If you're looking for the WIBC economic round table discussion from 10/6 please go HERE.
"My problem lies in reconciling my gross spending habits with my net income."
-George Bernard Shaw
What in the world is LIBOR?
The current overall economic challenges we're facing are broad. To boil it down to how the housing market is affected, one term we've all been hearing about in the last several weeks is LIBOR.
The LIBOR benchmark is a key rate that reflects how lending institutions loan money. It affects how businesses borrow money. It affects how people borrow money to buy homes, cars and just about anything else that requires capital. Right now the LIBOR numbers are very high meaning borrowing money is tough. It's high in part because so much money has disappeared from the stock market through many factors (corporate defaults, mortgage foreclosures, etc). In essence, lenders are scared. Hey, we're all a bit uncomfortable right now. But there is some light at the end of the tunnel.
One of the reasons that the LIBOR numbers remained so high is that the money agreed to in the economic bailout has not yet been put to use. It's not been used yet to help the current crisis because we passed a bailout bill in 10 days without really having any plan.
Uhhhhh.....Isn't this what we all feared?
The good news from those smarter than I on these things is that many people do have great faith in Henry Paulson and Ben Bernacke to get the right people and plan in place to use the bailout to help ease credit.
To keep this simple, if you look at LIBOR numbers for the next 30 days, they are still very high meaning borrowing money will still be tough. The 90 day numbers are much lower meaning the markets believe over the next three months money will be easier to borrow. IF...and it's a big if that does occur, car, home and business loans will be easier to get and we may see some progress in getting this mess headed in a better direction. LIBOR getting better is essential. Life getting back to normal (whatever that means) is essential. For all of our sake, let's hope we see some steps in the right direction between now and Christmas.
Questions, Comments , Donations? Greg@GregCooper.com or 317.848.GREG (4734)