Peak Oil News and Message Boards

Aug. 9 (Bloomberg) -- The British Bankers Association said the overnight lending rate that banks charge each other to borrow in dollars rose to 5.86 percent today from 5.35 percent. The so-called London interbank offered rate in dollars is the highest since the start of 2001.

The benchmark borrowing rate is rising on concern banks face growing losses on investments linked to U.S. mortgages. The European Central Bank said today it is ``closely monitoring the situation and stands ready to act to assure orderly conditions in the euro money market.'' "Liquidity in the market has completely dried up as investors aren't recycling their money back because of subprime concerns,'' said Saher Bin Jung, a trader on the commercial paper desk at Commerzbank AG. ``Levels have shot up dramatically since yesterday as issuers are trying to entice investors back.''

Bank of America Corp. and UBS AG said their overnight borrowing costs rose 65 basis points to 6.00 percentage points. Royal Bank of Canada said its costs rose to 6.00 percentage points from 5.37 percentage points. Barclays also said it needs to pay 6.00 percentage points to borrow overnight in dollars, up from 5.38 percentage points yesterday. For Bank of America, the increase in overnight borrowing costs was the biggest since the Federal Open Markets Committee raised interest rates at the end of June 2004.

BNP Paribas SA, France's biggest bank, today halted withdrawals from three investment funds because it couldn't ``fairly'' value their holdings on concern about subprime mortgage losses. The ECB in Frankfurt said in its statement today that ``there are tensions in the euro money market notwithstanding the normal supply of aggregate euro liquidity.'' Three-month dollar Libor increased to 5.5 percent from 5.38 percent

Eli wrote:firestarter what are you talking about?


The financial melt down caused by the mortgage melt down has been contained! I watch CNBC so I am well informed.

Nothing to see here move along.

Quote:
"A crucial date could be Aug. 15. That is 45 days before the end of the third quarter, the date when investors in many hedge funds can give notice that they are pulling out their money. If many give notice, it could spark a rash of selling by funds looking to raise cash to cover withdrawals.

Meanwhile, as a torrent of corporate debt hits the market in the weeks ahead, losses could grow for both investment banks and hedge funds, some say.

"The availability of credit has disappeared, and there are $220 billion of [leveraged-buyout] loans" that need to be financed, says J. Kyle Bass, a managing partner at Hayman. "It is going to smoke investment banks. And many more funds will be carried out, feet first."

Eli wrote:Too funny OIlm, so ECB injecting unlimited cash is bullish, how again?

Leon Cooperman: Why I'm a bull

(Fortune Magazine) -- The stunning drop in stock prices dominated the headlines for days in late July -- and not just in the business press. The major market averages in the U.S. fell approximately 5% in a week, the largest weekly decline in five years.

The steady rise in share prices that preceded the plunge contributed to investor complacency; bond buyers were not demanding enough compensation for the risks they assumed. Now fear has replaced complacency, and risk is more appropriately priced.

As a result -- and most important because I do not believe recent credit-market turmoil will derail the economy -- I view this market drop as a long overdue correction rather than the end of the bull market.

My outlook for the next 12 months has not changed. I believe there's limited downside risk in the U.S. stock market from current levels, and returns over the coming year should be in the low double digits.

One key reason is that we are enjoying steady employment growth, averaging 145,000 jobs a month so far this year, which should mitigate the effects of recent debt-market troubles and housing weakness.

In defense of my notion that the equity market is unlikely to fall sharply from current levels, I would note the following: First, bull markets do not die of old age, they die of excesses such as accelerating and above-trend economic growth, rapidly rising inflation, and interest-rate hikes from a hostile Federal Reserve.

Those excesses are simply not with us today, nor do I expect their arrival anytime soon.

Second, the current bull market has experienced no price/earnings ratio expansion -- unlike every other bull market in the past five decades. In effect, this bull market is not characterized by speculation; rather, its expansion has been restrained compared with earnings growth and the trend of inflation and bond interest rates.

Eli wrote:Yeah, this is a melt down but I will not be surprised if we end the day higher.

This is market is only going to go down kicking and screaming.