Interbank interest rates?

If banks are collectively lending and borrowing from each other why is that banks collectively seem to be complaining about a lack of liquidity. One would expect the better capitalised banks to be upgrading their profit forecasts and prefer the credit crunch to continue. This does not appear to be the case. There must be another angle to the lending side of this equation.

PS. I heard on Bloomberg that private equity firms want to raise capital to lend to the banks. At higher rates obviously. Do pension funds have a role in this. They have access to huge amounts of capital looking for a return?

Perhaps it is more of a case that some banks are being infected with leprosy. Maybe the liquidity issue is bank specific. In other words, there are loans at good rates for some banks but not for others. Much in the way that you get sub prime mortgages, you will get sub prime banks.

Pension funds and insurance companies like really long debt. There are always complaints about liquidity pushing prices up at the long end of the yield curve.

I shouldn't think that pension funds or life insurance companies would have a great deal of interest in 3 month swaptions.

It is a gamblers ruin theory, which is backed up by pyramid selling.