And now its libor...

If there is anything that affects your life more than your spouse and your family i can bet it can be none other than libor. Its the london interbank offer rate.

All the interest rates are tied to it, your mortgage rate, your car loan rate, your student loan rate, the rate that bank offers for your savings account, the rate the companies get money etc depends on this rate.

Not only that some countries even alter their monetary policy based on this rate .

With being the nerve and bankbone of the whole instituition of capitalistic soceity one would expect it is highly regulated and sanctified than the instituition of marriage.

But looks like it is another highly manipulated index with no verification on its validity. The libor rates depends on some 16 member banks dialy reportings or to aptly call it blabberings.

Just a .001 manipulation of its value would cost a whopping amount any one could imagine. I think we cannot, atleast i cannot quantify the number with my limited counting wizardry. I think no one better than these banks would understand the grave importance of being honest in this number. The entire capitalistic machinery needs this number to even make a creeching sound if not for running.

It looks as if these banks run a roulette wheel and just blurt out a number that is convenient to them to the libor board. But alas the libor board is as guillible as or even more guillible than a 3 year old as this libor board is. This is based on my experience , i dont think i can cheat or no one can cheat my 3 year old with a junk story of this type.

These 16 US banks tell the libor board as how much it would be willing to spend to get a loan as it stands today. The dollar libor rate would be the average of these 16 numbers.

The roulette random wheel which these bank uses cannot cross any number greater than 3. The wheel splurts the dice to a slot within the number 3 and the bank rep. just blurts out the number.

Even at the height of credit crisis when these banks were spending lot more to get their inter bank rate loans they repeatedly have quoted a very low number to libor. The main reason is if they tell the true picture it would clearly portray the desperate situation of their credit needs which in turn would show how hollow their balance sheet is. So inorder to conceal their hollowness these banks desperately tried to conceal the real percent lending rates and quoted low of their borrowing rates to the board.

The board members with so much guillible attitude could not even detect the hollowness in the numbers even at the time of credit crunch.

Capitalism can thrive only when there is sound regulatory authority that does not stifle the growth but miffles the fraud. But the libor board failed to act and behaved like the guillible buffons parading in the local circus.

At last some one in the wall street journal who grew suspicious of this libor conducted an investigation which revealed .75 to .85 percentage point cheating in the rates.

The transparancy International howls at indian babus for their corruption and ranks india at the top echelons of corruption index at the same time sleeping over the US corporate cheatings and defrauding to the tunes of arae yaar what number is after trillion?