British Bank, Barclays in an landmark settlement with the U.K. exposed how banks globally have effectively ripped everyone in the world off. Banks are out to make money, but it was exposed last week that instead of protracted investments that sometimes take decades to mature, Banks have been manipulating the interest rate globally to turn huge profits which further destabilise the global economy.
Libor is the base interest rate which is set by the British Bankers Association (BBA). Each week the B.B.A. meets to adjust the Libor rate, and takes submissions for all banks and taks out the highest and lowest 25 percent of submissions then calculates the average, this is Libor.
The Libor is calulated for various currencies and 15 banking periods. At least 10 banks in the United States submit their rates to the B.B.A each week.
The Libor is used to calculate loan interest rates as well as derivatives. These loans cover everything from business operating capitol, student loans to home mortgages. By artificially manipulating the cost at which currency could be borrowed Barclays and possibly other banks have managed to rip everyone off, as these rates effect Forex (Foreign Currency Exchange), the price at which currencies are measured against one another.