Everything is rigged?

[Hannes Kury]

I stumbled over this article (http://www.rollingstone.com/politics/news/everything-is-rigged-the-biggest-financial-scandal-yet-20130425) and found it shocking and sobering. Combined with the fact that the Fed with its policies prevents that people with savings get any money for loaning their savings I think the current times are exceptionally difficult for investors. The article is a bit long to read but I thought maybe some of the members would be interested.

[cwelsh]

Its actually a pretty good summary of what's been known for quite a while now.  When I first learned of the LIBOR fixing, I was stunned.  I started running numbers, and well, the article sums it up best:

 

"Translation: When prices are set by companies that can profit by manipulating them, we're fucked."

A $329 TRILLION DOLLAR market, being manipulated by about a dozen banks, at a rate of 10 basis points or so a day -- so what, who cares, its ten basis points on a loan. 

 

Well that only works out to about $329 billion on money manipulation per year -- o wait, that assumes no compounding, and this manipulation occurred daily.  What's a 10 basis point daily manipulation, compounded, work out to over a year?  North of $450 billion.  And that's on only one market.

 

(I wonder where those billions are going.....)