Barclays Scandal, Worse and Worse … Whatever It Is!
By Staff News & Analysis - July 02, 2012

Barclays Chairman Marcus Agius resigns over rate rigging … Marcus Agius, the chairman of Barclays, has resigned over the interest rate rigging scandal at the bank. He is stepping down in the wake of fierce shareholder and political pressure over the bank's "misconduct". Barclays was fined a record £290m last week for attempting to manipulate the interbank lending rate, Libor, between 2005 and 2009. – UK Telegraph

Dominant Social Theme: These banks cannot be trusted.

Free-Market Analysis: The Barclays scandal grows worse and worse. So here's a question: If you asked the average man on the street what the fuss was about, what answer would you get?

And if you told him the LIBOR rate was subjective anyway, what would be the response? And that Barclays seems to have set the rate LOWER than might have been warranted? …

We've dealt with this story previously, and we confess that when we looked it up on the 'Net we were surprised – our speculative article about this LIBOR nonsense had gone viral, with pickups all over the place. Strangely, the pickups didn't show up on our own back end. It's like Google is burying them or something … Google wouldn't do anything like that would it? "Barclays LIBOR Corruption a Phony Ploy to Strengthen the Bloomberg/Qatar QIBOR?"

Now Barclay's Chairman Marcus Agius has stepped down, remarking on the gravity of the situation. Aguis, reportedly married to a Rothschild, is not long from retiring so the idea is that he's stepping down to divert further damage from bank CEO Bob Diamond.

Agius was quite contrite in stepping down, and his use of language would seem to reinforce how terrible the corruption at Barclays actually is. Listening to Agius, you'd have thought a bank robbery took place. That's certainly the idea.

Mr Agius, chairman for the past five years, said on Monday: "Last week's events – evidencing as they do unacceptable standards of behaviour within the bank – have dealt a devastating blow to Barclays reputation. As Chairman, I am the ultimate guardian of the bank's reputation. Accordingly, the buck stops with me and I must acknowledge responsibility by standing aside."

Meanwhile, the Telegraph's Rosie Murray-West has written an accompanying article asking, "What does the LIBOR scandal mean for us? … Barclays' actions may sound esoteric, but all of us could have been affected."

Murray-West's article is a chirpy reiteration of what is already known about the scandal with the addition that more than a dozen other banks are being investigated for LIBOR manipulation. As we pointed out this past week, LIBOR is a subjective process and Murray-West's conclusion about the relative damage done is fairly tepid.

In another climate, perhaps, this would all seem to be an issue that is being treated with more seriousness than it deserves. Central banks with their low interest rates have caused a catastrophic depression around the world. But not a single central banker has been called to account for what may eventually end in the death of millions.

Barclays may have reported artificially low interest rates but there is a good deal of question as to whether they really had any impact on the reality of mortgage prices for actual homeowners. Not so central bank manipulation, which ruins whole countries. Here's some more from Ms. Murray-West's article:

The BBA, which oversees the setting of the London interbank lending rate (Libor), said it was "shocked" by revelations that Barclays had repeatedly made false submissions to help set the measure. Barclays staff filed misleading figures for borrowings that they had made from other banks.

Another week, another banking scandal. News that Barclays has been fined £290m for trying to manipulate a key interest rate has further rocked confidence in the sector. Similar tales involving other banks may now follow as the regulators look into the rest of the sector …

What has Barclays done? The Financial Services Authority (FSA) said traders from the bank lied about what it was costing it to borrow. This in turn influenced Libor, which is the rate banks use to lend to each other. Libor is important because it is a benchmark for pricing other deals and influences the price that we all pay to borrow …

But experts suggest that the artificially low figures, filed between 2007 and 2009, covered up the amount of financial stress that the bank was under, by making it look as if it was paying less to borrow money. Those seen as higher risk are charged more to borrow.

Mr Diamond said: "Barclays encountered no liquidity problems through 2007 and 2008. The inaccurate speculation about potential liquidity problems in the two periods noted created a real and material risk that the bank and its shareholders would suffer damage. But even taking account of the abnormal market conditions at the height of the financial crisis, and that the motivation was to protect the bank, not to influence the ultimate rate, I accept the decision to lower submissions was wrong."

We can see that Ms. Murray-West is having a hard time figuring out exactly what Barclays did and when it occurred. Later in the article she writes that if Barclays' traders did succeed in manipulating LIBOR downward mortgage customers may have gained. But she also quotes British regulators as saying that while such manipulations could have caused harm to other institutions and individuals that does not mean that they actually did.

As we pointed out last week, the entire ruckus strikes us as suspicious. We are fairly sure the power elite wants to crush the capitalist system once and for all and this Barclays LIBOR scandal is one more way to make sure it gets done.

Modern capitalism is under attack from all sides now and every attack, so far as we can tell, is a kind of false flag. The idea, as we have written many times before, is to reignite neo-Pecora hearings of the kind that were so successful for the power elite in the 1930s.

During the Pecora hearings the top elite banking families were effectively able to tether Wall Street and the City of London with regulations and regulators. This gave them enormous power, as they controlled the regulators.

Now the elites are closing in with many other regulatory initiatives to make sure that no one but certain chosen ones will ever be able to earn a dime in the securities markets. No more Mike Milkens, never again.

After Thoughts

These are controlled eruptions of "corruption" – just like the phony phone-tapping scandal. They are being created for a reason. The ultimate reason, in our view, is to bring every part of the capitalist process under the rule of a few.

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