Historian notes from GET team CC_07-25-12 (transcribed)
The discussion is a little deep, but it is a big piece of the RV of the puzzle according to her.
Historian: Some of the financial scandals that are prevalent in the news today. We need to start understanding why it is significant. It is no t so much the financial scandal itself, it is something I am watching and going hmmm this is interesting, this is strategy going on here. It has to do with a communication strategy that I believe is related to the switching of the financial systems from the old to the new.
It’s part of the entire game of creating the spin and everything that’s needed. In order to do that I just going to cover a few things.
Getting back to this thing called LIBOR and it’s now in the mainstream news and on Reuters and the business talk shows. It’s still way above everybody’s head and so it should be. It’s just real complicated stuff the financial world does in the background so you don’t need to understand how it works. All you need to know is what does it affect and how big is it.
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Should we be paying attention and at least understand something and I do believe we should because this is historical and it’s also, I am suspecting , it is being used as a major tactic I shifting from one system to another. The spin on it anyway.
It stands for London Inter Bank Offered Rate and what it means is it is an interest rate that is set that influences the entire mortgage industry worldwide and all banks as well as any kind of unsecured bank loans in other banks or in the mortgage industry or elsewhere.
So what you are talking about is this rate is set and everybody in some way uses something associated with, and if it is set too low it means someone pays less than they have to and if it is too high, someone is paying more than they have to. So depending on how it is set and who is paying what, all kinds of folks can really be given a raw deal on this. The fact is there’s all kinds of folks upset.
An example: The city of Baltimore is suing the banks involved in setting LIBOR including JP Morgan Chase, BOA, Barclays, Citibank and Deutsche Bank. There just one city. All manner of folks here. This has been referred to as potentially the crime of the century. It’s so complicated that most people don’t understand it, but let’s look at the scale.
Quoting from USA Today states that LIBOR is the most widely used interest rate in the world. Estimates of how much is tied to LIBOR vary from 350 Trillion dollars to 800 Trillion dollars. To put that in perspective, 350 Trillion would pay for all U.S. government spending for 96 years. So it’s big. It covers absolutely everything. What the scandal is about is them saying that they have found that these rates have been artificially set or people were giving out wrong rates.
What is very interesting is this has been going on for a while and for quite a few years now there have been investigations . Some time ago one of the big banks that was involved decided to become the whistle blower so they could negotiate a slightly better term for themselves should it come down to penalties and other things. What’s interesting is the spin that everyone puts on it.
Historian: The following is from Reuters out of the UK, Zurich. U.S prosecutors and regulators are close to arresting individual traders and charging them with colluding to manipulate global market benchmark interest rates. That’s what this is all about. I saw on the news channel last night that they had identified them across nine banks so far and they had identified a lead trader in one of the banks (UBS), but they aren’t sure that this is all to it. They are actually looking at 26 banks which are incidentally major trading partners of the Federal Trade System. So this is not banks all over.
Historian: This is a specific network of banks that tend to do business a lot together and have seemed to form a network to carry out things like this. What you are seeing is a bunch of people saying that this goes way beyond a bunch of traders and of course all the banks are saying no, no, no. It’s just the traders, rogue traders who did this.
We have seen this before where they blame it on a rogue trader.
Reuters UK article about Timothy Geithner. Geithner has been saying “oh no, we didn’t know” and then he finally came out and corrected himself. This article is the third amendment of the original article. In it Geithner says they he became aware of the problem in 2008. However, documents released by the Fed show that as early as 2007 Barclays told the Fed about this. So why would Geithner not know ?
Of course he would know. You look down thru it and there are a number of regulators and governments starting to look at this. Lawmakers are not buying this noting that the Fed continued to use LIBOR as a benchmark in its’ emergency lending programs including the controversial bailout of AIG.
Federal chairman Ben Bernanke says “The process for setting the rate was structurally flawed and he says the reforms were in the hands of, and here’s the spin, private UK banking group responsible for LIBOR”. However, this private UK banking group at LIBOR is used by absolutely everyone in the world for such a massive amount of financial transactions that it is not something that any government can sit there and say oops, the private sector is doing this. We’re not involved. That’s a quick summary of what’s out there in the news right now.
Historian: What do I think this has to do with the RV or anything else associated with the RV ? In this particular case I am looking at this from the perspective of saying what does it have to do with a possible changeover in the banking systems because this is just another one, and in fact not just anyone, a huge issue again demonstrating that the existing banking system and the entire financial system and all those back room type of rules and processes that they use is so corrupt and is so incapable of being the kind of reliable, stable, secure banking that you need That they going to have to shift from one system to the other regardless.
They are going to have to get out of this and go on to something else. I also look at something a little deeper than that. I am looking at strategy and tactics here. I am seeing week after week one scandal after another and they just get bigger. LIBOR is global on a huge scale. They have been doing this for a long time.
It used to be that people just made some snide comments. Now when I look at these articles and read down in the blogs I see. Absolute utter disgust. People who don’t really understand financial systems and banking are so disgusted and so fed up that they just want the whole thing to just go. They are at the point where they say I don’t care how much trouble it takes, get rid of these guys and get rid of the whole system and give us something from scratch that works the way it should.
And those opinions are people exercising their democratic right. Their opinion is essentially them saying go, go, go. Get rid of these guys and we don’t care how much trouble there will be when you switch this over. Anything is better than this. And I believe that is the strategy of the folks driving this. They are actually taking us thru the change process.
We would be psychologically and emotionally ready for the change from the old to the new. That’s a little bit deep, but that’s the kind of stuff I watch for. What does this tell me as I see the pattern repeat over and over week to week to week. That makes me feel fantastic about where we are. It’s getting extremely serious at this stage and there’s just no way this will not be removed.
I think the change of the financial system from the old to the new is absolutely critical and we cannot have an RV without them doing that because they are not going to put all that new wealth out into this old system that is so full of corruption and complex processes in there that are doing things they are not supposed to do that nobody can even keep a handle on. That would be a disaster. The financial system has to switch , in my view, and then we will see the RV and both of them likely at the same time. It’s a brilliant transition.