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talkpoliticsContinuing the theme of posting about subjects way over my head, I read this article from Rolling Stone, that expands on the Libor scandal of interest rate fixing. The article claims that perhaps ALL commodity exchanges are controlled by a small handful of individuals who have discovered a nice loophole: self-reporting can be obscenely profitable!
You may have heard of the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that's trillion, with a "t") worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history – MIT professor Andrew Lo even said it "dwarfs by orders of magnitude any financial scam in the history of markets."
That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world's largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world's largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps.
So what happened to that massive anti-trust suit brought against Libor? A funny thing, actually...
But the biggest shock came out of a federal courtroom at the end of March – though if you follow these matters closely, it may not have been so shocking at all – when a landmark class-action civil lawsuit against the banks for Libor-related offenses was dismissed. In that case, a federal judge accepted the banker-defendants' incredible argument: If cities and towns and other investors lost money because of Libor manipulation, that was their own fault for ever thinking the banks were competing in the first place.
Isolated incident, this Libor? The problem is, a number of markets feature the same infrastructural weakness that failed in the Libor mess. In the case of interest-rate swaps and the ISDAfix benchmark, the system is very similar to Libor, although the investigation into these markets reportedly focuses on some different types of improprieties. At ICAP, the interest-rate swap desk, and the 19901 screen, were reportedly controlled by a small group of 20 or so brokers, some of whom were making millions of dollars. These brokers made so much money for themselves the unit was nicknamed "Treasure Island."
Already, there are some reports that brokers of Treasure Island did create such intentional delays. Bloomberg interviewed a former broker who claims that he watched ICAP brokers delay the reporting of swap prices. "That allows dealers to tell the brokers to delay putting trades into the system instead of in real time," Bloomberg wrote, noting the former broker had "witnessed such activity firsthand."
OK so just how problematic is this in other benchmark setting commodities?
"In all the over-the-counter markets, you don't really have pricing except by a bunch of guys getting together," Masters notes glumly.
That includes the markets for gold (where prices are set by five banks in a Libor-ish teleconferencing process that, ironically, was created in part by N M Rothschild & Sons) and silver (whose price is set by just three banks), as well as benchmark rates in numerous other commodities – jet fuel, diesel, electric power, coal, you name it. The problem in each of these markets is the same: We all have to rely upon the honesty of companies like Barclays (already caught and fined $453 million for rigging Libor) or JPMorgan Chase (paid a $228 million settlement for rigging municipal-bond auctions) or UBS (fined a collective $1.66 billion for both muni-bond rigging and Libor manipulation) to faithfully report the real prices of things like interest rates, swaps, currencies and commodities.
I'm just not sure what to make of this. Theft at a level so obvious that like atmosphere, everyone should see it, but it is too common to sense. One one hand, taking down this system could bring a massive collapse of the financial markets, and the worth of currency. On the other hand, it sounds like a house of cards anyway, built on fraud like a Ponzi, destined to collapse anyway, only slower.
What should we do? How would you fix this problem. Isn't this just an Illuminati style financial cabal without the reptilians?
You may have heard of the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that's trillion, with a "t") worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history – MIT professor Andrew Lo even said it "dwarfs by orders of magnitude any financial scam in the history of markets."
That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world's largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world's largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps.
So what happened to that massive anti-trust suit brought against Libor? A funny thing, actually...
But the biggest shock came out of a federal courtroom at the end of March – though if you follow these matters closely, it may not have been so shocking at all – when a landmark class-action civil lawsuit against the banks for Libor-related offenses was dismissed. In that case, a federal judge accepted the banker-defendants' incredible argument: If cities and towns and other investors lost money because of Libor manipulation, that was their own fault for ever thinking the banks were competing in the first place.
Isolated incident, this Libor? The problem is, a number of markets feature the same infrastructural weakness that failed in the Libor mess. In the case of interest-rate swaps and the ISDAfix benchmark, the system is very similar to Libor, although the investigation into these markets reportedly focuses on some different types of improprieties. At ICAP, the interest-rate swap desk, and the 19901 screen, were reportedly controlled by a small group of 20 or so brokers, some of whom were making millions of dollars. These brokers made so much money for themselves the unit was nicknamed "Treasure Island."
Already, there are some reports that brokers of Treasure Island did create such intentional delays. Bloomberg interviewed a former broker who claims that he watched ICAP brokers delay the reporting of swap prices. "That allows dealers to tell the brokers to delay putting trades into the system instead of in real time," Bloomberg wrote, noting the former broker had "witnessed such activity firsthand."
OK so just how problematic is this in other benchmark setting commodities?
"In all the over-the-counter markets, you don't really have pricing except by a bunch of guys getting together," Masters notes glumly.
That includes the markets for gold (where prices are set by five banks in a Libor-ish teleconferencing process that, ironically, was created in part by N M Rothschild & Sons) and silver (whose price is set by just three banks), as well as benchmark rates in numerous other commodities – jet fuel, diesel, electric power, coal, you name it. The problem in each of these markets is the same: We all have to rely upon the honesty of companies like Barclays (already caught and fined $453 million for rigging Libor) or JPMorgan Chase (paid a $228 million settlement for rigging municipal-bond auctions) or UBS (fined a collective $1.66 billion for both muni-bond rigging and Libor manipulation) to faithfully report the real prices of things like interest rates, swaps, currencies and commodities.
I'm just not sure what to make of this. Theft at a level so obvious that like atmosphere, everyone should see it, but it is too common to sense. One one hand, taking down this system could bring a massive collapse of the financial markets, and the worth of currency. On the other hand, it sounds like a house of cards anyway, built on fraud like a Ponzi, destined to collapse anyway, only slower.
What should we do? How would you fix this problem. Isn't this just an Illuminati style financial cabal without the reptilians?
(no subject)
Date: 30/4/13 21:41 (UTC)Madame la Guillotine.
(no subject)
Date: 1/5/13 05:49 (UTC)But this thing gives even me pause....
Thing is, with so much to gain, some idiots may risk the DP for a chance at cheater's money.
(no subject)
Date: 1/5/13 09:08 (UTC)These folk have gone mad. They have forgotten the lessons of the French and Russian revolutions in their greed. Woe to the rest of us because of it.
(no subject)
Date: 1/5/13 11:02 (UTC)(no subject)
Date: 1/5/13 11:25 (UTC)Dulce et decorum est...but they are neither sweet nor noble, it seems.
(no subject)
Date: 1/5/13 07:22 (UTC)(no subject)
Date: 1/5/13 12:55 (UTC)*nods* yup: 3 hots and a cot.
(no subject)
Date: 1/5/13 16:44 (UTC)(no subject)
Date: 1/5/13 19:08 (UTC)(no subject)
Date: 2/5/13 15:11 (UTC)(no subject)
Date: 2/5/13 15:40 (UTC)And actually, in England, most folk who inherited anything worth having made damn sure that their siblings were taken care of: advanced in their careers, bought proper educations, given small subsidiary livings, or small private incomes, or nepotistic positions in the family firms, or whatever forms of assistance were required. Sometimes this meant a large-ish cheque and a one-way ticket to Timbuktu or some other backwater, but even so.
I accept that this scenario has not always been the case: but with a majority of the folk in such positions whom I know, or know of, this has been true for generations.
(no subject)
Date: 2/5/13 15:43 (UTC)(no subject)
Date: 2/5/13 16:01 (UTC)http://www.helsinki.fi/jarj/ufy/24991_s113_150Ross.pdf (http://www.helsinki.fi/jarj/ufy/24991_s113_150Ross.pdf)
(no subject)
Date: 2/5/13 16:13 (UTC)As for proper English, my introduction to broad English came care of D. H. Lawrence. I had heard that Ebonics had its source in non-English speaking people who worked at slave camps. I had no idea that some of that was broad English, for example pronouncing the word "ask" as if it were an implement of wood cutting. Such metatheses are more common that I realized.
(no subject)
Date: 1/5/13 00:54 (UTC)And that would be bad . . . why?
good question as always...
Date: 1/5/13 05:53 (UTC)*pondering*
I guess if we had another system in place to fall back on that is more organized than bartering, it may not be. If not, I see massive amounts of the population who don't understand how to even cook, much less grow food will begin to starve and riot. With no law enforcement structure in place (who will pay the cops?).
At that point, the patients run the asylum.
I think everything would be cool until the real hunger sets in, and the have nots start hunting the haves by a factor of 100 to 1.
(no subject)
Date: 1/5/13 20:58 (UTC)Systems like this used to be universal. Falling back on them would be a relative piece of cake, as easy as carving sticks. In fact, bartering is relatively new; most primitive cultures don't bother clearing the trade at the time of the trade. Most every culture on earth has a credit system that works very well for small villages and tribes, one that can be implemented quite easily. The only thing money allows is the ability to transport wealth away from the area where it is created. Ever wonder why New York is so rich?
Hopefully, growing one's own food will become more universal gradually so a complete overnight collapse of paper assets won't catch the world completely unprepared. Lawns used to be a status symbol only the rich could afford; we can rip them up and plant food in a heartbeat.
(no subject)
Date: 1/5/13 22:23 (UTC)I do not think there have been large enough successful efforts by revolutionary groups like social anarchists, libertarian socialists, ecological permaculturists, etc. to create alternative social structures (like cooperative farms and productives , free storehouses, gardens, some kind of elderly, mental, disabled, birth care etc.) as of yet, so a collapse could in some areas lead to conditions like in Somalia, whereas I have no doubt in the more rural areas people with access to more practical skills and land might be able to get by on barter and cooperative defense.
Hopefully, growing one's own food will become more universal gradually so a complete overnight collapse of paper assets won't catch the world completely unprepared
This is exactly what I'm expressing above, I just think there is more too it.
Specifically, I believe are needed: a widespread dispensation of practical knowledge about the natural world and DIY tactics, anarchist ethics with regard to social/sexual/community relations, an abandonment of the silly concept that the earth and its resources should be privately owned to keep other people from feeding themselves and laboring to take care of their needs through force, distribution of small arms for personal protection and collective defense (i.e. popular armament so no one group is exercising a monopoly on force and hence "in power" to create the system all over again).
I could go on but I think those are very important to make such a frankly revolutionary transition as tragic-less as possible.
(no subject)
Date: 2/5/13 00:30 (UTC)(no subject)
Date: 2/5/13 00:52 (UTC)Well said!!!
(no subject)
Date: 2/5/13 03:55 (UTC)Who is?!? Seriously, we live better today than kings and queens of yesteryear.
This may not be a decision we make but a predicament we take. Choice may have little to nothing to do with the coming abandonment.
And I am optimistic about some aspects of our civilization. The intertubes, for example, will probably be the first luxury salvaged, since it can be scaled. One need not have broadband to get incredible value out of a connection.
(no subject)
Date: 2/5/13 04:02 (UTC)(no subject)
Date: 2/5/13 05:16 (UTC)(no subject)
Date: 2/5/13 05:36 (UTC)But what about cat macros? These are huge!
Seriously, we keep getting more GDP out of each drop of oil or each cc of natural gas. We're also getting better at finding them. I expect we'll see prices increase and our use decrease, both of which are good things, but I'm not seeing the case that my grandkids will need to deindustrialize because of a lack of hydrocarbons. We've just been to clever, inquisitive, and greedy as a species to take that many steps backwards. Besides, according to those who are less optimistic, we've been at the peak of oil production every year for decades. Every year, we produce more and get a new graph showing the imminent downturn in production scheduled for the next year. Maybe $100 or $150 per barrel is what was meant by the end of cheap oil, if so, we're better off for it and we didn't need to give up cat macros.
(no subject)
Date: 2/5/13 19:25 (UTC)True, but this is not the only metric to consider. The other is how much fuel (of whatever sort) is needed to maintain a basal functionality. If your car gets 50 mpg, and it's 50 miles to (insert necessary economic activity here) and you have $5 to spend on getting that activity done, gas had better not rise above $5/gallon. If so, you have some major restructuring to do!
If the short supply drives the price too quickly, the basal function must cease. Since much of that basal function is necessary to innovate and develop new tech infrastructure. . . . I don't want to think about it, but force myself to consider it. Too many years driving boats; when you're miles from shore, you are the only help you can give yourself, so you take precautions.
We've just been to clever, inquisitive, and greedy as a species to take that many steps backwards.
In the 1920s (IIRC), Frederick Soddy gave a speech. After a performance, a concert organ player was approached by his pump operator (in the really old days, organs were pumped by hand). "We really gave them a show," said the pumper guy. The player poo-pooed this "we" nonsense, since he alone had wowed the crowd by touching all the right keys in just the right order.
The next night, in the middle of the performance the organ went silent. The pumper stood on the wings and asked the player, "Is it 'we' now?"
Cleverness and greed are insufficient to drive an industrial society. Fuel is also required. Remember, coal started the industrial revolution. Were people innovative before then? Of course. Did people aspire to higher living? You bet. With the coal, and later the oil and later the nat gas, these people were able to do something other than just talk about making life better.
Without it. . . .
Besides, according to those who are less optimistic, we've been at the peak of oil production every year for decades.
No, not true at all. 1970 was the peak in the US. Did you know there was an Arab oil embargo in 1968? True. The US was able, though, to increase domestic production so much that the embargo was almost a non-event. That was not the case after peak, where no matter how many wells we sunk we could not increase the rate of domestic production. That made the 1973 embargo an economic disaster (which I can attest made the '70s and early '80s Suck Central).
The world supply peaked in May, 2005. I won't bore you here with graphs indicating the effects this peak had, but can happily share links if you are so inclined.
And it's not cat macros you need to worry about. Solar power, wind, hydro or even a bike hooked up to a gen set can deliver the kyoot. Worry more about things that don't travel through wires.
Like food.
(no subject)
Date: 2/5/13 20:56 (UTC)pft...we will adapt! We will...um..just learn to eat...healthier...like.. um...North Korea!
(no subject)
Date: 2/5/13 23:40 (UTC)Of course, if the outcome is going to look like the '70's and '80's, I'm not going to argue, but most of us weren't growing our own food out of necessity then. Such things happen and will happen again, they're kind of happening now to some extent.
(no subject)
Date: 3/5/13 01:21 (UTC)I focus only on well-extracted petroleum because that is the low-hanging fruit, as it were. Any other motive fuel based on hydrocarbons requires significant energy inputs to produce and (in many cases) distribute. The more you must make, the more product you must consume to do so. This basic fact limits actual production for consumption. I heard a lecture recently (can't remember where) where the prof outlined this limit to Energy Return on Investment. If the EROI is below a certain threshold—say, 20 units produced for every unit consumed in production—then the process is only used in emergencies, if at all.
That's the problem with unconventional sources. Low EROI means shales and sands are last-resort, last-gasp methods. The fields also behave differently; liquid wells had a fairly predictable depletion pattern. Shale does not, not by a long shot. Instead of petering out gradually, production drops suddenly and with little warning. This makes predicting supply problematic at best.
In a nutshell, no economy doing as poorly as ours is should be paying per gallon what we're paying now. People have gotten used to it, but that's just so much graveyard whistling as they pretend that this is both the new normal (it is) and nothing to worry about (which I doubt).
Besides, we should also be talking about hydrocarbons, not oil.
Oil goes in cars. "Hydrocarbons" can be made into go juice only at extreme energy losses. Cars, right now, are what's important. Cars that don't use traditional oil were also around in the '70s. Every now and again I see a propane tank on a pickup. Every alternative has its own issues, including cost.
Hey, diesel fuel was dirt cheap a few years ago. Then Europe started building and using mostly diesel cars (to better take advantage of lower-quality crude). Now about a third of the fleet in many European countries burns diesel . . . and suddenly diesel is quite a bit more expensive. The market will bite whatever success story we can concoct right in the fundamentals.
if the outcome is going to look like the '70's and '80's, I'm not going to argue. . . .
Again, argue all you want. The situation will be what it is no matter your opinion. I've been there (see below) and had no say in the matter, either.
. . . but most of us weren't growing our own food out of necessity then.
Speak for yourself, if you must. Teachers like my folks didn't make enough to both pay all the bills and buy only ungrown food; when the recession hit, the garden grew. I didn't like it (still don't like most of the crap that comes from the average garden), but I had no choice. I also didn't like the cows we raised (and I had to feed), the goat (ditto) and all the other survival techniques foisted on a kid who just wanted to play and watch the tube.
took wrong turn at Albuquerque
Date: 3/5/13 02:09 (UTC)(no subject)
Date: 2/5/13 01:04 (UTC)A little more seriously; against my better judgement, I spent a day and a half preparing a small "truck garden" plot for my wife...just to plant tomatoes and squash. Considering where I live, it's way cheaper buying fresh veggies locally. But the biggest problem I see with growing one's own food is the time it takes to grow.
Less seriously; do the people with swimming pools come and work my yard?
(no subject)
Date: 2/5/13 03:52 (UTC)(no subject)
Date: 1/5/13 16:37 (UTC)BTW, I am fascinated by the false association of financial cabals with the German Illuminati.