London InterBank Offer Rate. Created by Sal Khan.
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Banks can strategically manipulate the LIBOR for whatever reason. Despite the huge fine imposed on some perpetrators, I believe this is still ongoing. It calls for the need for increased regulatory practices on banks given the impact of LIBOR rates to the global financial economy
Do you have one about a 'LIBOR scandal?'
I'm NOT going to be able to understand any OTHER financial channel's video, b/c they assume you have a full working brain and can actually use it.
Not someone who has medical proof of a traumatic brain injury.
The actual manipulations probably stole pennies per person affected, but it affected a lot of people.
The more chilling part is that they were in cahoots with the government. Part of the problem is that the LIBOR was supposed to show how healthy the financial system is, but government was just as anxious as Wall Street to show that everything was going well. Thus, the crash.
Wikipedia did a good job summing up the scandal.
Which is what's been going on with Barclays and a few other financial institutions recently. Compared to Australia, which uses actual transaction data to set the equivalent of LIBOR (bank bill interest rate or BBSW) as well as rate validation services.
This is a good explanation of what LIBOR is, but I'd be very grateful if someone could explain the actual significance of the manipulation of LIBOR. Obviously this rate impacts upon people's mortgage rates etc., but is it not right that the rate was manipulated so that interest rates were lower? So people with mortgages would pay less interest on them? I've probably way oversimplified it/got it completely wrong, but it would be great if someone could explain this to me.
One thing that I'd like to point out here: Sal mentioned that to calculate the LIBOR, they just take a survey and ask the banks. There isn't a lot of fact checking, from what I hear. Thus, it is subject to manipulation.
To paraphrase Mr. Weasely in The Chamber of Secrets, "Never trust a system if you can't see where it keeps its brains"
Is Sal going start explaining Austrian economics? I'm just curious and I hope he does since most YouTube uploaders, on the subject have a huge bias and aren't even willing to be realistic about the pros and cons.
And furthermore, they don't explain why and how bias towards Keynesian emerged. The worst offenders are the Zeitgeist...
Sometimes you have to maintain your "liquidity" or cash equivalents at a certain level without having to sell something that is not liquid (something that takes a while to make a market to transform to cash) or stocks/bonds/investments you don't want to sell because of taxes, or you think they are going up a lot faster then the interest rate.
People /business take out loans all the time when they could just pay cash. Basically, it's just leverage.
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