RATE-FIXING: Another reason why the playing field between Germany and the ClubMeds is uneven

How to put down $20 trillion on the table and make one helluva return.

This from three American sources, to varying degrees.

You are a derivatives trader or money broker circa 2005-2011. The Libor et al rate trends are theoretically unknown: they are floating, upping, downing and generally doing lots of ings that mean you, as an asshole, can’t make a cast-iron return for that gold-plated investment bank which employs you.

The banks writing the contracts are telling their clients that interest rates are going to head north….but then they don’t…because of LIBOR fixing.

So you (and other members of your syndicate) ring a big bank and say you’d like to swap this floating bollocks for something, as it were, rather more certain. No problem says banker-man…but to make this believable for the authorities, you’ll have to buy into very safe bonds. Very safe as in US, UK, German and Japanese.

And as any fool might expect, rates keep falling for the safer sovereign borrowers….especially in the EU: that’s normal, isn’t it? Of course it is.

The banks make money at both ends of this: they pocket not only the profit from writing and helping to broker the contract, but also make money on the bond purchase. While the soi-disant ‘risk takers’ actually take no risk at all.

Now you the banker have bought ‘safe’ bonds in order to execute the scam. What do you do with them? Simple really: you see another bout of UK/US/Euro overt or disguised QE coming (more erosion of currency = rising bond rates) and then you sell the bonds when the yields temporarily spike.
 
In this great little game, everyone who’s a member of the 3-7% informed elite does well. The people who don’t do well – let’s be real here, they catch f**king pneumonia – are the small investors, the mortgage owners, the small businesses looking for help to expand, and all the taxpayers who coughed up for the reckless sins of the bankers. (The traders are OK as, thanks to a fix, they’re clawing back any losses made).
 
Well, as the Friedmanite jerks are wont to say, the markets must decide. And because the markets will always decide in favour of the assholes who rig the markets, that imperative is 100% to their advantage.
 
But the social bottom line is that, in eurozone terms, the Germans win while the ClubMeds are doomed to lose.
 
Am I the only one who thinks this puts a whole new gloss on why investor ‘confidence’ in UK and German bonds is bound to rise, and that of the southern EU is doomed to decline, at an exponential rate?

26 thoughts on “RATE-FIXING: Another reason why the playing field between Germany and the ClubMeds is uneven

  1. T’was ever thus….

    This will only change….

    When, (and if) the passive masses, get involved…

    As some might find on here…

    That may be a mixed blessing!

    • Ah – the lovely masses. I love them all dearly.

      Let me tell you of a small episode I observed recently at a recycling centre. While I was talking with the site supervisor, we watched as a small car pulled up at the far end of the site. Out stepped a young beauty of no more than thirty summers who then proceeded to untie a double mattress which had been roped to the roof of the car. With an effort she hoisted the mattress to rest upon her head and wandered slowly past the bin for domestic waste (heavily populated by items of similar provenance), past the general waste and finally to the last bin where she staggered and, with her remaining strength, hurled the mattress on to a pile of grass cuttings and garden clippings. With a sigh, my companion walked over to the young lady and asked her why she had put the mattress in the “Green Waste” skip. She looked at him pityingly and said, “Cos it’s a green mattress, Sillee”. And she was serious.

      These are the people who cast their vote in general elections. These are the people who are forgotten when clarion voices call for a referendum on Europe. The masses may not always be totally reliable :-)

  2. And because the markets will always decide in favour of the assholes who rig the markets

    Not necessarily. The markets always decide in favour of the course that they hope will yield the maximum profit. That is not quite the same as always agreeing with the people who fix the markets.

    Looking at things from this perspective leaves the UK in a difficult position. As long as the markets can make more money whilst the Bank of England prints, they will take no notice. When the deceit practiced on them is taken note of, they will be less kind. That is the time when Britain realizes that its economic position is closer to the West and South of Europe than the Centre.

    This will of course be a problem for the Central and Northern parts of Europe who will be seen as even more of a safe haven! Whatever deceits the German banks practiced on the South, the South played along imagining that the future would always be thus. They are now repenting at their leisure. Britain in its turn will realize the false path of money printing, urged on it not from Moscow but Washington?

    • Sir,
      Please be informed , formally and with my own stamp of distinguished authority, that I am soon to receive my PHD in NAKED DERIVATIVES which will authorise me to talk with great knowledge and understanding of all things financial, including, and this is vital, all matters denominated in the euro currency.
      At this point I may be addressed as
      DOCTOR the real gemz and from that moment onwards, I PROMISE NOT TO TALK ANY MORE NONSENSE EVER .

      • “Good morning, this is Rent-a-Troll”

        “Oh, hello, ummm … err … can I buy a troll?”

        “What would you want to buy one for, horrid things! We tried selling them, but they all got sent back. So we only hire them out. We used to have pens out the back, but that was in the bad ol’ days”

        “How does it work then”

        “You hire one online, dummy! If you really want one, you send the thing back when you are done, then we send you the fumigation guys to clean up for you. Mind you cleaning up can be expensive, and the damage a Troll can do to your home – not to mention your reputation! No: just get one online, it is much better”

        “Oh, I didn’t want a troll in the house, I only wanted it for a blog I read – I don’t like … women and it is a man’s blog after all.”

        “Why didn’t you say? Number 35 is good at commenting. Well, actually it is cr*p at commenting, but it knows how to string a few unconnected words together.”

        “Sounds great, can it do Gravatars?”

        “Oh, we have backup that do the works, but that is where it all starts getting expensive of course. No, number 35 can do the basics of course, like basic spelling, messing up someone’s gravatar, nothing special.”

        “Well, it doesn’t need to look professional, does it? This is trolling after all?”

        “Now you are getting the idea! Rough jobs always look better”

        “And your troll can do everything from where you are?”

        “Yup. All online! Rent-a-Troll offer the works!”

        “So I don’t have to have the smelly thing here at all?”

        “We don’t have the smelly things here! I never see the things myself. They are in upstate Delaware, chained to some computer in a cellar. Most of the time they forge signatures for fraudulent businesses – tax avoidance mainly. It’s a good earner for us, that kind of petty fraud. ”

        “Petty fraud?”

        “Sure, the easy stuff. The sub-prime was terrific business for trolling. Gee, we lost 80% of our trolls when that folded. Those were the days. We piled up our profits. We have other departments, but not under this name. Trolls are only used for the basics, we have humans for the really deceitful stuff. We have a branch on Wall St who deal with all that, but they are expensive. I mean, they are really expensive. Mind you, they do the job if you can afford their rates”

        “How much do they cost?”

        “We cost $150 an hour, paypal only and no receipts.”

        “Yeah, but how much do they cost?”

        “Are you asking how much a Wall St banker costs? …read more here!

        http://eintroll.blog.de

        @Animal Farm
        “Careful that could take you to the Dark Side” – - – I thought that the REAL Gemz was already there! The Slog stands against fraud, except when it is funny of course. Bankers don’t like fraud, except when it makes a profit of course.

        You can’t have it both ways. Either you stand by what you say, or you don’t.

  3. Libor is the engine of the whole financial system so
    THIS IS A CRISIS, a large crisis.
    Its a 12 storey crisis with a magnificent entrance hall, carpeting throughout, a 24hour porterage and an enourmous sign on the roof which says
    THIS IS A LARGE CRISIS.

    • @ Mr E Blackadder: Has it got a basement swimming pool? I could be interested – I wonder who the Agents are?!

  4. Q. Is this fiat taxed?
    A. Definitely!
    Q. Is it insured?
    A. Yes, of course here’s the CDS.
    Q. Does it have an MOT?
    A. Umm, hold on I’ll have to go and look for that..

    The brakes and steering are shot and the suspension only works for disbelief; the fact that it derives beautifully doesn’t make it roadworthy. Oh, and someone’s taken the seat belts out.

      • @Nick: Absolutely brilliant! Two Fiats too!

        Listening to an unbelievable Toots Thielemans album called The Brasil Project (first one) – if you ever get a chance to listen, and you like music that swings and has terrific melody, it’s a great antidote to all this bollocks. If we could get all the banksters and pols into a room and play them music like this until they got it, we might get somewhere.

    • The warning light has been flashing for some time, the PTB just disconnected the warning light and said, there, all fixed folks, off you go!

      • @Wfd
        This happens in the real world too.
        I earn my living (such as it is) driving buses around in a UK city.
        I can personally testify that a vehicle I was driving developed a persistent overheating fault, which I reported to the Control Room. I took the bus back to my depot, as instructed, only to watch incredulously, whilst the maintenance fitter disconnected the spade clip from the temperature sensor.

        Said fitter proclaimed the vehicle as “fit for service” so I took it back out on the road.

        About an hour later, with a bus full of schoolchildren keen to get home, the top hose split.

        Still, I tried to play my part for the ‘Big Society’ (sarc on) by opening the engine hatch and trying to explain to the youngsters the various components and how they functioned.

        I don’t think I’d be much good as a banker!!

      • “The rich run a global system that allows them to accumulate capital and pay the lowest possible price for labour. The freedom that results applies only to them. The many simply have to work harder, in conditions that grow ever more insecure, to enrich the few. Democratic politics, which purports to enrich the many, is actually in the pocket of those bankers, media barons and other moguls who run and own everything.”
        ― Charles Moore

      • I had a bit of leisure time recently so took a short break in Argyll. I re read “The Ragged Trousered Philanthropists” by Robert Tressle (got it free as an e book on the internet).
        Couldn’t help thinking that nothing much has changed.
        Have a great day sloggers – and remember – lets be careful out there.

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