Is LIBOR a big lie? Well, it very much exemplifies the problems with finance. Why can't economics and finance be more scientific? It can be, but this will take more than the exploitation of advancements in mathematics and insight for the few (near-zero is real).
In the case of LIBOR, we're not far from the issue of 'mark to myth' (which Congress was told to favor by its financiers). Remember how stringent 'mark to market' seemed to be? Oh, you forgot? Well, the issue was not resolved in the appropriate way.
We'll keep going on about that, perhaps even using mathematical frameworks to lay out the argument. When? Again, hopefully, other than PTIME.
The motivations for continuing can be many. What idiocy is uncovered (ah, how can it be stupid, if it puts money into the pockets of the few?) every day? Why can't we find the proper insight to pull in those with power (who think that money defines truth - and smarts) before they crap on us? Surely, if we're to be mature, we'll have leaders who are capable of more than messing their diapers (requiring our cleaning up after them).
Let's look at a couple, namely the posts of note the past week or so.
- 201k, 401k, 801k, ... -- October, 2009, in jest, in part. But, note the progression upward toward 25601k. Can you not see that the current model ends with way less than one percent with the moolah whilst the rest (a large majority of them) are no more than slaves? And, this is supposedly the country, and economy, that epitomizes the best of humanity? BTW, no sarcasm, or cynicism, exists in the bones of the blogger. Rather, looking at the scope of things from the 'ideal' (which is available to all) shows failings everywhere (almost dense -- yes, humans are better than this).
- Big chimera -- November, 2009, which was not in jest. One might ask how this can be so. We're about three years beyond, and the markets are up. For instance, the DOW, on Friday, went up 200 points after it had fallen for six days or so. Well, these things can be explained several ways which we'll get to. Remember, though, Ben pushing out of money, and his continuing efforts to cause markets to rise, are a big factor. Yet, the longer-term consequences are still there. This is a bubble (pure and simple) that will be pricked at some point (toxics are still there, ...).
So much as happened the past month or so that it'll take some time to digest it all. I've been on a break, so to speak. The tone will change to one more academic and technical (how this transition will occur hasn't quite been worked out, as of yet).
It's probably comical that finance might think that LIBOR is a case of peer review (ah so!). If only. You know that it's more a continuation of self-audit (bankers are all angels).
12/06/2013 -- We all know how this panned out (with even more fudging coming to fore - the "f" in finance is for fudging?). If only Ben would put a shot across the bow. He's helped the chimera unfold in unhealthy ways. He could, at least, say a mea culpa.
12/13/2012 -- Don't know how long this page will be there, Daily Ticker. But, when I looked, 69% had said 'no' (hurt rather than helped) as to whether Ben has helped.
07/30/2012 -- Timmy knew. Ben says he's powerless. They admit that it's close to fraud.
07/21/2012 -- This week, the USA Today, had a nice little article on LIBOR. Some are looking for a better alternative. Earlier, I had meant to point to comments about why potential fraud seems to be the consequence of the way that things are set up. As in, what is maximized is the ability to pirate. Why is this?