Libor hits a new high
Even after news that the US bailout had been voted through there seems to be a general lack of trust and confidence in the money markets. Indeed we saw the Libor (London Interbank Offered Rate) hit a new high today just as authorities around the world had been praying for a return of confidence. It seems that the US bailout has yet to have the impact which many had forecast. So what next?
As we have covered on this site on a number of occasions the injection of confidence needed by the markets will not happen over night and will be gradual. The US deal is a big step in the right direct but it is not the be all and end all as many had been predicting. The task now is to control the flow of money into the money markets and ensure that it is made available at accessible rates.
This alone will ensure that confidence will finally return to the markets and hopefully free up the wheels of commerce around the world. We cannot highlight enough that confidence is the key to any future recovery, not the amount of money thrown at the problem and not further regulation. The actions of central banks around the world will be watched like a hawk by those looking for finance and a hopeful road to recovery.
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