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Explaining the Libor Scandal (We All Got Boned)

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It looks like the 99% have a right to be angry. So do the 1%, and anyone else who doesn’t like seeing their money and the country’s economy simultaneously fucked with.

In case you haven’t heard, one of the largest banking scandals in the history of money has recently been uncovered. Suffice it to say, it’s pretty fucked up. The short(est I can give) story is this: It has been discovered that in the middle of the past decade bankers from across the world (Barclays most notably to date) had been setting the Libor average for their own benefit rather than at the rate it was actually supposed to be set at.

The Libor average, for those unfamiliar, is essentially the benchmark for interest rates worldwide. It is determined by the British Banker’s Association and takes into account all kinds of factors, currencies, etc. If a bank or lender is going to give out a loan, be it a student loan, a mortgage, or whatever, they will often set their standard interest off of the Libor and then account for the borrower’s own personal credit from there. The Libor average is an important number. A really important number.

Here’s an example of one way this scandal affects you, the average fucked-up-the-butt person. If a bank requests that the Libor be set “as high as possible,” i.e. as high as would be believable without the artificially inflated rate fucking any other banks over too hard, they do so in order to get some sort of profitable benefit from it that they otherwise wouldn’t be getting were the Libor set where it was supposed to be. If at that same time you happen to be applying for a loan, then your interest rates, which are likely based on the Libor, would be set higher than they should have been because some dickhole wanted some extra cash in his pockets. They make money while you were/are losing money. To be fair with that analogy, there were also times when the Libor was set lower than it should have been. While that might not have affected borrowers in the way setting a high Libor would, it still ends up hurting the people and the economy while benefiting only the handful of bankers wrongfully manipulating it.

There are a few helpful infographics that explain it better than I ever could. The first is via

Essentially this infographic does an excellent job of showing you what the Libor affects in everyday life aside from the average borrower’s loans. It affects a lot. What’s even more infuriating is that this is a scandal involving foreign bankers fucking with American infrastructure, the credit of the American public, and the American economy in general. What is truly despicable is that American bankers were in cahoots with the foreign bankers, not giving any fucks about what they were doing to their own country. Why? Because getting six blowjobs in an hour on the French Riviera is awesome, that’s why. And without that bonus money they’re getting four blow j’s, max.

This infographic, via the New York Times, paints a good picture of the Libor’s more general influence on the world economy, as well as Barclay’s involvement in the scandal.

When the banks are punished for these infractions, the results of the punishments are hilariously incompetent. When the banks are fined, whether they have to pay those fines to the Financial Services Authority or the U.S. Government, those fines can be written off as “lower profits,” which then allows the banks to pay lower taxes, i.e. they don’t actually lose all that much money. Couple that with the fact that the fines are essentially a pittance to these financial behemoths and what you end up with are a bunch of people who can keep on giving zero fucks.

As an average person, you didn’t NOT get fucked by this scandal. There is a lot more left to be uncovered, and my guess is the details are only going to get more disgusting.

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