Let me first apologise for the long winded podcast, I do it on my way to work and the traffic was particularly bad today!
The more information that becomes available the more obvious it is becoming that the British public benefit from the current LIBOR system, even if it is rigged. The current system forces banks to give a lower interest rate than they other wise would and this benefits the public at large.
Here are some key sources of information.
World Socialist website. Obviously their opinion is pre determined but the article does contain some valuable information making my point http://www.wsws.org/articles/2012/jul2012/pers-j06.shtml
Wall Street Journal. This article makes it clear why Barclay’s are the whistleblower on the current LIBOR system, it was costing them billions, they were consistently declaring a borrowing rate above other banks and were asked to reduce it, hence the losses in income.
The article also makes it clear that it was the reduction of the declared rate by Barclay’s is what kicked the issue off, lowering of the rate being beneficial to most people. http://online.wsj.com/article/SB10001424052702303684004577507042740592120.html
Wake Up To Money also highlight the fact that it was the reduction of the rate that is the apparent problem, ie something which benefited the public is apparently the problem. http://www.bbc.co.uk/programmes/b0070lr5/broadcasts/2012/07
And this is why the government should not being getting involved in this issue.
The alleged role of the government is to act in the common good.
It is obvious to anyone who has looked at the evidence that the current system indirectly serves the public good by forcing banks to be open about their borrowing rates, even if the rater given is not accurate. For the government to want to change it is completely counter to the supposed role of government.
And with regards to private investors who may lose out under the current system. It is not the job of the UK taxpayer and the UK government to pay the legal fees of the private sector.
If there are private sector funds that have lost out due to the apparent rigging it is up to them to foot the legal bill, not the UK taxpayer.
Given the direction and tone of this story there is only one obvious outcome and that is people paying higher monthly payments for their mortgages and student loans.
The government is going to take the LIBOR figures out of the public domain and the LIBOR rate will be set by an even smaller group of people potentially leading to even more manipulation but in a direction that hurts the UK home owner.
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