Surely. Do you know what that "scandal" was? The magnitude of the trading? What was the magnitude of damage to consumers using LIBOR? What would the LIBOR rate have been if there were no participants?
Why do you always act as if the banks never do these things? It's really not funny.
You can google "Libor scandal" as I just did. Wiki has a pretty good account of the scandal and the damages that were done to various US entities. The fact remains that the banking cartel was manipulating interest rates in order to cheat everyone else, in the range of tens of billions.
The banks involved all should've been liquidated and their principals prosecuted fully, but apparently there was only 1 person ever convicted, a UBS trader. Same situation as in the "financial crisis" but nobody was prosecuted --- when in great contrast, during the late1980's there were thousands prosecuted for the same type of crap.
It's like Michael Milken teaching business ethics.
Q: Are You Printing Money? Bernanke: Not Literally
@MsMorrisine said:
this is a confusion of cause and effect.
the best thing to point out to demonstrate this is:
the fed hikes rates to slow the economy. when the economy is doing well, treasury yields are rising.
it's not the other way around.
above
from the Dec 2015 hike, 30year yields moved down about 0.80% in the face of a 0.25% hike. Preceeding the Dec 2015 hike, 30 year yields moved up about 1.00% before the fed hiked. Between the two, yields were more or less flat.
this is due to economic expectations and fixed income supply and demand, not rate hikes which would actually slow growth and reduce long-term rates, not increase them.
the fed hikes to slow the economy, a slowing economy means lower inflation, lower inflation expectations lowers long term yields.
If the FED hikes rates, then the costs of consumer loans increase, correct? That slows down people's desire to borrow and buy items like homes, cars, etc. which in effect slows growth, which was the intended purpose. I get all that. But doesn't the hike also mean that banks will pay more interest to their customers in an effort to get money cheaper than the FED's rates? For example, say the FED made the rate 10%.....banks might then begin to offer their customers say 6% interest rates while lending out at somewhere near 12%. Now if I can go deposit my money in my local bank @ 6% growth, doesn't that automatically force the government to increase the returns on bonds to remain competitive? That would increase the amount of interest needed to service the national debt in turn, wouldn't it? What part am I missing here?
You're missing a lot Gecko. Please reread what you wrote. First you said the FED raised rates to 10%. Then you say the govt would be forced to raise on bonds.
Also in the first part of what you write you assume increasing rates would cause people to slow spending. While at a certain point this can be true, you must account for relativity. Rates now are very low and an increase from these levels can and will drive more demand for debt as folks try to lock in lower rates.
You use 10 and 12% as examples....have you looked are where rates are today? If rates ever get to 10%, you will have witnessed one of the greatest economic expansions in history.
Comments
That's Godwin's law aka reducto ad hitlerum
Liberty: Parent of Science & Industry
Surely. Do you know what that "scandal" was? The magnitude of the trading? What was the magnitude of damage to consumers using LIBOR? What would the LIBOR rate have been if there were no participants?
Knowledge is the enemy of fear
Why do you always act as if the banks never do these things? It's really not funny.
You can google "Libor scandal" as I just did. Wiki has a pretty good account of the scandal and the damages that were done to various US entities. The fact remains that the banking cartel was manipulating interest rates in order to cheat everyone else, in the range of tens of billions.
The banks involved all should've been liquidated and their principals prosecuted fully, but apparently there was only 1 person ever convicted, a UBS trader. Same situation as in the "financial crisis" but nobody was prosecuted --- when in great contrast, during the late1980's there were thousands prosecuted for the same type of crap.
It's like Michael Milken teaching business ethics.
I knew it would happen.
You're right. All those people who made false statements about income to get a mortgage should be locked up. They caused the banks to fail.
Of course I'm being facetious, but I think you can see most issues are more complicated than what appears on the surface.
Knowledge is the enemy of fear
Well at least the ones with servers in their basements.
If the FED hikes rates, then the costs of consumer loans increase, correct? That slows down people's desire to borrow and buy items like homes, cars, etc. which in effect slows growth, which was the intended purpose. I get all that. But doesn't the hike also mean that banks will pay more interest to their customers in an effort to get money cheaper than the FED's rates? For example, say the FED made the rate 10%.....banks might then begin to offer their customers say 6% interest rates while lending out at somewhere near 12%. Now if I can go deposit my money in my local bank @ 6% growth, doesn't that automatically force the government to increase the returns on bonds to remain competitive? That would increase the amount of interest needed to service the national debt in turn, wouldn't it? What part am I missing here?
You're missing a lot Gecko. Please reread what you wrote. First you said the FED raised rates to 10%. Then you say the govt would be forced to raise on bonds.
Also in the first part of what you write you assume increasing rates would cause people to slow spending. While at a certain point this can be true, you must account for relativity. Rates now are very low and an increase from these levels can and will drive more demand for debt as folks try to lock in lower rates.
You use 10 and 12% as examples....have you looked are where rates are today? If rates ever get to 10%, you will have witnessed one of the greatest economic expansions in history.
Knowledge is the enemy of fear
The FED now has to hike rates to give them some wiggle room when it comes time to lower them. Sorta like a reload.
Are they really this stupid, or are they destroying the dollar on purpose?
Usury works harder on the people's treasury department than it does on it's people.