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Libor Scandal et al: The True and Total Cost

Posted by Larry Doyle on December 12, 2012 8:29 AM |

Would it be even possible to measure the total cost of the manipulation of Libor? A basis point here, a few basis points there and nobody really gets hurt, right? No, not right.

The simple fact is the manipulation of the most widely tracked short term interest rate in the world comes with the same very real costs attached to all forms of corruption, including the money laundering scandals at HSBC, Standard Chartered and who knows how many other institutions.

What are these costs? 

Say what you want about former UN Secretary General Kofi Annan, but he laid out in spades the very real costs of allowing corruption to propagate within any society. Does anybody doubt that the Madoff, Stanford, mortgage fraud, Libor manipulation, money laundering, MF Global, insider trading, naked short selling,  . . . where do I stop . . . and other scandals within our financial and political spheres do not rise to the level of corruption? To believe that would redefine the term “naive.”

So, back to Mr. Annan. What are the costs of the Libor scandal and other corrupt practices? John Plender highlights Annan’s assessment the other day in a book review in the Financial Times. Annan leaves little to interpretation in stating:

“Corruption is an insidious plague that has a wide range of corrosive effects on societies. It undermines democracy and the rule of law, leads to violations of human rights, distorts markets, erodes the quality of life and allows organised crime, terrorism and other threats to human security to flourish.”

Who in America right now does not believe that we are living in just such a society? Anybody?

Why and how has this corrupt, crony capitalism grown in the United States? People have not been held to account. The mere payment of fines or singular indictments/prosecutions for engaging in corrupt practices does not root out corruption, it emboldens it.

There are those who would maintain that the insider trading cases brought to date are evidence that our system of justice is working. I would respond, “Picking up crumbs, folks!!”

Sense on Cents/Libor Scandal

What happened to our country?

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

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