Yesterday, 3-month interbank spreads hit 134 basis points. Prior to the credit crunch, that number was usually around 12 basis points. The spread is at an all time high.
The credit crunch has never been more acute than it is tonight. The sterling interbank market appears to have collapsed. Banks are hoarding cash, and they are unwilling to lend to each other without collateral.
Those huge waves of central bank credit, the special liquidity scheme, and the rate cuts; none of it has worked. It has all failed. The financial system is close to meltdown.
How did things get so bad?