Daily Archives: 6 September 2007

Stressing Credit Stress

How bad will the credit crunch be?  Will it last into 2008?  Will it be worse than LTCM?  Is this the end of structured finance as we know it?  My quick answers: Yes, maybe, and no.  Structured finance is too useful of a concept to regulate too heavily.  Ratings are also difficult to do without […]

Sticking with the Short End, or, The Short End of the Stick

Banks lend to each other short-term in several ways.  For banks in the Federal Reserve System, they lend through Fed Funds, of which the Federal reserve provides more or less liquidity as it sees fit.  Bigger banks can lend/borrow in the overseas euro-markets at LIBOR [the London Interbank Offered Rate].  This market is unregulated — […]