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Libor rigging covers two quite different things, which happened at different times for different reasons. > If it was a good idea for everyone, why not do it e

by Lazare 10y ago

Libor rigging covers two quite different things, which happened at different times for different reasons. > If it was a good idea for everyone, why not do it explicitly and transparently? The point was that the entire banking system was seizing up, and for the banks in the biggest trouble, being honest about how much it was costing to borrow money (or worse, the fact that there was no money to be borrowed) would have sent them over the edge and (maybe!) taken the system with them. If your trying to fake it 'til you make it, you can't do that explicitly and transparently. (The US equivalent was to just force all banks to take government money whether they wanted or needed it or not, because just bailing out the ones who needed it would have made it clear who was in trouble, and again, sent them over the edge. That was, again, done in order to avoid transparency, and neither policy was without moral questions, but both worked in the end. And the UK one was at least cheap.) > Allowing (or even encouraging) a small group of people to secretly make a lot of money doesn't seem like a fair way to run the economy. Libor manipulation may be wrong, but it didn't really make anyone a lot of money. And this particular part of the overall scandal certainly didn't. Manipulating rates so that you can borrow money cheaply might be profitable; lying and claiming you can borrow money cheaply when yu actually can't is not to avoid sparking a bank run is not. :)

branchless 10y ago
Fake it till you make it? You mean cover up gross incompetence/fraud that could have seen them in jail. The UK lost control of the law in finance. A lot of the USA stuff was washed through London because of this. How they got into the bank run situation was illegal. You have one warped perspective.
riskable 10y ago
> The point was that the entire banking system was seizing up, and for the banks in the biggest trouble, being honest about how much it was costing to borrow money (or worse, the fact that there was no money to be borrowed) would have sent them over the edge and (maybe!) taken the system with them. Anything that can be destroyed by the truth deserves to be destroyed. Carl Sagan had a great quote about things like this: "One of the saddest lessons of history is this: If we’ve been bamboozled long enough, we tend to reject any evidence of the bamboozle. We’re no longer interested in finding out the truth. The bamboozle has captured us. It’s simply too painful to acknowledge, even to ourselves, that we’ve been taken."

by Lazare 10y ago

branchless 10y ago

Fake it till you make it? You mean cover up gross incompetence/fraud that could have seen them in jail. The UK lost control of the law in finance. A lot of the USA stuff was washed through London because of this. How they got into the bank run situation was illegal. You have one warped perspective.

riskable 10y ago

> The point was that the entire banking system was seizing up, and for the banks in the biggest trouble, being honest about how much it was costing to borrow money (or worse, the fact that there was no money to be borrowed) would have sent them over the edge and (maybe!) taken the system with them. Anything that can be destroyed by the truth deserves to be destroyed. Carl Sagan had a great quote about things like this: "One of the saddest lessons of history is this: If we’ve been bamboozled long enough, we tend to reject any evidence of the bamboozle. We’re no longer interested in finding out the truth. The bamboozle has captured us. It’s simply too painful to acknowledge, even to ourselves, that we’ve been taken."