Ok, the play on Shakespeare’s line did not come off that well but the point I’m trying to make is that the all encompassing Libor rate is being questioned by the finance elites of this world. First it was the Wall Street Journal and now it is Wharton which is questioning whether the rate is accurate or not. Why should this concern you and me? Well because the rate at which we borrow to pay for our home or our car depends on this fundamental rate. It seems the banks that report this rate voluntarily without any advanced mechanisms for checks and balances are not reporting it accurately. People are speculating that they are trying to hide their true cost of borrowing to avoid a Bear Stearns situation and thus be forced into a credit crunch. So it seems that we are unnecessarily paying more interest just because a bunch of banks decided they don’t want the world to know their true cost of borrowing. Another nail in the transparency of the financial institutions of the world.
Pranjal.in :: Random Musings
Nothing random about it!
