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View Diary: Libor --- OUTRAGE .... Please!!!! (210 comments)

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  •  I don't get it (1+ / 0-)
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    I get that banks have gotten away with altogether too much shit that should have been - and needs to be - regulated.

    If LIBOR is the rate at which banks will lend to each other, then who else is to set that rate except themselves? Banks A,B,C,D,E....X,Y,Z all agree that they will lend to each other at 2%. Or 7%. Or 70%.

    I'm not sure where the outrage is coming from, to be quite honest. I've seen people try to explain it, but I'm still not getting it. And I'm interested in bankster fraud and prosecution. If I don't get it, and the outrage isn't palpable and evident, then I don't expect many other people will understand it at all.

    I'm not saying outrage isn't warranted. I'm saying the reasoning behind the outrage has not been communicated effectively.

    •  LIEBOR (9+ / 0-)

      The problem is that they lied about the real rate they had to borrow at. Say Barclays would have had to pay 5%, but for the LIBOR submission they would say 4%. If, as suspected other banks did the same the announced LIBOR rate was a lie, and did not reflect the real cost of money, as it was supposed to.

      And this rate is used as a flow through rate to other products (mortgages, derivatives etc) because it was assumed to reflect real funding costs for banks. Deliberately manipulating this core piece of the market for money caused masses of products to be mispriced (with of course some people gaining and others losing).

      Those who make peaceful revolution impossible will make violent revolution inevitable. - JFK

      by taonow on Thu Jul 05, 2012 at 03:23:55 AM PDT

      [ Parent ]

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