"Banks aren't lending to each other not because they are afraid of contagion, but because the overnight loan business is a bad idea. Better to buy treasuries, so long as they get any interest at all, use these as reserves, and lend them to people who will pay a positive real rate of interest.
And that is what banks are doing, buying up short term treasuries, and continuing to lend. Mortgage rates, and even credit card rates, are not sky rocketing, nor are home equity loans, which if this were fear of bad home values, should be up in the stratosphere..."
--- Stirling Newberry
See: http://agonist.org/stirling_newberry/20080928/hell_no_we_wont_blow_it_all_on_paulsons_panic
-- Claudia Egelhoff Minneapolis, MN 55405