The central banks are the new "funding tills". LIBOR means nothing now, because the quotes given by the panel banks are just sticking a finger in the air: They have no demand for interbank loans, no need to make competitive offers.
In order to minimize damage to the real economy (through LIBOR-indexed variable rate loans), the regulators in all OECD countries should abolish libor and decree that by new law, all outstanding contracts mentioning a LIBOR tenor shall now use the target rate of the central bank plus a small tenor-related spread.
I'm appalled that still no-one has thought about fixing this disaster... Pierre
And I tend to agree - when banks have interna lfunding costs that are LIBOR+200 points, somethign is very wrong with LIBOR - ie it's too LOW, not too high. In the long run, we're all dead. John Maynard Keynes
