LIBOR bid only, no offer; a scramble for cash - really really scary; The Treasury Tarp plan is an irrelevance

RGE - Financial and Corporate System is in Cardiac Arrest: The Risk of the Mother of All Bank Runs

Nouriel Roubini
|
Oct 3, 2008

It is now clear that the US financial system - and now even the
system of financing of the corporate sector - is now in cardiac arrest
and at a risk of a systemic financial meltdown. I don’t use these words
lightly but at this point we have reached the final 12th step of my
February paper on “The Risk of a Systemic Financial Meltdown: 12 Steps to a Financial Disaster” (Step 9 or the collapse of the major broker dealers has already widely occurred).

• LIBOR bid only, no offer.
• Commercial paper market shut down, little trading and no issuance.
• Corporations have no access to long or short term credit markets -- hence they face massive rollover problems.
• Brokers are increasingly not dealing with each other.
• Even the inter-bank market is ceasing up.

We are indeed at the cardiac arrest stage and at risk of the mother of all bank and non-bank runs....