From Greek economist Christos Kissas, writing in New Europe:
Manipulating Libor is the equivalent of mass printing fake money, that is: stealing the wealth of billions of every-day people, because a change in Libor affects the payment of interest in student loans, small business loans, or mortgages. Compare this with the astronomical profits of the banking industry and the provocative bonuses of top bank executives (£15 million for Barclays CEO in 2011), and you realize the magnitude of fraudulent income transfer from the bulk of society to the “happy few.”
Another troubling element in this affair is the time span of the manipulation. According to US market authority CFTC, Barclays traders manipulated Libor “routinely and sometimes daily” from at least mid-2005. It is surprising that it took market authorities all this time to uncover the scandal. More to it, it’s hard to believe that Barclays acted alone; at present, several heavy-weights of international banking are under investigation, including JP Morgan Chase which is itself involved in another scandal… It seems pretty obvious that everybody knew and everybody partied. To make things worse, there are strong allegations that the Bank of England itself was fully aware of this game, and even indirectly encouraged it.
There are two reasons for playing with Libor: first, hiding the real cost of borrowing for each bank, thus painting a false picture of their financial health; and second, to boost profits through the artificially higher valuation of banks’ derivatives positions. In both cases, the game was really profitable for the banks involved, judging by the cheerful mood in the emails exchanged by the dealers after each shot, like the one saying “Done…for you big boy.”
