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.