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Guest Post: The Great LIBOR Bank Heist of 2008?

Tyler Durden's picture




 

Submitted by John Aziz of Azizonomics

The Great LIBOR Bank Heist of 2008?

The LIBOR manipulation revelations ask some interesting questions.

Washington’s Blog notes:

Barclays and other large banks – including Citigroup, HSBC, J.P. Morgan Chase, Lloyds,Bank of AmericaUBS, Royal Bank of Scotland– manipulated the world’s primary interest rate (Libor) which virtually every adjustable-rate investment globally is pegged to.

 

That means they manipulated a good chunk of the world economy.

 

They have been manipulating Libor on virtually a daily basis since 2005.

While the implications of this to the $1200 trillion derivatives market would seem to be profound, one question I have not seen asked much yet are the implications of the manipulation to the reality of the 2008 financial crisis.

Here’s a really wild hypothesis: if the LIBOR rate was under manipulation in 2008, is it not possible that the inter-bank lending rate spike (and resultant credit freeze) was at least partly a product of manipulation by the banking cartel?

Could the manipulators have purposely exacerbated the freeze, to get a bigger and quicker bailout? After all, the banking system sucked $29 trillion out of the taxpayer following 2008. That’s a pretty big payoff. LIBOR profoundly affects credit availability — and the bailouts were directly designed to combat a freeze in credit availability. If market participants were manipulating or rigging LIBOR, they were manipulating a variable directly tied to the bailouts.

That means that every single tick must be under scrutiny; we know that rates have been manipulated for profit. I am no conspiracy theorist; it may just be a coincidence that a massive spike in a variable we now know to have been manipulated contributed to a credit freeze that led to historically-unprecedented bailouts. Yet it is no great leap of the imagination to say that the crisis may have been deliberately worsened for profit.

Investigators should investigate.

(H/T to Saifedean Ammous)

 

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Mon, 07/02/2012 - 21:04 | 2582315 Rahm
Rahm's picture

Wake me up when we have public lynchings of fraudster bankers on pay-per-view.

Mon, 07/02/2012 - 21:07 | 2582318 Michael
Michael's picture

The coffin won't need any more nails. My work is done.

Mon, 07/02/2012 - 21:08 | 2582320 Rahm
Rahm's picture

Is there any number, anywhere that is not manipulated?  Or is math a dead language, ala sanskrit?

Mon, 07/02/2012 - 21:24 | 2582343 Stoploss
Stoploss's picture

Careful Aziz, that's the containment wall your fucking with. ;)

When this comes unwound, so does sub prime.

Barclay's is the crack in the dam.

Mon, 07/02/2012 - 22:02 | 2582424 Aziz
Aziz's picture

Creative destruction.

Mon, 07/02/2012 - 23:25 | 2582618 illyia
illyia's picture

Investigators should investigate.

Shoulda woulda coulda... ...

Tue, 07/03/2012 - 00:19 | 2582710 dannyboy
dannyboy's picture

We tried our hardest but the midget porn was just far to entertaining.

Tue, 07/03/2012 - 00:46 | 2582747 AurorusBorealus
AurorusBorealus's picture

This could indeed be the whole thing.  Imagine a LIBOR of 5% or 6%, or more given European bank insolvency.  This means, in effect, that every bond sold in the past 4 years was grossly mispriced- the same bonds that are collateral for x rehypothecations: margin calls for everyone. This means a massive hike in every ARM. The system comes down if LIBOR goes honest.  We are on the verge of Western financial collapse.  Looks like British regulators may be the boy who finally calls out that the emperor has no clothes.

Mon, 07/02/2012 - 21:09 | 2582321 sunaJ
sunaJ's picture

"High Frequency Treason"

 

Mon, 07/02/2012 - 21:25 | 2582346 vast-dom
vast-dom's picture

Aziz: i like the way you think. Similarly, as per the unsealed documents post re: banks bullying ratings agencies I wrote this:

 

the issue with all of this is that it damages S&P and the ratings agencies a lot more than the financial institutions themselves. Why is this important? Because the rating agencies need to downgrade said financial institutions shortly, and since these banks are already taxpayer and Fed funded they can hang on and get the advantage of minimizing any future immanent downgrades by accusing rating agencies of being on the take and grossly innacurate....perverted logic? yes. unexpected behavior? no.

Mon, 07/02/2012 - 21:48 | 2582395 disabledvet
disabledvet's picture

I agree with this. Absolutely! Having said "point to the beneficiary of the manipulation"? Right now Barclays is getting slammed because of it..."and they are but one of many in setting the rate." I just don't see how creating such a mass of uncertainty helps ANY bank. Indeed methinks Goldman itself is most displeased. Could such a revelation not precipitate a crisis in the EZ and whatever "euribor" is? Just my two cents of course.

Mon, 07/02/2012 - 21:09 | 2582322 ACP
ACP's picture

I'm waiting for my torches and pitchforks sales tracker to signal a red alert.

Mon, 07/02/2012 - 21:32 | 2582359 Itch
Itch's picture

Start digging the holes already!

Mon, 07/02/2012 - 21:46 | 2582389 ziggy59
ziggy59's picture

Why pay per view? Should be free. We already paid and still are..

Mon, 07/02/2012 - 22:24 | 2582484 monad
monad's picture

If you want it done right, you'll have to do it yourself. 

Mon, 07/02/2012 - 21:06 | 2582317 john39
john39's picture

all of the collapse is being orchestrated... just like the great depression... all to bring about greater centralization of power.  The old scare tales of one world government are not far from the truth.  a class of rulers and a class of slaves. 

Mon, 07/02/2012 - 21:47 | 2582393 ziggy59
ziggy59's picture

Yes, it's a controlled financial demolition...

Mon, 07/02/2012 - 22:24 | 2582486 monad
monad's picture

Full blown economic warfare.

Tue, 07/03/2012 - 00:46 | 2582748 Rahm
Rahm's picture

Coordinated Currency Collapse

Mon, 07/02/2012 - 22:02 | 2582425 gwar5
gwar5's picture

I agree.  These guys are moving us to the new system of a new global currency monopoly and World government by collapsing the old system and leaving us no choice.

 

Mon, 07/02/2012 - 21:09 | 2582323 AUD
AUD's picture

Pretty wild. It looks as if LIBOR more or less follows the Fed Funds Rate. I don't see what all the fuss is about.

Mon, 07/02/2012 - 21:24 | 2582344 luckylogger
luckylogger's picture

Imagine a spike to 7%, forcing the Bernank's hand to drop interest rates to 0 and give everybody free money is no big deal. It really helpe my mom with her savings in a cd, I see what you mean.... what could possibly be the big deal?

Mon, 07/02/2012 - 22:36 | 2582506 AUD
AUD's picture

The Fed Funds Rate is at zero & has been largely unchanged at zero for a few years. LIBOR is following the Fed Funds Rate, nothing more.

You think the Fed is solvent or something?

Mon, 07/02/2012 - 21:19 | 2582336 El Oregonian
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It is said (Dante) that the levels of hell one finds one's self is directly correlated to the degree of one's sins while living on this earth. If true, then these f'ing Banksters truely found the the hottest deepest pit to reside.

Mon, 07/02/2012 - 21:29 | 2582352 knowless
knowless's picture

let them find it while they live, hell is merely an analogy for what the anguish that you cause in the world brings back upon your mind.

 

they are too well protected from the backlash for their actions to draw the natural repercussions.

 

they do not view you numbers as having souls like them.

Mon, 07/02/2012 - 21:34 | 2582365 El Oregonian
El Oregonian's picture

Don't worry, I'm sure we'll find out...

Mon, 07/02/2012 - 21:32 | 2582362 q99x2
q99x2's picture

They're guilty as fuck. Arrest them.

Mon, 07/02/2012 - 22:00 | 2582416 gwar5
gwar5's picture

Free markets are for pussies.

 

These guys are the new rent-seeking super sovereign fascists who have been operating under the cloaking devices known as the MSM and the stealth political oligarchs. They are the shadow government. The monetary Ponzi end-game has made these cockroaches crawl out and operate in the light where they do not want to be. 

 

 

 

Mon, 07/02/2012 - 22:47 | 2582434 essence
essence's picture

Way back when, folks didn't seem to have a problem believing in or investigating the original mafia (i.e. Italian gangs). Certainly the FBI seemed to believe they existed, enough to warrant forming task forces against the mob.

So why is it considered outlandish "conspiracy theory" to believe in a banking cartel?

Let's extrapolate this.

Banking families (several hundred years ago)  using fractional reserve banking and propping up current governments via lending, gain control of money and credit creation.

One hundred years ago they hit paydirt in the 3rd iteration of a United States (PRIVATELY owned) Central Bank. It is the ultimate gravy train. The founding Banking families grow unimaginably powerful and wisely shield their wealth using a labyrinth of holding companies, trusts & foundations to veil exactly who are the Powers That Be that control the bulk of major western corporations and governments.

These people aren't clueless, exactly the opposite in fact, more like incredibly capable & worldly what with the best of education, advisers and passing on of wisdom from generation to generation.

Note, no talking of Reptilians, bases on the back of the moon or anything so far such as to make this beyond belief. Just everyday human stuff ... which is the eternal struggle for control over others such as to dominate.

---

It's OK to refer to the banking cartel as a matter of fact. The evidence certainly supports it. In fact, arguing against it is like being the last holdout for a flat earth.

Once one accepts an existing banking cartel then much of what takes place in world events makes sense whereas before it didn't.

For those still doubting, I urge you to view events through the prism of an existing Banking Cartel seeking to maintain, even expand control .... in the maelstrom of financial meltdown .

 

Mon, 07/02/2012 - 22:49 | 2582541 Westcoastliberal
Westcoastliberal's picture

I thought your point was already a given fact amongst most viewers here at ZH. I doubt you'll get much disagreement.

Mon, 07/02/2012 - 23:26 | 2582614 essence
essence's picture

I see hesitancy on behalf of "mainstream" writers to acknowledge this.

Look at the writings of a Doug Casey,Bill Bonner, John Maudlin,etc and you'll see a reluctant to discuss the root of our issues.

I post this to lay the cover so to speak for established folks to state what's likely on their minds.
Also, Zerohedge is always gathering new adherents, perhaps some still on the sideline in regards to what is going on. Far too many zealots seem to want to group banking cartel talk in the same vein as UFO's and such.

Mon, 07/02/2012 - 23:02 | 2582572 blindman
blindman's picture

check the "mafia-italian" origin meme, it goes
wider and deeper.
http://en.wikipedia.org/wiki/Jewish-American_organized_crime
.
just to nit pick some

Mon, 07/02/2012 - 22:09 | 2582445 El
El's picture

I dunno, but it seems more than passing odd to me that nothing has been fixed and things continue to go very wrong...and yet we are told the economy is improving. Why hasn't the whole thing collapsed yet? Makes me wonder if things were really all that dire back in 2008. Martial law in the streets bad as proclaimed? Just call me a Doubting Thomasina. I don't believe anything anymore.

Mon, 07/02/2012 - 22:46 | 2582535 Westcoastliberal
Westcoastliberal's picture

El, we're so close to a total collapse of our society I can smell it.

Mon, 07/02/2012 - 22:54 | 2582556 blindman
blindman's picture

rebirth or just birth

Mon, 07/02/2012 - 22:19 | 2582473 Whiner
Whiner's picture

Efficient market, Bitchez!

Mon, 07/02/2012 - 22:33 | 2582500 Amish Hacker
Amish Hacker's picture

The bankers have squeezed the taxpayers for $29 trillion? But I thought Hank Paulson said they only needed $700 billion.

Mon, 07/02/2012 - 22:52 | 2582554 blindman
blindman's picture

federal deposit less insurance. go figure

Mon, 07/02/2012 - 22:35 | 2582504 banksouttacontrol
banksouttacontrol's picture

So, because of the libor manipulation that exaggerated the crisis in the credit markets the result of which caused chaos in equities and a loss of capital to market paticipants and not to forget to mention the continuing chaos in  housing market that has cratered the economy, caused folks to give up their homes...Good grief.. no wonder the sec was quick with a fine and try and sweep this under the rug. I want justice and I want it now.  criminal and cival.

Mon, 07/02/2012 - 22:41 | 2582522 Westcoastliberal
Westcoastliberal's picture

But no laws were broken....uh, wait a minute..

Mon, 07/02/2012 - 22:51 | 2582548 blindman
blindman's picture

the large print giveth and the tied to
an index, small print, taketh away.

Mon, 07/02/2012 - 22:58 | 2582564 pragmatic hobo
pragmatic hobo's picture

I think it's clear at this point that the global banking system have failed. I think the only thing to do is to nationalize entire global banking system for the next 5 years then re-privatize the system but with global rules and regulations that will make sure tails don't wag the dog ever again.

Tue, 07/03/2012 - 01:47 | 2582804 aleph0
aleph0's picture

"Investigators should investigate."

More like ....

"The absense of Investigators should be investigated." 

 

 

Tue, 07/03/2012 - 02:12 | 2582826 KTV Escort
KTV Escort's picture

Nothing wild about the hypothesis as presented. No more wild than a 9-11 scenario... building 7 wired for demolition, the story all along would be "weakened by collateral damage" ~ so, they knew towers 1 & 2 would be coming down no matter what, thus, also pulled. Brazen and wicked these sociopathic scum.

Tue, 07/03/2012 - 03:42 | 2582886 JuicedGamma
JuicedGamma's picture

All I can think is I miss Lou Ruckeyser.

Tue, 07/03/2012 - 06:34 | 2582965 falak pema
falak pema's picture

those banks were doing god's work; proving to the world that libertarian logic, as executed by the private sector, got us to the pearly gates faster. And they succeeded, as now the debts have been socialised, and its not over, and the profits keep piling up in corporate oligarchy land; whereas the public sector faces drowning by millions under debt tsunami.

Islands of calm where Virgin Oligarchs surf on lonely beaches and suck on feminine peaches. "Paradise gained" where hell is what is reserved for all those sheeple who don't know how to count "crooked" with "funny money" generation. 

What a thrill is the HFT game of dark pools of fiat nanoseconds race. 29 T and still going strong! 

The real culprits of this scam as dogmatised in Media uber-culture "Mordoched and Shylocked" land?

"Why those socialist shills who claim more taxation and our hard earned wealth distribution to the needy. The public sector MUST SLIM. Look at all those debts they have accumulated!" 

Lol, the Oligarchical shills having BLINDED the people with the transfer of debt under the TARP Libor/rehypoth gun, now rail and scorn the same people/sheeple for being blind as bats! "You can't even see who creates wealth in this land!"

Wow, hubris and sleight of hand of magnitude unknown.

"We are so handsome in the Emperor's clothes. We can call black white and white black and nobody can contradict us; except maybe the wings of time, our nemesis, as we know our timeline ends one day (we ain't that dumb for god's sake but we have our stash in the Caymans); soooo then, lets keep kicking the can."

Tue, 07/03/2012 - 08:18 | 2583183 ItsDanger
ItsDanger's picture

Not sure what legal implications are here with this assertion.  What I would submit here is that you need to start electing people who have some expertise in financial matters.  Stop bitching about abortion rights, weed, etc.

Tue, 07/03/2012 - 09:41 | 2583413 Shigure
Shigure's picture

More joined-up dots. The picture is making more sense now.

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