Early Edition:Libor's Rise In Perspective

Libor,the London Interbank Offered Rate,the interest rate banks charge each other for loans,has been creeping up.This signifies a tightening of credit.On the other hand,it's nowhere near where it was at the height of the financial crisis.It was as high as 4.0 then;by last Friday,it was only at 0.54.Still,a decline in the rate would be more reassuring than an increase.Libor was at 0.25 three months ago.Now it is at its highest since July of 2009.
What's behind the rise in Libor is the European banks depositing in the European Central Bank rather than in one another-for safety.Money markets have been avoiding European banks as well.This decline of confidence in light of the Euro Zone debt problem is pushing Libor back up.The cost of money is going up as investors lessen risk.An unchecked rise could eventually result in corporate cutbacks again,bringing on another recession.

Libor Is Down

The London Interbank Offered Rate,or Libor,has been declining recently.From well over 4%,the 3-month rate has fallen to 3.83% as of this morning.It is the rate banks charge each other for loans,and its decline indicates a thawing of the credit markets.Governmental action around the world is beginning to have a positive effect on the banking system.