Libor scandal just got worse
The story that Bob Diamond allegedly got a nod and a wink from my old BoE boss Paul Tucker to carry on with Barclays Libor practice is very damaging as it drags the BoE into the mire. The Barclays phone calls may well all be recorded. Bad news for PT. Barclays chairman has fallen on his sword but not Diamond. Tucker has always wanted to be next BoE Governor but this cannot enhance his prospects in that direction.
That the FSA is now saying many banks were at this game does not surprise me at all. I described on Friday why I never trusted Libor rates so did not use them. Many people however had to use Libor or Libor based instruments not just in London but worldwide. Its a self inflicted disaster! It also takes the pressure off the Eurozone in London but not of course in Europe.
Reuters reports, " ESM bond buying in secondary markets would require unanimity and that seems unlikely because Finland and the Netherlands are against it, the Finnish government said a report to a parliamentary committee.
The report gave no explanation for the apparent volte-face but EU diplomats noted that a Finnish proposal that Spain and Italy should issued covered bonds, backed by state assets or future revenues, to avoid Helsinki having to demand collateral for any bailout loans, failed to find agreement last week.
However Prime Minister Jyrki Katainen's spokesman said the ESM stance had nothing to do with others blocking Finland's proposal. Helsinki simply did not consider secondary market purchases an effective way to counter the crisis, he told Reuters"
By Dr. Eric Edmond
Last Updated (Monday, 16 July 2012 12:48)