The LIBOR Scandal: Just the Tip of the Iceberg

Written by Bob Adelmann

The ripple effects from the announcement by the British Financial Services Authority (FSA) that it was fining Barclays Bank for manipulating in its favor a key interest rate are just beginning to be felt. Explained the authority:

The London Interbank Offered Rate (“LIBOR”) and the Euro Interbank Offered Rate (“EURIBOR”) are benchmark reference rates fundamental to the operation of both UK and international financial markets, including markets in interest rate derivatives contracts.

LIBOR and EURIBOR are by far the most prevalent benchmark reference rates used in euro, US dollar and sterling over the counter (“OTC”) interest rate derivatives contracts and exchange traded interest rate contracts.

The notional amount outstanding of OTC interest rate derivatives contracts in the first half of 2011 has been estimated at 554 trillion US dollars…  (emphasis added)

Let’s put that into simple terms: the LIBOR and the EURIBOR rates affect financial instruments with values more than 36 times the gross domestic product of the United States! These are rates that affect nearly every contract that contains or refers to an interest rate. That would include variable-rate mortgages, municipal bond financings, credit card debt, U.S. treasuries — an enormous, almost incomprehensibly large number.

Continue reading: http://www.thenewamerican.com/economy/markets/item/12222-the-libor-...

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Comment by Nathan on July 28, 2012 at 1:57pm

At least three banks seen central to Libor rigging
Some of the traders who are being probed have worked for several banks under scrutiny, raising the possibility that the rate fixing became more ingrained as traders changed jobs.
http://www.reuters.com/article/2012/07/28/us-banking-libor-traders-...

Say it aint so! LMAO

Comment by Nathan on July 28, 2012 at 1:09pm
Comment by Nathan on July 28, 2012 at 12:24pm

Yep, the end is near. The entire sys is founded on confidence of the masses, which is eroding at an exponential rate (as you already know). The tipping point is....yesterday? Last mo? A yr ago? 10? Just because the sys is limping along doesn't mean the tipping point hasn't already been reached. Look at the extraordinary measures 'they' are implementing to keep it propped up.....

Comment by truth on July 27, 2012 at 9:36am

"Destroying the New World Order"

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