LIBOR Rate Hardly Moved.

Despite multi trillion liquidity injection to the entire world financial systems the London LIBOR 1 month and 3 months interest rates hardly moved! Banks free and easy lending it's coming to the end sad to say. From now onwards ordinary folks like us getting bank loans will be proved harder then going to planet Mars because banks doesn't even want to lend to one another despite all this mambo jumbo trillion dollars rescue package, maybe the Maltian have some extra dollars to save or spare the earth from this credit crunch and helps earthling from falling to an economic deathly spiral into abyss.

One month LIBOR is normally some small percentage (say 15-30 basis points) above the Fed Funds Rate. It is now 297 basis points above the Fed Fund Rate.The key issue with LIBOR is the huge number of adjustable rate mortgages that are tied to it. Bernanke went on a slash and burn campaign of cutting interest rates from 5.25 all the way to 1.50 (375 basis points) yet LIBOR only picked up about 100 of them.

The current stock market bull run euphoria hardly proves anything to the bankers because the issues of counter parties risk still had not been totally and honestly encountered. Feds will have to ultimately separate the hays from the wheats. FDR during the world first depression in 1930 close down all American banks for one week so that government regulators can assessed the health of individual banks, savage those can be save and bankrupt those can't be savage. Only after that Feds pump in massive liquidity into the financial systems to jump start the economy.

Further more forcing the bankers to start lending facilities it's almost impossible when bank don't even trust one another.

Bloomberg : Treasury Secretary Henry Paulson persuaded nine major U.S. banks to accept $125 billion in government investment. Getting them to lend it out may prove a tougher sell.The equity stakes the government is purchasing in Citigroup Inc., Morgan Stanley and seven other big institutions come with no guarantee that the investments will spur lending and unfreeze credit markets. Nor do they give the government board seats or any other leverage to demand that that the firms actually use the money to help the economy.``The truth of the matter is, they can't put a gun to their head and say you have to lend this money,'' said Charles Horn, a former official at the Office of the Comptroller of the Currency, part of the Treasury Department, and now a partner at the Mayer Brown law firm in Washington.

Treasury officials acknowledge they can't force banks to get the taxpayer money into the hands of their customers. Instead, officials are betting that the government's investment will create conditions where banks have a greater incentive to earn profits from lending than to hoard money to shore up their balance sheets.``It's in their economic interest,'' said David Nason, the Treasury's assistant secretary for financial institutions, in an interview with Bloomberg Television. ``When you give them a stronger capital position and you also provide a certain amount of government backstop to their funding sources, it's incumbent upon them to go out and continue to lend.

Therefore central bankers will not only need to pump massive amount of liquidity into the market systems they also need to ensure sound lending environment of trust exist before the credit expansion begins. Anything lesser then that will be exercise in futility, markets negative sentiments towards the health of the real economy will simply overwhelmed whatever the central bankers initiatives to jump start the economy. This crisis of confidence in the financial system will take times and years of consistent efforts not a few quarters kind of problems but at least minimum 2 years or more to solve. For banks to starts lending again after the current crisis, at the moment seams impossible to do anything accurately right anyway, Feds will have to concentrate in having the right measures and responsed to bring the American economy to it's feet's again. Sound lending equal sound economy!

Meanwhile gold price it's one of the commodities most stable plus some upward trend compare with others commodities. Gold safe haven characteristics proved the most valuables assets in time of severe economy crisis.

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