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Hoarding by banks stokes fear
over crisis
Chris Giles and James Politi
Financial
Times
Wednesday, March 26, 2008
Central banks' efforts to ease strains in the money markets are
failing to stop financial institutions from hoarding cash, stoking
fears that the recent respite in equity markets may not signal
the end of the credit crisis.
Banks' borrowing costs - a sign of their willingness to lend
to each other - in the US, eurozone and the UK rose again even
after the Federal Reserve's unprecedented activity in lending
to retail and investment banks against weaker than usual collateral
and similar action in Europe.
The continued friction in the money markets came even as stock
markets were showing new signs of optimism in spite of fresh data
from the US showing consumers at their most pessimistic for 35
years and house prices falling at the fastest rate on record.
(Article continues below)
In London, where the Bank of England has faced criticism for
not being as proactive as other central banks, the three-month
Libor rate was set yesterday at 5.995 per cent, its highest of
the year.
This is nearly 0.9 percentage points above the level investors
demand for risk-free money, a spread nearly as high as that which
led to central bank interventions in September and December.
The European Central Bank allocated €216bn (£168bn)
in seven-day funds in its regular weekly operation yesterday -
some €50bn higher than the amount it estimated would have
normally been needed - at an average rate of 4.28 per cent, which
was the highest since late September.
The Fed's latest lending to banks under its Term Auction Facility
was also in heavy demand, receiving bids for $88.9bn compared
with the $50bn on offer, an excess of demand almost as great as
the previous auction two weeks ago, before the collapse of Bear
Stearns.
Full
article here.
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INFOWARS:
BECAUSE THERE'S A WAR ON FOR YOUR MIND
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