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LIBOR Defined

1246

Comments

  • lostinrates
    lostinrates Posts: 55,283 Forumite
    I've been Money Tipped!
    lemonjelly wrote: »
    I'm with you (kinda) on this. It is fascinating stuff in a way. I kinda feel like I almost understand, but am still worried about opening my mouth for fear of proving that I really don't get it!:o

    Still, like I said on another thread, it is very kind of numerous people to explain this kinda stuff!:)


    Are you blond LJ? (I'm sort of tabby ATM)

    I don't mind not getting it. There are people who read and never post here, in part because we are such a ''friendly'' appearing bunch. I'm very aware that when we ask question they get answers too. also where we get it wrong is often where popular conception is wrong thus explicitly addressing our wrongs is more broadly useful.

    The tireless explanations are amazing. Especially when some of them are ''greedy'' bankers and heir time can get lots of money :D:D.
  • Generali
    Generali Posts: 36,411 Forumite
    10,000 Posts Combo Breaker
    tomterm8 wrote: »
    Why would they? I can understand why Libor would misrepresent borrowing costs as being too high, but not why they would intentionally represent them as being lower than reality.

    After all, banks have a lot of deals where the rate they can charge customers is linked to Libor, especially in the US.

    To show they are not perceived as high risk...?
  • inspector_monkfish
    inspector_monkfish Posts: 9,276 Forumite
    Generali wrote: »
    To show they are not perceived as high risk...?

    thats definitely true

    also alot of things are priced to Banks unnoficial 'LIBID' rates, which are tradionally priced 0.125 below LIBOR - so they gotta keep a happy medium :cool:
    Please take the time to have a look around my Daughter's website www.daisypalmertrust.co.uk
    (MSE Andrea says ok!)
  • tomterm8
    tomterm8 Posts: 5,892 Forumite
    Part of the Furniture Combo Breaker
    Generali wrote: »
    To show they are not perceived as high risk...?

    Thanks, I don't know much about Libor. I was wondering whether it was that simple, or whether you thought there were derivatives where mispricing Libor is more profitable than reporting a true figure (the tail wagging the dog, so to speak).

    The other thing that occured to me is it might be a case that the money markets were still somewhat broken, because there was a period just before Northern Rock where it was widely reported that Libor was just made up. No one was really lending to each other at an affordable rate.
    “The ideas of debtor and creditor as to what constitutes a good time never coincide.”
    ― P.G. Wodehouse, Love Among the Chickens
  • Generali
    Generali Posts: 36,411 Forumite
    10,000 Posts Combo Breaker
    tomterm8 wrote: »
    ....Libor was just made up. No one was really lending to each other at an affordable rate.

    I think that was the broad thrust of IM's posts around LIBOR today and yesterday.
  • lemonjelly
    lemonjelly Posts: 8,014 Forumite
    1,000 Posts Combo Breaker Mortgage-free Glee!
    lostinrates wrote: »
    Are you blond LJ? (I'm sort of tabby ATM)

    I don't mind not getting it. There are people who read and never post here, in part because we are such a ''friendly'' appearing bunch. I'm very aware that when we ask question they get answers too. also where we get it wrong is often where popular conception is wrong thus explicitly addressing our wrongs is more broadly useful.

    The tireless explanations are amazing. Especially when some of them are ''greedy'' bankers and heir time can get lots of money :D:D.

    I am a blue eyed blond/blonde lir (see what I did there...;):D)

    I agree with all you say. I have learned a lot the past couple of days (& really enjoyed it here!:)) I know I do ask a lot of questions. I am more grateful than I could explain to the people who have replied. I also really like seeing other posters (I'm looking at you again lir) who ask the type of question I'd ask, as sometimes I worry that I might be taking liberties by constantly asking people stuff & wouldn't want them getting fed up of me!:o
    It's getting harder & harder to keep the government in the manner to which they have become accustomed.
  • Generali
    Generali Posts: 36,411 Forumite
    10,000 Posts Combo Breaker
    lemonjelly wrote: »
    I am a blue eyed blond/blonde lir (see what I did there...;):D)

    I agree with all you say. I have learned a lot the past couple of days (& really enjoyed it here!:)) I know I do ask a lot of questions. I am more grateful than I could explain to the people who have replied. I also really like seeing other posters (I'm looking at you again lir) who ask the type of question I'd ask, as sometimes I worry that I might be taking liberties by constantly asking people stuff & wouldn't want them getting fed up of me!:o

    One of the things I enjoy about posting here is explaining stuff to people. I get the same interest out of it that I did when I was teaching. It's a nice feeling seeing the penny drop and knowing that you gave it the final nudge.
  • lemonjelly
    lemonjelly Posts: 8,014 Forumite
    1,000 Posts Combo Breaker Mortgage-free Glee!
    Generali wrote: »
    One of the things I enjoy about posting here is explaining stuff to people. I get the same interest out of it that I did when I was teaching. It's a nice feeling seeing the penny drop and knowing that you gave it the final nudge.

    Your explanations are excellent Gen. I can see why you would have been a good teacher as your use of language & examples is first class!:)
    It's getting harder & harder to keep the government in the manner to which they have become accustomed.
  • Generali
    Generali Posts: 36,411 Forumite
    10,000 Posts Combo Breaker
    lemonjelly wrote: »
    Your explanations are excellent Gen. I can see why you would have been a good teacher as your use of language & examples is first class!:)

    Thank you very much, that's a very kind thing to say.
  • lemonjelly
    lemonjelly Posts: 8,014 Forumite
    1,000 Posts Combo Breaker Mortgage-free Glee!
    Generali wrote: »
    Thank you very much, that's a very kind thing to say.

    Kind, but deserved & honest.

    You are very welcome.
    It's getting harder & harder to keep the government in the manner to which they have become accustomed.
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