It has been a while since I blogged about the London Inter Bank Overnight Rate (LIBOR). As a review this rate along with the TED spread (the difference between what the US gov’t and businesses pay to borrow money) are really the magical indicators that tell us when markets are normal again.
This article is a bit long but it is worth reading the whole thing, there are some real good nuggets to explain where we are in the cycle and to see such a dramatic overnight change, coupled with this is the best we have been since the September Lehman Bros. failure.
Granted, it does show that we are still 90 some basis points away from “normal” remember when we were 364 basis points away? The article also suggests that forward markets think that the LIBOR will be “normal” by September 2010.
I know that sounds bad, but again, remember we survived with the TED spread at 4 times what it should have been, so from here to Sept. 2010 the spread will continue to improve and bring more liquidity into the system, as long as Banks keep that money moving through loans etc. then we will see continued improvement and health to the economy.
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