RATES SCAM: Euribor rates ‘rigged throughout 2009-10 crisis’.

As the news began to permeate deep into the MSM – even as far as the Dacre Wail – last night that the Libor rate has been fiddled for perhaps thirty years or more, an interesting (if brain-challenging) piece by John Morrison at Asymptotix argues strongly that euribor was completely rigged two years ago as interbank illiquidity solidified completely during 2009-10 in the eurozone. Thus we had:

‘….the context to incentivise Fixed Income trading desks (most all of which are in London) making losses in the context of total Armageddon, to start to behave in a criminally disruptive manner; the environment was ‘all bets are off’; ‘this is the end of the world as we know it’… the opportunity to rig LIBOR or EURIBOR occurs in a context of crisis where Central Authorities have lost control of the capital market transmission mechanism…’

This is an intriguing viewpoint, and one which I think has some validity – viz, when the authorities are ignorant and incompetent (and we are talking Brussels here) to keep things going it becomes a case of individual players following the sauve qui peut approach. This is backed up by Van Rompuy’s immortal line at the start of Ecofin, June 17th 2010:

“As we can see there is an absence of any sign of crisis at this moment, I hope we can look forward to meeting in a relaxed and comfortable context”.

But whatever the motive at any given time for Libor mendacity, we can see with crystal clarity now that Diamond, Tucker, most of the TSC, Marcus Agius, and let’s face it the entire politico-financial complex have been lying their heads off to us about stuff since forever.

Cheery way to start (or end) the day depending on your position, Pondside.

42 thoughts on “RATES SCAM: Euribor rates ‘rigged throughout 2009-10 crisis’.

      • Carrol Quigley – the bankers’ plan

        “The Power of financial capitalism had [a] far reaching plan, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole.

        This system was to be controlled in a feudalistic fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences.

        The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world’s central banks, which were themselves private corporations.

        Each central bank sought to dominate its government by its ability to control treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence co-operative politicians by subsequent rewards in the business world.”

        Carrol Quigley, Tragedy and Hope, 1966 – [Bill Clinton's mentor and Georgetown University professor]

  1. Thank you for the interesting links.

    A subtle thought and all the fuss over separating retail and investment banking try this … write or wrong?

    Every person when earning a wage primarily “has the right to earn cash” and not have it paid directly into a bank.

    Now the game changes a too big to fail bank cannot occur because the bank will only have the excess cash if anything and “can afford to be lost”. You can keep the money in your pocket, under the mattress or if you like and can find an honest bank somewhere there as well.

    The money now returned to people and without the skimming off the top by banks etc. Yours free to spend on whatever you can afford or wish and it may constructively unlock the consumption in the economy in the process.

    • @Mark Deacon: Thatcher put a stop to that when she repealed the 1922 Truckers Act, when every man had the right to be paid in cash at the end of the working week.
      That’s when the rot first set in, then, giving people the ‘right’ to buy their council houses finally sealed the coffin, from then on in the banks were in charge. Nothing has changed, the banks are still in charge. It will be almost impossible the wrest the power back from them.

      • From my recollection, the Truck Acts were aimed at outlawing the practice of paying staff in company tokens which could only be use at that company’s own store (and at inflated ‘prices’ obviously).
        I’m not aware that the basic right to be paid in legal tender was repealed – however, it’s a matter of interpretation whether data in a bank’s computer is, in effect, legal tender in this electronic-dominated world.

    • No, that’s not true. Interest rates have been set so low by governments that very few people invest cash in banks anyway. All the banks borrow short on the money markets and lend long. The money markets have far more cash than ordinary depositors. So the man I bought my house from got paid by debt raised by the bank on the money markets. The bank has to keep rolling over that money market debt every 5 years because they have lent for 25 years.

      That’s the real problem – not protecting the deposits but dealing with the mountain of debt that is now in the system passing itself off as cash. The money you get paid in your pay-packet is about 10% cash and 90% somebody elses debt being passed around the system. If the debt collapsed due to wide-range default (as it did during the Great Depression) we’d all be totally screwed. We’d be back to digging up the lawn to grow potatoes and standing over them with a shot-gun.

      • have you perchance considered trying your luck with a spud-gun, mr woodgnome? i am reliably informed by wikipedia (which boasts a surprisingly detailed article on the subject) that the ownership of some forms of spudzooka is legally permitted without a licence. i imagine that, in extremis, a certain amount of collateral damage to the crop, through its unavoidable depletion in favour of the missile-arsenal, would have to be acceptable – moreover, on a humanitarian note, there is the added benefit that tater-thieves would not actually have to get their hands dirty digging up the swag, but would instead be able to take direct delivery of the produce via environmentally friendly air-post, a logistical point admittedly, but one which would no doubt constitute a great comfort to socially conscious liberals experiencing qualms over the introduction of root justice.

  2. I have been saying for years how wrong it is for low paid workers not to have their wages paid in cash at the end of the week if they want it paid that way. It’s all right if you already have a lot of money to have it put in the bank at the end of the month, but if you are poor you probably need that money straight away, and not have to wait until a cheque is cleared either.
    David Cameron hasn’t got a clue what it’s like to be poor and need the wages you earn to buy food. Michael Portillo pretended to care about single mothers when they were the latest media target for a hate campaign, and did a television program about himself living on benefit, but he doesnt really care at all, he only made the program so that women would think “What a nice man” but he can forget it, it was just another political publicity stunt, aided and abetted by the corrupt television people.
    In my area (Staffordshire) there are disabled people having their benefits cut. I told one man that he should go to the food bank, but there isn’t a food bank near enough for him to go to. The man would like to work, but there aren’t enough good jobs for able bodied people round here, and there are very low paid jobs and you can get benefit top ups if you are on a very low wage, but its a minefield trying to claim those and they don’t want you to have them anyway, and the rules are really super complicated, you need a to be a lawyer to understand them. It’s really horrible being poor, because no matter what you do there is always someone to criticising you for even having the cheek to carry on existing, no wonder so many poor people end up depressed and ill. In the end, the people that poor people have to turn to for help is other poor people, and a lot of the not for profit charities that are supposed to be helping people are only helping to line the wallets of the already rich.

    • @Barbara. “Not for profit”. There is a certain ‘not for profit’ organisation in the supported (i.e. social) housing sector whose M.D. Is on £365,000 per year.

    • @ Barbara – is there an accepted definition of poor or an official definition of poor because I hear the word loosely used which is meaningless eg I’m poor compared to Bill Gates or I’m rich compared to a family of eight living in a council house without work .
      Isn’t much of the problem caused by failing local authorities eg Social Services or other agencies .There is a Bill making it’s way through Parliament to Cap Benefits to £26,000 per year, today, in some cases Benefits exceed £100,000 per year .

      • I’m talking about being too poor to afford to pay the rent and food and clothes. I don’t know anyone at all who is earning £26,000, thats £500 a week, I think all the people I know would consider ourselves to be rich if we had that much coming in and wouldn’t want to be claiming welfare benefits anyway.

      • So no official definition of poor means it’s left to others to determine .
        In the case of what you describe, isn’t it down to failing govt’s and or govt agencies eg the safety net is full of holes ?

      • The only “poor” people I know are the ones to proud to go on benefits but with no skills to get a well-paid job. But its not “poor” like when my grandfather was young when you worked all day down the mines just for the chance to scrape by.

      • If one has lived in Asia or generaly in third word countries has a different perception of poverty and understands what really means to be poor and hungry.What nevertheless strikes one when he looks at poverty in the West is the sense of loneliness and mental despair , which to me feels so weary , almost worse than any kind of hunger .

  3. I would imagine that it would be one way to wrest some power back from the banks, if all people had the right to be paid in cash at the end of the week but, can’t see employers or insurance companies going for it, let alone the banks, they would fight tooth and nail to stop it happening. Also there isn’t a politician alive who would risk trying to get that bill through Parliament!
    Are they all born eunuchs, or do they become them?

    • @KFC1404. When you work for, say, an hour and you are given £5note(s) in exchange, the transaction is tangible and meaningful. That sense of reality of exchange is loosened when you don’t see and touch your wages because they are paid monthly into your bank account.
      The move towards a cashless society takes us even further away from the sense that money is real and is the result of effort. I know I tend to spend more when I use plastic than when I hand over cash.

      And another thing….On top of that, banks create money out of thin air when they grant you a loan, devaluing one’s labour. Then along come these crooks manipulating virtual money, and still others talking about Eu 30bn as if it’s a flea bite. It’s a recipe for universal despair among the plebs. Add to the mix 3 million disaffected, unemployed youths (15-25) across Europe. That’s one big angry mob. “The old order is rapidly changing, and you’d better start swimming or you’ll sink like a stone.”

    • @kfc: One of the reasons why wages (also welfare benefits, pensions, large payment transactions and all the rest of it) are paid thru the banking system is to move towards the cashless society, which gives govt much better control over the black economy and tax collection. It is surely ironic that the very objective they have is in danger of a major setback as people pull their money out of banks and (perhaps) some demand payment in cash.

      • @BT: Very true. Many people I know are using cash now, I certainly am, I pull as much cash as I can out of the bank every month and only leave enough to pay DD and SO’s. I have noticed though that I am no longer asked about ‘cash’ and where it’s come from etc etc. Is it because they know now, all notes have RFI’s I wonder?

      • @kfc: Dunno about banknotes having RFIDs now. But I suspect that many banks are currently faced with growing numbers of customers walking in/out with large sums of £cash. It might be getting difficult for them to apply the rule of knowing where the money’s come from.

    • I remember the happy days of being paid cash in a brown envelope. In the early days, right down to the copper pennies.

      Over a long time, the envelopes developed a cellophane ‘window’ to count the notes before opening, and the loose change disappeared, being rounded up or down for each pay packet.

      Then, one day, we all had to ensure we had bank accounts and have it paid by BACS I think they called it. Happened back in the seventies if I recall.

      Ta for the memories :)

  4. From Prime Minister David Camerons wiki entry:

    David Cameron’s great-great grandfather Emile Levita, a German-Jewish financier (and descendant of Renaissance scholar Elia Levita) who obtained British citizenship in 1871, was the director of the Chartered Bank of India, Australia and China which became Standard Chartered Bank in 1969.[14] His wife, Cameron’s great-great grandmother, was a descendant of the wealthy Danish Jewish Rée family on her father’s side.[15][16] One of Emile’s sons, Arthur Francis Levita (died 1910, brother of Sir Cecil Levita),[17] of Panmure Gordon stockbrokers, together with great-great-grandfather Sir Ewen Cameron,[18] London head of the Hongkong and Shanghai Bank, played key roles in arranging loans supplied by the Rothschilds to the Japanese Central Banker (later Prime Minister) Takahashi Korekiyo for the financing of the Japanese Government in the Russo-Japanese war.[19]

      • Well, I just thought it was interesting that David Cameron is saying “We’re all in this together” when it’s clearly not the case, he hasn’t got the faintest idea of what it’s like to be poor. Incidentally, I only looked at his biography because I was very interested in Dr Ewan Cameron, I didn’t know anything about Sir Ewen Cameron the banker.

    • Interesting research and pertinent, in away. So his family have never known financial hardship or struggle for at least the last couple of hundred years. Has he ever done a real days work? At least Macmillan mucked in during WW1.

  5. Well as I said yesterday Tucker is the biggest liar of the lot . The greater the market stress the greater the need and/or desire to manipulate the rates . Ergo, rate rigging throughout 2009 is 99.99999999 certain .

  6. “As the news began to permeate deep into the MSM [redux] last night that the Libor rate has been fiddled for perhaps thirty years or more”

    LIBOR began 26 years ago (28 if you include the trial period).

    Interesting that you bring up EURIBOR fixing. This was raised by the FT early this week, with the Germans getting all upset about it. Turns out that as the EU is governed by Civil Law, and as there is no law governing EURIBOR fiddling in the EU, nobody can go to gaol for fiddling EURIBOR. In the UK we are governed by Common Law which means the judges themselves can set a precedent if they so desire and send people to gaol based on the spirit of other existing laws. Personally I think it is unlikely that this will happen as the nature of LIBOR would imply that it is about as worthy a benchmark as the opinion of Jeremy Clarkson. I don’t think you can sue Jeremy Clarkson for recommending an AMG Mercedes if it turns out you don’t like it. Seems like “Caveat Emptor” would apply, since it is all a matter of perception, and perception is not always a matter of reality. But let us see how things progress.

    • Yup. We’ll be lucky to come out of this alive, let alone with any wealth we might have accumulated intact.

      The world’s going to burn, it’s just a matter of when it starts and how long it takes to put the fire out afterward.

      • Minimum ten years for any sort of national recovery if at all.
        I think the US will Balkanize into 5 or 6 nations, and never reform.
        Russia will probably take over northern Europe.
        China will take:Asia. ,if they want it.
        The Middle East : semi continuous War.
        Interesting times we live in.

    • ESM – this you will remember is the EU`s secret weapon … a fund to rescue everybody and everything … that doesn`t actually have any money, that will be 100% outside all EU and Sovereign laws – as will be the people that run it.

      Oily Rain…. “I just underline that allowing the ESM to directly recapitalise banks, once the conditions are met, is a cornerstone of our efforts to break the vicious circle between banks and sovereigns. Once in place this will be a powerful tool to ease pressure on sovereigns in the euro area.”

      So now the ESM – funded by taxpayers, or at least German taxpayers, he he – will give money directly to banks……..
      Unbelievable!!!

      At least now we can theoretically – every five years or so – vote out our governments if we don`t like then giving all our money to the wankers (although I do accept that normally all parties presenting at elections want to do this anyway so we don`t have much “choice”}.

      But, once a country has ratified the ESM and it comes into being, the ESM can call on money from sovereign governments whenever it likes and the government has no option but to pay up, as much and as often as the ESM wants ….

      This is a “fund” that will be run by a mixture of EU cretins and wankers, who will operate outside of all laws, and who – it is now proposed – will have the right to give this money – our money, taken from us without our having any choice – directly to their wanker friends……..

      And we are meant to trust these people …… the people who brought us:
      Lehman brothers
      RBS
      MFGlobal
      Barclays
      LIBOR fixing
      pension miss-selling (several times in the UK)
      Austerity
      Greece, Ireland, Spain, Italy…..
      Bernie Maddox
      John Corzine
      PFG
      Too big to fail
      Too big to prosecute
      Unelected Prime Ministers
      Elections re-run until the “right” result is achieved

      I`m not sure that “screwed” is a strong enough word …….

      • @Mountainman: Yep, that’s where we are right now. The criminals, political has-beens and jackboots have taken over via a backdoor coup and are now determined to impoverish everybody and destroy what’s left.

    • Nah. As long as the BofE replaces all the collapsing debt with cash at exactly the right rate, we won’t even notice. Oh, and the government needs to get the deficit down fairly quickly. The EU, however, is screwed because it can’t create money to replace the collapsing debt under its own rules. China is screwed because its entire model is based on convincing the world it can grow at 8% per annum to suck in foreign investment, which clearly it can’t during a global recession. But since the UK can live quite happily without the EU or China this shouldn’t trouble us too much (unless they start shhoting at us that is…).

      I think we are going to be entering interesting territory over the next few years in the UK because 2/3rds of the population already own their own homes outright (including yours truly) and many of these are about to pop their clogs leaving their assets to their children. This is £4trillion of wealth in the hands of ordinary Brits. You can see that the indigenous Brits can soon tell the power elite to “f off” – I guess that’s why the power elite needed to import so many people with no money. I think we are going to see some sort of “revolution” in the UK, but not in the way we might expect. It will likely be some kind of revolution in the way we choose to live our lives which will render existing UK politics rather meaningless. Which is why I personally have a tendency to ignore (or just laugh at) UK politicians and their acolytes in the media.

    • It looks like Murky & Baubles are stuffed. Perhaps this is their most blatant violation of German rules so far.
      Bailing out the banks directly was intended to keep the bailout funds off the sovereign books and keep their bond yields down. But that was only a childish attempt to hoodwink everybody since it’s clear that sovereigns are liable for ESM bailout funds to banks and the markets will price this in. Nothing will be achieved.

  7. This is really quite serious. Interest rates represent the price of money and it is now clear that price was and is being manipulated. If people are fraudulently manipulating the price of money then they are manipulating evert single thing you do.

    Now, we need to move on to the other great indicator or the price of money and see whether that too is being manipulated and by whom. That, of course, is gold, and the very governments, ministers and regulators who are so shocked at Libor manipulation will be knee deep in that one.

    Where does it stop? And why should it?

  8. Pingback: RATES SCAM: Euribor rates ‘rigged throughout 2009-10 crisis’. | Machholz's Blog

  9. Of course.A very visible indicator of just how much
    “full faith and credit’ there is in fiat money.
    Just further can kicking.The road however is washed out,and
    the bridge has collapsed.
    There is only one option left for TPTB.
    Listen to the sabre rattling increase as Autumn comes to the
    Middle east..

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