anti-democratic, banker coup works and yet
nobody with any power is willing to stop it.
Central banks are run by the banks. They are
not government organs, despite the propaganda
and the political appointments.
So, when they play like democrats, that's Orwellian
-speak.
Read this with TAG Team 1 and 2, below
Checkit: Forbes
Shah Gilani
It's
Not Libor, Stupid. Central Banks Are The Problem
Not
only are at least twenty more big banks under investigation as part of a
massive fraud to manipulate interbank lending rates that affect some $800
trillion in loans and derivatives, but the Bank of England is about to take
center stage in the scandal.
And
that’s bad news for central banks around the world.
Well,
actually, it could be good news, as in really good news if it’s the beginning
of the end of what central banks do to manipulate free markets to the benefit
of their only real constituents, the world’s big banks.
First
the good news.
It’s
already come out that traders at Barclays with huge derivatives positions
leaned on co-workers who sit on “panels” that submit internal bank borrowing
cost data to Thompson Reuters, who averages the middle lot of submissions to
determine Libor (London Interbank Offered Rate) “fixings” (not my word, but
actually the established nomenclature for what it apparently is that they do…as
in “fix” rates) all under the auspices of the British Banking Association.
What’s
good is we now know for a fact that the traders (crooks?) were aided and
abetted by their co-workers, the submitters (crooks?), who were overseen by
managers and top executives, who design most of these schemes (crooks?), and
were all blessed by the British Banking Association, an illustrious association
of 200 some-odd banks, whose many members (crooks?) are panel members
submitting crooked (no question mark necessary) data.
Still
don’t get why that’s good news? Because it’s proof there are crooks out there
and this time it’s easy to see where the “fix” actually occurs. It’s also good
news because according to one multinational banking executive, just quoted in
the Economist, it’s “the banking industry’s tobacco moment.”
He
was referring to the potential mountain(s) of litigation being drawn up already
to claim that gross manipulation of interest rates caused billions, maybe
trillions, of dollars of harm to borrowers and financial players of all
stripes. Back in 1998 big tobacco had to settle class-action suits that cost
them over $200 billion.
The
bad news is the Bank of England, one of the world’s stalwart and oldest central
banks, is about to face its own potential Lehman moment (at least we can hope).
That’s on account of the fact that Paul Tucker, deputy governor of the Bank of
England (and its supposed next top dog), is going to have to come clean in
front of Parliament very shortly.
Mr.
Tucker is apparently on record (according to Bob Diamond’s phone call notes)
suggesting that the Bank of England wanted Barclay’s to manipulate it’s Libor
submissions downward so as to not panic counterparties and the country who
might view tight interbank lending conditions as a sign of stress across the
entire banking system.
So,
here’s why the bad news for the central bank (encouraging, no, make that,
demanding fraud) is really good news for free markets.
Central
banks have done nothing to countermand the trend (nothing but encourage)
leading to big banks getting bigger; so big, in fact, that now all of the big
banks around the world are all too-big-to-fail.
The
bigger the world’s banks are (bankers want size, because more size equals more
power to price, to manipulate markets, and to pay bigger bonuses) the more
important central banks become, both to the big banks, nations, and the global
economy.
Central
banks are the saviors of big banks that get in trouble, especially when
economies and systems are leveraged for profits that backfire and they all have
to be bailed out.
Central
banks are supposed to be above what’s going on below their ivory towers, but,
in fact, they are the puppets being manipulated by the big banks. It’s a case
of the tail wagging the dog.
Why
are central banks pouring money into banks, really? Why aren’t governments
printing money to pour into ailing economies but aiding and abetting central
banks instead?
It’s
because central banks are independent supra-national bodies who have been ceded
monetary power by governments almost everywhere to benefit banks and bankers
the world over, who are their only constituents, and for all intents and
purposes, effectively “own” legislators and governments.
They’re
pouring money into banks to keep them solvent. That’s what central banks are
there for. The banks aren’t lending the money (massive reserves are sitting on
balance sheets to shore up appearances) because they need it to meet reserve
requirements and offset the illiquidity evident in the interbank lending
market…the same interbank (Libor) market that the Bank of England wanted to
make look more liquid than it was viscous back in 2008.
