The Market Has Spoken – And It Is Rigged

Simon Johnson writes The Market Has Spoken – And It Is Rigged.

"Barclays has acknowledged that its staff took part in a wide-ranging conspiracy (or perhaps a set of conspiracies) to rig markets – including, but not limited to, any securities for which the price is linked to a particular set of short-term interest rates. The collective term for these rates is the London InterBank Offered Rate, known as Libor, but the use of this nomenclature sometimes hides the fact that there is currently a separate Libor daily for each of 10 currencies at 15 maturities, from overnight to 12 months, according to the British Bankers Association. The notional size of the derivatives involved is on the order of $360 trillion.

Barclays could not have manipulated those rates by themselves – and that is not what the C.F.T.C. found or the basis of the Barclays settlement. Rather, some Barclays employees colluded with people at other banks in a way that, over a period of years, moved Libor rates up and down – depending on what would favor the trading positions of the people and organizations involved."

"Nevertheless, five arguments put forward in the last 10 days, singly or collectively, attempt to provide some sort of cover for what happened at Barclays. None of these arguments have any merit."