Tuesday, August 14, 2012

London Interbank Offered Rate – let the games begin

“In virtually all transactions we rely on the word of those with whom we do business.” - Alan Greenspan, former chairman of the Board of Governors of the U.S. Federal Reserve

What happens when those with whom we do business lie?

Routinely. Habitually. Endlessly. For profit.

Thus, the fundamental assumption about transactions tied to the rate, in which even the tiniest fluctuations can mean that billions – even trillions – will change hands, was on any given day a stinking lie.

Barclays Bank, with headquarters in foggy old London town, has agreed to pay nearly a half billion in fines for the practice of lying about what bankers estimated would be the cost of borrowing money on any given day, the LIBOR.

It's only the single most important set of numbers in the global financial system.

How did they inflate, then pop the bubble for profit?

That's easy enough to explain. They allowed mortgage brokers to lie about the worth of real estate and the ability of buyers to repay the loans they made on properties, then they accepted the inflated appraisals tendered by crooked real estate operators. With that bogus information in hand, they loaned the money to people they knew could not pay them back.

That's when they insured those bad bets with government guaranteed and insured contracts.

Then they took their profits in insurance settlements – at the expense of the taxpayers. That's how you let the market regulate itself. Talk about cowboy capitalism. Yee-ha!

So, the neconservative government honchos paid a little more to the crooks under the double dome and loaned themselves some more taxpayer money to “bail out” their own crooked companies.

How do they finance all that? They sell bonds to cash-rich nations such as China, South Korea, Japan, and others, nations who have been given “most favored nation” status by which they reap huge benefit through greatly reduced import duties. Hence, whatever it is, we don't make it here any more. It's just not profitable enough to even get involved. Besides, at this rate, the Chinamen will allow Wal-Mart to dictate the prices they will pay. Who cares, huh?

The end result is that many millions of families are now without the means to accumulate wealth through home ownership. Their American dream got sawed up and lumbered.

Even more millions of American families have no prospect of ever achieving that dream, their futures having been mortgaged to the future ability of several generations as yet unborn to be able to pay off this huge and bogus debt, all of which is based on a pack of lies told by a tiny minority – less than one percent - of the working force of the United States of America. What to do? Would you consider these crimes as important as, say, sales and possession of marijuana?

“For some tips on how to do this, they might look to the way that American police forces have dramatically lowered big-city crime rates,” saith Mr. Surowiecki.

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