And on the subject of out-of-control interest…….

…..see this story on Bloomberg….

Money Market `Plagued’ by Libor That Fed Can’t Reduce

Gavin Finch, Bloomberg, 8th August 2008.

— A year after central banks started to pump trillions of dollars into the financial system to end a seizure in credit markets caused by subprime mortgages, cash is about as tight as it’s ever been.

Efforts by the Federal Reserve, ECB and Swiss National Bank to shore up the world’s biggest banks and promote lending have had limited success. The London interbank offered rate, the basis for at least $150 trillion of financial products, is within 0.06 percent of the highest since November 1999 compared with the Fed’s benchmark interest rate. The largest financial companies have lost almost $500 billion from subprime-linked securities.

`The key issue that has plagued money markets is the continued high level of borrowing rates,” said George Goncalves, chief Treasury and agency debt strategist in New York at Morgan Stanley, the second-biggest U.S. securities firm. “This time last year no one could have imagined the levels they are at now. We’ve seen a fundamental re-assessment of risk in this new world of tighter credit.”

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