The fact that the Dow is down another 300 points is not half as important as the reading of the LIBOR rate.
Interest rates on three-month dollar loans rose to the highest since January, short-term corporate borrowing fell by the most ever and high-yield loans tumbled, exacerbating the credit freeze that’s paralyzing business around the world.
The London interbank offered rate that banks charge each other for loans rose for a fourth day to 4.21 percent, boosting the Libor-OIS spread, a gauge of cash scarcity among banks, to a record, while a drop in financial issuance caused the U.S. commercial paper market to tumble 5.6 percent to a three-year low, according to the Federal Reserve.
There is an epic article on this more unseen crisis in the Times today. It’s long, but well worth reading.