Basically the Entire Credit system is total Bullshit

larsv8 · Aug 15, 2017

Meanwhile, behind the curtain:

http://www.rollingstone.com/politics/news/taibbi-is-libor-crucial-financial-benchmark-a-lie-w497305

A 2009 study by the Cleveland Fed found that 60 percent of all mortgages in the U.S. were based on LIBOR. Buried somewhere in your home, you probably have a piece of paper that outlines the terms of your credit card, student loan, or auto loan, and if you peek in the fine print, you have a good chance of seeing that the rate you pay every month is based on LIBOR.

Years ago, we found out that the world's biggest banks were manipulating LIBOR. That sucked.

Now, the news is worse: LIBOR is made up.
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As a few Wall Street analysts have quietly noted in the weeks since those comments, an "absence of underlying markets" is a fancy way of saying that LIBOR has not been based on real trading activity, which is a fancy way of saying that LIBOR is bullshit.
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Think about this. Millions of people have been taking out mortgages and credit cards and auto loans, and countless towns and municipalities have all been buying swaps and other derivatives, all based on a promise buried in the fine print that the rate they will pay is based on reality.

Since we now know those rates are not based on reality – there isn't a funding market – that means hundreds of trillions of dollars of transactions have been based upon a fraud. Some canny law firm somewhere is going to figure this out, sooner rather than later, and devise the world's largest and most lucrative class-action lawsuit: Earth v. Banks.
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With Donald Trump in office, most other things are not worth worrying about. But global finance being a twenty-year psychedelic delusion is probably worth pondering for a few minutes. Man, do we live in crazy times.
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pirc1 · Aug 15, 2017

The system is rigged, but that does not mean the entire credit system is garbage, it serves a very useful purpose in the society.

Astrodome · Aug 15, 2017

Good article. And LOL at that shot at Trump at the end.

dobro1229 · Aug 15, 2017

So let me ask a very dumb question. If the rates we pay are based on BS phony guessed rates based on speculation, BUT we are willing to pay it, doesn't the market we are creating with the willingness to buy or not buy at those perceived rates create a market on its own?

dmoneybangbang · Aug 15, 2017

pirc1 said: ↑

The system is rigged, but that does not mean the entire credit system is garbage, it serves a very useful purpose in the society.
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This.

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Basically the Entire Credit system is total Bullshit

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