The Economist on the LIBOR affair (video)
I like the Economist and was glad to see them report on the facts as they currently stand and not offer an opinion nor get overly passionate on the matter, like some news reports in the States tend to do.
That said, as someone who was caught leaning too far in the direction of the collapse about a year before it happened, and lost considerable funds when some surprise discount window rate drops happened in August of '07, I hope all this information finally comes to light. There is <i>no way</i> this is limited to just the banks in England.
Some of the submissions may have been 30-40 basis points off (0.3-0.4%). "If you take this and multiply it by the $800 trillion, you start talking real money."
Ever since I first heard that LIBOR is set by voluntary submissions rather than actual data, I have wondered how that works. Now it's becoming obvious that it doesn't.
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Why is this on the front page of HN? Because so many apologists for liquidity at any cost congregate here. Because so many of us rely on the FIRE sector to implement self-binding mechanisms of cooperative benefit to save for our retirement. And now we have more evidence the FIRE sector cannot be trusted. So perhaps instead of our colleagues patronizing us to go educate ourselves about the falsehood that all liquidity is good liquidity and that they are doing God's work (when research shows that HFT leads to diminishing returns [hint: gain from trade in competitive markets is a convex downward function with respect to efficiency]), they might consider engineering systems that sustain the cooperative benefits of self binding, instead of implementing systems that cynically and systematically win asymmetric zero-sum games against the rest of us.
I just don't think this scandal will have a big impact with the general populous. As big and as important as this scandal may be, it has one big thing going against it. It is dreadfully boring. I have to admit, while I did manage a single read through of the details when this was discussed earlier this week, I have not managed to listen or read through a full article since.