
The Biggest Financial Fraud of All Time - $300 Trillion Rigging of Libor - bitcartel
http://news.slashdot.org/story/13/01/29/2326242/the-biggest-financial-fraud-of-all-time
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orionblastar
This is something to be concerned with, it ruins the global economy and might
even lead some nations to an economic collapse. $300 trillion USD stolen in
this way really hurts. The money could have been used for good and helping
people instead of making the wealthy even more wealthy.

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meric
It's only a small fraction of $300 trillion USD stolen. $300T of contracts and
loans were affected but the banks were only skimming a small part of the
loans.

$300T would be 30 times US's _total production output_ for a year, or over 4
times total production of output _for the entire world_. Basically that means
4 times anyone has ever made over the past year. No way banks can steal that
much.

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swedishturnip
I've been meaning to comment on this for a while, e.g. on Slashdot, but the
thought of arguing this with some of those guys sends shivers down my spine.
I've been impressed by some the discussions on HN so I'll share this with you,
let's see what you think.

First of all, this is cleary fraud and those responsible should punished
harshly. The whole concept of Libor is also flawed, mainly because it's not
based on actual transactions and so is sensitive to manipulations like these.

Now having said that, let's make a couple of things clear:

1\. $300 trillion is not the amount of money that has been 'stolen'. If the
total amount by which the rate was skewed from what it would otherwise have
been was 0.01% (which probably isn't wide of the mark) then it's $30 billion
per year. A lot of money still, for sure.

2\. $300 trillion doesn't mean what you thin it means. This assumes that one
group of people 'loaned' another distinct group of people $300 trillion. But
this isn't what happens, the number doesn't take into account that vast
majority of these 'loans' are netted against each other. So at any given time
the total amount 'lent' is a relatively small proportion of that, say $1
trillion (I think this is roughly true). So I think a better estimate of what
was 'stolen' was about $100 million per year, within an order of magnitude.

3\. It's not clear who stole this from whom. There are two main types of
manipulation that have been reported:

a) Individual traders or desks manipulated submissions for personal gain. It's
not clear that this actually skewed the rates in any particular direction over
time, they might have increased one week and decreased the next (and so
traders were perhaps paid higher bonuses for one year). In this case one
trading desk or trader 'stole' from another trader or trading desk, perhaps
even within the same firm.

b) During the recent crisis, the industry as a whole submitted Libor rates
that were lower than the otherwise should have been, because they didn't want
to look weak (and we know what happened to those who looked weak). This would
have benefitted borrowers at the expense of lenders.

