Oldtent Archives 2007 - 2008

…no way..say it isnt so !

It wasn’t the Libor people doing the fabricating, it was the contibutors of the data.

Jim Sinclair’s Commentary

A small warning: Libor was caught fabricating its data on April 16th 2008. Who knows what lies behind the Libor door when a big lie would be very appreciated by the honest population of Wall Street.

“This game of “smoke and mirrors” took a big blow today with an article that you probably didn’t hear about today. CNBC “bubble-land” TV wouldn’t dare bring this to your attention. The WSJ and Bloomberg reported today that the Libor rate is being misquoted by banks. The Libor is set on the marketplace based on what the banks tell them they paid to borrow. This rate is not set by regulators. The Libor rate is set on trust.

So the banks are lying and saying they are paying a lower rate when they really paid a higher lending rate.

The British Bankers’ Association will speed up the review of the process by which money-market rates are set daily amid concern that some contributors are providing misleading quotes.

The global credit squeeze has raised concern lenders have been manipulating the so-called fixing process to prevent their borrowing costs from escalating, the Bank for International Settlements said in March. Participants have complained about whether banks are submitting accurate information, said Angela Knight, chief executive of the London-based BBA.”
–April 16, 2008

The Libor Lies: Smoke and Mirror Games Continue
Bloomberg
Wednesday, April 16, 2008

The world’s most important number?

By Mark Broad
Business producer, BBC News

On the fifth floor of an imposing building in London’s Canary Wharf, six people are putting together one of the world’s most important numbers.
Every weekday morning, as the clock ticks round to 11, the group’s members wait patiently for the numbers to arrive.

These are the figures that will determine the day’s Libor rate, or rather the rate banks charge when they lend each other money.

“It’s a huge responsibility,” says Brian Martin from Thomson Reuters, who heads up the team.

“The number we produce goes on to determine the price of trillions of financial products all over the world.”

Secret office

The London Interbank Offered Rate, or Libor, has become something of celebrity amongst financial statistics over the last year as the credit crunch has begun to bite.

To get a sense of the importance of Libor to the financial system you only have to look at the precautions that the team goes to make sure that the figure always gets published on time.

Libor facts
Libor stands for the London Interbank Offered Rate
Started on 1 Jan 1986
Determines $360 trillion worth of financial products
Currencies include the New Zealand dollar and the Swedish Krona
Run by the British Bankers’ Association

Not only do they have an emergency evacuation office in Canary Wharf.

They also have another permanently staffed office at a secret location outside London.

Every team member also has a dedicated phone line in their home in case they are prevented from getting to the office, by an incident such as a terrorist attack.

Nothing, it seems, is going to come between Libor and the wider world.

Trillions of dollars

As Libor measures the rates at which banks are prepared to lend to each other, it follows that it also determine the rate at which they are prepared to lend to their customers.

There’s a huge sense of frustration amongst everyone that rates have stayed so high
David Buik, BGC Partners

It eventually goes on to set the rate of $360 trillion (£210 trillion) worth of financial products worldwide, ranging from mortgage rates to car loans.

The UK banks have traditionally been net borrowers in the world money markets, relying on banks from countries like Japan to provide them with the money they need.

But the past year has seen Libor rates soar well above the official Bank of England or other central bank rates as commercial banks have reigned in lending, fearful that they might not get the cash back.

As the money markets have dried up, some of the biggest banks in the UK have been deprived of the finances they need for their day to day activities.

This has in turn forced the banks to withdraw some of their most generous products and cut back on the amounts that they lend to their customers.

Kiwi dollars and British sterling

The Libor number is compiled by putting together the estimates from of the cost of borrowing from at least eight banks, discarding the highest and lowest of the sample to leave an average rate which then becomes the daily ‘Libor Fix’.

The same calculation is made with another 10 currencies from all over the world as well as at a number of durations - ranging from overnight to a year.

Thus, as well as determining the rates at which banks lend in US dollars and British Sterling, there are also borrowing rates for currencies such as New Zealand dollar and Swedish kronor.

Banks and companies then use the ‘fix’ to calculate the rates at which they will do business with each other, which in turns determines the rates offered to their customers.

Libor’s influence is not restricted to banking; it’s also used as a worldwide interest rate benchmark for corporate deals and lending agreements.

Swearing and borrowing

While the ‘fix’ is used as a financial lending yardstick, Libor is also traded on a minute-by-minute basis by financial institutions across the world.

So few banks are actually trading with each other at the moment so the Libor rate is representing a very small number of transactions

James Ferguson, Pali International

Just across Canary Wharf from the Thomson Reuters offices is the busy trading floor of the money brokers, BGC Partners.

The room is dominated by the sound of expletive-laden shouting from traders who are acting as the intermediary between banks who are looking to lend or borrow.

The brokers use specially installed phone lines between them and their clients in the banks to negotiate the deals, as well as a multitude of screens displaying the most current market information.

On the floor surveying the organised chaos is David Buik from BGC Partners.

Mr Buik has worked in the City for 46 years, but even he has never experienced the spikes of the interbank lending market over the past year.

“Before the current crisis, the brokers here were doing a steady stream of Libor business, but with money markets paralysed they’re just having to get on with other work,”

“There’s a huge sense of frustration amongst everyone that rates have stayed so high,” says Buik.

Lender of last resort

The reluctance of the banks to lend to each other has forced them to look to their central banks to step in to get the lending flows moving again.

And according to James Ferguson, a stockbroker and economist at Pali International, the current situation is making Libor increasingly irrelevant.

“So few banks are actually trading with each other at the moment so the Libor rate is representing a very small number of transactions,” he says.

“The big institutions are increasingly dependent on the central banks for cash and until this ends we’ll not see Libor rates falling.”

So despite all the attention concentrated on its daily fluctuations, it seems that the lack of trust between banks has rendered the market almost silent.

But with the eyes of politicians, bankers and customers fixed on the daily Libor numbers, it seems unlikely that the attention will disappear.

What is certain is that you will get a big one from time to time.  In a small yacht in a storm this is often quite exciting.  Which is why I was trying to find the pattern - if there was one! 

is that just being associated with you makes me look so good.  Moggy loves me!!  I’m in heaven!!

Re:  Moggy@1518

and Irish at 1518

Nice rolling waves …smooth rolling waves….relaxing …things are calming down…BINK! Au up 150 buck’s …whooo what happened…well sir everything was nice and calm…7 wave patterns and all…Tell Me WHAt haPPened!
Ahh well sir, as I was saying, all was calm until in between the 6th and 7th wave there came a bottle that had a note in it…..well WELL what did it say son? Sir, it just had a two word note written from some Rothschild guy to a one Morgan Stanley, it said” COMEX DEFAULT”

In the short term the price may go up and it may go down.  If it were me I would think about an offer of 1000 or 1100 per coin assuming no numismatic value.  If some numismatic value popped up in the future then you could always send the seller a bonus check.

Maybe offer to buy 1/2 of the collection now and ask to be first contact if and when the seller wants to sell the remainder.

No, of course I was not thinking of you. Actually I regret even bringing the topic up but it fit in with what TQ posted.

Best wishes.

aurum

I can find no support for my belief that ocean waves are higher and lower in a predictable repetitive pattern. I can find articles on neural networks that predict the size of waves. I can find articles that show ocean waves as a sine wave - but not one that varies in a regular pattern as I believe. Still I stick by my opinion that waves come in a pattern of 7 waves. Now these will amplify or de-amplify as the neural network predicts but I can find no acknowledgment of my idea as shown on this chart.

aurum (ocean waves)

Why not just cut a price right between paper and street price…..1,100 per….if I were you I would get Polly Metalic involved. Her and hubby are fair honest and in possession of the running street value[also will spot a stray hot one in the bunch which should be pulled out and discussed individually].

Hi Bill,
We have a financial crisis that includes mortgage bond failures, bank lock up and derivative threats up to $1 quadrillion dollars. So the banks lock up on credit as the LIBOR is still high and the banks are charging premiums on top of that number.

So we need to get the banks loaning to each other again. In comic stupidity the government had the FASB change the rules from Mark to the Market to Mark to the Maturity (this is being intentionally simplistic, but accurate). Now under this rule we have the banks covering up their defaulted paper and adding it to the balance sheet at previous Mark to the Model value, which it no longer would provide in a Mark to the Market world. Real fraud here.

Now with all this extra opacity and smoke does anyone with two neutrons firing wonder why the lock up on bank to bank credit just got worse. No bank trusts and other bank’s collateral. And also does not want to get stuck with falsely marked up trash in a default. They know that all the other banks are insolvent.

Brilliant thinking I must say.

Now, it goes forward. The Fed now pays interest on reserve deposits. The banks can add to these deposits and get even more interest. It is about 2 1/2 percent. This interest is a better, safer deal than loaning money to anyone in a coming depression. So they just add to the reserves and make money that way. Ever wonder why they are not loaning to anyone?

The new government and Fed rules are just making things tremendously worse. Who would have thought?

Go GATA,
Roger