Back to work week on Wall Street

LIBOR scandal provides toxic background for stocks.

Berkeley Springs, WV, July 9, 2012 — Short column this morning as we’re about to wrap things up here out at our weekend place and head back into the election year chaos that is Washington, DC. This weekend has been, in many respects, a delightful break for us from the market meat-grinder made worse by last week’s vacation-split trading: light volume, heavy volatility, little in the way of predictive action. 

Meanwhile, our post 4th of July weekend consisted, as it has for over a decade, of five new or nearly-new plays, all part of the opening festivities of the Contemporary American Theater Festival in Shepherdstown, WV. In contrast to Washington politics and international banking, this year’s crop of plays was loaded with an unusually high level of intellectual content. Would that we could say the same about Congress and the White House. 

In any event, we’ll be posting our reviews of these new plays over in our Curtain Up! column in the Entertain Us section of Washington Times Communities. And we guarantee these reviews will be far more entertaining than our current crop of Maven columns which, given the market’s state of total confusion, have told pretty much the same tale day after day.

One interesting development that started unfolding last week was the still-building LIBOR scandal in London, something that’s a real challenge to explain in a short column. So we won’t, mostly, relegating this material to our more in-depth Prudent Man column here in business. As soon as we finish the piece. 

As far as this column is concerned, all you need to know about LIBOR is that it’s an interbank lending rate set in London more or less by the banks themselves. And that rate, among many other things, is the key rate off of which mortgage rates, even the ones over here, are set. And word is that these rates have been gamed for years, with that revelation coming from Barclays, but spreading, it seems, to encompass a great number of big bank players. 

So what, you say? Well, it seems as if this little manipulation game, meant to increase interest rate spreads and thus profits for the big banks, was particularly active in the years leading up to the 2007-2008 real estate crash here and elsewhere. Now the financial media are in a tizzy, wondering how much this may have attributed to Great Depression II (the debacle formerly known as the Great Recession.). Gosh, could it have? Ya think? Day by day, the world’s elites are looking more like a bunch of inbred dummies to us. 

At any rate, since we’re going to be on travel shortly, we’ll cut this column off at the past because again we don’t expect much in the way of definitive action in the market, although the latest earnings season is nearly upon us. The market looks to open decisively down this morning, but after that, the HFTs will move in, so who knows. If you’re on vacation, stay there and have fun. We’ll be back with more news tomorrow, but stay put today or reduce a few positions unless they’re REITs or utilities.

Disclaimer: The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate.

Positions mentioned above describe this author’s own investment decisions and should not be construed as either buy or sell recommendations. The current market is highly treacherous and all investors travel at their own risk, so caution should be exercised at all times.

Illustrations, charts, commentary, and analysis are only the author’s view of current or historical market activity and don’t constitute a recommendation to buy or sell any security or contract. Views, indications, and analysis aren’t necessarily predictive of any future market or government action. Rather they indicate the author’s opinion as to a range of possibilities that may occur going forward.

References to other reporters, analysts, pundits, or commentators are illustrative only and do not necessarily represent an endorsement of such individuals’ points of view. If specific investment vehicles are mentioned in any article under this column heading, the author will always fully disclose any active or contemplated investments in said vehicles.

Read more of Terry’s news and reviews at Curtain Up! in the Entertain Us neighborhood of the Washington Times Communities. For Terry’s investing and political insights, visit his Communities columns, The Prudent Man and Morning Market Maven, in Business.

Follow Terry on Twitter @terryp17


This article is the copyrighted property of the writer and Communities @ Written permission must be obtained before reprint in online or print media. REPRINTING TWTC CONTENT WITHOUT PERMISSION AND/OR PAYMENT IS THEFT AND PUNISHABLE BY LAW.

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Terry Ponick

Now writing on investing, politics, music, movies and theater for the Washington Times Communities, Terry was formerly the longtime music and culture critic for the Washington Times print edition (1994-2009) before moving online with Communities in 2010.  



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