This may actually help bring LIBOR down as the US banks don’t need USD funds from China while the rest of the world does.
China Halts Interbank Lending With U.S., Morning Post Says
By Joost Akkermans
Sept. 25 (Bloomberg) China’s banking regulator told domestic banks to halt lending to U.S. financial institutions in the interbank market to help prevent possible losses, the South China Morning Post reported, citing people it didn’t identify.
The ban imposed by the China Banking Regulatory Commission is for interbank lending of all currencies to U.S. banks, though not to banks from other countries, the English-language Hong Kong newspaper said today.
The decree came after the regulator obtained data about the risk of local banks to bonds issued by Lehman Brothers Holdings Inc., according to the newspaper. The CBRC wasn’t available for comment yesterday, the Morning Post reported.
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Warren, your calm isn’t helping me. I’m starting to agree with Jim. The problem here is they’ve managed to convince everyone that a crisis is really happening. Perception is reality.
I mean who cares if we know different, after all they have rules in place that say they have to sell treasuries to collect this money before they spend it don’t they? I mean what if no one does want to buy those treasuries? Just because we know there is no default risk in reality, doesn’t mean they can’t just decide to default…
agreed!
“I mean who cares if we know different, after all they have rules in place that say they have to sell treasuries to collect this money before they spend it don’t they?”
Wait a minute! I thought the tsy first spent, and then ‘sterilized’ afterwards by selling tsy secs.
Please clarify.
Winslow, I think Warren agreed that LIBOR will be helped by China’s move…The treasury will spend and then issue securities, just like they did a couple of months ago with the $300bb housing bill.
wins, that wasn’t my statement above. the author was talking about congress, who does have pay/go rules and the like- self imposed constraints- not operational constraints.
and following their own rules is often the source of trouble