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That people think LIBOR is some objectively calculated rate is probably an even bigger lie than LIBOR itself. How did that view come about, poor financial repor
by jnordwick 10y ago
That people think LIBOR is some objectively calculated rate is probably an even bigger lie than LIBOR itself. How did that view come about, poor financial reporting?
- tialaramex 10y agoThe calculations are objective, the input values are subjective. ICE says they ask a particular bunch of people "If _your_ bank wants to borrow money, how much does that cost?" and then they do a particular calculation to turn all those inputs into LIBOR 90 days later we can see all the individual numbers, so we can check if ICE did their job properly, and also we can see if, say, Lloyds have been ridiculously low-balling their numbers every Tuesday. Because the question is subjective, that's still subject to bias, in particular it makes an unspecified assumption: that the bank asked could in fact secure such a loan because it's available to them if they wanted it. As a result loss of liquidity in parts of the market is not visible through LIBOR even with reforms.
- jnordwick 10y agoThere seems to be a pattern lately of people replying to comments assuming the poster doesn't know anything. It is getting really annoying. Pro tip: many of us here work in finance or related fields. It is like people are just itching to show how much they know.
- deleted 10y ago[deleted]