LIBOR Fraud May Be the Mother of All Bank Scandals

In fact, this may be the mother of all scandals—the one that finally leads to criminal charges and the insolvency of major banks. The fraud is breathtakingly easy to understand once past a small amount of jargon. Indeed, the simplicity of the fraud is the greatest threat to the perpetrators because here at last is a fraud that is easy for juries to understand and for prosecutors to prove.

...

But this time it's different and here's why: The sheer volume of contracts based on LIBOR defies the imagination. Estimates vary, but $500 trillion seems reasonable. Even if the banks lied by as little as one-tenth of 1 percent, that percentage applied to $500 trillion multiplied by the six years of the fraud comes to $3 trillion stolen from customers. Cutting that amount in half to allow for the fact that some customers benefited from the fraud while others lost still gives implied damages of $1.5 trillion, greater than the combined capital of all of the too-big-too-fail banks in the United States. Taken to the full extent of the law, these damages are enough to render a large segment of the global banking system insolvent. These damages will be pursued not by regulators, but in private lawsuits by class action lawyers.


http://www.usnews.com/opinion/blogs/economic-intelligence/2012/07/23/libor-fraud-may-be-the-mother-of-all-bank-scandals

Headed For The Ceiling (Spanish Bond Yields)

Spain's stock market has lost a stunning 12% in two trading days.  By most measures that's a crash.  Nobody's talking about the magnitude of this, but they should be -- Spanish 10yr bonds pipped at 7.5%, which is more than Spain can pay.

http://market-ticker.org/akcs-www?post=209034

Denninger, as usual, spot on.  Not sure I agree with the conclusion that the Euro will collapse.  Debts that cant be paid, wont be paid.  As ever.

Tony Blair: hanging bankers won't help

Public anger over the financial crisis is wrong and must not lead Britain to “hang bankers at the end of the street,” Tony Blair says today.


http://www.telegraph.co.uk/news/politics/tony-blair/9422096/Tony-Blair-hanging-bankers-wont-help.html

A superior kind of Fed stimulus

Both the crisis and the apparent boom before it were caused by the change in private debt. Rising aggregate private debt adds to demand, and falling debt subtracts from it. This point is vehemently denied on conventional theoretical grounds by economists like Paul Krugman, but it is obvious in the empirical data. The crisis itself began in 2008, precisely when the growth of private debt plunged from its peak of almost 30 per cent of GDP per annum. down to its depth of minus 20 per cent in 2010. The recovery, such as it was, began when the rate of decline of debt slowed. Across recession, boom and bust between 1990 and 2012, the correlation between the annual change in private debt and the unemployment rate was -0.92.

http://www.businessspectator.com.au/bs.nsf/Article/crisis-US-private-debt-depression-recession-jobs-pd20120723-WG248 

Super-rich 'hiding' at least $21tn

A global super-rich elite had at least $21 trillion (£13tn) hidden in secret tax havens by the end of 2010, according to a major study.

The figure is equivalent to the size of the US and Japanese economies combined.
The Price of Offshore Revisited was written by James Henry, a former chief economist at the consultancy McKinsey, for the Tax Justice Network.

http://www.bbc.co.uk/news/business-18944097

Fed Proposal Allows Banks To Seize Your Money

The New York Fed has introduced a framework to give banks the right to suspend account withdrawals at will to defend against financial panic.
http://blog.alexanderhiggins.com/2012/07/20/big-fail-fed-proposal-banks-seize-money-149701/

Ten Italian Cities On Verge Of Financial Collapse

Sicily is followed by Calabria, Campania, Lazio, Abruzzo, Tuscany, Lombardy, Umbria, Liguria, Veneto and so on. At least the governors of those respective provinces now have an advance warning what the endgame is." Sure enough, now that this particular floodgate has also been opened, it is only fitting that in the aftermath of this weekend's main news that a total of 6 Spanish regions will demand bailouts, that Italy follow suit with its own blacklist, and as La Stampa has reported, there are now ten major Italian cities at risk of an imminent financial collapse, yet another factor pushing Italian yields well on their way to the country's own 7% rubicon, now at 6.34%.

http://www.zerohedge.com/news/blacklist-ten-italian-cities-verge-financial-collapse