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LIBOR: Why the Financial System Cannot Work on Trust (Tageblatt, Luxembourg)


“If the financial system, dominated by ‘too big to fail’ banks, has demonstrated anything, it would be that it cannot regulate itself. And how could it, in a system that continues to consider short term gain its greatest imperative? … Trust - even between banks - is gone. No matter. It was the wrong basis for the banking world anyway.”


By Sascha Bremer



Translated By Stephanie Martin


July 8, 2012


Luxembourg - Tageblatt - Original Article (French)

Disgraced former Barclays CEO Bob Diamond: Never a popular figure in London, the LIBOR scandal has made the American one of the nation's most dispised figures.


FINANCIAL TIMES NEWS VIDEO: U.S. limbers up for LIBOR scandal, July 8, 00:04:15RealVideo

They liked the billions that were tossed about during the subprime crisis, and they are going to love the trillions attached to the LIBOR scandal.


The latest machinations of casino capitalism (that's right, it still exists), which could once again take the world to the brink of collapse, have nothing to do with ultra-complicated financial products that no one can keep track of. In fact, the fraud that is currently shocking the City of London, and which could soon have a global impact, could hardly be simpler.


It all has to do with interest manipulation. Every day, twelve major banks submit confidential figures (meaning without oversight) for the interbank rate LIBOR (London Interbank Offered Rate). The LIBOR serves as a reference rate for an $800 trillion volume of financial transactions (loans, derivatives, etc.) and has been manipulated for years by Barclays Bank, among others.


There is something brewing in the rotten kingdom of the City of London. The consequences are incalculable. We could indulge in a little schadenfreude, since banks will likely take the brunt of any damage - and on several levels. On one level, customers who may have taken out loans or other products tied to the LIBOR may file suit against the banks. On another, financial institutions that have no in the calculation of the LIBOR were also defrauded. As a result, they provided Barclays and Co. with credit at lower rates.


But there were winners as well. Because of course, there were the major banks that participated in the fraud. Either they were able to conceal their true credit situation - like Barclays, or they used the manipulation for speculative transactions. Investigations against 20 large banks are now underway: Deutsche Banks, UBS, and the Royal Bank of Scotland, among others.

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But also people - perhaps even you, dear reader - who may have unknowingly received a favorable interest rate on a loan because of this fraud, must be considered "winners." But while Barclays and Co. can - and probably will - be sued, it is unlikely that anything can be gained from taking legal action against this latter "category." According to the Economist, the whole affair could cost the banking industry billions of dollars.


At the same time, from the point of view of the big banks, we are still in a "too big to fail" universe. This means that governments - the citizenry, in other words - may have to step up if any of these banks face bankruptcy. Sounds familiar. But perhaps this scandal will be handled like all the previous ones and everything will continue a "normal" until the next big bang. That would be the tragedy of this casino capitalism, which has taken over politics and continues without regulation to have widespread repercussions.


Trust just isn't enough


If the financial system, dominated by "too big to fail" banks, has demonstrated anything, it would be that it cannot regulate itself. And how could it, in a system that continues to consider short term gain its greatest imperative? The manipulation of the LIBOR was brought to the public's attention as early as 2008, and the fraud itself allegedly already began before 2005. Evidence of the entanglements between Barclays and the Bank of England show just how profoundly influenced the political elite has been by financial interests. Those being controlled continue to be today’s controllers.


Trust - even between banks - is gone. No matter. It was the wrong basis for the banking world anyway.



Der Tagesspiegel, Germany: The Untouchable, Unscrupulous ‘LIBOR Cartel’

Trouw, The Netherlands: Bob Diamond: Living Proof that Banks Can't be Trusted

Die Zeit, Germany: LIBOR Scandal Entails Monumental $350 Trillion in Loans

Financial Times Deutschland, Germany: Wall Street's Gordon Gekko: 'Hero Again'?
Die Welt, Germany: Euroland Looks for Scapegoats: U.S. Credit Rating Agencies

Der Spiegel, Germany: 'Myth' that U.S. Rating Agencies Seek to 'Destroy Euro'

Estadao, Brazil: Let the World Remember the 1930s - Not Relive Them

Komsomolskaya Pravda, Russia: Putin is Better than Goldman Sachs
Der Standard, Austria: Britain Acts as America's 'Trojan Horse' in Europe
Liberation, France: Democracy Crippled: Economics Replaces Separation of Powers

Semana, Colombia: Indignation Spreads, but Lack of Clarity Dogs 'Occupy'

Le Quotidien d’Oran, Algeria: Goldman Sachs and 'Human Sacrifice' to Money Gods

El Pais, Spain: Occupy Wall Street: Will it Help or Hinder Reelection of Obama?
Wochenzeitung, Switzerland: Swiss Occupy Movement Too Respectful of Authority

Frankfurter Rundschau, Germany: 'Occupy' is the 'Mega-Event of the Century'
Mainichi Shimbun?, Japan: 'Occupy Wall Street' Threatens to Divide American Society

Kayhan, Iran: Wall Street Uprisings Herald Victory of Islam and Iran!
Sueddeutsche Zeitung, Germany: Like Americans, Germans Must Stand Up at Last!

La Jornada, Mexico: Jobs' Career Showed How Capitalism was Meant to Work
Die Welt, Germany: Wall Street Occupied by Tea Party of 'Generation-Twitter'

Il Sole 24 Ore, Italy: How Finance Sector Greed Tramples on Human Rights
FTD, Germany: America's Economic Crash Had Little to do with September 11
Estadao, Brazil: To Shorten Crisis, U.S., E.U. Should Look to Latin America
Frankfurter Rundschau: Obama's Middle Road is Fatal
La Jornada, Mexico: The 'Grand Debt' of U.S. Families
Jornal Do Brasil, Brazil: American Default and the End of 'Zero Risk'
The Telegraph, U.K.: World Needs America to Come to its Senses
El Pais, Spain: Playing Chicken is the World's Newest Sport
Mainichi Shimbun, Japan: U.S. Must Prevent Another 'Made in U.S.' Disaster
Yomiori Shimbun, Japan: U.S. Lawmakers Should 'Stop Playing Political Games'
Yezhednevniy Zhurnal, Russia: The U.S. and Soviets: Pyramid Builders to Raiders
Frankfurter Rundschau, Germany: 'Radical' Republicans Threaten U.S. with Ruin
Tiscali Notizie, Italy: The Fiscal Decline of the 'Apocalypse'
News, Switzerland: Notion: 'Pay Politicians Based on Performance'
Salzburger Nachrichten, Austria: Debt Ceiling Attack By Republicans 'Backfires'
Gazeta, Russia: America's Astonishing 'Battle for the Ceiling'
People's Daily, China: U.S. Game of Chicken Threatens Creditors and Economy
Die Zeit, Germany: U.S. Risks 'Plunging World' Into New Financial Crisis
O Globo, Brazil: Global Economy Hangs on 'Mood' of U.S. Voters
The Telegraph, U.K.: Down on the Fourth of July: The United States of Gloom
Financial Times Deutschland, Germany: For Americans, a Dour Independence Day
Financial Times Deutschland, Germany: Who Cares about the U.S. Economy?
Folha, Brazil: U.S. Conservatives Threaten to Plunge U.S. into 'Lost Decade'




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[Posted by Worldmeets.US July 11, 6:39pm]




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