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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsWho put the lie in Libor?
Did pushing down rates benefit the banks - well yes, because it pushed down the value of certain hedges they had built that were tied to bonds that carried low interest rates. That isn't the same though as suggesting that consumers ended up paying more for their loans because of what banks did in the Libor "incident".
If anything, it was savers who were hurt most by the banks colluding to artificially push down Libor. That's because if banks had been truthful about what they were paying each other, they may have been tempted to pay depositors more for their money as well. Central banks too wouldn't have rushed to cut rates in that scenario (because the efficacy of monetary policy would be absent) and instead focused on direct capital support for banks - something they are belatedly on to today in Europe.
Then again, there is a small cabal of folk - numbering less than a handful - who have over the past five years stolen literally hundreds of billions of dollars from savers globally. What would the media do with this handful of criminals when presented with the incontrovertible evidence of the crimes of such people: get out the pitchforks or quietly slink away into the corner, muttering to themselves? Think that through - ask yourself what an extra 5% means for the global stock of savings, and who pushed it down?
Step forward, Federal Reserve chairman Ben Bernanke, Bank of England governor Mervyn King and European Central Bank president (and previously Bank of Italy governor) Mario Draghi. There, you have your culprits. Now tell me what you are going to do with them.
http://www.atimes.com/atimes/Global_Economy/NG07Dj02.html
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banned from Kos
(4,017 posts)The central banks are doing what they can.
Savers are less important than investment and jobs.
alcibiades_mystery
(36,437 posts)You think completely fabricating the LIBOR is just the bankers looking out for the general economy?
This is performance art, right?
FarCenter
(19,429 posts)Whether that can be proved or not is another matter. Plausible deniability is a key principle of political endeavors.
Barclay's traders were attempting to influence the rates in order to favor their positions in the market. It's not clear whether other banks were doing the same, at least not to the same extent. There was some mention that Barclays traders were communicating with ex-Barclay traders at other banks. If true, this would be a conspiracy and a big deal.
On the other hand, the lowering of LIBOR submissions by Barclays after the discussion between Diamond and Tucker is pretty clearly a response to Bank of England and UK Government urgings, whether misunderstood or not.
Bear in mind that banks like RBS were submitting LIBOR rates during this period when they could not actually get a loan from anyone for any interest rate -- so their submissions were completely bogus at a time when they were owned by the UK government.
banned from Kos
(4,017 posts)Learn to read.
alcibiades_mystery
(36,437 posts)It was the major investment banks that completely gamed LIBOR, not the central banks. It was just most of the major banks in the world. That the central banks are seemingly irrelevant to this matter is also fairly obvious. But you're right that they don't seem to have been involved with this particular round of fraud, at least so far as we know and if the denials of the British hold up.
Wilms
(26,795 posts)I thought the fact that they can't get the loans in the first place was more at issue. Or that there aren't any customers because the unemployed are so stingy.
And that little old lady down the street, who lives off SS in a house she and her husband bought and maintained at a MUCH higher interest rate than today shouldn't complain that her savings account is no hedge against inflation. Is that right?
Better that the house flippers and McMansioners have a low rate. Yes?
banned from Kos
(4,017 posts)And loan rates are LOW now and not "to high".
Low interest rates are an incentive to invest and spend - IOW just what the economy needs. Hoarding cash is NOT what the economy needs but many people do it out of fear in difficult times.
Wilms
(26,795 posts)The elderly woman down the street has a little bit tucked away (say, to fix the roof in a few years) and wouldn't mind gaining some interest as a hedge against inflation.
Americans should be saving too. But that's another story. As far as hoarding goes, talk to the 1 percent, not grandma.
