'Monopoly': Calling the Global Financial Sector What It Is
Published on Thursday, June 28, 2012 by Common Dreams
'Monopoly': Calling the Global Financial Sector What It Is
by Sasha Breger Bush
New York Times columnists Protess and Scott report that Barclays Bank is paying some US$450 million to regulators in the US and UK to resolve accusations surrounding its manipulation of a key interest rate, the London Inter-Bank Offer Rate (Libor), during the first years of the ongoing global financial crisis. According to the article, the Libor rate is used as a benchmark rate to price some US$350 trillion in financial products worldwide each year, from credit cards to derivatives and student loans.
The Financial Times reports that the investigation now spans 12 regulatorsfrom the US to Europe and Japanand 20 banks, including the multinational giants JP Morgan, Citigroup, Bank of America, UBS and Deutsche Bank. The general idea is that the big banksso far only Barclays has admitted wrongdoingmisreported the rates at which they borrowed from other banks, influencing the LIBOR rate so as to profit the banks. Barclays has also admitted to allowing consultations between various bank departments, and between itself and other banks, before reporting its rates to Libor, an illicit practice.
In most accounts, blame for such unsavory practices are spread around from bank managers and employees seeking higher profits and lower losses, to regulators who were asleep at the wheel, to the secretive and opaque process by which the Libor rate is set. Yet, behind the regulators and the greedy bankers, lies the m word that no one dares utter in the business pressesmonopoly. The global financial system is increasingly run by a few big firms operating in a highly uncompetitive market place and wielding enormous power, often behind a veil of secrecy, (intentional) regulatory blindness, and technical complexity.
As any introductory economic textbook shows, imperfectly competitive marketplaces (e.g. monopoly, monopsony, oligopoly and oligopsony) are defined by the ability of a few firms, or only one firm, to manipulate prices and other exchange terms. As markets concentrate, and free competition is replaced by collusion and superprofits, firms gain the market power to influence market rules and prices in their own interest. Indeed, any college freshman in an traditional economics department could foresee that growing concentration in global credit markets would result in price distortions, to the detriment of consumers and other less powerful actors. And, some might also be able to cite a few examples of the manner in which market power confers political power, another dangerous dimension of monopolistic market structures frequently noted in the Marxist tradition, among others (think, say, of Goldman Sachs ability to staff the US Treasury and Federal Reserve). .................(more)
The complete piece is at: http://www.commondreams.org/view/2012/06/28-3
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(15,064 posts)The Wielding Truth
(11,415 posts)middle class. A graduated tax system and anti-trust laws are the rungs of the economic ladder. Programs that insure those in trouble do not suffer the harshest of loses are necessary and healthcare is a right.
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(3 posts)A short while back, Directors of a business that I and about fifty colleagues worked for, lied to the staff and then took advantage of loopholes in Employment law to withhold wages, and cheat employees out of the money that they had earned http://bobblackmanmp.info/ The local MP, Bob Blackman, and other Government officials then simply claimed that it was not in the public interest to do anything about this matter, or to introduce new legislation to outlaw these kinds of sharp practise.
Now, greedy Bankers lie, cheat and steal, but, the Government response still appears to be that it is neither in the public interest to do anything about this matter, nor to bring in new legislation.