Central Banks are the Problem
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Central Banks are the Problem

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The Libor scandal is about to get a whole lot worse. And, ...

The Libor scandal is about to get a whole lot worse. And,
that’s the good news.
Not only are at least twenty more big banks under
investigation as part of a massive fraud to manipulate
interbank lending rates that affect some $800 trillion in
loans and derivatives, but the Bank of England is about to
take center stage in the scandal.

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    Central Banks are the Problem Central Banks are the Problem Document Transcript

    • Central banks are the problemShah Gilani,http://www.forbes.com7/06/2012The Libor scandal is about to get a whole lot worse. And,that’s the good news.Not only are at least twenty more big banks underinvestigation as part of a massive fraud to manipulateinterbank lending rates that affect some $800 trillion inloans and derivatives, but the Bank of England is about totake center stage in the scandal.And that’s bad news for central banks around the world.Well, actually, it could be good news, as in really goodnews if it’s the beginning of the end of what central banksdo to manipulate free markets to the benefit of their onlyreal constituents, the world’s big banks.First the good news.It’s already come out that traders at Barclays with hugederivatives positions leaned on co-workers who sit on“panels” that submit internal bank borrowing cost data toThompson Reuters, who averages the middle lot of submissions to determine Libor (London InterbankOffered Rate) “fixings” (not my word, but actually the established nomenclature for what it apparentlyis that they do…as in “fix” rates) all under the auspices of the British Banking Association.What’s good is we now know for a fact that the traders (crooks?) were aided and abetted by their co-workers, the submitters (crooks?), who were overseen by managers and top executives, who designmost of these schemes (crooks?), and were all blessed by the British Banking Association, an illustriousassociation of 200 some-odd banks, whose many members (crooks?) are panel members submittingcrooked (no question mark necessary) data. Still don’t get why that’s good news? Because it’s proof there are crooks out there and this time it’s easy to see where the “fix” actually occurs. It’s also good news because according to one multinational banking executive, just quoted in the Economist, it’s “the banking industry’s tobacco moment.” He was referring to the potential mountain(s) of litigation being drawn up already to claim that gross manipulation of interest rates caused billions, maybe trillions, of dollars of harm to borrowers and financial players of all stripes. Back in 1998 big tobacco had to settle class-action suits
    • that cost them over $200 billion.The bad news is the Bank of England, one of theworld’s stalwart and oldest central banks, is about toface its own potential Lehman moment (at least we canhope). That’s on account of the fact that Paul Tucker,deputy governor of the Bank of England (and itssupposed next top dog), is going to have to come cleanin front of Parliament very shortly.Mr. Tucker is apparently on record (according to BobDiamond’s phone call notes) suggesting that the Bankof England wanted Barclay’s to manipulate it’s Liborsubmissions downward so as to not paniccounterparties and the country who might view tightinterbank lending conditions as a sign of stress acrossthe entire banking system.So, here’s why the bad news for the central bank(encouraging, no, make that, demanding fraud) isreally good news for free markets.Central banks have done nothing to countermand the trend (nothing but encourage) leading to bigbanks getting bigger; so big, in fact, that now all of the big banks around the world are all too-big-to-fail.The bigger the world’s banks are (bankers want size, because more size equals more power to price, tomanipulate markets, and to pay bigger bonuses) the more important central banks become, both to thebig banks, nations, and the global economy.Central banks are the saviors of big banks that get in trouble, especially when economies and systemsare leveraged for profits that backfire and they all have to be bailed out.Central banks are supposed to be above what’s going on below their ivory towers, but, in fact, they arethe puppets being manipulated by the big banks. It’s a case of the tail wagging the dog.Why are central banks pouring money into banks, really? Why aren’t governments printing money topour into ailing economies but aiding and abetting central banks instead?It’s because central banks are independent supra-national bodies who have been ceded monetary powerby governments almost everywhere to benefit banks and bankers the world over, who are their only constituents, and for all intents and purposes, effectively “own” legislators and governments. They’re pouring money into banks to keep them solvent. That’s what central banks are there for. The banks aren’t lending the money (massive reserves are sitting on balance sheets to shore up appearances) because they need it to meet reserve requirements and offset the illiquidity evident in the interbank lending market…the same interbank (Libor) market that the Bank of England wanted to make look
    • more liquid than it was viscous back in 2008.But it gets worse. What will happen when the“multiplier effect” takes effect? I’m talking about thepotential for massive inflation when all those hugequantities of reserves (stimulus) get lent out instead ofshelved on balance sheets? How about massiveinflation.Heaven help us if all these macro crises are fixedquickly. The flood of idle cash and credits globallywill make past inflationary bursts look like a 40-yarddash compared to miles and miles of potentialproblems ahead of us.We need free markets not manipulated markets. We need to break up all the world’s big banks so they can fail when they overleverage themselves, and entire systems, nations, economies and the global economy aren’t all brought to their knees. If we break up all the too-big-to-fail banks we won’t need central banks. We can go back to what are supposed to be free markets dictating interest rates and creating honest, open economies and opportunities everywhereThe Biggest Financial Scandal In History?Michael SnyderThe Economic CollapseFriday, July 6, 2012We always knew that the financial marketswere rigged, but this is getting ridiculous. It isnow being alleged that 20 major banks havebeen systematically fixing global interest ratesfor years. Barclays has already beenfined hundreds of millions of dollars formanipulating Libor (the London Inter BankOffered Rate).But Barclays says that a whole bunch ofother banks were doing this too. This isshaping up to be the biggest financialscandal in history, and criminal
    • investigations have been launched on both sides of the Atlantic. What those investigations are likely to uncover could shake the financial markets to their very core. In the end, this scandal could absolutely devastate confidence in the global financial system and it could potentially bring down a number of major global banks. We have never seen anything quite like this before. What Is Libor? As mentioned before, Libor is the London Inter Bank Offered Rate. A recentWashington Post article contained a pretty good explanation of whatthat means…. In the simplest terms, LIBOR is the average interest rate which banks in London are charging each other for borrowing. It’s calculated by Thomson Reuters — the parent company of the Reuters news agency — for the British Banking Association (BBA), a trade association of banks and financial services companies.Why Does Libor Matter?If you have a mortgage, a car loan or a credit card, then there is a very good chance that Libor hasaffected your personal finances. Libor has been a factor in the pricing of hundreds of trillions ofdollars of loans, securities and assets. The following is from a recent article by Maureen Farrell…. These traders influenced the pricing of the London Interbank Offered Rate or Libor, a benchmark that dictates the pricing of up to $800 trillion of securities (yes trillion)$800 trillion?That is a number that is hard to even imagine.Most American consumers do not even know what Libor is, but it actually plays a key role in the U.S.economy as the Washington Postrecently explained…. In the United States, the two biggest indices for adjustable rate mortgages and other consumer debt are the prime rate (that is, the rate banks charge favored or “prime” consumers) and LIBOR, with the latter particularly popular for subprime loans. A study from Mark Schweitzer and Guhan Venkatu at the Cleveland Fed looked at survey data in Ohio and found that by 2008, almost 60 percent of prime adjustable
    • rate mortgages, and nearly 100 percent of subprime ones, were indexed to LIBOR Who Was Involved In This Scandal? According to the Daily Mail, in addition to Barclays it is being alleged that at least 20 banks (including some major U.S. banks) were involved in this interest rate fixing scandal…. Hundreds of bankers across three continents are embroiled in the interest-rate fixing scandal that has left Barclays chief executive Bob Diamond fighting to save his job. As pressure intensified on Britain’s highest paid banking boss to quit, MPs heard a string of other financial institutions across the world were under investigation. At least 20 banks are believed to be under suspicion, with growing demands for a criminal investigation.There are also indications that the Bank of England itself may have been involved in this scandal.What Did They Do?Employees at Barclays (and apparently at about 20 other major banks) were brazenly manipulatinginterest rates. A recentYahoo Finance article described how this worked… To help the bank’s trading positions between 2005 and 2009, and most notably during the global financial crisis of 2007-09, the bank made false submissions to the Libor-setting committee, which agrees rates daily in London. At the request of its own traders of interest-rate derivatives, Barclays made false submissions relating to Libor and Euribor (the eurozone benchmark rate). By doing this, Barclays personnel aimed to help their trading colleagues to profit by manipulating Libor. Rigging the world’s leading benchmark for interest rates is pretty serious stuff. Indeed, in the words of the FSA, “Barclays’ behaviour threatened the integrity of the rates, with the risk of serious harm to other market participants”.
    • Many in the financial world have been absolutely horrified by the details of this scandal that have been emerging. One recent CNN article declared that “the stench” coming from London is now “overwhelming”…. The Libor scandal has confirmed what many of us have known for some time: There is something smelly in the London financial world and the stench is now overwhelming. But It is only when I read the Financial Services Authority report — all 44 pages of it — that is became clear just how widespread, how blatant was the fixing of the benchmark interest rate Libor and Euribor by Barclays. Brazen is the only word for it. The emails and phone calls reveal that on dozens of occasions those who stood to gain by the decisions asked for favors (and got them) from those who helped set the interest rates.You can read many examples of the kinds of emails that were exchanged between traders in New Yorkand traders at Barclays in London right here.What Does This Scandal Mean For The Future?This scandal is making the global financial system look really, really bad. Confidence in globalfinancial markets has already been declining, and these new revelations are not going to help at all.The following is how an article in the Huffington Post put it…. The ballooning interest rate manipulation scandal at Barclays, coupled with stock market instability, is likely to fuel fresh doubts about the integrity of the stock market, insiders said. “Every time people begin to gain a little confidence, something else comes up,” said Randy Frederick, managing director of active trading and derivatives at Charles Schwab. “If it’s not Europe, it’s [troubled] IPOs, or JPMorgan or Barclays. Something new blows up and people say, ‘I knew it was rigged.’”
    • In addition, we are undoubtedly going tosee a huge wave of lawsuits come out ofthis scandal. Those lawsuits alone willgum up the financial system for a decade ormore.So needless to say, this is a very big deal.Sadly, the revelations that have come outabout Barclays in recent days are probablyjust the very tip of the iceberg. Before thisis all over, we are probably going to findout that most of the major global bankswere involved.At a time when the global financial systemis already on the verge of a majorimplosion, this is not welcome news.This financial scandal is just another reasonto be deeply concerned about the secondhalf of 2012. The house of cards is starting to look really shaky, and nobody knows exactly when itwill fall, but anyone with half a brain can see that things are progressively getting worse.A “perfect storm” is rapidly developing, and when it strikes it is going to be very, very painful.The New World Order -Eustace Mullins VIDEO BELOWhttp://www.youtube.com/watch?v=2h_V-ARe_nEThe Magical Money of The Federal Reserve Eustace Mullins VIDEO BELOWhttp://www.youtube.com/watch?v=Er3xPXb7aQwHey Banksters: We Are Fully Awake VIDEO BELOWhttp://www.youtube.com/watch?v=tEATp-xM7rU&feature=channel&list=ULBanking with hitler VIDEO BELOWhttp://www.youtube.com/watch?v=YauM5dHLn1sThe Federal Reserve Fractional Reserve Banking Explained VIDEO BELOWhttp://www.youtube.com/watch?v=eWl7Mb49vSkThe Money Masters a History of Money VIDEO BELOWhttp://www.youtube.com/watch?v=JXt1cayx0hsThe Secret of Oz VIDEO BELOWhttp://www.youtube.com/watch?v=swkq2E8mswI http://www.infowars.com/