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By Richard S. Grossman

The public has been so fatigued by the flood of appalling economic news during the past five years that it can be excused for ignoring a scandal involving an interest rate that most people have never heard of. In fact, the Libor scandal is potentially a bigger threat to capitalism than the stories that have dominated the financial headlines, such as the subprime meltdown, the euro-zone crisis, the Madoff scandal, and the MF Global bankruptcy.

It’s not surprising that Libor has generated less interest than these other stories. It has left neither widespread financial turmoil nor bankrupt celebrities in its wake. It took place largely outside of the United States, further rendering the American media and public more disinterested. It involves technical issues that induce sleep in even the most hard-bitten financial correspondents.

Yet, despite its lower profile, the Libor scandal is potentially more serious than any other financial catastrophe in recent memory.

The subprime crisis can be blamed on poor government management: irresponsible fiscal policy combined with loose monetary policy and poor regulatory enforcement. The euro crisis resulted from one poorly conceived idea: creating one currency when retaining 17 distinct currencies would have been better. The Madoff and MF Global debacles can be chalked up to a few isolated unscrupulous and reckless individuals.

By contrast, the Libor scandal was nothing less than a conspiracy in which a group of shadowy bankers conspired against the majority of participants in the financial system—that is, you and me. And therein lies the danger.

Libor is the acronym for the London InterBank Offered Rate. Previously produced for the British Bankers’ Association, it was calculated by polling between six and 18 large banks daily on how much it cost them to borrow money. The highest and lowest estimates were thrown out and the remainder—about half–were averaged to yield Libor.

Libor plays a vital role in the world financial system because it serves as a benchmark for some $800 trillion in financial contracts–everything ranging from complex derivative securities to more mundane transactions like credit card interest rates and adjustable rate home mortgages.

Since so much money rides on Libor, banks have an incentive to alter submissions to improve their profitability: raising submissions when they are net lenders; lowering them when they are net borrowers. Even small movements in Libor can lead to millions in extra profits–or losses.

Financial conspiracy theories are about as commonplace–and believable–as those on the Kennedy assassination and the Lindbergh kidnapping. This time, however, emails have surfaced proving that banks colluded on their Libor submissions. In one email, a grateful trader at Barclays bank thanked a colleague who altered his Libor submission at the trader’s behest: “Dude. I owe you big time! Come over one day after work and I’m opening a bottle of Bollinger.”

Unfortunately, efforts to reform Libor have been insufficient.

In July British authorities granted a contract to produce the Libor index to NYSE Euronext, the company that owns the New York Stock Exchange, the London International Financial Futures and Options Exchange, and a number of other stock, bond, and derivatives exchanges. In other words, the company that will be responsible for making sure that Libor is set responsibly and fairly will be in a position to reap substantial profits from even the slightest movements in Libor. Like putting foxes in charge of the chicken coop, this is a recipe for disaster.

The financial system’s role is to channel the accumulated savings of society to projects where they can do the most economic good—a process known as intermediation. My retirement savings may help finance the construction of a new factory; yours might help someone pay for a new house. Although Goldman Sachs CEO Lloyd Blankfein exaggerated when he called this function “Doing God’s work,” intermediation is nonetheless a vital function.

Intermediation will come screeching to a halt if individuals, corporations, and governments no longer trust the financial system with their savings. Those who believe that the interest rates they pay and receive are the result of a game that is rigged will just opt out. They may not go so far as to stash their savings under their mattresses, but they will certainly keep it away from the likes of bankers they believe have been cheating them. Instead they will hold it in cash or in government bonds which will reduce the amount of money available for productive purposes.  The consequences for the economy will be severe.

Rather than handing Libor over to a firm with a conflict of interest, the British government should announce that a year from now, Libor will cease to exist. How would markets react to the disappearance of Libor? The way markets always do. They would adapt.

Financial firms will have a year to devise alternative benchmarks for their floating rate products. Given the low repute in which Libor—and the people responsible for it—are held, it would be logical for one or more publicly observable, market-determined (and hence, not subject to manipulation) interest rates to take the place of Libor as currently constructed.

Only by making this important benchmark rate determined in a transparent manner can faith be restored in it.

Richard S. Grossman is Professor of Economics at Wesleyan University and a Visiting Scholar at the Institute for Quantitative Social Science at Harvard University. He is the author of WRONG: Nine Economic Policy Disasters and What We Can Learn from Them and Unsettled Account: The Evolution of Banking in the Industrialized World since 1800.

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Image credit: Stacks of coins with the letters LIBOR isolated on white background. © joxxxxjo via iStockphoto.

The post The trouble with Libor appeared first on OUPblog.

        

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By Chandra Ford

The seventh of February will mark the thirteenth National Black HIV/AIDS Awareness Day. Despite the fact that blacks make up only 14% of the US population, the CDC reports that blacks accounted for 44% of all newly reported HIV infections in 2009, the HIV infection rate among Latinos was nearly three times as high as that of whites, and 1 in 4 persons living with HIV/AIDS in the USA is an older adult (50+ years old).

The CDC reported that 1,600 White, 450 Black, and 300 Latino men aged 50 or older acquired HIV in 2009 through unprotected sex with other men. In other research conducted among senior-housing residents, investigators learned that 42% of residents had been sexually active within the previous six months. One third of the sexually active residents reported two or more partners during that period, but only 20% had regularly used condoms.

Alarmingly, older adults are prone to be disproportionately diagnosed in the late stages of HIV disease. Many older Americans who seek services in public health venues do not undergo testing for HIV infection, some due to mistrust in the government. Researchers in a recent study found among the 226 participants, 30% reported belief in AIDS conspiracy theories, 72% reported government mistrust, and 45% reported not undergoing HIV testing within the past 12 months.

Among African Americans, endorsements of AIDS conspiracy theories stem from historical experiences with racism and medical discrimination, although knowledge of African Americans’ experiences may lead members of other racial/ethnic groups to endorse such theories.

Making HIV testing routine in public health venues may be an efficient way to improve early diagnosis among at-risk older adults. Alternative possibilities include expanding HIV testing in nonpublic health venues. Finally, identifying particular sources of misinformation and mistrust would appear useful for appropriate targeting of HIV testing strategies in the future.

Key calendar dates:
7 February 2013               National Black HIV/AIDS Awareness Day
19 May 2013                       Asian Pacific Islander HIV/AIDS Awareness Day
27 June 2013                     National HIV Testing Day
15 October 2013               National Latino HIV/AIDS Awareness Day
1 December 2013              World AIDS Day

For further reading:

• AIDS.gov
• CDC on HIV/AIDS
• “Belief in AIDS-Related Conspiracy Theories and Mistrust in the Government” by Chandra L. Ford et al. in The Gerontologist

Dr. Chandra Ford is an assistant professor in the Department of Community Health Sciences at UCLA. Her areas of expertise are in the social determinants of HIV/AIDS disparities, the health of sexual minority populations and Critical Race Theory. Ford has received several competitive awards, including the Ruth L. Kirschstein National Research Services Award (an individual dissertation grant) from the National Institutes of Health and a North Carolina Impact Award for her research contributions to North Carolinians. Her most recent research, “Belief in AIDS-Related Conspiracy Theories and Mistrust in the Government” in The Gerontologist, is available to read for free for a limited time.

The Gerontologist, published since 1961, is a bimonthly journal (first issue in February) of The Gerontological Society of America that provides a multidisciplinary perspective on human aging through the publication of research and analysis in gerontology, including social policy, program development, and service delivery. It reflects and informs the broad community of disciplines and professions involved in understanding the aging process and providing service to older people.

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Jolyon Mitchell

A protestor holds a picture of a blood spattered Neda Agha-Soltan and another of a woman, Neda Soltani, who was widely misidentified as Neda Agha-Soltan.

It was agonizing, just a few weeks before publication of Martyrdom: A Very Short Introduction, to discover that there was a minor mistake in one of the captions. Especially frustrating, as it was too late to make the necessary correction to the first print run, though it will be repaired when the book is reprinted. New research had revealed the original mistake. The inaccuracy we had been given had circulated the web and had been published by numerous press agencies and journalists too. What precisely was wrong?

To answer this question it is necessary to go back to Iran. During one of the demonstrations in Tehran following the contested re-election of President Ahmadinejad in 2009, a young woman (Neda Agha-Soltan) stepped out of the car for some fresh air. A few moments later she was shot. As she lay on the ground dying her last moments were captured on film. These graphic pictures were then posted online. Within a few days these images had gone global. Soon demonstrators were using her blood-spattered face on posters protesting against the Iranian regime. Even though she had not intended to be a martyr, her death was turned into a martyrdom in Iran and around the world.

Many reports also placed another photo, purportedly of her looking healthy and flourishing, alongside the one of her bloodied face. It turns out that this was not actually her face but an image taken from the Facebook page of another Iranian with a similar name, Neda Soltani. This woman is still alive, but being incorrectly identified as the martyr has radically changed her life. She later described on BBC World Service (Outlook, 2 October 2012) and on BBC Radio 4 (Woman’s Hour, 22 October 2012) how she received hate mail and pressure from the Iranian Ministry of Intelligence to support the claim that the other Neda was never killed. The visual error made it almost impossible for Soltani to stay in her home country. She fled Iran and was recently granted asylum in Germany. Neda Soltani has even written a book, entitled My Stolen Face, about her experience of being mistaken for a martyr.

The caption should therefore read something like: ‘A protestor holds a picture of a blood spattered Neda Agha-Soltan and another of a woman, Neda Soltani, who was widely misidentified as Neda Agha-Soltan.’ This mistake underlines how significant the role is of those who are left behind after a death. Martyrs are made. They are rarely, if ever, born. Communities remember, preserve, and elaborate upon fatal stories, sometimes turning them into martyrdoms. Neda’s actual death was commonly contested. Some members of the Iranian government described it as the result of a foreign conspiracy, while many others saw her as an innocent martyr. For these protestors she represents the tip of an iceberg of individuals who have recently lost their lives, their freedom, or their relatives in Iran. As such her death became the symbol of a wider protest movement.

This was also the case in several North African countries during the so-called Arab Spring. In Tunisia, in Algeria, and in Egypt the death of an individual was put to use soon after their passing. This is by no means a new phenomenon. Ancient, medieval, and early modern martyrdom stories are still retold, even if they were not captured on film. Tales of martyrdom have been regularly reiterated and amplified through a wide range of media. Woodcuts of martyrdoms from the sixteenth century, gruesome paintings from the seventeenth or eighteenth centuries, photographs of executions from the nineteenth century, and fictional or documentary films from the twentieth century all contribute to the making of martyrs. Inevitably, martyrdom stories are elaborated upon. Like a shipwreck at the bottom of the ocean, they collect barnacles of additional detail. These details may be rooted in history,unintentional mistakes, or simply fictional leaps of the imagination. There is an ongoing debate, for example, around Neda’s life and death. Was she a protestor? How old was she when she died? Who killed her? Was she a martyr?

Martyrdoms commonly attract controversy. One person’s ‘martyr’ is another person’s ‘accidental death’ or ‘suicide bomber’ or ‘terrorist’. One community’s ‘heroic saint’ who died a martyr’s death is another’s ‘pseudo-martyr’ who wasted their life for a false set of beliefs. Martyrs can become the subject of political debate as well as religious devotion. The remains of a well-known martyr can be viewed as holy or in some way sacred. At least one Russian czar, two English kings, and a French monarch have all been described after their death as martyrs.

Neda was neither royalty nor politician. She had a relatively ordinary life, but an extraordinary death. Neda is like so many other individuals who are turned into martyrs: it is by their demise that they are often remembered. In this way even the most ordinary individual can become a martyr to the living after their deaths. Preserving their memory becomes a communal practice, taking place on canvas, in stone, and most recently online. Interpretations, elaborations, and mistakes commonly cluster around martyrdom narratives. These memories can be used both to incite violence and to promote peace. How martyrs are made, remembered, and then used remains the responsibility of the living.

Jolyon Mitchell is Professor of Communications, Arts and Religion, Director of the Centre for Theology and Public Issues (CTPI) and Deputy Director of the Institute for the Advanced Study in the Humanities (IASH) at the University of Edinburgh. He is author and editor of a wide range of books including most recently: Promoting Peace, Inciting Violence: The Role of Religion and Media (2012); and Martyrdom: A Very Short Introduction (2012).

The Very Short Introductions (VSI) series combines a small format with authoritative analysis and big ideas for hundreds of topic areas. Written by our expert authors, these books can change the way you think about the things that interest you and are the perfect introduction to subjects you previously knew nothing about. Grow your knowledge with OUPblog and the VSI series every Friday!

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Image credit: A protestor holds a picture of a blood spattered Neda Agha-Soltan and another of a woman, Neda Soltani, who was widely misidentified as Neda Agha-Soltan, used in full page context of p.49, Martyrdom: A Very Short Introduction, by Jolyon Mitchell. Image courtesy of Getty Images.

The post Making and mistaking martyrs appeared first on OUPblog.

Pimp County, AZ (FAN) — Twilight author Stephenie Meyer has made a stunning revelation today during a book signing in Pimp County: she is, in fact, J.K. Rowling, British author of the international bestseller, Harry Potter.

As hundreds of screaming teenaged girls waited in line to have their copies of the Twilight Saga signed, Meyer suddenly stood up on her desk, shouted “Finite Incantatum” in a noticeably British accent, and magically changed into Rowling.

“It was, like, so unexpected and, like, you know, weird and stuff,” says Casandra, a 16-year-old witness to the event. “First we were like, what, and then we were like, whoa.”

Rowling Comments

After revealing her disguise, Rowling told FAN why she did it: “I was writing the seventh Harry Potter book when I realised, holy skrutes, I got nothing after this! So I decided to write some lovey-dovey sparkly vampire bollocks to make my books look good in comparison, thereby keeping their sales up. But I couldn’t let anybody know it was me, so I created Stephenie Meyer. Of course, when I wrote Twilight, I never expected it to actually become popular. So I churned out three sequels that got progressively worse, hoping that [the fans] would start to shut up about it, but that didn’t work. Then I tried revealing my identity by having What’s-his-name play Edward in the Twilight movie, but nobody got the hint. So screw it all; here I am, suckers!”

Rowling proceeded to summon her Firebolt and fly away, cackling, with no further comment.

Christian Meyer Speaks Out

When asked about his role in Rowling’s plot, Stephenie Meyer’s “husband,” Christian Meyer (whose real name is Bernito Juliandre), had this to say: “When Miss Rowling approached me and asked me to pretend to be her husband for a while, I was all, hell yeah! I love Harry Potter! But after the first year it became difficult. When I tried to leave, she threatened me with the Cruciatus Curse. What could I do?”

A New Book in Progress

Rowling has recently announced that she is writing an eighth book in her international bestseller, titled Harry Potter and the Huge-Ass Bank Account, which is dated to be released in spring of 2011. FAN’s inside sources tell us the plot will center around Harry Potter and friends counting Rowling’s savings while battling the Dark Lord, Orson Scott Card.

Pimp County, AZ (FAN) — Twilight author Stephenie Meyer has made a stunning revelation today during a book signing in Pimp County: she is, in fact, J.K. Rowling, British author of the international bestseller, Harry Potter.

As hundreds of screaming teenaged girls waited in line to have their copies of the Twilight Saga signed, Meyer suddenly stood up on her desk, shouted “Finite Incantatum” in a noticeably British accent, and magically changed into Rowling.

“It was, like, so unexpected and, like, you know, weird and stuff,” says Casandra, a 16-year-old witness to the event. “First we were like, what, and then we were like, whoa.”

Rowling Comments

After revealing her disguise, Rowling told FAN why she did it: “I was writing the seventh Harry Potter book when I realised, holy skrutes, I got nothing after this! So I decided to write some lovey-dovey sparkly vampire bollocks to make my books look good in comparison, thereby keeping their sales up. But I couldn’t let anybody know it was me, so I created Stephenie Meyer. Of course, when I wrote Twilight, I never expected it to actually become popular. So I churned out three sequels that got progressively worse, hoping that [the fans] would start to shut up about it, but that didn’t work. Then I tried revealing my identity by having What’s-his-name play Edward in the Twilight movie, but nobody got the hint. So screw it all; here I am, suckers!”

Rowling proceeded to summon her Firebolt and fly away, cackling, with no further comment.

Christian Meyer Speaks Out

When asked about his role in Rowling’s plot, Stephenie Meyer’s “husband,” Christian Meyer (whose real name is Bernito Juliandre), had this to say: “When Miss Rowling approached me and asked me to pretend to be her husband for a while, I was all, hell yeah! I love Harry Potter! But after the first year it became difficult. When I tried to leave, she threatened me with the Cruciatus Curse. What could I do?”

A New Book in Progress

Rowling has recently announced that she is writing an eighth book in her international bestseller, titled Harry Potter and the Huge-Ass Bank Account, which is dated to be released in spring of 2011. FAN’s inside sources tell us the plot will center around Harry Potter and friends counting Rowling’s savings while battling the Dark Lord, Orson Scott Card.

Thank you all so much for all your posts and e-cards. You really made my birthday special! (((Hugs)))

I gave myself a present. I wouldn't move from my computer until I finished writing the rest of STEP MONSTER. Whew! That was the longest and most difficult revision I have ever done! The last time I switched a manuscript from a chapter book to an MG was CAMP CAPTIVE, and once the beginning hook clicked, the words just flew. I think it took about a week to write the first draft of the MG version.

Part of the reason STEP MONSTER took so long was because I had to stop for several conferences and vacations, and to polish three other novels. I was getting back into the groove when I had to stop and revise one of the other novels again. I also had run the beginning of STEP MONSTER through several of my groups, and received such wonderful feedback, saying it was my best work yet. Wow! But then I looked at the huge hole between the old and new versions. I kept writing and writing, and the versions felt like they were growing further apart instead of together. I don't think I had any usable chunks until somewhere around page 90--and even then, I had to be careful that anything I kept was in the MC's new and improved voice. But...I DID IT! I still have some polishing to do, but I love, love, love the novel. The first 64 pages are polished and ready to go, and I'm busy revising the rest and sending it through my groups. I was going to push myself to get this out by December, but with most of my time going to NaNoWriMo in a couple weeks, I'm probably going to start submitting it in early 2008.

By the way, this is what my daughters made for my birthday. Not only was it incredibly sweet of them, and extremely creative...it sparked a great picture book idea!