How LIBOR works...

Boss of Bank A is looking at its balance sheet and saying:

"Bloody Hell! If ours is that bad his (Bank B) must be even worse. So sod that for a game of soldiers, I am not lending to him at any price, well unless I can get a silly rate. Fred? Jack up the LIBOR rate by 500 bps."

Fred: "'OK Boss."

Boss: "Oh and while you're at it, put a target on all branches to call in 50% of all possible overdrafts."

(c) Lola. (Much better BTW, thanks for that).