tag:blogger.com,1999:blog-912107698547747613.post737313922742496226..comments2023-10-23T22:07:07.535+01:00Comments on London Banker: Lies, Damn Lies and LIBORLondon Bankerhttp://www.blogger.com/profile/13358082683340132378noreply@blogger.comBlogger35125tag:blogger.com,1999:blog-912107698547747613.post-49144055865053380972015-08-28T22:28:36.794+01:002015-08-28T22:28:36.794+01:00I completely agree, it's never okay when banks...I completely agree, it's never okay when banks abuse the power they have, and this LIBOR scandal has been a huge wake up call.Coldwell Bankerhttp://cbgosslee.comnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-5210053663297562792012-07-27T16:02:36.436+01:002012-07-27T16:02:36.436+01:00Thanks for the post. I had been looking for someth...Thanks for the post. I had been looking for something related and found your web site in the process.I will definitely be back for more.badger shaving brusheshttp://www.bmvintageshaving.com/noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-90175584478388191562012-07-18T22:39:30.425+01:002012-07-18T22:39:30.425+01:00It might seem over simplistic but if existing regu...It might seem over simplistic but if existing regulations are not adhered to and no one is brought to book, why would further legislation stem the tide of greed? Legislation without enforcement is pointless. <br /><br />What is worse is that our bankers have now learnt that they can operate illegaly with little more than a slap on the wrist. A little public humiliation is nothing and soon forgotten in the glittery face of mega wealth.<br /><br />While we look for govenrments to enforce laws, what are we doing to motivate them. To let them see that as the voting public we demand they enforce our legislated ethics.<br /><br />How many domestic Barclays clients closed their accounts, how many small businesses transferred their accounts to other banks, how many big companies severed thier ties with the lies?<br /><br />The truth is, no one wants the bank to fail. It is one of our foundations and rattling it appears sucidial. <br /><br />We need to sharpen the stick of justice and bring to book people, people responsible for committing the infringements, as well as those who have stood by and allowed what amounts to crimes against humanity. <br /><br />The collapse of our economic system is not being perpetuated by institutions it is being perpetuated by extremely greedy people with no guiding ethics!<br /><br />The system undoubtably needs a complete overhaul but in the meantime we need to lobby for personal accountability.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-18734498113729910972012-07-18T22:38:06.439+01:002012-07-18T22:38:06.439+01:00It might seem over simplistic but if existing regu...It might seem over simplistic but if existing regulations are not adhered to and no one is brought to book, why would further legislation stem the tide of greed? Legislation without enforcement is pointless. <br /><br />What is worse is that our bankers have now learnt that they can operate illegaly with little more than a slap on the wrist. A little public humiliation is nothing and soon forgotten in the glittery face of mega wealth.<br /><br />While we look for govenrments to enforce laws, what are we doing to motivate them. To let them see that as the voting public we demand they enforce our legislated ethics.<br /><br />How many domestic Barclays clients closed their accounts, how many small businesses transferred their accounts to other banks, how many big companies severed thier ties with the lies?<br /><br />The truth is, no one wants the bank to fail. It is one of our foundations and rattling it appears sucidial. <br /><br />We need to sharpen the stick of justice and bring to book people, people responsible for committing the infringements, as well as those who have stood by and allowed what amounts to crimes against humanity. <br /><br />The collapse of our economic system is not being perpetuated by institutions it is being perpetuated by extremely greedy people with no guiding ethics!<br /><br />The system undoubtably needs a complete overhaul but in the meantime we need to lobby for personal accountability.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-59240855974573077332012-07-18T16:29:45.427+01:002012-07-18T16:29:45.427+01:00@ Knute Rife
I reiterate; there is no need to go ...@ Knute Rife<br /><br />I reiterate; there is no need to go to a gold standard. <br /><br />That said, the scarcity of gold is exactly what constrains government from devaluing the currency for expedient political ends. <br /><br />There is absolutely no need to expand the monetary base other than some modest amount occasionally. Under a gold standard, if the sovereign wished to expand the money supply for whatever reason (and the reason should be submitted to the people for ratification) then said sovereign either employs people and machinery in order to locate, extract, convey, refine and distribute gold or it would have to produce goods to trade in order to accumulate gold. Either way, expanding the money supply would foster economic activity and capital formation.<br /><br />There cannot be a situation where there is not enough physical gold to satisfy monetary demand. If gold should be in great demand (i.e. if money should be in great demand according to the time preference of economic actors) then an ounce of gold would increase in price. Also, industrial use destroys only a fraction of mined gold. Most of the gold ever mined is still in existence.<br /><br />Regarding banks, I stand corrected. It is not "banks" that create money. It is the commercial banks and the Primary Dealers that do so.<br /><br />Fractional Reserve banking most certainly creates money supply. The crucial difference is that at 10% reserve requirement, 90% of the created money supply is "fiduciary media" - i.e. it is money that has not been requested by the sovereign.<br /><br />By extension, the newly created fiduciary media does not enter the economy evenly and simultaneously. Thus, as this process is carried out permanently and aggressively, the farther away you are from the creator of the currency, the weaker is the purchasing power of the currency when it finally reaches you.<br /><br />No need to call people names mate. We are here to debate. Keep it civil and we'll all get along just fine.guidoammhttp://www.guidoromero.wordpress.comnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-79014971793834619412012-07-17T03:27:19.903+01:002012-07-17T03:27:19.903+01:00LB,
Thank you, could you please comment on the li...LB,<br /><br />Thank you, could you please comment on the likelihood and the consequences of gold being accepted as a Tier 1 asset with zero risk rating, as is presently being contemplated on both sides of The Pond. <br /><br />Supplemental question: "gold" would be gold & gold receivables presumably?<br /><br />All the best,<br /><br />SRS Rochehttps://www.blogger.com/profile/18070519576321568415noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-19184891879850205472012-07-15T09:59:28.903+01:002012-07-15T09:59:28.903+01:00Sean - I'm a tad late here. but the cajas, at ...Sean - I'm a tad late here. but the cajas, at least the ones in the headlines, were never mutuals. They were/are not-for-profit charities. There's a very small and totally distinct sector (maybe 2% of total banking assets) known as 'cajas rurales', which sprung from agricultural and fishing co-ops. which are depositor owned. Hands down, they are the ones that have had the fewest problems arising from the real estate bubble - even including normal banks in the comparison.Charles Butlerhttps://www.blogger.com/profile/00486529931043507880noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-57565679044893900022012-07-13T15:21:06.405+01:002012-07-13T15:21:06.405+01:00Knute,
High speed trading has not rendered the tr...Knute,<br /><br />High speed trading has not rendered the transparency model of regulation a farce.<br /><br />First, the model is not just limited to trading. It extends to when and what banks/structured finance securities should have to disclose to all market participants.<br /><br />Second, the fact that high speed trading distorts the market is a positive finding from the transparency model of regulation. It is positive in that it suggests high speed trading should be banned.Anonymoushttps://www.blogger.com/profile/11316888485290662469noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-59066726383337996022012-07-13T07:28:03.289+01:002012-07-13T07:28:03.289+01:00@guidoamm
1. No, it is patently true there isn'...@guidoamm<br />1. No, it is patently true there isn't enough metal to go around. How much outstanding gold and silver do you think there is? It doesn't match outstanding cash flow, let alone adding in commercial and industrial uses for the metals. I have yet to see one of you bullion bugs show evidence to the contrary, unless you include exchange-traded bullion, which is bogus.<br /><br />2. All banks used to be able to issue currency. It was a mess. Now the sovereigns have pulled that power in. However Randbots may wish to misinterpret the monetary system, banks don't create money, sovereigns do, then they book it into the private system using the budget and banks and bring it back in through the revenue code. It's why having a sovereign currency matters.ivestsp 1Knute Rifehttps://www.blogger.com/profile/02345893660115107054noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-66376102009225022892012-07-12T19:50:17.451+01:002012-07-12T19:50:17.451+01:00@ Knute - "You would perhaps prefer the good ...@ Knute - "You would perhaps prefer the good old days when everyone could issue scrip and no one was obligated to accept it? Talk about a boom and bust currency. Or perhaps a hard money policy? There isn't enough gold and silver on Earth to back the currency needed for a sane global economy, let alone what we have now."<br /><br />The argument that "there is not enough gold or silver on earth to back the currency" is patently not true. All that happens is that the underlying is revalued or devalued with the ebb and flow of the economy; the old time preference trick. But without necessarily going to gold and silver, all that is needed is to eliminate the privilege to create unlimited currency from an entity that stands outside of society. In the current set up, the diminishing marginal utility of debt guarantees an asymmetric advantage to the creator of the currency whom ends up concentrating all profits.guidoammhttp://www.guidoromero.wordpress.comnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-59739043979553255812012-07-12T19:35:20.394+01:002012-07-12T19:35:20.394+01:00As I've chimed in with Black and others on sev...As I've chimed in with Black and others on several occasions, high-speed trading alone has rendered the transparency model of regulation a farce. It is physically impossible for anyone but insiders to receive, process, and act on investment information in a meaningful timeframe. Add neoliberal policies that have left regulators asleep at the switch, and the markets have turned into gunfights with everyone but the big houses armed with popsicle sticks.<br /><br />@PeterJB: In fact, there is effectively no such thing as a two-party financial contract anymore. The only laughably regulated derivatives market and the openly unregulated CDS market created daisy chains made of cotton candy that were leveraged up and down the line. We haven't even begun to wring this out yet.<br /><br />@Guidoamm: You would perhaps prefer the good old days when everyone could issue scrip and no one was obligated to accept it? Talk about a boom and bust currency. Or perhaps a hard money policy? There isn't enough gold and silver on Earth to back the currency needed for a sane global economy, let alone what we have now.<br /><br />@LB: Yes, price discovery is an archaic alchemy, but it's fundamental to the point of being taken for granted. People are now noticing because the comforting axioms we based our price discovery models on are proving, shall we say "weak"; what we thought was Chanel No. 5 is in fact Eau de Crappe. It's rather like waking up one morning to discover your house's foundation is just a figment of your imagination.Knute Rifehttps://www.blogger.com/profile/02345893660115107054noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-65711873543346447932012-07-12T03:55:51.997+01:002012-07-12T03:55:51.997+01:00Now we know why local police departments have been...Now we know why local police departments have been militarized.<br /><br />Now we know why there are cameras all over the place, watching our every move.<br /><br />Now we know why all of our governments have been spying on us for the last 10-15 years, if not longer.<br /><br />Oceania and Air Strip One were not built in a day.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-16505267909800214932012-07-12T00:29:27.263+01:002012-07-12T00:29:27.263+01:00Wondering what the London Bookies have odds on any...Wondering what the London Bookies have odds on anyone going to jail? <br />This is just business as usual for the criminal class running the planet for their own greed. Only Main Street will lose.jo6pachttps://www.blogger.com/profile/13243469700844995455noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-66422616150418525822012-07-11T21:08:20.460+01:002012-07-11T21:08:20.460+01:00Cheers to all of you for reading and commenting! ...Cheers to all of you for reading and commenting! I'm rather surprised at the interest in this piece, as price discovery functions of markets and reference data methodologies aren't compelling topics in normal times. But these are not normal times. <br /><br />Special hat tip to MarcoPolo as I had not drawn the London Whale/krill connection until he pointed it out. If only I was that clever!London Bankerhttps://www.blogger.com/profile/13358082683340132378noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-28716006553317190082012-07-11T15:01:21.956+01:002012-07-11T15:01:21.956+01:00Nice post.
Mutual's did not work too well in...Nice post. <br /><br />Mutual's did not work too well in Spains cajas did they? they too were well and truly corrupted.<br /><br />Now we all know how the Reed warbler feels when it discovers it has a Cuckoo in its nest. And just like the Cuckoo chick "banks" makes the sound of 6 hungry Reed warbler chicks to get the parent to feed it. The same chick that killed the Warblers natural young.<br /><br />I propose a new term "Cuckoo banking" it tells the story.Seanhttps://www.blogger.com/profile/04362169593902131947noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-67893855516241269632012-07-11T14:58:16.988+01:002012-07-11T14:58:16.988+01:00This comment has been removed by the author.Seanhttps://www.blogger.com/profile/04362169593902131947noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-91521518571913046432012-07-11T14:39:28.184+01:002012-07-11T14:39:28.184+01:00London Whale, meet Krill. Love the analogy.London Whale, meet Krill. Love the analogy.MarcoPolohttps://www.blogger.com/profile/03352448231722876114noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-17619745823903005262012-07-11T10:26:26.903+01:002012-07-11T10:26:26.903+01:00Not only has risk been mis-priced but synthetic co...Not only has risk been mis-priced but synthetic collateral has been pyramided to the point that global GDP exceeds global Output. The constant drive for cheap labour in China to support the Credit Pyramid through increased output of physical goods has run up against constraints.<br /><br />When Marks & Spencer built a financial services division it destroyed its retail operation by driving for FIRE returns from Clothing and cheapened product and presentation by skimping on textile quality and fabric sizing.<br /><br />The Capitalist System is hollowed out by the FIRE Sector which distorts measurement to favour money scales of attainment only.<br /><br />The FIRE Sector is a coaling station reducing all physical products to combustible carbonTomTomnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-12119829230135637222012-07-11T10:22:09.433+01:002012-07-11T10:22:09.433+01:00Great post.
"In a monetary system predicated...Great post.<br /><br />"In a monetary system predicated on the deliberate and artificial inducement of inflation, the diminishing marginal utility of the currency ensures that ALL profits eventually concentrate in the financial industry and, finally, concentrate in the hands of the Primary Dealers. Granted the time line is rather extended but the ultimate result is an arithmetical certainty."<br /><br />+1 on this one<br /><br />Is'nt our great "London banker" joining the lunatic fringe:)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-79815399791299625002012-07-11T07:53:02.149+01:002012-07-11T07:53:02.149+01:00Just a minor correction. You say:
"Global ban...Just a minor correction. You say:<br />"Global banks have built the casinos and tilted the odds in the house's favour by rigging the data that determines the outcomes of most of the bets on the table."<br /><br />This is not a matter of odds. Fractional Reserve Banking ensures that money is injected into the economy through specific and exclusive gates. In a monetary system predicated on the deliberate and artificial inducement of inflation, the diminishing marginal utility of the currency ensures that ALL profits eventually concentrate in the financial industry and, finally, concentrate in the hands of the Primary Dealers. Granted the time line is rather extended but the ultimate result is an arithmetical certainty.Guidoammhttp://www.guidoromero.wordpress.comnoreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-47033006710160401682012-07-11T07:18:04.814+01:002012-07-11T07:18:04.814+01:00How much different is this to make conterfeit mone...How much different is this to make conterfeit money ?<br />Why is sentencing shockingly light for them, if they get any ? <br />See <a href="http://www.bankofcanada.ca/wp-content/uploads/2010/10/sentencing_offences.pdf" rel="nofollow">Money Conterfeit Sentencing</a>Unknownhttps://www.blogger.com/profile/15683099600920815516noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-79499779943025711102012-07-11T07:10:47.881+01:002012-07-11T07:10:47.881+01:00This comment has been removed by the author.Unknownhttps://www.blogger.com/profile/15683099600920815516noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-57084273816875132132012-07-10T22:55:31.946+01:002012-07-10T22:55:31.946+01:00LB,
As always, excellent post.
What you describe...LB,<br /><br />As always, excellent post.<br /><br />What you described is how the banks have inserted opacity into the financial system over the last 30 years. Opacity that the financial regulators permitted.<br /><br />The results have been predictable as opacity hides bad behavior.<br /><br />The solution as you correctly point out is transparency. (I have discussed this extensively on my blog: www.tyillc.blogspot.com)<br /><br />It is well recognized that sunlight is the best disinfectant for the behavior the banks are engaging in and stopping their extraction of rent from the real economy.<br /><br />I agree that Libor should be based on real transactions. <br /><br />As for the concern that the market froze and there were no transactions, the response is the freezing of the market occurred in all the opaque areas of the market (banks and structured finance securities for example). If transparency were brought to these areas, then the market would not have frozen and prices would have been available.Anonymoushttps://www.blogger.com/profile/11316888485290662469noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-35408032017143632192012-07-10T19:27:07.317+01:002012-07-10T19:27:07.317+01:00All transactions involve two parties. If a transac...<i>All transactions involve two parties. If a transaction is private (off-exchange) why does it follow that one party to the trade is disadvantaged?</i> Rich L<br /><br />Here's a better question RL, how is it the taxpayer's job to backstop the speculators involved when these "private" instruments blowup in their faces? <br /><br />It's a simple deal here, if you want to privatize the gains then you damn well better be prepared to privatize the losses.Coldtypehttps://www.blogger.com/profile/09509152474515164151noreply@blogger.comtag:blogger.com,1999:blog-912107698547747613.post-13455170621393316502012-07-10T17:30:34.225+01:002012-07-10T17:30:34.225+01:00Always appreciate your writing. I do have to say t...Always appreciate your writing. I do have to say though that I find the idea that clearinghouses are the cure-all (or even the cure-most) solution to be a little naive.<br /><br />The abuse of customers that existed at every single clearinghouse-based exchange until side-by-side electronic markets nullified that abuse's tactics was widely acknowledged and accepted by all "members".<br /><br />I agree with the trust of the post though -- regulation must have effective enforcement measures and markets should quote actual transactions in some audit-able kind of way.BRMhttps://www.blogger.com/profile/17864068100462781592noreply@blogger.com