“Investors are taking losses of up to 90% in the $1.2 trillion market for collateralized debt obligations (CDOs) tied to corporate credit,” reports Bloomberg. Much of the losses have been triggered by the failure of Lehman Brothers and Icelandic bank.

“Bank stocks are getting extremely cheap,” my friend Andrew told me over breakfast yesterday.

All was quiet in the Far East and Europe in gold and silver trading yesterday morning. Then the boys in New York showed up for work…and away went the prices to the upside.

By how much is the Libor lending rate understated? Maybe as much as 0.3%, which doesn’t sound like that much, but when you are talking about trillions and trillions of pounds and euros of debt, it adds up to a lot of money!

The credibility of Libor is in doubt so interbank lending rates could be higher than reported. If estate agents were woodworm, many a British high street would complain of infestation.

In my recent article, “The FED’S End Run,” I wrote this: Beginning late Friday evening, March 29, we have been in the midst of an end run by the Federal Reserve System around Congress. The FED is about to be given authority to regulate the nation’s largest non-commercial financial institutions, including stocks and commodities.

It may be that the credit crunch has not arrived yet, according to Financial Times blog FT Alphaville.

Alphaville has dug up a chart showing average daily volume of cash and securities transfers across Fedwire, the real-time gross settlement system operated by the Fed for transfers between commercial banks and other major financial institutions in the US.