Spirit Level... Or Li(e)bor?

Tyler Durden's picture


There was a time when Libor, and the British Bankers' Association was relevant. As well it should: after all $350 trillion worth of downstream "products" are reliant on it. That's right: $350,000,000,000,000.00 worth of notional assets have their value directly and indirectly linked to what a consortium of BBA member banks sits down every day and tells the world is the cost of unsecured overnight funding. Of course, there are occasional allegations and lawsuits that the entire Libor market is nothing but one massively manipulated cesspool, in which the banks, desperate to give off the impression they are healthy will offer numbers which have no bearing on reality, and which in a world which is now entirely funded by central banks, are just as irrelevant. This, however, is total BS. After all, as we all know, in the past three months, liquidity conditions have tightened massively, an entire country's banking system has officially failed and been bailed out, and everyone is now screaming for more liquidity because liquidity is so obviously tight. Surely this all is reflected in a volatile, and rapid rise in the USD Libor as reported daily by the BBA: after all they do have an upward struggle to regain their credibility, and to restore confidence in the Libor indicator. Well, let's take a look at the historical chart of the benchmark 3 Month Libor, shall we....

Wait, this can't... Europe is imploding, the world economy is crashing, and the Spanish banking sector has failed, and the BBA is telling us that in over 3 months Libor has moved by at most... 3 bps, has actually been unchanged for weeks and weeks on end, and has been used by construction workers in the place of a spirit level?

But, but, this may lead some to believe that all those allegations of Libor market manipulation are....true?! Because if the world is on the verge of collapse and Liebor, pardon, Libor has not budged by 3 pips since the day LTRO2 was concluded,  it may, just may, lead some to question just how bad the bank liquidity truly is among the BBA respondent banks.

Fear not, though, we know what will fix everything shortly:

Anthony Browne, a Morgan Stanley executive and former adviser to Boris Johnson, the mayor of London, is on Tuesday expected to be named as the new head of the British Bankers’ Association.


The appointment follows a two-month search by Marcus Agius, chairman of the BBA and of Barclays, one of the UK’s biggest banks. Angela Knight, chief executive of the BBA who led the lobby group through the tumultuous years following the onset of the financial crisis, announced she would step down in April.


He has experience defending the UK financial services industry through his involvement with City UK, a group dedicated to promoting the square mile. Mr Browne helped set up the group and remains a member of its board.


His role at Morgan Stanley – head of government relations for Europe, the Middle East and Africa – should also prepare him for tricky dealings with ministers as he tackles a range of sensitive industry issues, including pay and consumer protection.

Well, if a former Morgan Stanley "diplomat" is about to be placed in charge of Libor, then all is well, and the $350 trillion market is once again in safe, unmanipulated, and fully-credible hands.

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Mon, 06/11/2012 - 14:00 | 2515409 francis_sawyer
francis_sawyer's picture

 "There was a time when Libor, and the British Bankers' Association was relevant"


When? Like right before the battle of Waterloo?

Mon, 06/11/2012 - 14:02 | 2515412 sunaJ
sunaJ's picture

So, to combine two ZH headlines, we die of Eurosis of the Libor.  Is that correct?

Mon, 06/11/2012 - 14:04 | 2515423 Raymond Reason
Raymond Reason's picture

The tangled web they're weaving is beginning to look like a noose. 

Mon, 06/11/2012 - 14:09 | 2515447 gmrpeabody
gmrpeabody's picture

"Eurosis of the Libor"

Well played, Sir!!!

Mon, 06/11/2012 - 14:11 | 2515455 francis_sawyer
Mon, 06/11/2012 - 14:12 | 2515459 Manthong
Manthong's picture

Atta’ boy for that.. They will just keep swigging down that 100 proof liquidity, all the while pretending it’s water until everything stops working.

Tue, 07/03/2012 - 12:07 | 2584179 Shizzmoney
Shizzmoney's picture

Let's just hope the noose is made in China, that way, it will break when it tries to hold up.

Wed, 07/04/2012 - 10:35 | 2586618 LMAOLORI
LMAOLORI's picture

Seriously hahaha you actually believe anyone will do anything about this??????

Wall Street Supporters In Congress Unmoved By Libor Probe



Wall Street still giving to Obama



Morgan Stanley Got S&P To Inflate Ratings, Investors Say



Hot new filing claims internal docs show rating agencies lied on MBS


Mon, 06/11/2012 - 14:14 | 2515464 Dr. Engali
Dr. Engali's picture

+1 I was a little slow on the take there. I had to take a second look.

Mon, 06/11/2012 - 14:57 | 2515608 Random_Robert
Random_Robert's picture

"Eurosis of the Libor"


Fucking brilliant....

Mon, 06/11/2012 - 15:01 | 2515623 krispkritter
krispkritter's picture

I think Tyler needs to add that one to the ZH dictionary...

Mon, 06/11/2012 - 16:40 | 2515956 Stuck on Zero
Stuck on Zero's picture

You guys are reading the chart wrong.  The patient is the banking system and the pulse of banking is what is charted.  This patient is clearly "flat lined."

Mon, 06/11/2012 - 14:07 | 2515419 Dr. Engali
Dr. Engali's picture

Mean while back in the U.S:




What to do? What to do? So many drones ...so few ideas.

Mon, 06/11/2012 - 14:07 | 2515438 Cognitive Dissonance
Cognitive Dissonance's picture

"The agency also said it won’t expand beyond 10 drones — “unless directed to do so by a higher authority.”"

I assume they mean the Fed?

Mon, 06/11/2012 - 14:57 | 2515609 krispkritter
krispkritter's picture

Or the EPA. Seems they want to keep track of all the bullshit ranchers are spreading as opposed to all the bullshit that .GOV and the Fed produces.


Mon, 06/11/2012 - 14:06 | 2515426 Cognitive Dissonance
Cognitive Dissonance's picture

".....and has been used by construction workers in the place of a spirit level?"

Actually just plumbers.....who all know that shit flows down hill and payday is Friday. No need for a spirit level anywhere as good as the Li(e)bor. Just piss on the ground and carefully watch where the dollars flow.  

Mon, 06/11/2012 - 14:07 | 2515441 libertus
libertus's picture

Libor is meaningless in a world where the ECB and the FED backstop everything. If the markets actually worked it would have spiked. This number--like most of the others coming out of the markets means nothing and just points to the singularity around the corner. 

Mon, 06/11/2012 - 14:12 | 2515458 waterwitch
waterwitch's picture

I feel pretty level after a few spirits :D

Mon, 06/11/2012 - 14:21 | 2515492 disabledvet
disabledvet's picture

So is England the collateral or merely London? Of course "there is the slight problem of collection." Who here has thought about that? The "number of airborne divisions" it takes to "collect on an unpayable debt"? Oh, that would be me of course. Shall i interest you in a 1000 ton "experimental German tank" then? The Germans actually built some of these things in case you're wondering.

Mon, 06/11/2012 - 14:21 | 2515499 blindman
blindman's picture

that was a big deal in the summer of 2008,
as you suggest, i think, before full entrenchment
of the digital ponzi-gnome, central, che-loving,
guerilla, capitalist banker zombie-vampire occupation.
they will find no flesh in the gut upon autopsy,
it will all be laying on the streets as reported
by those closest to the situation. (eye witnesses).
shouldn't there be a rehypothecated index normalization swap to, upon request, keep that thing right where it is or needs to be/should be for occasions such as this?
b double e double r U>N>. beer run?
what is spirit level? among other things..
Jethro Tull - Locomotive Breath
" no way to slow down.." i.a.

Mon, 06/11/2012 - 14:26 | 2515513 AndrewJackson
AndrewJackson's picture

As a clerk in the Eurodollar Options pit, I can tell you liebor is the biggest piece of shit ever. It really is hilarious how many products are linked to libor. Why on earth, going forward, would anyone hedge with this piece of shit number? Gosh I need to find a new less manipulated market.

Mon, 06/11/2012 - 14:27 | 2515519 Broomer
Broomer's picture

I read 350 trillion and felt nothing, but seeing $350,000,000,000,000.00 written sent a chill down my spine.

Mon, 06/11/2012 - 16:55 | 2516013 noob
noob's picture

...relax, it's only...

   3.5E+14      ...no biggy  /sarc   ;)

Mon, 06/11/2012 - 14:27 | 2515520 sudzee
sudzee's picture

I think the financial system is at the point where it could crash with the withdrawel of 5 physical dollars. I'll be back in 10 min.

Mon, 06/11/2012 - 17:55 | 2516143 The Alarmist
The Alarmist's picture

Don't leave that $5 lying around unguarded ... JPM will take it for itself as collateral and rehypothecate it to the ECB, and they will leverage it to bail out Italy, and the next thing you know the whole world economy will implode.

Mon, 06/11/2012 - 14:46 | 2515583 HellZero
HellZero's picture

Not defending libor, but plenty of the banks on the panel are awash with liquidity; when things get worse, some are seeing more not less liquidity (maybe short duraton, but still). 

Thus its a totally redundant indicator for risk at moment. EurUsd basis swap is a far better indicator of stress

Mon, 06/11/2012 - 14:51 | 2515596 razorthin
razorthin's picture

No, it was relevant in 2008.  After the ensuing crash is when they decided to put a lid on it.  Never again shall the sheep be forewarned.

Mon, 06/11/2012 - 15:08 | 2515660 slewie the pi-rat
slewie the pi-rat's picture

eurosis of the the libor made me spill my rice!

Mon, 06/11/2012 - 15:54 | 2515827 AGoldhamster
AGoldhamster's picture

reminds me of EURCHF

Tue, 06/12/2012 - 03:33 | 2517180 BritishBankers
BritishBankers's picture

British Bankers' Association here. As you know we do not comment on LIBOR movements so we will limit ourselves to two factual corrections. One: you do not need to be a BBA member bank to be a member of a LIBOR panel. Two: LIBOR data are available in 15 maturities, so it's not just overnight funding. That's all.

Wed, 07/04/2012 - 10:39 | 2586629 Cursive
Cursive's picture

Another comedic trolling attempt.  Here's a fact:  one can either be hanged by the neck until one dies or one can be hanged in such a way as to break one's neck, thus dying instantaneously.  I'd prefer to avoid the noose altogether, but if given the ultimatum, I'd go with instantaneously.  Something for all BBA members to think about.

Tue, 07/03/2012 - 12:14 | 2584201 bmusic
bmusic's picture

The problem is, outside of the few thousand that will likely read this article, no one cares.  Try walking down an average street and asking people about Libor manipulation, and you'll be hard pressed to find a single person that know what you are talking about.  Normal people just don't know what the hell is going on!

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