On the Rain Slick Precipice of Darkness….

Yes, this blog post is homage to one of my favorite comic strips… Penny Arcade.  Thanks for the great title guys….

But not only does the title sound incredibly scary… it specific describes how we are in our economy….  we will probably fall... but we can fight it!

We truly stand on a precipice that is wet with the tears of those who have made incredibly bad decisions, it’s the slip off this precipice that will cause us to fall head long into the event.

Let’s take one more step toward the “Event” and look today at the LIBOR scandal.

The mainstream media is now finally reporting about how big and how vast and damaging this truly is!

Just so we’re square, let me give you a “layman’s term about what the LIBOR is.

The LIBOR (London Interbank Offered Rate) is the rate on Eurodollars traded between banks in London.

 A Eurodollar is a dollar-denominated deposit in a bank in a country where the currency is not the dollar. The Eurodollar market is more than 40 years old and is a major component of the international financial markets.

LIBOR is quoted on a one-month, three-month, six-month or yearly basis. The six-month LIBOR is the one most commonly quoted for mortgages. Both Fannie Mae and Freddie Mac use LIBOR as an indices for loans they purchase.

The LIBOR rate can be found daily in The Wall Street Journal "Money Rates" table. Until recently it has been considered one of the most important barometers of the international cost of money, LIBOR has historically reflected money market rates more accurately than prime- and Treasury-based indices.

Think of your mortgage rate this way. The LIBOR + the margin your banker sets to make their money = your total mortgage rate.

So… there is the brief over view.

Now… onto the deception.

The sheeple over at MSNBC finally have started to look at the LIBOR scandal now that it is starting to make its way across the pond. 

To give you an idea of what has happened is this; Barclays bank in early June was identified as one of the main firms that were affecting the number of basis points (that is the .xx that they charge you on the loan i.e “your rate is 3.45%”) that the LIBOR is made up of.

Now since MSNBC is run by liberals they like to quote liberals and so Robert Shapiro, former Under Secretary of Commerce and Economic affairs during the Clinton administration is quoted as saying that

“the LIBORwas off by an average of 30 to 40 basis points for several years (one hundred basis points is equal to one percentage point in an interest rate)-- enough to add $50 to $100 to the monthly cost of a $100,000 loan. Healso notes that, between 2007 and 2008, Americans held $11.1 trillion in outstanding residential mortgage debt. During the time of the alleged manipulations between 30 percent and 40 percent of that debt carried adjustable rates.”

Holy Poop – any idea how much money that is?

It has been 5 years since 2007… and in 2007 the median price of a home was $314,600.00 (source: US Census Bureau) … and the 6 month LIBOR rate was 5.370 (source: mortgage-x.comhttp://mortgage-x.com/general/indexes/wsj_libor_history.asp?y=2007)… let’s do some math now…

$11.1 Trillion divided by $314,600.00 = 34,965,034 mortgages that were held.

34,965,034 Mortgages x $100 per month = $3,496,503,400 per month in over charges.

$3,496,503,400 x 12 months a year = 41,958,040,800.00 per year in bogus dollars made.

$41,958,040,800.00 x 5 years = $209,790,204,000.00 for the last five years in fraudulent dollars made.

If that is the case then each family should really be due $6000.00 in back over paid costs. 

Now … this may change because not all mortgages were the same amount… but you get the idea..

So… do you think that the people who are owed this money will ever get it?... Heck no!  There is no way that a dime of any of it will be paid. 

Now… here is where things are starting to get really bad for this situation.  It is now not just Barclays that are under investigation.  Here is the current list of banks being investigated for their part in the fraud;

Citigroup

JP Morgan Chase

HSBC

Deutsche Bank

Royal Bank of Scotland

And the list is growing.  This single event will be the most expensive event to ever affect the financial industry. 

Ever!

They will never be able to pay it back.  If they do it would completely break every bank that is associated with the fraud. 

Greed drove the world to this point. 

It is the greed that caused all of this to take place! It is greed that will be our downfall!

This will contribute to the Event… could it truly be the catalyst? 

Think about it.  It could be the straw that breaks the camel’s theoretical back.What if the whole system came crashing down on our heads?  What would we do?  How would we "restart"?  Could we go back to bartering for goods and services?

What would you be able to barter?  What skills / services can you offer? 

Be ready friends.  Don’t just bury your head in the sand!

Please… Please wake up!  We have to understand that we are walking the razors edge and we are not going to make it.  We are running out of time!

Tell your friends, tell your family members!  Let them know that if they do don't prepare now... there will not be hope for them. 

The Event is coming.  We are the cause... we can be the solution.

Until next time.