In an ominous echo of 2008, European bank stocks on Wednesday fell 10 percent or more — and banks in Europe are beginning to hoard cash, crimping the interbank loans that keep the global financial system operating smoothly. While borrowing costs for banks in the United States and Britain have crept up only slightly recently, borrowing costs for Continental banks that lend to one another have doubled since the end of July.The actual Euribor interbank loan rate data are here:
More optimistic market watchers point out that these rates are still well below those at the height of the financial crisis. But they nonetheless are the highest since the spring of 2009.
Because European banks trade billions of dollars daily with their American counterparts, fears of contagion have spread.
As you can see - rates are not back to the heady levels of 2004-2005, never mind 2008-2009. And they've dropped in the last few days. I just am unable to look at this data and summon any fear of an imminent problem*. So is this just a case that the NYT reporter is not numerate enough to actually look at the graph before writing about the subject? Or am I missing something?
* Not to say there couldn't be a major problem down the road - the ECB has calmed the Italian/Spanish bond markets for the moment, but it's critical that that calm holds.