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Worse : the distressed nations (Greece, Portugal, Ireland) will be further stressed by rate increases. To say nothing of distressed mortgage holders...

The interest rate rise stresses mostly the banks.

Interbank lending (Euribor) on which lending to states and individuals is based, and to which mortgages are pegged in some countries, has been rising for a number of months, so the current rise is unlikely to have noticeable effects on Euribor.

I should note that Euribor, like LIBOR, is based on a survey, not on actual interbank transactions, and when the market is very thin as is the case now the Euribor rate is basically fictitious. The banks set it at what they feel like. And that's the benchmark for lending to the real economy. Oh joy.

Economics is politics by other means

by Carrie (migeru at eurotrib dot com) on Thu Apr 7th, 2011 at 04:46:35 PM EST

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