I never link to my Daily Beast pieces, but I know the systemic corruptions and crises in the global financial system is of great interest to Kossacks, and this aspect doesn't seem to have been covered.
My investigations into the fixing of the LIBOR rate by Barclays indicate that not only are other banks involved, but other markets too:
Barclays Scandals the First of Many
You ain’t heard nothing yet. If you thought the admission by Barclays Bank that it manipulated the key interbank lending rate was shocking, be prepared for a series of larger jolts which could expose the banking system to its worst crisis yet.
SNIP
Think of it as a horse race, with the participants fixing the result of a photo finish race. The change in the cost of borrowing is just the prize money for your winner. But the real money to be made is on the side bets.
Here’s the scale of the difference between the rewards at stake. The loan market (the prize money if you like) determined by the LIBOR rate, is worth some 10 trillion dollars annually. But the betting market, the various “over the counter derivatives” that depend on LIBOR, is a hundred times bigger at least. As the FSA pointed out in its document on the Barclays scandal, just one contract based on the rate traded out of Chicago was worth a staggering volume of $564 trillion U.S. dollars in 2011.
LIBOR is not the only horse race in town, not by a long shot. Other key markets in sovereign debt, exchange rates, commodity or energy futures, are also subject to trillions of dollars in speculative swaps, and this is where the price fixing just scandal could really go global.
No one knows where the next unexpected ‘black swan’ crisis will come from, except all eyes are turned to false reporting of indexes and the derivatives market. There have been rumors about oil price fixing for decades, as well speculation about silver and Brent crude. A decade ago, the U.S. Commodity Futures Trading Commission found that the practice of false reporting and price manipulation was rife but mostly “beyond the reach of any other federal financial regulator.” As a former securities regulator pointed out to The Daily Beast, “The mechanism for fraud through quotation manipulation was the same as Libor.”
Meanwhile, with
Fall of the House of Murdoch completed and out at the end of the month, other
Murdochgate investigators are doing a grand job keeping up with that other great media scandal of the time (see
Eric Lewis' reclisted diary on the latest Murdoch furore). As I point out in the book, the financial crisis and the News Corp scandal are intimately related: from The
Introduction to the Book
The hacking scandal erupted in a year of many crises including: the collapse of regimes in Tunisia, Egypt and Libya; a global financial meltdown which had turned from a liquidity crisis three years earlier into a wider sovereign debt crisis in the eurozone. Commentators have made comparisons between Murdoch’s slow-motion demise and the toppling of tyrants in the Arab Spring, but the connection with the economic crisis is more pertinent.
Murdoch has always enjoyed a close relationship with bankers and shown a fondness for leveraged buyouts since his earliest Australian acquisitions. A personal friend of the junk bond trader Michael Milken, Murdoch has both deployed the aggressive techniques of deregulated globalised finance and stoutly defended its principles editorially.
BIG TEN PAGE SNIP
Rather like Enron, the notorious US company which went from provision of energy to trading in energy futures, one can look at News Corp’s various gambles over the years – from the cross promoting of Sky in the Sun to the promotion of favoured politicians – as a trading in news futures, i.e. betting on outcomes rather than current events. And just as this kind of derivative trading is liable to consume the original activity (as Enron did by deliberately provoking power cuts in California to manipulate energy prices) I would argue that News Corp has gone from being a news organisation to an anti-news organisation and has thus failed its primary purpose. It’s hard to imagine any other industry surviving such a scandal: a pharmaceutical company creating a drug that makes people ill, a construction company building skyscrapers that fall down or an airline company making planes that regularly fall out of the sky. In the past, such corporate malpractice has been eventually brought down by media exposure. If the media itself is faulty, the safety valve has gone.
2:48 PM PT: As per the discussion below about a complete change in the banking system
2:52 PM PT: Yes Goldman Sachs wants a state run bank: that crashing sound is 30 years of neoliberalism falling
3:13 PM PT: The City of Baltimore join what will be a long line of investors taking legal action over the LIBOR fix
http://dealbook.nytimes.com/...