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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsIs the LIBOR scandal a 1% vs. 1% thing?
While I understand that this LIBOR scandal exposes the almost-routine corruption at the heart of our banking system, I'm having a hard time understanding the impact on common people who DON'T trade derivatives.
If they were forcing the LIBOR up, then yeah, everyone with an ARM mortgage would be impacted. But they were mostly forcing the LIBOR down.
I haven't formed an opinion yet, just asking questions.
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Is the LIBOR scandal a 1% vs. 1% thing? (Original Post)
Junkdrawer
Jul 2012
OP
Yesterday, I speculated that Tim Geithner (and by association, guess who) MAY be involved...
Junkdrawer
Jul 2012
#3
marmar
(77,042 posts)1. from Robert Reich:
.....(snip).....
But the other scandal is worse, and is likely to get the blood moving even among Americans who assume they've already seen all the damage Wall Street can do. It involves a more general practice starting around 2005 and continuing until who knows, it might still be going on to rig the Libor in whatever way necessary to assure the banks' bets on derivatives would be profitable. This is insider trading on a gigantic scale. It makes the bankers winners and the rest of us whose money they've used to make their bets losers and chumps.
Obviously, Libor is not limited to the UK. As the benchmark for trillions of dollars of loans worldwide mortgage loans, small-business loans, personal loans it affects the most basic service banks provide: borrowing money and lending it out. People put their savings in a bank to hold in trust, and the bank agrees to pay interest on those. And people borrow money from the bank and agree to pay the bank interest.
The typical saver or borrower on both sides of the Atlantic trusts that the banking system is setting today's rate based on its best guess about the future worth of the money. And we assume that the banks' guess is based, in turn, on the cumulative market predictions of countless lenders and borrowers all over the world about the future supply and demand for money.
But if that assumption is wrong if the bankers are manipulating the interest rate so they can place bets with the money we lend or repay them, bets that will pay off big for them because they have inside information on what the market is really predicting which they're not sharing with the rest of us it's a different story altogether. ..............(more)
The complete piece is at: http://www.guardian.co.uk/commentisfree/2012/jul/08/american-libor-banking-scandal-us
banned from Kos
(4,017 posts)2. Yes, because they manipulated LIBOR down
which would benefit consumers.
Junkdrawer
(27,993 posts)3. Yesterday, I speculated that Tim Geithner (and by association, guess who) MAY be involved...
Think Timothy Geithner will be implicated in the LIBOR scandal?
If so, the answer to my OP's question will have increasing importance.
If so, the answer to my OP's question will have increasing importance.
DCKit
(18,541 posts)4. While you might think that, the 1% are in on it.
The corruption goes all the way to the top. As long as their brokers get paid, they get the bestest inside information.
Martha Stewart got screwed for something her neighbors do every day.