Thanks to the banking crisis, the spread between LIBOR and Treasuries has widened to 1.5% (it’s normally closer to 0.5%). As Brad de Long puts it, “the odds that any given major bank borrowing Eurodollars will collapse tomorrow have gone from something that you expect to happen roughly once every 3000 years to once every 500 years.”
December 26, 2007 at 10:18 am |
Greenspan’s Conundrum involved persistantly low long term rates whereas Bernanke’s Conundrum is the spread between LIBOR and Treasuries.
November 12, 2008 at 4:20 pm |
Please recommend a book that explains how a savings bank
can make money from opening the door forward.
Rod Funk