The Fix is in

BRT has talked often about the Fed and how it games the system for Wall Street while us rube take the hit. The old term, "Privatize the profits, socialize the losses." rules when bailouts at our expense became the norm in 2008, a policy that continues to this day though the corporate controlled press never talks about it... ever, save for Matt Tiabbi, a guy who knows the drill and has been right on since, it seems, from the beginning of time. To that end, I give you Everything is Rigged, The biggest Price Fixing Scandal Ever.

Conspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world's largest banks may be fixing the prices of, well, just about everything.

You may have heard of the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that's trillion, with a "t") worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history – MIT professor Andrew Lo even said it "dwarfs by orders of magnitude any financial scam in the history of markets."

That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world's largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world's largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps.

Interest-rate swaps are a tool used by big cities, major corporations and sovereign governments to manage their debt, and the scale of their use is almost unimaginably massive. It's about a $379 trillion market, meaning that any manipulation would affect a pile of assets about 100 times the size of the United States federal budget.

What's truly amazing about this piece is that the data used to drive ICAP and LIBOR is not vetted and the trivial bribes the geeks take in gaming the system is absolutely astounding.

Famously, one Barclays trader monkeyed with Libor submissions in exchange for a bottle of Bollinger champagne, but in some cases, it was even lamer than that. This is from an exchange between a trader and a Libor submitter at the Royal Bank of Scotland:

SWISS FRANC TRADER: can u put 6m swiss libor in low pls?... 

PRIMARY SUBMITTER: Whats it worth 

SWSISS FRANC TRADER: ive got some sushi rolls from yesterday?... 

PRIMARY SUBMITTER: ok low 6m, just for u 

SWISS FRANC TRADER: wooooooohooooooo. . . thatd be awesome

Screwing around with world interest rates that affect billions of people in exchange for day-old sushi – it's hard to imagine an image that better captures the moral insanity of the modern financial-services sector.

David Stockman's right about the corruption permeating every aspect of finance. BRT disagrees about gold being the solution to our financial woes but not on his premise we are in trouble thanks to the malfeasance of government, the Fed and Wall Street banks but we already knew about this because the power elite has been doing this kind of business since the beginning of time, only now, the web shows us how this chicanery is done. 

Everywhere he sees sweetheart deals between government and industry, often engineered by lobbyists. The energy sector in particular he views as a sewer of subsidy and false "green" promises. Meanwhile, corporate America enters into reckless deals in part because borrowing is much too cheap, thanks to skewed tax and monetary policies.

Any questions?

Addendum: The book's a very good read. Very entertaining without question. 

Addendum II: Click here for another MT piece, this time on foreclosures. Guaranteed to make one feel even better about the Fed, governance and WS Greed.