Aava on Nostr: Enlightening interview with Caitlin Long #[0] : ...
Enlightening interview with Caitlin Long caitlinlong (npub1uyz…8632) :
https://podcasts.apple.com/us/podcast/gold-goats-n-guns-podcast/id1435023391?i=1000607983738
SOFR is a *secured* overnight rate, LIBOR was unsecured.
SOFR is tied to a collateral, typically to a government guaranteed short term instrument such as TBill.
Unsecured LIBOR was tied to the default risk of the banks.
In ‘08, there was just one US bank that was the part of the LIBOR panel. In effect, in 2008 we saw the onshoring of the over-leveraged European banks credit risk to the US economy—and the mechanism was through LIBOR over which the FED had effectively no control.
https://podcasts.apple.com/us/podcast/gold-goats-n-guns-podcast/id1435023391?i=1000607983738
SOFR is a *secured* overnight rate, LIBOR was unsecured.
SOFR is tied to a collateral, typically to a government guaranteed short term instrument such as TBill.
Unsecured LIBOR was tied to the default risk of the banks.
In ‘08, there was just one US bank that was the part of the LIBOR panel. In effect, in 2008 we saw the onshoring of the over-leveraged European banks credit risk to the US economy—and the mechanism was through LIBOR over which the FED had effectively no control.