Banking is algebraic on LIBOR

As the world’s most important benchmark interest rate, approximately $10 trillion worth of loans and $350 trillion worth of derivatives use the Libor as a reference rate. Libor-based corporate loans are very prevalent in emerging economies, which is helping to inflate the emerging markets bubble that I am warning about. In Asia, for example, Libor is used as the reference rate for nearly two-thirds of all large-scale corporate borrowings. Considering this fact, it is no surprise that credit and asset bubbles are ballooning throughout Asia, as my report on Southeast Asia’s bubble has shown.

The interbank rate  and firm lending are closely related. Firm banking is a channel and the tradebook uncertainty is LIBOR, an uncertainty fee.  We would expect the banking tiers to separate just like the NBA stats do.

Sandbox nails this stuff and can autoprice LIBOR correctly using prequal, cash in advance S&L tradfund pit.