Libor and the FED

Ok lets talk education and the lack thereof in the USA today. Its all over the news now that LIBOR is sky high. LIBOR is a measure of credit risk, in normal times LIBOR is usually within 15 to 30 basis points or bps of the FED target rate.

However now that the FED rate is back down to 1.5% the LIBOR is lingering 300 bps plus above LIBOR signaling the complete destruction of the entire credit system. Why is this important? Or a better question what exactly is important about this whole thing?

Remember in January we discuss the fact the FED raised rates 17 times and with those hikes LIBOR correlated with the FED hike better than 90% from 1.5% to the upper 5% range. Now the FED knows this is a measure of credit default. Further more the FED also knows very well that 80% of the purchase money mortgages used in the peak of the housing market from 2003-2006 were adjustable rate mortgages (ARMs) that were set to LIBOR upon adjustment. This would indeed make the FED guilty of deliberately triggering a default way by changing the future credit worthiness of all mortgage backed securities, CMOs, and CDOs that package these adjustable mortgage products by knowing full well that all those purchase money mortgages will then adjust higher. This is very simple. They new what they were doing all along these are Harvard educated business men with intimate knowledge of this system. Where exactly are they cutting rates from to increase liquidity to save us. From the 5.25% they cranked it in the largest debt boom in history. 17 hikes and no accountability how is this possible unless the media is helping to hide the problem.

98% of Americans have no idea about this and this is the single most important aspect of the financial crisis gripping the planet today. The FED has extensive knowledge of the system they regulate and are aware most Americans and Congress don't get it. Now the FED has absolute authority over the entire banking and credit system with the unchecked power. This doesn't bother any out there?