The LIBOR scandal

bloomberg.com/news/2012-07-0 … ne-1-.html

nakedcapitalism.com/2012/07/ … -here.html

nakedcapitalism.com/2012/07/ … andal.html

Not looking good for Diamond Bob.

The Feds are taking an interest.

So long, farewell, auf wiedersehn…

And for the Diamond geezer…

It sounds like there will be many many to follow him

Some background posts here: viewtopic.php?f=19&t=7579

https://1.bp.blogspot.com/-MBsWVrudOu4/T-svJdT-BgI/AAAAAAAAAf8/uv9bAzuA9yQ/s1600/1268549692_ebe567bc0e_b.jpg

looks like the BOE are flexing some underworked muscles

ftalphaville.ft.com/blog/2012/07 … rclays-pb/

I’d like Rob Brydon to play him in the telefilm.

Was it not necessary to make some *intervention *in LIBOR rates to mitigate the financial crisis? Back in 2007/8 when LIBOR rates started going sky high due to banks not trusting each other, did this fact not introduce a potentially catastrophic dynamic with regard to the potential of the whole western economic system to go down the tubes?

It seems to me that interventions were necessary across the board in the name of crisis management. It seems to me that in a lot of the conversation about what ought to be done etc (eg. allowing companies to fail), there is this assumption that we ought to treat everything as if there was/is no crisis. ie. Just let the system do what it is designed to do.

But the primary fact in my mind when it comes to current analysis is that the system has failed badly and incontrovertibly. It is still in a state of failure, although it is much improved than it was in 2007/8. Yet, there are all these calls to just let the system work as normal, even though it is in this state?!

No doubt there has been some (or a lot) of corruption tied up with this failure. No one disputes that. But it is important to separate this aspect from the other aspect which consists of necessity in terms of repairing the system so that it can be allowed to work on its own again, without encompassing the high probability of continuing and worsening failure.

Arguably, yes during the peak of the crisis.

The issue, though, is that before then and since then Libor and Euribor have been manipulated for profit.

Yes. I wonder was there some degree of sanction by the authorities, since there was a need there (originally and/or continued), and perhaps they thought they could trust the banks to exercise their judgement on the issue.

And it’s not a victimless crime.

I doubt there was a sanction in 2005/6/7…

I serioulsy doubt this was allowed as some kind of policy. Firstly, the traders would try to get Libor up or down depending on whatever suited them. Secondly, this is massive blow to London’s position. Not just for the derivates market but every credit agreement that is governed by Libor.

Diamond Bob to drop a bomb

So, if he goes down, as he has, he intends on taking others down with him.
This could get real interesting, what did the BoE know and for how long?

bbc.co.uk/news/business-18690102

Thanks for that, Magpie - confirms what I was thinking.

“The FT suggests that a 2008 conversation between Diamond and Paul Tucker, deputy governor of the Bank of England, had mistakenly given mid-level managers at Barclays the impression that the BoE was telling them to reduce their Libor submissions.”

The banks are only a small part of the story (as always). The real story is tacit collusion among all establishment institutions to cover-up the mendacity of their boom-time assumptions.

(Let’s not forget either that the individual acts of citizens voting gave tacit approval to these institutional charades… while the mendacity of boom-time assumptions and the following cover-up was never explicitly articulated in the mainstream across society, I think near most people had a good enough sense of it. eg. Who could miss the fact that young people were being loaded up with 30 years of debt for paltry boxes in bleak overcrowded estates etc. And it continues…)

No, the real story, as I said already, is banks colluding to rip off some customers to the benefit of their own trading positions and of other customers. The customers that they are ripping off are largely institutional ones - insurance and pension companies. This is your pocket they’re taking it out of.

edit: the ‘blame the regulator’ is part of the banks weaseling out of the blame for this, despite the evidence that this was going on as far back as 2005 at least. This is spin from the banks and some are falling for it :wink: