Worried about a credit crunch? The British Bankers' Association says don't be.

One of the things about Seeking Alpha is that folks around the world get access to blogs they might otherwise miss. After a few years as a Contributor, they’ve grabbed 280 posts in total from our corporate blog site. Including yesterday’s LIBOR post.

It caught the attention of The British Bankers Association (assuming of course that it’s not a fake poster, ala Twitter’s “Pippa Middleton”). Here’s their comment:

British Bankers’ Association here. Interesting post. We have to remember that whilst all markets are interconnected, what is happening in the equity, CDS and bond markets does not immediately impact upon the cost of borrowing for large international banks in the wholesale money market (which is what LIBOR captures).

What we are seeing in the markets is not a sharp credit crunch like 2008. This looks more like a huge de-risking exercise (equities dropping across the board, gold hitting yet further highs). To coin a phrase with which we are all familiar, this time it’s different.

You’ve got to commend the BBA’s communications department for their proactive efforts. Seeking Alpha is an important site in the world of online financial commentary, and this shows why. The BBA even has a corporate blog — so much for stodgy London!

The BBA’s comforting message can stand on its own, but one can’t but remark that a “credit crunch” didn’t kick off the mayhem in 2008. The credit crunch ultimately came to pass when banks and other financial institutions found themselves holding assets that weren’t as valuable as first believed (those of the sub prime kind); which drove the need to recapitalize the equity boxes of Citibank, BofA, Lloyds, RBoS, etc., etc. And that, among other reasons, drove the pullback in lending capacity within the system.

MRM