If there were any last doubts they were dispelled by the record $1.5bn fine paid by the Swiss bank UBS for “pervasive” and “epic” efforts to manipulate the benchmark rate of interest – Libor – at which the world’s great banks lend to each other.
By deinfition the manipulation meant that Libor wasn’t the rate at which the world’s great banks were lending to each other. Without manipulation it would have been.
What makes your head reel is the size of this global market. World GDP is around $70tn. The market in interest rate derivatives is worth $310tn. The idea that this has grown to such a scale because of the demands of the real economy better to manage risk is absurd.
You stupid, stupid, man. That’s outstanding nominal, not net.
The centre-left thinktank IPPR reports that people with identical skills earn on average 20% more in financial services than in other industries, with the premium rising the higher the seniority. That wage premium does not come from virtuous hard work or enterprise. It comes from how finance is structured to deliver excessive profit.
Erm, actually, we tend to think that people earn higher wages in businesses and fields with higher productivity….