The government's plan to ease the credit crisis is causing borrowing rates to slip to a new all time low. The government has set trillions of dollars worth of programs into action that are aimed at easing funding between financial institutions and encourages lending between them. Lowering interest rates, injecting capital into banks and providing insurance on all non-interest bearing accounts are some of the measures the government has instituted.
Over the past several weeks, lending rates have been going downward. The London Interbank Offered Rate (LIBOR) has declined steadily over the past several weeks. The LIBOR is a daily average of what banks charge other banks to lend money in the United Kingdom. These lower rates are boosting the strangled credit market. More than $350 trillion dollars are tied to LIBOR.
Pierre Ellis, senior economist at Decision Economics has stated that the credit crisis is tentatively solved and money is available to those who need it. He states the next step is to get banks to trust each other after we have a period of sustained stability.
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