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Libor, long the most important number in finance, dies at 52

nytimes.com

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Re: Libor, long the most important number in finance, dies at 52

#61

Post by xtracto »

yufeng66 wrote: post #59
hardtke wrote: post #6

I have an adjustable rate mortgage based on LIBOR and the lender still has not said what they plan to do. The presumed replacement rate (SOFR) seems to be pegged near 0% which would be good.

legally the new definition of 3 month Libor is sofr + 26.161bps

Completely tangentially related: I love basis points. Up until I started working in the FinTech I could not grasp the need for it... but after much repeating "x% plus 3%" and then having to clarify that is 300 basis points and not x*1.03, it got my eyes opened.

Re: Libor, long the most important number in finance, dies at 52

#62

Post by svnpenn »

mhh__ wrote: post #55
svnpenn wrote: post #40

Earlier quoted context omitted.

Yeah this just screams clickbait. "Let's create a title that makes no sense, followed by an entire article with a strained metaphor".

How is it clickbait? LIBOR is omnipresent in finance and it is being killed. Sterling LIBOR is already dead for example.

Well:

1. Its LIBOR, not Libor

2. LIBOR is not a number, its a rate. Thats literally what the "R" stands for

3. LIBOR cant die, as its not a person

Its just an awful title because it calls LIBOR a number, which its not, then goes on to treat it as a human, which its also not.

Re: Libor, long the most important number in finance, dies at 52

#63

Post by hardtke »

yufeng66 wrote: post #59
hardtke wrote: post #6

I have an adjustable rate mortgage based on LIBOR and the lender still has not said what they plan to do. The presumed replacement rate (SOFR) seems to be pegged near 0% which would be good.

legally the new definition of 3 month Libor is sofr + 26.161bps

I'm tied to the 1 year LIBOR -- do you know what that will be?

Re: Libor, long the most important number in finance, dies at 52

#64

Post by boringg »

kaesar14 wrote: post #51
fanzhang wrote: post #45

When I first heard about LIBOR in 2002, I was surprised that the number is just based on a survey of bankers. Surely there would be accuracy issues with that? But at that time I was young and had no finance experience, so though that the adults in the room knew best. Turns out not! I don't think the base problem is that people shaded their numbers one way or another, it's that the system is designed wrong.

This was also my impression learning about it as I was starting to learn about global finance in high school. Even them it seemed ridiculous. I wonder how many more systems currently in place are based on such foolish promises and easily exploited foundations of trust.

Fiat currency is based on trust - so was the gold standard to a degree. Trust is an important part of society. We rip trust away in our societal institutions and we are left in a terrible existence.

If you boil everything down - trust a critical function. Your day is filled with trust of functioning. Without it you would live in pure chaos. I find these arguments facile.

Re: Libor, long the most important number in finance, dies at 52

#65

Post by erichocean »

JackFr wrote: post #35
HarryHirsch wrote: post #13

Earlier quoted context omitted.

So - considering that LIBOR was not an observed number, but a made-up number that was nonetheless useful, what did the LIBOR actually measure?

It measures the answer to the hypothetical question "If a another bank with good credit came to you right now to borrow (overnight/1W/1M/3M) in (USD/EUR/GBP/CHF/JPY) what rate would you offer them?" Which is a proxy for the banks' willingless to lend. (It had a less quoted counterpart, LIBID the London Interbank Bid Rate, where would you borrow at.)

ELI5 Why not simply measure the actual trading activity for exactly those activities the previous day?

Re: Libor, long the most important number in finance, dies at 52

#66

Post by cardiffspaceman »

kaesar14 wrote: post #51
fanzhang wrote: post #45

When I first heard about LIBOR in 2002, I was surprised that the number is just based on a survey of bankers. Surely there would be accuracy issues with that? But at that time I was young and had no finance experience, so though that the adults in the room knew best. Turns out not! I don't think the base problem is that people shaded their numbers one way or another, it's that the system is designed wrong.

This was also my impression learning about it as I was starting to learn about global finance in high school. Even them it seemed ridiculous. I wonder how many more systems currently in place are based on such foolish promises and easily exploited foundations of trust.

Pre-SoundScan record sales numbers?

Re: Libor, long the most important number in finance, dies at 52

#67

Post by whatshisface »

outside1234 wrote: post #60
erwincoumans wrote: post #27

From the title it seems like Mr. or Dr. Libor died. For a paragraph, it is cute to have Libor personified. Doing it until the end of the story feels a bit artificial to me.

It is a literary device to make a very boring topic interesting for mainstream readers.

A giant London banking scam touching on something that may even have been involved in the reader's mortgage contract, is not exactly a boring topic.

Re: Libor, long the most important number in finance, dies at 52

#68

Post by decafninja »

throwmeaway666 wrote: post #58
decafninja wrote: post #23

I was working at an investment bank (as a developer) when this scandal hit. My entire department was laid off as a result. Not because we were involved or complicit in the scandal, but because the scandal indirectly caused a big financial hit to the bank and we were part of the cost cutting measures. It was a traumatic and tragic moment for me at the time. But in hindsight it was the event that lead to my eyes being…

>we were part of the cost cutting measures. >the event that lead to my eyes being opened to the world of Silicon Valley tech companies I found that being aware of whether you will be part of the cost center or profit center in a company is very useful when deciding where you should work.

Agree with this 100%. I now make it a point to avoid any companies where tech is an unrespected cost center, which unfortunately does rule out the overwhelming majority of companies out there.

That said, even companies where SWEs and tech are the profit center are certainly capable of laying you off, so profit vs cost center isn't really any insurance to avoid that sort of fate. Even at the banks I've worked at the traders (profit center) would face the axe before us lowly peasants in the tech departments.

Rather, it's more an issue of respect...and relative compensation.

Re: Libor, long the most important number in finance, dies at 52

#69

Post by recursive »

svnpenn wrote: post #62
mhh__ wrote: post #55

Earlier quoted context omitted.

How is it clickbait? LIBOR is omnipresent in finance and it is being killed. Sterling LIBOR is already dead for example.

Well: 1. Its LIBOR, not Libor 2. LIBOR is not a number, its a rate. Thats literally what the "R" stands for 3. LIBOR cant die, as its not a person Its just an awful title because it calls LIBOR a number, which its not, then goes on to treat it as a human, which its also not.

I don't know anything about LIBOR, but I know a few things about rates. Every rate I've ever heard of is a number. How can a rate not be a number?

Re: Libor, long the most important number in finance, dies at 52

#70

Post by rwmj »

hardtke wrote: post #6

I have an adjustable rate mortgage based on LIBOR and the lender still has not said what they plan to do. The presumed replacement rate (SOFR) seems to be pegged near 0% which would be good.

In my previous job we sold LIBOR (and Euribor) mortgages, so I have been wondering what the lender would do about those, since as I understand it the LIBOR element was written into the 25+ year mortgage contracts. I guess I found out - nothing!
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