Conspiracy theorists of the world, believers in the hidden
hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you
an apology. You were right. The players are a little different, but your basic
premise is correct: The world is a rigged game. We found this out in recent
months, when a series of related corruption stories spilled out of the
financial sector, suggesting the world's largest banks may be fixing the prices
of, well, just about everything.
You may have heard of the Libor scandal, in which at least
three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks
have been manipulating global interest rates, in the process messing around
with the prices of upward of $500 trillion (that's trillion, with a
"t") worth of financial instruments.
That was bad enough, but now Libor may have a twin brother.
Word has leaked out that the London-based firm ICAP, the
world's largest broker of interest-rate swaps, is being investigated by
American authorities for behavior that sounds eerily reminiscent of the Libor
mess. Regulators are looking into whether or not a small group of brokers at
ICAP may have worked with up to 15 of the world's largest banks to manipulate
ISDAfix, a benchmark number used around the world to calculate the prices of
interest-rate swaps. Interest-rate swaps are a tool used by big cities, major
corporations and sovereign governments to manage their debt, and the scale of
their use is almost unimaginably massive. It's about a $379 trillion market,
meaning that any manipulation would affect a pile of assets about 100 times the
size of the United States
federal budget…..
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