thannagan

Credit Crisis Watch: Are the Markets Thawing?

Banks, specifically the largest international banks are obvioulsy not what they used to be years ago. They are riskier (for a variety of reasons). Meanwhile, the Fed's target rates are at resession wartime levels. And, for the moment, global fear-and-panic have bouyed the US$ and Treasury values as stores of safety (relative to other alternatives).

Who says LIBOR rates and TED spreads should be any lower. They probably shuld have been inching higher for several years, now. Risk wasn't properly priced into many things in the last few years or the whole subprime ponzi play would not have happended to begin with.

It's the real economy, now, and the resulting ability of individuals and businesses to make debt service payments - not capital markets.

Obama Honeymoon Likely To Be Cut Short By Bond Market

Yes, the accelorated demand for (government) financing will tend to create/require higher prices (rates), except for that portion of funding that is offset by a (significantly) greater supply of "money" looking to go to work. The future financing requirements will happen in the currency of the day, not just with today's money supply. And we know who prints the stuff.