Dear God Willy Hutton: Can\’t you even get Libor right?

It beggars belief that the top of Barclays did not know what measures it had to take to pull through. It had to lie about the rates it was paying to borrow money.

This came easily because the practice had become habitual. The London interbank offer rate is set each day at 11am in all the key currencies lent and borrowed in London. Each major bank submits the interest rate it is paying to the British Bankers\’ Association and the average becomes the benchmark rate for most of the world\’s loans and financial contracts.

No, it is not the rate at which they are borrowing. It is the rate at which, in their opinion, they woud be abe to borrow in size.

You might think that this is just another titbit from one famed for pendantry but this is important. It simply is not true that a bank such as Barcays is trying to borrow today, in all currencies and all maturities that make up the various Libors. Thus the system can opny be opinions about what rates woud be if they tried to.

Sure, the Euribor system of others determining what rates they woud end at seems better, but that sti faces the same probem. It\’s an opinion.

Now, did they ie about these opinions? Oh yes, they most certainly did. But they were not, as you allege, borrowing at one rate and reporting another. They were reporting an opinion at which they woud be abe to borrow in size.

11 thoughts on “Dear God Willy Hutton: Can\’t you even get Libor right?”

  1. W. M. Connoley

    It’s a misspelling by Polly Toynbee in the Guardian deliberately repeated: “Tim Worstall you pendant, what on earth is your life and view of the world?”

  2. Pendant is spelt correctly but Tim does need to run a spellcheck over his writing general. Mistakes all over the place. Get Chrome Tim, at least that has a built in spell checker if you writing online.

  3. Correctly if quoting Polly, otherwise it’s a bit dubious:

    Pendant: something suspended: as a: an ornament (as on a necklace) allowed to hang free b: an electrical fixture suspended from the ceiling

    Pedantic – marked by a narrow focus on or display of learning, especially its trivial aspects.

  4. The extent to which Hutton does not have a funcking clue is amazing. He is so clueless. I can only assume that he was such a funckwit as a junior stockbroker that they told him to funck off.

  5. Nice one Tim, this is the only report (exclude FTAV) that has mentioned this point. It is a survey, with the key word being IF.

    It makes me believe this is nothing more than a Straw Man set up to hide more egregious goings on.

    Elsewhere else, and on another topic, I discovered the term: “Partial Hangout”.

    According to Wikipedia:

    “A ‘limited [partial] hangout’ is spy jargon for a favorite and frequently used gimmick of the clandestine professionals. When their veil of secrecy is shredded and they can no longer rely on a phony cover story to misinform the public, they resort to admitting—sometimes even volunteering—some of the truth while still managing to withhold the key and damaging facts in the case. The public, however, is usually so intrigued by the new information that it never thinks to pursue the matter further.”

  6. No, it is the rate at which they would, themselves, lend to a good name London bank…. not where they reckon they could borrow themselves.

  7. There’s no mystery about what question the Libor panel is asked: it’s on the BBA website:

    At what rate could you borrow funds, were you to do so by asking for and then accepting inter-bank offers in a reasonable market size just prior to 11 am?

Leave a Reply

Your email address will not be published. Required fields are marked *