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Shock Revelation - Wall Street Journal - Uk's Libor Rate


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Guest Steve Cook

So, the banks are lending to each other at even higher libor rates than they are reporting.

This is becoming more difficult to disguise though because the libor rates as reported are not being passed onto debtors. In fact the opposite. Debtor's rates are being raised.

So, one must assume from this that a large proportion of the banking industry has been on the very brink of bankruptcy?

Have I got it basically right?

Edited by Steve Cook
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Seems like only 3 of us are vaguely interested in this out of 800+ folk on this forum. Hmmm, I feel HPC has gained a very different population, somewhat less well-versed in economics, recently.

Oh well, I suppose it's another indicator that we're in the next phase of the cycle.

I'm interested. Just hadn't been on yet tonight.

This is absolutely huge. Are variable rate loans to corporates set as Libor plus a certain number of basis points? If so, then they might very likely wish to take legal action against the banks if they can prove false reporting.

Ditto with parties trading options whose value depends on Libor (presumably such things exist). If someone has lost out because of dubious reporting then they would have a case against the banks?

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Seems like only 3 of us are vaguely interested in this out of 800+ folk on this forum. Hmmm, I feel HPC has gained a very different population, somewhat less well-versed in economics, recently.

Oh well, I suppose it's another indicator that we're in the next phase of the cycle.

Just got on. This is big news if true. I should just include this piece from the article though (below). I wish I could add some insight into this Paddles but I'll just have to go with the flow. Mad times.

No specific evidence has emerged that banks have provided false information about borrowing rates, and it's possible that declines in lending volumes are making some Libor averages less reliable.
Edited by DoctorJ
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I'm interested. Just hadn't been on yet tonight.

This is absolutely huge. Are variable rate loans to corporates set as Libor plus a certain number of basis points? If so, then they might very likely wish to take legal action against the banks if they can prove false reporting.

Ditto with parties trading options whose value depends on Libor (presumably such things exist). If someone has lost out because of dubious reporting then they would have a case against the banks?

Yes, look at this.

The association, which held its annual board meeting today, said it will ban any member deliberately misquoting lending rates. The rate serves as the basis for many interest-rate derivatives, including swaps that switch between fixed and floating-rate payments, which totaled $382.3 trillion in the second half of last year, according to the International Swaps and Derivatives Association.

http://www.bloomberg.com/apps/news?pid=206...t8&refer=uk

If you make up the rate that affects the pricing on stuff worth $382Trillion, even a 1 basis point distortion costs more than the NHS gets in a year. Legal action big time.

Isn't this like finding the ship is holed below the water line? When the passengers find out about a submerged hole they tend to panic. Meanwhile Brown and Darling are setting up deckchairs in an interesting geometric pattern.

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Just got on. This is big news if true. I should just include this piece from the article though (below). I wish I could add some insight into this Paddles but I'll just have to go with the flow. Mad times.

Won't this destroy any credibility of London as a financial centre?

I hope Brown has a really uncomfortable feeling in the pit of his stomach tonight when he hears this. He ought to resign immediately. He must realise the game is up?

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Won't this destroy any credibility of London as a financial centre?

I hope Brown has a really uncomfortable feeling in the pit of his stomach tonight when he hears this. He ought to resign immediately. He must realise the game is up?

I'm very tempted to start my own black Thursday thread. This seems to be getting very nasty, quickly.

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Won't this destroy any credibility of London as a financial centre?

I hope Brown has a really uncomfortable feeling in the pit of his stomach tonight when he hears this. He ought to resign immediately. He must realise the game is up?

Need evidence. ...you'd have to find deals banks had done and not quoted, or just plain lied about...good hunting all...

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Need evidence. ...you'd have to find deals banks had done and not quoted, or just plain lied about...good hunting all...

The records all exist. Many of the banks who've lost money on the derivatives will be counterparties to the Libor transactions. This one really smells!

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Won't this destroy any credibility of London as a financial centre?

Which is why they'll investigate it, announce that "there's nothing to see here", while Libor rates slowly creep up to their true level. If the cost of this is as high as some here state then no one wants another bank going after them for lost earnings because they under reported their figures (if I understand this correctly).

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LIBOR being set artificially low is OLD news. Everyone knows it's been far too low for months now. The NEWS today is the threat of a BAN on banks from the panel chosen to set libor. Will libor rates shoot higher tomorrow? Yes but perhaps not as far as some think. Is losing your status on the BBA panel of contributing banks such a bad thing in the current climate? As a bank i wouldn't want to be under the scrutiny.

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LIBOR being set artificially low is OLD news. Everyone knows it's been far too low for months now. The NEWS today is the threat of a BAN on banks from the panel chosen to set libor. Will libor rates shoot higher tomorrow? Yes but perhaps not as far as some think. Is losing your status on the BBA panel of contributing banks such a bad thing in the current climate? As a bank i wouldn't want to be under the scrutiny.

Maybe old news - in the sense that people expected it, but when reuters and all the others go with publishing it, the news is that it is in the news.

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LIBOR being set artificially low is OLD news. Everyone knows it's been far too low for months now. The NEWS today is the threat of a BAN on banks from the panel chosen to set libor. Will libor rates shoot higher tomorrow? Yes but perhaps not as far as some think. Is losing your status on the BBA panel of contributing banks such a bad thing in the current climate? As a bank i wouldn't want to be under the scrutiny.

The problem is it isn't news. It won't make the mainstream - not while red squirrels are fighting back against grey squirrels, Prince William cost us 15k in stag party helicopter rides and the Pope is visiting the USA.

In fact isn't it amazing how interested the mainstream news is in the Zimbabwe election????

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The problem is it isn't news. It won't make the mainstream - not while red squirrels are fighting back against grey squirrels, Prince William cost us 15k in stag party helicopter rides and the Pope is visiting the USA.

In fact isn't it amazing how interested the mainstream news is in the Zimbabwe election????

Hi claireinspain

It would take an entire news program to bring the masses (and I include myself in the term "masses") up to speed on how the banking system works before they could report this news. A red squirrel on the other hand is easy to digest, especially with a side salad.

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The problem is it isn't news. It won't make the mainstream - not while red squirrels are fighting back against grey squirrels, Prince William cost us 15k in stag party helicopter rides and the Pope is visiting the USA.

In fact isn't it amazing how interested the mainstream news is in the Zimbabwe election????

who is the royal at the centre of this trial, and HTF can you have a trial going on in public view but the royal is not allowed to be mentioned anywhere? is it Viscount Linley?

http://prisonersvoice.blogspot.com/2007/10...r-royal-in.html

Edited by Converted Lurker
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Some interesting points raised and although I am not in the banking world, this seems to be one hell of a pandora's box that is opening (at this time very slowly). I sometimes wonder that this slow leakage is designed to stop the worst happening. What is the worst that can happen really? A system can easily be pulled apart looking unstable from the outside when it is relatively in a fine equilibrium on the inside. I'd like some more on the sources of the story that broke, it all seems flakey to me. As for hyperinflation theories, is this all linked to GB's trip to America. I did find it amusing that the pope is also coincidentally over there.....

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So who has been upsetting the cartel so much that they want to chuck 'em out?

Also, why does nobody AUDIT this shit? How difficult can it be?

Curious that this emerges at the same time as the BOE are finalising their "bailout" plan - They've dispensed with NRK, and now someone else looks likely to be culled.

Edited by Red Kharma
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