Taibbi, Spitzer, and Kelleher On LIBOR - But Even They Don't Understand the Bigger Picture

"Bleed, bleed, poor country!
Great Tyranny! lay thou thy basis sure,
For goodness dares not check thee!"

William Shakespeare, Macbeth. Act IV. Sc. 3.

The LIBOR scandal is shaking the remaining confidence that people have in the financial system.

It is the equivalent to rigging the US benchmark interest rates with advance insider knowledge to benefit the banks' personal accounts to the loss of everyone else.

 Oh wait, they already do that, don't they?

Bear in mind, the Federal Reserve is a private institution, owned and managed by the Banks. The government itself uses the bankers to achieve their own policy ends, both domestically and abroad, and turns a blind eye to their more brazen extracurricular privateering for their own accounts out of professional courtesy, and blackmail.

What is equally outrageous is the long term manipulation of gold and silver, which are also foundational benchmarks of the monetary system. 

The manipulation in the metals has been exposed for some time now, and is virtually in plain sight. 

The same parties involved in LIBOR are involved in manipulation across multiple markets, actively mispricing risk and misallocating capital to serve the greed of the privileged few.

And the pity is so few people get it.  But they will.  As I had forecast, this is the year of revelations.

When it comes out they will say, 'we did it for the sake of the system.' 

And don't be a sap, because after all, everybody knows.



(h/t Capitalism Without Failure)





"Separate But 'Equal'"

Synchronized Easy Money: Central Banks Cutting Key Rates - Denmark Goes Negative

"Decency, security and liberty alike demand that government officials shall be subjected to the same rules of conduct that are commands to the citizen. In a government of laws, existence of the government will be imperiled if it fails to observe the law scrupulously. Our Government is the potent, the omnipresent teacher. For good or for ill, it teaches the whole people by its example.

Crime is contagious. If the Government becomes a lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy."

Louis D. Brandeis, US Supreme Court Justice, Olmstead v. United States, 1928

Gentleman, start your presses, and rig the markets to both enhance the effect in some and to hide it in others.  And this produces a mindset towards manipulation in all the key market participants.

Bob Diamond is a sociopathic child of a monied culture of privilege and deceit, a collegiality of crime.

They may try to bury the stench of corruption in the banking system by further diluting the value of money, but this will not restore vitality to the real economy.  It will only continue the malicious trends and increase the misery of the people.  And this energizes the feedback loop of repression.

Eventually the monied interests must accept reform, but because of the credibility trap this will be something that is more likely forced upon them when they go too far.

US Non-Farm Payrolls Report for June on Friday. It may appear a little better than expected, or it may not.

The monthly figures, as are several key market indicators and prices, all a part of the show, masking the real trends at times like these. This was shown clearly in the manipulation of LIBOR by the Bank of England, in addition to the extracurricular privateering of the banks for their own accounts.

USAToday
Central banks worldwide cut key interest rates
By David McHugh, Associated Press
5 July 2012

FRANKFURT, Germany – The European Central Bank has cut its key interest rate by a quarter percentage point to a record low of 0.75% to boost a eurozone economy weighed down by the continent's crisis over too much government debt.

The move followed a rate cut by China's central bank and new stimulus measures by the Bank of England as global financial authorities seek to shore up a slowing global economy.

Stock markets rose briefly on the news, mainly because China's rate cut was unexpected. But the gains did not last long as investors seemed worried about the extent of the slowdown in the global economy. Germany's DAX was up 0.4% while the Dow futures were flat...


 

Reuters
Denmark cuts rates, one to negative for first time
By John Acher and Ole Mikkelsen
5 July 2012

* Central bank cuts main policy rate by 25 bps to 0.20 pct
* Cuts CD rate by 25 bps to negative 0.20 pct
* Keeps current account rate unchanged at 0.0 pct
* Lifts current account limits

COPENHAGEN, July 5 (Reuters) - Denmark's central bank cut interest rates by a quarter point on Thursday, shadowing the European Central Bank's action earlier in the day, in a historic move that put one of its secondary rates below zero for the first time.

"The interest rate reduction is a consequence of the reduction by the European Central Bank of its monetary policy rates by 0.25 percentage point," the Nationalbank said in a statement.  (a spiral of competitive devaluations of fiat currency - Jesse)

The Nationalbank cut its lending rate to 0.20 percent from 0.45 percent and lowered its certificates of deposit (CD) rate to negative 0.20 percent from 0.05 percent to match the ECB's move and to curb strength in the Danish currency... 

PBS Frontline: Money, Power, and Wall Street: Part Four

"Wall Street has lost its way. And it all began when the Banks started trading for their own profits, and not for their customers."

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustained growth and recovery.

Watch Money, Power and Wall Street: Part Four on PBS. See more from FRONTLINE.

Reaction in the UK To This Morning's Bob Diamond Testimony

After the hearing, Conservative MP David Ruffley, a member of the Treasury Committee, said he was not satisfied with Mr Diamond's evidence.

"Either he was complicit or, frankly, incompetent," Mr Ruffley told the BBC.

He said he was astonished that Mr Diamond said he only became aware of the rate-rigging at Barclays last month.

"It was quite shocking testimony, in the sense that there was serious wrongdoing and he didn't know about it," the MP said. "Heaven knows what else was going on inside the bank."

BBC


"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."

John Dalberg Lord Acton

I found much of his testimony troubling when viewed within the context of what had actually happened, which is a long term criminal conspiracy involving many of the major Banks to 'fix' one of the public financial system's most important, foundational benchmarks.

One example of his dissembling is the finger pointing at the Bank of England,  which may have encouraged Barclays to jigger rates during the 2008 liquidity crisis. There should be little doubt that governments intervene in markets during crises. But they also turn a blind eye to much criminal activity in ordinary times as well, as a professional courtesy it appears.

This allegation of Barclays deliberately misstates and misdirects the history of LIBOR fixing.  For some three years at least prior to the crisis with evidence dating from 2005 the rigging of LIBOR proceeded. Felix Salmon of Reuters enlightens us on this little bit of prevarication. Defiant Barclays.

Is Mr. Diamond not only negligently incompetent but delusional as well, or merely a pathological liar?

The standard CEO defense is well known to the readers here, and to those who have closely followed the series of scandals from Enron to MF Global to JPM. The leaders of the companies are paid astronomical sums to run their firms and take credit for the results, but if anything should go wrong, they are never involved and know almost nothing, barely paying any attention at all to the business which they direct.

And they throw their employees, their shareholders, and the public under the bus.

There will be plenty of excuses made and defenses of a thoroughly rotten financial system offered. This is all a part of the credibility trap, and the corruptibility of even the best of us, and certainly of the worst.

Can you believe that there are those in the American Congress who are already calling for and engaged in the weakening and overturning even the little reforms that have been pushed through the formidable lobbying pressure of the Banks, as if the financial crisis and widespread bank fraud had not ever occurred but a few years ago.

Power not only corrupts, it also attracts into its service the weak, the morally ambivalent, the greedy, and the corruptible.

"There is no error so monstrous that it fails to find defenders among the ablest men...The danger is not that a particular class is unfit to govern. Every class is unfit to govern...The strong man with the dagger is followed by the weak man with the sponge.”

John Dalberg Lord Acton