LIBOR: The Market is a Fairytale

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Should you care about LIBOR? Not unless you’ve used credit – for home loans, business loans, credit cards, student loans, anything with an interest rate.

Here’s the short of what the LIBOR scandal means for us that have used credit: we’ve been used as a spring of wealth. We the People of the United States and the entire globe, with our earned money have been covering for huckster book cookers. The implications are that most or all major, multinational banks are conspiring and colluding to fix the market at its very basic building block level. The government in London is implicated, possibly most major governments are also guilty.

It looks to be an extremely extensive web of deceit. The market fixing done cannot be done alone – Barclay’s has already admitted to fixing – in order for the level of corruption that has unfolded to be true, the likelihood is that all major banks are involved in this type of fixing and scandal.

So not only do banks need bailing out but they need bailing out even though the game was rigged in the first place. This is despite the fact that they have unlimited legal, financial, marketing, lobbying, security, and public relations resources. Still, they produce no actual product and rely on those of us who actually provide goods and services to the globe to keep the spigot of money flowing their way. The greed and corruption also seems unlimited.

This scandal exposes, not just a corrupt bank, but the very mechanisms by which we are told “the Market” works. Those mechanisms have been found to be figments of the imagination, not even rusty or broken, but a fairytale that bankers have been telling each other – and the rest of us have been betting the farm on them.

Matt Taibbi and Dennis Kelleher explain in more detail:

Once again, it is up to the People to demand that these stories get reported in the media (go ahead and make a request), and that we keep the pressure on by asking candidates about it, asking our representatives about it, and making it an issue while Barclay’s is spilling the beans. These organizations have been left to police themselves, instead they have reinvented pillaging our villages – and been unbelievably successful.

This is not just another scandal, it is about real dollars that used to be yours and now they are not. And those are the same dollars that are buying government influence, and the same dollars that pay to keep labor conditions racing to the bottom while sky’s-the-limit for elite profits and living conditions.

It is easy to write this off as another boring example of how we get screwed over by “the system”. It’s common to hear, “they’re all crooks!” as a general reference to anyone in business or government, but that is the white flag of apathy. It is music to “their” ears to hear a meme that encourages shrugging it off as business as usual.

Yes, it has been, “business as usual”, but the fat financial dragon has exposed its underbelly. Are we going to yawn our way through the opportunity to demand more accountability, transparency, and responsibility? Once again it’s up to us. Learn more here and here and here.

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8 thoughts on “LIBOR: The Market is a Fairytale

  1. hespeler1 says:

    …….”they have reinvented pillaging our villages”……Brings to mind the image of outraged villagers with torches and pitchforks chasing Dr. Frankenstein. Past time for that…..

    Good article. I think the “business as usual” meme will prevail though, people being preoccupied with dealing with poverty or Disney-esque amusements. Time to fire off a letter to the editor…..

  2. Robert Malt says:

    The Bank of England (a Central Bank printing fiat money…authorized by government…not a free market institution….supported by Krugman and other Keynesian economists) is deeply involved in this manipulation, if not at the center of it. Why is this critical information not included in your post?

    Had Obama, McCain, Bush, and the “leadership” of both political parties in the U.S. not bailed out the banks, this problem would have ended in 2008.

    • Amy Meier says:

      I agree with you on the point that “too big to fail” is a big lie Americans begrudgingly capitulated to. It would be great if you could collect your opinions and ideas into blog posts, I’d be happy to check them out and give you some space.

      I think we both find accountability to be severely lacking and needed.

      • Robert Malt says:

        Liberal/Progressives and Conservatives should be able to unite around the idea of sound money and too-big-to-fail. This is a no-brainer. However, I have found that most progressives and conservatives simply don’t understand the issue of sound money, or worse, have a false understanding of it. The mainstream media, including Fox and MSNBC, does not educate the public on this important issue.

      • Amy Meier says:

        A blog post goes a lot further than comments in your efforts to educate the rest of us. πŸ™‚ If you want to put together a series of posts for a serious attempt at explaining a point of view you think would work, normal rules apply.

  3. lokywoky says:

    All sixteen of the too-big-to-fail banks are free market institutions. Completely and totally corrupt free market institutions. Robert Malt – you seem to think that only government can be corrupt but you are quite wrong about that. the so-called free market is just as easily corrupted, if not more so, especially when the so-called free market is unregulated or nearly so as it is today.

    And you keep using the term “fiat money”. I like the term “sovereign in its own currency” better. Both are equally valid. When a country is sovereign in its own currency, that means that it is free to run up as much “debt” as it likes since the debt it owes is to its own citizens, and the money is backed by the economy – something far more valuable than a few chunks of metal. In the case of the US, even when the dimwit credit ratings agencies downgraded the US credit – all other countries were leaping at the chance to buy US Government Bonds. Says a lot about what they think about our creditworthiness doesn’t it?

    Back to this article – I like the prescription that Mr. Kelleher recommended – get rid of this entire generation of banksters. Preferably to some penal institution would be my choice. And then re-institute the provisions of Glass-Steagall, break these banks up. And task their boards with finding new CEO/DFOs with more ethics. And give the regulators some actual enforcement powers and the money to actually do their jobs.

    • Robert Malt says:

      “All sixteen of the too-big-to-fail banks are free market institutions.”

      This is fundamentally not true. If they were, they would have been allowed to go bankrupt in 2008, and not bailed out by Obama/McCain/Bush.

      “When a country is sovereign in its own currency, that means that it is free to run up as much β€œdebt” as it likes since the debt it owes is to its own citizens, and the money is backed by the economy – something far more valuable than a few chunks of metal.”

      Fiat money is not free market money. Also, the debt is primarily owed to banks, corporations, and foreign governments….and this debt is put on the backs of future generations, unborn….actual people…not the “economy”. Why do you defend debt servitude. Why do you defend the Wall Street Too-Big-To-Fail Banks. You do realize that the Fed works for them, not the American people, don’t you?

      “In the case of the US, even when the dimwit credit ratings agencies downgraded the US credit – all other countries were leaping at the chance to buy US Government Bonds.”

      The Fed is buying a lot of our own debt (Treasuries) to artificially keep interest rates low. China and Japan, the two largest foreign sovereign buyers, are slowly reducing their purchases of US debt, not leaping at buying more.

      It is important to put facts ahead of ideology, and knowledge ahead of conjecture. The Federal Reserve hurts the poor and elderly (on fixed incomes) the most….people that progressives claim to actually care about. Why do progressives support the ultimate in crony capitalism…the Federal Reserve? I would really like to know.

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