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The LIBOR Scandal: How the Financial Fish Rots From the Head

By The Daily Reckoning, Daily Reckoning.com.au:

In The Dark Knight Rises, a cruel strongman rallies the people of Gotham against the corruption of the elites, instituting a violent dictatorship in the name of a people’s liberation. What’s troubling for the viewer is that the strongman is right about the corruption. In this case, and as usual, the fix is worse than the problem.

In a similar way today, the “Occupy” protesters and populists of the left and right scream about the corruption in the system today. The ongoing LIBOR scandal is but the beginning. Let’s try to understand this whole thing and see the way the corruption played itself out.

In olden days, people managing monetary and financial scams toyed with weights and measures. They would mix dross into silver to fool the traders. Governments were especially good at it, but they often relied on the cooperation of the bankers and money merchants. Everyone won but the public.

These days, these schemes take a very different form. There is no more metal in the money, so weights don’t apply. Measures are still around, but the system has become so incredibly complicated that only a tiny elite can begin to understand it. This is one reason that the LIBOR scandal probably won’t stay in the headlines that long.

Read More @ DailyReckoning.com.au

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