Christ almighty, Ballsy, that hard to get stuff printed in the Mirror that you have to go to bloody LibCon these days?

And how much did Gordon, Ed and Alistair know about this???
If anyone says nothing or not much I’m from the planet Zoony!!!

@1 @2

I see this post is not important enough to have the trolls identify themselves. Still, hours of harmless fun for the spineless keyboard heroes of the right, eh? Keep eating the Farleys, lads, one day you might grow up.

(Sigh) This from the man who boasted, when in power:

“Our system of light-touch and risk-based regulation is regularly cited…as one of our chief attractions…regarded as the best in the world…the Government’s interest in this area is specific and clear: to safeguard the light touch and proportionate regulatory regime that has made London a magnet for international business…we must ensure that all new regulations are implemented in a sensitive and light touch manner…[The Labour government] will outlaw the imposition of any rules that might endanger the light touch, risk based regulatory regime that underpins London’s success.”

CR @ 4 has it perfectly: Ed Balls was one of the architects of the current mess. Like so many politicians of both left and right, all Balls wants is power – a ministerial limousine, etc.

Try this from the Indy on John Redwood and his campaign for Deregulation:
http://blogs.independent.co.uk/2011/06/01/john-redwoods-part-in-the-credit-bubble/

Erm, the Libor fixing was going on while you were in office.

The Libor fixing should have been obvious: it was after all the talk of the markets at the time.

Why did neither you, in power, nor the regulatory system you set up, either notice such an obvious piece of manipulation (I am talking about the deliberate talking down of Libor, not the traderly manipulation) nor do anything about it?

“: it was after all the talk of the markets at the time.”

I’ve had a look on your blog, and I can’t find anything you wrote on this prior to the last month. Which either means your search facility and google aren’t very good, or you didn’t write about it. Which would be strange seeing as

“it was after all the talk of the markets at the time.”

8 – Tim’s not a financial markets insider though is he? There’s not much market gossip on his blog ever is there?

In any event, the interesting thing here will be the extent to which this was officially sanctioned. It’s clear there was at least some sort of conversation between the BoE and Barclays about the overnight rate. If the BoE was involved, it’s a reasonable inference that HMT was as well – and there’s some evidence for that as well.

Given who was in power when all this was going on, does Balls really want an investigation so badly?

From this morning’s FT Alphaville:

“There was a piece in the Telegraph on Sunday that may well sum up the thoughts on the Libor scandal of many who worked, or are still working, in banks. It’s called “Libor scandal: How I manipulated the bank borrowing rate“. It gives a sense of how it is that a hell of a lot of people didn’t question the manipulation of the rate.

Frankly, anyone with a Bloomberg terminal in 2008 would have been in on this, as one could see that the rates various banks had submitted did not reflect where they could fund. Deals were getting torn apart all over the place because no one could ramp up funding at a decent rate, despite what those screens said.

People knew how Libor was constructed, that it was a survey with barely a disciplinary mechanism in sight (other than being kicked off a panel, which seemed a ridiculous threat when so many were lowballing rates at the same time).

But it was just accepted. A great number of people didn’t even clock that there was a whistle to blow. Why might that be? We’d posit it’s because they didn’t even perceive what was going on to be wrong, and that it probably has a lot to do with social conformity (within the sphere of banking).”

If anyone with a Bloomberg screen could see it why couldn’t the FSA? The Treasury? BoE? Ed himself?

Today’s banks represent the incarnation of profit-seeking behaviour taken to its logical limits, in which the only question asked by senior staff is not what is their duty or their responsibility, but what they can get away with.

He just doesn’t get it, which is perhaps not surprising, because he was part of the problem.

Today’s banks represent the incarnation of profit-seeking behaviour when markets don’t work and corporate cartels are encouraged by politicians to exploit their customers. The answer to this is not regulation of the market processes which has been shown not to work. Instead, the market should have been properly regulated by the OFT over the previous thirty years to prevent the monopoly players developing.

But then, when the banks had over extended themselves with their “profit-seeking behaviour” and failed, Brown rewarded their “risk taking” by bailing them out and propping them up- once again subverting the proper market mechanism. I’m convinced Cameron would have done the same thing.

It is not profit-seeking behaviour that is the problem- it is the complicity of the state apparatus in market fixing and Balls was up to his armpits in that cesspool.

11 “If anyone with a Bloomberg screen could see it why couldn’t the FSA? The Treasury? BoE? Ed himself?”

Bloody good question Tim. Has Ed any answers?

But it’s all very funny for any free market fundamentalists, whether ‘left’ like Balls or ‘right’ like his supposed opponents, getting indignant now, after their precious markets have screwed up yet again, making piles of cash for the privileged few who play around with these things at the expense of the rest of us suckers. When are they all going to face up to the harsh reality that the “rational actor” doesn’t exist and that the genuinely “free market” is as much of a dangerously idealistic fiction as the fantasies on which socialism is based?

see here for some more informed analysis, and some history concerning how long people have known about potential problems in the rate setting process:

http://notthetreasuryview.blogspot.co.uk/2012/07/libor-scandal-and-reforming-banking.html

I think some blessed with hindsight commentators here are radically underestimating the importance of herd effects here – people generally only realise something is importance once everybody else decides it is important. Yes, anybody looking might have known, years ago, that Libor setting was questionable. But it’s only in the post-crisis context and the current (well deserved) witch-hunt atmosphere that it takes on such importance, as another signifier of banker moral decrepitude. In 2007 if somebody had pointed out that Libor rates are probably too low to be true, they would have been met with indifference and have found it very hard to get anybody else much interested in the problem. There is no realistic reason to think that somebody is Ball’s position would have paid any attention to it, so all this “it happened on your watch” stuff is just sanctimonious hot air, imho.

making piles of cash for the privileged few who play around with these things at the expense of the rest of us suckers.

this is how the Libor thing is going to be universally interpreted, isn’t it. The facts of the matter, don’t matter.

As I understand it, some small businesses were mis-sold interest rate swaps, otherwise if anything “the rest of us suckers” probably benefited from Libor rates being understated, and the only direct losers I can think of whichever traders held the other side of the derivative contracts that the libor-setters’ buddies held.

[note this does not mean I am trying to downplay the importance of all this - something can be important and bad without actually directly hurting the man on the street]

There is no realistic reason to think that somebody is Ball’s position would have paid any attention to it, so all this “it happened on your watch” stuff is just sanctimonious hot air, imho.

That line works as a shield, not a sword. It prevents Balls using the scandal as a stick with which to beat the Government. Mind you, if it can be shown (as the Shriti Vadera memo makes plausible) that HMT were encouraging the manipulation of libor, then the whole thing becomes extremely embarrassing for Labour as a whole.

TimJ

yes it cuts both ways. point scoring is inevitable, but phony

” . . then the whole thing becomes extremely embarrassing for Labour as a whole.”

In addition to abolishing boom and bust, creating the consumer credit mountain, the house-price bubble, 100pc loan to value mortgages or better, houses becoming less affordable than 50 years ago, and house building dropping back to levels last seen in peacetime in the late 1920s. Some achievement. For all that, the Conservatives were calling for more Deregulation.

@4 Churm Rincewind

I’ll see you your Balls quote and raise you and Osborne one:

Richard McCarthy ?@Barsacq
@RichardJMurphy “In short, in an age that demands light touch regulation, he offers that clunking fist.” Osborne 2006

15 “making piles of cash for the privileged few who play around with these things at the expense of the rest of us suckers.”
this is how the Libor thing is going to be universally interpreted, isn’t it.
As I understand it, some small businesses were mis-sold interest rate swaps, otherwise if anything “the rest of us suckers” probably benefited from Libor rates being understated, and the only direct losers I can think of whichever traders held the other side of the derivative contracts that the libor-setters’ buddies held.
………………………………………………………………………

Luis you seem to be misinterpreting my point, which was that the Libor manipulation is just another example, for those who need one, of how the whole system is completely, irredeemably bent. As you yourself even point out …

14 ” … underestimating the importance of herd effects here … There is no realistic reason to think that somebody in Ball’s position would have paid any attention to it …”

Indeed. All these ludicrously over-remoonerated “experts”, as acclaimed by each other in a sycophantic circle jerk, and they are in fact doing nothing better than blindly following their fat, greedy herd to the trough and are incapable of telling right from wrong, good from bad.

This is well illustrated in an article yesterday about the psychology that operates among the delusional captains of mendacity who think they are so much better than the rest of us that they deserve to be paid so many hundreds of times more than ordinary folk for what they laughably call their “work”:

http://www.guardian.co.uk/commentisfree/2012/jul/02/bankers-greed-brain-changes

“Researchers at Tilburg University showed that people made to feel more powerful cheated more when they believed themselves to be unobserved. Power also made ordinary people more hypocritical when making judgments about moral dilemmas, being much more strict in applying rules to others, but much more lax in applying them to themselves. Even tiny amounts of artificial power, in other words, increased both immorality and hypocrisy.

And there is a further point. Senior bankers, by virtue of their enormous wealth, sit at the top of the socioeconomic tree. Paul Piff of the University of Berkeley found in a US-based study that, compared with lower class people, upper class individuals were more likely to break the law while driving, to show unethical tendencies in decision-making, to take valued goods from others, to lie in a negotiation, to cheat in order to improve their chances of winning a prize, and to endorse unethical behaviour in a work situation …”

The problem of the banking crisis and the issue of inter-bank lending rates, is that the average person does not understand it.
The imperative now, not just for political reasons, but because it is right – is that criminal charges are brought against Barclays (because people do understand a fraud in the region of trillions of dollars) and a full judicial enquiry where people will, at last, see how the culture of the City has been costing all of us!

Follow the link for a very good analysis of the days events and why the memo released by Barclays today, makes the case for a judicial enquiry irresistible.

http://www.allthatsleft.co.uk/2012/07/banks-and-libor-fixing-the-case-for-a-judicial-inquiry/

@19 BenM:

Certainly when Balls was calling for ever more light touch regulation, there were Conservatives calling for even less. But I do object to Ed Balls’ Pontius Pilate act – “nothing to do with me, guv, I was only in charge at the time”. I found his article offensively sanctimonious and hypocritical, and rather more concerned with political advantage than constructive debate.

Rest assured that if George Osborne writes a similar article I’ll object to that too!