Holy fuck, way to break the page.
Can someone who knows about this stuff explain how these artificially suppressed interest rates affect the other side of the municipal equation -- municipal borrowing? I'm not being snarky, I'm asking a serious question. Seattle, for instance, has issued a gazillion dollars worth of bonds over the past decade-plus for stadiums, parking garages, and a million other things. How does the LIBOR affect the rate of those, and the marketability?
I don't know anything about this either, but just found this article:…
@2 jacks it up quite a bit.

One of the problems is that ginning LIBOR was done both ways - on the upside and on the downside - depending on which side they were betting on.
And Marxism never works like Marxism is supposed to work, either. Oh, shit. I sound as vapid as Mudede now.
Large private banks conduct legalized racketeering. The term, "financial genius" is an oxymoron. Any idiot, with no laws to encumber them, and a public system to use as a giant cushion for their dumb asses, can use the system to steal more money.

It's not as if what they're doing is that complicated, either. It's almost universally the same things they've done in the past with a small twist on them so that they pass regulations.

Every banker needs to be kicked in the nuts, just before they're shot in the head.
Also, note the same impacts on oil and gas, as speculators drive the markets.

There's a reason why we capped speculation at 30 percent of market orders for 70 years.
@7 nice spam. Did you know that LIBOR jacked up housing prices in the US?
Thank you for the infographic, Mudede. Much appreciated.
LIBOR wasn't what jacked up the housing prices in the US. That was the "financialization" of the market - splicing these home securities into parts and packaging them as commodities.

The system feeds on itself and it can only survive with exponential increases in the value of the commodities.

LIBOR was one tool among many which was used to accomplished this goal, but it is not the root cause of the problem.
Ironically enough, you have Bill Clinton to blame for that.
Yes, I should have elaborated, "someone who is not Will in Seattle", please. Preferably someone who, unlike Will, had heard the term "LIBOR" prior to this month. I remember it from all those boring bank stories in the Economist back when I used to subscribe; I knew what it stood for but not how it played out across the financial system. Will, on the other hand, is the kind of financial genius who has to empty his pockets on the counter and have the store clerk count out his cash when he pays for things.
Shittiest info-graphic ever. I did learn that the Libor is the result of numbers generated by many banks. It did not explain to me what is going wrong.

I would not be surprised if a wikipedia search could teach me more in about the same amount of time it took to look this over. Matt Taibbi writes an enjoyable read, but he's mostly flash and pomp.
Planet Money has been talking about LIBOR for a while now and they had some terrific pieces on it recently.

One thing they point out is that it's really hard to figure out the effect of Barclays manipulating the rate since LIBOR is averaged using 18 different London banks with the top 4 and bottom 4 thrown out. So one bank shouldn't make a difference. But there is some evidence of collusion between banks, and even if they didn't collude they might have all been doing it out of self interest.
But we don't know yet so it's possible there was actually no effect from this. (But probably there was.)

Anyway, after the financial crisis hit none of the banks wanted to admit they were unsafe so they gave artificially low LIBOR scores. A low score means they can borrow money cheaply because they are sooooo trustworthy.
Banks like to appear completely safe especially when they aren't, so they all said "we're 100% fine" and reported low scores.

But all sorts of loan contracts reference LIBOR. A house or credit card loan might be set at "LIBOR plus some percent" so when it's a teeny bit lower it might be good for individuals.

But if things like cities or pension funds bought bonds that were based on a lower LIBOR then those bonds are paying out less, so the city or fund is out some money.

I have no idea how it affects the stadium bonds. Thinking it through as a layman: the stadiums were selling bonds to raise money, so if they were based on LIBOR they could have been paying out slightly higher or lower interest than they should have been. But if they sold all the bonds then they got their money anyway so they wouldn't be hurt much, unless a slightly lower rate means fewer people bought them. But if the rate was higher than it should have been then they'd be paying out higher interest than they should which is bad for them, unless this is what enticed people to buy the bonds in the first place.

I'm not an expert in any way, everything I know about this is from Planet Money (which I -heart-). Here are some blog posts on it and a really good podcast episode (as if this wasn't long enough already):

This blog post talks about who the victims were -- scroll to the end if you like.…

This is a short version of the LIBOR scandal, which I mostly summarized already but this has an audio version plus transcript:…

And this is the full 20 minute podcast that talks about it in a really approachable and fascinating way:…

municipal bonds are based on the market rate of municipal bonds.

Can libor affect that rate? sure, but there are other things which affect it more, not the least of which is the stock market.

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