Deutsche Bank Turns Sides, Becomes Rat For The Liebor Prosecution

Tyler Durden's picture

Escalation. The inevitable collapse of the Prisoner's Dilemma that kept the LIBOR contributors together is occurring rapidly. After Barclays' forced admission and initial fine, the 'he-who-defects-first-wins' strategy has been trumped by Deutsche Bank as they turn all 'Donnie Brasco' on their oligopolistic peers. As Reuters reports this morning "The bank last year obtained the status of being a witness for the prosecution in the EU and in Switzerland," and "as a result of that, the bank could get a lighter penalty if a punishment is imposed," though of course this does not mean they are admitting guilt (sigh). Under the leniency programs of the EU, companies may get total immunity from fines or a reduction of fines which the anti-trust authorities would have otherwise imposed on them if they hand over evidence on anti-competitive agreements or those involved in a concerted practice. How quickly the worm turns when trust leaves the system - the warning the rest of the Liebor contributors - be afraid, be very afraid.

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mikla's picture

It's all math and game theory.

Ponzis all end the same, and the conclusion is established the day it begins.  The only difference is timing.

However, because it is "math" and "logic", it could-not-have-been-predicted by politicians, economists, "the-smart-guys", and morons.

Only normal people see this coming.

veyron's picture

I wonder if anyone bothered to plot the frequency and scale of Ponzi schemes over time. The schemes the past few years really make Charles Ponzi look like a shoplifter.

HoofHearted's picture

So who turns State's first concerning gold and silver manipulation? I'd guess (just to be sardonic) it would be JP Morgan.

metastar's picture

When my son was young he would ask me what I was doing when I made a stink in the bathroom.

I would tell him that "I was doin Business, BIG BUSINESS!"

strannick's picture

when it comes to their fellow bankers in crime, seems bankers arent stand up guys with a code of omerta. bankers are even lowlifes amoung other criminals, sqeak sqeak

Joe Sixpack's picture

The biggest scoundrel in the derivatives bubble gets some temporary protection, as the flesh of the lesser banks is stripped from their bones, in a desperate last ditch attempt to avoid the onrushing cataclysm.

MillionDollarBoner_'s picture

Are JPM manipulating gold & silver?

Who says so?

<sarc>

Pool Shark's picture

 

 

This is exactly how the system should work: all the criminal rats should be afraid they'll be ratted out; makes 'em more likely to follow the law.

I hope we have a giant Rat Roast...

 

ZackLo's picture

I love it when a cartel breaks down , almost as good as a bank run.

mikla's picture

Good question.  Google searches turn up interesting things, such as "bizarre economic bubbles": http://www.businesspundit.com/10-most-bizarre-economic-bubbles-in-history/

However, yes, there has been some good analysis the last few years about the increasing-size-and-amplitude of (worldwide) economic bubbles.  In short, to combat deflation, the "next" bubble must be bigger-and-more-dramatic than the previous bubble.

The "Housing" bubble was supposed to be the "last possible" bubble, because it is the greatest percentage of "normal" people's expenditures (e.g., rent/mortgage).  The previous bubble cannot be repeated, which is why "housing-bubble" usurped "Dot-Com-bubble".

Now, they are trying the "Education-Bubble" to usurp the "Housing-Bubble", but it likely can't surpass housing, and shows signs of stress (e.g., rate-of-growth is impressive, but wavering).  It's tough to see much more life in the "Healthcare-bubble" (e.g., it's mostly maxed-out).  The "Collateralization-bubble" isn't really being repeated with things like MBS, but the off-the-books "Derivatives-Bubble" is truly fantastic -- Quadrillions, and if you dig deep enough, Quintillions.  (Not kidding.)

But, the problem with the "Derivatives" bubbles is that they are already "too-large", and are mostly not-relevant to the "real-economy".  So, one can argue they don't matter, except for end-game-timing (e.g., counter-party risk manifested through law-enforcement or return to anything that looks like an accounting standard).

So, IMHO, it's easy to illustrate, and people have done it:  Each bubble for the last forty years has been bigger than the one before, and the one before never repeats.  And, all of these bubbles are ponzi fraud (my assertion, but IMHO easy to support).

veyron's picture

Do you think Facebook, Groupon, and other Internet company IPOs constitute a second Internet IPO bubble (repeat of 1999)?

mikla's picture

Short answer:  No.

Long answer:  They wish.

The Fed has been printing money, and speculators (e.g., banks and investment banks) are looking for bubble-speculation-to-park-the-cash.  The valuations have no bearing to anything (e.g., Facebook will be priced at zero because there is no scenario by which they could achieve dividend).  So, you *are* seeing Facebook and Groupon at insane valuations, but in "the-big-scheme-of-things" it's in-the-noise (it's not enough money to worry about).

The "market-cap" being reported is not real.  That money doesn't exist.  And, it has no bearing on the "real-economy".  It reflects printing and speculation desperation, and the accident for how "market-cap" is computed.  (Just try to sell those shares and see what the "real-market-cap" happens to be.)

There is no investing anymore (right now).  Half of the S&P500 will go to zero, the Bond market will be wiped out (e.g., counter-party risk), and we'll have a worldwide financial reboot.

So no, on the whole, while it "happens" to be a bubble, it's not really one because it's mere desperate thrashing during the "end-game" and it actually has no significant bearing on the economy.

Joe Sixpack's picture

The derivatives bubble and the desperation to keep it from blowing out completely control the operation of every nation on earth today.

blindman's picture

bond bubble.
.
The Real Libor Scandal ~Paul Craig Roberts and Nomi Prins
http://maxkeiser.com/
.
http://www.paulcraigroberts.org/2012/07/14/the-real-libor-scandal/
.
"...On the losing side of the scandal are purchasers of interest rate swaps, savers who receive less interest on their accounts, and ultimately all bond holders when the bond bubble pops and prices collapse.

We think we can conclude that Libor rates were manipulated lower as a means to bolster the prices of bonds and asset-backed securities. In the UK, as in the US, the interest rate on government bonds is less than the rate of inflation. The UK inflation rate is about 2.8%, and the interest rate on 20-year government bonds is 2.5%. Also, in the UK, as in the US, the government debt to GDP ratio is rising. Currently the ratio in the UK is about double its average during the 1980-2011 period.

The question is, why do investors purchase long term bonds, which pay less than the rate of inflation, from governments whose debt is rising as a share of GDP? One might think that investors would understand that they are losing money and sell the bonds, thus lowering their price and raising the interest rate.

Why isn’t this happening?

PCR’s June 5 column, “Collapse at Hand,” explained that despite the negative interest rate, investors were making capital gains from their Treasury bond holdings, because the prices were rising as interest rates were pushed lower.

What was pushing the interest rates lower?

The answer is even clearer now. First, as PCR noted, Wall Street has been selling huge amounts of interest rate swaps, essentially a way of shorting interest rates and driving them down. Thus, causing bond prices to rise.

Secondly, fixing Libor at lower rates has the same effect. Lower UK interest rates on government bonds drive up their prices.

In other words, we would argue that the bailed-out banks in the US and UK are returning the favor that they received from the bailouts and from the Fed and Bank of England’s low rate policy by rigging government bond prices, thus propping up a government bond market that would otherwise, one would think, be driven down by the abundance of new debt and monetization of this debt, or some part of it.

How long can the government bond bubble be sustained? How negative can interest rates be driven?" ...

blindman's picture

yes and no to that link. beware recycled
ideology misrepresenting the historical facts
and details and most definitely in service of
more of the same initial abuse and systemic usury
as demanded by legislated fraud in the form of
a crooked monetary monetary system
.
and watch out for this.
.
The Gentleman's Guide To Forum Spies (spooks, feds, etc.)
http://pastebin.com/irj4Fyd5

Joe Sixpack's picture

"Only normal people see this coming."

 

Yep. Joe Sixpack commented on this in 2008:

 

http://joesixpack.me/orig_letter.html

TheGardener's picture

Original "prisoner`s dilemma" is a show piece of all the wrong assumptions of those ivory tower type never-been-down-and -low who made up the case study, I could write a book refuting each and every detail of this non-dilemma in it`s full futility.

But what is commonly perceived as a story of former partners
in crime turning on each other, this metaphor certainly fits.

ekm's picture

As I commented on the previous Liebor entry,

THERE IS NOTHING BLOODIER THAN ELITE INFIGHTING.

cossack55's picture

"There is no honor among thieves"

Updated:

"Scumbag banksters need to burn in Hell"

saturn's picture

Nah, they need to burn much much sooner.

monoloco's picture

It's like a game of musical chairs, last one on the mordida train might get prosecuted. but at least, now they've established the cost of business as usual. 

americanspirit's picture

Please, please let's all stop calling these high-floating pieces of shit 'The Elite". They are merely those turds who by no virtue of their own have risen to the top of the cesspool. It's a function of the gas given off by decay - in this case decaying souls.

ekm's picture

I do not disagree.

Well, propose another "name" and let's use it, but the term "elite" has already negative connotation.

Joe Sixpack's picture

I prefer the term "piles of human feces". It has an elitist ring, is does not use any four letter words, and is pretty much on the mark.

ekm's picture

Deal

From now on, the "elite" is officially the "fecal elite".

WillyGroper's picture

let the games begin.

 

Bill D. Cat's picture

Bank on bank crime spree . The irony , it burns .

AL_SWEARENGEN's picture

This whole thing is going to be one giant fucking disaster!!  Every last one of these greedy cocksuckers will rat eachother out to save their own diseased skin.  I'm so fucking glad all these pinchbeck government commissioners were around to slap wrists and point fingers at the banks now that the corruption spotlight is off them right?  A Godly armed mob demanding justice will be the only quorum which can wrestle control away from these evil cocksuckers!

yabyum's picture

Al, Time to feed them to Mr. Wu's pigs.

monoloco's picture

Wouldn't that constitute cruelty to pigs?

AL_SWEARENGEN's picture

Don't I yearn for the days yabyum, where a draw across the throat made fucking resolution!

bubbleburster's picture

However, unless these inquests avoid turning into dog and pony shows that will pander to their constituents......unless these inquests lead to heads rolling and jail time served....JUST like the most famous first inquest...the Watergate scandal....then all these investigations will be yet another gloss, allowing the criminals to avoid jail.  Unless real heads roll then nothing will have changed and the motivation to avoid financial crimes in the future will be neutered. 

MillionDollarBoner_'s picture

You hit the nail on the head!

This is ALL about the Rule of Law (or lack thereof)

Joe Sixpack's picture

Rule of Law? That was eliminated in the first round of cost cutting.

TheGardener's picture

Jail ? What is jail ? Where commoners can freely resemble ?

monoloco's picture

Yeah, in the end it will probably be some lowly bank clerk left holding the bag.

Joe Sixpack's picture

The proper term would be a "rogue bank clerk".

metastar's picture

Fines!!?? What fines??

It's just a cost of doing business. I'm sure it is already built into their business case.

It's not like anyone is going to go to jail? It's not like anything is going to change.

Haole's picture

The elite ponzolympics of collapsing fraud and paper where the winners are likely to get the same literal medallion of superiority albeit more than just gold plated.  Ain't it awesome when criminals turn on eachother?

world_debt_slave's picture

Those at the gourndloor level on the ponzi could care less about the suckers climbing onboard.

DavidC's picture

I was told the other day by someone in the know that UBS could be the next one in London. Only a rumour, but...

DavidC

Extremist Tan's picture

Please advise as to impact that Liebor reforms have on prevailing interest rates.  It strikes this non-bond-trading, non-Bloomberg-owning, non-Jim-Grant-worthy observer of interest rates that at least some chance exists that truthful submissions could mean submissions at higher rates, regardless of what central banks try to do.  

bubbleburster's picture

http://www.bbc.co.uk/news/business-18848673

 

It spreads like running water.  Maybe toxic, heavy water....

Joebloinvestor's picture

HAHAHA

Remember when the BIG PROBLEM were those horrible Chinese currency manipulators?

MillionDollarBoner_'s picture

Uuuur...let me guess...they all turned state's evidence somewhere, so they all get let off lightly?

Say it isn't soooo..!