If you haven't yet read Matt Taibbi's latest jaw-dropper
, do so now. Basically, Matt tells us that the Illuminati-spotters were right all along -- in a sense. Although that secret society is fictional, our real-world big banks have colluded to fix interest-rate swaps.
What are interest rate swaps? As you know, countries and states and counties and cities around the world all borrow money -- which means that they pay interest. An interest rate swap is, basically, a way to renegotiate the loan. And that's no small thing.
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.
If you can imagine paying 20 bucks for a crappy PB and J because some evil cabal of agribusiness companies colluded to fix the prices of both peanuts and peanut butter, you come close to grasping the lunacy of financial markets where both interest rates and interest-rate swaps are being manipulated at the same time, often by the same banks.
"It's a double conspiracy," says an amazed Michael Greenberger, a former director of the trading and markets division at the Commodity Futures Trading Commission and now a professor at the University of Maryland. "It's the height of criminality."
This next bit is hard for me to write. You guys know how much I hate Glenn Beck, right? A couple of days ago, Jon Stewart made fun of Beck because he (Beck) recently claimed that Powerful Unseen Forces had engineered the rapid fall in gold prices. (Rightwingers sure do love them some gold.) Stewart's audience had a huge laugh at that one, and so did I.
The bad news didn't stop with swaps and interest rates. In March, it also came out that two regulators – the CFTC here in the U.S. and the Madrid-based International Organization of Securities Commissions – were spurred by the Libor revelations to investigate the possibility of collusive manipulation of gold and silver prices. "Given the clubby manipulation efforts we saw in Libor benchmarks, I assume other benchmarks – many other benchmarks – are legit areas of inquiry," CFTC Commissioner Bart Chilton said.
We are forever being told that finance capital must go unregulated because any government intrusion would conflict with the Gospel According to Adam Smith. But Smith said that the only thing that made capitalism worthwhile is competition -- and there's none to be found at the top levels of the capitalist system.
These banks, which already possess enormous power just by virtue of their financial holdings – in the United States, the top six banks, many of them the same names you see on the Libor and ISDAfix panels, own assets equivalent to 60 percent of the nation's GDP – are beginning to realize the awesome possibilities for increased profit and political might that would come with colluding instead of competing. Moreover, it's increasingly clear that both the criminal justice system and the civil courts may be impotent to stop them, even when they do get caught working together to game the system.
If true, that would leave us living in an era of undisguised, real-world conspiracy, in which the prices of currencies, commodities like gold and silver, even interest rates and the value of money itself, can be and may already have been dictated from above. And those who are doing it can get away with it. Forget the Illuminati – this is the real thing, and it's no secret. You can stare right at it, anytime you want.
There's a lot more. I suggest you take some time away from following the Boston bombing weirdness and read Matt's piece.