Everything Is Rigged: The Biggest Price-Fixing Scandal Ever

Everything Is Rigged: The Biggest Price-Fixing Scandal Ever

The Illuminati were amateurs. The second huge financial scandal of the year reveals the real international conspiracy: There’s no price the big banks can’t fix

Illustration by Victor Juhasz

By 

OUR COMMON GROUND Voice

April 25, 2013

Conspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world’s largest banks may be fixing the prices of, well, just about everything.

You may have heard of the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that’s trillion, with a “t”) worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history – MIT professor Andrew Lo even said it “dwarfs by orders of magnitude any financial scam in the history of markets.”

That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world’s largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world’s largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps.

Interest-rate swaps are a tool used by big cities, major corporations and sovereign governments to manage their debt, and the scale of their use is almost unimaginably massive. It’s about a $379 trillion market, meaning that any manipulation would affect a pile of assets about 100 times the size of the United States federal budget.

It should surprise no one that among the players implicated in this scheme to fix the prices of interest-rate swaps are the same megabanks – including Barclays, UBS, Bank of America, JPMorgan Chase and the Royal Bank of Scotland – that serve on the Libor panel that sets global interest rates. In fact, in recent years many of these banks have already paid multimillion-dollar settlements for anti-competitive manipulation of one form or another (in addition to Libor, some were caught up in an anti-competitive scheme, detailed in Rolling Stone last year, to rig municipal-debt service auctions). Though the jumble of financial acronyms sounds like gibberish to the layperson, the fact that there may now be price-fixing scandals involving both Libor and ISDAfix suggests a single, giant mushrooming conspiracy of collusion and price-fixing hovering under the ostensibly competitive veneer of Wall Street culture.

The Scam Wall Street Learned From the Mafia

Why? Because Libor already affects the prices of interest-rate swaps, making this a manipulation-on-manipulation situation. If the allegations prove to be right, that will mean that swap customers have been paying for two different layers of price-fixing corruption. If you can imagine paying 20 bucks for a crappy PB&J because some evil cabal of agribusiness companies colluded to fix the prices of both peanuts and peanut butter, you come close to grasping the lunacy of financial markets where both interest rates and interest-rate swaps are being manipulated at the same time, often by the same banks.

“It’s a double conspiracy,” says an amazed Michael Greenberger, a former director of the trading and markets division at the Commodity Futures Trading Commission and now a professor at the University of Maryland. “It’s the height of criminality.”

The bad news didn’t stop with swaps and interest rates. In March, it also came out that two regulators – the CFTC here in the U.S. and the Madrid-based International Organization of Securities Commissions – were spurred by the Libor revelations to investigate the possibility of collusive manipulation of gold and silver prices. “Given the clubby manipulation efforts we saw in Libor benchmarks, I assume other benchmarks – many other benchmarks – are legit areas of inquiry,” CFTC Commissioner Bart Chilton said.

But the biggest shock came out of a federal courtroom at the end of March – though if you follow these matters closely, it may not have been so shocking at all – when a landmark class-action civil lawsuit against the banks for Libor-related offenses was dismissed. In that case, a federal judge accepted the banker-defendants’ incredible argument: If cities and towns and other investors lost money because of Libor manipulation, that was their own fault for ever thinking the banks were competing in the first place.

“A farce,” was one antitrust lawyer’s response to the eyebrow-raising dismissal.

“Incredible,” says Sylvia Sokol, an attorney for Constantine Cannon, a firm that specializes in antitrust cases.

All of these stories collectively pointed to the same thing: These banks, which already possess enormous power just by virtue of their financial holdings – in the United States, the top six banks, many of them the same names you see on the Libor and ISDAfix panels, own assets equivalent to 60 percent of the nation’s GDP – are beginning to realize the awesome possibilities for increased profit and political might that would come with colluding instead of competing. Moreover, it’s increasingly clear that both the criminal justice system and the civil courts may be impotent to stop them, even when they do get caught working together to game the system.

If true, that would leave us living in an era of undisguised, real-world conspiracy, in which the prices of currencies, commodities like gold and silver, even interest rates and the value of money itself, can be and may already have been dictated from above. And those who are doing it can get away with it. Forget the Illuminati – this is the real thing, and it’s no secret. You can stare right at it, anytime you want.

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We’re Saddling College Students with Crushing Debt … and the Govt. Is Acting Like a Greedy Profitee

Matt Taibbi: We’re Saddling College Students with Crushing Debt … and the Govt. Is Acting Like a Greedy Profiteer

 

“Even gamblers can declare bankruptcy, but kids who enter into student loans will never, ever be able to get out of this debt.”

Photo Credit: Shutterstock.com/KenDrysdale

August 20, 2013  |

The following content originally appeared onDemocracyNow!

On the heels of President Obama’s signing of a measure keeping federally subsidized student loans at a relatively low rate through 2015, Rolling Stone political reporter Matt Taibbi joins us to discuss how the high price of U.S. college tuition and the federal expansion of student debt to pay for it pose a major threat to the economy. In his new article, ” Ripping Off Young America: The College-Loan Scandal,” Taibbi writes: “The dirty secret of American higher education is that student-loan interest rates are almost irrelevant. It’s not the cost of the loan that’s the problem, it’s the principal — the appallingly high tuition costs that have been soaring at two to three times the rate of inflation, an irrational upward trajectory eerily reminiscent of skyrocketing housing prices in the years before 2008. … Throw off the mystery and what you’ll uncover is a shameful and oppressive outrage that for years now has been systematically perpetrated against a generation of young adults.” Taibbi says the federal government is poised to make $185 billion over the next 10 years on student loans, with no way out for the young borrowers: “Even gamblers can declare bankruptcy, but kids who enter into student loans will never, ever be able to get out of this debt.”

Transcript

The following is a rush transcript. Copy may not be in its final form.

AARON MATÉ: We begin today with student loans. When President Obama signed it into law this month, the Bipartisan Student Loan Certainty Act was hailed as a major victory for students. The bill reversed a temporary doubling of the interest rate on federally subsidized Stafford student loans that took effect in July. Most students will pay a low rate of around 3.8 percent through 2015 but then see that rate jump as it becomes attached to financial markets. At the signing ceremony, President Obama praised Congress for reaching an agreement, but he warned the temporary fix in rates doesn’t address the underlying problem: the massive cost of college tuition and the debt burden imposed on students and their families.

PRESIDENT BARACK OBAMA: Even though we’ve been able to stabilize the interest rates on student loans, our job is not done, because the cost of college remains extraordinarily high. It’s out of reach for a lot of folks. And for those who do end up attending college, the amount of debt that young people are coming out of school with is a huge burden on them. It’s a burden on their families. It makes it more difficult for them to buy a home. It makes them more difficult—more difficult for them if they want to start a business. It has a depressive effect on our economy overall, and we’ve got to do something about it.

AMY GOODMAN: President Obama speaking in the Oval Office earlier this month.

Well, our next guest has just written an in-depth  piece exploring the nation’s soaring education costs and their dangers. In the latest edition of  Rolling Stone, Matt Taibbi argues that the high price of college tuition and the federal expansion of student debt to pay for it pose a major threat to the economy, as Taibbi writes, quote, “The dirty secret of American higher education is that student-loan interest rates are almost irrelevant. It’s not the cost of the loan that’s the problem, it’s the principal—the appallingly high tuition costs that have been soaring at two to three times the rate of inflation, an irrational upward trajectory eerily reminiscent of skyrocketing housing prices in the years before 2008. … Throw off the mystery and what you’ll uncover is a shameful and oppressive outrage that for years now has been systematically perpetrated against a generation of young adults.” Matt Taibbi’s article is called “Ripping Off Young America: The College-Loan Scandal.” He’s a political reporter for  Rolling Stone.

Full Article

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Matt Taibbi is a contributing editor for Rolling Stone. He’s the author of five books and a winner of the National Magazine Award for commentary. Please direct all media requests to taibbimedia@yahoo.com  Matt is an OUR COMMON GROUND Voice

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Matt Taibbi: Geithner is ‘the architect of too big to fail’

Taibbi: Geithner is ‘the architect of too big to fail’

By Arturo Garcia
Saturday, January 12, 2013 18:03 EST

 
Matt Taibbi on Democracy Now 011113
The legacy of outgoing U.S. Treasury Secretary Tim Geithner will be simple, said Rolling Stone contributing editor Matt Taibbi on Friday — and unflattering.

“He’s the architect of “too big to fail,” Taibbi told Democracy Now hosts Amy Goodman and Juan Gonzalez. ” When this all blows up — and it’s going to blow up, for sure, because things can’t continue the way they are right now — people are going to look back in history, and they’re going to say, “Who was to blame for this?” And Timothy Geithner is going to be the guy who designed this entire system.”

That picture is quite different from the one President Barack Obama painted in his sendoff to Geithner on Thursday, when he said that the history books would portray him as “one of our finest secretaries of the Treasury.” Geithner will be succeeded by Obama’s chief of staff, Jack Lew, a choice Taibbi described as a signal that the White House intends to keep bailing Wall Street out.

Author and former financial regulator William Black also criticized Geithner, saying he “created crony capitalism, American style” and helped develop regulations that will not prevent further financial trouble for the country. He also scoffed atthe recent deal made by 10 major mortgage-lenders that will include $3.5 billion in payments to almost 4 million homeowners.

“The rest of the supposed $5 billion in settlement is really just what in the commercial world we call ‘troubled debt restructurings,’ which are the things you would do anyway if the government didn’t exist, because in most cases it’s better for the bank not to have the default, to instead reduce the principal slightly,” said Black. “So, none of that is actually a bailout. None of it is actually a settlement. It’s just the banks doing that which will profit maximize for the banks anyway.”

Watch Taibbi and Black discuss Geithner’s legacy and the issues behind the government’s Wall Street bailout, originally aired on January 11, 2013, below.
Raw Story (http://s.tt/1ym7E)

Matt Taibbi  is Rolling Stone contributing editor, and  is an OUR COMMON GROUND Voice

July 9, 2009  Matt Taibbi, Author and Journalist, Rolling Stone Magazine on OUR COMMON GROUND with Janice Graham

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