Libor manipulation doesn't necessarily mean Libor lies

Reducing the rates at which you loan is the good sort of manipulation

Yesterday afternoon, Ric Holden (the Conservative Party's press officer) tweeted this quote, apparently from the 8 November 2008 edition of the Daily Express:

Chancellor Alistair Darling summoned bank chiefs to an emergency meeting yesterday before reading them the riot act. Just hours later the banking industry reacted by slashing the Libor - the rate at which banks lend to one another.

It certainly sounds like it plays into the narrative that Labour directly encouraged Barclays to lie about the rate at which it thought it could borrow. But there's an important distinction between the communication between Paul Tucker and Bob Diamond (or rather, Jerry del Missier's apparent misinterpretation of their communication) and the meeting of Darling and the bank chiefs, which is that the latter is plural.

Remember that Libor is the rate at which banks believe they can borrow large sums of money, unsecured, from other banks. There are two ways to artificially reduce that number. One is to encourage the banks to lie about the rate they think they could pay for borrowing; this is what del Missier believed Paul Tucker had done.

The other is to encourage the banks to lend to each other at lower rates. That's not manipulating Libor, although it is, of course, manipulating other aspects of the finance system. It's something you can only do if you have the ear of all the banks, though; if Barclays unilaterally decides to loan to other banks for less, all that happens is they lose money. But if all the banks do that, then interbank lending rates drop.

The Telegraph's Andrew Lilico points out today that that may even be what Paul Tucker was talking about in his "no particular reason why Barclays should be borrowing at such a high rate" comment:

Take this as an example. The Bank of England, if it found that one of the banks – let us call it B Bank – were finding it harder to borrow money than the rest, might have a chat with B Bank to see why. It might reassure senior officials in B Bank that it still regarded B Bank as sound. It might even tell those officials that it would have a chat with other banks to reassure them as well. It might also feel that other banks were sufficiently sound that it would be prepared to provide last resort lending to them. The upshot of B Bank being sound and other banks being able to obtain cash from the Bank of England if necessary might be that other banks should feel able to lend money to B Bank at interbank rates not wildly dissimilar to the rates those other banks lend to each other. A perfectly natural way to convey this, perfectly proper, intention by the central bank to reassure other banks about B Bank might be to say that the Bank of England saw no particular reason why B Bank should always be borrowing at the most expensive rate.

Of course, there is a lesser question here, which is whether we should be using Daily Express reports for any type of historical record. Here are the various dollar Libor rates (from overnight to 12 month) for the two months surrounding the reported meeting, with the black line marking when it apparently occurred (click, as ever, for big):

That doesn't seem like a suspicious drop. Or really a suspicious anything.

Alistair Darling: the Brows are Back, Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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The US intelligence leaks on the Manchester attack are part of a disturbing pattern

Even the United States' strongest allies cannot rely on this president or his administration to keep their secrets.

A special relationship, indeed. British intelligence services will stop sharing information with their American counterparts about the Manchester bombing after leaks persisted even after public rebukes from Amber Rudd (who called the leaks "irritating") and Michael Fallon (who branded them "disappointing").

In what must be a diplomatic first, Britain isn't even the first of the United States' allies to review its intelligence sharing protocols this week. The Israeli government have also "reviewed" their approach to intelligence sharing with Washington after Donald Trump first blabbed information about Isis to the Russian ambassador from a "close ally" of the United States and then told reporters, unprompted, that he had "never mentioned Israel" in the conversation.

Whether the Manchester leaks emanate from political officials appointed by Trump - many of whom tend to be, if you're feeling generous, cranks of the highest order - or discontent with Trump has caused a breakdown in discipline further down the chain, what's clear is that something is very rotten in the Trump administration.

Elsewhere, a transcript of Trump's call to the Philippine strongman Rodrigo Duterte in which the American president revealed that two nuclear submarines had been deployed off the coast of North Korea, has been widely leaked to the American press

It's all part of a clear and disturbing pattern, that even the United States' strongest allies in Tel Aviv and London cannot rely on this president or his administration to keep their secrets.

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.

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