Real Scandal No. 1: Global Banking Conspiracy

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Even at the ten-foot-pole distance I keep from news media I am still hearing echoes of the "IRS scandal" in which field personnel applied certain keywords to screen for potential tax-evasion schemes by possibly illegitimate nonprofit political groups. Arguably, depending on the specifics, the story could be important enough to continue dissecting. I don't buy it, though: problem discovered, plausible explanation extracted, congressional hearings held, officials held accountable with loss of jobs, and dire warnings of jackbooted IRS thugs hiding in the hosta patch.

I've heard no echoes, though---not even on The Liberal NPR---about

the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that's trillion, with a "t") worth of financial instruments.

The Libor scandal is last year's news, so corporate media and political celebrities long ago directed everyone to look forward instead of indulging in fingerpointing and recriminations in order to avoid Tearing The Nation Apart With Partisan Bickering. So, fair enough: no echoes.

But have you even heard a peep about this one anywhere outside of Rolling Stone?

Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world's largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps.

Interest-rate swaps are a tool used by big cities, major corporations and sovereign governments to manage their debt, and the scale of their use is almost unimaginably massive. It's about a $379 trillion market, meaning that any manipulation would affect a pile of assets about 100 times the size of the United States federal budget.

Matt Taibbi reported on the ISDAfix, um... fix in April. I understand that this was literally months ago (as of today, at least). But, seriously. Considering Libor and ISDAfix only, this is an issue of price fixing and insider trading that rigs markets encompassing about $880 trillion in financial assets. According to my arithmetic, that's getting close to $1 quadrillion.

If you are interested in the parallels between the crime syndicate and international financial institutions, I recommend that you read Taibbi's whole piece. If you're not that interested, at least keep in mind the figure of $1 quadrillion when you hear Tea Party conservatives complaining about the (phony) looming Social Security bankruptcy or marveling about which planet a stack of dollar bills in the amount of the (falling) federal deficit would reach.

Think about it next time you hear Fiscally Responsible Moderates lament the fact that public-sector pensions, mass transit, and safe bridges are no longer luxuries "we" can afford, because transnational financial pirates routinely loot the funds supporting such projects.

At the very least, do click through to the Taibbi story and read the first paragraph. It's a perfect Fifty50 footnote for any story I tag with the label sympathy for the wingnut.