The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK ( ETF Expert) -- LIBOR (London Inter-Bank Offered Rate) is the interest rate that fellow European banks will charge other banks. Put another way, it is the rate at which a financial institution in the region can borrow money.
In order for banks to operate, they are consistently lending out and/or borrowing. If they cannot exchange with one another, required reserve levels could be deemed "inadequate" or investors could sour on the health of the company. A bank that cannot get access to funds from any source could find itself being taken over by a respective government, perhaps to prevent widespread withdrawals that might cripple the entity.
Why am I bringing up LIBOR trends today when S&P downgraded the sovereign debt of France? For one thing, inspite of the market's gloom-n-doom reaction, the event is not a surprise. The agency gave a 45-day warning on
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