I Suspected As Much

I've been telling everyone I know here (and somewhere in the wilds of a Donklephant comment thread) that I got the feeling all the promises of cheap money from the Feds were what was "freezing" the credit market more than anything else. It looks like I'm not alone:

The Fed’s massive and numerous liquidity facilities are making things worse. The problem is more than banks unwilling to lend to each other, they are also unwilling to borrow from each other. Banks can get all the funding they need (and then some) from their central bank so they do not need to seek a loan from another bank. I believe it has gotten so bad that they don’t even bother to make a decent market for inter-bank loans anymore. No reason to, they don’t need them anymore as central banks have replaced them.

The head slapping "Well, no duh!" gets inserted about right here.