The Biggest Financial Scam In World History

George Washington's picture

There have been numerous big banking scandals recently.

But the Libor scandal is the biggest financial scam in world history.  See this and this.

The former CEO of Barclays said today that banks across the world were fixing interest rates in the run-up to the financial crisis .

Professor of economics and law Bill Black notes:

It is the largest rigging of prices in the history of the world by many orders of magnitude.

Indeed, the scandal effects an $800 trillion dollar market - 10 times the size of the real world economy.

Matt Taibbi explains that this is the "mega scandal of all mega scandals", because Libor is the "sun at the center of the financial universe", and manipulating Libor means that "the whole Earth is built on quicksand."

Local governmentscredit card holders, students, small businesses, small investors, homeowners and virtually everyone else in the entire world has been impacted by the manipulation.

Credit card debt - almost a trillion dollar market - is pegged to Libor. So are student loans - a trillion dollar market.

Mortgages are a bigger market: around $10 trillion dollars in the U.S.  The Washington Post notes today:

60 percent of prime adjustable rate mortgages, and nearly 100 percent of subprime ones, were indexed to LIBOR.

 

***

 

That means that when LIBOR rises, so do the prices ordinary consumers pay to, say, get a mortgage.

 

***

 

So how did the manipulations by Barclay’s affect this rate? First, from 2005 and 2007, the bank allegedly varied the rates it reported to the BBA and Thomson Reuters so as to improve its margins on internal trades. For example, it could have placed bets that the LIBOR rate would increase, and then reported artificially high rates which in turn artificially increased the LIBOR averages, so that the bets were likelier to pay off. This ... bumped up mortgage rates  however infinitesimally  for consumers even when the risk of the loans hadn’t changed at all.

Other loans - like small business loans - are usually based on Libor as well.

But that is all small potatoes compared to the $350 trillion in swaps tied to Libor.  Virtually every single local government in the United States has been scalped by Libor manipulation.

The big banks have robbed the whole world.

Indeed, the scandal is so big that it will further destroy trust in our financial system and drive many people from investing in the capital markets altogether.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sandy15's picture

That explains why the market was saying that I made money in my Libor commercial property loan, but Wachovia AKA Wells Fargo, charged me $150K to get out of a commercial loan.  I should have made money, NOT lose money.

Roger Knights's picture

This Libor scandal will make it harder to sneer at conspiracy theories. It should also prompt more people to put their trust in gold.

machineh's picture

... as opposed to putting their gold in trust!

Benjamin Glutton's picture

"What we probably need to do is wipe out this entire generation of so called banking leaders who apparently have no ethics or integrity." Financial Times commenting on TBTF institutions actions through the LIBOR CRIME.

falak pema's picture

Second biggest : the biggest was capitalist meltdown in 2008 as a result of recurrent bubble-o-nomics. After dot.com 5T loss, the 20 T fiat meltdown of 2008/2009 was awesome.

Peter Pan's picture

The biggest scam going on as we speak is having the Dow so close to its top when the economy is so close to the bottom.

Panafrican Funktron Robot's picture

http://www.zerohedge.com/news/707568901000000-how-and-why-banks-increased-total-outstanding-derivatives-record-107-trillion-6

I like to quote Mr. Durden.  $707 trillion bitches.  $20 trillion is child's play.  Nearly every derivative that exists is in some way based on Fed funds/LIBOR.  We're essentially living inside an air bubble near the Marianas trench.  

falak pema's picture

ahem...losses on nominals...I hope u are wrong! that's twice the GDP. And all the while the US says its bank debts are low and under control !!!

Widowmaker's picture

What part don't utterly clueless ass-chugger ZH muppets get --

FINANCE IS FRAUD!

G.Washington is tearing pages out of Widowmaker's commentary from almost 2 years ago verbatim.

"MODERN-FINANCE" IS ROTTEN TO THE CORE, PERVASIVE IN ALL BANKING AND BUSINESS THE LAST 40 YEARS+. 

One man's record bonus is another man's reason to take his life.  Take heed you finance faggots, this is just the beginning --

Liebor has NEVER been honest/straight - EVER.

 

Panafrican Funktron Robot's picture

List of major Fed member banks that also control the LIBOR rate of every currency within the LIBOR system (USD, GBP, EUR, JPY, CHF, CAD, AUD, NZD, DKK, SEK):

Barclays

Deutsche Bank

HSBC

JP Morgan

Lloyds

RBS

What a total fucking surprise!

http://www.bbalibor.com/panels

Panafrican Funktron Robot's picture

What I'm confused about is why people get so up in arms about rate manipulation via LIBOR, but are completely fucking braindead don't give a shit about the Fed funds rate.  I know Mr. Widowmaker and others that actually read up on this shit or work in this space find this obvious, but motherfuck, both rates are decided by the same fucking institutions.  Please, people reading this, please bring up this point when discussing rates.  LIBOR and Fed funds are two hands connected to the same body.  If you don't control these hands in some way/shape/form, you are the puppet/muppet!

Bartanist's picture

My guess is that the Libor scandal is simply one tiny exposed rancid tentacle of the rotting of an entire system of markets that use controlled methods of price discovery (metals, market makers and specialists, etc) ... and are corrupt(ed).

I have found no evidence anywhere that there are any free markets ... and it saddens me. However, I understand that there exist self interested people who have the ability to control price absolutely and therefore they do.

It takes a higher level of being to allow free markets to exist and Wall Street critters and their masters have not evolved to that level. 

Winston Smith 2009's picture

People need to wake up and realize that since human nature is exactly the same worldwide, most "developed" nations in the world are nothing more than subtle, highly sophisticated, and tremendously lucrative banana republics where the thievery isn't as blatant as a guy in a police uniform and mirrored sunglasses demanding a direct cash bribe from you and where the propaganda isn't like the typically clumsy and obvious propaganda of the former Soviet Union.  But it is all just as much of a scam, especially in the US where our two-tiered "justice" system, the farce of two major political parties both owned by the same moneyed interests and unresponsive to the best interests of the citizens who elected them, and the corrupt and rotten to the core financial sector should be adequate proof of the banana republic theory.

DaveyJones's picture

Well said Winston. Notice it (and the press covering it) are getting more blatant. Criminal behavior is like that. It grows with each step of false confidence.

Jack Sheet's picture

Peter Warburton's essay written in 2001 is still uncannily accurate today ("Inflation, but not as we know it")
http://www.gata.org/node/8303

ebworthen's picture

Bailouts

+Mozillo

+Subordinated bond holder rights

+FED lending to TBTF banks at 0.10%

+Flash crashes

+Fraudclosure

+LIEbor scandal

+CORZINE
_______________

= NO TRUST

DavidPierre's picture

911 BANK HEIST

As the years pass, the evidence mounts. The AE1000 organization is expert and loud, the architects and engineers who provide expert testimony on the absurd official 911 story at the World be-Trade Tower.

A secretive Russian Bond valued at $240 billion was to mature the very next day, most of which were held in the Cantor Fitzgerald offices atop the tower. Those bonds could not be redeemed at maturity, a theft.

Nothing on the official story makes any sense, nor does it stand up to chemical scrutiny or to scrutiny from phsyics.

Costa Rica has a richly dotted landscape of very well informed people with all kinds of legitimate contacts, such from Secret Service friends, bank executive friends, ex-USMilitary types, slush fund managers, obscure types, and more.

My informed sources have been numerous that have shed light on the infamous event.

It was a grand bank heist that involved around $100 billion in stolen bearer bonds,  around $100 billion in stolen gold bullion bars, and around $100 billion in stolen diamonds.

The 911 event marked a coup d'etat of the United States Govt.

Their grip on power continues through to today. The true story will come out, all in time, like veracity bubbles working toward the surface. Those holding the lid on the actual events are reducing in number each year. My expectation is that the true story will come out as the inevitability of a USGovt debt default becomes evident and unavoidable, when the JPMorgan machinery fails in full view to uphold the USTBond tower. At that time, the new trade settlement systems, the new barter systems, the bypass to USDollar settlement, they will come into place.

Gold will be at the center of every new system. Much like how geophysics leads to iron forming at the core of a stable body, gold will form at the core of the stable financial body. But its price will be closer to $10,000 per ounce than $2000 per ounce.

Gold price charts mean little, when the enter paper system is in the process of imploding, first bonds, then currencies, then sham gold markets.

http://news.goldseek.com/GoldenJackass/1341518400.php

All Risk No Reward's picture

If we don't identify and extract the criminal international financiers (who will create the gold backed system and use it as a weapon, just like they did before the current system), you will be cursing gold before they are done with you.

A gold backed system won't save us, we have to have an educated populace who can identify and beat back criminal elements in government and those that would seek to control government.

"Gold and money are separate things, gold is the trick mechanism by which you can control money.  That is the root of all evil."
~Thomas Edison

Now, our current system is even worse over the long run, but I don't want to go back to what Edison call "the root of all evil."

That's exactly what we will get if we don't identify the criminals, lock them up, end their frauds, and claw back their ill gotten gains.

Weapons of Mass Debt

http://www.keepandshare.com/doc/3324744/wmdebt-graph-3-79k?tr=77

Debt Money Tyranny

http://www.keepandshare.com/doc/3325954/debt-dollar-tyranny-2-54k?tr=77

Who is doing this to us?  Let John Taylor Gatto try and explain with sourced documents: The Ultimate History Lesson:

http://www.youtube.com/playlist?list=PL463AA90FD04EC7A2

The Ultimate history Lesson Commentary:

https://www.tragedyandhope.com/th-films/the-ultimate-history-lesson/comm...

Jack Sheet's picture

Thanks for the link. Jim Willie's writings ring true.

Joebloinvestor's picture

This is what you get with a fiat based electronic system and a bunch of fucking LIARS and OPPORTUNISTS.

Add in a big dose of INEPT regulators and no prison time.

Widowmaker's picture

Cost of incarceration of 1 year = $45k.

Cost of a .22 to the temple = $.11.

You think the poor can pay for incarceration??

vote_libertarian_party's picture

and yet here in the 'Dancin with the Stars USA' it is still a tiny pollen fleck in the Tom and Kate super nova.

RichardENixon's picture

Hey anything new on that Tom and Kate thing? And what about Suri, how's she handling all this hoopla?

Downtoolong's picture

Indeed, the scandal is so big that it will further destroy trust in our financial system and drive many people from investing in the capital markets altogether.

I’m already there. Not that I didn’t already suspect it. Not that I didn’t already know of so many other manipulative schemes in the financial markets similar to it. But, finding suspicious hotel charges on your credit card statement is one thing. Finding your mate cheating on you with your best friend right in your own bed in your own house pretty much clinches it. It’s fucking over. It’s an extinction level event. Small investor to Wall Street, we’re getting a divorce. You can have the house and bank accounts; I’m taking the gold.

Der Wille Zur Macht's picture

Fuck it. Just wanna ride in the choom wagon.

reader2010's picture

The whole system is a fucking scam. Wake the fuck up! The thing to ask yourselves is why they just want to let you know about it now. 

Sofa King Confused's picture

Exactly, they have been hiding all this for years.  For them to let all this leak out now there must be a reason.  My wild guess would be to collapse the current system and bring in a new one that they claim cannot be corupted but is just a lie.  Maybe even getting rid of the FED and other central banks and the IMF and World bank running everthing.  Consolidation of power??

reader2010's picture

That's exact the motive behind all the smoke and mirror. Yes, they want to set up a brand-new blood-sucking system so that they can extract more wealth for themselves on the worldwide scale, and less and less for everyone else while bringing down the concept of nation states. The whole new fucking system will be centered in ASIA.

All Risk No Reward's picture

Exactly.  This is a big scam, but not even close to the biggest.

The biggest scam is the fact our debt based monetary system is a fraud that systematically and covertly conveys the wealth of productive society and transfers it to the Big Finance Capital parasites at the top.

Debt Money Tyranny

http://www.keepandshare.com/doc/3325954/debt-dollar-tyranny-2-54k?tr=77

The second biggest fraud is that the Federal Reserve broke its mandate, criminally blew the world's largest credit bubble in human history and they, as well as everyone in the establishment, lied about their true mandate in order to cover up this crime spree.

The Federal Reserve, Section 2A mandate is above the Z1 and BEA graphed data...

http://www.keepandshare.com/doc/3324744/wmdebt-graph-3-79k?tr=77

These are hard core criminals who only play academic idiots in order to commit more of their crimes.

Dingleberry's picture

Libor scandal is big but I'll bet an ounce of the noble metal that the Fed has more manipulations going on behind the scenes than the cabal scamming Libor.  Secret swaps, backdoor bailouts, etc....all done under the emergency clause or whatever of the Fed Reserve Act. 

Whatever happened with I believe Harry Markopolis (I think) and the banking scam (NY Melon?) of churning fees with foreign currency exchanges I read about last year? That was supposed to blow sky high too.

Nobody For President's picture

LIEbor.

At least they were obvious about it.

Not to worry. World banks are working on a new anacronym.

And you DO have to admit it is taking a bit of heat of Jamie and the Great White Whale lose...

cifo's picture

anacronym?

Is this a new word? Merge between acronym and anachronism?

matterhornclimber's picture

Correctamente! And moneypolitics is in the only hands of the Rothschilds or they influence the not Rothschild's

monetary politicians!

matrix2012's picture

Now do you see why this writing is still quite relevant and does matter until today? when you look into all the major banks involved here, you'll see the same controlling hands.

 

The History of the House of Rottenschilds by Andrew Hitchcock

"The Rottenschilds have been in control of the world for a very long time, their tentacles reaching into many aspects of our daily lives, as is documented in the following timeline.  However, before you jump to the timeline, please read this invaluable introduction which will tell you who the Rottenschilds are as oppose to who they claim to be.

. . .

The most wealthy bloodline in the world bar none and the leader of the Ashkenazi J--s in the world today is the Rottenschilds family.  As you will see in the timeline, the  Rottenschilds have obtained this position through lies, manipulation and murder.  Their bloodline also extends into the Royal Families of Europe, and the following family names: ASTOR; BUNDY; COLLINS; DUPONT; FREEMAN; KENNEDY; MORGAN; OPPENHEIMER; ROCK3FELL3R; SASSOON; SCHIFF; TAFT; and VAN DUYN.

Reading Hitchcock one will realize that the Rock3fell3r family are Rottenschilds descendants through a FEMALE bloodline!!!

And how this family intermarried with it's first and second cousins to preserve the family fortune (of the 18 marriages by Mayer Amschel  Rottenschild's grandchildren, 16 were between first cousins - a practice known today as inbreeding).

Read the entire summarized "TWO-AND-A-HALF-CENTURY" TIMELINE here: http://bit.ly/MhkwoV

Or see the very terse version of above writing formatted in .ppt:  http://bit.ly/NlwRto

 

-------------

“We are on the verge of a global transformation. All we need is the right major crisis and the nation will accept the New World Order.” — David Rock3fell3r 

El Oregonian's picture

Wrathchilds is closer to the truth...

t_kAyk's picture

Speaking of which... 

http://www.usatoday.com/money/industries/banking/story/2012-07-05/barclays-downgrade/56032826/1

Two leading credit rating agencies took steps Thursday toward downgrading Barclays in the wake of a trading scandal that's seen three senior Barclays executives, including CEO Bob Diamond, hand in their resignations.

Although both Moody's and Standard & Poor's maintained their ratings on the bank, they lowered their outlooks to "negative" from "stable." That means that a downgrade of the actual rating is now more likely.

 fucking LuLz

 

 

 

boogerbently's picture

Resigning keeps them from being fired, which protects their "Golden Parachute" retirements.

krispkritter's picture

Too bad they can't give them real gold parachutes...then drop them over water somewhere.

Sabremesh's picture

You mean an even bigger financial scam than fractional reserve banking? Shurely shome mishtake.

moneymutt's picture

actually, fractional reserve lending, in that it provides money supply upon demand has actually done a decent amount of good for many economies if you consider the alternative to be a non-expanding money supply. (see, say China, when exported almost everything they made to get silver, their hard money after corrupt empires trashed faith in their paper money, from Spanish mines, because not only would silver not expand with economy but actual wore away from the coins)

the problem I have with fractional reserve is 3 main things 1)private banking cartels get almost all the benefit of their money creation from thin air, when it should go to whole nation (no one should get all the benefit from a state granted monopoly on money printing and 2)private banks are incentivized by fractional reserve lending to increase the volume of their loans, and so they want as much debt as possible in the economy ...which is cross purposes to a productive, value-delivering economy, as inevitably the banks get carried away and lend into ponzi scheme of people speculatively buying assets which can only pay debt if the assets keep appreciating...leveraged run up of asset prices is bad for economy leading to all sorts of non-beneficial malinvestments and 3)the above wouldnt even be that bad but on top of problems 1 and 2, today we also bail out banks when they fail, so taxpayers end up footing bill to keep banks solvent after they got to keep all the profit on the way up...

The Aussie economist Steve Keen is working on models of economy that shows fractional reserve lending is not automatically and always a ponzi scheme...the money supply they create can stabling create necessay interest to pay back loans ....however, that stable state is rarely achieved, because bankers are incentivized to finance asset speculation (a true ponzi scheme).

 

Grey-Ghost's picture

Sir Josiah Stamp, President of the Bank of England in the 1920s, the second richest man in Britain, correctly said:

"Banking was conceived in iniquity and was born in sin. The Bankers own the Earth. Take it away from them, but leave them the power to create deposits, and with the flick of a pen they will create enough deposits to buy it back again. However, take it away from them, and all the fortunes like mine will disappear, and they ought to disappear, for this world would be a happier and better world to live in. But if you wish to remain slaves of the Bankers and pay for the cost of your own slavery, let them continue to create deposits."

cranky-old-geezer's picture

 

 

Yep, you can start a bank with a million dollars, use some of it to join the Fed clearing system, use some of it for reserves, then move ahead creating hundreds of millions of dollars of loans and deposits out of thin air.

It really is magic.  Turning a million dollars into hundreds of millions of dollars, maybe billions, with a few computer keystrokes.  Yep, that's magic.

This is why bankers love an unbacked fiat currency.  They can create all the money they want out of thin air, no limit, and loan it out in exchange for liens on real things like homes and farms and factories, plus all the interest from it.

I really should have been a banker.  Easy life sitting back creating money with a few computer keystrokes, and I don't even have to press those keys, someone else does.  I just decide how much money we're gonna create today, this week, this month.

My little million dollar investment buys me a huge money tree, easy life, respect from the community (I'm the man with the money they all want to borrow), who knows, maybe all the women I want, all of anything I want.

And it wasn't my million dollars.  It was other people's million dollars.  Investors.  Stockholders.  Sure, I'll toss 'em a bone occasionally, but the big money is mine, all mine.

And now if I screw up and make a bunch of bad loans, I don't care, Fed will bail me out, buying all those bad loans from me, giving me way more than they're worth, millions more than they're worth, maybe billions more than they're worth. 

I just take that money and start the process all over, creating more millions and billions out of thin air.

Say what?  I'm ruining the currency?  Creating massive inflation?

I don't care, I can have someone tap a few computer keys and create more money to make up for it.

You can't of course.  You're not a banker like me.  I wouldn't wana be in your shoes.  You're fucked. 

I don't care, go away, don't bother me.  Security, escort this peasant out of my bank, toss 'em out on the street.

MrBoompi's picture

Fractional reserve banking was risky even when the reserves were gold.  Now they are just pieces of paper that contain a promise to pay.

In real-life, you don't build skyscrapers on quicksand.  I guess that's why economics is a religion these days.  Basic truths are not truths anymore.

 

 

 

 

Vendetta's picture

The key to fractional reserve banking is that people 'believe' in the integrity of the system and the system itself, like religion, despite so much evidence to the contrary.

DaveyJones's picture

if it's now religion, can we use the inquisition on these bastards?

aleph0's picture

Sounds straight out of Jekyll Island .... oh wait , it is the CB system (Norm.)

alien-IQ's picture

Fictional Reserve Banking.

George Washington's picture

Yeah, I thought about that when writing the post.  Fractional reserve probably bigger ...