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Have Regulators Really Defused The Year-End $230 Trillion LIBOR Derivative Time-Bomb?

Years ago, we predicted that the Fed's commitment to phase out Libor, the interest rate set by committee (not market forces) that had come to undergird trillions of dollars in loans and securities around the world, would ultimately prove unsuccessful.

Now, as the FT points out, it appears we were correct.

Libor won't be phased out completely by the start of next year. While technically speaking no new securities can be bechmarked to Libor, there's still the matter of the $230 trillion in existing contracts that rely on the benchmark. And the rates that undergird these contracts will continue to be published.

Still, plenty of other Libor rates won't. Only the most popular will survive, according to the FT. So in a way, next month does mark the moment when "four years of arduous preparation to live without it goes into effect."

"It’s one of the biggest transitions in financial markets in decades," said Dixit Joshi, group treasurer of Deutsche Bank.

"This is a milestone for the regulators since the great financial crisis about lessons learned."

But it's not a complete break, which is what the world was promised in the wake of the scandals that inspired the decision.

Much lower in its story on the impending Libor deadline, the FT concedes that, in order to make the transition "work", America's financial regulators had to help build a workaround whereby futures markets based on the US dollar LIbor would need to be allowed to continue on until mid-2023, something we noted a year ago.

As a result, the US dollar Libor rates will continue to be published until that point (and potentially beyond mid-2023, once regulators devise some new excuse for keeping it alive for even longer).

According to one expert quoted by the FT, most people never even believed regulators would make it this far which is...not exactly a vote of confidence.

“If you’d asked anyone at the end of 2017 if this was going to happen by the end of 2021, they’d have laughed at you,” said Sarah Boyce of the UK’s Association of Corporate Treasurers.

Now it seems the skeptics have been partially vindicated.

That scepticism has been partially vindicated. Even as the year began, contracts worth $265tn were still attached to Libor. Embedding an alternative for US dollar Libor has been particularly tricky because it was a new rate. To ease the burden, UK and US authorities have allowed US dollar Libor for existing contracts to continue until mid-2023, although new business is barred after December. The FCA also allowed “synthetic” versions of sterling and yen Libor for a year to wean more stubborn contracts off the rate. Even so, daily publication of 24 Libor rates will go after December.

US regulators decided to create a whole new rate to try and wean people off of Libor, and still they've been met with only limited success. The new rate is called "Sofr" - the "Secured Overnight Financing Rate". According to data from the government, the latest Sofr overnight rate is close to even with its Libor equivalent.

At the end of the day, forcing lenders to stop using Libor will be like "enforcing prohibition." Parties will keep on using Libor until the very last second, until continuing on is no longer an option.

"Telling people to stop using Libor is like reimposing prohibition. People will keep drinking right up until the last moment," said Mark Cabana, head of US rates strategy at Bank of America.

And regulators are warning now that this time, they're for real.

"Market participants have all the tools they need to meet this deadline. The responsibility is on market participants to take the action needed to prepare for a world with no new Libor," said Tom Wipf, a senior executive at Morgan Stanley, who chairs the industry body to lead the shift from US dollar Libor.

Even so, the market accepts change is coming. At CME Group, the world’s largest futures market, open positions in Sofr-linked futures outstripped Libor-linked futures for the first time in December.

Prosecutors first accused banks of more or less openly rigging Libor in their own favor to benefit their trading books back in 2012.

Even if regulators succeed at getting rid of Libor, pretty soon, a whole decade will have passed since the discovery of the 'scandals' that inspired regulators to go after Libor. Soon, people will forget why they even bothered to try to dump Libor in the first place. One critic described the transition as akin to "open heart surgery" for the financial system. And it's going to be difficult to keep justifying something so taxing.

Tyler Durden Thu, 12/30/2021 - 18:00
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Schiffty Character - Never Let Reality Get In The Way Of Political Goals

Authored by Dominick Sansome via TheAmericanConservative.com,

Earlier this month, Representative Adam Schiff was reported to have doctored a text message between former White House Chief of Staff Mark Meadows and Republican representative Jim Jordan in the ongoing investigations of the House January 6 Committee. This report should hardly come as a surprise.

On the House floor, Schiff was confronted by Republican Congressman Jim Comer for peddling the “Russia hoax.” He responded by launching into a tirade of circumstantial evidence that was supposed to prove Trump-Russia collusion. Given Schiff’s most recent ethically questionable choice in the January 6 Commission, it is worth recounting his central role in the collusion investigations.

Schiff was one of the main proponents of the collusion theory from day one.

Throughout the 45th president’s tenure, the congressman continuously assured the Trump-deranged media that there was “plenty of evidence” of collusion with Russia hiding “in plain sight”, and that the proof was “more than circumstantial.” Despite substantial evidence to the contrary, he also continued to maintain the legitimacy of the legally abominable FBI application for surveillance warrants on then-Trump aide Carter Paige, one of the main premises justifying the subsequent Mueller investigation.

Schiff was undeterred when House Intelligence Chair Devin Nunes released a memo in 2018 that detailed this corrupt FISA process. Nunes, a Republican congressman also from California, presented damning proof that the entire application was largely predicated on the now-debunked dossier by Christopher Steele—in reality, a political operation funded by the Clinton campaign through research firm Fusion GPS. Nunes’ memo was immediately denounced by the entire Democrat establishment as false, and Schiff subsequently responded with a memo of his own. The latter purported to document the errors of its Republican-derived counterpart.

Naturally, the Schiff memo was the story that stuck for the zealots of the Russia collusion cult in Washington and their media enablers; this, despite the fact that DOJ Inspector General Michael Horowitz would go on to confirm the veracity of the very claims on which Schiff was attempting to cast doubt. The Wall Street Journal previously documented the exact falsehoods in the Schiff memo and the inspector general’s refutations here.

When Schiff was called out by Comer on the House floor, the former launched into a series of “Are you aware?” questions that were ostensibly meant to maintain support for the Trump-Russia thesis (outside of the Steele Dossier). Yet Schiff’s statements are still based on, to use his own words, mere “circumstantial evidence.” It is worth considering Schiff’s reasoning behind each claim:

“Are you aware that the president’s campaign chairman, Paul Manafort, met with an agent of Russian intelligence and provided Russian intelligence with internal campaign polling data, as well as strategic insights about their intelligence in key battleground states?”

The “agent of Russian intelligence” to whom Schiff is referring here is Manafort’s longtime Ukrainian business associate Konstantin Kilimnik. According to the Washington Times, the Senate Select Committee on Intelligence’s final report on Russian election interference—a more than 900 page report of which Kilimnik and Manafort are central focuses—states that Kilimnik was “a Russian intelligence officer.” Manafort’s lawyer responded to the accusation by claiming that there are classified documents that would, if released, prove this to be false; however, if Kilimnik is indeed a Russian asset as stated by the Senate report, then he “may have been connected to the GRU [Russian state intelligence service]” responsible for hacking into the DNC in 2016.

In the second part of his statement, Schiff refers to Manafort’s providing polling data to Russian intelligence (Kilimnik, on the presumption that he is a Russian agent). The Mueller report had already cast doubt on this being connected to “Russian interference,” however, as the meeting in which this transaction took place is purported to have happened only after the reports of a Russian cyber attack had already been released by the U.S. media. Collusion would thereby be assumed only on the evidence that Manafort had an ongoing relationship with Kilimnik, and must have subsequently known about the latter’s speculative ties with the GRU and its attempt to influence the U.S. election. Circumstantial indeed.

“Are you aware that while the Trump campaign chairman was providing internal polling data, that Kremlin intelligence was leading a clandestine social media campaign to elect Donald Trump?”

In 2020, the Senate Intelligence Committee released a report defending a 2017 intelligence community assessment that there was “unprecedented Russian interference in the 2016 U.S. Presidential election.” The report finds that the essential task of the Russian interference was to sow discord in the United States, primarily through social media posts and advertisements that were aimed at denigrating Hillary Clinton and undermining trust in U.S. democracy.

This is in part contrary to the 2018 House Intelligence Committee report, which found that the intelligence community’s assessment on “Putin’s strategic intentions” were insufficient. When viewing the various posts, advertisements, and accounts (examples available for download from the House Report here) attributed to Russian intelligence agents, it is evident that there was a clear intention to sow discord; however, the sheer number of social justice posts related to racial equality and police brutality seem to suggest that the Russian influencers may have sought social tension as the goal in itself, rather than a means to get Trump in particular elected.

Regardless, Schiff’s two statements together allude to the notion that Manafort was giving polling data in battleground states to Kilimnik, ostensibly all in an attempt to then have Russian hackers specifically target voters in politically purple areas.

“I am aware of President Trump’s son meeting secretly in Trump Tower New York with a Russian delegation with the purpose of receiving dirt on Hillary Clinton, which the Russian delegation represented was part of the Russian government’s effort to help elect Donald Trump in 2016.… And when asked about that secret meeting, both the president and his son lied about it.”

Donald Trump Jr. did indeed meet with Russian lawyer Natalia Veselnitskaya. The meeting is reported to have been short and fruitless, with then-candidate Trump having had no knowledge of it. Although this is not illegal, it is ethically questionable, even given the fact that politics is indeed a dirty game; however, it also incidentally sheds light on another strange development in the Trump-Russia saga. Veselnitskaya is documented as having met with Fusion GPS co-founder Glenn Simpson just hours before the Trump Tower meeting, and then again after. Recall that Fusion GPS is the Clinton-financed firm responsible for compiling the Steele Dossier, seeking to tie Trump to Russia. While Trump Jr. meeting with Veselnitskaya under the pretenses of getting dirt on a political opponent may not be considered honorable (even though that was the very mechanism working against Trump at that exact moment), the surrounding circumstances raise just as many, if not more, questions about Clinton corruption as they do Trump collusion.

Although not mentioned by Schiff in this specific instance, also consider his maintaining the guilt of Trump’s National Security Advisor Michael Flynn. In another supposed tie between Trump and Russia, Flynn was caught in a carefully set perjury trap arranged by James Comey’s FBI. Comey actually bragged in an open forum about his taking advantage of the hectic Trump transition—which unelected bureaucratic forces and Obama holdovers mobilized to make as difficult as possible—to get agents into the White House and attempt to interrogate various officials, of whom Flynn was foremost.

Schiff is not unique in his views among the Democratic Party or its political allies in relation to the Russia narrative, and no one can question the congressman’s determination in investigating corruption stories related to Trump—regardless of how scant or shoddy the hard evidence that the allegations are based on may be. It is important, however, to consider the circumstances he presents in support of his ongoing belief in collusion, as it is telling of how the congressman treats evidence that is politically inexpedient to his predetermined conclusions.

This is relevant given his central position on the House January 6 Committee, and may have very real consequences for the fate of the American citizen’s upon whom the latter’s deliberations are focused.

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Prosecutors Quietly Dropped Case Against Epstein Jail Guards During Ghislaine Maxwell Trial

While Ghislaine Maxwell stood trial for her part in Jeffrey Epstein's underage sex-trafficking operation, federal prosecutors quietly dropped their case against two jail guards who allegedly 'slept on the job' while the wealthy pedophile killed himself - or was murdered, depending on who you believe, or whether one has common sense.

On December 13, federal prosecutors in Manhattan signed a nolle prosequi, a document indicating to the judge that they wish to drop the case, according to Insider. The filing didn't appear on the court's public docket until Thursday, more than two weeks later, and one day after Maxwell was convicted for sex-trafficking girls to Epstein to be sexually abused.

The guards, Tova Noel and Michael Thomas, were arrested charged in November 2019. According to the original complaint, they two had fallen asleep, browsed news feeds, and shopped for motorcycles and furniture (with unexpected income, perhaps?), instead of performing their rounds at the Metropolitan Correctional Center. They were also charged with falsifying documents and conspiracy to defraud the US.

Did we mention that prison surveillance footage of the alleged suicide disappeared? Yes, we did.

Did we mention that Epstein had reportedly been in 'good spirits' right before his suicide - meeting with his lawyers for up to 12 hours a day to discuss his case? Yes, we did.

Epstein, or a homeless guy in an Epstein mask, was found dead in his cell on the morning of August 10, 2019. While the NY City head coroner ruled it a suicide, Epstein's brother hired a private coroner who ruled that the financier's broken neck bones were more consistent with a homicide.

Noel and Thomas pleaded not guilty to the charges against them for falsifying records. In May this year, they entered a deferred prosecution agreement where prosecutors agreed not to bring the guards' case to trial until after they finished cooperating with an investigation into the circumstances of Epstein's death with the Justice Department's Office of the Inspector General. The OIG has yet to release a report in connection with the investigation.

A public status conference for the case against Noel and Thomas had been scheduled for December 16, but was canceled on December 15 without explanation, or scheduling of a future meeting. -Insider

According to the December 13 filing, Noel and Thomas had complied with the terms of their non-prosecution agreement and completed community service.

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Canada Cancels Unvaccinated Joe Rogan: Can't Attend His Own Sold-Out Show

Joe Rogan was set to attend his long anticipated Vancouver show scheduled for April 20, which has long been sold out, but on Wednesday The Hill is reporting it's been canceled due to the Canadian government barring him from entry for the event

"Ticketmaster Wednesday on its website confirmed that Rogan’s Vancouver show had been canceled and ticket holders would receive a refund," The Hill reports. However, the event has been pushed to a much later date in 2022, though it's unclear whether Canada will relax its vaccine requirement to cross the border by that point (at the rate things are going, an unlikelihood). "According to Rogan’s Facebook page, the event has been rescheduled for Oct. 24," The Hill added.

Rogan himself had hinted that the cancelation is coming, given Canada's strict requirements for all entering its territory of showing proof of "fully vaccinated" status.

During his Dec.24th episode of "The Joe Rogan Experience" podcast, which gets more listeners than even major mainstream TV network shows get viewers during prime time hours, Rogan explained, "I should probably say this because I haven't yet. My 4/20 show that's sold out in Vancouver — I don't think that's happening." 

He then vented to his guest, comedian Tim Dillon, that it's ridiculous that unlike an increasing number of European countries Canada doesn't recognize natural immunity from a prior infection. 

"I don't think I can even get into the country. I'm not vaccinated. I'm not gonna get vaccinated. I have antibodies, it doesn't make any sense," Rogan said.

Since announcing that he had Covid in late August in a social media post last September, Rogan has been at the center of mainstream media attacks over his spending a lot of time describing his personal experience with a mix of medications given by a doctor. Additionally he had given advice to friends based on his successfully and fully recovering in a matter of a few days.

Rogan posted the following image announcing the show's cancelation and postponement:

This included the supposedly "controversial" ivermectin (which led to disinformation and personal attacks from CNN), in addition to a treatment of monoclonal antibodies, a Z-pack, prednisone, an NAD drip, as well as a vitamin drip.

Also contributing to the Vancouver show's cancelation is the current implementation of what are essentially "Covid passports" for a number of indoor and public venues. "The Canadian territory requires proof of vaccination to gain entry into some indoor businesses and event spacesincluding Rogers Arena, where Rogan’s show was set to take place," The Hill underscores.

For Rogan fans in Canada, the likelihood is that he's not going to be let in the country even by late 2022. A number of health officials in Western governments have of late declared various forms of policies which sound like "mandates forever" as they promote the notion that citizens must get ready to live under pandemic conditions for possibly more years to come. 

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Doug Casey On How Marxists Captured The Universities And Will Soon Capture The Nation

Authored by Doug Casey via InternationalMan.com,

International Man: Communist and socialist ideas are growing in popularity among the millennial and Gen Z generations. In fact, the majority of young people dislike capitalism and favor a more socialist or even a communist economic system.

This is evidenced by the rise of politicians like Alexandria Ocasio Cortez (AOC) and The Squad.

What’s your take on this?

Doug Casey: The youth are being corrupted, and it’s more serious than ever. Although I say that a bit tongue-in-cheek since people have probably thought the youth were becoming degenerate since about day one.

For instance, one of the two charges against Socrates when he was executed in Ancient Greece was corrupting the youth. Older people always think the youth are foolish, ignorant, lazy, crazy and generally taking the world to hell in a handbasket. And, of course, many of their charges are, and always have been, true.

But as kids get older, they generally get wiser, more knowledgeable, harder-working, and more prudent—nothing new here. The world has survived roughly 250 new generations since civilization began in Sumer 5,000 years ago. And it will likely survive this one too.

That’s the bright side. And, as you know, I always look on the bright side. But, on the other hand, the American university system has been totally captured by Cultural Marxists, socialists, statists, collectivists, promoters of identity politics, and people of that ilk. These people hate Western Civilization and its values and are actively trying to destroy them. My view is that this challenge is perhaps the most serious we’ve ever encountered, and the dangers are greatly amplified by advancing technology.

International Man: What role are Western universities playing? How is this shaping current and future generations?

Doug Casey: Universities have been totally transformed in many ways over the past century, and it’s been for the worst in every instance. When the average 18-year-old goes to college, he knows very little about how the world works in general. He’s got vague ideas he picked up mostly from TV, movies, and people who got a job teaching high school. They know basically nothing about economics, government, or history. Worse, what they think they know is mostly wrong.

That makes them easy prey for professors with totally bent views to indoctrinate them.

It’s not so much that they’re taught inaccurate facts. There are plenty of “factoids” (artificial facts), of course—like the War Between the States (which shouldn’t be called the Civil War) was mainly fought to free the slaves. Or that Keynesian economics is correct. Or that the US is a democracy ruled by “We the People.” And many, many more. But that’s just part of the problem.

It’s not just the factoids they’re taught. It’s the way the schools interpret actual facts and the kind of meaning they infuse into events. The “why?” of events is twisted, and concepts of good and evil are perverted. The education system has been almost completely captured by Marxists and other leftists. They’re in a position to indoctrinate the youth, and they use that power to the maximum. Once a kid’s thoughts are bent—much the way a tree can be bent as a sapling—in one direction or another, it’s very hard to straighten them out.

Of course, that leads to the question of whether the youth should be directed one way or another in the first place. Which values are “right” or “wrong?” I certainly have views on that subject, but this isn’t the place to go into them—beyond saying that basic values are too important to be left to random government employees.

The real problem, however, is that today’s education does not teach critical thinking. Rather just the opposite is true. Students are taught blind acceptance of what’s currently considered politically correct.

Instead of questioning authority in a peaceful and rational manner—which is what Socrates did—the current idea is to prevent any divergent views from even being discussed. The professors are basically all socialists, and the kids tend to believe what they’re taught. Those views are reinforced by the other sources of information surrounding them—Hollywood, mass media, and the government itself.

Destructive ideas usually start with “intellectuals.” Intellectuals typically despise business, commerce, and production, and they envy the money the capitalists have. Intellectuals feel they’re not only smarter but also much more moral than business people. That gives them the right, in their own eyes, to dictate to everyone else. They’re usually socialists, and approve of “cadres” like themselves, ordering everyone else around. Intellectuals naturally gravitate to the universities, where they’re paid to hang out with each other, be lionized by kids, and hatch goofy ideas.

This has always been the case. But it’s become a much bigger problem than in the past, partly because a much, much higher percentage of kids go to college now than ever before. Even in the recent past, at most five or 10 percent of kids went to college. These days, almost everybody goes, and a much higher proportion of the youth are being infected with leftist memes than ever before.

Some kids will grow out of it and realize that most of what they’ve paid an exorbitant amount of money to learn is nonsense. But most will reflexively defend what they were taught in the cocoon. And I’m afraid those people now make up a big chunk of the U.S. population.

Kids who are polled say that they think socialism is good.. I suspect the polls are accurate. And even if they don’t think it, almost all of them feel it—although few know the difference between thinking and feeling … If you’re brought up thinking that the values of socialism and the welfare state are good, and everyone around you believes in them, the chances are you will too.

International Man: What are your thoughts on the emphasis on identity politics and the concept of “white privilege?”

Doug Casey: Identity politics is essentially the idea that a person is first and foremost a member of some race or ethnicity and only secondarily an individual. In recent years, most people have been indoctrinated indirectly and directly, subtly and overtly, to believe white people and the civilization they created are bad. The meme is everywhere. They’ve come to believe Western Civilization is a bad thing and that white people are destroying the world.

Even if they don’t want to believe it because the concept is so stupid and so utterly contrafactual, they end up accepting it just because they’ve heard it over and over. Propaganda works. Memes that originated with intellectuals in universities have thoroughly infiltrated the mass media and the entertainment industry. It’s perverse how today’s “thought leaders” overwhelmingly think the same thing.

There’s been no defense at all—forget about a counterattack—from so-called capitalists and business leaders. All they’re interested in is making money. In fact, they not only accept the ideas but contribute money to the causes of their enemies, idiotically thinking that virtue-signaling will placate them. It’s an unfortunate fact that business people, especially the suits managing large corporations, don’t really care how they make money. They tend to be completely amoral or immoral philistines and political hacks. They look like hypocrites and are (correctly) held in contempt by the intellectuals. The corporate types are happy to work with and for their counterparts in government, which is exactly what the fascism of Mussolini advocated. They self-righteously make charitable contributions to universities and NGOs, subsidizing the source of the poison.

There’s almost no defense of the ideas that brought us Western Civilization, which is responsible for just about everything that’s good in the world. I’m not kidding when I make that assertion. With the exception of a few anomalies like Taoism, martial arts, yoga, and Oriental cooking, East minus West equals zero. Without it, the whole world would resemble Africa, Cambodia, or Mongolia—not even today, but 200 years ago. Ideas like individualism, freedom of thought, freedom of speech, science, rationality, and capitalism are products of Western Civilization. These concepts no longer have any defenders anywhere. They’re under attack everywhere.

International Man: What do you think the impact of this will be on the markets and the economy?

Doug Casey: I’m bearish, especially for the near term since actual Jacobins are in charge in Washington.

How can the markets be healthy when what passes for a ruling class in the West actually hate themselves and middle class is collapsing economically and psychologically? When, political entrepreneurship is valued more than making money through production, When the currency is being actively destroyed to prop up what has become a very corrupt political system?

In fact, the economy and the markets are the least of our problems. The very foundation of civilization itself is under attack. The widespread acceptance of destructive statist and collectivist ideas is serious. The consequences will be the same here as they were in Russia under the Soviets, in Germany under the Nazis, and in China under Mao. The situation may be even more serious since the idea of Western Civilization itself is under serious attack in the U.S., which has been the bulwark for the last century.

So, excuse my bearishness, but I think it’s warranted.

*  *  *

Unfortunately, there’s little any individual can practically do to change the course of these trends in motion. The coming economic and political crisis is going to be much worse, much longer, and very different than what we’ve seen in the past. That’s exactly why New York Times best-selling author Doug Casey and his team just released an urgent new video Doug Casey’s Top 3 Secrets to Survive and Thrive During a Dollar Crisis. It explains what’s to come and exactly what you should do to protect yourself. Click here to watch it now.

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