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Honestly this is hair splitting. Ultimately the point remains: there isn't sufficient market activity to build a real value for Libor so it's basically made up

• JumpCrisscross 9y ago
  > there isn't sufficient market activity to build a real value for Libor so it's basically made up from whole cloth The least active currency-tenor, since deprecated, traded once a month. Most currency-tenors trade many, many, many times a day. There's plenty of market activity to build Libor-esque metrics. > It's a distinction without a material difference It's a world of material difference. The Fed Funds rate in the United States is based on the same kind of wholesale unsecured interbank lending as Libor is supposed to be. The metric, and the market it's based on, work. We can have something like Libor based on market activity. It just won't be published every day for every tenor and currency. If you just read Taibbi, the answer would seem to be to scrap any attempt at measuring the market because you cannot measure something that does not exist. If you understand the nuance, you walk away better appreciating what (a) went wrong, (b) we should do to improve future metrics and (c) one should look for when evaluating other metrics purporting to do similar things. You also gain an understanding for the kinds of scaling problems financial markets run into, which are quite unlike scaling problems in other contexts.
• skybrian 9y ago
  What makes you think it's "not a material difference" and how would you know?