A lot of things came out of Paul Tucker’s testimony yesterday in front of a Commons Select Committee.
The first was that The Telegraph has reported that Alistair Darling manipulated the LIBOR rate by pressuring the banks to lower it.
This article was brought up by one of the members in the committee yet there was not a raised eyebrow.
Given this report by The Telegraph, it seems bizarre to me that it is okay for the government to put pressure on banks to manipulate the LIBOR but it is not okay for another organisation to do the same, the Bank Of England for example.
And why no journalist (excluding this tiny excerpt in The Telegraph) in the mainstream media has brought up Darling’s manipulation of the LIBOR beggars belief considering the media frenzy surrounding the rigging of LIBOR.
Something else to come out of Paul Tucker’s testimony was that the Bank Of England also manipulates the LIBOR.
Paul Tucker constantly referred to “packages” that have been implemented by the Bank Of England and the government. These packages taking the form of giving money to the major banks that were/are in trouble.
I believe he specifically said that the injections of liquidity were principally designed to lower the LIBOR.
So not only do we have the government of the day manipulating the LIBOR we also have the Bank Of England actively manipulating the LIBOR by the use of cash injections into the market.
And yet not a word has been raised about this.
The biggest deal, if you can believe the reports in the mainstream media, was that Paul Tucker had made a phone call to Bob Diamond saying Barclay’s LIBOR submissions did not need to be as high as they were.
This is just a phone call and Paul Tucker has denied it was to put pressure on Barclay’s to reduce their LIBOR submissions.
A phone call which has apparently been misunderstood by one of the participants is apparently worth an investigation by government but the Chancellor of the day reading the riot act to bankers to lower LIBOR apparently is not worth an investigation.
The Bank Of England’s injection of cash into the banks with the aim of reducing LIBOR is apparently not worthy of investigation but a phone call is.
The LIBOR scandal is exposing the complete negligence of the mainstream media in reporting stories accurately and fairly.
If I can repeat these points in another way.
It is apparently okay for the Bank Of England to rob British taxpayers with the stealth tax of inflation through money printing in order to help bad banks but it is no okay for someone to discuss LIBOR on the telephone.
It is apparently okay for the British government to take out loans in the name of the British people in order to give the money to the banks so as to directly manipulate the LIBOR rate, but it is not okay for two senior people to call each other to discuss LIBOR.
The testimony highlighted the fact that Bob Diamond had had a discussion with Paul Tucker about the LIBOR submission being made by other banks. Bob Diamonds saying to the effect that other banks are underreporting the actual LIBOR.
Paul Tucker’s response to this was this. Bob Diamond was merely pointing out that some banks did not need to use all the borrowing facilities available to them at a specific time. Bob Diamond was pointing out that if these banks were to borrow in the markets they were reporting on they would find they would be paying more that what they were submitting.
This seems like a completely logical explanation to me and with that one of the biggest planks in the LIBOR problem has been taken away. So what do we have left?
A phone call where one party categorically denies implying any pressure on the other party and the other party misunderstanding the phone call.
The point I am making here the media and politicians are highlighting so called problems with LIBOR that are quite vague and unclear ie phone call where there has been an apparent misunderstanding.
But at the same time the media and politicians are completely ignoring black and white facts that show LIBOR is and was manipulated by the Bank Of England and the government of the day.
It is almost as if the banks are taking the public fall in exchange for the government and the Bank Of England changing the current system of LIBOR into something that it is more beneficial to them and less beneficial to the public.
The whole LIBOR rigging “scandal” makes absolutely no sense if you take it at face value.
The media is trying to say that Barclay’s manipulated the LIBOR and that other banks may be doing the same. The media is completely derelict in its duty to highlight that the government manipulated the LIBOR by giving taxpayers money to the banks and by giving the banks a “barracking” at Downing Street.
The media is also completely derelict in their duty of reporting the admitted manipulation of the LIBOR by the Bank of England through cash injections into troubled banks.
The cost to the taxpayer of the government involvement is obvious. The government borrows money from the banks to give back to the banks which the taxpayer then has to repay at interest.
The cost to the taxpayer of the Bank Of Englands ‘s money printing is less clear. Bank Of England money printing creates inflation which is the stealth tax. It robs people of their savings and of their spending power. Wages never keep up with inflation which is why the working and middle class are the ones to suffer most by this tax.
The parties that receive the cash first get it’s full buying power, the more that money circulates in the economy the less power it has and given that the banks are the ones to receive the cash first it is they who benefit to the expense of people further down the line.
So Paul Tucker’s testimony made it obvious that the taxpayer has paid to manipulate the LIBOR whether directly through government borrowing or indirectly through inflation but apparently this is okay.
What is not okay is for banks themselves to underestimate the LIBOR to make themselves look strong, which directly benefits the people through lower borrowing costs. This is not okay.
A LIBOR process which costs people very little in the way of extra debt and/or does not effect their spending power is not okay. ie what we have now.
But a LIBOR process with costs the taxpayer tens if not hundreds of billions of pounds in extra debt and reduced spending power is inconsequential and does not deserve to be reported by the media. ie what the government and Bank Of England have been doing since 2008
The whole situation is backwards. It is obvious it is backwards, it is obvious that the whole story is being spun to make the current LIBOR process look bad when in fact it benefits the taxpayer.
It is obvious that bank are losing out due to the (current) open and public LIBOR setting process and that they want it changed.
This article by the Guardian further illustrates the power the banks like to yield over government.
I think it would be naive of anyone to think that just because the banks are getting “grilled” in the mainstream media that they are not actually controlling the whole process.
I am not saying the banks are manipulating the media and the political process, what I am saying is that since 2008 the banks are receiving tens of billions of pounds from the British taxpayer in order to stop the “World from ending”, in short they are yielding massive power, to not acknowledged that there is a possiblity that the LIBOR scandal is a PR campaign for the LIBOR system to be changed to the benefit of banks would be a mistake.
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