once again, page-11

Hey BH!,

I've just read in today's Fin Review that it ain't in the interest of the banks to let the LIBOR slip too much. Banks can now access cheap funding from central banks ("as long as they can pony up half-decent assets to use as collateral").

Why use other sources of funding when you can just use the central bank?

Also banks have given a lot of loans with interest rates based on LIBOR and a fixed rate on top of that. So the higher the LIBOR the more interest earned.

Higher LIBOR means greate margins.

Its things like this that make me wonder about deflation. Every action that the governments take have a number of side effects.