Looking for the Real Bank Robbers

The financial world has its knickers in a twist right now over the fact that Barclays Bank in Britain (and perhaps/probably up to 20 others others, including former golden bank J.P. Morgan) attempted to manipulate the LIBOR (London Inter-Bank Offered Rate) market, which is the hinge rate affecting something like $800 trillion-worth of financial instruments.  (Can that number–$800 trillion—possibly be right?  It is the figure The Economist cites.)  Gee—bankers trying to affect a market to get larger spreads and, therefore, larger profits: who could have ever imagined it?  The Wall Street Journal reports this morning that at least nine government regulatory agencies in six different nations are on the case.  Bankers can expect a complete colonoscopy before this is over.  Too big to flail?   (Our mordant pals at ZeroHedge celebrate the laughable fact that Barclays just won a “Bank of the Year Award” from the financial magazine Euromoney, which is a bit like Bernie Madoff winning a charity award the day before he copped to his swindle.)
Without excusing big banks trying to manipulate a market unfairly or illegally, I wonder if we’re looking at the right parties in the interest rate manipulation game, and whether the consequences of a story running right alongside this bank “scandal” isn’t a whole lot more significant.  Yesterday the central banks of China, the Eurozone, and the U.K. all cut interest rates close to zero (mimicking our Federal Reserve) supposedly so as to spur economic growth.  As the Journal explains this morning, “Central bankers hope cheaper credit will induce businesses and households to borrow, spend and invest to boost growth. Lower rates could also reduce the burden of past loans on borrowers.”

Read more: http://www.powerlineblog.com/archives/2012/07/looking-for-the-real-bank-robbers.php