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John Dolva

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Barclays fined for attempts to manipulate key bank rates


Chief executive Bob Diamond will give up his bonus for this year - last year it was £2.7m

Barclays bank will pay penalties of £290m ($450m) for trying to rig the key interest rates at which banks lend money to each other.

The penalty from UK and US authorities followed "serious and widespread" misconduct, the Financial Services Authority said.

These interbank rates influence the costs of loans and mortgages.

Barclays chief executive Bob Diamond and three other executives have given up this year's bonus as a result.

Barclays admitted the actions of its staff, which lasted from 2005 to 2009, "fell well short of standards".

The misconduct relates to the daily setting of the London Interbank Offered Rate (Libor) and the Euro Interbank Offered Rate (Euribor).

Continue reading the main story

_53409471_peston-112x81.jpg Analysis Robert Peston Business editor

Barclays has admitted that a group of traders lied about what it was costing the bank to borrow.

Now, why does this matter?

It matters because lots and lots of deals involving clients of Barclays used the interest rate into which Barclays was feeding this information, about its own borrowing costs, to determine the profit and loss on their own deals.

It's quite hard to think of behaviour by a bank as shocking as this: not telling the truth about what it is costing you to borrow, that then becomes a benchmark for pricing other deals.

The statement from the US regulator, which levied a big chunk of the fine, talks about how Barclays was working with other banks to try to fix this interest rate.

This of course implies that Barclays is simply the first bank to settle and we will see fines and punishments against some of the other big banks of the world.

These are two of the most important interest rates in the global financial markets and directly influence the value of trillions of dollars of financial deals between banks and other institutions.

The FSA said: "The integrity of benchmark reference rates such as Libor and Euribor is of fundamental importance to both UK and international financial markets."

"Firms making submissions must not use those submissions as tools to promote their own interests," the regulator added.

'Wholly unacceptable'

Each day the British Bankers' Association and the European Banking Association publish the the Libor and Euribor rates by taking an average of the estimated rates submitted to them by leading banks.

Between 2005 and 2008, the Barclays staff who submitted estimates of their own interbank lending rates were frequently lobbied by its derivatives traders to put in figures which would benefit their trading positions, in order to produce a profit for the bank.

And between 2007 and 2009, during the height of the banking crisis, the staff put in artificially low figures, to avoid the suspicion that Barclays was under financial stress and thus having to borrow at noticeably higher rates than its competitors.

"Making submissions to try to benefit trading positions is wholly unacceptable," the FSA said.

"Barclays' behaviour threatened the integrity of the rates with the risk of serious harm to other market participants," it added.

One of the US authorities involved, the US Commodity Futures Trading Commission (CFTC) described the importance of the Libor rates.

"People taking out small business loans, student loans and mortgages, as well as big companies involved in complex transactions, all rely on the honesty of benchmark rates like Libor for the cost of their borrowings."

'Utmost regret'

Barclays said it had reached settlements with the FSA, the United States Department of Justice Fraud Section (DOJ), the CFTC and the other panel members to the bodies that set various interbank rates.

The resolution is part of an industry-wide investigation into the setting of interbank offered rates across a range of currencies between 2005 and 2009.

Chief executive Bob Diamond, who last year got a bonus of £2.7m, said activities "fell well short of the standards to which Barclays aspires in the conduct of its business".

"I am sorry that some people acted in a manner not consistent with our culture and values. To reflect our collective responsibility as leaders, Chris Lucas, Jerry del Missier, Rich Ricci and I have voluntarily agreed with the Board to forgo any consideration for an annual bonus this year," Mr Diamond added.

Barclays chairman, Marcus Agius, said: "The Board takes the issues underlying today's announcement extremely seriously and views them with the utmost regret."


After Barclays, other banks are in our sights over interest rates, warns FSA

• Barclays fine 'must act as warning to entire industry'

• Watchdog continues with international investigation


The FSA's headquarters. Photograph: Sean Potter/Alamy

After imposing a record fine on Barclays, the regulator's investigations are continuing.

The Financial Services Authority has warned the banking industry that the record-breaking £59.5m fine levied on Barclays for attempting to manipulate interest rates might not be the last as an international investigation into the activities of other banks is being continued.

Tracey McDermott, acting director of enforcement and financial crime at the City regulator, said that a "number of other significant cross-border investigations in this area" were under way involving other banks. "The action against Barclays should leave firms in no doubt about the serious consequences of this type of failure," she said.

The bailed-out banks Lloyds Banking Group and Royal Bank of Scotland are among those co-operating with the authorities.

The total fines levied against Barclays reach £290m when penalties to settle actions with the US department of justice and Commodity Futures Trading Commission (CFTC) are included. They follow an investigation of the activities of its traders in London, New York and Tokyo.

Bob Diamond, the chief executive of Barclays, insisted that the events "fell well short of the standards to which Barclays aspires in the conduct of its business".

"When we identified those issues, we took prompt action to fix them and co-operated extensively and proactively with the authorities," Diamond said in a statement. He and the chairman Marcus Agius spoke to shareholders to try to reassure them about the impact of the affair, which could have resulted in an £85m fine from the FSA if the bank had failed to co-operate.

One investor said: "The company needs to urgently convince shareholders that this is not symptomatic of wider ethical business failures." Barclays refuses to disclose how many employees were caught up in the affair and how many have left or face disciplinary action, although it is known that some employees connected to the affair have left.

The account of the long-running saga provided by the CFTC showed that Barclays attempted to manipulate, and made false reports concerning, two global benchmark interest rates "on numerous occasions and sometimes on a daily basis over a four-year period, starting as early as 2005".

The benchmarks referred to are the London interbank offered rate (Libor) and the Euro interbank offered rate (Euribor). They are used by the financial industry to set the rates of interest that households and major companies pay to borrow.

Banks are asked which rate they think they will be able to borrow from each other for periods of time ranging from overnight to 12 months in currencies including sterling, US dollars, euros, yen and Swiss francs. The rates are then submitted to the British Bankers' Association which publishes the "fix" each day.

The actions against Barclays show how crucial the rate became during the financial crisis when the management of the bank was worried about the negative publicity surrounding the higher rates it was submitting compared with its rivals.

In October 2008, in the days before other banks were bailed out, a "submitter" – one of the Barclays traders responsible for submitting rates – remarked that "manager E asked me to put it lower than it was yesterday … to send the message that we're not in the xxxx".

The FSA admits that a miscommunication may have occurred after a conversation between Barclays management and the Bank of England. "No instruction was given to Barclays to lower its Libor submission during this telephone conversation. However, as the substance of the telephone conversation as relayed down the chain of command at Barclays, a misunderstanding or miscommunication occurred. This meant that Barclays submitters believed mistakenly that they were operating under an instruction from the Bank of England to reduce Barclays' Libor submissions."

The other part of the offence relates to the breakdown in systems controls at Barclays that allowed interest rate traders to work with "submitters" to make the rates suit the traders' and the bank's purposes. It was not until 20 May 2009 that requests to submitters were rebuffed by an email that said: "Sorry I can't do that – compliance would have a real issue with that."

The impact went far beyond London. David Meister, the CFTC's director of enforcement, said: "The American public and our markets rely upon the integrity of benchmark interest rates such as Libor and Euribor because they form the basis for hundreds of trillions of dollars of transactions."

Chris Leslie, the shadow Treasury minister, said that the regulation of Libor arrangements now needed to be reviewed. "We need to know what the government plans to do to prevent traders manipulating the independent interest rates between the banks for their own advantage." said Leslie.

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The Barclays scandal is not 'wholly inappropriate'. It's a crime

If the authorities were consistent, they would punish the banks just as severely as they reacted to last year's rioters


Two men pass a closed Barclays Bank branch in the City of London.

But 'make no mistake, it is banks plural … not just Barclays' who are involved.

Photograph: Chris Helgren/Reuters

Even if he hasn't yet debased the coinage, Bob Diamond has certainly done his bit to debase further the language of British public life. Confronted with a clear ruling that Barclays traders had lied and cheated in seeking to rig a key interest rate used to determine everything from mortgages to credit card bills, Diamond put his hands up and conceded that the traders' action had been "wholly inappropriate".

Inappropriate? Inappropriate is wearing a tie to a barbecue. Wholly inappropriate is burping during the wedding vows. Distorting for personal gain a rate that underpins contracts worth $350 trillion worldwide is rather more than "inappropriate".


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  • 1 month later...

baltic shipping index


Daily Market: This page contains the latest Dry Bulk Shipping News

22 August 2012

Baltic Dry Index (BDI) +3 712



(Cape index)


(Panamax index)


(Supramax index) INDEX






No change














13281 14412

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''Hindenburg Omen'' ?


Dow Industrial v Dow Transport



The Basics On Fibonacci Ratios

& Elliott Wave Theory


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''Fed minutes point to a bankrupt economic order

28 August 2012

Much of the attention of the financial markets and media since the minutes of the July 31-August 1 meeting of the US Federal Reserve Board’s Federal Open Market Committee (FOMC) were released last week has focused on when and how the Fed will carry out the next stage of quantitative easing—the process through which the central banks pumps hundreds of billions of dollars into the money markets.

However, such is the myopia of the media as they direct their attention to the short-term fluctuations of the financial markets that the real significance and implications of the Fed’s deliberations are passed over in silence. ...''

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Indicators are coming together that indicate an imminent meltdown.


This is for the 99%.

Concentrate on ensuring security of essentials for nutrition* and health*. Minimise outgoings to be best positioned for access to essentials. No longer 'what you want' but 'what you and your family need'. It's best to do it in advance so as not to be caught up in a scramble.

This means disconnect from consumerism.

For a poor person the best way to gain resources is to not spend, except in a very targeted way. As indicated before, doing this in a collective format is the best way to ensure group benefit.

*These are primary in order to take clear minded positive directions.

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  • 2 months later...

an aside : the fibonacci approach which is if nothing else amusing


Chewing Gum!


Though relatively new it does indeed follow the economy. I see it as symptomatic and would be more interested to understand how an industry can massively gear up production in todays economy without the necessity of preparation. iow Understand the market.

I don't know. I can think of other scenarios. But still, whatever, current events seem to bear out the premise that was the impetus for this thread. (it started with the question of what is money which inevitably led to a look at the economy) More now I'm interested in extrapolating forward.

edit typos

Edited by John Dolva
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fiat [ˈfaɪət -æt]n1. official sanction; authoritative permission2. an arbitrary order or decree3. Chiefly literary any command, decision, or act of will that brings something about[from Latin, literally: let it be done, from fierī to become]

fiat moneyn. Legal tender, especially paper currency, authorized by a government but not based on or convertible into gold or silver



What Does Fiat Money Mean?

Currency that a government has declared to be legal tender, despite the fact that it has no intrinsic value and is not backed by reserves. Historically, most currencies were based on physical commodities such as gold or silver, but fiat money is based solely on faith.

Investopedia explains Fiat Money

Most of the world's paper money is fiat money. Because fiat money is not linked to physical reserves, it risks becoming worthless due to hyperinflation. If people lose faith in a nation's paper currency, the money will no longer hold any value.



26 November 2011 Last updated at 00:32 GMT

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Chavez repatriates Venezuela's foreign gold reserves


The gold was escorted through Caracas by troops and armoured vehicles Continue reading the main story

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Venezuela has received its first shipment of gold bars, after President Hugo Chavez ordered the repatriation of 85% of the country's bullion reserves.

The gold was unloaded from a plane and taken under heavy guard to the Central Bank in the capital, Caracas.

President Chavez has explained the move as an act of sovereignty that will protect Venezuela's reserves from global economic turbulence.

However critics say it is expensive and unnecessary.

Venezuela plans to bring home around 160 tonnes of gold, worth more than $11bn (£7bn).

"The gold is returning to where it was always meant to be: the vaults of the Central Bank of Venezuela," Mr Chavez said.

Hundreds of troops lined the route to Caracas as a convoy of armoured security trucks escorted by military vehicles carried the bullion to the bank.

'Historic act' Officials said the gold had come from European countries but did not say how much was in the first shipment, citing security concerns.

Central Bank chief Nelson Merentes said the return of the gold to Venezuela was a "historic act".

"It has historic value, it has symbolic value, and it has financial value," he said.

"The country's finances will be backed by autonomous wealth, so we are not subject to pressure from anyone."

Opposition groups have criticised the move as a populist measure aimed at boosting Mr Chavez's popularity ahead of next October's presidential elections, when he is seeking another term in office.

Some critics have suggested that Mr Chavez is acting out of fears Venezuela's overseas assets could one day be frozen by sanctions, as happened to his friend and ally, the late Libyan leader Col Muammar Gaddafi.

Most of Venezuela's foreign gold reserves are held in London.

''Chavez repatriates Venezuela's foreign gold reserves''

And Germany is now doing the same, (reported in Handelsblatt).

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  • 1 year later...

A couple of developing perspectives. Many commentators are now seriouslylooking for answers. Fundamentaly the socialist perspective is that the crisis is an inevitable progression of capitalism to severe crisis where decisions are made with no regard for people (as debt slaves (slaves to fiat currency which is slave to a faith). The 'new' opiate'?


Modern slaves

1 Economic coercion slaves for continuous operation. Modern slave forced to work without stopping to death, because Funds earned a slave for 1 month, enough to pay for accommodation for 1 month, food for 1 month and drive for 1 month. Since there is enough money in the modern slave is always only 1 month, the modern slave forced to work all his life before his death. The pension is also a great fiction, because Slave pensioner pays all pension for housing and food, and a slave-pensioner is left free money.

2 The second mechanism hidden coercion of slaves to work is the creation of an artificial demand for psevdonuzhnye goods, which are imposed by a servant, tv advertising, public relations, the location of the goods at certain store locations. Modern office involved in the endless race for the "what's new", and this has to work constantly.

3 Third hidden mechanism of economic coercion modern slaves is a credit system, with the "help" that modern slaves more and more drawn into the credit bondage, through the mechanism of "lending rate".

Every day the modern office must be more and more, as Modern office in order to pay off the loan interest rate, taking a new loan without giving the old, creating a pyramid of debt. Debt, constantly hanging over the modern slave, well stimulates modern slave to work even for little pay.

4 The fourth mechanism to make modern-day slaves to work on the hidden slaveholder is the myth of the state. Modern office believes that working for the state, but in fact a slave working on pseudo-state, as Money into the pockets of slave slave owners, and the notion of the state is used to obscure the brains of slaves, slaves were not to ask too many questions like why the slaves work all my life and always remain poor? And why slaves did not have the share of the profits? And who specifically lists the money paid slaves in the form of taxes?

5 Fifth mechanism hidden coercion of slaves is the mechanism of inflation or periodically arranged artificially defaults, which do not allow citizens to develop economically, ruined again starting the business from scratch .. The rise in prices in the absence of wage growth slave provides unobtrusive hidden robbery slaves. Thus, modern office impoverished more and more.

6 Sixth hidden mechanism to force the slave to work for free to deprive a slave of funds for relocation and purchase of real estate in another city or another country. This mechanism forces the modern slaves to work on one city-forming enterprise and "tolerate" onerous conditions, as Other conditions of the servants, and there is simply no escape slaves were not on that and nowhere.

7 The seventh mechanism, forcing the slave to work for free, is hiding information about the real value of slave labor, the real value of the goods that produced slave. And the share of wage slave, which takes slaveholder through the mechanism of accounting accruals, using the ignorance of slaves and the lack of control over slaves surplus value, which takes a slaveholder himself.

8 To modern slaves demanded their share of the profits, not required to pay earned by their fathers, grandfathers, great-grandfathers, great-grandfathers, etc. Concealment of facts is plundering the pockets of the slave-owners of resources that have been created by numerous generations of slaves for thousands of years of history.

Do you still think that you are free?

Central News Agency Novorossia


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