LIBOR

• Greece Faces Need for Additional Assistance: €30 billion (WSJ)
• Greeks fail to agree on bailout terms (FT)
• The report that got the NYT banned on the Chinese interweb: Billions in Hidden Riches for Family of Chinese Leader (NYT)
• Bo Xilai: China parliament expels disgraced politician (BBC)
• Japan Adds Stimulus Amid Threat of Bond-Sale Disruption... $9.4 billion (Bloomberg)
• Hubbard Said to Prefer Treasury Chief to Fed If Romney Wins (Bloomberg)
• 9 More Banks Subpoenaed Over Libor (WSJ)
• Romney raises $112m in 17 days (FT)
• Amid Cutbacks, Greek Doctors Offer Message to Poor: You Are Not Alone (NYT)... no, we are all broke
• Muni Downgrades Top 2011 Total on Weak Economy: Moody’s (Bloomberg)
• Ireland urges ECB to commit to bond-buying (FT)
• Cameron and Clegg unite in EU demands (FT)

If you often wonder why ‘free market capitalism’ feels like it is failing despite universal assurances from economists and political pundits that it is working as intended, your intuition is correct. Free market capitalism has become a thing of the past. In truth free market capitalism has been replaced by something that is truly anti-free market and anti-capitalistic. The diversion operates in plain sight. Beginning sometime around 1970 the U.S. and most of the ‘free world’ have diverged from traditional “free market capitalism” to something different. Today the U.S. and much of the world’s economies are operating under what I call Monetary Fascism: a system where financial interests control the State for the advancement of the financial class. This is markedly different from traditional Fascism: a system where State and industry work together for the advancement of the State. Monetary Fascism was created and propagated through the Chicago School of Economics. Milton Friedman’s collective works constitute the foundation of Monetary Fascism. Today the financial and banking class enforces this ideology through the media and government with the same ruthlessness of the Church during the Dark Ages: to question is to be a heretic.   When asked in an interview what humanities’ future looked like, Eric Blair, better known as George Orwell, said “Imagine a boot smashing a human face forever.”

Before the campaign contributors lavished billions of dollars on their favorite candidate; and long after they toast their winner or drink to forget their loser, Wall Street was already primed to continue its reign over the economy. For, after three debates (well, four), when it comes to banking, finance, and the ongoing subsidization of Wall Street, both presidential candidates and their parties’ attitudes toward the banking sector is similar  – i.e. it must be preserved – as is – at all costs, rhetoric to the contrary, aside. Obama hasn’t brought ‘sweeping reform’ upon the Establishment Banks, nor does Romney need to exude deregulatory babble, because nothing structurally substantive has been done to harness the biggest banks of the financial sector, enabled, as they are, by entities from the SEC to the Fed to the Treasury Department to the White House.

• Japan grapples with own fiscal cliff (Bloomberg)
• Japan Protests After Four Chinese Vessels Enter Disputed Waters (Bloomberg)
• Asian Stocks Rise as Exporters Gain on China, U.S. Data (Bloomberg)
• An obsolete Hilsenrath speaks: Fed Keeps Rates Low, Says Growth Is Moderate (WSJ)
• ECB Said to Push Spain’s Bankia to Swap Junior Debt for Shares (Bloomberg)
• Spain’s Bad Bank Seen as Too Big to Work (Bloomberg)
• China postpones Japan anniversary events (China Daily)
• Carney Says Rate Increase ‘Less Imminent’ on Economy Risk (Bloomberg)
• Credit Suisse to Cut More Costs as Quarterly Profit Falls (Bloomberg)
• Obama offers a glimpse of his second-term priorities (Reuters)
• Draghi defends bond-buying programme (FT)

Unlcear if as on recent occasions, there will be 7,000 policemen protecting him: Mario Draghi travels to Berlin today to meet with key German parliament members involved in the eurozone crisis policy.  This private meeting is the ECB president’s effort to defend his new bond buying plan as a legitimate instrument in its monetary policy arsenal. Germany’s legislative backing is critical for Draghi’s plan to buy up Spanish and other eurozone area government bonds. The Bundesbank president, Jens Weidmann, says the program is tantamount to financing governments by printing money, which is prohibited by the ECB’s founding treaty. ECB presidents normally give evidence to the European parliament but rarely if ever address national legislatures especially behind closed doors.  This journey is highly unusual but a critical sell for Draghi. Today’s session will be followed by a press briefing at 4pm local time by Mr. Draghi and Bundestag leader Norbert Lammert.

• Debt Fuels a Dividend Boom - Firms Collect Payouts, and Investors Get Yield; 'Reminiscent of the Bubble Era' (WSJ)
• Black Monday Echoes With Computers Failing to Restore Confidence (BBG)
• Poll: Obama Leads in Wisconsin, Iowa (WSJ)
• Gold Imports by India Seen Climbing First Time in Six Quarters (BBG)
• Europe pushes ahead towards ECB bank supervision (Reuters)
• ... And fails: Summit fails to agree timetable for aid to failing lenders (FT)
• Toyota Prius Dominates California as State’s No. 1 Model (BBG)
• Italy raises €18bn in huge bond sale (FT)
• Diplomacy inbox fills up as U.N. awaits U.S. presidential vote (Reuters)
• Goldman braced for more revelations (FT)
• China power brokers agree preferred leadership team (Reuters)
• EU, Japan Warn Against New US Swaps Rules (WSJ)
• Why VaR is the most meaningless contraption ever: Morgan Stanley shows the ‘flaky’ side of model (FT)
• Made in France Trumps Consumer Choice in Hollande Jobs Quest (BBG)
• North Korea threatens South over propaganda balloons (Reuters)

• Hillary Clinton Accepts Blame for Benghazi (WSJ)
• In Reversal, Cash Leaks Out of China (WSJ)
• Spain Considers EU Credit Line (WSJ)
• China criticizes new EU sanctions on Iran, calls for talks (Reuters)
• Portugal sees third year of recession in 2013 budget (Reuters)
• Greek PM says confident Athens will secure aid tranche (Reuters)
• Fears over US mortgages dominance (FT)
• Fed officials offer divergent views on inflation risks (Reuters)
• China Credit Card Romney Assails Gives Way to Japan (Bloomberg)
• Fed's Williams: Fed Actions Will Improve Growth (WSJ)
• Rothschild Quits Bumi to Fight Bakries’ $1.2 Billion Offer (Bloomberg)

Nearly four years ago, we started a series of articles in which we methodically presented evidence that LIBOR was manipulated. Then, in late June, the biggest (to date) bank conspiracy was exposed, in which it was found beyond a reasonable doubt that at least one, and in many case all (including the BOE and Fed) were if not engaging, then certainly aware of numerous instances when daily USD LIBOR fixing was fudged one way or another for various non-fiduciary, read illegal purposes. When our conspiracy theory was confirmed to be conspiracy fact (as usual), we suggested the following: "Our advice to anyone who had an adjustable rate mortgage in the period between 2005 and today: speak to a lawyer immediately about suing the living feces out of Barclays, and all other banks who crawl out of the woodwork with purported settlements. Because due to their undisputed mark manipulation, it is absolutely safe to say that ARMs, which rely on Libor for interest rate formation, were grossly manipulated by the same idiot traders who left written evidence of their manipulation year after year. Now it is their turn to pay." As of last night, this too has occurred, after several homeowners, aka Adams et al (Southern New York, 12-cv-07461) launched a class action lawsuit against Bank of America and all other LIBOR banks, accusing the defendants of "unjustly enriched themselves" by manipulating the rate, which allowed them to increase the payments by homeowners on adjustable rate loans, and boosting profits.

Watch as The Intruders crash the Investment Banking Awards in Mayfair to present a spoof award to Barclays for their role in manipulating LIBOR.

While the recent revelations of multi-year LIBOR manipulation (but, but how was that possible: it involved thousands of people, operating for years, manipulating numbers - all the traditional reasons presented against conspiracy theory crackpots alleging that manipulation may be going on here, or there, or at the BLS, or somewhere), which we had said had been happening for the past 3 years, confirmed that the entire rate-based derivative market was a giant scam, at least one market spared from cartel whistleblower, i.e., insider, humiliation, was the commodities market. No longer. As the FT first reported, a Swiss trading office of Total Oil Trading sent a response letter to IOSCO (the International Organization of Securities Commissions), alleging that the same kinds of market "pricing" shennanigans that have been now exposed to have taken place over bottles of Bollinger, may have been pervasive in the crude market as well.

Church of England - and Religious Leaders Worldwide - Say Bankers Should Repent and Change Their Ways

• China accuses Bo Xilai of multiple crimes, expels him from communist party (Reuters), China seals Bo's fate ahead of November 8 leadership congress (Reuters)
• "Dozens of phone calls on days, nights and weekends" - How Bernanke Pulled the Fed His Way - Hilsenrath (WSJ)
• Fed won't "enable" irresponsible fiscal policy-Bullard (Reuters)
• PBOC Adviser Says Easing Restrained by Concerns on Homes (Bloomberg)
• Data Point to Euro-Zone Recession (WSJ)
• Fiscal cliff dims business mood (FT)
• FSA to Oversee Libor in Streamlining of Tarnished Rates (Bloomberg)
• Monti Says ECB Conditions, IMF Role Hinder Bond Requests (Bloomberg)
• Japan Heads for GDP Contraction as South Korea Weakens (Bloomberg)
• Moody’s downgrades South Africa (FT)
• Madrid Struggles With Homage to Catalonia (WSJ)

The financial crisis of 2008 shook politicians, bankers, regulators, commentators and ordinary citizens out of the complacency created by the 25-year "great moderation". Yet, for all the rhetoric around a new financial order, and all the improvements made, many of the old risks remain (and some are far larger). The following 'story' suggests a scenario based on an 'avoidable history' and while future crises are not avoidable, being a victim of the next one is.

"John Banks was woken by his phone at 3am on Sunday 26th April 2015. John worked for Garland Brothers, a formerly British bank that had relocated its headquarters to Singapore in late 2011 as a result of..."

• China To Maintain Prudent Monetary Policy (China Daily)
• Why Exit Is An Option For Germany (FT)
• China-Japan Ministers Hold 'Severe' Talks As Spat Damages Trade (Bloomberg)
• Eurozone Deal Over Bank Bailout In Doubt (FT)
• UBS Co-Workers Knew of Fake Trades, Adoboli Told Lawyer (Bloomberg)
• Banks Seek Changes To Research Settlement (FT)
• Secession Crisis Heaps Pain On Spain (FT)
• SEC: NY Firm Allowed HFT Manipulation (Bloomberg) - busted 'providing liquidity'?
• Germany To Tap Brakes ON High-Speed Trading (WSJ)
• Rajoy Outlines Fresh Overhauls (WSJ)
• BBC Apologizes To Queen Over Radical Cleric Leak (Reuters)
• British Banks Step Back From Libor Role (WSJ)
• Obama Seeks To Recast Ties With Arab World (FT)

We have not been aggressive anti-CDS fanatics in the past - since the ignorance of mainstream media types satisfies that need - as the reality in the credit market is less extreme than many would love it to be. However, the latest move by Markit and its self-aggrandizing dealer owner/clients, to bring names into the high-yield credit index that do not even have CDS trading on them, is simply remarkable. While they will defend the move on the basis that it will force dealers to provide single-name CDS liquidity in three of the high-yield credit markets most-indebted companies (CIT, Charter Comms, and Calpine), the fact is that they are using the liquidity/fungibility of the index to enable risk to be unwound on what is likely bloated balance sheets containing too much of this crap. By imagining (or fixing LIBOR-style) where the CDS would trade, based on where the firms' bonds trade, we worry that the hitherto somewhat liquid source of 'fast' macro-hedging or positioning has become even more manipulable than before - and in the event of a default (or stress/illiquidity event), we can only imagine the law-suits. As the FT notes - all this does is provide more 'arbitrage' opportunities as opposed to real hedging; simply amazing that as with equities - it is now the synthetic indices that run the entire market.