Europe is falling apart---close to bringing the whole world down.

Cohete Rojo · Jun 28, 2012

Whoops wrong thread. What a day. Anyway, to contribute something, Northside, the real fun begins Sunday.

Mathloom · Jul 2, 2012

I just wish more people understood exactly what happened.

Here is link to the report issued by the UK Financial Services Authority:

http://www.guardian.co.uk/business/interactive/2012/jun/27/barclays-fsa-findings-libor?intcmp=239

Also, here is a brief description of LIBOR:

LIBOR stands for London interbank offered rate. Banks in London, similar to the United States, can exchange money between banks. LIBOR is the rate at which banks borrow funds from other banks in the London interbank market.

LIBOR Calculation
LIBOR is an average of actual rates used by banks. To calculate LIBOR, the British Banker's Association (BBA), surveys a variety of banks that reflect the general market. The BBA then surveys the different banks' interbank interest rate quotes. These quotes are made available to the public.

The top and bottom quartile of the quotes are discarded, and the remaining interest rate quotes are averaged to form the daily LIBOR. LIBOR is calculated daily at 11:00 am London time or 6:00 am eastern time. Because LIBOR is an average of quotes and only calculated daily, the actual rates used between banks may fluctuate from the specific LIBOR rate. However, LIBOR provides a good approximation of the actual rates being used. This approximation is normally more accurate for short-term LIBOR rates and less accurate for long-term LIBOR rates.

LIBOR Rates
LIBOR rates are provided for periods of up to 12 months. The most common rates are the daily, weekly, one month, six month, and one year. LIBOR rates are also provided in ten currencies, including the US dollar, Japanese yen, Euro, and Pound Sterling. The Financial Times displays current LIBOR rates in multiple currencies.

LIBOR Applications
LIBOR is an important rate that influences many financial instruments. In addition to providing an interbank lending rate and baseline for other lending rates, LIBOR also influences derivatives. Eurodollar futures and interest rate swaps are derivatives that are influenced significantly by LIBOR.

http://wiki.answers.com/Q/How_you_can_calculate_LIBOR_rate#ixzz1zSkrcZbg
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Mathloom · Jul 3, 2012

Diamond quits as Barclays chief

Outgoing chairman Agius to lead search for replacement
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and

From Bloomberg:

Morgan Stanley successfully pressured Standard & Poor’s and Moody’s Investors Service Inc. to give erroneous investment-grade ratings in 2006 to $23 billion worth of notes backed by subprime mortgages, investors claimed in a lawsuit, citing documents unsealed in federal court.
...

The unsealing of the internal documents from Moody’s and Standard & Poor’s came in one of the largest ratings lawsuits to emerge from the 2008 financial crisis. The lawsuit was filed in 2008 by Abu Dhabi Commercial Bank, based in the United Arab Emirates, and Washington’s King County, which includes Seattle.

2007. SIVs issued short-term debt to fund purchases of higher- yielding long-term notes and failed when credit dried up amid the financial crisis, sparked by investments in mortgage-backed securities.

As Morgan Stanley bankers were designing the Cheyne notes, they asked Moody’s to use the same volatility assumptions for subprime-backed mortgage securities as for those that had prime home loans as collateral, the investors allege in today’s filing. The ratings company agreed, the investors claim.

“We in fact built everything,” Dorothee Fuhrmann, an executive for New York-based Morgan Stanley, said according to the documents, allegedly referring to the risk-analysis methods applied to the Cheyne ratings.

This is where it gets good:

Morgan Stanley successfully pressured New York-based S&P to raise its rating on some of the Cheyne securities, according to the plaintiffs. After Lapo Guadagnuolo, an S&P employee, told Morgan Stanley that some of the securities would get BBB ratings instead of the desired A grade, a banker e-mailed his boss and said the ratings were “very inappropriate.” S&P then agreed to give the higher rating.

Morgan Stanley earned fees totaling as much as $30 million when the Cheyne notes were issued, according to the documents.

“All of us were under instructions to rate everything that we could bring in the door, and they were measuring market share on a monthly basis,” Frank Raiter, a former analyst of residential-mortgage bonds at S&P, said in a deposition, according to the documents.

“I wasn’t real confident we were doing a very good job at it.”

Perry Inglis, the head of the S&P group that rated the Cheyne securities, wrote in an e-mail that it would be a “good idea” to figure out how to change its methodology to be more “competitive,” according to the court filing.

And the punchline:

“I’m a bit unclear if it is a big change or a ‘wee itty bitty no-one’s going to notice’ change!” Inglis is quoted as saying in an e-mail.
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http://www.zerohedge.com/news/unsea...anley-forcing-rating-agencies-inflate-ratings

pippendagimp · Jul 12, 2012

eur/usd 21-handle......teenager next week?

Northside Storm · Jul 12, 2012

pippendagimp said: ↑

eur/usd 21-handle......teenager next week?
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Translated for the benefit of non FX people---

The euro has weakened further this morning, and just hit a new two-year low against the US dollar of $1.2197.

The euro hasn't been below the $1.22 mark since July 2010, but has been driven down by continuing fears over the future of the eurozone.

Peter O'Flanagan of Clear Currency predicted that the single currency could slide to $1.18 soon, unless "some meaningful action" is taken to restore faith in the euro, adding:

Hope is clearly not enough to keep the Euro afloat any longer
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Euro definitely has a lot of downwind pressure on it...but as for the teens, unless China or a major player starts dumping their Euro reserves, I don't think it will slide that fast. Of course, the market tends to surprise (witness the shock layoffs in France today).

Northside Storm · Jul 12, 2012

The system is bankrupt---not only materially, but spiritually as well.

British bank HSBC is to apologise to politicians in the United States for its failure to properly implement money-laundering controls meant to prevent terrorists and other criminals from using its services.

The disclosure was made in an internal memo sent out by HSBC's chief executive Stuart Gulliver and comes in advance of what is expected to be a substantial fine for the bank.

"Between 2004 and 2010, our anti-money-laundering controls should have been stronger and more effective, and we failed to spot and deal with unacceptable behaviour," Gulliver told staff.

HSBC executives are due to appear before a Senate permanent subcommittee on investigations on 17 July as US officials investigate the ties between money laundering and the financing of terrorism.
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http://www.guardian.co.uk/business/2012/jul/11/hsbc-failure-control-money-laundering

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Europe is falling apart---close to bringing the whole world down.

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