muses of the moment

August 4, 2012

AutoEarth on LIBOR

Filed under: The Banking Crisis, The Federal Reserve, The Financial Crisis, US Government Debt — totallygroovygirlfriday @ 5:06 pm

Autoearth has an excellent update/report on LIBOR and its effects. Click here.

LIBOR requires no real data, no real rates at which banks lend and borrow. It merely asks banks to state every working day at 11.00 am GMT at what rate they thinkthey can borrow. Ergo: anything goes. This was done on purpose. LIBOR was built to be rigged. And here’s what is was built for:

1986 was the time when the derivatives industry was starting to take off for real. An interest rate was needed to “guide” them. But not one that would be neutral or impartial, not if the bankers had any say in the matter. They had all the say they wanted and needed. Still, as I said, I don’t think it was a conspiracy in the sense that in 1986 anybody knew exactly how big it was all going to get (not that it matters; it’s about intent).

Derivatives “languished” for a while around the 1x global GDP level. Then they came into their own and rose to ten times that or more. The industry began to clue in on the virtually limitless possibilities.

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Do you trust who is standing between you and your money?

Ladies and Gentlemen, we have had several very clear warnings about the fragility of the investment markets from the freezing of money market fund withdrawals in 2008-2009 to MF Global, PFG, Penson and now, Knight Capital. I don’t know how it can be any clearer.

Your investments are at risk if they are not in your hand.

Here is Jim Sinclair’s thoughts on how to get your investments out of 3rd party hands. Groovygirl understands your conflict. You must invest/trade to make income. But there is a new risk here that you will lose everything and then never have an opportunity for any more income. Capital that is lost, missing, or tied up in courts for years can not make you any income. So, if you will not modify 100% of your investments out of 3rd party hands, then do 10%….do 30%. Do something.

Until the next breakdown, then you can do another 30% ­čÖé

This is what gg has been talking about for the last 4 years. It is not a downturn, it is collapse of the WHOLE SYSTEM. It is a paradigm shift on EVERY LEVEL.

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