As LIBOR spreads widen...

...Still many innings left to play in this game.  I am watching as many measures of credit supply and demand as possible at the moment, and remain skeptical of the "slowing 2nd derivative" (things are getting bad at a slower rate) arguments that fail to see other possibilities.

May 4 (Bloomberg) -- Most U.S. banks expect loan
delinquencies and losses to increase this year, a Federal
Reserve report showed today before this week’s release of stress
tests of the nation’s 19 largest lenders.
More than 70 percent of respondents on net said bad loans
will rise should the economy progress “in line with consensus
forecasts,” the Fed said in a quarterly survey of banks’ senior
loan officers. More firms made it tougher for consumers to get
home and credit-card loans in the past three months than in the
previous survey, while fewer tightened terms for businesses.
The report indicates that signs of stabilization in the
U.S. economy aren’t resulting in an easing in lending terms.
Banks are hoarding a record $1.1 trillion of cash even after the
Treasury and central bank made emergency capital injections and
set up special lending programs to ensure lenders extended
credit to households and businesses.
“The vast majority of domestic and foreign respondents
indicated that they expect deterioration in credit quality for
all types of business and household loans,” today’s Fed report
said.