The Other McCain

"One should either write ruthlessly what one believes to be the truth, or else shut up." — Arthur Koestler

Good News: The Libor Scandal Is A Purely European Problem

Posted on | July 8, 2012 | 12 Comments

by Smitty

Zero Hedge is on about the Libor scandal as though it was a deal of Biden-esque proportions. Robert Reich is shocked, SHOCKED! at this turn of events:

Suppose the bankers are manipulating the interest rate so they can place bets with the money you lend or repay them – bets that will pay off big for them because they have inside information on what the market is really predicting, which they’re not sharing with you.

Reich figures the Glass-Steagall Act could be our instrument of human redemption. Because nothing says “Save us from overly concentrated power by. . .using legislation to concentrate power in the government.”
At least two big points here:

  • At least we can rest assured that Ben Bernanke and the Federal Reserve are not engaged in related/bigger manipulation. So we’ve got that sorted.
  • Also, we can be confident that barbaric, recidivist, capitalistic market solutions, like opening banking up to greater competition from smaller lenders, is a total wash. The only cure for excess power is. . .more power.
Category: Economics

Comments

12 Responses to “Good News: The Libor Scandal Is A Purely European Problem”

  1. Evilbloggerlady
    July 8th, 2012 @ 10:00 am

    It is good to see Robert Reich is back. Not because I agree with his politics or policy arguments (I do not) but because he is so small I thought I lost him in the couch cushions.

  2. Ten
    July 8th, 2012 @ 10:31 am

    Given what’s going on in centralized, globalized, progressive banking, Smitty,  and its wholly corrosive effects on personal liberty and property by way of the corrupt and incestuous Wall St-Washington DC corridor, it’s good to see you enjoy a bit of snide sarcasm in pointing all this out.  Well played, you classical liberal you.  Jefferson would be proud.

  3. ReaganiteRepublican
    July 8th, 2012 @ 10:46 am

    I thought Libor was a town in Romania or something

  4. Charles
    July 8th, 2012 @ 12:09 pm

    Reich seems confused about the location of Wall Street, placing it in London. The big derivatives trading score was not Libor but the 2008 AIG bailouts.

  5. Adjoran
    July 8th, 2012 @ 3:58 pm

     He never went away.  He just needed a new step stool.

  6. Adjoran
    July 8th, 2012 @ 4:06 pm

    The LIBOR scandal isn’t of actual manipulation of interest rates, but misreporting of them to convince investors the bank is doing better than it is.  They lied so they could steal, in effect.  And as with any good confidence scam, the investors believed they were getting in on the scam.

    Gee, maybe there should be laws against lying and stealing?

    The FACT is that the AIG bailout and most of the banking crisis of 2008 was directly caused by the federal government, between pushing subprime mortgages to unqualified borrowers, not requiring disclosure of these loans when included in traditional mortgage “basket” securities, and the insane “mark to market” capitalization rule.

    Blaming the bankers is STUPID.  They didn’t want to lend money to deadbeats at all, that’s why the Federales forced them to do it, and subsidized it through Freddie Mac and Fannie Mae.  Republicans stood aside and let them do it, cowed by the threat of being charged with “racism” for not letting deadbeats steal.

    One Republican did repeatedly raise the alarm, but his warnings went unheeded.  Guy named George W. Bush.  

  7. Bob Belvedere
    July 8th, 2012 @ 6:50 pm

    Well put, especially about Mr. Bush.  There’s an awful lot he did that was not good, but on this he deserves much praise.

  8. DaveO
    July 8th, 2012 @ 7:09 pm

    Blaming the bankers is very smart, and very successful for three reasons:

    1. Joe 6-pack doesn’t understand how the banks work. For that matter, many informed people aren’t sure how it works.

    2. Joe 6-pack up to multi-millionaires owe money to the bank. Owing money is a big psychological trigger.

    3. Bankers make money. The 2008 fiscal crisis was caused by a number of factors, but the actual numbers were based upon the promise of the debtor paying his or her debt – not the actual debt itself. Worse than Pentagon Math are the numbers bandied about the banking world.

      – Did not banks receive tax credits for making subprime loans? Yes. Banks post profit, and/or get bought.

      – Were not banks forced to receive money from TARP to repay perceived losses? Yes.

      – Did not banks continue to pressure (even upping the pressure) on good debtors to pay their debts?

      – Bankers, when not banking, support politicians with cash in amounts Joe 6-pack can’t match. In 2008, it was Obama. They chose poorly as Obama and his minions proceeded to pyschologically abuse them. They may not be giving to his re-election campaign in the same amounts, but they are still contributing.

    Blaming the bankers is, and has been a very successful tactic. It will continue to be so, so long as bankers are unfamiliar with the terms “Ramen” and “PBR.”

  9. Bob Belvedere
    July 9th, 2012 @ 7:55 am

    But, he’s full of stools.

  10. Bob Belvedere
    July 9th, 2012 @ 7:58 am

    Demonizing the bankers has been around since The Founding.  The Democratic Republicans were very good at it.  Ironic, eh, that the first major banker bashers were landed gentry.

  11. DaveO
    July 9th, 2012 @ 1:08 pm

    A long-term, very incestuous relationship.

  12. Ten
    July 9th, 2012 @ 4:07 pm

    Aw, blame bank bad.  Bank private, bank good.

    http://pjmedia.com/blog/the-libor-scandal-historys-largest-market-fraud/

    The “right” has to get its mind around the nature of money.  From there, corruption.  From there, crony capitalism and from there, Washington DC.

    Once they do they shall call themselves conservatives instead of Republicans.