Banking fraud

Manipulation And Abuse Confirmed In $350 Trillion Market

Zero Hedge, 

10 february, 2012

Just over three years ago, Zero Hedge first pointed out some dramatically meaningless inconsistencies in one of the world’s most important numbers (which also happens to be “self-reported” and without any checks and balances) – the London Interbank Offered Rate, better known as LIBOR, which is the reference rate of a rather large market. 

Following that, we made a stronger case that the Libor, should really be abbreviated to LiEbor in “On the Uselessness of Libor” from June 2009, which alleged that this number is essentially manipulated, potentially with malicious intent. 

That alone got us a very unhappy retort from the British Banker Association (BBA) which is the banker-owned entity set to “determine” what the daily Libor fixing is based on how banks themselves tell us their liquidity conditions are. Well, as has been getting more and more obvious over the past two years, our allegations were 100% correct, and have now manifested in a series of articles digging through the dirt, manipulation and outright crime behind this completely fabricated number. 

And yet this should be the most aggravated offence in the capital markets, because LIBOR just so happens is the primary driver in determining implicit risk as a reference rate for $350 trillion worth of financial products. 

That’s right – that one little number, now thoroughly discredited, has downtstream effects on $350,000,000,000,000.00 worth of notional assets. 

That’s a lot. And while we are confident that nobody will ever go to prison for LIBOR fraud, which has explicitly been leading investors and speculators alike to believe that risk is far lower than where it truly is, what one should ask if the LIBOR rate is manipulated, and with is the entire floating and interest rate derivative market, not to mention CDS which are also driven off a Libor benchmark, what is there to say about the minuscule in comparison global equity market? 

In other words, does anyone honestly think that with the entire fixed income market pushed around by individuals with ulterior motives, that stocks are … safe for manipulation?