LIBOR suggests "Credit CRUNCH on the Horizon"
John Nyaradi :
The scary news is that LIBOR, the interbank lending rate, has been steadily climbing, just as it did in late summer 2007, indicating the potential of a credit crunch just ahead.
As I said last week, just think of Bear Sterns and Lehman Brothers on an international scale.
Overall, it appears that European banks are on the hook for more than $2 trillion in sketchy sovereign debt, $500 billion from Spain alone. Yields in Spain soared this week as the sharks start to circle the next weakest fish in the sea.
On the home front, the news was mixed and almost unnoticed as the global drama unfolded.
Four banks failed on Friday, bringing the year’s total to 68.
Moody’s (MCO) is under investigation by the SEC.
Wells Fargo (WFC) is being investigated over their mortgage lending practices.
Unemployment crept up to 9.9% from 9.7% and while new jobs were created, the U6 figure, the “underemployment” rate, continued its steady climb from 16.9% to 17.1%.