On LIBOR, Dudes and massive Fraud at Barclay’s.

When you or I get caught doing something illegal such as smoke pot or burgling someone else’s house we probably end up in jail which in the US means having to do slave labour in a privately owned jail.

In China if you get caught scamming the banking system as a banker, even a rich one, you get the death penalty.

If on the other hand you are a trader like John Key once was in the Western banking system, you work for a bank and you manipulate the interest rate of the global money supply you are more likely to get a slap on the wrist and a minute fine for the billions and billions you have been scamming of mortgage and loan payers.

Here is what happened at Barclay’s and what happens with all the other too big to fails.

First of all here is another word for your Banking term dictionary: LIBOR

LIBOR (EURBOR in Europe) stands for London Interbank Offered Rate and is the daily calculated interest rate the preferred borrowers are able to borrow money. The problem with LIBOR is that nobody really understands how it is calculated and that is because it isn’t. It is just a number pulled out of a hat based on what the too big to fail banks feel like they can charge. Now this of course is a recipe for fraud disaster.

Zero Hedge pointed out that the LIBOR in 2009 already was inconsistent with what it should have been and that is putting it mildly. The highest interest rates came from banks which were more or less Nationalised in the aftermath of subprime crisis while they should have been the lowest as they were guaranteed by Government making the need for high interest rates less urgent.

Today it was announced that Barclay bank had to pay fines to the  value of $450 million because it got found out manipulating LIBOR in order for traders to make money by skimming of pennies on the dollar over sums as large as $ 80 billion in mortgages and other loans from us the little people.

How did they find out? The Dudes traders had left a trail of damaging e-mails detailing the crime which took place from 2005 to 2009 and is only the first of a series of investigations.

That sound you hear in the background? That’s the sound of the virtual shredders going full steam 24/7 in every to big to fail bank around the globe while the bosses are calculating the fine the sheeple are willing to accept!

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