TELEGRAPH: ‘The Price Of Gold Has Been Manipulated. This Is More Scandalous Than Libor’


Governments can’t will gold into existence

The price of gold has been manipulated. This is more scandalous than Libor (Telegraph, July 11, 2012):

The new media and the 24-hour news cycle have a great deal to answer for, not least encouraging a political class which would otherwise be happily engaged expensing duck houses into the belief that it should demonstrate perpetual action on our behalf – hence the endless stream of badly drafted legislation from the corridors of Whitehall.

It does, however, reveal things that would otherwise be ignored. The issue of manipulation in the gold market which I wrote about last week is a case in point. The ball of half-truths and downright lies which have surrounded the issue for a long time is beginning to unspool in an issue internet activists kept alive long before it was acknowledged by the mainstream media.

People ask why the issue is important at a time of naked market manipulation of the Libor rate. The answer is simple: the Libor manipulation scandal can be seen as the thin end of the wedge in terms of government market manipulation.

Although Libor manipulation affects the interest rates we pay on all number of credit products, gold market manipulation is more serious still.

Read moreTELEGRAPH: ‘The Price Of Gold Has Been Manipulated. This Is More Scandalous Than Libor’

Federal Reserve Admits It Knew Of Barclays Libor ‘Problems’ In 2007 And 2008

From the article:

Via Reuters:

According to the calendar of then New York Fed President, Timothy Geithner, who is now U.S. Treasury Secretary, it even held a “Fixing LIBOR” meeting between 2:30-3:00 pm on April 28, 2008. At least eight senior Fed staffers were invited.

It is unclear precisely what was discussed at this meeting or who attended. Among those invited, along with Geithner, was William Dudley, who was then head of the Markets Group at the New York Fed and who succeeded Geithner as its president in January 2009. Also invited was James McAndrews, a Fed economist who published a report three months later that questioned whether Libor was manipulated.


Federal Reserve Admits It Knew Of Barclays Libor “Problems” In 2007 And 2008 (ZeroHedge, July 10, 2012):

Last Tuesday we suggested thatNow The Fed Gets Dragged Into LiEborgate when we observed that “Barclays also cited subsequent research by the New York Federal Reserve staff members that, according to the lender, concluded that banks’ Libor quotes were systematically below their borrowing rates by 39 basis points after the Lehman bankruptcy. “Barclays own submissions for tenors of 1 month to 1 year Libor were higher than actual Barclays trades on 97% of the occasions when Barclays had actual trades during the financial crisis,” the lender said.” It seems that unlike the BOE, which had no idea of any Barclays problems and was merely calling up Diamond now and then to make sure the bank’s money market risk mechanisms were operational and to chit chat about the weather (as per the BOE at least), the Fed has decided to take the high road and openly admit it was well aware of Barclays’ LIBOR “problems.” And like that the Senatorial circus just got exciting, while that popping noise is bottles of Bollinger going off at every class action lawsuit legal firm.

From Bloomberg:

The Federal Reserve Bank of New York was aware of potential issues involving Barclays Plc and the London interbank offered rate after the financial crisis began in 2007, according to a statement from the district bank.

“In the context of our market monitoring following the onset of the financial crisis in late 2007, involving thousands of calls and e-mails with market participants over a period of many months, we received occasional anecdotal reports from Barclays of problems with Libor,” New York Fed spokeswoman Andrea Priest said in an e-mailed statement.

In the spring of 2008, following the failure of Bear Stearns and shortly before the first media report on the subject, we made further inquiry of Barclays as to how Libor submissions were being conducted,” the statement said. “We subsequently shared our analysis and suggestions for reform of Libor with the relevant authorities in the U.K.”

Read moreFederal Reserve Admits It Knew Of Barclays Libor ‘Problems’ In 2007 And 2008

The Wrecking Of Barclays Is Organised Looting By Those At The Very Top (Guardian)


Barclays’ top 238 employees took a total of £1.01bn home last year – or £4.27m each. Photograph: Nadia Isakova/Alamy

The wrecking of Barclays is organised looting by those at the very top (Guardian, July 9, 2012):

You’d have learned precious little from watching Bob Diamond in parliament last week – apart, that is, from his love for his former employer. If pressed, you or I might admit to tolerating our jobs, to getting on with colleagues or, at the very least, to taking full advantage of the company stationery supplies. For the multimillionaire banker, however, this would be mere watery equivocation. The firm that had forced him out just the day before was “an amazing place”, packed with “wonderful people”. And, he told MPs over and over: “I love Barclays.”

Read moreThe Wrecking Of Barclays Is Organised Looting By Those At The Very Top (Guardian)

LIBOR Scandal: The Crime Of The Century? (TIME)

– LIBOR Scandal: The Crime of the Century? (TIME, July 9, 2012):

The latest interest-rate-fixing LIBOR scandal is being heralded as the most egregious in a generation

The 21st has been a banner century for financial and accounting scandals. Enron, the dotcom bust, the subprime-mortgage crisis and the bank bailouts have all contributed to the very low esteem in which the American public holds Corporate America in general, and high finance in particular. So it is no small feat that the latest interest-rate-fixing LIBOR scandal is being heralded as the most egregious in a generation or, as Robert Scheer put it in the Nation, “the crime of the century.”

LIBOR is an acronym for the London interbank offered rate, and it is the average interest rate the world’s largest banks pay when they borrow money. And this figure (or figures, as different LIBORs are calculated for different loan maturities and currencies) is used to price hundreds of trillions of dollars worth of financial instruments, from high-yield corporate debt to student loans.

Considering the importance of this benchmark rate and the financial industry’s recent track record, it is no wonder that many in the press are up in arms about Barclays’ recent admission that it intentionally submitted false rates in order to manipulate LIBOR for its own gain. Barclays has been fined more than $450 million by British and American regulators, but it is by no means the only bank thought to have deceptively tried to influence LIBOR — thus the outrage expressed this past week in the media.

Scheer, for instance, pulled no punches in his polemic:

“Modern international bankers form a class of thieves the likes of which the world has never before seen. Or, indeed, imagined … It reveals that behind the world’s financial edifice lies a reeking cesspool of unprecedented corruption. The modern-day robber barons pillage with a destructive abandon totally unfettered by law or conscience and on a scale that is almost impossible to comprehend.”

Read moreLIBOR Scandal: The Crime Of The Century? (TIME)

Libor Rate-Fixing Scandal Spotlight Now On … Citigroup And JPMorgan

Libor rate-fixing scandal spotlight now on Citi, JPMorgan (Raw Story/AFP, July 7, 2012):

NEW YORK — The harsh light of the Libor rate-fixing scandal has crossed the Atlantic, with both Citigroup and JPMorgan Chase saying regulators and investigators have requested information from them in a so-far preliminary probe of the case.

Share prices for both — as well as Bank of America, which has not said if it was asked for information — have fallen sharply this week amid worries they could be in line for the type of heavy fines laid on Britain’s Barclays Bank, at the center of the scandal.

Read moreLibor Rate-Fixing Scandal Spotlight Now On … Citigroup And JPMorgan

Barclays: ‘The Bank Of England Told Us To Do It’ (Telegraph)

The Bank of England told us to do it, claims Barclays (Telegraph, July 3, 2012):

The Deputy Governor of the Bank of England encouraged Barclays to try to lower interest rates after coming under pressure from senior members of the last Labour government, documents have disclosed.

A memo published by Barclays suggested that Paul Tucker gave a hint to Bob Diamond, the bank’s chief executive, in 2008 that the rate it was claiming to be paying to borrow money from other banks could be lowered.

His suggestion followed questions from “senior figures within Whitehall” about why Barclays was having to pay so much interest on its borrowings, the memo states.

Barclays and other banks have been accused of artificially manipulating the Libor rate, which is used to set the borrowing costs for millions of consumers, businesses and investors, by falsely stating how much they were paying to borrow money.

The bank claimed yesterday that one of its most senior executives cut the Libor rate only at the height of the credit crisis after intervention from the Bank of England.

Read moreBarclays: ‘The Bank Of England Told Us To Do It’ (Telegraph)

Matt Taibbi: LIBOR Banking Scandal Deepens; Barclays Releases Damning Email, Implicates British Government (Rolling Stone)

LIBOR Banking Scandal Deepens; Barclays Releases Damning Email, Implicates British Government (Rolling Stone, July 4, 2012):

This Libor-manipulation story grows crazier with each passing minute. We have officially disappeared now down the rabbit-hole of the international financial oligarchy.

Former Barclays CEO Bob Diamond is testifying before parliament in London today, and that’s sure to bring some shocking moments. But there’s already been one huge stunner. In advance of that testimony, Barclays released an email from October 29, 2008, written by Diamond to then-Chairman John Varley and COO Jerry del Messier (who also stepped down yesterday). The email from the CEO to the other two senior Barclays execs purports to detail the content of the conversation Diamond had with Bank of England deputy governor Paul Tucker that same day.

In the email, Diamond essentially tells the other two execs that he has been given permission by Tucker – encouraged, actually – to rig Libor rates downward. What’s even worse is that Diamond’s email suggests that Tucker was only following orders, i.e. that Tucker had received phone calls from “a number of senior figures within Whitehall” – that is, the British government – expressing concern about Barclays’ high Libor rates. Tucker in this version of events was acting as a middleman for the British government, telling Diamond to fake his borrowing rates in order to preserve the appearance of financial stability, for the good of Queen and country as it were.

Again: Libor, the London Interbank Exchange Rate, is the rate at which banks borrow from each other. A huge percentage of the world’s variable-rate investments are pegged to Libor. When Libor rates are high, it suggests that the banks’ confidence in each other is low, and high Libor rates are generally an indicator of shaky financial health among the banks. If the banks manipulated Libor, they did it to make themselves look healthier, but this had the consequence of affecting hundreds of trillions of dollars’ worth of financial products worldwide.

Read moreMatt Taibbi: LIBOR Banking Scandal Deepens; Barclays Releases Damning Email, Implicates British Government (Rolling Stone)

Matt Taibbi: Why Is Nobody Freaking Out About The LIBOR Banking Scandal? (Rolling Stone)


Barclays bank

Why is Nobody Freaking Out About the LIBOR Banking Scandal? (Rolling Stone, July 3, 2012):


YouTube

The LIBOR manipulation story has exploded into a major scandal overseas. The CEO of Barclays, Bob Diamond, has resigned in disgrace; his was the first of what will undoubtedly be many major banks to walk the regulatory plank for fixing the interbank exchange rate. The Labor party is demanding a sweeping criminal investigation. Mervyn King, Governor of the Bank of England, responded the way a real public official should (i.e. not like Ben Bernanke), blasting the banks:

It is time to do something about the banking system…Many people in the banking industry are hardworking and feel badly let down by some of their colleagues and leaders. It goes to the culture and the structure of banks: the excessive compensation, the shoddy treatment of customers, the deceitful manipulation of a key interest rate, and today, news of yet another mis-selling scandal.

The furor is over revelations that Barclays, the Royal Bank of Scotland, and other banks were monkeying with at least $10 trillion in loans (The Wall Street Journal is calculating that that LIBOR affects $800 trillion worth of contracts).

Read moreMatt Taibbi: Why Is Nobody Freaking Out About The LIBOR Banking Scandal? (Rolling Stone)

The Fed And LIBOR – The Biggest Manipulator Of Them All

The Fed And LIBOR – The Biggest Manipulator Of Them All (ZeroHedge, July 4, 2012):

Via Peter Tchir of TF Market Advisors,

The Fed does everything it can to keep LIBOR low.

This chart says it all.

The Fed cannot affect LIBOR directly, but in general LIBOR trades in line with Fed Funds.  You can see that historically as Fed Funds was changed, LIBOR responded appropriately.  There was typically some small premium to reflect the “credit risk” of banks versus the Fed, but it was relatively small, and fairly stable.  3 Month LIBOR would deviate a bit as rate cuts and hikes were anticipated in the market, but in general, it was a fairly stable game.

Read moreThe Fed And LIBOR – The Biggest Manipulator Of Them All

WSJ: Barclays Chief Says ‘Sorry’ … And Then … WSJ: Barclays CEO Robert Diamond Resigns

See also:

Barclays Agrees To Pay Record $453 Million Fine To US And British Regulators In Libor Manipulation Scandal

Barclays Found To Engage In Massive Libor Manipulation, Gets Wrist-slapped By Coopted Regulators


Barclays Chief Says ‘Sorry’ (Wall Street Journal, July 3, 2012):

LONDON—Barclays BARC.LN +2.73% PLC Chief Executive Robert Diamond apologized for the interest-rate manipulation scandal that has engulfed the U.K. bank but resisted outside pressure to resign.

In a letter to employees, the 60-year-old Mr. Diamond, Barclays CEO since 2011, said he was “sorry” and vowed to impose new internal controls. “I am disappointed because many of these behaviours happened on my watch. It is my responsibility to make sure that it cannot happen again,” Mr. Diamond wrote.

Barclays CEO Robert Diamond Resigns (Wall Street Journal, July 3, 2012):

LONDON—The chief executive of Barclays BARC.LN +3.53% PLC, Robert Diamond, resigned Tuesday amid intense political and investor pressure from the British bank’s involvement in rigging an important interest-rate benchmark—and another senior executive appeared close to following him out the door.

The scandal is tearing through Barclays’s top ranks. Two people close to the bank said Tuesday that Jerry del Missier, the chief operating officer, is likely to step down from his role. Monday, the bank said Chairman Marcus Agius would resign.

Read moreWSJ: Barclays Chief Says ‘Sorry’ … And Then … WSJ: Barclays CEO Robert Diamond Resigns

The MK2 Grenade: Mike Krieger And Max Keiser Take On The World Of Financial Crime – ‘It’s Official: The Shadow Banking System Is Now Bigger Than The Non-Shadow Banking System, … Many Hundreds Of Trillions Of Dollars Bigger Than The Real Economy’ (Video)

The MK2 Grenade: Mike Krieger And Max Keiser Take On The World Of Financial Crime (ZeroHedge, July 2, 2012)

There is a reason why WWII legendary “pineapple” grenade bore the initials MK2. Those who enjoy the works of Mike Krieger and Max Keiser are in for a treat, with this 2 for the price of 1 (technically for the price of zero) interview of Krieger by Keiser, as the MKs of the world unite, and take on financial fraud.

From Mike Krieger of Libertyblitzkrieg:

In case you missed it, Josh Brown recently published a list via the Huffington Post of what he believes are the 25 most dangerous people in financial media.  He definitely got the first two slots correct.  At the very top are Max Keiser and Stacy Herbert, who unrelentingly publish their “Financial War Reports” daily here.  At the number two position, is Zerohedge, the best financial site on the web.  I have been fortunate enough to have collaborated with Max, Stacy and Zerohedge for the past two years and it has been an extremely rewarding experience.  To get to the point, below is my just released latest interview on the Keiser Report.  I think it’s the best one we’ve done in a while.  Enjoy!


YouTube

Barclays Agrees To Pay Record $453 Million Fine To US And British Regulators In Libor Manipulation Scandal

UK drafts in fraud squad as Libor fine hits Barclays (Reuters, June 28, 2012):

LONDON  – Britain said on Thursday it had brought in the fraud squad to investigate possible crimes and would tighten laws over attempts to manipulate lending rates, a scandal which has engulfed Barclays and is expected to spread to other banks.

Shares in Barclays tumbled as much as 18 percent at one point by midday trade, wiping out 4.2 billion pounds from its share price – the biggest one-day fall since 2009, according to Reuters data. Shares were down 14.8 percent at 1113 EDT.

The bank agreed to pay a record $453 million fine to U.S. and British regulators for attempting to manipulate the London Interbank Offered Rate in 2005-08. It is the first bank to settle in a case that also includes most of the world’s other largest financial institutions.

“This is a scandal, it’s extremely serious. They’ve paid a very large fine and quite rightly but frankly the Barclays management team have some big questions to answer,” Prime Minister David Cameron told the BBC.

“Who was responsible? Who was going to take responsibility? How are they being held accountable?” he said.

Read moreBarclays Agrees To Pay Record $453 Million Fine To US And British Regulators In Libor Manipulation Scandal

Barclays Found To Engage In Massive Libor Manipulation, Gets Wrist-slapped By Coopted Regulators

Barclays Found To Engage In Massive Libor Manipulation, Gets Wrist-slapped By Coopted Regulators (ZeroHedge, June 27, 2012):

We can finally close the case on the massive Libor manipulation issue that we first brough to the world’s attention back in January 2009 when we penned: “This Makes No Sense: Libor By Bank.” As of minutes ago, Barclays is the first bank to admit it has engaged in gross manipulation of the key benchmark rate that sets the cost of capital for $350 trillion in interest-rate sensitive products. As the CFTC notes, as it produly announces an epic wristslap of $200 million for Barclays Bank: “The Order finds that Barclays attempted to manipulate and made false reports concerning two global benchmark interest rates, LIBOR and Euribor, on numerous occasions and sometimes on a daily basis over a four-year period, commencing as early as 2005.” Surely this massive fine will teach them to never do it again, until tomorrow at least, when the British Banker Association once again finds 3 month USD liEbor to be… unchanged. In other news, who would have thought that the fringe “conspiracy” brigade was right all along once again.

From the CFTC:

CFTC Orders Barclays to pay $200 Million Penalty for Attempted Manipulation of and False Reporting concerning LIBOR and Euribor Benchmark Interest Rates

The Order finds that Barclays attempted to manipulate interest rates and made related false reports to benefit its derivatives trading positions

Read moreBarclays Found To Engage In Massive Libor Manipulation, Gets Wrist-slapped By Coopted Regulators

The Gold Sell Off Is Likely Coming To An End As Negative Gold Lease Rates Collapse

As Negative Gold Lease Rates Collapse, The Gold Sell Off Is Likely Coming To An End (ZeroHedge, Dec. 15, 2011):

One of the more curious dynamics for those who follow the gold market closely, has been the relentless grind lower (or higher if looked at on an absolute value basis), of gold lease rates (defined as Libor – GOFO), which recently hit all time record lows (i.e., negative), for the 1 month version, although the more traditional 3 Month (as it is based on the benchmark 3M USD Libor) was also quite close to breaching historic low levels. And while we have discussed the nuances of Libor-GOFO, or the gold lease rate extensively before, a good summary was presented by Jesse’s Cafe Americain yesterday, who correctly suggested that record lease rates are a primary driver for the near historic sell off we experienced yesterday.

In a nutshell, negative lease rates mean one has to pay for the “privilege” of lending out one’s gold as collateral – a prima facie collateral crunch. The lower the lease rate, the greater the use of gold as a source of liquidity – and since the indicator is public – it is all too easy for entities that do have liquidity to game the spread and force sell offs by those who are telegraphing they are in dire straits and will sell their gold at any price if forced, to prevent a liquidity collapse. Said otherwise: to force a firesale. Well, we are happy to announce that the selloff spring clip potential that is embedded in a near record negative lease rate has now been discharged courtesy of the $100 dump in the past two days, which may have happened for a plethora of reasons and nobody can tell why precisely, but one thing is now sure: the underlying tension in the supply and demand for gold as a source of liquidity has collapsed. That said, the next time we approach the previous thresholds we will advise readers as it will likely indicate another gold-derived liquidity rubberband “breach” is imminent.

Read moreThe Gold Sell Off Is Likely Coming To An End As Negative Gold Lease Rates Collapse