

The Economist on the LIBOR affair (video) - leot
http://www.economist.com/blogs/schumpeter/2012/07/libor-affair

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walru
I like the Economist and was glad to see them report on the facts as they
currently stand and not offer an opinion nor get overly passionate on the
matter, like some news reports in the States tend to do.

That said, as someone who was caught leaning too far in the direction of the
collapse about a year before it happened, and lost considerable funds when
some surprise discount window rate drops happened in August of '07, I hope all
this information finally comes to light. There is <i>no way</i> this is
limited to just the banks in England.

~~~
BlackNapoleon
>I like the Economist and was glad to see them report on the facts as they
currently stand and not offer an opinion nor get overly passionate on the
matter, like some news reports in the States tend to do.

Its... the Economist...lol

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Thrymr
Some of the submissions may have been 30-40 basis points off (0.3-0.4%). "If
you take this and multiply it by the $800 trillion, you start talking real
money."

Ever since I first heard that LIBOR is set by voluntary submissions rather
than actual data, I have wondered how that works. Now it's becoming obvious
that it doesn't.

~~~
walru
Well the way it's supposed to be set is by averaging out what the '16' banks
are charging each other, or more specifically by throwing out the top 4 and
bottom 4 rates then averaging out the 8 remaining.

When you look at how everything eventually played out, it becomes clear
Barclays was not alone in what they were doing.

~~~
cb18
_Barclays was not alone in what they were doing_

yeah, I think I read on Taibbi's blog that the attention initially came to
Barclays because they _weren't_ "juicing the goose," they then were encouraged
to do so to alleviate the disparity in the rates they were reporting relative
to the other banks.

postscript- I reviewed the post before submitting(
[http://www.rollingstone.com/politics/blogs/taibblog/libor-
ba...](http://www.rollingstone.com/politics/blogs/taibblog/libor-banking-
scandal-deepens-barclays-releases-damning-email-implicates-british-
government-20120704) )

The scenario described above is as told by the recently resigned Barclays ceo,
perhaps not an exemplar of honesty, but it seems plausible.

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ChristianMarks
Why is this on the front page of HN? Because so many apologists for liquidity
at any cost congregate here. Because so many of us rely on the FIRE sector to
implement self-binding mechanisms of cooperative benefit to save for our
retirement. And now we have more evidence the FIRE sector cannot be trusted.
So perhaps instead of our colleagues patronizing us to go educate ourselves
about the falsehood that all liquidity is good liquidity and that they are
doing God's work (when research shows that HFT leads to diminishing returns
[hint: gain from trade in competitive markets is a convex downward function
with respect to efficiency]), they might consider engineering systems that
sustain the cooperative benefits of self binding, instead of implementing
systems that cynically and systematically win asymmetric zero-sum games
against the rest of us.

~~~
photon137
This is on the front-page of HN because, as Richard Feynman said, "It's the
things that nobody knows about that we _can_ discuss. We can talk about the
weather; we can talk about social problems; we can talk about psychology; we
can talk about _international finance_... so it's the subject that nobody
knows anything about that we can all talk about!".

~~~
Variance
HN is also far more of a resource for tech-sector knowledge and wisdom than
economic wisdom, as I've found all too often. On the other side of the LIBOR
issue, reading through many of the comment pages here and seeing all the cries
for disincorporating banks or "eliminating the profit motive" betrays an
unfortunately reactionary populism.

------
lifeguard
<http://news.ycombinator.org/item?id=4213354>

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shootthemoon
I just don't think this scandal will have a big impact with the general
populous. As big and as important as this scandal may be, it has one big thing
going against it. It is dreadfully boring. I have to admit, while I did manage
a single read through of the details when this was discussed earlier this
week, I have not managed to listen or read through a full article since.

~~~
swordswinger12
Boring is in the eye of the beholder. I think it's pretty interesting
personally.

