2007-12-13blogspot.com

'To a banker the cost of funds is a fixed cost. Therefore, the only way to increase your RAM is to minimize losses or increase revenues. So you bump your interest rates (revenue to you) on your loans to other banks to compensate for higher than expected losses. The central banks are trying to increase liquidity in the credit markets by lowering the cost of funds, but this does not effect their fear losses, so the market remain stuck.'



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