Be Careful!: “The LIBOR Scandal Is “Huge”

Posted by The Daily Ticker & Richard Russell

Share on Facebook

Tweet on Twitter
0.D34

The LIBOR scandal that has engulfed London’s financial and political elites is entering its third week and picking up steam on this side of the Atlantic.

Among the latest developments:

  • The NY Times reports the Justice Department’s criminal division is “building cases against several financial institutions and their employees.”
  • State Attorneys General in New York and Connecticut are investigating whether states incurred losses because of LIBOR manipulation which “could lead to a wider multi-state enforcement action,” The WSJ reports.
  • Top officials of the British version of the SEC, the Financial Services Authority, will testify before Parliament on why regulators failed to respond to concerns about LIBOR rigging going back to 2008. Congress is set to hold similarly themed hearings later this week and Fed chairman Ben Bernanke is almost certain to be asked about the matter when he testifies on Capitol Hill Tuesday and Wednesday.

Comment via Richard Russell of Dow Theory Letters:

“This is probably a good time to re-post a chart of GDOW, which is the Global Dow, an equal-weighted index of 150 blue chip stocks from around the world. GDOW provides a good insight as to the health of the world’s stock markets. The GDOW index is now in a head & shoulders formation with support at 1700. Support at 1700 better hold! If GDOW breaks below 1700, I think it will signal a world recession or depression. .Listening to the financial news, it all seems to be about four matters: (1) US unemployment (2) the state of China’s finances (3) whether the Fed will pull the QE3 trigger or not and (4) the Libor mess.

0.D34

In the accompanying video, taped Friday, I discuss the scandal with former New York Governor and Wall Street prosecutor Eliot Spitzer.

“LIBOR is huge,” Spitzer says. “This is about as big as it gets in the financial world. [LIBOR] goes to the heart of every piece of debt that’s issued to consumers — your auto loan, your credit card debt.” (click on photo or HERE to view the entire interview)

Picture 5

also:

Cenk Uygur discusses how Barclay’s LIBOR scandal effects you, and how it effects the bankers that caused the scandal. Cenk also discusses the recent news that Tim Geithner knew about the scandal in 2007 and choose not to take any action. Tell us in the comment section below what you think about the LIBOR scandal.