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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

#161

Post by lmm »

nerdponx wrote: post #10

> In 1986, at age 17, it hit the big time: Libor was taken in by the British Bankers Association, a trade group described later by The New York Times as a “club of gentlemen bankers.” What are the chances that this "club of gentlemen bankers" always intended to manipulate Libor to some extent? I know finance and banking is very complicated; maybe someone will come along who happens to have been a banker in London in…

Banks took both sides of LIBOR contracts. So it wasn't really about manipulation so much as just having a standard to follow. Do you read about clubs of Silicon Valley browser makers meeting up to come up with a new HTML standard and assume that this is some nefarious plot? I imagine your London banker counterpart does.

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

#162

Post by lvmz »

sokoloff wrote: post #105
cromulent wrote: post #88

Earlier quoted context omitted.

The Corruption Index is similar - it’s based on how corrupt people think a nation is. Nothing to do with how much actual corruption exists.

It seems overwhelmingly likely that "how corrupt people think a nation is" does have "[something] to do with how much actual corruption exists".

Just how much corruption is known. Even if you make the assumption that people in aggregate can generally assess whether corruption exists somewhere, it'd be harder to measure the 'severity' that way. I actually think you're probably correct that people's perceptions of corruption have some connection to reality, but I think the more fundamental problem with such a scale is boiling a complicated reality like corruption into a single corruption number, which seems pretty silly on its face.

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

#163

Post by aidenn0 »

RocketOne wrote: post #152

The Libor scandal ripped off just about every person who held any kind of debt. And yet it's STILL barely known. When I got my mortgage I asked my banker agent what she thought about it. She had no clue what Libor was, let alone the scandal.

I don't know where you are, but at least in the US, the banks that make the loans don't hold the debt; they sell it off almost immediately.

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

#164

Post by csense »

tlb wrote: post #85
SkyMarshal wrote: post #79

Earlier quoted context omitted.

The more I've learned of the banking system, the more examples of this I see. It seems that much of the banking system was designed by bottom-line-oriented, non-systems-thinkers, who just wanted an immediate, good-enough solution to a problem. Accuracy, reproducibility, scalability, systemic integrity, and similar concerns often weren't a factor.

It evolved from a small system where the people all knew each other and went to the same few public schools where everything also ran on the honor system. It wasn't a bad design for its original scale & context. Those dumb bankers. We computer scientists would never design something that failed to scale through 5 decades.

32 bits is more than enough network address space for a small-scale university experiment.

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

#165

Post by Shorel »

sokoloff wrote: post #105
cromulent wrote: post #88

Earlier quoted context omitted.

The Corruption Index is similar - it’s based on how corrupt people think a nation is. Nothing to do with how much actual corruption exists.

It seems overwhelmingly likely that "how corrupt people think a nation is" does have "[something] to do with how much actual corruption exists".

Technically yes, but on the short term, there is a lot of lag to this signal. Even in the not so short term.

That is: people's perception can be anything from a few months to a few decades outdated to the current state.

Usually, every four years, a new party in power can change the trend.

So, it is overwhelmingly likely that something better can be found to reflect this reality.

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

#166

Post by Shorel »

tacostakohashi wrote: post #147
sokoloff wrote: post #105

Earlier quoted context omitted.

It seems overwhelmingly likely that "how corrupt people think a nation is" does have "[something] to do with how much actual corruption exists".

Kind of... but certain countries have done a great job of gaming the system, particularly one of the countries that is currently ranked #3.

Switzerland?

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

#167

Post by riffraff »

sokoloff wrote: post #105
cromulent wrote: post #88

Earlier quoted context omitted.

The Corruption Index is similar - it’s based on how corrupt people think a nation is. Nothing to do with how much actual corruption exists.

It seems overwhelmingly likely that "how corrupt people think a nation is" does have "[something] to do with how much actual corruption exists".

Up to a point. A lot of these indexes are PR and the people who answer them have motives to rate one way or the other (e.g. you are an opinionated journalist and you want the current government to look bad).

There's usually something weird going on with some of these indexes if you compare statistics with opinion-survey-based stats.

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

#168

Post by watwut »

pgwhalen wrote: post #153
tlb wrote: post #85

Earlier quoted context omitted.

It evolved from a small system where the people all knew each other and went to the same few public schools where everything also ran on the honor system. It wasn't a bad design for its original scale & context. Those dumb bankers. We computer scientists would never design something that failed to scale through 5 decades.

I'd suggest that most of society still runs on the honor system (especially finance and law), it's just more abstracted away from interpersonal relationships than it used to be. The existence of things like encryption often deceives us hackers about what the real foundation is.

> I'd suggest that most of society still runs on the honor system (especially finance and law)

Aren't those the most corrupt part of society?

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

#169

Post by Dylan16807 »

WanderPanda wrote: post #86
catothedev wrote: post #73

Earlier quoted context omitted.

It's also useful for negotiating rates. Saying you want a rate to be .2% lower is awkward and wordy. Saying 'can we take it down 20 bips?' sounds much more pro ;).

Your expressions are not equivalent

How so?

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

#170

Post by Dylan16807 »

RocketOne wrote: post #152

The Libor scandal ripped off just about every person who held any kind of debt. And yet it's STILL barely known. When I got my mortgage I asked my banker agent what she thought about it. She had no clue what Libor was, let alone the scandal.

Did it? Wasn't the scandal part about manipulating it up or down very slightly on a per-day basis? Shouldn't that have basically no effect on a normal person?
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