Global Credit Still In Deep Freeze

Worldwide Interest Rate Cuts Have Yet To Revive Paralyzed Markets

(CBS/AP)  Governments around the world have slashed interest rates and ramped up their lending to unprecendented levels, but banks are still charging each other extremely high borrowing rates - a bad sign for the credit markets that remain close to paralysis.

Traders will be closely watching the G-7 finance ministers meeting this weekend, and hoping the officials will consider guaranteeing lending between banks - which could potentially bring down the relentlessly high key lending rate known as Libor.

In spite of bank bailouts and injections of capital amounting to billions of dollars by central banks around the world, CBS News correspondent Sheila MacVicar reported there is still no confidence in the market, and no confidence between banks.

"That means they are still not lending to each other. That's the grease that makes the global economy go around, and without that, the system remains stuck," MacVicar reported from London's financial district.

U.S. President George W. Bush noted that major Western economies were working together in an attempt to stabilize markets and end the spreading panic.

"Through these efforts, the world is sending an unmistakable signal. We're in this together and we'll come through this together," Mr. Bush said.

From Wall Street's perspective, the goal of the talks with world financial leaders, CBS News correspondent Anthony Mason said, is for a coordinated response that will calm the markets in time for Monday's trading.

The London Interbank Offered Rate, or Libor, for three-month dollar loans jumped to 4.82 percent from 4.75 percent on Thursday. Just a month ago, three-month Libor was at 2.82 percent.

Libor is the rate at which banks make unsecured loans to one another. Investors in the stock market, where heavy selling continued Friday, aren't going to get any relief until bank-to-bank lending comes down. Not only does it represent how unwilling banks are to part with their cash, but the rate is directly tied to many consumer loans, including adjustable-rate mortgages. If those rates rise, that will mean more mortgage defaults and foreclosures.

The difference between three-month Libor and the three-month T-bill yield swung to its widest level in more than 25 years - indicating that banks are viewing loans to other banks as significantly more risky than government debt. The yield on the three-month T-bill fell as low as 0.12 percent Friday before recovering to 0.28 percent, still down from 0.58 percent late Thursday.

Overnight Libor has pulled back, a sign that banks were a bit more willing Friday to make extremely short-term loans. Libor for overnight dollar loans dropped to 2.47 percent Friday from 5.09 percent Thursday. That rate been very volatile lately, however, and remains well above the target fed funds rate, which the Federal Reserve lowered on Wednesday to 1.5 percent from 2 percent.

The fed funds rate is the overnight rate at which banks lend funds that are held by the Federal Reserve to other banks; the Fed therefore has some control over it. Libor, on the other hand, is the average bank-to-bank lending rate on the wholesale market, and a better benchmark for global short-term interest rates.

In one positive sign, rates on commercial paper have been coming down from lofty levels, which is good for companies that rely on short-term financing from that market. Commercial paper is a type of debt that's either unsecured or backed by assets like mortgages; companies sell it to get funding for maintaining payrolls, buying inventory and other operations.

Most top issuers on Friday were selling commercial paper with one-to-seven day maturities at rates of less than 1 percent, according to Morgan Keegan fixed income analyst Kevin Giddis. Longer-term commercial paper rates were also largely lower. Commercial paper for 30 days from American Express Co., for example, slipped to about 2.75 percent Friday, he said, while 30-day paper from General Electric Co. slipped to about 2.5 percent.

"It could change in a moment's notice," Giddis said. "But between last night and today, the flows that we've seen, the tone is a little better."

On Thursday, the Fed said that commercial paper outstanding dropped for the fourth straight week in the week ended Wednesday. Commercial paper outstanding has fallen by 30 percent to a seasonally-adjusted $1.55 trillion since the summer of 2007. The Fed announced Tuesday that it will be buying commercial paper to keep that market more liquid.

Overall, though, investors and banks alike still appeared very nervous, flocking to Treasury bills as the stock market appeared to be headed for its eighth straight day of losses.

Longer-term Treasurys, however, fell. The 2-year note fell 4/32 to 100 25/32 and yielded 1.59 percent, up from 1.55 percent. The 10-year note fell 20/32 to 101 4/32 and yielded 3.86 percent, up from 3.76 percent. The 30-year bond fell 20/32 to 106 4/32 and yielded 4.14 percent, up from 4.09 percent.

Meanwhile, stock prices careened lower Friday in Asia and Europe and gyrated wildly in the United States, extending a stampede of selling that began on Wall Street a day earlier and deepening a global financial crisis that has defied all efforts to stop it.

On Wall Street, stocks prices swung sharply. The Dow Jones industrials fell nearly 700 points soon after trading began.

Asian markets followed Wall Street's cue, as key market gauges dropped 9.6 percent in Japan, 8 percent in India and 7.2 percent in Hong Kong. European stocks slumped by midday with key market barometers losing 7.3 percent in London, 7.7 percent in Germany and 7.5 percent in Paris.

A stream of selling forced exchanges in Austria, Russia and Indonesia to suspend trading, and the rout in Australian markets caused traders to call it "Black Friday."

[gramto8]

That''''s total BS.
If the DOW was at 7500 I could see that statement making some sense....but it''''s not.
There''''s major support on the Dow at 7500.
The big boys are just using the media to get the average person to sell all their stocks and take a loss so they can buy them all back super cheap.
Think about it.
Posted by snarkysnark at 02:41 AM : Oct 10, 2008

The way things are going, I guess we will find out real soon whether you are correct or not.

[smurfcrusher]

Hey, let''s adopt the Republican''s suggestion, and put Social Security funds into the stock market!

You''ll be RICH!!!!


HAHAHAHAHAHAHA!!!!!

[toby2958]

Ahhh Bush''s neocon agenda has worked so well.

Endless war.
Economic destruction.

Thanks Bush!

Time for a change.

[shanev137]

Global war, WW3, Financial destruction of all nations, One world government, Anti-Christ....when can we expect the locusts to arrive?

[samthetvcat]

---"Indonesian stock trading was frozen indefinitely Friday to "avoid deeper panic," the bourse president said."---

This sounds extreme, but is there any reason we can''t all do the same thing?

These numbers are just UNbelievable! :(

I feel like maybe the world economic leaders need time to catch up, or people need time to cool off or something . . .

[oneworldusa]

As far as I''m concerned the stock market can keep on crashing for a while. I got out of stocks and mutual funds years ago because essentially they were flat. Even if fixed interest doesn''t ''keep up with inflation'' as they say, at least it doesn''t completely go backwards, and your money is insured. I''ll take slow and steady any day over this chaos.

[oneworldusa]

Posted by SamTheTVCat at 03:57 AM : Oct 10, 2008

Yes, we have a stop-loss that was implemented after the ''crash'' of 1987. If the market loses a certain percentage over a certain period of time, it can shut down to give investors a cooling off period. The idea is to encourage people to make investment decisions practically and not emotionally.

[lewiston14]

To Sam and One: Might as well keep it open and let it fall until such a point that it reaches a bottom. Even if the NYSE was closed today before opening it would just drop more monday. I was thinking last night it might go up 175 to 200 today but after reading the other worlds markets we are in for another free fall today. It has to stop at some point of they will wipe themselfs off the map along with everything else.

[sumarongi1]

This is what follows from having a financial and political that is bereft of any social or moral conscience. Here in America they should all be put on trial for treason. Al Qaeda was really the least of our threats. We have created a monster by giving the banks and Wall Street control of our government. They have exported our jobs, ruined our educational system and sold our country to the highest bidders.
They should be sent to prison and put to hard labor so that for once we would get an "honest" days work out of them

[sumarongi1]

This is what follows from having a financial and political leadership that is bereft of any social or moral conscience. Here in America they should all be put on trial for treason. Al Qaeda was really the least of our threats. We have created a monster by giving the banks and Wall Street control of our government. They have exported our jobs, ruined our educational system and sold our country to the highest bidders. We have an overabundance of middle men who are akin to bloodsucking leeches. They produce nothing, yet they take a large cut of our profits by raking a little more of the funds for every friend or associate they have in the network.
Example: FEMA got Congress to approve $140,000,000.00 for roof repairs in an area near New Orleans after Katrina. After passing through the hands of multiple companies on the way to it''s final destination it was finally awarded to a Mississippi company and amounted to a little over $85,000,000 in actual aid for the people who needed it. $55,000,000 had been used to pay consulting and handling fees for companies who did nothing but pass the money on to someone else.

These people and the market manipulators are moral slime and should be eradicated from our financial and politcal environs.

They should be sent to prison and put to hard labor so that for once we would get an "honest" days work out of them

[sumarongi1]

snarkysnark

Try telling that to the poor guy working his butt off for a living and can''t make basic life essential payments, like for power, gas, food, health care, etc., etc., etc. Tell him this while he''s holding you up at your ATM because he can''t afford to feed his kid or get to work at his underpaying job.

[sumarongi1]

snarkysnark

Why don''t you go and recite that bs at the funerals of the families killed by despondent relatives because they see their livelihoods and dreams shattered and have a choice of ending it or living in a park or their car with a family of five.

WAKE UP AND SMELL THE ODOR OF DECAY NOW DEBUTING IN OUR COUNTRY.

[sumarongi1]

snarkysnark

Obviously you aren''t aware that for those with low and middle incomes it literally is the end of "their" world. Bend over grasp both earlobes in your fingers and tug your head out of your butt. You may have to tug violently since you appear to have been suffering from this condition for some time.

[smirk5]

Let the stock market take another huge dive this morning. I''m not worried. John McCain told me the fundamentals of the economy are strong. And, I''d hate to be a whiner anyway.

[zaqxsw22]

John McCain has shown through his past actions that he has no concern for the wellbeing of middle-class Americans. When taking that into consideration, just how do you think he will handle the current financial disaster our economically battered nation is in today? For an answer to that question, one must look to the past, specifically McCain%u2019s disgraceful involvement in the Keating Five savings-and-loan scandal that decimated our economy, not to mention millions of hard working American%u2019s life savings, in the late 1980%u2019s.

Millions of hard working Americans had their life savings wiped out when one savings-and-loan after another went down because of the criminality of repugnant swindlers such as Charles Keating. Keating is a convicted felon who greedily defrauded millions out of their life savings, while at the same time he donated more money to McCain%u2019s campaign than any other contributor in the nation. And what did McCain do when he learned of Keating%u2019s arrest? He illegally tried to use his influence to keep his friend and largest campaign contributor out of jail.

McCain%u2019s involvement as the key figure in the Keating Five scandal is a window into his past, present, and future disregard for middle-class Americans. I urge all decent Americans who are sick and tired of being treated like second class citizens by the reprehensible corporate elite on Wall Street and their enablers such as John McCain, to take a look at KeatingEconomics.com

[excoachken]

Looks like the whole world is following Ronald Reagan''s "trickle down." Finally, someone (Reagan) will help the Republicans forget Herbert Hoover. Deregulations final disaster!!!!!!!!!!!

[gmcnally2]

It is odd that the banks are not lending to each other. This entire ''catastrophe'' is artificial. Perhaps now is the time the powers that be intend to force the ''New World Order'' on us and go to a one world currency? Google ''Money Masters'' and watch the video for an enlightening look at the financial industry.

[thebigdiffer]

"The serious problems we face today won''t be solved by the same minds that created them." - Albert Einstein. Einstein quote explains perfectly why onthis election I will NOT vote for the Republican candidate Sen. McCain. Palin and McCain can keep throwing garbage (shame on them, this is not the Republican party of Ronal Reagan anymore) but on Nov. 4 I will vote for the best and only solution: Obama-Biden.

[ybotheratall]

Ok, bailout didn''t work. NOW can we have our billions back? Oh nevermind, those spa treatment do tend to get pricey. Turn the criminals over to the people; we''ll know what to do with them! It''s quite obvious the government isn''t going to hold them accountable.

There is a special place in h.e.l.l for this type of scum.

[antoniof123]

It is odd that the banks are not lending to each other. This entire ''''catastrophe'''' is artificial. Perhaps now is the time the powers that be intend to force the ''''New World Order'''' on us and go to a one world currency? Google ''''Money Masters'''' and watch the video for an enlightening look at the financial industry.
Posted by gmcnally2 at 07:57 AM : Oct 10, 2008

No it is not odd if a run starts the solid banks want to stay in business. Those are the fiscal responsible banks you know that ones that did the right job. The fiscal conservative banks are the ones in trouble. They said let the market free float and let us do as we please. Well like I always said there are just if not more conservatives that can''t handle finances as there are liberals. Of course the greatest finance person is a liberal you Buffett.

[sumarongi1]

YBotherAtAll

I prefer not to wait for the divine courts decision.
Put the bustards in jail now and not the Federal Country Club. Put them to work in prison industries, or better yet put them on their very own chain gang and let them begin cleaning up America one roadside at a time.

[sumarongi1]

GrabAndGo

The only problem is that when the rich are resorting to hamburger, those with in fixed,low or middle incomes are already eating dog and cat food.

[daffy64]

Heck of a job, Bushie!

[gop_will_win]

all right you Neocons! Ready to sing your song?
-I''ll say we are!
-Yeah!
-Let''s sing it now!
Okay, Rumsfeld?
-Okay!
Okay, Ashcroft?
-Okay!
Okay, Cheney? Cheney? CHENEY!
-OKAY!!!)

Bushmas, Bushmas time is near
Time for war and time for fear
We''ve been good, but we can''t last
Hurry Bushmas, hurry fast
Want a plane and a half-track
Me, I want no bid contract
We can hardly stand the wait
Please Bushmas, don''t be late.

(Okay fellas get ready.
That was very good, Rumsfeld.
-Naturally.
Very good Ashcroft.
-Ahhh.
Ah, Cheney, you were a little flat, watch it.
Ah, Cheney. Cheney. CHENEY!
-OKAY.)

Want a plane and a half track
I still want no bid contract
We can hardly stand the wait
Please Bushmas, don''t be late.
We can hardly stand the wait
Please Bushmas, don''t be late.

[thomopolous2]

Time for some Jim Jones Koolaid or catch a comet with your Black Nike''s. Don''t forget the Mayan calender ends 2012. Good luck Smucks.

[antoniof123]

The only problem is that when the rich are resorting to hamburger, those with in fixed,low or middle incomes are already eating dog and cat food.

Posted by Sumarongi1 at 08:28 AM : Oct 10, 2008

I know how to hunt squirles in the park so I''ll have better meat than them.

[sumarongi1]

Daffy64
Let''s not be stingy. There is plenty of blame to spread around in Congress and in our banking system.
What business school teaches that you can run your business on the margin and borrow money monthly to make up deficits caused by excessive profit spending prior to reinvesting in your companies. The banks love folks like that. Anyone got the figures on how much banks made last year on short term, high interest loans to cover company overheads. It''s got to be in the billions.

[gop_will_win]

MERRY BUSHMAS CHARLIE BROWN!

Hark! the herald angels sing,
Glory to George Bush the King!
War on earth, and mercy none,
Bush has evildoers on the run.
Joyful, all ye nations, rise,
Join the triumph of the skies;
With th'' angelic host proclaim,
"Bush is born in Crawfordhem."
Hark! the herald angels sing,
Glory to George Bush King!

Bush, by highest heav''n adored:
Bush, the everlasting Lord;
Late in time behold him come,
Offspring of the favored one.
Veil''d in flesh, the Godhead see;
Hail, th''incarnate Deity:
Pleased, as man, with men to dwell,
George, our Emmanuel!
Hark! the herald angels sing,
"Glory to the newborn King!

[sumarongi1]

jamesm12341

Well it''s kind of obvious that our current crop of "financial experts" were just a teeny bit off the mark.

I''m from the government or the bank and I''m here to help! Who do you think runs our government? You? LOL
The banking and insurance industries do.

[gop_will_win]

You know some of you libs would go around saying the stock market has lost half its value but I am a conservative and would say the stock market still has half its value. Thats because I am a glass half full type of person.

[davidbthelen]

I believe in most instances, there are 2 Newton%u2019s laws of physics related to emotions. They are for every action, there is like reaction. Then there is the momentum effect.
Emotions can be between individuals, nations or groups of people. You may have hate, good will or panic emotions. We now have worldwide panic when it comes to the worldwide stock markets. This has to do with the momentum effect of emotions.
What may be causing this negative emotion?
I would say it might be our negative presidential campaigns.
It seems our stock markets took a real negative turn when our presidential campaigns also took a real negative turn. This might have to do with 2 of Newton%u2019s laws when it relates to emotions.
I believe when the presidential campaigns stick to the issues and not mudsling, our stock markets will stabilize.

[sumarongi1]

The truly rich are sitting pretty right now. They have enough money to weather the storm and are having a great time buying whatever they desire for a song from those becoming desperate enough to sell. Laughing all the while as they traipse on down to the bank.

[jsl45]

George Bush, the Herbert Hoover of the 21st century....what a disaster!!!

[gop_will_win]

Uhoh! Rickwars GM investment yesterday looks like its going to cost him. He will be so disappointed he didnt get in at the bottom afterall. Poor Rickwar!

[jennings501]

Looks like the financial casino is calling in the chips.

[liberalme]

Everything starts at the top and the "top" in America has been outright raping this country since 911.

How and why these people aren''t in jail is our fault--but with the market falling like it has, we are finally letting them know we no longer trust them.

How can we trust someone who says he can "fix" the economy just give him 700 billion and his decisions are "non-reviewable and may not be reviewed by any court or administrative agency"?
He''s telling us flat out, right from the onset--he can''t be trusted.
The "trickle down" effect from the Bush administration has done a lot of damage, not only to our country, but globally.

[gop_will_win]

You''''re wasting your time.

Little Jimmy only likes to complain about people discussing important issues, in discussion forums.

He''''s not intelligent enough to discuss the topics at hand, so he logs on to post complaints about people posting their opinions.

So trying to get him to discuss the topic of conversation is pointless - he''''s just not smart enough to understand.


--------------------------------------------------------------------------------

Posted by hungry1968-2
======================
How can someone who has nothing better to do waste their time?

[gop_will_win]

Im voting for McCain because he says our economy is sound. I like people with a possible outlook in hopeless situations.

[liberalme]

not the point i was trying to make



Posted by jamesm12341 at 08:47 AM : Oct 10, 2008

That''s the problem jimmy-boy--you have never made a point, you have never stated anything remotely intelligent or factual on any post.

[thomopolous2]

God says print your own worthless paper while you can still afford the ink, just like the government is doing.

[sumarongi1]

jennings501

The global market was approaching a meltdown point over energy anyway. The movers and shakers just hit the reset button so they can get a fresh run going.
They could care less how many people and families are ruined or destroyed along the way. It doesn''t effect them in their "spas" and resorts or on their yachts and planes. We need to set an example of them along the lines of the French and Marie Antionette. We need to shove so much cake down their gullets that they die of gastromonic overload.

[liberalme]

is iraq an armed country ? yes or no?


Posted by jamesm12341

That''s a question---state a fact and share your resource.

[twig221]

People create runs on a bank, then the bank fails.
Just take a step back and breath. Whatever you sell now at a loss will never be made up. The calm will make a killing when it rebounds, which it will do. Panic helps no one.

[thomopolous2]

How about we turn the IRS into a lending institution to the people instead of a collection company abusing the poor and middleclass.

[walt1944-2009]

THE GREAT GLOBAL DEPRESSION HAS ARRIVED!!!!!!

No longer will the Great Emperor Bush II have to worry about what his legacy will be! It has already been determined WORLD-WIDE, that his legacy will be one of the being the ABSOLUTE WORST Emperor in history, not only of the USSA, but of the entire world, surpassing that of Adolph Hitler and Joseph Stalin!

Hitler destroyed Europe!
Stalin destroyed Russia!
Imperialistic Japan destroyed Asia!
But the Great Emperor Bush II has destroyed the ENTIRE WORLD!!!

The anti-Christ has been in our midst all along, supported by wackos on the religious right, neocon Fascist Nazis looking for a return of a "4th Reich", and Corporate America whose only agenda is GGGRRRREEEEEEDDDD!!!!

And look what all these extremists and GREEDY "financial" airheads have given us!!!

SIG HEIL, LET''S GIVE MORE MONEY TO FINANCIAL AMERICA!!!, BUSH!!!
sig heil, WHERE ARE ALL MY FRIENDS???, McBush!!!
sig heil, MY "FIRST DUDE" DID IT!!!, Palin!!!

[oscarez]

The Economy World House built with credit paper cannot stand in a strong wind.

[strangeworld]

The republicans (including John McCain) pushed the deregulation of the banking industry so that they and their wealthy campaign contributors could rake in more money. The regulations were put there during the depression because the republicans did bascially the same thing in the 1920''s - they caused a financial meltdown by being too greedy. Who made money in the last 8 years?...the average wage when adjusted for inflation went down. The only people that continued to stock away cash were the wealthy...they did it by buying off republican politicians who changed the policies to favor the wealthy. No wonder the GOP is so out of touch with the average american.

[sumarongi1]

howzilla

Come on, life in the country club. Look what they did to Martha just for listening to her financial advisors advice. I want them on a chain gang cleaning up America a block at a time. We just might get an honest days work out of them for the first time in their lives. Heck, they might just have to develop blisters and callouses. Work and blisters and callouses, OH MY!

[thomopolous2]

Do your part and help save the environment! Recycle all that worthless paper!

[strangeworld]

On the bright side, the Baghdad stockmarket is doing great because we''ve sent so much of our tax money over there to rebuild their country. So what if grandmas 401K tanked...at least Halliburton is making lots of money in Iraq.