From incredibly important Matt Taibbi story:
“Conspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world’s largest banks may be fixing the prices of, well, just about everything.”
And from the last page:
“After scandals involving libor and, perhaps, ISDAfix, the question that should have everyone freaked out is this: What other markets out there carry the same potential for manipulation? The answer to that question is far from reassuring, because the potential is almost everywhere. From gold to gas to swaps to interest rates, prices all over the world are dependent upon little private cabals of cigar-chomping insiders we’re forced to trust.
‘In all the over-the-counter markets, you don’t really have pricing except by a bunch of guys getting together,’ Masters notes glumly.
That includes the markets for gold (where prices are set by five banks in a Libor-ish teleconferencing process that, ironically, was created in part by N M Rothschild & Sons) and silver (whose price is set by just three banks), as well as benchmark rates in numerous other commodities – jet fuel, diesel, electric power, coal, you name it. The problem in each of these markets is the same: We all have to rely upon the honesty of companies like Barclays (already caught and fined $453 million for rigging Libor) or JPMorgan Chase (paid a $228 million settlement for rigging municipal-bond auctions) or UBS (fined a collective $1.66 billion for both muni-bond rigging and Libor manipulation) to faithfully report the real prices of things like interest rates, swaps, currencies and commodities.”
What is the most important factor in a market system? Price. That’s it. Prices are the most important factor. Sellers want the highest price, buyers want the lowest. In a market system in which worthless currency is traded for goods and services, price is everything.
In fact, prices–i.e., how much worthless currency one must trade for goods or services–are so important that there is an entire profession devoted to setting prices: appraising. We are taught from birth that price-fixing is not only illegal, but immoral. We are taught that competition is the only fair way to conduct business and that monopolies are anti-competitive and therefore bad. We are taught that price controls are bad, and that “you get what you pay for.” We are taught that the “invisible hand of the market” will determine the correct, fairest price.
None of these concepts are controversial, or original with me, or even particularly remarkable because they’ve been drilled into our heads so much that they just seem too obvious. But we have to face the fact that we have been duped. Price-fixing goes on every day.