% higher than yesterday’s close and reminiscent of the types of moves we saw during the 2008 crisis era. The move to 0.54% was sudden, somewhat sharp, and a reason to pause and reflect as to where the financial system is starting to freeze up again, just like 2008. The bond markets are telling us that the flight to safety is not an inflation nor deflation play but a desire to preserve capital rather than seek out dramatically better yields or take any risk.
We witnessed this entire fiasco once before and the central banks plus large commercial banks of the world are running out of time to stabilize this situation or they face a new series of Lehman styled cascading failures which will require more nationalization and even deeper involvement of the various central governments in the inner workings of Western economies. This is no longer a matter of putting lipstick on the PIIGS; it is time for the various governments and central banks to either act in a unified Keynesian like fashion and intervene to their maximum potential, or step aside and let the free markets make the necessary corrections to the economic imbalances in housing, trade, currencies, etc. that have to be completed for the world economy to heel.
In other words, we need an economic depression or we will continue to experience these annual or bi-annual phases of credit seizing up and world economies crumbling to some degree or another until finally all of them collapse in unison.