The Return of the Ice Age: Temporary Thaw in Inter-Bank Lending is Over → Washingtons Blog
The Return of the Ice Age: Temporary Thaw in Inter-Bank Lending is Over - Washingtons Blog

Friday, October 24, 2008

The Return of the Ice Age: Temporary Thaw in Inter-Bank Lending is Over

The one, much-trumpeted bright spot in the world economy was that inter-bank lending rates started to fall slightly.

Of course, banks lending to each other is not the same thing as banks lending to real people and the real businesses. They're not doing that, and won't any time soon. And the inter-bank lending rates may have been manipulated, so its hard to know whether the situation really eased or not.

However, manipulated or not, even the inter-bank lending rate is now rising again.

Any way you look at it, the much-hyped "thaw" in bank lending is over, and everything is freezing back up. Despite governments spending trillions upon trillions of dollars, we remain in an ice age of frozen lending.

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