Finally a decent explanation of what LIBOR is! It's the rate at which banks borrow from each other. A low LIBOR means the banks are doing great at managing their money. A high LIBOR means the banks are losing lots of money and need loans from each other to stay afloat.
The scandal here is that the folks that manage and report the LIBOR were lying to everyone, all the time. They reported numbers lowers than were true, giving the impression right through the crash of 2008, that everything was copacetic. And the big banks *knew* they were lying, encouraged it, and frequently told them what number the LIBOR needed to be at for a certain day, in order for their deals to be the most profitable.
That is to say the bankers actively managed their reported exchange rate to enable banks to screw people and small businesses and towns across the world
out of as much cash as was physically possible. Got that?
This is the wholesale rigging of our financial industry by a handful of Too Big To Fail banks. It is incontrovertible proof that the system is fixed against civilians and is corrupt to its very core.
Why isn't the American press reporting on this?
LIBOR Banking Scandal Deepens; Barclays Releases Damning Email, Implicates British Government | Matt Taibbi | Rolling Stone
Again: Libor, the London Interbank Exchange Rate, is the rate at which banks borrow from each other. A huge percentage of the world’s variable-rate investments are pegged to Libor. When Libor rates are high, it suggests that the banks’ confidence in each other is low, and high Libor rates are generally an indicator of shaky financial health among the banks. If the banks manipulated Libor, they did it to make themselves look healthier, but this had the consequence of affecting hundreds of trillions of dollars’ worth of financial products worldwide.
During the crash of 2008, governments understandably would have been concerned about high Libor rates – high rates and a lack of confidence in banks threatened economic stability – but the notion that governments would have encouraged banks to fake those rates would have been beyond unthinkable even a decade ago.
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Former Barclays CEO Bob Diamond is testifying before parliament in London today, and that's sure to bring some shocking moments. But there's already been one huge stunner. In advance of that testimony, Barclays released an email from October 29, 2008, written by Diamond to then-Chairman John Varley and COO Jerry del Messier (who also stepped down yesterday). The email from the CEO to the other two senior Barclays execs purports to detail the content of the conversation Diamond had with Bank of England deputy governor Paul Tucker that same day.
In the email, Diamond essentially tells the other two execs that he has been given permission by Tucker – encouraged, actually – to rig Libor rates downward. What’s even worse is that Diamond’s email suggests that Tucker was only following orders, i.e. that Tucker had received phone calls from "a number of senior figures within Whitehall" – that is, the British government – expressing concern about Barclays' high Libor rates. Tucker in this version of events was acting as a middleman for the British government, telling Diamond to fake his borrowing rates in order to preserve the appearance of financial stability, for the good of Queen and country as it were.
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