Monday, 16 July 2012
This earth-shattering news come at a difficult time. Already Politicians and Regulators have been caught bang to rights in causing the Great Recession we are enduring. Now of course they are seeking to deepen the crisis as much as they can by keeping the euro and refusing all monetary approaches to trying to return the economies of the West to growth.
In the UK, the Leveson enquiry has not been enough to make people forget the stain of the political expenses scandal and the new Libor investigation is trying to see to that.
But now the focus is on expanding this. Many prices in the world economy are set like LIBOR. Nearly all commodities have benchmark pricing, Gold and Silver too (mind you, with allegations of real corruption here this is perhaps one set that could do with an investigation). Indeed, asking market participants for their pricing input is, um, how you would get a price out of a series of private players.
Of course, there are suspicions this is open to abuse, it is why there is much disquiet in the city over the Chinese takeover of the London Metal Exchange. The rise of hedge funds as key players in markets trying to fix things for their own ends is nothing new (see Armajaro Holdings and the Chocolate Finger), It does need to watched and regulated.
Equally though, wantonly saying that most of the Western system for benchmark pricing is corrupt is rather silly thing to do. Just like saying all our banks are bust and crooked. This has not helped the economy recover nor done our reputation any good - in fact things just keep getting worse as the double dip recession proves.
More importantly though, rent-a-gob politicians get to lightly grill some executives from the City in the House of Commons or Congress and get in their class-war inspired jibes about how horrid these people are though. And it distracts from the calamitous decision-making of US and UK regulators and politicians - whose reputation must be upheld above all others of course.