6 ms·

I don't understand why this stuff isn't front page news of mainstream (cnn, fox news, etc.) newspapers. You'd figure with all the lingering resentment this woul

by cluda01 14y ago

I don't understand why this stuff isn't front page news of mainstream (cnn, fox news, etc.) newspapers. You'd figure with all the lingering resentment this would be a huge field day. Currently relegated to business news journals.

debacle 14y ago
Because people don't understand it or don't care, and that doesn't garner eyeballs like the story about Tom and Katie's split.
danboarder 14y ago
One reason is that the London Interbank Offered Rates (LIBOR) are just not as relevant as they used to be: "...the scandal has shed light on an inconvenient truth about these interbank rates which are used to determine the price of so many hundreds of trillions of dollars worth of global financial contracts. That inconvenient truth is that even when London Interbank Offered Rates are not "fixed", they may still not bear very much relation to reality - because banks are not actually offering much unsecured money to each other at all." See: Inconvenient truths about Libor http://www.bbc.co.uk/news/business-your-money-18701623 http://www.bbc.co.uk/news/business-your-money-18701623
- Tloewald 14y ago
  Back in 2008 my ARM's rate was tied to LIBOR. I doubt I Was alone.
  - JackFr 14y ago
    But the the manipulation was as likely in your favor as it was against you. Edit: I take it back. Looking at the data, Barclays was definitely cheating against you.
    - retube 14y ago
      Rates were low-balled by the majority of banks. Barclays was high in comparison because for much of the time they were posting accurate rates. This was the reason for calls from the Bank of England (why are you guys so high?). The fact is anyone with a libor-linked mortgage will have benefitted from this.
      - intended 14y ago
        A really important point to add is that at this juncture, LIBOR was also no longer the rate at which Barclays wa being loaned money. Banks would be giving them cash at rates higher than libor. Search for "LIBOR has become dislocated from itself " a beautifully finance speak way of saying "it's bullshit/it's being manipulated and it doesn't matter" Edit: found it! http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9368430/Libor-scandal-How-I-manipulated-the-bank-borrowing-rate.html http://www.telegraph.co.uk/finance/newsbysector/banksandfina... Every time I read one of these I think that the reporting/commenting/story is over the top, and then something else blows by in a few months which makes it look like child's play.
- kitsune_ 14y ago
  There are hundreds of trillions of dollars of derivates tied to the LIBOR. If the LIBOR moves 0.01% it translates to shifts in billions of dollars around the globe. Fixing the LIBOR is one of the (if not the) biggest thefts in history. Free-market capitalism is a joke. Deregulation and corporate socialism has led to a dysfunctional society ruled by a kleptocratic elite.
  - retube 14y ago
    > Fixing the LIBOR is one of the (if not the) biggest thefts in history. Except they've basically stolen from themselves. The vast majority of libor fixing was downwards. Loans they've made that pay libor-linked rates thus pay lower - so the bank earns less interest. The lowballing of libor doesn't (or didn't) affect the actual rate at which banks could fund/borrow, so net the banks lose. Libor was low-balled to paint a better picture of the health of the market. It was a survival tactic, not an attempt to deliberately rip people off. It's quite possible that if real rates had been posted the markets would have got spooked and banks would have gone bust. I'm not saying it's right, just let's have a little perspective here. Banks haven't "stolen" from anyone. And frankly if you were out trading eurodollar futures or something then you should have known something about the libor market.
    - kitsune_ 14y ago
      http://www.nytimes.com/interactive/2012/07/10/business/dealbook/behind-the-libor-scandal.html http://www.nytimes.com/interactive/2012/07/10/business/dealb...
  - crusso 14y ago
    > Free-market capitalism is a joke. To paraphrase Churchill: It has been said that free-market capitalism is the worst economic model except all the others that have been tried. You use the word "deregulation", yet thousands of pages of new regulations are churned out each year by the Federal government... when 1 or 2 pages are repealed, we hear "They're deregulating!". Any look at the regulations being emitted from the Federal Government will numerically prove that deregulation isn't our problem. It seems more apparent to me that the problem is that the Government has created really poor regulations and way too many of them at that. They created the regulatory mix that their corporate partners wanted them to in order to protect the business models of those corporate partners. Maybe if the Government tried to do a lot less and just did what it does well, we could keep better track of it and hold it accountable? Instead, the trend seems to be to hand over more power and authority to the Government in hopes that the people in it are somehow more ethical and wiser than the citizenry. That hope would seem to have been misplaced.
danielweber 14y ago
I heard about "LIBOR fixing" but this was the most detail I found on it so far. (To be fair I've been busy and haven't gone proactively digging for information on it.)
- intended 14y ago
  The always interesting Matt tabibi - http://www.rollingstone.com/politics/blogs/taibblog/why-is-nobody-freaking-out-about-the-libor-banking-scandal-20120703 http://www.rollingstone.com/politics/blogs/taibblog/why-is-n... The always good ft/alphaville http://ftalphaville.ft.com/blog/2012/07/09/1075161/almost-everyone-goes-mental-about-libor/ http://ftalphaville.ft.com/blog/2012/07/09/1075161/almost-ev... You can read the trader emails which were part of the initial explosion http://www.thedailybeast.com/articles/2012/07/05/barclays-settlement-the-worst-of-the-emails.html http://www.thedailybeast.com/articles/2012/07/05/barclays-se... I thought this was a great line "One trader had a few choice words of advice for another: “This is the way you pull off deals like this chicken, don’t talk about it too much … the trick is you must not do this alone … this is between you and me but really don’t tell ANYBODY.” " I'll dig up more if I can. Do note that the big picture blog would also probably be talking about this, and there was an economist article on hacker news a day or two ago.
neilk 14y ago
I think we overestimate what the media can really do. The public always wants them to lead the charge, but traditionally, they've rarely done so. They've always trailed behind activists, politicians, and social movements. And to some extent it makes sense; things really become "stories" when there's a nonzero possibility things might change. And that doesn't happen unless there are champions, pointing the way to some other possible future. In the USA, both parties favor hushing up financial scandal, so it's really hard to break through. There's this great fantasy show on HBO right now, The Newsroom, where one news show decides to lead the public rather than following them.
Tycho 14y ago
It's very big news in the UK.
- deleted 14y ago
  [deleted]
- olefoo 14y ago
  It's big news in the very narrow segment of American society that pays attention to hard news. In the sense that we can see the mechanisms by which the general public is being robbed. It is not news in the sense that most anyone who has been paying attention the last 3 decades knows that the both the markets and the regulation of the markets is a rigged game.
  - Tycho 14y ago
    This angle seems a bit overplayed to me. The main victims of the fraud are just the counter parties on these large derivative trades that investment banks make between each other. One side was tilting the scales. At least that's what I make of it.
    - intended 14y ago
      Considering that libor affects mortgage rates, I'd say that's a lot of people affected. that's like saying the only people affected by oil speculation are the counter parties.
      - Tycho 14y ago
        I've not been able to find any analyses about mortgage borrowers being adversely affected. Regardless, they are not the targets of the fraud, so the idea about libor rate fixers robbing the public is disingenuous.
        intended 14y ago
        What should probably get your goat though, is that this method completely destroys price discovery and was a clear case of the market not working because of collusion. The other things that should strike you is the scale of the fiasco and the collateral damage - Lets see... I would likely be using LIBOr for financial models, at the very least those focused on bond pricing and hence any shorts/longs made on that - all of those are off. LIBOR does get used to set variable rate mortgages, Switzerland uses it for national projections for a few other things. In essence those few terms I've mentioned are already fast approaching nearly a trillion dollars in affected securities and financial instruments. > they are not the targets of the fraud... Not being the target means little if you are still collateral damage. Heck the collateral damage was higher, since all the financiers were away the game was rigged by 2006. "LIBOR has become dislocated from itself". Losers who weren't direct targets would be someone making a deposit - they were getting lower interest rates than they should have.

by cluda01 14y ago

debacle 14y ago

Because people don't understand it or don't care, and that doesn't garner eyeballs like the story about Tom and Katie's split.

danboarder 14y ago

One reason is that the London Interbank Offered Rates (LIBOR) are just not as relevant as they used to be: "...the scandal has shed light on an inconvenient truth about these interbank rates which are used to determine the price of so many hundreds of trillions of dollars worth of global financial contracts. That inconvenient truth is that even when London Interbank Offered Rates are not "fixed", they may still not bear very much relation to reality - because banks are not actually offering much unsecured money to each other at all." See: Inconvenient truths about Libor http://www.bbc.co.uk/news/business-your-money-18701623 http://www.bbc.co.uk/news/business-your-money-18701623

Tloewald 14y ago
Back in 2008 my ARM's rate was tied to LIBOR. I doubt I Was alone.
- JackFr 14y ago
  But the the manipulation was as likely in your favor as it was against you. Edit: I take it back. Looking at the data, Barclays was definitely cheating against you.
  - retube 14y ago
    Rates were low-balled by the majority of banks. Barclays was high in comparison because for much of the time they were posting accurate rates. This was the reason for calls from the Bank of England (why are you guys so high?). The fact is anyone with a libor-linked mortgage will have benefitted from this.
    - intended 14y ago
      A really important point to add is that at this juncture, LIBOR was also no longer the rate at which Barclays wa being loaned money. Banks would be giving them cash at rates higher than libor. Search for "LIBOR has become dislocated from itself " a beautifully finance speak way of saying "it's bullshit/it's being manipulated and it doesn't matter" Edit: found it! http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9368430/Libor-scandal-How-I-manipulated-the-bank-borrowing-rate.html http://www.telegraph.co.uk/finance/newsbysector/banksandfina... Every time I read one of these I think that the reporting/commenting/story is over the top, and then something else blows by in a few months which makes it look like child's play.
kitsune_ 14y ago
There are hundreds of trillions of dollars of derivates tied to the LIBOR. If the LIBOR moves 0.01% it translates to shifts in billions of dollars around the globe. Fixing the LIBOR is one of the (if not the) biggest thefts in history. Free-market capitalism is a joke. Deregulation and corporate socialism has led to a dysfunctional society ruled by a kleptocratic elite.
- retube 14y ago
  > Fixing the LIBOR is one of the (if not the) biggest thefts in history. Except they've basically stolen from themselves. The vast majority of libor fixing was downwards. Loans they've made that pay libor-linked rates thus pay lower - so the bank earns less interest. The lowballing of libor doesn't (or didn't) affect the actual rate at which banks could fund/borrow, so net the banks lose. Libor was low-balled to paint a better picture of the health of the market. It was a survival tactic, not an attempt to deliberately rip people off. It's quite possible that if real rates had been posted the markets would have got spooked and banks would have gone bust. I'm not saying it's right, just let's have a little perspective here. Banks haven't "stolen" from anyone. And frankly if you were out trading eurodollar futures or something then you should have known something about the libor market.
  - kitsune_ 14y ago
    http://www.nytimes.com/interactive/2012/07/10/business/dealbook/behind-the-libor-scandal.html http://www.nytimes.com/interactive/2012/07/10/business/dealb...
- crusso 14y ago
  > Free-market capitalism is a joke. To paraphrase Churchill: It has been said that free-market capitalism is the worst economic model except all the others that have been tried. You use the word "deregulation", yet thousands of pages of new regulations are churned out each year by the Federal government... when 1 or 2 pages are repealed, we hear "They're deregulating!". Any look at the regulations being emitted from the Federal Government will numerically prove that deregulation isn't our problem. It seems more apparent to me that the problem is that the Government has created really poor regulations and way too many of them at that. They created the regulatory mix that their corporate partners wanted them to in order to protect the business models of those corporate partners. Maybe if the Government tried to do a lot less and just did what it does well, we could keep better track of it and hold it accountable? Instead, the trend seems to be to hand over more power and authority to the Government in hopes that the people in it are somehow more ethical and wiser than the citizenry. That hope would seem to have been misplaced.

danielweber 14y ago

I heard about "LIBOR fixing" but this was the most detail I found on it so far. (To be fair I've been busy and haven't gone proactively digging for information on it.)

intended 14y ago
The always interesting Matt tabibi - http://www.rollingstone.com/politics/blogs/taibblog/why-is-nobody-freaking-out-about-the-libor-banking-scandal-20120703 http://www.rollingstone.com/politics/blogs/taibblog/why-is-n... The always good ft/alphaville http://ftalphaville.ft.com/blog/2012/07/09/1075161/almost-everyone-goes-mental-about-libor/ http://ftalphaville.ft.com/blog/2012/07/09/1075161/almost-ev... You can read the trader emails which were part of the initial explosion http://www.thedailybeast.com/articles/2012/07/05/barclays-settlement-the-worst-of-the-emails.html http://www.thedailybeast.com/articles/2012/07/05/barclays-se... I thought this was a great line "One trader had a few choice words of advice for another: “This is the way you pull off deals like this chicken, don’t talk about it too much … the trick is you must not do this alone … this is between you and me but really don’t tell ANYBODY.” " I'll dig up more if I can. Do note that the big picture blog would also probably be talking about this, and there was an economist article on hacker news a day or two ago.

neilk 14y ago

I think we overestimate what the media can really do. The public always wants them to lead the charge, but traditionally, they've rarely done so. They've always trailed behind activists, politicians, and social movements. And to some extent it makes sense; things really become "stories" when there's a nonzero possibility things might change. And that doesn't happen unless there are champions, pointing the way to some other possible future. In the USA, both parties favor hushing up financial scandal, so it's really hard to break through. There's this great fantasy show on HBO right now, The Newsroom, where one news show decides to lead the public rather than following them.

Tycho 14y ago

It's very big news in the UK.

deleted 14y ago
[deleted]
olefoo 14y ago
It's big news in the very narrow segment of American society that pays attention to hard news. In the sense that we can see the mechanisms by which the general public is being robbed. It is not news in the sense that most anyone who has been paying attention the last 3 decades knows that the both the markets and the regulation of the markets is a rigged game.
- Tycho 14y ago
  This angle seems a bit overplayed to me. The main victims of the fraud are just the counter parties on these large derivative trades that investment banks make between each other. One side was tilting the scales. At least that's what I make of it.
  - intended 14y ago
    Considering that libor affects mortgage rates, I'd say that's a lot of people affected. that's like saying the only people affected by oil speculation are the counter parties.
    - Tycho 14y ago
      I've not been able to find any analyses about mortgage borrowers being adversely affected. Regardless, they are not the targets of the fraud, so the idea about libor rate fixers robbing the public is disingenuous.
      - intended 14y ago
        What should probably get your goat though, is that this method completely destroys price discovery and was a clear case of the market not working because of collusion. The other things that should strike you is the scale of the fiasco and the collateral damage - Lets see... I would likely be using LIBOr for financial models, at the very least those focused on bond pricing and hence any shorts/longs made on that - all of those are off. LIBOR does get used to set variable rate mortgages, Switzerland uses it for national projections for a few other things. In essence those few terms I've mentioned are already fast approaching nearly a trillion dollars in affected securities and financial instruments. > they are not the targets of the fraud... Not being the target means little if you are still collateral damage. Heck the collateral damage was higher, since all the financiers were away the game was rigged by 2006. "LIBOR has become dislocated from itself". Losers who weren't direct targets would be someone making a deposit - they were getting lower interest rates than they should have.