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Subject: LIBOR-MEET THE BANKSTERS: WORLD FINANCIAL CORRUPTION SCHEMES
UNRAVELING
MEET THE BANKSTERS: WORLD FINANCIAL CORRUPTION SCHEMES UNRAVELING
http://theinternationalforecaster.com/Date: Saturday, 7-Jul-2012 03:59:13
THE INTERNATIONAL FORECASTER
SATURDAY, JULY 7, 2012
07/07/12 #1
WORLD MARKETS
Meet the Banksters: World Financial Corruption Schemes Unraveling
by James Corbett
www.corbettreport.com What do you get when you cross a banker and a gangster? A bankster,
of course. The temptation might be to think of this as colorful
hyperbole, but it's not. Exactly as the gangsters of old colluded
to buy off the regulators, rub out the competition, and swindle
the public, so too do the big banks cheat, steal, lie and swindle
to support their corrupt practices. Although there is no dearth of
evidence to support this thesis, this week was particularly ripe
with examples of just how the banksters run their racket.
The biggest news, of course, was the unraveling of the Libor
lie. Even more amazing than the scandal itself is the fact that
people are hearing about it on mainstream television. Everything
you've heard is true. It is, dollar for dollar (or, more accurately,
pound for pound), the largest scam ever perpetrated through the
banking system. Or at least the biggest scam unearthed so far. For
those who don't know (and somehow managed to miss the multiple
explanations in the commercial press), Libor is the London Inter
Bank Offered Rate. It represents the average lending rate between
banks for a number of currencies and maturities. The reason the
fixing of this rate is so monumentally important is that so many
loans and derivatives are priced off of Libor. Some estimates
place the value of Libor-linked loans and securities (interest
rate swaps, syndicated loans, currencies, variable rate mortgages,
forward rate agreements, etc.) at 800 trillion dollars, or about
10 times the GDP of the entire planet. To say that small changes
in these rates can have large knock-on effects in the economy
at large is an understatement. This isn't to say that the rates
were always manipulated upward to maximize profit. They can and
were manipulated downward at times, too, to convey a confidence in
the stability of the banks that the banksters weren't necessarily
feeling on the street.
Here's the rub: the Libor scandal can't be swept under the rug
by blaming "one bad apple." It's the go-to excuse whenever the
banksters are caught with their pants down, but it won't hold
this time. The Libor isn't set by one bank, but by a number of
them; eight, twelve, sixteen or twenty depending on the currency
involved. The top and bottom quartile are thrown out and the middle
50% of values are averaged out to arrive at the final figure. In
order to actually effect manipulation of the rate, over a quarter
of the banks would have to be committed to skewing the numbers. And
the whole thing requires, needless to say, a generous helping of
governmental consent. And so it was that after the Barclays $455
million smackdown and the resignation of CEO Bob Diamond, Barclays
itself released a memo detailing a conversation between Diamond and
the Deputy Governor of the Bank of England, Paul Tucker, which seemed
to suggest that the BOE was pressuring Barclays to drive the Libor
down during the height of the credit crisis in October 2008. Cue Bob
Diamond, ex-Barclays CEO, who resigned earlier this week and then sat
down to testify before Parliament. Diamond claimed that Tucker and
the BOE wasn't trying to pressure Barclays into manipulating Libor,
but he did reveal that he had been trying to blow the whistle for
years on the collusion of other banks in fixing the rate. According
to him, senior Labour MPs knew full well what was happening but
nothing was ever done about the practice. Current British Chancellor
George Osborne has opined that Gordon Brown's cronies were "clearly
involved." The regulators failing to regulate? Why, I never!
If this is all too follow-the-bouncing-ball for you, the short and
skinny is this: banks around the world were in on the fixing of
Libor. Government "regulators" knew and didn't step in.
Well, then, this seems pretty open and shut. The largest rate
fixing scandal in the history of the world. Hundreds of trillions in
loans and derivatives effected. Banks all over the world allegedly
involved. Government regulators looking the other way. Surely this is
the start of the Great Banking Bust-up of 2012 that we were pining
for last week, the turning of the tide against the banksters and
the beginning of public arrests, trials and convictions of the
multi-trillion dollar racketeers and scamsters populating Wall
Street, Washington, the City and London?...
Not by a long shot. So far Barclays has had to pay its fine, and
it has lost its chairman, CEO and COO in the scandal. But what of
all of those other banks around the world? What about the MPs who
were allegedly in cahoots with them? When will they be rounded
up? I know this is going to shock you, but the answer is: likely
never. As of press time, Cameron has proposed a joint MP/peer led
"investigation" into the scandal that will propose "reforms" to be
implemented by the start of next year. This despite the fact that
his own Attorney General has advised that any inquiry will likely
prejudice criminal proceedings against the offenders. Ironically,
the larger the scandal turns out to be, the less likely we will
see criminal prosecutions and class action lawsuits. When the
rot is exposed as systemic, the "reformers" will step in to make
sure that this type of scandal "never happens again." And so
it is that the likelihood of seeing real, substantive, criminal
investigations into the matter becomes less and less likely as the
public gets suckered once again by platitudes about "reform" and
"looking forward." If you're not sure how that works, just ask an
Obama supporter who believed the Obama administration was going
to investigate the criminal activities of the Bush era; they can
tell you all about it. Meanwhile, Tom Cruise and Katie Holmes are
divorcing, so the public won't be asked to think too deeply about
this whole largest-scam-in-history thing for very long.
One is tempted to just shrug one's shoulders and move on, but
perhaps the story deserves more than a few pithy paragraphs. A
single bank being hit with a half billion loss on what amounts to the
largest racketeering scheme in the history of the planet is hardly
proportional. Why is it that a woman in Houston can be thrown in jail
for holding up a sign warning drivers about a speed trap up ahead,
but banksters who literally siphon untold billions out of the economy
cannot be charged with anything? And why can a public that can be
infuriated by Tour de France doping scandals not bother to hold
the banksters to account? These should not be rhetorical questions.
But wait, there's more. Much less reported is how the same
Libor-fixing scandal is playing out in the US right now. Citigroup,
BOA, and a dozen or so other banks are facing a suit by a group of
institutional investors alleging that they participated in the exact
same type of Libor-fixing that Barclays just got dinged for. The
banks have motioned for dismissal, but given the attention on the
case and the nature of the scandal, it's unlikely to be dismissed so
easily. Instead, market watchers note that an admission of criminal
wrongdoing is unthinkable, so the only question is what size will the
eventual payout be and how much leniency will banks get for playing
ball with investigators. Which leads us to the ongoing JPMorgan
fiasco. (You know it's a busy news week when the story of a $9
billion trading loss gets relegated to the ninth paragraph.) When
their initial $2 billion trading loss on credit derivatives was
announced in May, CEO Jamie Dimon was predicting that number could
double as the bank unwinds the trade and clears its position. That
number may actually be closer to $9 billion. The new figure comes
from an internal report from last April that showed a worst-case
scenario of the loss could mean the bank will lose much more than
it bargained for. The real test comes next Friday when they release
their second quarter results. The smart money is on the bank losing
as much from the trade as they made in profit in the quarter.
But as if that's not enough, now Dimon and the boys at JPMorgan face
a fresh scandal. J.P. Morgan Ventures Energy Corp. is being sued by
the Federal Energy Regulatory Commission over allegations that Morgan
had tried to manipulate energy prices upward in California and the
Midwest. Now a federal judge is ordering the company to explain why
it shouldn't turn over emails that will shed light on its role in
the scandal. Another week, another black eye for the JPMorgan crew.
And in some ways that's the point. What better sign of the bankster
nature of those in the hot seat than that they take beating after
metaphorical beating in full view of the public, from rate-fixing
scams to historical trading losses to market manipulations and
yet nothing ever seems to change? The "investigative journalists"
get a chance to break a big story, they play it out in the back
pages of the newspaper for a few months, politicians get on their
high horse and make wonderful sounding speeches about the need to
rout out the rot at the heart of the system, a gold star panel is
appointed to look into the problem, an ineffectual and toothless
new regulatory regime is rolled out to placate whatever of the
general public still remembers the problem in the first place,
and everything is patched over until the next scandal erupts. Who
else but organized criminals with bought-and-paid for "regulators"
in their back pockets could possibly get away with such crimes?
Oh, and the piece de resistance? A certain European market rag
that shall remain nameless (the third most read in Europe behind
FT and The Economist, we're told) just bestowed its Awards for
Excellence 2012. Any guesses on the Best Global Flow House, Best
Global Debt House, and Best Investment Bank and Risk Adviser in
United States? Just a little outfit called Barclays. To coin a
phrase: It's good to be a bankster.
Corbett@TheCorbettReport.com LINK:
http://theinternationalforecaster.com/=============================================
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