Where's Boris When We Need Him ?

Up to his old tricks, that's where.  The papers are full of stories of how he is using the Olympics to further his designs on the Conservative leadership, just as the great international banking-regulatory crisis - conspiracy or no - threatens the City he sometimes claims to defend and promote.  All hands should be on deck to repel boarders, else we may find that during our rose-tinted Olympic revels Johnny Foreigner has been purposefully neutering our financial pre-eminence.

We have fingered Osborne as being asleep on watch, a capital offence, and we must diskard him utterly. Boris, a classicist, doubtless sees himself as Julius Caesar in Gaul, with dreams of crossing the Rubicon in due course.  He needs to recall that victories in vital battles are what is needed, not self-indulgent grandstanding.

The track record of our own regulators gives little grounds for optimism they can do what is needful, which is a sight more than a 'Libor overhaul', or token prosecution of a couple of small fry. ("Supervision of Libor could be handled by a 'college of supervisors' from across the world with Britain in the chair, Wheatley said."  Did he, indeed ? And why does he think we'll be given the chair, eh ?)

No, it is the politicians that must act, working night and day to restore the situation, as we've prescribed before. It should be Osborne.  It could in theory be Cable.  Clearly, neither is equal to the task.  Boris, you have no formal powers in this matter but you have the pulpit. If you are genuinely up for the Top Job, here's a battle for you. 

ND

How did Barclays make it through that dark days of 2009?

So back to 2007 and the heady days as the crisis which ash felled the world brewed. of course, as we blogged here, it was reasonably obvious a bust would come, although the extent of it was under-estmiated by several fold.

However, if you were a Bank you could see the leverage wall collapsing, worse events took place as time wore on in 2008 and 2009; Banks started going to the wall for lack of liquidity. Fear of lending to one another gripped the market and we had a credit crunch.

The lack of liquidity could kill a bank, even a huge one like Wall Street leviathan, Lehman Brothers. It becamse crucial that Banks knew who could still borrow, who was still 'safe.' One such bank as risk was Barclays.

And now it come to light that they were consipirng to affect the LIBOR rate, to show them in a better light, to show the market they were still a trusted bank perhaps. Barclays makes much of its ability not to tkae a Government stake in 2008 - it did really via Qatar, just not a UK stake. Barclays share price went from 350p to 60p in a few weeks. How much of an imapct did this LIBOR manipulation have here (and follwoing this logic through, save the British taxpayer even more money, albeit by potential deception?)

 Senior Barclays directors were conniving in trying to fix the market for Libor. It maybe that this will only ever be viewed as a kind of day trade strategy where they sought overnight margin from a rate that benefitted them and their loans versus other market participans - but I wonder if this does go higher up the Bank to support the macro position described above?

By whistle-blowing Barclays are probably covered against future investigations and the other Banks will soon get their own place in the limelight of shame. It's a sad story though and shows that even the heart of the markets cannot be trusted, a sad day for financial capitalism and the reputation of London - but a better day hopefully as it lead to positive changes at the Banks (or their regulators keeping a better watch).