Paul Jorion's Blog

Tag: LIBOR

  • LE POINT*, Understanding Liborgate – Friday, July 20th, 2012

    Understanding Liborgate?

    Paul Jorion worked from 1998 to 2007 in the American banking sphere as a pricing specialist. Here he sets out his vision of ‘Liborgate’ which is currently shaking British banks.

    Le Point.fr : What is the LIBOR rate and what is it used for?

    Paul Jorion : It’s the rate at which the banks lend to each other. Each establishment declares the rates its competitors charge it in order to lend for three months, six months, a year. Other loan rates are then defined in relation to this rate (consumption, housing), particularly variable rates.

    How did the … Read the rest

  • LIBÉRATION, “Plundering and looting must be punished”

    Plundering and looting must be punished?

    For the economist and anthropologist Paul Jorion, the financial system needs regulating.

    The LIBOR scandal took place in 2008 against a backdrop of almost total indifference. This time there has been a huge outcry. Why?

    It is a situation specific to Great-Britain. It is in this country that a context has appeared which has given the public the impression of being able to identify the real causes of the crisis. And suddenly, at the time when it was made known that a British bank, Barclays, had cheated and that it was going to … Read the rest

  • ATLANTICO.fr, The LIBOR scandal : are bankers totally untrustworthy?

    The LIBOR scandal : are bankers totally untrustworthy??

    Translated from the French by Tim Gupwell

    Can a banker be trusted? This is indeed the question one is obliged to ask in the light of the “LIBOR affair” which broke in April 2008 and saw a dramatic turn of events four years later, on the 27th June, when the British bank Barclays was publicly condemned to pay an exceptionally large fine, equivalent to 365 million Euros, for having manipulated the family of rates known as LIBOR, determined daily at the time by Barclays plus 15 other banks, and today … Read the rest

  • LE MONDE-ÉCONOMIE, The LIBOR affair…… a scandal postponed from 2008, Monday 16 – Tuesday 17 July 2012

    My most recent column in the French daily paper Le Monde : Le scandale du Libor, c’était en 2008. Translated from the French by Tim Gupwell.

    When the LIBOR affair first broke in April 2008, the press comments were laconic to say the least. Last month, when the fire that had been smouldering flared up again with the conviction of Barclays for having manipulated the rates that govern the loans (in dollars) that banks contract amongst themselves, we saw media fireworks. At the time Barclays was one of the 16 banks (which number 18 today) responsible for submitting the … Read the rest

  • THE FOUR YEARS NEEDED TO CREATE A SCANDAL

    Translated from the French by Tim Gupwell

    Over recent years you may have seen me carrying out extremely complex complications such as this: “it needed four years – between 1929 and 1933 – before any genuine measures were taken at the time of the Great Depression!” And it was this kind of calculation which led to my disenchanted musings– since nothing was being done – when I wondered on the 28th June whether I should put an end to the blog.

    And then, and in fact it was on this very same day, the second episode of the LIBOR … Read the rest

  • LIBOR: WE AIN’T SEEN NOTHING YET

    Translated from the French by Tim Gupwell

    From the Financial Services Authority’s Final Notice of their decision, dated the 27th June, to impose an 85 million Pound fine on Barclays Bank (less a reduction of 30% for exemplary co-operation with the enquiry) due to their manipulation of the LIBOR interbank rates, two separate periods need to be distinguished. In the first period, which loosely spans the period from 2005 to 2007, rates were manipulated on trading floors by operators at a subordinate level; in the second period, which runs from 2007 to 2009 and which corresponds to the height … Read the rest

  • LIBOR: DELAYED INDIGNATION

    Translated from the French by Tim Gupwell

    The paradox of the 2008 ‘LIBOR scandal’ – in addition to its familiar ring in 2012 – is that, as I alluded to at the time and as I recalled a few days ago, the fraud was well-intentioned for once: the ‘philia’ of Aristotle, the good will exercised by everyone so that a common activity can be pursued – in this case the very existence of the financial system.

    Yesterday’s ‘surprise’ was that Paul Tucker, Vice-Governor of the Bank of England, was said to have advised Bob Diamond, who resigned yesterday from … Read the rest

  • THE MANIPULATION OF THE LIBOR

    Translated from the French by Tim Gupwell

    In my Friday morning video (in French), I said that when a pirate (Rupert Murdoch) does business with a ship wrecker (the City of London), it tends to weaken the entire system, and I went on to add that this is particularly the case when the population, which is observing all this from afar, starts to exhibit a certain degree of indignation.

    The LIBOR affair has been widely discussed for several days now, due to the 290 million pound fine imposed on the British bank Barclays. My reaction hitherto has been limited to … Read the rest