World View: Barclay's COO Admits Having Rigged Libor

This morning’s key headlines from GenerationalDynamics.com

• Barclay’s COO admits having rigged Libor, thought it was OK
• Russia accuses the West of ‘blackmail’ on Syria
• Germany’s Angela Merkel denies caving in on Spain’s bank bailout

Barclay’s COO admits having rigged Libor, thought it was OK

Jerry del Missier, testifying on Monday (Bloomberg)

The former chief operating officer of Barclays Bank received adramatic drilling on Monday in front of the British Parliament’sTreasury Select Committee. Under close questioning, Jerry del Missiersaid that he had given instructions to Barclays’ money market tradersto manipulate interest rates in 2008, after he interpreted a messagefrom the Bank of England as an instruction to do so. The Bank ofEngland, as well as del Missier’s boss Bob Diamond, have said therewas no such instruction. (See “4-Jul-12 World View — Barclays interest rate manipulation prompts desperate finger-pointing by British officials”)During the hearing, del Missier was asked several times whether hebelieved that these rate-fixing actions were legal or illegal. Herefused to answer, saying that the actions were perfectly OK, given thecontext of the time. The Libor fixing scandal is drawing increasedattention as more banks are investigated, because Libor is thebenchmark interest rate used in the pricing of some 1/3 of $1quadrillion in financial instruments worldwide, so even a small changein the Libor rate can affect trillion of dollars in securities.Bloomberg

Russia accuses the West of ‘blackmail’ on Syria

Russian Foreign Minister Sergei Lavrov accused the West of “blackmail”in the United Nations Security Council. Security Councilauthorization for Kofi Annan’s “Syria peace plan” observer mission,which has only increased violence in Syria because it provides anexcuse for the Bashar al-Assad regime to exterminate even moreinnocent Sunni Arab civilians, expires on July 20. The British textfor a new resolution extends the observer mission, but it alsoauthorizes “Chapter 7” military enforcement, which Russia refuses toendorse. According to Lavrov,

“To our great regret, there are elements ofblackmail. We are being told that if you do not agree to passingthe resolution under Chapter 7 of the U.N. Charter, then we shallrefuse to extend the mandate of the monitoring mission.

We consider it to be an absolutely counterproductive and dangerousapproach, since it is unacceptable to use monitors as bargainingchips.”

The issue is becoming even more heated, as there are some unconfirmedreports that al-Assad is planning to begin using chemical weapons.Meanwhile, the UN’s wandering Gypsy, Kofi Annan, will visit Moscow onTuesday for some reason or other. Reuters and AFP

Germany’s Angela Merkel denies caving in on Spain’s bank bailout

The question is still unresolved whether the European Commission liedwhen officials said that the 100 billion euro bailout of Spain’s bankshad to be guaranteed by Spain’s government, in case the banks can’trepay the bailout loans. The first announcement was that GermanChancellor Angela Merkel had caved into pressure from Spain and Italy,and had agreed that Spain would NOT have to guarantee the loans. Thencame reports that the EuropeanCommission had lied, and that Spain WOULD have to guarantee the loans.Now Merkel is saying that she did NOT cave in to the demands of Spainand Italy, and that it hadn’t yet been decided whether the bank loanswould have to be guaranteed by Spain. Spiegel

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