Libor rises on debt concerns

Concern about the exposure of European banks to the debts of weaker countries in the eurozone is stoking growing risk aversion in money markets and increasing the amounts banks charge to lend to each other.

The London inter-bank offer rate, or Libor, has risen in recent weeks to its highest level since last August, especially for dollars, which is significant because the rate has served as a leading gauge of stress during the financial crisis.

The rise in Libor – which affects consumers and companies because it is the reference rate for many floating rate loans and mortgages – has come even though central banks are in no rush to tighten monetary policy.

Analysts say Libor’s recent ascent reflects fears that the €750bn ($928bn) emergency funding facility agreed by the European Union and International Monetary Fund last week will fail to fully resolve the crisis in the eurozone…link.

Look out for some other “observations” on Bank of England forecasts and questions to ask yourself before you swallow what we are being told about the economy

Bottom line: Hold on to your hats…things could start to come apart over the next 3 – 6 weeks!!!

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