Home » Posts tagged 'libor' (Page 2)
Tag Archives: libor
This Is What Global Currency War Looks Like: A Complete History Of Recent FX Interventions
This Is What Global Currency War Looks Like: A Complete History Of Recent FX Interventions
After the dramatic collapse in the SNB’s defense of the Swiss Franc peg to the Euro, there was a period of relative FX peace in which few if any central banks engaged in outright currency intervention (aside from the countless rate cuts so far in 2015 in response to the soaring strength of the USD, which has risen dramatically over the past year for all the wrong reasons). Then China last night reminded us what happens when in a centrally-planned world one or more markets take too great advantage of relative FX differentials, in this case Japan, whose Yen plunged from USDJPY 80 to 125, and the Euro, which tumbled from EURUSD 1.40 to just above parity.
Now, it’s China’s turn.
But as we pointed out before, FX interventions never take place in a vacuum, and especially during periods of rising dollar strength, when the entire FX world, and especially exporters and mercantilists, go berserk.
Furthermore as Stone McCarthy notes, “this is the sort of “international development” that the Fed will need to keep an eye on and assess as conditions align for the start of policy normalization.” The reason is simple: what China just did could make a rate hike impossible as multinational US corporations will be slammed with a double whammy of soaring dollar and sliding CNY, making US exports that much tougher. And as we won’t tire of repeating, the Fed can not print trade.
And just to help remind readers of what happens when the entire world engages in wholesale currency war, here is a complete list of all the recent FX interventions, courtesy of Stone McCarthy.
Summary of Recent FX Interventions:
The last period of any significant Fed interventions in foreign exchange markets was during 1994-1995 when the dollar reached all time lows against what were then the benchmark currencies of the Japanese yen and German deutsche mark, and the period of the Mexican Peso Crisis. After that, it was acting to defend the value of the yen and new-minted euro.
…click on the above link to read the rest of the article…
In Latest Market Rigging Scandal, Wall Street Now Sued For Treasury Market Manipulation
“Defendants used electronic chatrooms, instant messaging, and other electronic and telephonic methods to exchange confidential customer information, coordinate trading strategies.”“Traders at some of these primary dealers talked with counterparts at other banks via online chatrooms and swapped gossip.”
Sound familiar?
Those quotes are from a 61-page complaint filed in the Southern District of New York wherein Boston’s public sector pension fund accuses all US primary dealers (the cabal of usual suspect dealer banks that transact directly with Treasury and “have a special obligation to ensure the efficient function” of what was formerly the deepest, most liquid market on the planet) of colluding to manipulate the $12.5 trillion US Treasury market.
The alleged scheme (tipped here last month) was remarkably simple and involved precisely the same sort of conspiratorial, chatroom shenanigans employed by the very same banks who, at various times, have colluded to rig FX, gold, various -BORs, ISDAfix, and pretty much everything else.
In short, the banks simply conspired to keep the spread between the when issued price and the price at auction as wide as possible, thus inflating their profits at the expense of everyone else where “everyone else” includes institutional investors and hedge funds all the way down to retirees and Main Street in general. From the complaint:
Defendants employed a two-pronged scheme to manipulate the Treasury securities market. First, Defendants used electronic chatrooms, instant messaging, and other electronic and telephonic methods to exchange confidential customer information, coordinate trading strategies, and increase the bid-ask spread in the when-issued market to inflate prices of Treasury securities they sold to the Class. Second, Defendants used the same means to rig the Treasury auction bidding process to deflate prices at which they bought Treasury securities to cover their pre-auction sales. Recent reports confirm that traders at some of these primary dealers “talked with counterparts at other banks via online chatrooms” and “swapped gossip about clients’ Treasury orders.
…click on the above link to read the rest of the article…
The Biggest Winner From The Greek Tragedy
The Biggest Winner From The Greek Tragedy
Long after Greece has left the Eurozone and Germany is using the Deutsche Mark as its currency, the people of the two nations, antagonized to a level unseen since World War II, will be accusing each other of benefiting more from the brief but tumultuous period of the common currency.
In reality, nobody had put a gun to Greece’s head and told it to lever up, enriching local oligarchs and corrupt politicians, taking advantage of credit that was artificially cheap only due to the common currency and an implicit monetary, if not fiscal, union.
Germany, whose exports account for nearly 50% of GDP, on the other hand experienced an unprecedented exporting golden age, made possible only due to an artificial currency, the Euro, that was by definition created to be weaker than the Deutsche Mark and benefitted from any bout of weakness in Europe’s periphery, such as the past 5 years.
The truth is, when things were good nobody second-guessed any decisions for a second, and since the rising economic tide lifted all boats, nobody cared.
And then the tide rolled out, displaced by trillions in bad loans and gargantuan mountains of sovereign and financial debt, which ultimately would lead to the first, then second, then third and then an all-out cascade of sovereign defaults.
Sadly, the losers – regardless of the propaganda and jingoist rhetoric – are the ordinary, common, taxpaying people of Germany and Greece (and every other European nation), who enjoyed a few brief years of artificial prosperity, which in retrospect was entirely due to debt, masked well by the “currency swaps” and other financial engineering concocted by banks such as Goldman Sachs, in clear violation of the Maastricht treaty which is now a long-forgotten memory of the founding ideals behind the Eurozone.
…click on the above link to read the rest of the article…
Ten Banks, Including JPM, Goldman, Deutsche, Barclays, SocGen And UBS, Probed For Gold Rigging
Ten Banks, Including JPM, Goldman, Deutsche, Barclays, SocGen And UBS, Probed For Gold Rigging
No matter how many times the big banks are caught red-handed manipulating precious metals, some failed former Deutsche Bank prop-trader (you know who you are) will take a vociferous stand based on ad hominem attacks and zero facts that no, what you see in front of you is not precious metal rigging at all but a one-off event that has nothing to do with a criminal banking syndicate hell bent on taking advantage of anyone who is naive and dumb enough to still believe in fair and efficient markets.
The last time this happened was in November when we learned that “UBS Settles Over Gold Rigging, Many More Banks To Follow“, and sure enough many more banks did follow, because in Europe, where the stench of gold market manipulation stretches far beyond merely commercial banks, and rises through the central banks, namely the BOE and ECB, culminating with the Head of Foreign Exchange & Gold at the BIS itself, all such allegations have to be promptly settled or else the discovery that the manipulation cartel in Europe involvesabsolutely everybody will shock and stun the world, which heretofore was led to believe that such things as gold market (not to be confused with Libor or FX) manipulation only exist in the paranoid delusions of a few tinfoil fringe-blogging lunatics.
However, as usually happens, someone always fails to read the memo that when it comes to gold-market manipulation one must i) find nothing at all incriminating if one is a paid spokesman for the entities doing the manipulation such as former CFTC-sellout Bart Chilton or ii) if one can’t cover it, then one must settle immediately or else the chain of revelations will implication everyone.
…click on the above link to read the rest of the article…
CEO Of Rosneft Compares Oil Market Manipulation Which “Doesn’t Reflect Reality” To Gold Price Rigging
CEO Of Rosneft Compares Oil Market Manipulation Which “Doesn’t Reflect Reality” To Gold Price Rigging
It was a little under two years ago when, when oil and gas prices were both surging, Obama decided to punish the evil speculators whose fault the rise of oil was when he announced he would “give the Commodity Futures Trading Commission authority to increase the amount of money that a trader must put up to back a trading position. The administration officials said such authority could help limit disruptions in energy markets.” Needless to say, Obama did not punish the world’s central banks for flooding the globe with excess liquidity, which by definition would end up in less than “productive” ventures such as barrels of oil.
Over the weekend, it was the opposite, when instead of blaming speculators for soaring prices, none other than the CEO of Russia’s largest publicly-traded oil company, Rosneft, in not so many words, accused speculators of sending the price of oil plunging. Which is actually a narrow read of what he said, and one we don’t agree with.
What we most certainly do agree with, is his broader message, namely that financial speculation has made a mockery of physical supply and demand and “distorted oil markets, prices do not reflect reality. They are driven instead by financial speculation, which outweighs the real-life factors of supply and demand. Financial markets tend to produce economic bubbles, and those bubbles tend to burst. Remember the dotcom bust and the subprime mortgage crisis? Furthermore, they are prone to manipulation. We have not forgotten the rigging of the Libor interest rate benchmark and the gold price.”
Yes indeed, the CEO of an oil major just used gold rigging as an example of the same commodity manipulation that gold longs have been complaining about for years if not decades.
Here is Igor Sechin full Op-Ed in the FT:
…click on the above link to read the rest of the article…
Continuing With The Insanity | Humanity’s Test
Continuing With The Insanity | Humanity’s Test.
During the peak of the financial crisis during 2008 and 2009, there was a window of opportunity for a fundamental remaking and realignment of the massively over-sized and dysfunctional global financial system. Perhaps, also a questioning of the consensus that supports general deregulation and globalization. This opportunity was not taken, and instead the status quo was supported. Now, five years later, the insanity continues. Just a few stories from a single issue of the Financial Times (October 28th, 2014) pay testament to this ….
Rebound in sales of risky assets raises fears over quantitative easing’s legacy
In the financial crisis the risky assets were subprime housing loans (retail loans to borrowers with very low credit scores) bundled together and securitized (turned into bonds and other financial instruments that could be sold to investors). The new risky assets of choice are subprime car loans, and junk-rated corporate (companies with low credit ratings) bonds. In the United States, the issuance of sub-prime car loan securitizations has grown rapidly from its nadir during the crisis, and may surpass its pre-crisis peak this year. Investors are taking on more risks to gain what they see as an acceptable return, in a low interest rate environment, just as they did pre-crisis. The overall issuance of securitized assets is still significantly below pre-crisis levels, but its current rapid growth shows how little the crisis changed things.
…click on the above link to read the rest of the article…
