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State Undermining Faith In Justice


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Read this story and it struck a chord with me,  particularly the willingness of the press (who always talk about how instrumental they are in exposing societal truth and injustice) to colude in the injustice.

It harks back to the time of the credit crisis when many of us were laughing at the Libor rate as it became ever more detached from reality..  showing TPTB really were beginning to sh1t themselves as the credit bubble started to pop.

A short time later they arrested, charged and convicted a small number of bankers for Libor manipulation,  which always seemed odd since the pressure to do so at that time seemed almost certainly from government / central banks.

Interestingly, now,  one of the bankers is fighting to clear his name (after several similar convictions were thrown out). It turns out we weren’t wrong,   bankers had been manipulating the rates..  but broadly within the actual range that that they actually were trading at.  The real pressure to lie about Libor rates came from the Bank of England,  and yet while this guy was doing porridge for basically doing nothing wrong,  the criminal justice system and the media both conspired (or at least turned a blind eye) to completely ignore the real wrong-doing and deception stemming from the central bank (and probably No 11).

I don’t particularly mind either,  it was arguably done “in the public interest”.  But the double standards of the press and the justice system are just..  well,  worrying.  And disappointing..  if perhaps not surprising.

Full article: 

'They wanted to jail a banker - I was that banker' https://www.bbc.co.uk/news/business-56088419

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I went to a meeting at the BoE about LIBOR replacement which went into this back story and whilst the LIBOR curve has been long formed part of borrowing contracts it can only ever be a best guess; banks being asked to go high or low only has a minimal effect and is similar to conservative / optimistic forecasts.

I didn't think that the banks had done anything wrong in this regard; they each provided the forward LIBOR curve at the the request of the BoE for whose benefit it was rather than their own.  The BoE reviewed and assembled the data as well as presumably retrospectively checking its accuracy for decades.

This last is a tricky point because a 60 day LIBOR rate comprises three elements: the BoE base rate, a risk premium, and a time premium.   Nobody was ever claiming that borrowing on a 60 day basis was as cheap as borrowing overnight because of these latter two premiums which are estimates.  Risk premium used to be 0.5% to allow for fluctuations.

There therefore isn't a wrong or a right; and certainly no "LIBOR scandal".  Banks are still supplying their estimates but are understandably reluctant to do so if a prison sentence can result from getting it incorrect; with no reward for being correct.

It is going to be entirely cut through with a measure called SONIA (Sterling Overnight Interbank Average Rate) which is an actual, if retrospective, measure of interest.

When a company now borrows money it will be at SONIA plus an agreed time premium which will probably be included within each loan agreement.

The big downside of this is that the future interest cost of borrowings is no longer known.

Under LIBOR I could borrow for 90 days and know the interest charge on day one.  With SONIA as the reference rate I will only know the interest rate I have been charged for each day of the ninety on the subsequent day.

LIBOR is better IMHO but the BoE doesn't feel that it can make it work so it is being scrapped.

It was ludicrous that this man was jailed.

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