About two months ago I posted here about suspicions that LIBOR (the London Interbank Offered Rate) had been manipulated by the participating banks. I concluded with the observation that borrowers whose commercial loan interest rates were liked to LIBOR shouldn't care; after all, the manipulation was downward, not up.
The editors of The Economist differ. Read here to see their argument that even borrowers should care: "Borrowing made cheap by financial distortions is not a good thing ..." because under-priced risk destabilizes the financial (and thus all other) markets.
Right from a systems point of view, no doubt. And why results of the current investigations into LIBOR manipulation should be make public sooner than later.
The editors of The Economist differ. Read here to see their argument that even borrowers should care: "Borrowing made cheap by financial distortions is not a good thing ..." because under-priced risk destabilizes the financial (and thus all other) markets.
Right from a systems point of view, no doubt. And why results of the current investigations into LIBOR manipulation should be make public sooner than later.
No comments:
Post a Comment