The Wall Street Journal reports on another sign of how bad the credit crunch has gotten: banks fudging on what they are reporting as their short-term cost of interbank borrowing, out of fear of revealing how stressed they are. So the Libor becomes less useful as a guide. That in turn means that the so-called TED spread (the difference between three month Libora and ninety-day Treasuries), which is one of the preferred measures of stress in the interbank markets, is understated by as much as 30 basis points.
Next they will be telling us that the inflation figures are not accurate.