Comments on: Stressed Banks Underreporting Libor Rates http://www.nakedcapitalism.com/2008/04/stressed-banks-underreporting-libor.html Sun, 22 Nov 2009 13:16:39 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Anonymous http://www.nakedcapitalism.com/2008/04/stressed-banks-underreporting-libor.html#comment-6949 Anonymous Thu, 17 Apr 2008 06:43:00 +0000 http://www.nakedcapitalism.com/2008/04/stressed-banks-underreporting-libor-rates/#comment-6949 <i>rates can still "be manipulated if contributor banks collude </i><br/><br/>Sounds a bit like the Federal Reserve. :-) rates can still “be manipulated if contributor banks collude

Sounds a bit like the Federal Reserve. :-)

]]> By: Anonymous http://www.nakedcapitalism.com/2008/04/stressed-banks-underreporting-libor.html#comment-6942 Anonymous Thu, 17 Apr 2008 03:32:00 +0000 http://www.nakedcapitalism.com/2008/04/stressed-banks-underreporting-libor-rates/#comment-6942 Steve, The player that's enabling X to offer this low rate is Fed ( through their discount window operations). No wonder some US banks (Citi) is offering the lowest interbank rates. Steve, The player that’s enabling X to offer this low rate is Fed ( through their discount window operations). No wonder some US banks (Citi) is offering the lowest interbank rates.

]]> By: Steve http://www.nakedcapitalism.com/2008/04/stressed-banks-underreporting-libor.html#comment-6940 Steve Wed, 16 Apr 2008 23:34:00 +0000 http://www.nakedcapitalism.com/2008/04/stressed-banks-underreporting-libor-rates/#comment-6940 Here's what I don't get: if bank X under reports its borrowing costs, eventually the other players in the market (who've loaned to X) will catch on and drive X's borrowing costs even higher on the theory that X is hiding something real bad. If LIBOR is actually being underreported, it would seem to require the complicity of most or all of the reporting banks, and I can't see a motive there other than gaming derivative positions, and that would suppose that the underreporting banks had made similar bets. Here’s what I don’t get: if bank X under reports its borrowing costs, eventually the other players in the market (who’ve loaned to X) will catch on and drive X’s borrowing costs even higher on the theory that X is hiding something real bad. If LIBOR is actually being underreported, it would seem to require the complicity of most or all of the reporting banks, and I can’t see a motive there other than gaming derivative positions, and that would suppose that the underreporting banks had made similar bets.

]]> By: S http://www.nakedcapitalism.com/2008/04/stressed-banks-underreporting-libor.html#comment-6936 S Wed, 16 Apr 2008 20:32:00 +0000 http://www.nakedcapitalism.com/2008/04/stressed-banks-underreporting-libor-rates/#comment-6936 Interest on US debt was about $240B last year on ~$9 trillion of debt - or 8% of outlays. If yield curve gives a 200 bps parrellel shift would double the cost to the government. 400 bps triple. etc. <br/><br/><br/>an inflation true up is asking the governement to raise its cost of capiytal. we saw what happened when the bond insureres were taken to task for their failed bsuiness model - we got Dodd accusing Wall Street of raising the cost for hospitals. The whole thing is so sureal it is beyond belief. hard to get shocked these days. <br/><br/><br/>TIPS: yet another example of letting the fox guard the henhouse<br/> <br/>"Treasury-Inflation Protected Securities, also known as TIPS, are securities whose principal is tied to the Consumer Price Index. With inflation, the principal increases. With deflation, it decreases. When the security matures, the U.S. Treasury pays the original or adjusted principal, whichever is greater. <br/><br/>TIPS pay interest every six months, based on a fixed rate applied to the adjusted principal. Each interest payment is calculated by multiplying the adjusted principal by one-half the interest rate." Interest on US debt was about $240B last year on ~$9 trillion of debt – or 8% of outlays. If yield curve gives a 200 bps parrellel shift would double the cost to the government. 400 bps triple. etc.

an inflation true up is asking the governement to raise its cost of capiytal. we saw what happened when the bond insureres were taken to task for their failed bsuiness model – we got Dodd accusing Wall Street of raising the cost for hospitals. The whole thing is so sureal it is beyond belief. hard to get shocked these days.

TIPS: yet another example of letting the fox guard the henhouse

“Treasury-Inflation Protected Securities, also known as TIPS, are securities whose principal is tied to the Consumer Price Index. With inflation, the principal increases. With deflation, it decreases. When the security matures, the U.S. Treasury pays the original or adjusted principal, whichever is greater.

TIPS pay interest every six months, based on a fixed rate applied to the adjusted principal. Each interest payment is calculated by multiplying the adjusted principal by one-half the interest rate.”

]]> By: Anonymous http://www.nakedcapitalism.com/2008/04/stressed-banks-underreporting-libor.html#comment-6935 Anonymous Wed, 16 Apr 2008 20:07:00 +0000 http://www.nakedcapitalism.com/2008/04/stressed-banks-underreporting-libor-rates/#comment-6935 "Little to no actual lending" for loans of three months? So the TED spread is marked to model (or make believe)? “Little to no actual lending” for loans of three months? So the TED spread is marked to model (or make believe)?

]]> By: NC Jim http://www.nakedcapitalism.com/2008/04/stressed-banks-underreporting-libor.html#comment-6931 NC Jim Wed, 16 Apr 2008 18:55:00 +0000 http://www.nakedcapitalism.com/2008/04/stressed-banks-underreporting-libor-rates/#comment-6931 Anyone know of a trustworthy inflation measure with which to deflate GDP, retail sales, house prices, etc ?<br/><br/>Without a valid measure, no one knows what is more "stuff" and what is just higher prices for the same (or less) "stuff".<br/><br/>A serious failing IMO.<br/><br/>Jim Anyone know of a trustworthy inflation measure with which to deflate GDP, retail sales, house prices, etc ?

Without a valid measure, no one knows what is more “stuff” and what is just higher prices for the same (or less) “stuff”.

A serious failing IMO.

Jim

]]> By: Anonymous http://www.nakedcapitalism.com/2008/04/stressed-banks-underreporting-libor.html#comment-6929 Anonymous Wed, 16 Apr 2008 18:10:00 +0000 http://www.nakedcapitalism.com/2008/04/stressed-banks-underreporting-libor-rates/#comment-6929 The similarities with the late Soviet Union are more and more striking.<br/><br/>It's not a market we have here. It's the Gosplan. The similarities with the late Soviet Union are more and more striking.

It’s not a market we have here. It’s the Gosplan.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/04/stressed-banks-underreporting-libor.html#comment-6927 Anonymous Wed, 16 Apr 2008 16:45:00 +0000 http://www.nakedcapitalism.com/2008/04/stressed-banks-underreporting-libor-rates/#comment-6927 The speculators seem to enjoy the volatility of TED and the continuing lack of liquidity and Fed collusion, so maybe we should all get in before we get priced out of a good hedge bet!! The speculators seem to enjoy the volatility of TED and the continuing lack of liquidity and Fed collusion, so maybe we should all get in before we get priced out of a good hedge bet!!

]]> By: Tom http://www.nakedcapitalism.com/2008/04/stressed-banks-underreporting-libor.html#comment-6918 Tom Wed, 16 Apr 2008 15:15:00 +0000 http://www.nakedcapitalism.com/2008/04/stressed-banks-underreporting-libor-rates/#comment-6918 I wouldn't blame the BBA too much, there is likely to always have been a degree of fudge in the quote. Market benchmarks are always more flexible than they seem from the outside.<br/><br/>Anyways, I've written about this myself, from my own syndicated loan perspective (as the WSJ says, Libor was developed for the syn loan market). My comment is <a HREF="http://www.cashandburn.com" REL="nofollow">here</a> on my blog. I wouldn’t blame the BBA too much, there is likely to always have been a degree of fudge in the quote. Market benchmarks are always more flexible than they seem from the outside.

Anyways, I’ve written about this myself, from my own syndicated loan perspective (as the WSJ says, Libor was developed for the syn loan market). My comment is here on my blog.

]]> By: a http://www.nakedcapitalism.com/2008/04/stressed-banks-underreporting-libor.html#comment-6916 a Wed, 16 Apr 2008 14:55:00 +0000 http://www.nakedcapitalism.com/2008/04/stressed-banks-underreporting-libor-rates/#comment-6916 And now the BBA says (according to Bloomberg) that any member deliberating misquoting lending rates will be banned.<br/><br/>What a bunch of effing hypocrites. They've known about this for 6 months and they've done squat. Now they pretend they take the matter seriously because it has hit the MSM. And now the BBA says (according to Bloomberg) that any member deliberating misquoting lending rates will be banned.

What a bunch of effing hypocrites. They’ve known about this for 6 months and they’ve done squat. Now they pretend they take the matter seriously because it has hit the MSM.

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