The real truth about LIBOR as I spoke about earlier is coming out now.  Here is a Yale Professor speaking articulately about the fallacy of LIBOR as a legitimate benchmark rate. Libor: Three Scandals in One | Foreign Affairs  [emphasis mine] The fundamental principle underlying floating rates is to allow the market to determine borrowing costs. Customers who borrow on a floating-rate basis, if they are sensible, and institutions that loan money on a floating-rate basis, if they are ethical, therefore expect two things from a benchmark interest rate. First, the benchmark should reflect actual conditions in the financial markets. … Continue reading More on the selective memory surrounding LIBOR

A telling comment from one of the original architects and promoters of the original financial services holding company that could only exist with the repeal of Glass-Steagall. Former Citigroup CEO Weill Says Banks Should Be Broken Up | Bloomberg “What we should probably do is go and split up investment banking from banking,” Weill, 79, said yesterday in a CNBC interview. “Have banks do something that’s not going to risk the taxpayer dollars, that’s not going to be too big to fail.” He goes on to say “We can have size and scale but it doesn’t have to be connected … Continue reading Weill says Glass-Steagall repeal was a mistake

Nice catch from Finextra on this new initiative from the UK Government to resolve the debacle that dates back to 2009 when the banks decided they would eliminate cheques.  The catch was that they forgot to develop an alternative. I have to admit I noted the original idea here in 2009, but naively assumed they knew what they were doing. What was I thinking?  Continue reading UK Payments Council to be stripped of powers as govt seeks ‘fresh start’ | finextra

The US Justice department is now deeply engaged against multiple banks on the LIBOR fixing issue. U.S. Is Building Criminal Cases in Rate-Fixing | NY Times But the Libor case presents a potential opportunity for prosecutors. Given the scope of the problems and the number of institutions involved, the rate-rigging investigation could provide a signature moment to hold big banks accountable for their activities during the financial crisis. Continue reading “A signature moment to hold big banks accountable for their activities during the financial crisis” | NY Times

When we consider all the selective memory on LIBOR at the moment, its always fun to go back and look at what was topical on this blog back then.  I found this: LIBOR and why it matters | risk that any bank could face a run on its deposits from May 8th, 2008 It was a concern because the hot topic was the high rates of LIBOR and the resultant high interest payments but large banks, and this 5 months before the Lehmans moment. No evidence here of manipulation, but there is circumstantial evidence that the topic was under review … Continue reading LIBOR post from May 2008 indicates the rate was a hot topic

This article is a good introductory analysis of the power of Amazon, but there is one point made that is worth analysing deeper because it goes to the core of the internet commerce revolution. This quote struck me as critical (emphasis mine) Amazon economy: From warehouse to powerhouse At a macro level, hub businesses such as Amazon improve efficiency, which is good news for small players, says Marco Iansiti, a professor at Harvard Business School. “The bad news is your destiny is shared with a bunch of other people,” he says. “If Amazon has a catastrophe, if the website goes down, then … Continue reading FT announces a new series on Amazon beginning Monday July 9th, 2012