The Economist on the LIBOR affair (video)(economist.com)
economist.com
The Economist on the LIBOR affair (video)
http://www.economist.com/blogs/schumpeter/2012/07/libor-affair
6 comments
>I like the Economist and was glad to see them report on the facts as they currently stand and not offer an opinion nor get overly passionate on the matter, like some news reports in the States tend to do.
Its... the Economist...lol
Its... the Economist...lol
Some of the submissions may have been 30-40 basis points off (0.3-0.4%). "If you take this and multiply it by the $800 trillion, you start talking real money."
Ever since I first heard that LIBOR is set by voluntary submissions rather than actual data, I have wondered how that works. Now it's becoming obvious that it doesn't.
Ever since I first heard that LIBOR is set by voluntary submissions rather than actual data, I have wondered how that works. Now it's becoming obvious that it doesn't.
Well the way it's supposed to be set is by averaging out what the '16' banks are charging each other, or more specifically by throwing out the top 4 and bottom 4 rates then averaging out the 8 remaining.
When you look at how everything eventually played out, it becomes clear Barclays was not alone in what they were doing.
When you look at how everything eventually played out, it becomes clear Barclays was not alone in what they were doing.
Barclays was not alone in what they were doing
yeah, I think I read on Taibbi's blog that the attention initially came to Barclays because they weren't "juicing the goose," they then were encouraged to do so to alleviate the disparity in the rates they were reporting relative to the other banks.
postscript- I reviewed the post before submitting( http://www.rollingstone.com/politics/blogs/taibblog/libor-ba... )
The scenario described above is as told by the recently resigned Barclays ceo, perhaps not an exemplar of honesty, but it seems plausible.
yeah, I think I read on Taibbi's blog that the attention initially came to Barclays because they weren't "juicing the goose," they then were encouraged to do so to alleviate the disparity in the rates they were reporting relative to the other banks.
postscript- I reviewed the post before submitting( http://www.rollingstone.com/politics/blogs/taibblog/libor-ba... )
The scenario described above is as told by the recently resigned Barclays ceo, perhaps not an exemplar of honesty, but it seems plausible.
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Why is this on the front page of HN? Because so many apologists for liquidity at any cost congregate here. Because so many of us rely on the FIRE sector to implement self-binding mechanisms of cooperative benefit to save for our retirement. And now we have more evidence the FIRE sector cannot be trusted. So perhaps instead of our colleagues patronizing us to go educate ourselves about the falsehood that all liquidity is good liquidity and that they are doing God's work (when research shows that HFT leads to diminishing returns [hint: gain from trade in competitive markets is a convex downward function with respect to efficiency]), they might consider engineering systems that sustain the cooperative benefits of self binding, instead of implementing systems that cynically and systematically win asymmetric zero-sum games against the rest of us.
This is on the front-page of HN because, as Richard Feynman said, "It's the things that nobody knows about that we can discuss. We can talk about the weather; we can talk about social problems; we can talk about psychology; we can talk about international finance... so it's the subject that nobody knows anything about that we can all talk about!".
HN is also far more of a resource for tech-sector knowledge and wisdom than economic wisdom, as I've found all too often. On the other side of the LIBOR issue, reading through many of the comment pages here and seeing all the cries for disincorporating banks or "eliminating the profit motive" betrays an unfortunately reactionary populism.
I just don't think this scandal will have a big impact with the general populous. As big and as important as this scandal may be, it has one big thing going against it. It is dreadfully boring. I have to admit, while I did manage a single read through of the details when this was discussed earlier this week, I have not managed to listen or read through a full article since.
Boring is in the eye of the beholder. I think it's pretty interesting personally.
Yes, stealing tons of people's money is very boring. Unlike the Kardashians...
That said, as someone who was caught leaning too far in the direction of the collapse about a year before it happened, and lost considerable funds when some surprise discount window rate drops happened in August of '07, I hope all this information finally comes to light. There is <i>no way</i> this is limited to just the banks in England.