http://www.silverdoctors.com/international-banker-the-western-banking-system-is-being-intentionally-burned-to-the-ground/
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LIBOR- All over the news you hear the mother of all scandals, the fact that all the major multinational banks have been rigging the interest rate system and keeping it artificially low. Which robs you of your dividends and annihilates your savings but profiteers the banksters in their risky gamble with your money. They profit and you are left holding the bag. The banks involved in this LIBOR mess total 200 about the same that just so happen to be the same banks that are all of a sudden being “hacked” and are having “glitches”. This LIBOR scandal puts into risk an $800 trillion market made up of savings, investments, mortgages, loans and retirement accounts. Taking a sledgehammer to the confidence of the whole entire global market and western backed banking system. I laugh at these pundits who talk about the LIBOR. You see my friends there is no oversight over LIBOR,it’s just a bunch of crooks deciding what they will charge for lending amongst themselves and how they can profit off of you. LIBOR was invented to be MANIPULATED the very design of this screams so. You have to wonder why now all of a sudden LIBOR is an issue? Read on.
http://www.businessinsider.com/david-kotok-what-a-crazy-week-2012-7
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We will end this weekend missive with an email exchange.
Steve wrote, “David, Do you have any insight into this article? To what degree is it true / false?” He furnished this link to a Business Insider piece that discusses corruption in China.
My answer follows.
Steve, we have continuing questions about reporting from China. It takes on-site anecdotes to gain a picture that reveals trends. We do that by obtaining data from sources we know and trust. For example, one can count containers on ships or coal inventories or financial holdings at public institutions.
But why is the writer looking at China?
Business Insider penned this opening: “[Other articles have described the] widespread fraud that has become apparent, both in mainland and US listed Chinese companies…..an extraordinary number of the Communist Party and the military cadre had massive unexplained wealth …”
Let’s take a different approach. I have rewritten his sentence into a different context. Suppose you, Steve, were an honest Chinese observer, reading the following sentences about the United States.
“Widespread fraud has become apparent in the Mainland US and among US-listed financial firms. Extraordinary numbers of political figures and public appointees have massive wealth. Examples include (1) Dick Fuld, who was a director of the Federal Reserve Bank of NY until his firm, Lehman Brothers, went into bankruptcy. He has not been charged with any crime. He denied knowledge of any accounting irregularities. (2) Former US Senator Jon Corzine’s firm was a Federal Reserve primary dealer before it failed. Huge balances of client funds are unaccounted for at MF Global. Corzine says he does not know what happened. (3) No one knows the counterparties of the transactions that cost JPM billions. (4) Members of Congress and their staffs trade on insider information and are not violating US law because of the congressional exemption that Congress legislated for itself.”
Steve, I could lengthen this but you get my point.
I will stop with my own personal observation about the LIBOR scandal. My colleagues Michael Lewitt, Bob Eisenbeis, and Bill Witherell have written about it this week. (www.cumber.com)
The LIBOR rigging is systemic. For evidence see a Bloomberg report from May 29, 2008, under the headline, "Libor Banks Misstated Rates, Bond at Barclays Says." (Yes, the article ran more than four years before Barclays's $453 million settlement last month with U.S. and U.K. authorities for manipulating Libor.)
Steve, this scandal is going to take down many more than just Barclay’s leaders. The claims are likely to be in the trillions.
Imagine the board meeting at Barclays. The general counsel says, “I have a settlement proposal. We can pay 1/2 billion in fines to the US and UK authorities now; and you, Mr. Chairman, and you, Mr. CEO, and you, Mr. COO, will resign at once. Others will also resign or be dismissed. Gentlemen, I can make this deal right now and settle it or we can have a prolonged investigation. In my opinion, paying the half billion now and taking the resignations early is the cheapest way out of this mess.” The board votes yes.
Steve, the insiders on that board know the facts. Watch out for what is coming. It may dwarf allegations about Chinese corruption.
The US and UK systems were once the models for the world. They are now sick and corrupt. We are five years into a financial crisis and nothing has changed. Who are we to throw stones at others?
and....
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9385359/Paul-Tucker-aware-of-move-to-fix-Libor.html
7:22PM BST 08 Jul 2012
26 Comments
The deputy governor of the Bank of England was warned that UK lenders were manipulating interest rates a year before he allegedly gave Barclays “a nod and a wink” to rig its own, in a call with former chief executive Bob Diamond in 2008.
Paul Tucker will on Monday be grilled by MPs on the Treasury Select Committee (TSC) over the Libor scandal, where he will be asked whether regulators decided to turn a blind eye to misconduct during the banking crisis in the interests of financial stability.
Specifically, he is expected to be quizzed about a meeting he chaired of the Bank’s Sterling Money Markets Liaison Group in November 2007, at which several members warned they “thought that Libor fixings had been lower than actual traded inter-bank rates through the period of stress”.
Mr Tucker will also be asked to explain why he did not want to relay a message from Barclays’ chief executive Bob Diamond to Westminster that other banks were low-balling their Libor submissions on Oct 29, 2008, according to Mr Diamond’s record of the event.
TSC sources on Sunday said Mr Tucker must have known that Royal Bank of Scotland and Lloyds Banking Group were posting false rates because their Libor submissions were lower than Barclays even after they had been locked out of markets and forced to take £60bn in secret loans from the Bank.
and....
http://hat4uk.wordpress.com/2012/07/08/libor-analysis-the-hints-of-global-fireworks-in-the-fsas-barclays-rationale/
LIBOR ANALYSIS: The hints of global fireworks in the FSA’s Barclays rationale
WHO WILL LIGHT THE BLUE TOUCHPAPER?
A close examination of the FSA rationale for fining Barclays points – along with other established facts – towards bank rate fixing that goes way beyond both Britain and Barclays. In fact, the connections apparent across the piece of this rapidly developing scandal suggest that nobody ‘saved the banking system’ in 2008: key players intimately involved in the sector simply lied about the cost of borrowing….using a fraud both well-established and near universal by then.
By becoming embroiled in a fruitless search for who said what to whom and when, the MSM have I think missed two vital points from the written rationale behind the FSA fining Barclays a total of £290m. In my view, enquiries and seclect committees and all the rest of the Establishment’s delaying tactics are pointless, because it’s brutally obvious that almost every witness (and half the examiners) employ practices they wish to either play down or hide.
Above all, the FSA document suggests a degree of coordinated action very damaging to the British political class; and it suggests very strongly that a large number of banks across all continents must be involved.
In section 8 of the FSA rationale we find this (my emphasis)
Barclays acted inappropriately and breached Principle 5 on numerous occasions
between January 2005 and July 2008 by making US dollar LIBOR and EURIBOR
submissions which took into account requests made by its interest rate derivatives
traders. At times these included requests made on behalf of
derivatives traders at other banks. The Derivatives Traders were motivated by profit
and sought to benefit Barclays’ trading positions.
between January 2005 and July 2008 by making US dollar LIBOR and EURIBOR
submissions which took into account requests made by its interest rate derivatives
traders. At times these included requests made on behalf of
derivatives traders at other banks. The Derivatives Traders were motivated by profit
and sought to benefit Barclays’ trading positions.
This is an explosive paragraph, because it establishes (1) the manipulation was at least three years old before 2008 (2) It was not just Libor but also Euribor that we see involved here and (3) the derivative trader sector beyond Barclays was well aware of the scam, and used it regularly to create (or recover from) positions taken.
In this initial period – when the world was in a new paradigm and did not need saving – borrowing rates were lied about up and down to get kickbacks from/do favours for derivatives traders inside and outside the bank. Essentially, the parallel is that of punters at one roulette wheel persuading a gambling house to weight another wheel so they can get their money back.
This was in a market worth $554trillion in 2011, so you can imagine the sums involved. The sums are in dollars, and the fixes apply to both UK and European rates. It is therefore very hard to imagine that the Central Banks had no idea the practice was going on. Plus we also know that, once this profit-fraud became a save-the-world gambit, Swiss outfit FTC sued 16 banks on four continents about libor rate fixing in 2007/8.
Think about this applying commonsense logic. Over any given trading period, all the banks are chopping and changing staff regularly between each other. It is inconceivable that Barclays is the only villain between 2005-8…any more than Newscorp was the only phone-hacker after 1998: what we’re seeing is a widespread, nudge-nudge blind-eye practice taking place across the piece.
Now put yourself in the position of being a senior Minister conversant with the banking system (for example, Gordon Brown), a senior Treasury mandarin of even more ability, and the Governor of the Bank of England. Or Hank Paulson at the Fed and Jean-Claude Trichet at the ECB. One thing all these men freely accept is that, during late 2007, they began to see the global banking system’s liquidity drying up….the result of mutual distrust, fear and rumours about competitor solvency. These guys are having G20 summits and attending the same banking seminars all the time. But they never talk about rate fixing?
Alright then, let’s be kind and assume that they’re all spotlessly clean on this issue. However, in late 2007 Deputy BoE Governor Paul Tucker makes a call to Robert E. Diamond, the man in charge at Barcap. This is significant in itself because, no matter who you believe, they can at least agree upon the subject spoken about: Barclay’s declared Libor rates being well on the high side compared to most other banks.
The FSA document takes up the story:
Liquidity issues were a particular focus for Barclays and other banks during the
financial crisis, and banks’ LIBOR submissions were seen by some commentators as
a measure of their ability to raise funds. Barclays was identified in the media as
having higher LIBOR submissions than other contributing banks at the outset of the
financial crisis. Barclays believed that other banks were making LIBOR submissions that were too low and did not reflect market conditions.
financial crisis, and banks’ LIBOR submissions were seen by some commentators as
a measure of their ability to raise funds. Barclays was identified in the media as
having higher LIBOR submissions than other contributing banks at the outset of the
financial crisis. Barclays believed that other banks were making LIBOR submissions that were too low and did not reflect market conditions.
Now this is key. Having moved on from cheating the public to hoodwinking the media, Barclays staff are already lying ‘downwards’ about the borrowing rates in order to ensure there is no whiff of liquidity problems at the bank. Now they find that at least 11 other banks are lying even more. Tucker has done no more than observe that Barclays Libor submissions seem ‘on the high side’. Two questions:
i. Why does he seem worried about that in the first place? Because he is AWARE of the impending danger of bank-panic.
ii. Why does he imagine Diamond can do something about it? Because he knows that the banks have been fiddling the rates for years.
I have no doubt at all that, in his evidence to the TSC tomorrow, Tucker will say “I merely rang to receive Diamond’s assurance that the bank was OK”. Rubbish. Tucker knows that, of all the banks, Barclays is the most independent, and the most scathing about the ideas of both regulation and potential nationalisation. What does he expect Bob to do, tell him the truth?
Anyway, Diamond now goes to his 2ic Jerry del Missier and somehow this guy manages to mishear his boss saying that they need to cheat even more on Libor. He doesn’t ask Bob to repeat the order, and in the ensuing four years of working closely together, only a few weeks ago does he realise that Diamond said ”try more” or “buy more” or “my boar”, as opposed to Libor. This is obviously total bollocks, but is not germaine to the point here: the fact is that del Missier trots off to ‘lie more’…such that – miraculously – all the Libor contributing banks have almost exactly the same rate…and thus not too long afterwards, FTC gets miffed about its client forecasts being wrong, and takes the pretty damn big step of suing the global banking giants.
It’s unlikely bordering on impossible that this synchronised fraud is done purely between the banks with no other parties being involved.
Here’s why, in plain English: only a mad senior banking executive would make the first phone-call. A request to illegally fix the rates low would be seen immediately by the other sharks as clear evidence of a drowning prey. This is why Libor’s secrecy and discretion via the BBA exists in the first place.
The only way such coordination could’ve been achieved is via central banks. And again, the same rule applies as above to the idea of a bank approaching the Central Bank: that marks you down as a Northern Rock who has reached the desperate stage of implosion. Far more likely is that the key CBs and their grovelling politicos initiated the idea: “we must all stick together or hang together”.
I have two sources – very senior sources – one in an investment bank and one a former Treasury official – who are not only clear about the fact that there was widespread talk of Libor fixing to save the banks: they are very clear that Gordon Brown for one was yelling at various bank CEOs on a regular basis during this period. He obviously believed that they weren’t going to recoil in horror at the idea.
And one can apply that same principle to the Paulsons, Kings, Tuckers and Trichets of this world: is anyone in such a position of senior probity likely to risk his neck by openly suggesting the banks lie about one of the most revered institutions in the financial sector…if he suspects they’ve never done such a thing before?
While so far I have focused on both the global and conspiratorial nature of the Libor rigging practice, there is also a final factor that spells potential disaster for the Conservative Party in particular. Neither Cameron nor Osborne were in office at the time, but a staggering number of the Party’s senior players, donors and facilitators have been deeply involved in Libor credit broking for years. The brokerage sector is the most potentially dangerous wire in this UXB.
If you were going to try an save the banking system by under-reporting Libor rates, would you bring the key brokers onside, or leave it to chance? Suppose one of the more honest brokers decides a fix is in, and rings up the FSA. No, it’s far too leaky: you have to get them inside the tent as well. In fact, if you coordinate the fix THROUGH the brokers, everyone wins: the FSA is pretty useless about libor broking; doing so is far more discreet than banks informing the BoE and Treasury direct; three big bananas control the whole sector – so it’seven less likely to leak; AND most of the political class are in it up to their necks.
I think it highly unlikely that the fix was put in during 2007-8 without getting the brokers onside. The biggest players there are ICAP and Tullet Prebon…inside those companies right at the top are megadonor Michael Spencer, Deputy Tory Chairman Michael Fallon, and Tory supporter Terry Smith, the Tullets CEO.
Farfetched conspiracy bollocks? Look at the Torygraph piece from Thursday about why Brown really sold the UK’s gold at a low price. The then Chancellor did it to help the banks, who had made bad bets on gold: he therefore publicly and with notice dumped an enormous heap of gold to get the price down. This is EXACTLY THE SAME as Barclays helping derivative chums to get their money back on bad bets by massaging the Libor up and down.
The whole idea that ‘the markets must decide’ has always been drivel. It is being shown up increasingly, however, as cant: the stock markets have been rigged and propped up by QE, the Gold market has witnessed secret sales and Fed dumping for years, and now the Libor rate is revealed as a way to screw bank customers by those in search of illegal riches, to retrieve hopeless bet positions by fraud, and then save the brass necks of investment bankers who have already been bailed out by obscene injections of public money.
Nobody believed a word Bob Diamond said in testimony last Wednesday, but he is not the issue. He is gone from the scene – and for The Slog, that’s a major result. Paul Tucker is one level of conspiracy higher, and I don’t expect to find his evidence tomorrow to be either truthful, or credibly explanatory. Just as with Hackgate, the closer we get to the epicentre of this vortex of villainy, the dafter the raionales, denials and memory failures are going to get. We should not make the same mistake as we did with Hackgate: we should launch a multinational and powerful criminal investigation, and start getting some gargoyles in the dock. Otherwise, the usual ‘enquiry as filibuster’ outcomes will apply.
and Barclays has well earned egg on their faces with this hack of their brand......
http://www.guardian.co.uk/commentisfree/2012/jul/06/barclays-adverts-brand-hacking?newsfeed=true
I'm afraid this is not a Barclays ad – brand hacking is on the rise
Spoof adverts show editing skills being channelled into creative forms of protest – which aren't always obvious hoaxes
Email
In light of the recent Libor-fixing scandal, Barclays' marketing has taken a surprisingly honest turn, with the troubled bank changing its tagline to:Barclays, Fucking Barclays. The slogan features on a new and improved version of the bank's egg timer advert and even has a mobile component, with iterations of the line recently surfacing on Boris bikes. A straight-talking poster accompanies these efforts, touting Barclays "for the best fixed rates".
Sadly, all this is a little too good to be true. Barclays has indeed attempted to distance itself from confusing banking acronyms and jargon through "more colloquial" terminology – but this was in 2006 when the bank spent £7m rebranding ATMs "holes in the wall" and putting up signs saying "Hi". As for the explicit new slogan: while the language is blue, it is definitely not Barclays. Rather, this recent creative work is an example of brand hacking. And it has gone viral with a speed and inevitability that represents not just the levels of public anger towards Barclays, but also the potential pitfalls of advertising in an age of digital reproduction.
Brand hacking, or subvertising, is not a new phenomenon. However, technology has made it easier than ever to appropriate and subvert a brand's iconography. With a computer and some creativity, a company's advertising campaign can quickly be turned into an activism campaign against that same company. And while gargantuan marketing budgets once guaranteed your brand's message would drown out opposing view-points, this is no longer the case. The fake BP public relations Twitter handle, for example, has about four times as many followers as the official BP America account.
The reworked egg timer ad exemplifies how fast and furious editing can be channelled into creative forms of protest. Michael Spicer, the comedian behind the spoof, told me that his anger about the unravelling Barclays scandal and the growing chasm between the ultra-wealthy and everyone else led to him sitting up one night, with "GarageBand, iMovie and YouTube open and [cobbling] together the advert in about two hours". The next morning he uploaded it and tweeted it. Within a few hours online Spicer's spoof had been viewed thousands of times, covered by mainstream news, and re-tweeted by the likes of Radio 4 presenter Corrie Corfield and Zombie Apocalypse! author Sarah Pinborough.
Spicer's egg timer ad was clearly a parody, and obvious to 99.9% of people. However, the growing sophistication of digital tools means the mimicry that is an inherent part of subvertising has become so pitch perfect it's hard to tell what's real and what's fake; to distinguish who is the ventriloquist and who the dummy. It was, for example, difficult to ascertain from a first-look that the "best fixed rates" posters were not just an ill-timed media buy. And last month, Greenpeace teamed up with "culture jammer collective" The Yes Men to create an Arctic Readycampaign for Shell's arctic drilling project that had a lot of people fooled before it was revealed as an elaborate hoax. The spoof was many levels of meta, with Greenpeace constructing a Shell crowd-sourcing campaign, then engineering its social media savaging.
The public readiness to believe Arctic Ready was legitimate marketing is hardly surprising. It is entirely plausible Shell might have been reckless enough to crowd-source adverts using its Let's Go line, and that the crowd-sourced efforts had included gems such as "This fox will murder you unless we kill it first. Let's Go". Not only is it entirely plausible, it has happened myriad times. McDonald's recent #McDStories hashtag campaign, for example, resulted in people sharing stories such as: "One time I walked into McDonalds and I could smell Type 2 diabetes floating in the air and I threw up. #McDStories. "
With digital tools democratising the creation and distribution of content, you no longer need to be employed by Sterling Cooper to make an ad. And this has resulted in a new breed of mad men: ones who aren't just getting mad, they're getting even.
and....
http://blogs.telegraph.co.uk/finance/jeremywarner/100018423/lord-please-save-us-from-the-coming-tsunami-of-libor-litigation/
As if global banking wasn't damned enough by the emerging libor scandal, it also looks set to be engulfed by a veritable tsunami of compensation seeking litigation. Already a number of class actions have been filed.
Analysis by Nomura of just one of these claims suggest a possible eventual cost, once damages are taken into account, of $18.3bn. Assuming half of the 16 named defendents are found guilty, that makes $2.3bn apiece. But this is just one product – US interest rate swaps.
With a legion of other products also priced off libor and euribor, the eventual numbers could be off the scale, wiping out profits for years to come and thereby threatening efforts to rebuild capital. In other words, the already acute deleveraging problem among banks could be made even worse by the libor scandal, further hindering economic recovery.
It's hard to see who really gains from all this other than the lawyers, who must be licking their lips in anticipation. The closest parallel would seem to be the tobacco litigation which stretched from the first hard evidence linking lung cancer and heart disease to smoking in the 1950s right up to 1998, when final settlement was reached.
But with Big Tobacco, there were easily identified victims and costs. In the libor case, we are dealing with manipulation of a benchmark whose true value seems to have been virtually impossible to identify anyway. That doesn't mean the crime was victimless, but it is by no means obvious who and to what extent people were defrauded.
OK, so you might argue, as some plaintiffs already do, that it's relatively simple. In manipulating the rate Barclays and other defendant banks paid lower interest rates to clients and counterparties than otherwise.
But since nobody appears to know what the real interest rate should have been, establishing the size of any loss is going to be fraught with difficulty. And in any case, those who did suffer a loss might in turn have gained from the lower interest rate in subsequent transactions. Just establishing a formula for who lost what to whom will be a legal quagmire.
Just as there is really only one set of winners from all this – the lawyers – there is also only one set of losers – as ever, you and me, the bankers' customers, who will end up paying for it all in higher charges.
It therefore seems imperitive that this legal bandwagon is stopped before it gets going. Part of what's gone wrong with modern business is its progressive invasion by the legal system. The chief executive cannot so much go to the loo any longer without risking a law suit.
Alright, so I'm being facetious, but it's actually much worse than that because what this culture of legal intrusion has done is to remove all sense of personal and institutional responsibility for business behaviour and decision making, and replaced it with cowardice and buckpassing. The moral dimension which enables us to distinguish right from wrong and "do the right thing" is absent. There is a sense in which business and banking has become what the lawyers say you can do rather what's decent, honest and proper.
By the way, I exclude from these generalisations the vast bulk of small and medium sized enterprises struggling valiently against the odds to stay afloat. This is largely a "big business" phenomenon".
The above clip is of Tony Hayward, former CEO of BP, stonewalling before a Senate committee hearing on the Gulf of Mexico oil spill. His performance was a total disgrace, both to himself and his company. But it is also easily explained. He'd been got at by his lawyers, who had told him on no account to admit anything lest it be used in evidence against the company in the anticipated tidal wave of legal actions. Both for his own and his company's sake, he was not to admit culpability.
As a result, Mr Hayward emerged from that meeting without a shred of human dignity left in him. It was the same with Bob Diamond at this week's Treasury Committee meetings. What he should have said was that it was an almighty failure by Barclays for which he was truly sorry. But contrition came there none.
