So there\’s an investigation into whether LIBOR, the rate at which banks lend to sech other and which is the benchmark for huge swathes of other interest rates, was manipulated during the crisis a few years back.
Good, excellent, possibly or potentially dodgy dealings should be investigated.
Yet Ritchie turns to autorant mode:
So much for competition and the power of the market then.
Actually, as always, it’s about rigging the system to ensure monopoly power rules at cost to ordinary people.
Adam Smith said so long ago. He was right.
Those of us who say so now are right.
That’s why regulation – and a confident state willing to enforce it – are essential to well-being.
Bastard bankers screwing the little guy then……
Umm, well, no actually:
Critics of the process for setting Libor – which is used as a reference rate for about $350,000bn in financial products – have long claimed it is antiquated and lacking in transparency. Commentators complained bitterly during the financial crisis that the rates were distorted because they believed weaker banks were unwilling to admit higher borrowing costs.
Actually the allegation is that banks did not conspire. Rather, that they with held information: there is a difference here. They were not revealing information rather than huddling around chatting about how to stop other people finding out what they knew.
The much more amusing thing is, far from screwing the little guy whose mortgage was fixed to $ LIBOR (which some number of the newer floating rate mortgages in the US were) the effect of these actions was to lower $ LIBOR, not raise it.