$LIBOR and sub prime connected , how ?

No different to having global crude oil priced in USD and primary price setting based on NYMEX trading.

Normally the commodity seller sets pricing terms.....
 
Many mortgages are not indexed to treasuries because they are a risk free rate and more easily manipulated by the central bank. Try and read some of Galen Burghardt,s stuff. Libor cash is a huge deep liquid market.
 
Quote from cgar:

Many mortgages are not indexed to treasuries because they are a risk free rate and more easily manipulated by the central bank. Try and read some of Galen Burghardt,s stuff. Libor cash is a huge deep liquid market.
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So the LIBOR can't be manipulated? Give me a break.

If for whatever reason one of the LIBOR banks goes under, all hell will break loose.
 
Who would manipulate it? It is the free market price of money. London Interbank Offer Rate. LIBOR. It is just the price that thease banks are willing to lend money, specifically dollars. They have no power to print dollars or reduce the supply of dollars the way the Fed. does. They cannot target short term rates the way the Fed can through any number of mechanisms.
 
Quote from cgar:

Who would manipulate it? It is the free market price of money. London Interbank Offer Rate. LIBOR. It is just the price that thease banks are willing to lend money, specifically dollars. They have no power to print dollars or reduce the supply of dollars the way the Fed. does. They cannot target short term rates the way the Fed can through any number of mechanisms.
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Who would manipulate it? Someone who is shorting the US housing market or wants to cause a recession in the US. In fact, that's the position of Goldman Sachs, Jim Rogers, and a number other players.
 
Look, London is a global banking hub. A large portion currency trading is done through that location.Also, a large portion of global trade is still done in dollars. So an awfull lot of money changing is done on Londons watch.That is why the LIBOR rate carries so much weight.

The question was why are so many of the adjustable rate mortgages are indexed to the LIBOR rate.They are because the mortgages are packaged and sold all accross the globe.Now many holders of the investments want to hedge dollar risk.

Since the pricing of dollars for the rest of the world is done during the London session in many cases ,they rely on that mechanism for price discovery.

Maybe you are right, there is a wide conspiracy to tank the U.S. housing market.I am not smart enough to figure out how that would be done.All I know is that adjustable mortgages are indexed to LIBOR and it makes sense to me.They are not indexed to Treasuries because that is a risk free rate and the spreads between treasuries and non treasury rates can be very volatile and more difficult to manage.

I am done.You may have the last word.

Happy Holidays.
 
Quote from Retired:

So the LIBOR can't be manipulated? Give me a break.

If for whatever reason one of the LIBOR banks goes under, all hell will break loose.
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eurodollar futures are the libor rate. you think the most liquid contract can be manipulated
 
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