In 1993 when the CFTC first picked up excessive trading in silver at PhiBro, the CFTC ran in and demanded to know who the client was. PhiBro refused to tell them it was Warren Buffet and the CFTC said exit the trade. That is why they began to move to London.
It is becoming increasingly apparent that as the global investigation into interest rate manipulations by American and British elected officials, they are starting to realize that regulators turn the other way each and every time and prosecute only the competitors to the big banks so they keep their edge.
Regulators have allowed banks to report false interest rates in the run-up to the 2008 financial crisis and afterwards. Congress requested information about the role of the Federal Reserve Bank of New York as well.
Liquidity has collapsed since 2008. The story I hear traveling around the world is how serious money does NOT trust the banks and brokers. We have a real crisis developing for as taxes rise and governments hunt the rich down like a African Safari, all that is happening is capital is starting to hoard. Trading has shrunk. The German bunds have dropped to about 1/3 of the volume there once was before 2008.
Unless regulators are independent, we run the risk of the financial markets spiraling downward as we head toward the Stone Age in finance. All of this because banks want to trade on a guaranteed basis with other people’s money. The Age of Manipulation is perhaps starting to implode.
The LIBOR scandal seems to be getting somewhere. But of course it took the British to get it going – not the Americans.