LIBOR Fabrication

Jim Sinclair's Commentary:
A small warning: Libor was caught fabricating its data on April 16th 2008. Who knows what lies behind the Libor door when a big lie would be very appreciated by the honest population of Wall Street. "This game of "smoke and mirrors" took a big blow today with an article that you probably didn't hear about today. CNBC "bubble-land" TV wouldn't dare bring this to your attention. The WSJ and Bloomberg reported today that the Libor rate is being misquoted by banks. The Libor is set on the marketplace based on what the banks tell them they paid to borrow. This rate is not set by regulators. The Libor rate is set on trust. So the banks are lying and saying they are paying a lower rate when they really paid a higher lending rate. The British Bankers' Association will speed up the review of the process by which money-market rates are set daily amid concern that some contributors are providing misleading quotes. The global credit squeeze has raised concern lenders have been manipulating the so-called fixing process to prevent their borrowing costs from escalating, the Bank for International Settlements said in March. Participants have complained about whether banks are submitting accurate information, said Angela Knight, chief executive of the London-based BBA."
RCM Comments: LIBOR is the interbank lending rate in London and is used as an indicator for the health of the global banking system. Government regulators would love to see the spread between LIBOR and U.S. treasury bills narrow because the market would rally on the premise that their bailout policies were working. We are unwilling to embrace any unconfirmed positive spin regarding LIBOR as we believe it can be too easily manipulated.