...and thus banks won't lend to each other...the credit flow has dried up.
If all is as governments would have us believe, then fair enough...we might
have a chance of solving it.

BUT...if the real reason for this credit freeze, is that banks now recognise
that we are all indebted up to our eyeballs.....with very real prospects, in
the current shrinking economy, of these debts being repaid....or at least an
ever increasing liklehood of defaults...then surely a credit freeze would be
a natural consequence of this?

Not saying that banks would 'conciously' recognise this....but it seems to
me that the LIBOR rate is the one final 'check' that we have in place to
stop the whole thing going tits-up!
Kind of like the ultimate bank manager...who puts his hand up and says "stop
lending guys....it's all going horrible wrong".

If so, then isn't a 'credit freeze' exactly what we in fact need...put the
brakes on things...allow the levels of personal and national debt to fall
back into manageable amounts?

Wouldn't this make sense?

If so, then governments pumping money nto banks isn't going to solve the
problem is it?
And at best, there will be no effects on a market that wants and needs to
readjust at a much lower level.
But at worst....if it does get the banks lending again.....if our spiraling
credit and debt problems are allowed to ....well, to continue to spiral.
Then it might only be for a very very short period of time.....before it all
comes grinding to a halt.
And then what!

Shouldn't we be 'listening' to the LIBOR rate.....and doing as it tells
us....rather than trying to manipulate it...to force the rate lower.