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Except it doesn't. Libor IS an arbitrary number decided by a cabal of bankers. This process has zero transparency and accountability which lead to the fixing an

by throw2016 9y ago

Except it doesn't. Libor IS an arbitrary number decided by a cabal of bankers. This process has zero transparency and accountability which lead to the fixing and abuse in the first place. Its not Matt Taibbi but the regulators who concluded there is no basis for LIBOR as reported in the article so perhaps you meant to accuse the regulator of sensationalism.

JumpCrisscross 9y ago
> regulators...concluded there is no basis for LIBOR Regulators did not conclude this. They concluded (a) better metrics for banks' costs of capital exist (e.g. the Fed funds rate [1]), (b) the market Libor is based on (wholesale unsecured interbank term lending) is too small and inactive to provide the sort of precision Libor implies and (c) transitioning from Libor will be messy [2]. [1] https://fred.stlouisfed.org/series/FEDFUNDS https://fred.stlouisfed.org/series/FEDFUNDS [2] https://www.fca.org.uk/news/speeches/the-future-of-libor https://www.fca.org.uk/news/speeches/the-future-of-libor
- throw2016 9y ago
  In other words there is no basis for libor.
  - c3534l 9y ago
    What do you mean by "no basis"? I suspect to you it means something like "too abstract" or "not good enough"?
  - JumpCrisscross 9y ago
    > In other words there is no basis for libor No, there is a basis. The regulator Taibbi cites speaks competently about this [1]; the least actively-traded currency-tenor traded only about once a month. (Every other currency-tenor traded more often.) That may be a fine frequency for 6-month wholesale interbank rates in Danish krona (which, until recent reforms, was one of the currencies Libor was quoted for [2]). But turning it into a daily rate with three decimal places of precision is silly. [1] https://www.fca.org.uk/news/speeches/the-future-of-libor https://www.fca.org.uk/news/speeches/the-future-of-libor [2] https://en.wikipedia.org/wiki/Libor#Currency https://en.wikipedia.org/wiki/Libor#Currency

JumpCrisscross 9y ago

> regulators...concluded there is no basis for LIBOR Regulators did not conclude this. They concluded (a) better metrics for banks' costs of capital exist (e.g. the Fed funds rate [1]), (b) the market Libor is based on (wholesale unsecured interbank term lending) is too small and inactive to provide the sort of precision Libor implies and (c) transitioning from Libor will be messy [2]. [1] https://fred.stlouisfed.org/series/FEDFUNDS https://fred.stlouisfed.org/series/FEDFUNDS [2] https://www.fca.org.uk/news/speeches/the-future-of-libor https://www.fca.org.uk/news/speeches/the-future-of-libor

throw2016 9y ago
In other words there is no basis for libor.
- c3534l 9y ago
  What do you mean by "no basis"? I suspect to you it means something like "too abstract" or "not good enough"?
- JumpCrisscross 9y ago
  > In other words there is no basis for libor No, there is a basis. The regulator Taibbi cites speaks competently about this [1]; the least actively-traded currency-tenor traded only about once a month. (Every other currency-tenor traded more often.) That may be a fine frequency for 6-month wholesale interbank rates in Danish krona (which, until recent reforms, was one of the currencies Libor was quoted for [2]). But turning it into a daily rate with three decimal places of precision is silly. [1] https://www.fca.org.uk/news/speeches/the-future-of-libor https://www.fca.org.uk/news/speeches/the-future-of-libor [2] https://en.wikipedia.org/wiki/Libor#Currency https://en.wikipedia.org/wiki/Libor#Currency