The LIBOR scandal meets Jon Stewart
The headquarters of Barclays Bank in London, England.
The financial information website Investopedia defines the London Interbank Offered Rate — or LIBOR — like this:
"An interest rate at which banks can borrow funds, in marketable size, from other banks in the London interbank market. The LIBOR is fixed on a daily basis by the British Bankers' Association. The LIBOR is derived from a filtered average of the world's most creditworthy banks' interbank deposit rates for larger loans with maturities between overnight and one full year."
Jon Stewart of the Daily Show defines it a little differently:
"The mythical half wild boar-half lion that was rumored to have killed Achilles' brother Jimmy the Greek."
Yes, you know it's finally a real crisis when the Daily Show digs in.
Stewart and team last night humorously dismembered everyone involved (and more) in the widening scandal — from Fox News anchors to Republicans to, of course, those at the heart of the story: bankers.
"Never trust anything that's rhyming with wankers," Stewart added.
It couldn't have been that hard to write this segment.
Even some of the key bankers' very names — like Rich Ricci and Bob Diamond of Barclays — help Stewart's job of getting us to laugh at this mess.
Here's the segment, broken up into two parts by Comedy Central:
And here's part two:
The Daily Show
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Yes, this is funny and very entertaining stuff.
The Daily Show is clearly doing its job of using humor to root out deeper truths. We should all be grateful for that.
But digging deeper, the segment resonates because the LIBOR rate — and what it represents — is so important to how the global financial system operates.
Because this benchmark rate is at the center of so much financial activity, the manipulation of this key rate raises serious questions about the essential fairness of our interconnected global economy.
Simply put, what happens with a handful of bankers in London matters to millions of people around the world.
It affects students looking for loans, people trying to buy homes, small businesses owners trying to raise capital to fund new ideas and create jobs, and just about everything else that underpins our shared global financial system.
And at the bottom of this capitalist system is trust — a necessary and shared belief that rates are fairly determined by the market, and that there are responsible people making sure that the rules of the game are enforced for all, not for just a fortunate few in pinstripes.
Trust is the whole game in economics. Without it, everything else falls apart.
This trust has been severely damaged since the beginning of the Great Recession in 2008 — from the implosion of the US housing market and its economic consequences, to the explosion of complex financial instruments that helped facilitate that mess, to the tepid and often ineffectual policy responses of regulators and elected politicians worldwide.
As Jon Stewart and his talented gang know, this deeper truth is no laughing matter.
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