I knew I saved these documents for a reason. First off, I want to state I got these documents on the up and up, no grand hacking was implemented or corporate subterfuge deployed. Basically, I am archivist with an eye for the historically important.
A little known fact was these documents were publicly available for a glorious four hour window in England before the lords and masters of Barclays hustled some poor judge out of bed to put an injunction against their download. I was paying attention and got the documents.
First, here they are. Second, I will attempt to explain what these clever fellows were up to in layman terms.
So:
http://www.mediafire.com/...
Now, this started simply enough as massive tax avoidance. One of the easier ones to follow is Project Knight. Here they set up CDS and CDOs in a grand international scheme to bypass tax men in both the USA and England. Though very clever, as with most people, greed got the best of them when no one seemed to notice.
Now two key things were happening in this period as well. First off, we are finding out that major banks were rigging the interest rate on LIBOR. LIBOR backs a paper commodity and is not just the rate. To get said rate, you have to physically purchase or take liability behind the asset. Just a few assets LIBOR has a hand in determining is interest rate swaps, inflation swaps, floating rate notes, syndicated loans and variable rate mortgages, the last one screwing large parts of middle-class America.
Also, LIBOR determined the interest rates for money market bonds, which were the fuel for CDSs and CDOs. Kindling, as it were, in 2006.
See, back then, money was tight because of antics dating back to Clinton repealing Glass-Steagall. The smart money on Wall Street knew they had a decade at most before public outrage caught on to them. BarCap, as Barclays was called, intentionally lowered their borrowing rate outside even the most courteous deviation curve.
In effect, they were drawing flies to their honey when the rest of the world was offering vinegar due to tight, tight money. This got their biggest LIBOR money market client on the line, hook and sinker. Those poor bastards went by the name Lehman Brothers.
See, the money markets fueled their CDO/CDS tax avoidance scheme. Tragically, the more Lehman lent to Barclays, the further in the trap they went. Because my friends, Barclays had an end-game that would make a third-world dictator blush.
It's bad kept secret that third-world despots like to take advantage of the IMF. They like to borrow say, a billion dollars, and then default on the loan. Then they go and buy their bad debt for pennies on the dollar and pocket the rest as profit. This happens more than you'd probably like to know.
Anywho, so Barclays tied up billions, some argue a trillion or two, in money market bonds from Lehman Brothers who became addicted to their cheap capital. This would end badly once Barclays stopped the flow and watched them die on the vine in 2008.
I think we all remember this, but do you remember who bought Lehman Brothers?
That's right, Barclays.
So Barclays was allowed to buy back their own debt for shillings on the pound. This is how they posted that crazy profit a few years back that raised a lot of eyebrows. That should all be forehead slapping at this point because during the entire caper it was pretty obvious what they were doing.
But the heart of the regulators failed, probably because of the incestual nature of High and Wall Street.
But hey, that's how they did it and now hopefully we can get regulators with a backbone back in the game so investors like me can soundly invest in long-term value instead short-term utter bullshit.
Because at the end of the day, what Barclays did was complete and utter bullshit.