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The Biggest Price-Fixing Scandal Ever
Posted on 4/29/13 at 10:04 pm
Posted on 4/29/13 at 10:04 pm
quote:
All of these stories collectively pointed to the same thing: These banks, which already possess enormous power just by virtue of their financial holdings – in the United States, the top six banks, many of them the same names you see on the Libor and ISDAfix panels, own assets equivalent to 60 percent of the nation’s GDP – are beginning to realize the awesome possibilities for increased profit and political might that would come with colluding instead of competing.
LINK
Has anyone else read this article? Thoughts?
2
Posted on 4/29/13 at 10:12 pm to DriveByBBQ
Yep. Been posted twice on poli board
Makes me wanna back bitcoins
Makes me wanna back bitcoins
Posted on 4/29/13 at 11:37 pm to gizmoflak
quote:
Makes me wanna back bitcoins
If bitcoins were to take over, you'd soon be seeing scandals about bitcoin manipulation. Some say we're already seeing that.
Posted on 4/30/13 at 7:37 am to DriveByBBQ
quote:
Has anyone else read this article?
Yes, several times.
quote:
Thoughts?
It's not that well written in terms of what actually happened, but the thing that bothers me the most is what they're using for their derivative market exposure figures.
That "60% of the nation's GDP" and "$379T market" figures are notional values of derivatives. That isn't your actual ecnonomic exposure, its completely igonoring option delta, mark-to-market values, and almost everything else. For example, if you're in a 1B notional 3-month LIBOR interest rate swap that pays quarterly, say 3M LIBOR is currently at 0.35% and that's what the pay-fixed side pays. If LIBOR stays there after 3 months no money is exchanged, but if LIBOR moves say 0.03% either way (3 basis points), only $300k is exchanged depending on which way it moved. It would take 3-month LIBOR moving 100% (10k basis points) for $1 billion in cash to actually be exchanged. I can't promise many things, but I can promise 3-Month LIBOR would never move 10k basis points.
This post was edited on 4/30/13 at 7:50 am
Posted on 4/30/13 at 7:40 am to BennyAndTheInkJets
:mindblown:
Posted on 4/30/13 at 7:49 am to TheDiesel
The writer was trying to angle it in a way to make it the scandal of the millenium. Don't get me wrong LIBOR fixing absolutely did happen and it was a shady situation for a long time. A lot of people knew about it, not because they knew people were fixing it but because the actual process of submitting LIBOR bids was obviously flawed. You're asking a bunch of people that work at banks, many of who know each other, to submit what they would theoretically charge another bank to borrow from them? And you're surprised that they talked to each other in the process of sending completely arbitrary figures on a daily basis? Come on.
Posted on 4/30/13 at 7:50 am to BennyAndTheInkJets
quote:
You're asking a bunch of people that work at banks, many of who know each other, to submit what they would theoretically charge another bank to borrow from them? And you're surprised that they talked to each other in the process of sending completely arbitrary figures on a daily basis?
I was coming to post something similar, but this is far better than what I was going to say
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