Barclays LIBOR Market Manipulation Fraud To Boost Profits and Mask Insolvency, RBS, HSBC and Lloyds to Follow
Politics / Banksters Jun 28, 2012 - 12:09 PM GMTBy: Nadeem_Walayat
The FSA has belatedly acted on the blatant and obvious to all market participants manipulation of the LIBOR reference rates for various markets including interest rate derivatives. Most market participants had concluded that the LIBOR rate as published by the BBA cannot be accurate and to on occasion an extreme extent at several points during the past 5 years of the financial crisis. The FSA action that amounts to a £290million fine is of little consequences to Barclays because the Bank of England in collusion with the UK Treasury have been busy stuffing every orifice of all of the banks with free cash under the constant threat that if tax payers did not provide unlimited cover for liabilities then the banks would trigger Financial Armageddon which ironically did not stop RBS from exploding last week, freezing millions of account holders in what amounts to a 2 week bank holiday.
What is LIBOR and Why Barclays, Banks, and Central Banks Manipulate it.
The London Interbank Offered rate (LIBOR) is the benchmark reference for rates banks charge one another for borrowing funds over various durations ranging from overnight to 2 years that directly has an impact on the rates that banks charge it's customers as most of the monies loaned out by the major banks are borrowed from other banks, insurers and investors, which is why the freeze in the interbank market as a consequence of bank contagion risks prompted global central banks to take extreme measures to force liquidity into the banking system by various means such as direct loans to banks and QE.
That is the basic picture that the mainstream press is aware of, the truth is what the Government fears you knowing, and that truth is that the banks have increasingly leveraged themselves up on interest rate bets over the past decade on the off exchange derivatives market based on LIBOR and other similar benchmark rates, therefore a small change in LIBOR can have a huge impact on derivatives contracts. We are not talking about billions, or hundreds of billions, or even trillions, we are talking about HUNDREDS OF TRILLIONS of exposure, more than enough to trigger a collapse of the global financial system several times over.
LIBOR Manipulation is NOT News
The mainstream press have been busy during the past 24 hours writing much commentary on the Barclays and other banks manipulation of the LIBOR rate, but as I have already mentioned this was obvious to most market participants and something that I have written about aspects of the manipulated LIBOR interest rates market for several years as signs of market manipulation date back to BEFORE Lehman's went bust in September 2008, the reasons for which I will explain next -
LIBOR Manipulation Only HALF the Story is Being Reported
Virtually all of the present mainstream press commentary is centred around the fact that Barclays somehow made huge profits on the blatant attempts to manipulate the banks reported LIBOR rates lower. However this is less than HALF of the actual story, the fact is that the prime reason why senior bank staff jumped onboard the LIBOR market manipulation band wagon several years ago was to give the illusion to the market of solvency during credit crisis extremes when the LIBOR market would freeze, when the reality was that Barclays along with all of the major banks were Insolvent, bankrupt, having made and lost huge over leveraged sums that were many times the amount of capital the banks had hence the banks lied, lied about virtually everything including LIBOR to prevent market panic and a Lehman's style collapse. Off course to prevent actual insolvency required huge amounts of capital injections, loans and other extreme measures such as QE free money to prevent bankruptcy which the politicians who are highly critical today have been more than culpable in offloading onto the backs of tax payers starting in September 2007 with the Northern Rock bailout.
If the LIBOR rate manipulation story is followed to its logical conclusion then it will eventually be found out that the banks received a nod and a wink from the Bank of England to under report their LIBOR rates as an panic measure (one amongst many) to avert financial armageddon and promote financial stability, given that it has taken this long for Barclays culpability to emerge then the Bank of England and Governments role in market manipulation of interest rates won't be being reported on in the mainstream press anytime soon, and it should not be forgotten that Quantitative Easing (QE) of £325 billion to date has been for the purpose of manipulating market interest rates lower across the yield curve, all the way from short LIBOR right through to the long dated Government Bonds. This is a FACT, the Bank of England has manipulated the market interest rates lower between banks and for government bonds but not for retail customers.
British Bankers Association Evading Responsibility for LIBOR
The BBA is responsible for compiling and reporting the daily LIBOR rates, and thus has a better understanding of the market than most market participants, especially at times of serious deviation from the the actual rates banks were offering to counter parties. Instead of owning upto responsibility, representatives of the BBA have been busy all day offloading responsibility onto others with comments that the BBA had out sourced the process of compiling rates. This illustrates a banking sector that acts outside the law and in totality amounts to nothing more than an cancerous growth on the backs of ordinary tax payers who continue to be held liable and pay for the continuing crimes of bankster's.
However it is not surprising that the BBA is trying hard to wriggle out of responsibility, for there allegedly exists evidence that it knew precisely what was going on but went ahead any way, year after year, reporting misleading information to potential investors on the risks posed by bank offered debt products, which lawyers all across the globe will be busy analysing in terms of damages.
Similarly the Barclays website asks customers to contact the bank about fraud, need not worry for they WILL be being contacted for recompense for telephone number amounts of damages in the near future, the bills for which will ultimately be passed to the tax payers of Britain.
Did RBS / Nat West Weapon of Mass Financial Destruction Just Explode?
The UK economy has been sitting on a huge ticking time bomb, it's banking sector where total debt and liabilities extend to at least X4 official public debt of 1.3 trillion, where RBS alone has liabilities of over £1 trillion that have been dumped onto tax payers so is more than capable of bankrupting Britain on its own should it explode as a consequence of over leveraged positions (gambles) exploding due to contagion third party failure impact no matter where it emanates out from i.e. the present focus is on exposure to the bankrupting euro-zone.
The facts are this and they have remained a constant for the duration of the financial crisis when it first broke in June 2007 . The facts are that ALL of the banks are bankrupt, insolvent as a consequence of over leveraged bets made to bank short-term bonuses that keep blowing up in their faces, the latest bets to blow up were made AFTER Lehman's went bust and the banks were bailed out with cheap tax payer monies that they plowed into the bonds of Euro-zone PIIGS.
This is what Quantitative Easing is, a policy of funneling unlimited cash into the bankrupt banks so that the banks do not go bankrupt and default. This policy that the likes of the Bank of England has rammed down the throats of ordinary tax payers by means of gullible, inept and incompetent politicians such as Britain's Brown, Darling and now Osbourne who are more than eager to give the illusion of knowing what they are doing to the general public by following the recommendations of central bankster's.
Now the consequences of this policy of bailing out bankrupt banks is ultimately that they will bankrupt ALL NATIONS, because the amount debts and liabilities are many times greater than each countries ability to cover these liabilities for instance for the UK, it would amount to about £5 trillion pounds.
The defacto closure of RBS, freezing of customer bank deposits illustrates the point that the banks are in effect a cancerous growth on the back of Britain that are continuing to eat the economy alive, rather than accept the unlimited liabilities of the banks, instead they should be treated as insolvent institutions and result in the process of bankruptcy to take place for bond holders and investors, else the current situation of an Inflationary Depression will continue INDEFINTELY! Because it is going to take a hell of a lot of inflation to inflate the debt away, forget 3% per year , but more like 3% per MONTH! Now, don't take that as a forecast as 3% per month would amount to a series of events resulting in loss of confidence in fiat currency, such as the UK government bond market rates breaking above 3% first then spiraling ever higher, such events do not appear to be on the horizon for the UK for the rest of 2012, instead Britain continues to suffer the consequences of bailing out the banks and their bond holders in terms of the continuing Inflation Mega-trend and its consequences in terms of loss of purchasing power as illustrated by the CPI Index.
My next in-depth analysis will take a detailed updated look at the UK's critical debt crisis before it explodes, as many of the forecasts trends of several years ago are resulting in an significantly worse fiscal position than even my pessimistic expectations of June 2010 (UK ConLib Government to Use INFLATION Stealth Tax to Erode Value of Public Debt ), as clearly Britain is accelerating towards bankruptcy, ensure you are subscribed to my always free newsletter to get this analysis when complete in your email in box.
The bottom line remains in that bank customers must seek to protect themselves from the bankrupt fraudulent banking sector. As I have covered in depth several times in articles such as -
- 22 Jun 2012 - Did RBS Hit the Greece Election Eurogeddon Bank Holiday Panic Button by Mistake?
- 03 Dec 2011 - How to Protect Your Bank Deposits, Savings From Euro-zone Collapse Financial Armageddon
So what will be next weeks bankster fraud revelation ?
By Nadeem Walayat
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Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of three ebook's - The Inflation Mega-Trend; The Interest Rate Mega-Trend and The Stocks Stealth Bull Market Update 2011 that can be downloaded for Free.
Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 600 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk
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